CORNERSTONE HEALTHCARE PLUS REIT, INC. FORM OF DEALER MANAGER AGREEMENT Up to 55,000,000 Shares of Common Stock
Exhibit
1.1
CORNERSTONE HEALTHCARE PLUS REIT, INC.
FORM OF DEALER MANAGER
AGREEMENT
Up to 55,000,000 Shares of Common
Stock
Pacific Cornerstone Capital,
Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Dear Sirs:
Cornerstone Healthcare Plus REIT, Inc., a Maryland corporation (the
“Company”), is registering for public sale a
maximum of 55,000,000
shares of its common stock,
$0.01 par value per share, (the “Shares”), to be issued and sold for an
aggregate maximum purchase price of $544,500,000 (44,000,000 Shares to be offered to the public
in a primary offering with
an aggregate maximum purchase price of $440,000,000 (the “Primary Offering”)
and 11,000,000 Shares to be offered pursuant
to the Company's distribution reinvestment plan with an aggregate maximum
purchase price of $104,500,000 (“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:
|
Distribution
Channel
|
Primary
Offering
|
DRP
Offering
|
||||||
|
Participating
Brokers
|
$ | 10.00 | $ | 9.50 | ||||
|
Participating Brokers Deferring
Commission*
|
$ | 9.40 | $ | 9.50 | ||||
|
Fee for Service Investment
Advisers
|
$ | 9.30 | $ | 9.50 | ||||
* 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.
|
1.
|
Representations and Warranties of
the Company
|
The Company represents and warrants to
Dealer Manager and Participating Brokers that:
1
Exhibit
1.1
(a) The Company has prepared and filed with
the Securities and Exchange Commission (the “SEC”) a registration statement
(Registration No.
333-___________) 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 or prospectus supplement 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 ▇▇▇▇▇▇▇, ▇▇▇▇▇ 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,
2008. 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.
2
Exhibit
1.1
(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.
|
2.
|
Representations and Warranties of
the Dealer Manager
|
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.
3
Exhibit
1.1
(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.
|
3.
|
Obligations and Compensation of
Dealer Manager
|
(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 $10.00 per
Share):
|
Selling
Commissions
|
||||||||
|
Distribution
Channel
|
Primary
Offering
|
DRP
Offering
|
||||||
|
Participating
Brokers
|
7.0 | % | 0.0 | % | ||||
|
Fee for Service Investment
Advisers
|
0.0 | % | 0.0 | % | ||||
4
Exhibit
1.1
|
Dealer Manager
Fee
|
||||||||
|
Distribution
Channel
|
Primary
Offering
|
DRP
Offering
|
||||||
|
Participating
Brokers
|
3.0 | % | 0.0 | % | ||||
|
Fee for Service Investment
Advisers
|
3.0 | % | 0.0 | % | ||||
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, $9.40 per Share
(which includes a commission of $0.10 per Share). For a period of six years
following the date of purchase, an additional $0.10 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 40,000,000 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
40,000,000 shares offered to the public.
5
Exhibit
1.1
(e) In
conformity with FINRA Rule 2310(b)(4)(B)(vii), 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
$9.30 per share, reflecting that selling commissions in the amount of $0.70 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
$9.30 per share, reflecting that selling commissions in the amount of $0.70 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.
|
4.
|
Sale of the
Shares
|
(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 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. 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 HEALTHCARE PLUS 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 Healthcare Plus REIT, Inc., c/o Phoenix American
Financial Services, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, 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 Healthcare Plus REIT, Inc., c/o Phoenix American Financial
Services, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, 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 Healthcare Plus REIT, Inc., c/o Phoenix American Financial
Services, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(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.
6
Exhibit
1.1
|
5.
|
Offering Termination
Date
|
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) _______________, 2013
(unless extended by the Company and confirmed in writing to the Dealer
Manager). 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.
|
6.
|
Covenants of the
Company
|
(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.
7
Exhibit
1.1
(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.
|
7.
|
Covenants of Dealer
Manager
|
(a) All training and education meetings held
by the Dealer Manager will
be in compliance with Rule 5110 (h)(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(h)(2) of the FINRA
rules.
(b) 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.
(c) 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.
(d) Dealer Manager has established and will
maintain an anti-money laundering compliance program in accordance with
applicable laws and regulations, including the Bank Secrecy Act, Title 31 U.S.C.
Sections 5311-5355, as amended by the USA Patriot Act of 2001 and related regulations (31 C.F.R. Part
103), and in accordance
with FINRA Rule 3310 and the related supplementary material, and Dealer Manager will require each
of the Participating Brokers to establish and maintain such a
program.
(e) 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 ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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, including, but not
in any way limited to, Rules 2440, 2730, 2740 and 2750 of the NASD Conduct
Rules, FINRA Rule 2310 and
the 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.
8
Exhibit
1.1
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
9
Exhibit
1.1
|
8.
|
Indemnification
|
(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 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 (C) any
Supplemental Material, or (ii) the omission or alleged omission to state 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 or in any Blue Sky Application or Supplemental
Material 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. The Company will reimburse each Indemnified Person for any
legal or other expenses reasonably incurred by such Indemnified Person, in
connection with investigating or defending such Loss upon final disposition of
the proceeding giving rise to such Loss; provided that the Company will not be
liable in any such case to the extent that any such Loss or expense 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 (x) to the Company by the Dealer Manager or (y) to the
Company or the Dealer Manager by or on behalf of any Participating Broker
specifically for use in the preparation of the Registration Statement or any
such post-effective amendment thereto, any such Blue Sky Application or any such
Preliminary Prospectus or the Prospectus, and, further, the Company will not be
liable in any such case if it is determined that such Participating Broker or
the Dealer Manager was at fault in connection with the Loss, expense or
action.
(b) Notwithstanding the foregoing, the
Company shall not provide for indemnification of any Indemnified Persons for any
liability or loss suffered by any such Indemnified Person, unless all of the
following conditions are met: (i) the directors of the Company or the Advisor or
its affiliates have determined, in good faith, that the course of conduct that
caused the loss or liability was in the best interests of the Company; (ii) the
Indemnified Persons were acting on behalf of or performing services for the
Company; (iii) such liability or loss was not the result of negligence or
misconduct by the Indemnified Persons; and (iv) such indemnification or
agreement to hold harmless is recoverable only out of the Company's Net
Assets (as defined in the Company's charter)
and not from its stockholders.
(c) In addition, the Company shall not
indemnify or hold harmless an Indemnified Person for any Losses or expenses
arising from or out of an alleged violation of federal or state securities laws
by such party unless one or more of the following conditions are met: (i) there
has been a successful adjudication on the merits of each count involving alleged
securities law violations as to the particular Indemnified Person, (ii) such
claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular Indemnified Person and (iii) a court of
competent jurisdiction approves a settlement of the claims against a particular
Indemnified Person and finds that indemnification of the settlement and the
related costs should be made, and the court considering the request for
indemnification has been advised of the position of the Securities and Exchange
Commission and of the published position of any state securities regulatory
authority in which securities of the Company were offered or sold as to
indemnification for violations of securities laws.
(d) The Dealer Manager will indemnify and
hold harmless the Company, each director and officer of the Company (including
any person named in the Registration Statement, with his consent, as about to
become a director), each other 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 (each a “Dealer Manager
Indemnified Person”), from
and against any Losses to which any of the Company Indemnitees may become
subject, under the Securities 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 (C) any
Supplemental Material, or (ii) the omission or alleged omission to state 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 or in any Blue Sky Application or Supplemental
Material 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, in the case of each of clauses (i) and (ii) 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 Dealer Manager specifically for use with
reference to the Dealer Manager in the preparation of 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 or any such Blue Sky Application or Supplemental Material, (iii) any
unauthorized use of sales materials, use of unauthorized verbal representations
or use of “For Broker-Dealer Use Only” materials with members of the public
concerning the Shares by the Dealer Manager; (iv) any untrue statement made by
the Dealer Manager or its representatives or agents or omission to state a fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading in connection with the offer and sale
of the Shares (v) any material violation of this Agreement; (vi) any failure to
comply with applicable laws governing money laundering abatement and
anti-terrorism financing efforts, including applicable FINRA rules, SEC rules
and the Bank Secrecy Act,
Title 31 U.S.C. Sections 5311-5355, as amended by the USA Patriot Act of 2001, and related regulations (31 C.F.R.
Part 103); or (vii) any
other failure to comply with applicable FINRA or SEC rules. The Dealer Manager
will reimburse each Dealer Manager Indemnified Person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending such Loss, expense or action. This indemnity agreement will be in
addition to any liability that the Dealer Manager may otherwise
have.
10
Exhibit
1.1
(e) Each Participating Broker severally will
indemnify and hold harmless the Company, the Dealer Manager, each of their
officers and directors (including any person named in the Registration
Statement, with his consent, as about to become a director), each other person
who has signed the Registration Statement and each person, if any, who controls
the Company and the Dealer Manager within the meaning of Section 15 of the
Securities Act (each, a “Participating Broker
Indemnified Person”) from
and against any Losses to which a Participating Broker Indemnified Person may
become subject, under the Securities 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 (C) any
Supplemental Material, or (ii) the omission or alleged omission to state 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 or in any Blue Sky Application or Supplemental
Material 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, in the case of each of clauses (i) and (ii) 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 such Participating Broker specifically for use with
reference to the Participating Broker in the preparation of 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 or any such Blue Sky Application or Supplemental
Material, (iii) any unauthorized use of sales materials, use of unauthorized
verbal representations or use of “For Broker-Dealer Use Only” materials with
members of the public concerning the Shares by the Dealer Manager; (iv) any
untrue statement made by such Participating Broker or its representatives or
agents or omission to state a fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading
in connection with the offer and sale of the Shares (v) any material violation
of this Agreement; (vi) any failure to comply with applicable laws governing
money laundering abatement and anti-terrorism financing efforts, including
applicable FINRA rules, SEC rules and the Bank Secrecy Act, Title 31 U.S.C.
Sections 5311-5355, as amended by the USA Patriot Act of 2001, and related regulations (31 C.F.R.
Part 103); or (vii) any
other failure to comply with applicable FINRA or SEC rules. Each such
Participating Broker will reimburse each Participating Broker Indemnified Person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss, expense or action. This indemnity
agreement will be in addition to any liability that such Participating Broker
may otherwise have.
11
Exhibit
1.1
(f) Promptly after receipt by an indemnified
party under this Section 8 of notice of the 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 8, notify in writing the indemnifying
party of the commencement thereof. The failure of an indemnified party so to
notify the indemnifying party will relieve the indemnifying party from any
liability under this Section 8 as to the particular item for which
indemnification is then being sought, but not from any other liability that 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 8(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. Any indemnified party shall not be bound to perform or
refrain from performing any act pursuant to the terms of any settlement of any
claim or action effected without the consent of such indemnified
party.
(g) 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 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.
|
9.
|
Effective Date and
Termination
|
Provided that at least one counterpart
of this Agreement shall then have been executed and delivered, this Agreement
shall become effective at 12:00 noon, California time, of the first full
business day following the effective date of the Registration Statement or at
such later time after the Registration Statement becomes effective as the
Company shall first release the Shares for sale to the public. For the purpose
of this section the Shares shall be deemed to have been released for sale to the
public upon release by the Company of correspondence or other notification to
Dealer Manager indicating the effectiveness of the Registration Statement,
whichever shall first occur.
This Agreement may be terminated by
either party, at such party’s option, by giving notice to the other party. In
any case, this Agreement will terminate at the close of business on the Offering
Termination Date; provided, however, that all accrued fees, commissions and
out-of-pocket accountable expenses payable to Dealer Manager under the
terms and conditions hereof shall be paid when due although this Agreement shall
have theretofore been terminated.
Except as otherwise provided in Section
10, any termination of this Agreement
pursuant to this Section 9 shall be without liability of the Company to Dealer
Manager and without liability on Dealer Manager's part to the
Company.
|
10.
|
Survival of Indemnities,
Warranties and
Representations
|
The indemnity agreements contained in
Section 8 hereof, and the representations and warranties of the Company set
forth in Section l hereof, shall remain operative and in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Company, the Dealer Manager or any
controlling person referred to in Section 8, and shall survive the delivery of
and payment for the Shares, and any successor of Dealer Manager or the Company
or of any such controlling person or any legal representative of any such
controlling person, as the case may be, shall be entitled to the benefit of the
respective indemnity agreements and representations and
warranties.
12
Exhibit
1.1
|
11.
|
Notices
|
Except as in this Agreement otherwise
provided, (a) whenever notice is required by the provisions of this Agreement or
otherwise to be given to the Company, such notice shall be in writing addressed
to the Company at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and (b) whenever notice is required by the
provisions of this Agreement or otherwise to be given to Dealer Manager, such
notice shall be in writing addressed to Dealer Manager at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Any notice referred to herein may be given in
writing or by facsimile or telephone and if by facsimile or telephone shall be
immediately confirmed in writing. Notice (unless actual) shall be effective upon
mailing or facsimile transmission with confirmation of receipt, as the case may
be.
|
12.
|
Counterparts
|
This agreement may be executed in any
number of counterparts. Each counterpart, when executed and
delivered, shall be an original contract, but all counterparts, when taken
together, shall constitute one and the same agreement.
|
13.
|
Persons Entitled To Benefit of
Agreement
|
Except
as provided in the next sentence, this Agreement is made solely for the benefit
of Dealer Manager, Participating Brokers, the Company or controlling persons
thereof, and their respective successors and assigns, and no other person shall
acquire or have any right by virtue of this Agreement, and the term “successors
and assigns,” as used in this Agreement, shall not include any purchaser, as
such purchaser, of any of the Shares.
|
14.
|
Not a Separate
Entity
|
13
Exhibit
1.1
Nothing contained herein shall
constitute the Dealer Manager and Participating Brokers, or any of them, as an
association, partnership, unincorporated business or other separate
entity.
Please confirm your agreement to become
Dealer Manager under the terms and conditions herein set forth by signing and
returning the enclosed duplicate copy of this Agreement at once to the Company
at the address specified in Section 11 above.
|
Very truly
yours,
CORNERSTONE HEALTHCARE PLUS REIT, INC.,
a Maryland
corporation
|
|||
|
|
By:
|
||
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer and President | |||
|
AGREED AND ACCEPTED:
PACIFIC CORNERSTONE CAPITAL,
INC., a California
corporation
|
|||||
| By: |
|
|
|||
|
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
|
|
||||
|
|
|
||||
Dated: ______________, 20__
14