EXHIBIT 1.1
INLAND AMERICAN REAL ESTATE TRUST, INC.
540,000,000
SHARES OF COMMON STOCK
$.001 PAR VALUE PER SHARE
DEALER MANAGER AGREEMENT
__________, 0000
Xxxxxx Securities Corporation
0000 Xxxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxx 00000
Ladies/Gentlemen:
Inland American Real Estate Trust, Inc., a Maryland corporation formed on
October 4, 2004 (the "Company"), and governed by bylaws (as may be amended from
time to time, the "Bylaws") and Articles of Incorporation (as may be amended
from time to time, the "Articles") in the form incorporated by reference into
the Registration Statement, as described in SECTION 1(A) hereof (the Bylaws and
Articles being hereinafter referred to as the "Organizational Documents"), is
offering, upon the terms and conditions set forth in the Prospectus (as defined
below), (i) on a "best efforts" basis up to 500,000,000 shares of common stock,
$.00l par value per share (the "Shares") for a purchase price of $10.00 per
Share with a minimum initial investment of $3,000 ($1,000 in the case of
tax-exempt entities) and (ii) up to 40,000,000 Shares for a purchase price of
$9.50 per Share for issuance through the Company's distribution reinvestment
plan (collectively the "Offering"). Each subscriber will be required to enter
into a subscription agreement substantially in the form of the Subscription
Agreement attached as APPENDIX C to the Prospectus (appropriately modified, in
the case of Canadian subscribers, to conform to applicable requirements of
Canadian provincial and territorial securities laws) (the "Subscription
Agreement"), and will, upon acceptance of the subscriptions by the Company,
become a stockholder of the Company (individually, a "Stockholder" and
collectively the "Stockholders"). Capitalized terms used but not defined herein
shall have the meanings set forth in the Prospectus.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants that:
(a) REGISTRATION STATEMENT AND PROSPECTUS. A registration statement (File
333-122743) on Form S-11 with respect to an aggregate of 540,000,000
Shares has been prepared and filed by the Company pursuant to the
Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder. The registration statement, which includes a
preliminary prospectus, was initially filed with the Commission on or
about February 11, 2005. Copies of the registration statement and
prospectus contained therein, as finally amended and revised at the
effective date of the registration statement, are respectively
hereinafter referred to as the "Registration Statement" and the
"Prospectus," except that if the Prospectus first filed by the Company
pursuant to Rule 424(b) under the Securities Act shall differ from the
Prospectus, the term "Prospectus" shall also include the Prospectus
filed pursuant to Rule 424(b). The Commission has not issued any stop
order suspending the effectiveness of the Registration Statement and
no proceedings for that purpose have been instituted, are pending
before, or to the Company's knowledge, threatened by the Commission.
(b) COMPLIANCE WITH THE ACT. From the time the Registration Statement
becomes effective and at all times subsequent thereto up to and
including the Termination Date (as defined in SECTION 2(f) hereof):
(i) the Registration Statement, the Prospectus and any amendments or
supplements thereto will contain all statements that are required
to be stated therein by the Act and the Rules and Regulations and
will comply in all material respects with the Act and the Rules
and Regulations; and
(ii) neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto will at any such time include 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, in light of the circumstances under which
they were made, not misleading.
(c) NO SUBSEQUENT MATERIAL EVENTS. Subsequent to the respective dates as
of which information is given in the Registration Statement and
Prospectus and prior to the Termination Date, except as contemplated
in the Prospectus or as disclosed in a supplement or amendment thereto
or in the periodic financial statements of the Company, the Company
has not and will not have:
(i) incurred any material liabilities or obligations; or
(ii) entered into any material transaction not in the ordinary course
of business and, except as so disclosed, there has not been and
will not be any material adverse change in the financial position
or results of operations of the Company.
(d) CORPORATION STATUS. The Company is a corporation duly formed and
validly existing under the General Corporation Law of the State of
Maryland.
(e) AUTHORIZATION OF AGREEMENT. This Dealer Management Agreement (this
"Agreement") has been duly and validly authorized, executed and
delivered by or on behalf of the Company and constitutes the valid and
binding agreement of the Company enforceable in accordance with its
terms (except as enforceability may
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be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws of the United States, any state or any political
subdivision thereof that affect creditors' rights generally or by
equitable principles relating to the availability of remedies). The
performance of this Agreement by the Company and the consummation of
the transactions contemplated herein do not and will not result in a
breach of any of the terms and provisions of, or constitute a default
under, any statute, indenture, mortgage, deed of trust, voting trust
agreement, note, lease or other agreement or instrument to which the
Company is a party or by which the Company or its property is bound,
or under any rule or regulation or order of any court or other
governmental agency or body with jurisdiction over the Company or any
of its properties; and no consent, approval, authorization or order of
any court or governmental agency or body has been or is required for
the performance of this Agreement or for the consummation of the
transactions contemplated herein except as have been obtained under
the Act, from the National Association of Securities Dealers, Inc.
(the "NASD") or as may be required under state securities or blue sky
laws in connection with the offer and sale of the Shares or under the
laws of states in which the Company may own real properties in
connection with its qualification to transact business in such states.
(f) PENDING ACTIONS. There is no material action, suit or proceeding
pending or, to the knowledge of the Company, threatened, to which the
Company is a party, before or by any court or governmental agency or
body which adversely affects the Offering.
(g) REQUIRED FILINGS. There are no contracts or other documents required
to be filed by the Act or the Rules and Regulations thereunder as
exhibits to the Registration Statement which have not been so filed.
(h) FEDERAL INCOME TAX LAWS. The Company has obtained an opinion of
Xxxxxxx & Xxxxxxxx Ltd., Chicago, Illinois, stating that, under
existing federal income tax laws and regulations, assuming the Company
acts as described in the "Federal Income Tax Considerations" section
of the Prospectus and timely files the requisite elections, counsel is
of the opinion that the Company has been organized in conformity with
the requirements for qualification as a REIT beginning with its
taxable year ending December 31, 2005, and that its method of
operation (as described in the Prospectus and represented by
management) should enable the Company to satisfy the requirements for
qualifying as a REIT.
(i) INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS. To the best of the
Company's knowledge, the accountants who have certified certain
financial statements appearing in the Prospectus are an independent
registered public accounting firm within the meaning of the Act and
the Rules and Regulations.
(j) AUTHORIZATION OF THE SHARES. The Company has an authorized and
outstanding capitalization as set forth in the Prospectus. The sale of
the Shares has been duly and validly authorized by the Company, and
when subscriptions for the Shares have been accepted by the Company
for the consideration set forth in the
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Prospectus and issued to the respective subscribers, the Shares will
be fully paid and non-assessable. Stockholders will have no preemptive
rights to purchase or subscribe for securities of the Company, and the
Shares will not be convertible or subject to redemption.
2. OFFERING AND SALE OF THE SHARES. On the basis of the representations,
warranties and agreements herein contained, and subject to the terms and
conditions herein set forth, the Company hereby appoints you as its
exclusive Dealer Manager to solicit and to cause other dealers (as
described in SECTION 2(a) hereof) to solicit subscriptions for the Shares
at the subscription price to be paid and otherwise upon the other terms and
conditions set forth in the Prospectus and in the Subscription Agreement.
You agree to use your best efforts to procure subscribers for the Shares,
during the period commencing with the Effective Date (as defined in SECTION
9(a)(i) hereof) and ending on the Termination Date (the "Offering Period").
The number of Shares, if any, to be reserved for sale by each Soliciting
Dealer (as defined below) may be decided by the mutual agreement, from time
to time, of you and the Company. In the absence of mutual agreement, the
Company shall, subject to the provisions of SECTION 2(b) hereof, accept
Subscription Agreements based upon a first come, first accepted reservation
or other similar method. Nothing contained in this SECTION 2 shall be
construed to impose upon the Company the responsibility of assuring that
prospective purchasers meet the suitability standards contained in the
Prospectus or to relieve you or any Soliciting Dealer of the responsibility
of complying with the rules of the NASD or, if applicable, Canadian
provincial and territorial securities laws.
(a) SOLICITING DEALERS. The Shares offered and sold through you under this
Agreement shall be offered and sold only by you and, at your sole
option, any other securities dealers that you may retain (individually
a "Soliciting Dealer" and collectively the "Soliciting Dealers"), each
of whom, with respect to offers and sales of Shares in the United
States of America, is a member of the NASD, and each of whom with
respect to offers and sales of Shares in Canada, is properly
registered as a dealer under applicable Canadian provincial and
territorial securities laws or exempt from such registration,
executing agreements with you substantially in the form of the
Soliciting Dealers Agreement attached hereto as EXHIBIT A
(appropriately modified, in the case of Canadian Soliciting Dealers,
to conform to applicable requirements of Canadian provincial and
territorial securities laws).
(b) SUBSCRIPTION AGREEMENTS AND SUBSCRIBER FUNDS.
(i) Each person desiring to purchase Shares through you or any other
Soliciting Dealer must deliver a completed and signed copy of the
Subscription Agreement together with a check payable to the order
of "LBNA/Escrow Agent for IARETI" in the amount of $10.00 per
Share to you or the Soliciting Dealer.
(ii) Each Soliciting Dealer shall forward any Subscription Agreement
and check to you not later than noon of the next business day
after receipt of
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the Subscription Agreement, if the Soliciting Dealer conducts its
internal supervisory procedures at the location where the
Subscription Agreement and check were initially received. If the
internal supervisory procedures are performed at a different
location (the "Final Review Office"), the Subscription Agreement
and check must be transmitted to the Final Review Office by the
end of the next business day following receipt of the
Subscription Agreement and check by the Soliciting Dealer. The
Final Review Office will, by the next business day following
receipt of the Subscription Agreement and check, forward both the
Subscription Agreement and check to you as processing
broker-dealer in order that you may complete your review of the
documentation and process the Subscription Agreement and check.
The Company reserves the unconditional right to reject any
Subscription Agreement (except for subscriptions through the
Company's distribution reinvestment plan). Any check received by
you directly, or as processing broker-dealer, from the Soliciting
Dealers will, in all cases, be forwarded to the Escrow Agent (as
defined below) as soon as practicable, but in any event by the
end of the second business day following receipt by you. The
Company will promptly notify you or the Soliciting Dealer, as
appropriate, of any rejection, and you shall send the check and
the Subscription Agreement to the Escrow Agent with directions to
promptly return the check and the Subscription Agreement to the
rejected subscriber. All subscription funds may be deposited
directly with the Company.
(c) SALES LITERATURE. You shall use and distribute in conjunction with the
Offering only the Prospectus and such sales literature and advertising
as shall have been previously approved in writing by the Company. With
respect to the distribution of Shares in Canada, the Prospectus shall
be distributed together with a private placement memorandum "wrap"
(the wrap document and the Prospectus being collectively referred to
as the "Private Placement Memorandum") in the form as approved by you,
the Company and the Company's Canadian counsel in order to comply with
applicable Canadian provincial and territorial securities laws.
(d) JURISDICTIONS. You shall cause Shares to be offered and sold only in
those jurisdictions specified in writing by the Company for whose
account Shares are then offered for sale. The list of jurisdictions
shall be updated by the Company as additional states or Canadian
provinces or territories are added. The Company shall specify only
those jurisdictions in which the Offering has been authorized by
appropriate state regulatory authorities or Canadian provinces in
which the Shares may be offered and sold in reliance on exemptions
from the prospectus requirements of Canadian provincial and
territorial securities laws or pursuant to discretionary exemption
orders obtained in advance from applicable provincial or territorial
regulatory authorities. No Shares shall be offered or sold for the
account of the Company in any other states or Canadian provinces or
territories.
(e) ESCROW. All funds received by you for the sale of Shares shall be
deposited in an escrow account established by the Company at LaSalle
Bank, N.A., Chicago,
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Illinois (the "Escrow Agent"), by the close of the first business day
following receipt of such funds by you.
(f) TERMINATION OF THE OFFERING. The Offering Period will terminate on a
date on or before one year from the original effective date of the
Prospectus (subject to requalification in certain states, the Company
may extend the Offering Period from time to time, but in no event for
longer than two years from the original effective date of the
Prospectus), subject in any event to the Company's right to terminate
the Offering at any time (the "Termination Date") and the proceeds
will be applied as set forth in the Prospectus.
3. DEALER MANAGER COMPENSATION. As compensation for services rendered
hereunder the Company shall pay you the following:
(a) Subject to the volume discounts and provisions regarding Special Sales
(as defined below): (i) a selling commission equal to seven and
one-half percent (7.5%) of the selling price of each Share for which a
sale is completed with respect to Shares offered on a "best efforts"
basis, of which seven percent (7.0%) may be reallowed by you to the
Soliciting Dealers; (ii) a marketing contribution equal to two and
one-half percent (2.5%) of the selling price of each Share for which a
sale is completed with respect to Shares offered on a "best efforts"
basis, of which one and one-half percent (1.5%) may be reallowed by
you to the Soliciting Dealers; and (iii) all actual expenses incurred
in connection with due diligence investigation of the Company or the
Offering up to one-half percent (0.5%) of the selling price of each
Share for which a sale is completed with respect to Shares offered on
a "best efforts" basis (except for certain Special Sales), some
portion of which may be reallowed by you to the Soliciting Dealers for
any bona fide due diligence expense incurred by the Soliciting
Dealers.
(b) Notwithstanding the provisions of SECTION 3(a) above, and subject to
certain conditions and exceptions explained below, the reallowable
selling commission to be paid by the Company shall be reduced for
Shares sold to investors making an initial cash investment or, in the
aggregate, combined additional investments of at least $250,000.00
through the same Soliciting Dealer in accordance with the following
schedule:
Amount of Selling Maximum Reallowable
Commission Volume Amount of Purchaser's Investment Commission
Discount From To Per Share
--------------------- --------------------- ------------------ -----------------------
1% $ 250,000 $499,999 6%
2% $ 500,000 $999,999 5%
3% $ 1,000,000 $2,499,999 4%
4% $ 2,500,000 $4,999,999 3%
5% $ 5,000,000 $9,999,999 2%
6% $10,000,000 and over 1%
Any reduction in the amount of the selling commissions in respect of
volume discounts received will be credited to the investor in the form
of additional whole shares with fractional shares being rounded up to
the nearest whole number.
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Selling commissions will not be paid on whole Shares issued in respect
of a volume discount.
(c) (i) To the extent reasonably practicable, you or the Soliciting Dealer
shall combine purchases for the purpose of qualifying an investor for,
and crediting a purchaser or purchasers with, additional Shares
provided that all combined purchases are made through the same
Soliciting Dealer and approved by the Company. For these purposes, the
Company will combine subscriptions made in the Offering with other
subscriptions in the Offering by the same purchaser for the purpose of
computing amounts invested. Purchases by individuals within a "primary
household group" also will be combined and purchases by any investor
may be combined with other purchases of Shares to be held as a joint
tenant or a tenant in common. For these purposes, a "primary household
group" includes the purchaser, the purchaser's spouse or "domestic or
life partner" and all of the purchaser's unmarried children under the
age of twenty-one (21). For primary household group purposes,
"domestic or life partners" means any two unmarried same-sex or
opposite-sex individuals who are unrelated by blood, maintain a shared
primary residence, or home address, and have joint property or other
insurable interests. Purchases by tax-exempt or non tax-exempt
entities may be combined with purchases by other tax-exempt entities
for purposes of computing amounts invested if investment decisions are
made by the same person, provided that if the investment decisions are
made by an independent investment adviser, that investment adviser may
not have any direct or indirect beneficial interest in any of the
tax-exempt entities who seek to combine purchases. You acknowledge and
agree that purchases by entities required to pay federal income tax
that are combined with purchases by other entities not required to pay
federal income tax for purposes of computing amounts invested may have
adverse tax consequences to the investor. The investor must xxxx the
"Additional Investment" space on the Subscription Agreement signature
page in order for purchases to be combined. The Company is not
responsible for failing to combine purchases if the investor fails to
xxxx the "Additional Investment" space.
(ii) In the case of subsequent investments or combined investments, a
volume discount shall be applicable only on the portion of the
subsequent or combined investment that resulted in the investment
exceeding the breakpoint. If the Subscription Agreements for the
purchases to be combined are submitted at the same time, then the
additional Shares to be credited to the purchasers as a result of the
combined purchases will be credited on a pro rata basis. If the
Subscription Agreements for the purchases to be combined are not
submitted at the same time, then any additional Shares to be credited
as a result of the combined purchases will be credited to the last
component purchase, unless the Company is otherwise directed in
writing at the time of the submission; except however, the additional
Shares to be credited to any tax-exempt entities whose purchases are
combined for purposes of the volume discount will be credited only on
a pro rata basis based on the amount of the investment of each
tax-exempt entity and their combined purchases.
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(d) Notwithstanding the above, in no event shall any investor receive a
discount greater than five percent (5.0%) on any purchase of Shares if
the investor owns, or may be deemed to own, any Shares prior to
subscribing.
(e) (i) No commission shall be payable on any subscription rejected by the
Company. The Company may reject a subscription for any reason or for
no reason. In addition, no selling commission, marketing contribution
or due diligence expense allowance shall be paid in connection with
Shares issued by the Company as compensation for services performed or
otherwise provided by Inland Real Estate Investment Corporation or any
of its directors, officers, employees or affiliates, or the initial
sale of Shares to you or any of your or the Company's directors,
officers, employees or affiliates; provided that the discount on any
subsequent sales of Shares to the foregoing entities or individuals
may not exceed five percent (5.0%). You acknowledge and agree that all
sales of Shares pursuant to this Section 3(e)(i) shall comply, and be
made in accordance, with the rules of the NASD, specifically
including, but not in any way limited to, Rule 2790 therein.
(ii) All selling commissions due hereunder will be paid on a weekly
basis, substantially concurrently with the acceptance of a subscriber
as a stockholder by the Company; provided, however, that the Company
may, in its sole discretion, make these payments on a monthly basis.
(f) The Company will not pay the reallowable seven percent (7.0%) selling
commissions in respect of Special Sales. For purposes of this
Agreement, "Special Sale" shall mean: (i) the initial sale of shares
to each Soliciting Dealer and to any of their respective directors,
officers, employees or affiliates who request and are entitled to
purchase Shares net of selling commissions; provided that the discount
on any subsequent sales of Shares to the foregoing entities or
individuals may not exceed five percent (5.0%); (ii) Shares credited
to an investor as a result of a volume discount; (iii) the sale of
Shares to certain investors whose contracts for investment advisory
and related brokerage services include a fixed or "wrap" fee feature.
The Company shall, however, pay the marketing contribution and due
diligence expense allowance in respect of "Special Sales." You
acknowledge and agree that all sales of Shares pursuant to this
Section 3(f) shall comply, and be made in accordance, with the rules
of the NASD, specifically including, but not in any way limited to,
Rule 2790 therein..
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with you that:
(a) REGISTRATION STATEMENT. The Company will use its commercially
reasonable best efforts to cause the Registration Statement and any
subsequent amendments thereto to become effective as promptly as
possible and will not, at any time after the Effective Date, file any
amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and
furnished a copy at a reasonable time prior to the proposed filing or
to which you shall have reasonably objected or which is not, to the
best of the Company's
8
knowledge in compliance with the Act and the Rules and Regulations.
The Company will prepare and file with the Commission and will use its
commercially reasonable best efforts to cause to become effective as
promptly as possible:
(i) any amendments to the Registration Statement or supplements to
the Prospectus that may be required pursuant to the undertakings
in the Registration Statement; and
(ii) upon your reasonable request, any amendments to the Registration
Statement or supplements to the Prospectus that, in the opinion
of you or your counsel, may be necessary or advisable.
(b) SEC ORDERS. The Company shall advise you of any request made by the
Commission to amend the Registration Statement, supplement the
Prospectus or for additional information, or of the issuance by the
Commission of any stop order or of any other order preventing or
suspending the use of the Prospectus or the institution of any
proceedings for that purpose. The Company shall use its commercially
reasonable best efforts to prevent the issuance of any such order and,
if any such order is issued, to obtain the removal thereof as promptly
as possible.
(c) BLUE SKY QUALIFICATIONS. The Company shall use its commercially
reasonable best efforts to qualify the Shares for offering and sale
under the securities or blue sky laws of the jurisdictions as you may
reasonably request and to make any applications, file any documents
and furnish any information as may be reasonably required for that
purpose. With respect to the offer and sale of Shares in Canada, the
Company will file or cause to be filed all forms of undertakings
required to be filed by it so that the distribution of the Shares may
lawfully occur without the necessity of filing a prospectus in any
Canadian province or territory. The Company will, at your request,
furnish you copies of all material documents and correspondence sent
to or received from these jurisdictions and will promptly advise you
when the Shares become qualified for offering and sale in each
jurisdiction. The Company will promptly advise you of any request made
by the securities administrators of each jurisdiction to revise the
Registration Statement or the Prospectus or for additional information
or of the issuance of any stop order preventing or suspending the use
of the Prospectus or of the institution of any proceedings for that
purpose, and will use its commercially reasonable best efforts to
prevent the issuance of any such order and if any such order is
issued, to obtain the removal thereof as promptly as possible. The
Company will furnish you with a blue sky survey dated as of the
Effective Date, which will be supplemented to reflect changes or
additions to the information disclosed in the survey.
(d) AMENDMENTS AND SUPPLEMENTS. If, at any time when a Prospectus relating
to the Shares is required to be delivered under the Act or otherwise
during the period of distribution of the Shares, any event shall have
occurred to the knowledge of the Company as a result of which the
Prospectus or Private Placement Memorandum
9
as then amended or supplemented would include any untrue statement of
a material fact, or omit to state a material fact necessary to make
the statements therein not misleading in light of the circumstances
existing at the time it is so required to be delivered to a
subscriber, or if it is necessary at any time to amend the
Registration Statement or supplement the Prospectus or Private
Placement Memorandum relating to the Shares, the Company will promptly
notify you thereof and will prepare and file with the Commission or
any Canadian provincial or territorial securities administrator, as
applicable, an amendment or supplement.
(e) COPIES OF REGISTRATION STATEMENT. The Company will furnish you copies
of the Registration Statement (only one of which need be signed and
need include all exhibits), the Prospectus or Private Placement
Memorandum and all amendments and supplements thereto, including any
amendment or supplement prepared after the Effective Date, and any
other information with respect to the Company as you may from time to
time reasonably request, in each case as soon as available and in such
quantities as you may reasonably request.
(f) QUALIFICATION TO TRANSACT BUSINESS. The Company will take all
reasonable steps necessary to ensure that it will be validly existing
as a Maryland corporation at all times and will be qualified to do
business in all jurisdictions in which the conduct of its business
requires qualification and where qualification is required under local
law.
(g) AUTHORITY TO PERFORM AGREEMENTS. The Company shall use its
commercially reasonable best efforts to obtain all consents,
approvals, authorizations or orders of any court or governmental
agency or body which are required for it to perform its obligations
under this Agreement and the Organizational Documents and to
consummate the transactions contemplated hereby and thereby,
respectively, or to conduct the business described in the Prospectus.
(h) COPIES OF REPORTS. The Company will use its commercially reasonable
best efforts to furnish to you as promptly as shall be practicable the
following:
(i) a copy of each report or general communication (whether
financial or otherwise) sent to the Stockholders;
(ii) a copy of each report (whether financial or otherwise) filed
with the Commission; and
(iii) such other information as you may from time to time reasonably
request regarding the financial condition and operations of the
Company including, but not limited to, copies of operating
statements of properties acquired by the Company.
(i) USE OF PROCEEDS. The Company will apply the proceeds from the sale of
the Shares as set forth in the Prospectus; provided that, if for any
reason, all or a portion of the proceeds of the Offering are not
applied or committed for use as provided in the Prospectus within
twelve months of the Termination Date, the
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Company shall promptly return the unused proceeds, with interest, to
each subscriber on a pro rata basis.
(j) ORGANIZATION AND OFFERING EXPENSES. In no event shall the total of the
organizational expenses and expenses of the Offering to be paid
directly by the Company exceed fifteen percent (15%) of the gross
proceeds of the Offering of Shares sold on a "best efforts" basis.
5. COVENANTS OF THE DEALER MANAGER. You covenant and agree with the Company on
your behalf and on behalf of the Soliciting Dealers as follows:
(a) COMPLIANCE WITH LAWS.
(i) you and each Soliciting Dealer that offers Shares in the United
States of America shall comply with any applicable requirements
of the Act, the Rules and Regulations, the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the
Commission thereunder, and the applicable state securities or
blue sky laws, and the rules of the NASD, specifically
including, but not in any way limited to, Rules 2440, 2710,
2730, 2740, 2750, 2790 and 2810 therein;
(ii) you and each Soliciting Dealer that offers Shares in Canada will
comply with all applicable Canadian provincial and territorial
securities laws, will not offer or sell Shares in Canada except
to "accredited investors" pursuant to Ontario Securities
Commission Rule 45-501 or Multilateral Instrument 45-103 of the
Canadian Securities Administrators and will not take any action
that would obligate the Company to file a prospectus under these
laws;
(iii) you shall not deliver any sales literature to any person unless
the sales literature is accompanied or preceded by the
Prospectus; and, in accordance with applicable law or as
prescribed by any state securities administrator, you shall
provide or cause Soliciting Dealers to provide any prospective
investor with copies of any exhibit to the Registration
Statement; provided that if you intend to deliver the Prospectus
by means of electronic delivery, you shall comply with all
appropriate procedures including any requirements imposed by the
Commission; and
(iv) with respect to your and each Soliciting Dealer's participation
in any resales or transfers of the Shares, you agree, and each
Soliciting Dealer agrees, to comply and shall comply with any
applicable requirements as set forth above.
(b) NO ADDITIONAL INFORMATION. In offering the Shares for sale, you and
each Soliciting Dealer shall not give or provide any information or
make any representation other than those contained in the Prospectus,
the sales literature or any other document provided to you for this
purpose by the Company.
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(c) SALES OF SHARES. You and each Soliciting Dealer shall solicit
purchases of the Shares only in the jurisdictions in which you and the
Soliciting Dealer are legally qualified to so act and in which you and
the Soliciting Dealer have been advised by the Company that
solicitation is permissible under the law of the applicable
jurisdiction.
(d) SUBSCRIPTION AGREEMENT. Subscriptions will be submitted by you and
each Soliciting Dealer to the Company only on the form that is
included as APPENDIX C to the Prospectus or as such form of
Subscription Agreement as may be revised by the Company. The
Subscription Agreement to be executed by Canadian subscribers will be
in the form as approved by you, the Company and the Company's Canadian
counsel. You and each Soliciting Dealer understand and acknowledge
that the Subscription Agreement must be validly executed and delivered
by the subscriber. In addition, you and each Soliciting Dealer shall
ensure that no Subscription Agreement is presented to the Company for
acceptance until at least five (5) business days after the date on
which the subscriber received the Prospectus or Private Placement
Memorandum, as the case may be.
(e) SUITABILITY. In offering the Shares to any person, you and each
Soliciting Dealer shall have reasonable grounds to believe after due
inquiry that: (i) the person has the capability of understanding the
fundamental aspects of the Company from either the person's: (A)
employment experience; (B) educational level; (C) access to advice
from qualified sources, such as attorneys, accountants and tax
advisors; or (D) prior experience with investments of a similar
nature; (ii) the person has apparent understanding of: (A) the
fundamental risks and possible financial hazards of this type of
investment; (B) the risk that the person may lose the entire
investment; (C) the lack of liquidity of this investment; (D) the
restrictions on transferability of Shares; (E) the background and
qualification of the Company's sponsor and its Business Manager; and
(F) the tax consequences of the investment; (iii) the person can
reasonably benefit from an investment in the Company based upon the
person's overall investment objectives and portfolio structure; (iv)
the person is able to bear the economic risk of the investment based
on the person's overall financial situation; and (v) such other
information as we may reasonably request. You or each Soliciting
Dealer (as the case may be) shall maintain records disclosing the
basis upon which you and each Soliciting Dealer determined the
suitability of any persons offered Shares. Further, you and each
Soliciting Dealer shall have reasonable grounds to believe that the
person satisfies the higher of the following suitability standards:
(1)(a) a minimum annual gross income of $45,000 and a minimum net
worth (excluding home, home furnishings and automobiles) of $45,000;
or (b) a minimum net worth of $150,000 (excluding home, home
furnishings and automobiles); or (2) the suitability standards set
forth in the Subscription Agreement and the Prospectus or Private
Placement Memorandum for investors residing in certain states or in
Canada. You and each Soliciting Dealer shall maintain, for at least
six years, a record of the information obtained to determine that an
investor meets the suitability standards imposed on the offer and sale
of the Shares (both at the time of the initial subscription and at
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the time of any additional subscriptions) and a representation from
the investor that the investor is investing for the investor's own
account or, in lieu of such representation, information indicating
that the investor for whose account the investment was made satisfied
the suitability standards.
(f) DUE DILIGENCE. Prior to offering the Shares for sale, you and each
Soliciting Dealer shall have reasonable grounds to believe, based on
information made available to you by the Company, that all material
facts are adequately and accurately disclosed and provide a basis for
evaluating the purchase of the Shares. In determining the adequacy of
the disclosure, you and each Soliciting Dealer may obtain, upon
request, information on material facts relating at a minimum to the
following:
(i) items of compensation;
(ii) Company properties;
(iii) tax aspects;
(iv) financial stability and experience of the Company and the
Business Manager;
(v) conflicts and risk factors; and
(vi) appraisals and other pertinent reports.
Notwithstanding the foregoing, you and each Soliciting Dealer may rely upon
the results of an inquiry conducted by another Soliciting Dealer, provided
that:
(i) the Soliciting Dealer has reasonable grounds to believe that the
inquiry was conducted with due care;
(ii) the results of the inquiry were provided to you with the consent
of the Soliciting Dealer conducting or directing the inquiry;
and
(iii) no Soliciting Dealer that participated in the inquiry is an
affiliate of the Company or the Business Manager.
Prior to the sale of the Shares, you and each Soliciting Dealer shall
inform the prospective purchaser of all pertinent facts relating to the
liquidity and marketability of the Shares.
6. EXPENSES. The Company shall pay all fees and expenses arising from its
obligations under this Agreement, including, but not limited to:
(a) the Commission's registration fee;
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(b) the expenses of printing the Registration Statement, the Prospectus
and any amendment or supplement thereto and the expense of furnishing
copies to you of the Registration Statement, the Prospectus, the
Private Placement Memorandum and any amendment or supplement thereto
as herein provided;
(c) the fees and expenses of its accountants and counsel in connection
with the Offering contemplated by this Agreement;
(d) the fees and expenses of any filing with the NASD or any Canadian
provincial or territorial securities administrator;
(e) all of your reasonable expenses in connection with the Offering,
subject to the limits contained in the Prospectus, including, but not
limited to, the travel expenses and similar expenses of your employees
and personnel incurred in connection with the Offering; and
(f) the expenses of qualifying the Shares for offering and sale under
state blue sky and securities laws, including the expense of preparing
and printing the blue sky survey.
7. PRIVACY ACT. (i) The Company, you and each Soliciting Dealer shall comply
with all applicable federal, state and provincial regulations regarding
customer and consumer privacy, including Title V of the Xxxxx-Xxxxx-Xxxxxx
Act. Privacy provisions of the Xxxxx-Xxxxx-Xxxxxx Act limit disclosure of
customer information to uses required by law, regulation or rule, or uses
consistent with the purposes for which this information was disclosed in
each Soliciting Dealers Agreement. "Customer information" is defined as any
information contained on a customer's application and includes all
nonpublic personal information about a customer shared by the Company, you
or a Soliciting Dealer.
(ii) Subject to the provisions of the Xxxxx-Xxxxx-Xxxxxx Act, the Company,
you and each Soliciting Dealer shall establish and maintain safeguards
against the unauthorized access, destruction, loss or alteration of
customer information in their control. In the event of any improper
disclosure of customer information, the party responsible agrees to
immediately notify the other party or parties.
8. ANTI-MONEY LAUNDERING. The Company, you and each Soliciting Dealer shall
agree to comply with U.S. Department of Treasury regulations (outlined in
the Patriot Act) that require reasonable efforts to verify the identity of
new customers, maintain customer records, and check the names of new
customers against a government terrorist list. Further, the Company, you
and each Soliciting Dealer shall provide the Financial Crimes Enforcement
Network with information regarding: (a) the identity of a specified
individual or organization; (b) account number; (c) all identifying
information provided by the account holder; and (d) the date and type of
transaction, upon request. All parties will manually monitor account
activity to identify patterns of unusual size or volume, geographic
factors, and any of the other "red flags" described in the Patriot Act as
potential signals of money laundering or terrorist financing. The Company
and you
14
reserve the right to reject account applications from new customers who
fail to provide necessary account information or who intentionally provide
misleading information.
9. CONDITIONS OF OBLIGATIONS. Your obligations hereunder shall be subject to
the accuracy of the Company's representations and warranties contained in
SECTION 1 hereof, the accuracy of the statements of the Company made
pursuant to the provisions hereof, to the performance by the Company of its
covenants, agreements and obligations contained in SECTION 4 and SECTION 6
hereof, and to the following additional conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT.
(i) the Registration Statement shall have become effective not later
than 5:00 p.m., Chicago,
Illinois time, on the day following the
date of this Agreement, or such later time and date as you and
the Company shall have agreed (the "Effective Date");
(ii) no stop order suspending the effectiveness of the Registration
Statement shall have been issued by the Commission and, to the
best knowledge of the Company or you, no proceedings for that
purpose shall have been instituted, threatened or contemplated
by the Commission; and
(iii) any request by the Commission for additional information (to be
included in the Registration Statement or Prospectus or
otherwise) shall have been complied with to the reasonable
satisfaction of you or your counsel.
(b) ACCURACY OF REGISTRATION STATEMENT. You shall not have advised the
Company that the Registration Statement, Prospectus or the Private
Placement Memorandum, or any amendment or any supplement thereto, in
the reasonable opinion of you or your counsel, contains any untrue
statement of fact which is material, or omits to state a fact which is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
10. INDEMNIFICATION.
(a) Subject to SECTIONS 10(b) and 10(c) hereof, the Company shall
indemnify and hold harmless you, each Soliciting Dealer and each
person, if any, who controls you or any Soliciting Dealer within the
meaning of the Act (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties"), against any and all loss,
liability, claim, damage and expense whatsoever caused by any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement, the Prospectus, the Private Placement
Memorandum or any amendment or supplement thereto, or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
The Company shall not be required to provide indemnity or hold you
harmless for any loss, liability, claim, damage or expense suffered by you
or the Company unless: (i)
15
the party seeking indemnification has determined, in good faith, that its
course of conduct was in the best interests of the Company; (ii) the person
seeking indemnification was acting on behalf of or performing services on
behalf of the Company; (iii) the loss, liability, claim, damage or expense
was not the result of negligence or misconduct on the part of the party
seeking indemnification or the Indemnified Party; and (iv) any loss,
liability, claim, damage or expense is recoverable only out of the assets
of the Company and not from the personal assets of its Stockholders.
In no case shall the Company be liable under this SECTION 10(a) with
respect to any loss, liability, claim, damage or expense suffered by an
Indemnified Party unless the Company shall have been notified in writing by
the party seeking indemnity (in the manner provided in SECTION 13 hereof)
within a reasonable time after the assertion thereof; provided that the
failure to so notify the Company shall not relieve the Company from any
liability unless the failure to notify materially prejudices the Company's
defense of the claim. The Company shall be entitled to participate, at its
own expense, in the defense of, or if it so elects within a reasonable time
after receipt of such notice, to assume with counsel chosen by it and
reasonably acceptable to the Indemnified Party the defense, of any claim or
suit for which the Indemnified Party seeks indemnification hereunder.
If the Company elects to assume the defense of any such suit and
retains counsel, the Company shall not be liable under this SECTION 10 for
any legal or other expenses subsequently incurred by the party seeking
indemnity, and the party seeking indemnity shall bear the fees and expenses
of any additional counsel unless: (A) the employment of counsel by the
Indemnified Party has been authorized by the Company; (B) the Company shall
not in fact have employed counsel to assume the defense of such action, in
either of which events such fees and expenses shall be borne by the
Company; or (C) the Indemnified Party reasonably believes that it has
defenses different from, or additional to, those available to the Company.
The Company may advance amounts to an Indemnified Party for legal and
other expenses and costs incurred as a result of any legal action for which
indemnification is being sought only if all of the following conditions are
satisfied: (i) the legal action relates to acts or omissions with respect
to the performance of duties or services by one or more Indemnified Parties
for or on behalf of the Company; (ii) the legal action is initiated by a
third party who is not a Stockholder and a court of competent jurisdiction
specifically approves advancement; and (iii) the Indemnified Parties
receiving the advances undertake to repay the advanced funds to the
Company, together with the applicable legal rate of interest thereon, if
indemnity is later found not to be proper.
Notwithstanding the foregoing provisions of this SECTION 10, the
Company will not be liable in any such case to the extent that any loss,
liability, claim, damage 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 to the Company by or on behalf of you or any Soliciting Dealer
for use in the Registration Statement or Private Placement Memorandum (or
any amendment thereof) or the Prospectus (or any supplement thereto);
provided further that if the claim
16
relates to or arises from an untrue statement, alleged untrue statement,
omission or alleged omission made in the Prospectus or Private Placement
Memorandum but eliminated or remedied in any amendment or supplement
thereto, the Company shall have no obligation to provide indemnity to you
or any Soliciting Dealer if a copy of the Prospectus (or Private Placement
Memorandum, if applicable) as so amended or supplemented was not sent or
given by you or the Soliciting Dealer to the ultimate purchaser of Shares
at or prior to the time the subscription was accepted by the Company; but
only if a copy of the Prospectus or Private Placement Memorandum (as so
amended or supplemented) had been supplied by the Company to you or any
Soliciting Dealer prior to acceptance. The Company's obligations hereunder
shall be in addition to any other obligations the Company may have under
applicable law.
(b) The Company's obligations under this SECTION 10 is further limited to
the extent that indemnification is not permitted under this Agreement
for loss, liability, claim, damage or expense related to or arising
from an alleged violation of federal or state securities laws 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 and a court of competent jurisdiction has
approved indemnification to you or the Soliciting Dealer; (ii) the
claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee and the court
has approved indemnification; or (iii) a court of competent
jurisdiction approves a settlement of the claims and finds that
indemnification of the settlement and related costs should be made and
the court considering the request has been advised of the position of
the Commission and of the published positions of the Tennessee
Securities Division and any other state, provincial or territorial
securities regulatory authority in which securities of the Company
were offered and sold respecting the availability or propriety of
indemnification for securities law violations.
(c) You and each Soliciting Dealer agree to indemnify and hold harmless
the Company, and each person, if any, who controls the Company within
the meaning of the Act and any controlling person of the Company: (i)
to the same extent as in the foregoing indemnity from the Company to
you and each Soliciting Dealer, but only to the extent that any loss,
liability, claim, damage or expense relates to or arises from
information relating to you or any Soliciting Dealer furnished in
writing by you or the Soliciting Dealer or on your or their behalf for
use in the Registration Statement or the Prospectus or the Private
Placement Memorandum, or any amendment or supplement thereto; and (ii)
for any violation by you or any Soliciting Dealer of any applicable
state, provincial, territorial or federal law or any rule, regulation
or instruction thereunder, provided that the violation is not
committed in reliance on any violation by the Company of any law,
rule, regulation or instruction.
You and each Soliciting Dealer further agree to indemnify and hold
harmless the Company and any controlling person of the Company against any
losses, liabilities, claims, damages or expenses to which the Company or
any controlling person may become subject under the securities or blue sky
laws of any jurisdiction insofar as the
17
losses, liabilities, claims, damages or expenses (or actions, proceedings
or investigations in respect thereof) arise by reason of a sale of the
Shares through the efforts of you (with respect to sales effected without
the assistance of a Soliciting Dealer) or a Soliciting Dealer (with respect
to sales effected by such Soliciting Dealer) that is effected other than in
accordance with the terms hereof or the blue sky survey supplied to you by
the Company (a "Non-Permitted Sale"), whether the Non-Permitted Sale is
caused by a sale in a jurisdiction other than those specified in the blue
sky survey, by a sale in a jurisdiction in which you or the Soliciting
Dealer is not registered to sell the Shares or which results in a sale in a
jurisdiction in excess of the number of Shares permitted to be sold in the
jurisdiction, and will reimburse the Company or any such controlling person
for any legal fees, monetary penalties or other expenses reasonably
incurred by any of them in connection with investigating, curing or
defending against any such losses, liabilities, claims, damages, actions,
proceedings or investigations. The obligations of you and any Soliciting
Dealer hereunder shall be in addition to any other obligations you or the
Soliciting Dealers may have under applicable law.
(d) The notice provisions contained in SECTION 10(a) hereof, relating to
notice to the Company, shall be equally applicable to you and each
Soliciting Dealer if the Company or any controlling person of the
Company seeks indemnification pursuant to SECTION 10(c) hereof. In
addition, you and each Soliciting Dealer may participate in the
defense, or assure the defense, of any such suit so sought under
SECTION 10(c) hereof and have the same rights and privileges as the
Company enjoys with respect to suits under SECTION 10(a) hereof.
11. TERMINATION OF THIS AGREEMENT. This Agreement may be terminated by you in
the event that the Company shall have materially failed to comply with any
of the material provisions of this Agreement on its part to be performed at
or prior to the Effective Date or if any of the representations,
warranties, covenants or agreements of the Company herein contained shall
not have been materially complied with or satisfied within the times
specified.
In any case, this Agreement shall terminate at the close of business on the
Termination Date. Termination of this Agreement pursuant to this SECTION 11
shall be without liability of any party to any other party other than as
provided in SECTION 6 and SECTION 10 hereof, which shall survive termination.
12. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of the Company submitted pursuant hereto shall
remain operative and in full force and effect, regardless of any
investigation made by or on behalf of you or any person who controls you,
or by or on behalf of the Company, and shall survive the Termination Date.
13. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered: (i)
when delivered personally or by commercial messenger; (ii) one business day
following deposit with a recognized overnight courier service, provided
such deposit occurs prior to the deadline imposed by such service for
overnight delivery; (iii) when transmitted, if sent by facsimile copy,
18
provided confirmation of receipt is received by sender and such notice is
sent by an additional method provided hereunder, in each case above
provided such communication is addressed to the intended recipient thereof
as set forth below:
IF TO THE COMPANY, TO:
Inland American Real Estate Trust, Inc.
0000 Xxxxxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH COPIES TO: Xxxxxxx & Xxxxxxxx Ltd.
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000)000-0000
Facsimile: (000)000-0000
IF TO THE DEALER MANAGER, TO: Inland Securities Corporation
0000 Xxxxxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
14. REFERENCE TO INLAND SECURITIES CORPORATION. All references herein to you,
the Dealer Manager or Inland Securities Corporation hereunder shall be
deemed to include all successors and assigns of Inland Securities
Corporation.
15. PARTIES. This Agreement shall inure to the benefit of and be binding upon
you, the Company and the successors and assigns of you and the Company.
This Agreement and the conditions and provisions hereof are intended to be
and shall be for the sole and exclusive benefit of the parties hereto and
their respective successors and controlling persons, and for the benefit of
no other person, firm or corporation, except for the Soliciting Dealers,
and the term "successors and assigns," as used herein, shall not include
any purchaser of Shares as such.
16. APPLICABLE LAW. This Agreement and any disputes relative to the
interpretation or enforcement hereto shall be governed by and construed
under the internal laws, as opposed to the conflicts of laws provisions, of
the State of
Illinois.
17. EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective at 6:00
p.m., Chicago,
Illinois time, on [_________] [__], 2005, or at such earlier
time as you and the Company agree.
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18. NOT A SEPARATE ENTITY. Nothing contained herein shall constitute you or the
Soliciting Dealers or any of them an association, partnership, limited
liability company, unincorporated business or other separate entity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return it to us, whereupon this instrument will become a binding
agreement between you and the Company in accordance with its terms.
INLAND AMERICAN REAL ESTATE TRUST, INC.,
A MARYLAND CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Accepted as of the date
first above written:
INLAND SECURITIES CORPORATION.,
A DELAWARE CORPORATION
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
