Exhibit 1.1
ORANGE REIT, INC.
78 OKNER PARKWAY
LIVINGSTON, NEW JERSEY,
07039
Common Shares
Agency Agreement
January ,
2006
J.P. Turner & Company, LLC
One Buckhead Plaza
3060 Peachtree Road, 11 th Floor
Atlanta, Georgia 30305
Dear Sir:
The purpose of this agreement (the
“ Agreement ”) is to confirm the
appointment of J.P. Turner & Company, LLC (the “
Managing Agent ”) by Orange REIT, Inc., a Maryland
corporation, (the “ Company ”) in
connection with the Offering described herein on the above date
(the “ Engagement Date ”) under the terms
and conditions set forth herein. The Company and Managing Agent
desire to, and hereby do, agree as follows:
The Company is a Maryland
corporation that will elect to qualify as a real estate investment
trust pursuant to Sections 856 through 860 of the Internal Revenue
Code of 1986, as amended (the “ Code ”).
Subject to the terms and conditions stated herein, the Company
proposes to engage the Managing Agent to solicit offers to buy and
obtain purchasers for shares of common stock, $.01 par value, of
the Company (the “ Shares ”) in a
“best efforts” public offering for a minimum of
$12,000,000 up to a maximum of $100,000,000 worth of Shares (the
“ Offering ”). The Managing Agent, shall
coordinate the activities of the Agents with regard to investor
participation in the Offering. The Shares will be registered for
sale to the public under the Securities Act of 1933, as amended
(the “ Act ”), and the regulations
promulgated thereunder by the Securities and Exchange Commission
(the “ Commission ”), on SEC Form S-11,
but will not be listed for post-issuance trading on any exchange or
included for quotation on any of the Nasdaq markets. The net
proceeds of the Offering will be employed by the Company primarily
for the purposes of acquiring hotel properties, including
extended-stay, limited service hotels and other hotels, and to
repay up to $800,000 of funds loaned to the Company by Briad
Development West LLC, an affiliate of Brad Honigfeld, the
President, Chief Executive Officer and a director of the
Company.
By signature to this Agreement, the
Company hereby engages the Managing Agent for the Offering, to
solicit offers to buy and obtain purchasers for the Shares on a
“best efforts” basis and otherwise in accordance with
the terms and conditions set forth in this Agreement, and the
Managing Agent agrees to be so engaged.
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1. Representations and
Warranties.
(a) The Company represents and
warrants to, and agrees with, the Managing Agent with effect from
the date hereof, that:
(i) The Company has heretofore filed
a registration statement on Form S-11 with the Commission (File
No. 333-
), and as a part thereof, a preliminary prospectus with respect to
the registration of the Shares under the Act; any preliminary
prospectus included in such registration statement or filed with
the Commission pursuant to Rule 424 of the Commission under the Act
is hereinafter called a “ Preliminary Prospectus
”; the registration statement, as amended at the time it
becomes effective under the Act, and the prospectus filed as a part
thereof pursuant to Rule 424(b) of the Act are hereinafter called
the “ Registration Statement ” and “
Prospectus ,” respectively; except that: (A) if
the Company files a post-effective amendment to the registration
statement, then the term “Registration Statement” shall
refer to the registration statement as amended by such
post-effective amendment thereto and the term
“Prospectus” shall refer to the amended prospectus then
on file with the Commission, and (B) if the prospectus,
including any sticker supplement thereto not theretofore
consolidated into a post-effective amendment, filed by the Company
pursuant to either Rule 424(b) or (c) of the rules and
regulations of the Commission under the Act (the “
Regulations ”), shall differ from the prospectus on
file at the time the Registration Statement or any post-effective
amendment thereto shall have become effective, the term
“Prospectus” shall refer to the prospectus, including
any such sticker supplement, filed pursuant to either Rule 424(b)
or (c), as the case may be, from and after the date on which it
shall have been filed. The Company will not file any registration
statement for Shares or any amendment to the registration statement
or any amendment or supplement to the Prospectus to which the
Managing Agent shall reasonably object in writing or which shall be
reasonably disapproved by the Managing Agent and its
counsel.
(ii) When the Registration Statement
(including any exhibits thereto and the Prospectus contained
therein) is declared effective by the Commission, the Registration
Statement and the Prospectus and any amendments thereof and
supplements or exhibits thereto will comply in all material
respects with the applicable provisions of the Act, the Regulations
and all other federal and state securities laws, rules and
regulations, will not contain an untrue statement of a material
fact and will not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading under the circumstances under which they were made.
No representation and warranty is made in this subsection (ii),
however, with respect to any information contained in or omitted
from the Registration Statement or the Prospectus or any related
Preliminary Prospectus or any amendment thereof or supplement
thereto in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Managing
Agent specifically for use therein.
The parties acknowledge and agree
that such information provided by or on behalf of the Managing
Agent consists solely of the section of the Prospectus captioned
The Offering.
(iii) The Shares to be issued and
sold by the Company pursuant to this Agreement have been duly and
validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and
fully paid and non-assessable and will conform to the description
of the Shares contained in the Prospectus.
(iv) As of the date of this
Agreement, the Company has no direct or indirect subsidiaries
(each, a “ Subsidiary ” and together, the
“ Subsidiaries ”).
(v) The Company has the corporate
power to enter into this Agreement, and the issuance and sale of
the Shares by the Company and the performance of this Agreement and
the Offering and the consummation by the Company of the Offering
and the other
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transactions and actions
contemplated herein will not result in a breach or violation of any
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
Subsidiaries or properties is subject, nor will such action result
in any violation of the provisions of the Articles of Incorporation
or Bylaws of the Company, or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of
the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Act and under state securities or Blue Sky laws in
connection with the distribution of the Shares by the Managing
Agent.
(vi) This Agreement has been duly
authorized executed and delivered by the Company, and constitutes a
valid and binding agreement of the Company, enforceable in
accordance with its terms, except to the extent that enforceability
may be limited by bankruptcy, insolvency or other laws affecting
the enforcement of creditors’ rights generally or by general
principles of equity, and except to the extent that the
enforceability of the indemnity and contribution provisions
contained in this Agreement may be limited under applicable
laws;
(vii) There are no contracts or
other documents (including, without limitation, any agreement with
any affiliate of the Company or any option or other agreement
relating to the purchase of real property) which are required to be
described in the Registration Statement and the Prospectus or filed
as exhibits to the Registration Statement by the Act or the
Regulations and which have not been so described or
filed.
(viii) To the best of the knowledge
of the Company’s management, Grant Thornton, LLP, auditor of
the financial statements of the Company, is an independent public
accountant as required by the Act and the rules and regulations of
the Commission thereunder.
(ix) The Company is not in violation
of its Articles of Incorporation, By-laws or other organizational
documents or in default in the performance or observance of any
material obligation, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or
any of its properties may be bound.
(x) There are no legal or
governmental proceedings pending to which the Company is a party or
to which any property of the Company is the subject, which,
individually or in the aggregate, would have a material adverse
effect on the financial position, shareholders’ equity or
results of operations of the Company and, to the best of the
knowledge of the Company’s management, no such proceedings
are threatened or contemplated by governmental authorities or
threatened or contemplated by others.
(xi) The Company is not and, at all
times up to and including consummation of the transactions
contemplated by this Agreement, and after giving effect to
application of the net proceeds of the Offering, will not be,
subject to registration as an “investment company”
under the Investment Company Act of 1940, as amended, and is not
and will not be an entity “controlled” by an
“investment company” within the meaning of such
act.
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(xii) Except as disclosed in the
Registration Statement and the Prospectus: (i) no person or
entity has been engaged by the Company to act as a finder or
investment adviser in connection with the transactions contemplated
herein (ii) there are no contracts, agreements or
understandings between the Company and any person or entity that
would give rise to a valid claim against the Company or Managing
Agent for a brokerage commission, finder’s fee or other like
payment in connection with the transactions contemplated by this
Agreement or (iii) there are no arrangements, agreements,
understandings, payments or issuance with respect to the Company or
any of its officers, directors, shareholders, partners, employees,
Subsidiaries or affiliates that may affect the Managing
Agents’ compensation as permitted by the National Association
of Securities Dealers, Inc. (“ NASD ”).
Except for Scott Lipkin, none of the Company’s officers,
directors or shareholders is a member of NASD, an affiliate or an
associated person of a member of NASD.
(xiii) Neither the Company nor any
Subsidiary has any: (i) employment, severance or other similar
arrangement or agreement, or (ii) plan, policy or other
instrument of insurance (including any self-insured arrangements),
in each such case, providing or providing for any of the following:
workers’ compensation benefits, disability benefits,
severance benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, deferred compensation,
profit-sharing, bonuses, fee sharing, stock options, stock
appreciation or other forms of incentive compensation, or
post-retirement insurance, compensation or similar benefits. In the
event that the Company or any Subsidiary shall enter into, adopt or
purchase, as the case may be, any such agreement, plan or policy,
the Registration Statement and the Prospectus shall be
appropriately amended or supplemented to disclose all material
facts pertaining thereto.
(xiv) The Company has not promised
or represented to any person or entity that any Shares will be
directed or otherwise made available to them in connection with the
Offering. The Company has not offered any shares of Common Stock to
any person or entity with the intention of unlawfully influencing:
(i) a business relationship with the Company or any Subsidiary
or (ii) a journalist or publication to write or publish
favorable information about the Company, any Subsidiary or their
affiliates.
(xv) The conditions for use of Form
S-11 to register the Offering under the Act, as set forth in the
General Instructions to such Form, have been satisfied.
(xvi) Any certificate signed by any
officer of the Company and delivered to the Managing Agent in
connection with the Offering shall be deemed a representation and
warranty by the Company to the Managing Agent, as to matters
covered thereby.
(b) As a condition: (i) to the
issuance by the Managing Agent to the Commission of its consent to
the declaration of effectiveness of the Registration Statement and
(ii) of the Managing Agent acting as agent in connection with
the Offering as contemplated herein, the Company shall, by delivery
to the Managing Agent of appropriate written documentation to such
effect, restate and reiterate, subject to such modifications as may
be necessary to account for changes in facts or circumstances, all
of its representations and warranties contained in
Section 1(a) hereof, and shall, as of the Initial Closing Date
and as of each Subsequent Closing Date, further represent and
warrant to, and agree with, the Managing Agent, in each case with
effect from the date upon which the Registration Statement shall be
declared effective (the “ SEC Effective Date
”) that:
(i) No stop order suspending the
effectiveness of the Registration Statement or any part thereof has
been issued and, to the knowledge of the Company, no proceeding for
that purpose has been instituted or is contemplated by the
Commission or by the state securities authority of any
jurisdiction. No order preventing or suspending the use of the
Prospectus has been issued and, to the knowledge of the Company, no
proceeding for that purpose has been instituted or is contemplated
by the Commission or by the state securities authority of any
jurisdiction.
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(ii) The Company and each of its
Subsidiaries has been duly incorporated or organized, is validly
existing, is in good standing, under the laws of its state of
organization, with power and authority (corporate or other) to own
its properties and conduct its business, and has been duly
qualified as a foreign entity for the transaction of business and
is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership of
property or the conduct of business, except such jurisdictions, if
any, in which the failure to be so qualified will not have a
material adverse effect on the respective company.
(iii) No permits, licenses,
approvals, consents and other authorizations (collectively, the
“ Licenses ”) must be issued by any
federal, state, or local regulatory agencies or bodies or private
entities in order for the Company or any Subsidiary to conduct, as
of the date of this Agreement, the business of such entities in the
manner described in the Registration Statement and Prospectus. In
the event of a change of circumstances that shall require the
Company or any Subsidiary to obtain any License in order for the
Company or any Subsidiary to conduct, the business of such entities
in the manner described in the Registration Statement and
Prospectus, the Company and/or the relevant Subsidiary shall obtain
all requisite Licenses.
(iv) The Company has an authorized
capitalization as set forth in the Prospectus. All of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and
conform to the description of the capital stock of the Company
contained in the Prospectus. There are no preemptive or other
rights to subscribe for or to purchase any shares of capital stock
of the Company or of any of its Subsidiaries. Except as set forth
in the Prospectus, there are no warrants or options to purchase any
shares of capital stock of the Company or of any of its
Subsidiaries. Neither the filing of the Registration Statement nor
the offering or sale of the Shares as contemplated by this
Agreement will give rise to any rights for or relating to the
registration of any shares of the capital stock of the
Company.
(v) Except as listed as shown on
Exhibit A, neither the Company nor any Subsidiary: (i) owns or
possesses any patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses (other than “shrink
wrap,” non-fee generating and royalty free software
licenses), formulae, customer lists, know-how or other intellectual
property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures, the “ Intellectual Property
”) which is used in the conduct of their respective
businesses; or (ii) has knowledge or, has received any notice,
that the conduct of their respective businesses conflicts with any
Intellectual Property rights of others.
(vi) Neither the Company nor any of
its affiliates has, prior to the date hereof, made any offer or
sale of any securities which are required to be
“integrated” pursuant to the Act or the Regulations
with the offer and sale of the Shares pursuant to the
Registration
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Statement. Except as disclosed in
the Registration Statement or the Prospectus, neither Company nor
any of its affiliates has sold or issued any Relevant Security
during the six-month period preceding the date of the Prospectus,
including but not limited to any sales Regulation D or S under the
Act other than shares of Common Stock issued pursuant to employee
benefit plans, qualified stock option plans or the employee
compensation plans or pursuant to outstanding options, rights or
warrants as described in the Registration Statement and the
Prospectus.
(vii) The financial statements,
including the notes thereto, included in the Registration Statement
and the Prospectus present fairly the financial position as of the
dates indicated and the cash flows and results of operations for
the periods specified of the Company. Except as otherwise stated in
the Registration Statement and the Prospectus, said financial
statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent
basis throughout the periods involved (“ GAAP
”). No other financial statements or supporting schedules are
required to be included or incorporated by reference in the
Registration Statement. The other financial and statistical
information included in the Registration Statement and the
Prospectus present fairly the information included therein and have
been prepared on a basis consistent with that of the financial
statements that are included in the Registration Statement and the
Prospectus and the books and records of the respective entities
presented therein.
(viii) There are no pro forma or as
adjusted financial statements which are required to be included in
the Registration Statement and the Prospectus in accordance with
Regulation S-X which have not been included as so
required.
(ix) Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, neither the Company nor any of its Subsidiaries has
experienced any material adverse change or any development
involving a prospective material adverse change in the general
affairs, prospects, management, financial position, properties or
results of operations of the Company or any of its Subsidiaries,
otherwise than as set forth in the Prospectus; and neither the
Company nor any of its Subsidiaries has entered into any material
transactions other than as described in the Prospectus; and the
capitalization, indebtedness, properties, material liabilities and
business of the Company and its Subsidiaries conform to the
descriptions thereof contained in the Prospectus.
(x) Neither the Company nor any of
its Subsidiaries is in violation of its Articles of Incorporation,
By-laws or other organizational documents or in default in the
performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be
bound.
(xi) There are no legal or
governmental proceedings pending to which the Company or any of its
Subsidiaries is a party or to which any property of the Company or
any of its Subsidiaries is the subject, which, individually or in
the aggregate, would have a material adverse effect on the
financial position, shareholders’ equity or results of
operations of the Company or any of its Subsidiaries and, to the
best of their knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened or
contemplated by others.
(xii) Neither the Company nor any of
its Subsidiaries has violated: (i) the Bank Secrecy Act, as
amended, (ii) the Money Laundering Control Act of 1986, as
amended, (iii)
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the Foreign Corrupt Practices Act,
or (iv) the Uniting and Strengthening of America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
PATRIOT ACT) Act of 2001, and/or the rules and regulations
promulgated under any such law, or any successor law.
(xiii) The Company is organized in
conformity with the requirements for qualification as a real estate
investment trust under Sections 856 through 860 of the Code and the
rules and regulations thereunder. The contemplated method of
operation of the Company’s business as described in the
Prospectus will allow the Company to satisfy the operational
requirements for qualification as a real estate investment trust
under such Sections and such rules and regulations
(xiv) The Company has disclosed in
the Prospectus all potential conflicts of interest involving the
officers, directors, principal shareholders, and/or employees of
the Company and any of its Subsidiaries required to be disclosed
therein or the omission of which would render the Prospectus
materially misleading. No relationship, direct or indirect, exists
between or among any of the Company or any affiliate of the
Company, on the one hand, and any director, officer, shareholder,
customer or supplier of the Company or any affiliate of the
Company, on the other hand, which is required by the Act or the
Regulations to be described in the Registration Statement or the
Prospectus which is not so described and described as required.
There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of their
respective family members, except as disclosed in the Registration
Statement and the Prospectus. The Company has not, directly or
indirectly, including through a Subsidiary, extended or maintained
credit, arranged for the extension of credit, or renewed an
extension of credit, in the form of a personal loan to or for any
director or executive officer of the Company.
(xv) Neither the Company nor any of
its directors, officers or controlling persons or affiliates, has
taken or will take, directly or indirectly, any action resulting in
a violation of Rule 102 of Regulation M under the Securities
Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the “ Exchange
Act ”), or designed to cause or result in, or that
has constituted or that reasonably might be expected to constitute,
the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the
Shares.
(c) As used in this Agreement, the
term “ knowledge of the Company ” (or similar
language) shall mean the knowledge of the officers and directors of
the Company, with the assumption that such officers and directors
shall have made reasonable and diligent inquiry of the matters
presented (with reference to what is customary and prudent for the
applicable individuals in connection with the discharge by the
applicable individuals of their duties as officers, directors or
managers of the Company or the applicable Subsidiaries or
affiliates).
2. Offering and Sale of
Shares—Closing Dates.
(a) On the basis of the
representations, warranties and covenants herein contained, but
subject to the terms and conditions herein set forth, the Managing
Agent is hereby appointed as the selling agent of the Company
during the term herein specified (the “ Offering
Period ”) for the purpose of finding subscribers for
the Shares for the account and risk of the Company through a public
offering beginning on the SEC Effective Date. The Offering Period
shall continue as long
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as Shares are being offered through the
Registration Statement, but not to exceed 30 months after the SEC
Effective Date. The Company agrees to file a supplement to the
Registration Statement whenever required by law or appropriate to
fully inform participants in the Offering of material changes in
the Company’s business or finances. Subject to the
performance by the Company of all of its obligations to be
performed hereunder, and to the completeness and accuracy of all
the representations and warranties contained herein, the Managing
Agent hereby accepts such agency and agrees on the terms and
conditions herein set forth to use its reasonable best efforts
during the Offering Period to find subscribers for the Shares at
the current public offering price (each subscriber being required
to invest at least $5,000, except for IRAs and Keogh and Pension
Plans which shall be required to invest at least $2,000). The time
for each issuance of and payment for Shares is herein referred to
as a “ Closing Date .” The initial Closing Date
shall take place promptly after subscribers have been obtained for
$12 million of Shares (the “ Initial Closing
Date ”). The Offering shall terminate if the Initial
Closing Date has not occurred on or before the first anniversary
date of the SEC Effective Date.
(b) All subscription payments for
the Shares shall be deposited into a qualified escrow account
maintained by Deutsche Bank National Trust Company.
(c) If less than all the Shares
shall have been subscribed and paid for at the Initial Closing
Date, then, at periodic intervals to be mutually agreed upon by the
Managing Agent and the Company during the Offering Period, there
shall be subsequent closings for the payment to the Company of the
purchase price of additional Shares sold by the Managing Agent (the
“ Subsequent Closing Date(s ) ”) as
described in Section 2(d).
(d) Subsequent closing(s) will take
place at such time(s), date(s) and place(s) as determined by the
Company, with the concurrence of the Managing Agent. Shares will be
issued to subscribers and compensation will be paid to the Managing
Agent at each Subsequent Closing Date.
(e) Subscriptions for Shares may be
solicited by certain dealers selected by the Managing Agent or by
an agent that the Managing Agent appoints, in each case, with the
Company’s approval of such selections which shall not be
unreasonably withheld or delayed (the “ Selected
Dealers ”). Each such Selected Dealer shall be a
member in good standing of NASD.
(f) As compensation for the services
of the Managing Agent under this Agreement, the Managing Agent will
be paid in immediately available funds, on each Closing Date, a
commission equal to 7.0% of the public offering price for each
Share placed by or on behalf of the Managing Agent and subscribed
and paid for at each Closing Date (other than Shares by directors,
officer or affiliates of the Company not solicited by the Managing
Agent). In addition, the Managing Agent will be paid in immediately
available funds, on each Closing Date, a non-accountable expense
allowance equal to 3.0% of the public offering price for each Share
placed by or on behalf of the Managing Agent and subscribed and
paid for on the applicable Closing Date (other than reinvestment
Shares by directors, officers and affiliates of the Company not
solicited by the Managing Agent). The Managing Agent may reallow
some or all of the commission and fees payable to it by the Company
to the Selected Dealers. The Managing Agent and each Selected
Dealer will be paid, in immediately available funds and
simultaneously with issuance, a commission and a non-accountable
expense allowance in the amounts set forth above (subject to the
adjustment described in the immediately preceding sentence) each
time the Company issues Shares under the reinvestment plan covered
by the Registration Statement to purchasers obtained by each such
Selected Dealer engaged by the Managing Agent. The Managing Agent
reserves the right (in its sole discretion) to reduce any item of
compensation or
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adjust the terms thereof as specified herein in
the event that a determination shall be made by the NASD to the
effect that the Managing Agents’ aggregate compensation is in
excess of NASD rules or that the terms thereof require
adjustment.
(g) The Managing Agent shall enter
into a financial advisory agreement with Orange Realty Group, LLC
(“ Orange Realty ”) to provide services
in connection with future sales of one or more of the
Company’s properties (the “ Orange Realty
Advisory Agreement ”). Such agreement shall provide
that Orange Realty will pay to the Managing Agent, an amount which,
in the aggregate, shall be equal to 15% of the fee Orange Realty
receives or will receive from the Company upon the sale of such
properties.
(h) The Managing Agent shall enter
into a financial advisory agreement with Orange Advisors, LLC
(“ Orange Advisors ”) to provide advisory
services to Orange Advisors (the “ Orange Advisors
Advisory Agreement ”). Such agreement shall provide
that Orange Advisors will pay the Managing Agent, an amount which,
in the aggregate, shall be equal to 15% of the following specific
fees which Orange Advisors receives or will receive from the
Company:
(i) deferred subordinated share of
net sales proceeds upon liquidation of the Company (as described in
the Prospectus),
(ii) subordinated incentive fee
payable upon listing (as described in the Prospectus),
and
(iii) performance fee (as described
in the Prospectus).
(i) Neither the Company, nor the
Managing Agent or any Selected Dealer participating in the Offering
shall, directly or indirectly, pay or award any finder’s
fees, commissions or other compensation to any person engaged by a
potential investor for investment advice as an inducement to such
adviser to advise the purchase of Shares; provided, however, that
normal sales commissions payable to a registered broker-dealer or
other properly licensed person for selling Shares shall not be
prohibited hereby.
(j) The Managing Agent will retain
and will require each Selected Dealer to retain, for a period of
six (6) years, copies of all documents reflecting their
respective determinations regarding the suitability of each
investor and potential investor in the Offering solicited by each
of them.
(k) The Company has advised the
Managing Agent that it or one of its affiliates may desire to
engage in wholesaling activities in the future. The Company
agrees to consult with the Managing Agent concerning the scope and
the cost of such activities and to obtain the approval of the
Managing Agent, which shall not be unreasonably withheld, before it
or one of its affiliates engages in such activities.
3. Certain Covenants. The
Company hereby covenants and agrees to and with the Managing Agent
that:
(a) All corporate proceedings
undertaken by the Company and other legal matters which relate to
the Offering and other related transactions shall be reasonably
satisfactory in all material respects to the Managing Agent and its
counsel.
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(b) The Company and its Subsidiaries
shall maintain a system of internal accounting and other controls
sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with
management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accounting for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(c) The Company will use its best
efforts to cause the Registration Statement to become effective and
wil
