Exhibit 10.1
CORNERSTONE CORE PROPERTIES REIT,
INC.
DEALER MANAGER
AGREEMENT
Up to 77,350,000 Shares of Common
Stock
Pacific
Cornerstone Capital, Incorporated
1920 Main
Plaza, Suite 400
Irvine,
California 92614
Dear
Sirs:
Cornerstone Core Properties REIT, Inc., a
Maryland corporation (the “ Company ”), is
registering for public sale a maximum of 77,350,000 shares of its
common stock, $0.001 par value per share, (the “
Shares ”), to be issued and sold for an aggregate
maximum purchase price of $610,360,000 (56,250,000 Shares to be
offered to the public in a primary offering with an aggregate
maximum purchase price of $450,000,000 (the “Primary
Offering”) and 21,100,000 Shares to be offered pursuant to
the Company's distribution reinvestment plan with an aggregate
maximum purchase price of $160,360,000 (“ DRP
”)). The Shares are to be sold to selected persons or
entities acceptable to the Company, upon the terms and subject to
the conditions set forth in the enclosed Prospectus.
The Company hereby invites you, Pacific
Cornerstone Capital, Inc., a California corporation (the “
Dealer Manager ”), to become the dealer manager in
connection with the offer and sale of the Shares. By your
acceptance hereof, you agree to act in such capacity and to use
commercially reasonable efforts to find purchasers for the Shares
in accordance with the terms and conditions of the Prospectus
(defined below) and this dealer manager agreement (the “
Agreement ”), but with no obligation or understanding,
express or implied, that you are making a commitment to purchase or
sell the Shares. You agree to use commercially reasonable efforts
to find purchasers of Shares both directly and indirectly through a
selling group consisting of participating brokers (the “
Participating Brokers ”) with whom you shall contract
pursuant to a participating broker agreement substantially in the
form attached as Attachment 1 hereto (the “ Participating
Broker Agreement ”) or such other form as may be
requested by a Participating Broker provided the consent of the
Company is obtained for the use of such form.
Accompanying this Agreement is a copy of the
Prospectus and the Supplemental Material (defined below) prepared
by the Company for use in conjunction with the offer and sale of
the Shares. You are not authorized to use any solicitation material
other than that referred to in this section, which material has
been furnished by the Company.
Except as described in the Prospectus or in
Sections 3(f) and (g) hereof, the Shares are to be sold for a per
Share cash price as follows:
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Primary
Offering
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DRP
Offering
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$
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8.00
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$
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7.60
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Participating Brokers Deferring
Commission*
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$
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7.52
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$
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7.60
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Fee for Service Investment Advisers
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$
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7.44
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$
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7.60
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* For a period
of six years following the date of purchase, an additional $0.10
per share will be deducted annually from cash distributions
otherwise payable to the purchaser and will be used to pay deferred
commissions.
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Representations and Warranties of the
Company
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The Company
represents and warrants to Dealer Manager and Participating Brokers
that:
(a) The
Company has prepared and filed with the Securities and Exchange
Commission (the “ SEC ”) a registration
statement (Registration No. 333-155640) for the registration of the
Shares under the Securities Act of 1933, as amended (the “
Securities Act ”), and the applicable rules and
regulations promulgated thereunder. Copies of such registration
statement as initially filed and each amendment thereto have been
or will be delivered to the Dealer Manager. The registration
statement and the prospectus contained therein, as finally amended
at the effective date of the registration statement, are
respectively hereinafter referred to as the “ Registration
Statement ” and the “ Prospectus ,”
except that if the Company files a prospectus or prospectus
supplement pursuant to Rule 424(b) under the Securities Act, or if
the Company files a post-effective amendment to the Registration
Statement, the term “Prospectus” includes the
prospectus filed pursuant to Rule 424(b) or the prospectus included
in such post-effective amendment. The term “ Preliminary
Prospectus ” as used herein shall mean a preliminary
prospectus related to the Shares as contemplated by Rule 430 or
Rule 430A under the Securities Act included at any time as part of
the Registration Statement.
(b) On
the date that any Preliminary Prospectus was filed with the SEC, on
the effective date of the Registration Statement, on the date of
the Prospectus, and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or
supplement to the Prospectus is filed with the SEC, the
Registration Statement, each Preliminary Prospectus and the
Prospectus, as applicable, including the financial statements
contained therein, complied or will comply with the Securities Act
and the applicable rules and regulations promulgated thereunder. On
the effective date, the Registration Statement did not contain any
untrue statement of a material fact or omit to state any 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. On the date of the Prospectus, as
amended or supplemented, as applicable, the Prospectus did not or
will not contain any untrue statement of a material fact or omit to
state any 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; provided,
however, that the foregoing provisions of this Section 1(b) will
not extend to such statements contained in or omitted from the
Registration Statement or the Prospectus, as amended or
supplemented, as are primarily within the knowledge of the Dealer
Manager or any of the Participating Brokers and are based upon
information furnished by the Dealer Manager in writing to the
Company specifically for inclusion therein.
(c) All
additional written, audio or audio-visual material, including an
investment summary, audio tape, video tape and internet site
prepared by the Company for use in conjunction with the offer or
sale of the Shares (“ Supplemental Material ”)
will be distributed by the Company only in full compliance with the
requirements of the Act (including, without limitation, the
requirement that such Supplemental Material not be delivered to any
prospective purchaser unless accompanied or preceded by a
Prospectus), and at the time the Registration Statement is declared
effective and at all times subsequent thereto up to and including
the Offering Termination Date (as defined in Section 5 below), such
Supplemental Material has not contained and will not contain any
untrue statement of material fact or omit to state 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.
(d) No
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus has been issued and no proceedings for
that purpose are pending, threatened, or, to the knowledge of the
Company, contemplated by the SEC; and to the knowledge of the
Company, no order suspending the offering of the Shares in any
jurisdiction has been issued and no proceedings for that purpose
have been instituted or threatened or are contemplated.
(e) The
Company intends to use the funds received from the sale of the
Shares as set forth in the Prospectus.
(f)
The Company has obtained an opinion of DLA Piper
LLP (US) confirming that, the Company has qualified for taxation as
a REIT commencing with the taxable year ended December 31,
2006. The conditions on which the opinion was issued
were met at the time of such issuance and will continue to exist
during the Offering Period unless the board of directors of the
Company determines that qualification as a REIT is no longer in the
best interests of the Company, in which case the Company will
promptly provide the Dealer Manager notice of such
determination.
(g) The
accounting firm that has certified or shall certify the financial
statements filed and to be filed with the SEC as part of the
Registration Statement and the Prospectus is a registered public
accounting firm, as required by the Act and the rules and
regulations promulgated thereunder.
(h) The
Company is a corporation duly organized under the laws of the State
of Maryland, is validly existing as a corporation under such laws
and has power and authority to conduct business as described in the
Prospectus under the laws of the State of Maryland and every other
jurisdiction in which it conducts business or owns or leases
property.
(i)
The Company has full legal right, power and authority to
enter into this Agreement and to perform the transactions
contemplated hereby, and the Company has duly authorized, executed
and delivered this Agreement.
(j)
This Agreement is a valid, legal, and binding agreement
of the Company enforceable in accordance with its terms, except to
the extent that the enforceability of the indemnity provisions
contained in Section 8 hereof may be limited under applicable
securities laws and to the extent that the enforceability of this
Agreement may be limited by bankruptcy, insolvency or similar laws
affecting the rights of creditors generally.
(k) The
execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and the compliance with the terms
of this Agreement by the Company will not conflict with or
constitute a default or violation under any charter, by-law,
contract, 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.
(l)
No further 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 laws of certain states, if any,
which we have identified to you.
(m) At
the time of the issuance of the Shares, the Shares will have been
duly authorized and, upon payment therefor as provided in this
Agreement, will be validly issued, fully paid and nonassessable and
will conform to the description thereof contained in the
Prospectus.
(n) At
all times subsequent to the date of this Agreement and up to and
including the Offering Termination Date (as defined in Section 5
below), the representations and warranties made in this Section l
will be true and correct with the same effect as if they had been
made on and as of such time, except as may subsequently be
disclosed in writing to the Dealer Manager.
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Representations and Warranties of the Dealer
Manager
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As an inducement to the Company to enter into
this Agreement, the Dealer Manager represents and warrants to the
Company that:
(a) The
Dealer Manager is a member of the Financial Industry Regulatory
Authority (“ FINRA ”) in good standing and a
broker-dealer registered as such under the Securities Exchange Act
of 1934, as amended, and under the securities laws of the states in
which the Shares are to be offered and sold. The Dealer Manager and
its employees and representatives have all required licenses and
registrations to act under this Agreement.
(b) The
Dealer Manager has full legal right, power and authority to enter
into this Agreement and to perform the transactions contemplated
hereby, and the Dealer Manager has duly authorized, executed and
delivered this Agreement.
(c) This
Agreement is a valid, legal, and binding agreement of the Dealer
Manager enforceable in accordance with its terms, except to the
extent that the enforceability of the indemnity provisions
contained in Section 8 hereof may be limited under applicable
securities laws and to the extent that the enforceability of this
Agreement may be limited by bankruptcy, insolvency or similar laws
affecting the rights of creditors generally.
(d) The
execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and the compliance with the terms
of this Agreement by the Dealer Manager will not conflict with or
constitute a default or violation under any charter, by-law,
contract, 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 Dealer Manager.
(e)
No consent, approval, authorization or other order of
any governmental authority is required in connection with the
execution, delivery or performance by the Dealer Manager of this
Agreement.
(f)
The Dealer Manager represents and warrants to the
Company and each person that signs the Registration Statement that
the information under the caption “Plan of
Distribution” in the Prospectus and all other information
furnished to the Company by the Dealer Manager in writing expressly
for use in the Registration Statement, any Preliminary Prospectus,
or the Prospectus, does not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(g) All
training and education meetings held by the Dealer Manager will be
in compliance with Rule 5110 (i)(2) of the FINRA rules. Dealer
Manager will require each Participating Broker to represent that
all training and education meetings held by the Participating
Broker will be in compliance with Rule 5110(i)(2) of the FINRA
rules.
(h) Dealer
Manager will obtain FINRA approval of any sales incentive program
developed by the Dealer Manager prior to its implementation. Dealer
Manager will require each Participating Broker to represent that
all sales incentive and bonus programs designed by the
Participating Broker for its registered representatives will comply
with the FINRA rules. For purposes of this Agreement,
references to “FINRA rules,” “rules of
FINRA” or similar variations, shall include, unless otherwise
expressly stated or context otherwise requires, NASD and FINRA
rules currently in effect and any successor or subsequent rules
adopted by FINRA as part of its consolidated rulebook or
otherwise.
(i)
Dealer Manager has established and will maintain, and will
require Participating Brokers to establish and maintain, a customer
identification program which requires Dealer Manager, or the
Participating Broker, as applicable, to (i) verify the identify of
any person seeking to purchase the Shares through Dealer Manager,
or the Participating Broker, as applicable, to the extent
reasonable and practicable, (ii) maintain records of the
information used to verify the person's identity and (iii)
determine whether the person appears on any lists of known or
suspected terrorists or terrorist organizations provided to brokers
or dealers by any government agency, in all accordance with the
requirements of 31 C.F.R. Section 103.122.
(j)
Dealer Manager has established and will
maintain an anti-money laundering compliance program in accordance
with applicable laws and regulations, including the USA Patriot Act
of 2001, and in accordance with NASD Rule 3011 (or successor FINRA
rule) and the related interpretive guidance described in
NASD’s IM-3011-1 and IM-3011-2 (or successor FINRA
interpretive guidance), and Dealer Manager will require each of the
Participating Brokers to establish and maintain such a
program.
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Obligations
and Compensation of Dealer Manager
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(a)
The Company hereby appoints the Dealer Manager as its agent and
principal distributor during the Offering Period (as defined in
Section 3(c)) for the purpose of finding, on a best efforts basis,
purchasers for the Shares for cash through the Participating
Brokers, all of whom shall be members of FINRA. The Dealer Manager
may also arrange for the sale of Shares for cash directly to its
own clients and customers at the public offering price and subject
to the terms and conditions stated in the Prospectus. The Dealer
Manager hereby accepts such agency and distributorship and agrees
to use its best efforts to find purchasers for the Shares on said
terms and conditions, commencing as soon as practicable.
(b) The
“ Offering Period ” shall mean that period
during which Shares may be offered for sale, commencing on the date
the registration was made effective by the SEC, during which period
offers and sales of the Shares shall occur continuously in the
jurisdictions in which the Shares are registered or qualified or
exempt from registration (as confirmed in writing by the Company to
the Dealer Manager) unless and until the Offering is terminated as
provided herein, except that the Dealer Manager and the
Participating Brokers shall suspend or terminate offering of the
Shares upon request of the Company at any time and shall resume
offering the Shares upon subsequent request of the Company. The
Offering Period shall in all events terminate upon the sale of all
of the Shares. Upon termination of the Offering Period, the Dealer
Manager's agency and this Agreement shall terminate without
obligation on the part of the Dealer Manager or the Company except
as set forth in this Agreement.
(c)
Except as may be provided in the “Plan of
Distribution” section of the Prospectus, as compensation for
the services rendered by the Dealer Manager, the Company agrees
that it will pay to the Dealer Manager selling commissions plus a
dealer manager fee as follows (based on a selling price of $8.00
per Share):
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Selling
Commissions
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Primary
Offering
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DRP
Offering
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7.0
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%
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0.0
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%
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Fee for Service Investment Advisers
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0.0
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%
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0.0
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%
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Dealer Manager Fee
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Primary
Offering
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DRP
Offering
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3.0
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%
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0.0
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%
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Fee for Service Investment Advisers
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3.0
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%
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0.0
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%
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If the Dealer Manager, the Participating Broker
and the investor agree, the selling commissions can be paid on a
deferred basis for Shares sold in the primary offering. In these
instances, the Company will sell the Shares at a reduced price as
set forth above and pay the Dealer Manager a correspondingly
reduced sales commission at the time of sale. The balance of the
normal commission would be paid to the Dealer Manager over six
years for Shares sold in the primary offering, out of the dividends
or other distributions that are declared and paid with respect to
the reduced-priced shares sold through the Dealer Manager or
Participating Broker. The amount by which by the investor's
dividends are reduced in these cases would be paid by the Company
as deferred commissions to the Dealer Manager (and by the Dealer
Manager to the Participating Brokers for Shares sold by the
Participating Brokers).
As an example, investors electing the deferred
commission option for Shares purchased in the primary offering will
pay, on the date of purchase, $7.52 per Share (which includes a
commission of $0.08 per Share). For a period of six years following
the date of purchase, an additional $0.08 per Share will be
deducted annually from dividends or other cash distributions
otherwise payable to the investor and will be used to pay deferred
commissions. The net proceeds to the Company will not be affected
by the election of the deferred commission option. Under this
arrangement, an investor electing the deferred commission option
will pay a 1% commission upon subscription, rather than a 7%
commission, and an amount equal to a 1% commission per year
thereafter for the next six years, or longer if required to satisfy
outstanding deferred commission obligations, will be deducted from
dividends or other cash distributions otherwise payable to such
stockholder. The Company may also use other deferred commission
structures, but the Company will not pay total commissions in
excess of 7% of the offering price of the Shares.
If at any time prior to the satisfaction of the
Company's remaining deferred commission obligations, the Company
decides to list its common stock for trading on national securities
exchange, or the Company begins a liquidation of its properties,
the Company may accelerate the remaining commissions due under the
deferred commission option. To the extent that the distributions
prior to listing are insufficient to satisfy the remaining
commissions due, the obligations of the Company and the investor to
pay any further deferred commissions will terminate, and the Dealer
Manager and the Participating Brokers will not be entitled to
receive any further portion of their deferred commissions following
listing of the Company's common stock.
In addition, if an investor that has elected the
deferred commission option decides to participate in the
Company’s share redemption program or requests that the
Company transfer such stockholder’s Shares for any reason
prior to the time that the remaining deferred selling commissions
have been deducted from such stockholder’s cash
distributions, the Company will accelerate the selling commissions
due under the Deferred Commission Option as set forth in the
Prospectus.
(d) The
Company will also reimburse the Dealer Manager for all items of
underwriter compensation referenced in the Prospectus to the extent
the Prospectus indicates that they will be paid by the Company,
provided that the Company’s reimbursement payments shall not
cause (i) total underwriting compensation (excluding reimbursement
of bona fide invoiced due diligence expenses) to exceed 10% of
gross offering proceeds from the sale of the 56,250,000 shares
offered to the public or (ii) total Organization and Offering
Expenses (as defined in Article IV of the Company’s charter
included as an exhibit to the Registration Statement) to exceed 15%
of gross offering proceeds from the sale of the 56,250,000 shares
offered to the public.
(e)
In conformity with NASD Conduct Rule
2810(b)(4)(B)(vii) (or successor FINRA rule), the Company will also
pay the Dealer Manager for bona fide due diligence expenses of the
Dealer Manager and the Participating Brokers, and subject to the
terms and conditions, as may be allowed by any subsequent FINRA
Rule or Notice to Members.
(f)
As described in the Prospectus,
the Dealer Manager agrees to sell Shares in the primary offering to
persons identified by the Company as affiliates of the
Company. The purchase price for Shares under this
program will be $7.60 per share, reflecting that selling
commissions in the amount of $0.40 per Share will not be payable in
connection with such sales. The Dealer Manager agrees to
work together with the Company to implement this program and to
execute sales under the program according to the procedures agreed
upon by the Dealer Manager and the Company.
(g) In
addition, as described in the Prospectus, the Dealer Manager may
sell shares to Dealers, their retirement plans, their
representatives and the family members, IRAs and the qualified
plans of their representatives at a purchase price of $7.60 per
share, reflecting that selling commissions in the amount of $0.40
per share will not be payable in consideration of the services
rendered by such Dealers and representatives in the
Offering. For purposes of this discount, a family member
includes such person’s spouse, parent, child, sibling,
mother- or father-in-law, son- or daughter-in law or brother- or
sister-in-law.
(a) A
subscription agreement (“ Subscription Agreement
”) must be completed by each person desiring to purchase
Shares, or, at Dealer Manager's or Participating Broker's option,
by Dealer Manager or Participating Broker on behalf of each such
person, and returned by Dealer Manager or Participating Broker
together with any other documents that may be required under state
securities laws or by the Company, to the Company at 1920 Main
Plaza, Suite 400, Irvine, California 92614, Attention: Terry G.
Roussel. The Dealer Manager or Participating Broker shall ascertain
that the Subscription Agreement has been properly completed in full
and signed by the prospective purchaser prior to its
return.
(b) All
subscription checks shall be made payable to the order of
CORNERSTONE CORE PROPERTIES REIT, INC. If Dealer
Manager or Participating Broker receives a check not conforming to
the foregoing instructions, Dealer Manager and/or Participating
Broker must return such check directly to the subscriber not later
than the end of the next business day following its
receipt. Checks conforming to the foregoing instructions
shall be transmitted by Dealer Manager for deposit directly to the
Company, at Cornerstone Core Properties REIT, Inc., c/o Phoenix
American Financial Services, Inc., 2401 Kerner Boulevard, San
Rafael, CA 94901, as soon as practicable but in any event by the
end of the second business day following receipt by Dealer
Manager. Checks conforming to the foregoing instructions
shall be transmitted by Participating Broker for deposit directly
to the Company, at Cornerstone Core Properties REIT, Inc., c/o
Phoenix American Financial Services, Inc., 2401 Kerner Boulevard,
San Rafael, CA 94901, as soon as practicable but in any event by
the end of the next business day following receipt by Participating
Broker. In the event Participating Broker's final
internal supervisory review is conducted at a different location,
then checks must be transmitted to Participating Broker's final
review office by the end of the next business day following receipt
by Participating Broker and Participating Broker's final review
office must in turn by the end of the next business day following
receipt by it, transmit the check for deposit directly to
Cornerstone Core Properties REIT, Inc., c/o Phoenix American
Financial Services, Inc., 2401 Kerner Boulevard, San Rafael, CA
94901.
(c)
Upon receipt of the Subscription Agreement, the
Company, will determine promptly (and in any event within thirty
(30) days after such receipt) whether it wishes to accept the
proposed purchaser as a stockholder of the Company, it being
understood that the Company reserves the right to reject the tender
of any Subscription Agreement. Should the Company determine to
accept the tender of the Subscription Agreement, the Company will
promptly advise Dealer Manager or Participating Broker of such
action. Should the Company determine to reject the tender it will
promptly notify in writing the prospective purchaser, Dealer
Manager and Participating Broker, if any, of such determination and
will promptly return the tendered Subscription Agreement and the
purchase price of the Shares directly to the prospective
purchaser.
(d) The
Dealer Manager will use all reasonable efforts to offer Shares, and
in its agreements with Participating Brokers will require that the
Participating Brokers offer Shares, only to persons who meet the
financial qualifications set forth in the Prospectus or in any
suitability letter or memorandum sent to it by the Company and will
only make offers to persons in the states in which it is advised in
writing that the Shares are qualified for sale or that such
qualification is not required. In offering Shares, the Dealer
Manager will, and in its agreements with Participating Brokers, the
Dealer Manager will, require that the Participating Brokers comply
with the provisions of all applicable rules and regulations
relating to suitability of investors, including without limitation,
the provisions of Article III.C. of the Statement of Policy
Regarding Real Estate Investment Trusts of the North American
Securities Administrators Association, Inc. (the “ NASAA
Guidelines ”). In making the determinations as to
suitability required by the NASAA Guidelines, the Dealer Manager
may rely on representations from (i) investment advisers who are
not affiliated with a Participating Broker or (ii) banks acting as
trustees or fiduciaries. With respect to the maintenance of records
required by the NASAA Guidelines, the Company agrees that the
Dealer Manager can satisfy its obligations by contractually
requiring such information to be maintained for a period of at
least six (6) years by the investment advisers or banks discussed
in the preceding sentence. Nothing contained in this Section 4(d)
shall be construed to impose upon the Company the responsibility of
assuring that prospective purchasers meet the suitability standards
contained in the Prospectus and the Subscription Agreement or to
relieve Dealer Manager and Participating Brokers of the
responsibility of complying with the rules of FINRA.
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Offering
Termination Date
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As used herein, the term “ Offering
Termination Date ” shall mean the earliest to occur of
(i) the date upon which subscriptions for the maximum number of
Shares offered have been accepted by the Company which date the
Company shall designate by notice to Dealer Manager in writing; or
(ii) June 10, 2011. The Company may terminate the offering of
Shares at any time for any reason by written notice to the Dealer
Manager at least two (2) business days prior to the date of
termination.
(a) The
Company covenants and agrees that it will pay or cause to be paid
(i) all expenses and fees in connection with the preparation,
printing, filing, delivery and shipping of the Registration
Statement (including this Agreement and all other exhibits to the
Registration Statement), the Prospectus (including any amendments
or supplements thereto) and the Supplemental Material, including,
without limitation, expenses associated with the production of
slides and graphics, fees and expenses of any consultants engaged
in connection with presentations with the prior approval of the
Company and travel and lodging expenses of the representatives of
the Company and any such consultants, (ii) filing fees, Company
counsel's fees and expenses paid and incurred in connection with
the registration and qualification of the Shares for offer and sale
by Dealer Manager and Participating Brokers under the Act and the
securities or Blue Sky laws of the states in which offers are to be
made, and (iii) filing fees, Company counsel's fees and expenses
paid and incurred in connection with the review by FINRA of the
underwriting terms of the offering of the Shares, and (iv) the fees
and expenses of any registrar or transfer agent in connection with
the Shares.
(b) The
Company will advise Dealer Manager and Participating Brokers
promptly of the issuance of any stop order withdrawing the
qualification for the offer and sale of the Shares or of the
institution of any proceedings for that purpose, and will use its
best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible the lifting thereof, if
issued.
(c) If
at any time when a Prospectus relating to the Shares is required to
be delivered under the Act any event shall have occurred as a
result of which, in the opinion of counsel for the Company, the
Prospectus as amended or supplemented includes an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company promptly will
prepare and file with the SEC an appropriate amendment or
supplement.
(d) The
Company will deliver to Dealer Manager and Participating Brokers
from time to time without charge as many copies of the Prospectus
(and, in the event of an amendment or supplement to the Prospectus
pursuant to the provisions of this Agreement, of such amended or
supplemented Prospectus) and the Supplemental Material as Dealer
Manager or Participating Brokers may reasonably request, which
Prospectus(es), as from time to time amended or supplemented, and
Supplemental Material the Company authorizes Dealer Manager and
Participating Brokers to use in connection with the sale of the
Shares.
(e) The
Company will use its best efforts to register and qualify the
Shares for sale under the laws of those states and other
jurisdictions where it is intended that offers and sales will be
made and will comply to the best of its ability with the laws of
those states so as to permit the continuance of sales of the Shares
thereunder. The Company covenants and agrees that neither the
Company, nor any officer, manager or employee of either of them
will make any offer or sale of the Shares unless such offer or sale
is made in compliance with the Act and the rules and regulations
promulgated thereunder.
(f)
The Company will comply with all requirements
imposed upon it by the Securities Act and the Exchange Act, by the
rules and regulations of the SEC promulgated thereunder and by all
securities laws and regulations of those states in which an
exemption has been obtained or qualification of the Shares has been
effected, to permit the continuance of offers and sales of the
Shares in accordance with the provisions hereof and of the
Prospectus.
(g) The
Company agrees to do or cause to be done all such filing,
recording, publishing and other acts as may be appropriate to
comply with the requirements of law for the operation of a foreign
corporation in all jurisdictions, other than Maryland, where the
Company shall desire to conduct business or own properties as the
case may be.
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Covenants of
Dealer Manager
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(a) Dealer
Manager covenants and agrees to comply, and to use commercially
reasonable efforts to cause the Participating Brokers to comply,
with any applicable requirements of the Act, and of the Exchange
Act, and the rules and regulations promulgated thereunder, all
applicable state securities laws and regulations as from time to
time in effect, any other state and federal laws and regulations
applicable to the offering, the sale of Shares or the activities of
the Dealer Manager pursuant to this Agreement, including without
limitation the privacy standards and requirements of the
Gramm-Leach-Bliley Act of 1999, the requirements of any applicable
state privacy laws and the applicable provisions of the USA Patriot
Act of 2001, this Agreement and the Prospectus as amended and
supplemented and the FINRA rules and, in particular, the conduct
rules which require Dealer Manager (i) to recommend the purchase of
Shares only when Dealer Manager has reasonable grounds to believe,
on the basis of information obtained from the investor concerning
his investment objectives, other investments, financial situation
and needs, and any other information known by the Dealer Manager,
that the investor is or will be in a financial position appropriate
to enable him to realize to a significant extent the benefits
described in the prospectus, that the investor has a fair market
net worth sufficient to sustain the risks inherent in the program,
including loss of investment and lack of liquidity, and that the
program is otherwise suitable for the investor, (ii) to maintain or
require to be maintained certain files concerning the basis for
Dealer Manager's determination of the suitability of the investor,
(iii) to have reasonable grounds to believe, based on information
made available to the Dealer Manager by the Company, that all
material facts are adequately and accurately disclosed and that
such disclosed facts provide a basis for evaluating an investment
in the Company, and (iv) to inform the prospective investor or
require the prospective investor to be informed of all pertinent
facts relating to the liquidity and marketability of the investment
during the term of the investment. Dealer Manager also agrees not
to deliver the Supplemental Material to any person unless the
Supplemental Material is accompanied or preceded by the Prospectus.
The Dealer Manager will permit a Participating Broker to
participate in the offering only if such Participating Broker is a
member of FINRA and will reallow commissions only to such FINRA
members.
(b) Dealer
Manager will not, and will require in its agreements with
Participating Brokers that such Participating Brokers not, give any
information or make any representation in connection with the
offering of the Shares other than those contained in the Prospectus
and Supplemental Material furnished by the Company, publish,
circulate or otherwise use any other advertisement or solicitation
material in connection with the Offering. Dealer Manager is not
authorized to act as agent of the Company in any transaction, and
Dealer Manager agrees not to act as such agent and not to purport
to do so without the prior written approval of the Company. Dealer
Manager agrees that if and when the Company supplies Dealer Manager
with copies of any supplement to the Prospectus, Dealer Manager
will thereafter distribute Prospectuses with such supplement.
Dealer Manager further agrees to comply with all instructions from
the Company concerning the destruction of out-dated Prospectuses
and the use of supplemented or amended Prospectuses.
(c) Dealer
Manager agrees to solicit purchases of Shares only in the States
and other jurisdictions in which the Company indicates that such
solicitation can be made and in which Dealer Manager has determined
that such solicitation can be made by Dealer Manager and in which
Dealer Manager is qualified to so act.
(d) Dealer
Manager will not sell the Shares pursuant to this Agreement unless
the Prospectus is furnished to the purchaser at least five (5)
business days prior to the execution of the Subscription Agreement,
or is sent to such person under circumstances that it would be
received by the purchaser five (5) business days prior to his
execution of the Subscription Agreement.
(e) Dealer
Manager will use reasonable efforts to select, and will require in
its agreements with Participating Brokers that such Participating
Brokers use reasonable efforts to select, investors who Dealer
Manager reasonably believes meet the investor suitability
requirements which are set forth in the Prospectus and Subscription
Agreement (Appendix A to the Prospectus) and such additional
individual state requirements as are specified in the Subscription
Agreement and which are confirmed by the investors by payment of
the purchase price for the Shares including that each investor be
of legal age in the state of his or her residence. Dealer Manager
will maintain, for a period of six years, in Dealer Manager's files
a copy of the Subscription Agreement for each investor for whom
Dealer Manager acts as Dealer Manager.
(f)
To the extent that information is provided to Dealer
Manager marked “For Broker-Dealer Use Only,” Dealer
Manager covenants and agrees not to provide such information to
prospective investors.
(g)
The Dealer Manager will provide the Company with such information
relating to the offer and sale of the Shares by it as the Company
may from time to time reasonably request or as may be requested to
enable the Company to prepare such reports of sale as may be
required to be filed under applicable federal or state securities
laws.
(a) Subject
to the limitations below, the Company will indemnify and hold
harmless the Participating Brokers and (to the extent permitted by
the Company's charter) the Dealer Manager, their officers and
directors and each person, if any, who controls such Participating
Broker or Dealer Manager within the meaning of Section 15 of the
Securities Act (the “ Indemnified Persons ”)
from and against any losses, claims, damages or liabilities
(“ Losses ”), joint or several, to which such
Indemnified Persons may become subject, under the Securities Act,
the Exchange Act or otherwise, insofar as such Losses (or actions
in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained
(A) in the Registration Statement, the Prospectus, any Preliminary
Prospectus used prior to the effective date of the Registration
Statement or any post-effective amendment or supplement to any of
them, (B) in any blue sky application or other documen
