EMPIRE AMERICAN REALTY TRUST, INC UP TO 110,000,000 SHARES OF COMMON STOCK FORM OF DEALER MANAGER AGREEMENT
EMPIRE AMERICAN REALTY TRUST,
INC
UP TO 110,000,000 SHARES OF COMMON STOCK
FORM OF DEALER MANAGER
AGREEMENT
____________, 2009
Empire American Realty,
LLC
00 Xxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Ladies and
Gentlemen:
Empire American Realty Trust, Inc. (the
“Company”) is a Maryland corporation that
intends to qualify to be taxed as a real estate investment trust (a
“REIT”) for federal income tax purposes
beginning with the taxable year ending December 31, 2010, or the first year
during which the Company begins material operations. The Company
proposes to offer (a) up to 100,000,000 shares of common stock, $.01 par value
per share (the “Shares”), for a purchase price of $10.00 per
Share (subject in certain circumstances to discounts based upon the volume of
shares purchased and for certain categories of purchasers), in the primary
offering (the “Primary
Offering”), and (b) up to
10,000,000 Shares for a purchase price of $9.50 per Share for issuance through
the Company’s distribution reinvestment program (the “DRP” and together with the Primary
Offering, the “Offering”), all upon the other terms and subject
to the conditions set forth in the Prospectus (as defined in Section
1(a)). The
Company has reserved the right to reallocate the Shares offered in the Offering
between the DRP and the Primary Offering.
Upon the terms and subject to the
conditions contained in this Dealer Manager Agreement (this “Agreement”), the Company hereby appoints Empire
American Realty, LLC, a Delaware limited liability company (the “Dealer
Manager”), to act as the
exclusive dealer manager for the Offering, and the Dealer Manager desires to
accept such engagement.
1. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY. The Company hereby
represents, warrants and agrees during the term of this Agreement as
follows:
(a) REGISTRATION STATEMENT AND PROSPECTUS. In connection with the
Offering, the Company has prepared and filed with the Securities and Exchange
Commission (the “Commission”) a registration statement (File No.
333-160093) on Form S-11 for the registration of the Shares under the Securities
Act of 1933, as amended (the “Securities
Act”), and the rules and
regulations of the Commission promulgated thereunder (the “Securities
Act Rules
and Regulations”); one or
more amendments to such registration statement have been or may be so prepared
and filed. The registration statement on Form S-11 and the prospectus
contained therein, as finally amended at the date the registration statement is
declared effective by the Commission (the “Effective
Date”) are respectively
hereinafter referred to as the “Registration
Statement” and the
“Prospectus”, except that (i) if the Company files
a post-effective amendment to such registration statement, then the term
“Registration Statement” shall, from and after the declaration of the
effectiveness of such post-effective amendment by the Commission, refer to such
registration statement as amended by such post-effective amendment, and the term
“Prospectus” shall refer to the amended prospectus then on file with the
Commission, and (ii) if the prospectus filed by the Company pursuant to either
Rule 424(b) or 424(c) of the Securities Act Rules and Regulations shall differ
from the prospectus on file at the time the Registration Statement or the most
recent post-effective amendment thereto, if any, shall have become effective,
then the term “Prospectus” shall refer to such prospectus filed pursuant to
either Rule 424(b) or 424(c), as the case may be, from and after the date on
which it shall have been filed. As used herein, the terms
“Registration Statement”, “preliminary Prospectus” and “Prospectus” shall
include the documents, if any, incorporated by reference
therein. As used
herein, the term “Effective Date” also shall refer to the effective date of each
post-effective amendment to the Registration Statement, unless the context
otherwise requires.
(b) COMPLIANCE WITH THE SECURITIES
ACT, ETC. During the term of this
Agreement:
(i) the Registration Statement, the
Prospectus and any amendments or supplements thereto have complied, and will
comply, in all material respects with the Securities Act, the Securities Act
Rules and Regulations, the requirements of the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”) and the rules and
regulations promulgated thereunder (the “Exchange
Act Rules”);
and
(ii) the Registration Statement does not, and
any amendment thereto will not, in each case as of the applicable Effective
Date, include any untrue statement of 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 and the Prospectus does not, and any amendment or supplement thereto
will not, as of the applicable filing date, 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 are made, not misleading; provided, however, that the foregoing provisions of this
Section
1(b) will not extend to any
statements contained in or omitted from the Registration Statement or the
Prospectus that are based upon written information furnished to the Company by
the Dealer Manager expressly for use in the Registration Statement or
Prospectus.
(c) SECURITIES
MATTERS. There
has not been (i) any request by the Commission for any further amendment to the
Registration Statement or the Prospectus or for any additional information,
(ii) any issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or, to the Company’s
knowledge, threat of any
proceeding for that purpose, or (iii) any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction or
any initiation or, to the
Company’s knowledge, threat
of any proceeding for such purpose. The Company is in
compliance in all material respects with all federal and state securities laws,
rules and regulations applicable to it and its activities, including, without
limitation, with respect to the Offering and the sale of the
Shares.
(d) CORPORATE STATUS AND GOOD STANDING. The
Company is a corporation duly organized and validly existing under the laws of
the State of Maryland and is in good standing with the State
Department of Assessments and Taxation of Maryland, with all requisite power and
authority to enter into this Agreement and to carry out its obligations
hereunder.
(e) AUTHORIZATION OF AGREEMENT. This Agreement is duly and
validly authorized, executed and delivered by or on behalf of the Company and
constitutes a valid and binding agreement of the Company enforceable in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws of the United States, any state or any political subdivision thereof which
affect creditors’ rights generally or by equitable principles relating to the
availability of remedies or except to the extent that the enforceability of the
indemnity and contribution provisions contained in this Agreement may be limited
under applicable securities laws.
The execution and delivery of this
Agreement and the performance of this Agreement, the consummation of the
transactions contemplated herein and the fulfillment of the terms hereof, do not
and will not conflict with, or result in a breach of any of the terms and
provisions of, or constitute a default under: (i) the Company’s or
any of its subsidiaries’ charter, bylaws, or other organizational documents, as
the case may be; (ii) any indenture, mortgage, deed of trust, voting trust
agreement, note, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their properties is bound except, for purposes of this
clause (ii) only, for such conflicts, breaches or defaults that do not result in
and could not reasonably be expected to result in, individually or in the
aggregate, a Company MAE (as defined below in this Section 1(e)); or (iii) any statute, rule or
regulation or order of any court or other governmental agency or body having
jurisdiction over the Company, any of its subsidiaries or any of their
properties. No consent, approval, authorization or order of any court
or other governmental agency or body has been or is required for the performance
of this Agreement or for the consummation by the Company of any of the
transactions contemplated hereby (except as have been obtained under the
Securities Act, the Exchange Act, from the Financial Industry Regulatory
Authority (the “FINRA”) or as may be required under state
securities or applicable 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 or as may be required by subsequent events which may
occur). Neither the Company nor any of its subsidiaries is in
violation of its charter, bylaws or other organizational documents, as the case
may be.
As used in this Agreement, “Company
MAE” means any event, circumstance,
occurrence, fact, condition, change or effect, individually or in the aggregate,
that is, or could reasonably be expected to be, materially adverse to
(A) the condition, financial
or otherwise, earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, or (B) the ability of the Company to perform its obligations under this Agreement or the validity or
enforceability of this Agreement or the Shares.
(f) ACTIONS OR PROCEEDINGS. As of the
initial Effective Date, there are no actions, suits or proceedings against, or
investigations of, the
Company or its subsidiaries
pending or, to the knowledge of the Company, threatened, before any court,
arbitrator, administrative agency or other tribunal (i) asserting the invalidity
of this Agreement, (ii) seeking to prevent the issuance of the Shares or the
consummation of any of the transactions contemplated by this Agreement, (iii)
that might materially and adversely affect the performance by the Company of its obligations
under or the validity or
enforceability of, this Agreement or the Shares, (iv) that might result in
a Company MAE, or (v) seeking to affect adversely the
federal income tax attributes of the Shares except as described in the
Prospectus. The
Company promptly will give notice to the Dealer Manager of the occurrence of any
action, suit, proceeding or investigation of the type referred to above arising
or occurring on or after the initial Effective Date.
(g) ESCROW
AGREEMENT. The Company will enter into an escrow agreement (the
“Escrow
Agreement”) with the Dealer Manager and [_________] (the “Escrow
Agent”), substantially in the form included as an exhibit to the
Registration Statement.
(h) SALES LITERATURE. Any supplemental sales
literature or advertisement (including, without limitation any “broker-dealer
use only” material), regardless of how labeled or described, used in addition to
the Prospectus in connection with the Offering which previously has been, or
hereafter is, furnished or approved by the Company (collectively, “Approved
Sales Literature”), shall,
to the extent required, be filed with and approved by the appropriate securities
agencies and bodies, provided that the Dealer Manager will make all FINRA
filings, to the extent required. Any and all Approved Sales
Literature did not or will not at the time provided for use include any untrue
statement of a material fact or omit to state 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.
(i) AUTHORIZATION OF SHARES. The Shares have been duly
authorized and, upon payment therefor as provided in this Agreement and the
Prospectus, will be validly issued, fully paid and nonassessable and will
conform to the description thereof contained in the
Prospectus.
(j) TAXES. Any taxes, fees and other governmental
charges in connection with the execution and delivery of this Agreement or the
execution, delivery and sale of the Shares have been or will be paid when
due.
(k) INVESTMENT COMPANY. The
Company is not, and neither
the offer or sale of the Shares nor any of the activities of the Company will cause the Company to be, an “investment company” or under the control of an “investment company” as such terms are defined in the
Investment Company Act of
1940, as amended.
(l)
TAX RETURNS. The Company has filed or will file all material federal, state and foreign
income tax returns required to be filed by or on behalf of the Company on or before the due dates therefor
(taking into account all extensions of time to file) and has paid or provided
for the payment of all such material taxes indicated by such tax returns and all
assessments received by the
Company to the extent that
such taxes or assessments have become due.
(m)
REIT QUALIFICATIONS. The Company will
make a timely election to be subject to tax as a REIT pursuant to Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the “Code”)
for its taxable year ended December 31, 2010, or the first year during
which the Company begins material operations. The Company has been organized and
operated in conformity with the requirements for qualification and taxation as a
REIT. The Company’s current and proposed method of operation as
described in the Registration Statement and the Prospectus will enable it to
continue to meet the requirements for qualification and taxation as a REIT under
the Code.
(n) INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM. The accountants who have certified
certain financial statements appearing in the Prospectus are an independent registered public
accounting firm within the
meaning of the Securities
Act and the Securities Act Rules and Regulations. Such accountants have not
been engaged by the Company to perform any “prohibited activities” (as defined
in Section 10A of the Exchange Act).
(o) PREPARATION OF THE FINANCIAL
STATEMENTS. The
financial statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus present fairly the consolidated
financial position of the
Company and its
subsidiaries as of and at the dates indicated and the results of their
operations and cash flows for the periods specified. Such financial
statements have been prepared in conformity with generally accepted accounting
principles as applied in the United States applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting
schedules are required to be included in the Registration Statement or any
applicable
Prospectus.
(p) MATERIAL ADVERSE CHANGE. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
may otherwise be stated therein or contemplated thereby, there has not occurred a Company MAE, whether or not arising in the ordinary
course of business.
(q) GOVERNMENT PERMITS. The Company and its subsidiaries possess such
certificates, authorities or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, other than those the failure to possess or own would not
have, individually or in
the aggregate, a Company
MAE. Neither the
Company nor any of its
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Company
MAE.
(r) PROPERTIES. Except as otherwise disclosed in the
Prospectus and except as would not result in, individually or in the
aggregate, a Company MAE, (i) all properties and assets described
in the Prospectus are owned with good and marketable title by the Company and its subsidiaries, and (ii) all liens, charges, encumbrances,
claims or restrictions on or affecting any of the properties and assets of any of
the Company or its subsidiaries which are required
to be disclosed in the Prospectus are disclosed
therein.
(s) HAZARDOUS MATERIALS. The
Company does not have any
knowledge of (i) the unlawful presence of any hazardous
substances, hazardous materials, toxic substances or waste materials
(collectively, “Hazardous
Materials”) on any of the properties owned by it
or its subsidiaries or
subject to mortgage loans owned by the Company or any of its
subsidiaries, or
(ii) any unlawful spills, releases,
discharges or disposal of Hazardous Materials that have occurred or are
presently occurring off such properties as a result of any construction on or
operation and use of such properties, which presence or
occurrence in the case of clauses (i) and
(ii) would result in, individually or in the
aggregate, a Company MAE. In connection with the properties
owned by the
Company and its
subsidiaries or subject to
mortgage loans owned by the Company or any of its subsidiaries, the Company has no knowledge of any material
failure to comply with all applicable local, state and federal environmental
laws, regulations, ordinances and administrative and judicial orders relating to
the generation, recycling, reuse, sale, storage, handling, transport and
disposal of any Hazardous Materials.
2. REPRESENTATIONS AND
WARRANTIES OF THE DEALER MANAGER. The Dealer Manager
represents and warrants to the Company during the term of this Agreement
that:
(a) ORGANIZATION
STATUS. The Dealer Manager is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite power and authority to enter into this Agreement
and to carry out its obligations hereunder.
(b) AUTHORIZATION
OF AGREEMENT. This Agreement has been duly authorized, executed and
delivered by the Dealer Manager, and assuming due authorization, execution and
delivery of this Agreement by the Company, will constitute a valid and legally
binding agreement of the Dealer Manager enforceable against the Dealer Manager
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability and except that rights to indemnity and contribution hereunder
may be limited by applicable law and public policy.
(c) ABSENCE
OF CONFLICT OR DEFAULT. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated and compliance with the
terms of this Agreement by the Dealer Manager will not conflict with or
constitute a default under (i) its organizational documents, (ii) any indenture,
mortgage, deed of trust or lease to which the Dealer Manager is a party or by
which it may be bound, or to which any of the property or assets of the Dealer
Manager is subject, or (iii) any rule, regulation, writ, injunction or decree of
any government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Dealer Manager or its assets, properties or
operations, except in the case of clause (ii) or (iii) for such conflicts or
defaults that would not individually or in the aggregate have a material adverse
effect on the condition (financial or otherwise), business, properties or
results of operations of the Dealer Manager.
(d) BROKER-DEALER
REGISTRATION; FINRA MEMBERSHIP. The Dealer Manager is, and during the
term of this Agreement will be, duly registered as a broker-dealer pursuant to
the provisions of the Exchange Act, a member in good standing of FINRA, and a
broker or dealer duly registered as such in those states where the Dealer
Manager is required to be registered in order to carry out the Offering as
contemplated by this Agreement. Moreover, the Dealer Manager’s
employees and representatives have all required licenses and registrations to
act under this Agreement. There is no provision in the Dealer
Manager’s FINRA membership agreement that would restrict the ability of the
Dealer Manager to carry out the Offering as contemplated by this
Agreement.
3. OFFERING
AND SALE OF THE
SHARES. Upon the
terms and subject to the conditions set forth in this Agreement, the Company
hereby appoints the Dealer Manager as its agent and distributor to solicit and
to retain the Soliciting Dealers (as defined in Section
3(a)) to solicit
subscriptions for the Shares at the subscription price to be paid in
cash. The Dealer Manager hereby accepts such agency and exclusive
distributorship and agrees to use its reasonable best efforts to sell or cause
to be sold the Shares in such quantities and to such persons in accordance with
such terms as are set forth in this Agreement, the Prospectus and the
Registration Statement. The Dealer Manager shall do so during the
period commencing on the initial Effective Date and ending on the earliest to
occur of the following: (1) the later of (x) two years after the
initial Effective Date of the Registration Statement and (y) at the Company’s
election, the date on which the Company is permitted to extend the Offering in
accordance with the rules of the Commission; (2) the acceptance by the Company
of subscriptions for 110,000,000 Shares; (3) the termination of the Offering by
the Company, which the Company shall have the right to terminate in its sole and
absolute discretion at any time; (4) the termination of the effectiveness
of the Registration Statement; and (5) the liquidation or dissolution of the
Company (such period being the “Offering
Period”).
The number of Shares, if any, to be
reserved for sale by each Soliciting Dealer may be determined by mutual
agreement, from time to time, by the Dealer Manager and the
Company. In the absence of such determination, the Company shall,
subject to the provisions of Section
3(b), accept Subscription
Agreements based upon a first-come, first accepted reservation or other similar
method. Under no circumstances will the Dealer Manager be obligated
to underwrite or purchase any Shares for its own account and, in soliciting
purchases of Shares, the Dealer Manager shall act solely as the Company’s agent
and not as an underwriter or principal.
(a) SOLICITING DEALERS. The Shares offered
and sold through the Dealer Manager under this Agreement shall be offered and
sold only by the Dealer Manager and other securities dealers the Dealer Manager
may retain (collectively the “Soliciting
Dealers”); provided, however,
that (i) the Dealer Manager reasonably
believes that all Soliciting Dealers are registered with the Commission, members
of FINRA and are duly licensed or registered by the regulatory authorities in
the jurisdictions in which they will offer and sell Shares and (ii) all such
engagements are evidenced by written agreements, the terms and conditions of
which substantially conform to the form of Soliciting Dealers Agreement
substantially in the form of Exhibit
A hereto (the “Soliciting
Dealers Agreement”).
(b) SUBSCRIPTION DOCUMENTS. Each
person desiring to purchase Shares through the Dealer Manager, or any other
Soliciting Dealer, will be required to complete and execute the subscription
documents described in the Prospectus.
(c) COMPLETED SALE. A sale of a Share shall be
deemed by the Company to be completed for purposes of Section
3(d) if and only if (i) the
Company or an agent of the Company has received a properly completed and
executed subscription agreement, together with payment of the full purchase
price of each purchased Share, from an investor who satisfies the applicable
suitability standards and minimum purchase requirements set forth in the
Registration Statement as determined by the Soliciting Dealer or the Dealer
Manager, as applicable, in accordance with the provisions of this Agreement,
(ii) the Company has accepted such subscription, and (iii) such investor has
been admitted as a shareholder of the Company. In addition, no sale
of Shares shall be completed until at least five (5) business days after the
date on which the subscriber receives a copy of the Prospectus. The
Dealer Manager hereby acknowledges and agrees that the Company, in its sole and
absolute discretion, may accept or reject any subscription, in whole or in part,
for any reason whatsoever or no reason, and no commission or dealer manager fee
will be paid to the Dealer Manager with respect to that portion of any
subscription which is rejected.
(d) DEALER-MANAGER
COMPENSATION.
(i) Subject to the volume discounts and
other special circumstances described in or otherwise provided in the “Plan of
Distribution” section of the Prospectus or this Section
3(d), the Company agrees to
pay the Dealer Manager selling commissions in the amount of seven percent (7.0%)
of the selling price of each Share for which a sale is completed from the Shares
offered in the Primary Offering. The Company will not pay selling
commissions for sales of Shares pursuant to the DRP, and the Company will pay
reduced selling commissions or may eliminate commissions on certain sales of
Shares, including the reduction or elimination of selling commissions in
accordance with, and on the terms set forth in, the Prospectus. The
Dealer Manager will reallow all the selling commissions, subject to federal and
state securities laws, to the Soliciting Dealer who sold the Shares, as
described more fully in the Soliciting Dealers Agreement.
(ii) Subject to the special circumstances
described in or otherwise provided in the “Plan of Distribution” section of the
Prospectus or this Section
3(d), as compensation for
acting as the dealer manager, the Company will pay the Dealer Manager, a dealer
manager fee in the amount of three percent (3.0%) of the selling price of each
Share for which a sale is completed from the Shares offered in the Primary
Offering (the “Dealer
Manager Fee”). No Dealer Manager Fee
will be paid in connection with Shares sold pursuant to the DRP. The
Dealer Manager may retain or re-allow all or a portion of the Dealer Manager
Fee, subject to federal and state securities laws, to the Soliciting Dealer who
sold the Shares, as described more fully in the Soliciting Dealers
Agreement.
(iii) All sales commissions payable to the
Dealer Manager will be paid within thirty (30) days after the investor
subscribing for the Share is admitted as a shareholder of the Company, in an
amount equal to the sales commissions payable with respect to such
Shares. The Dealer Manager acknowledges that no commissions, payments
or amount will be paid to the Dealer Manager unless and until the gross proceeds
of the Shares sold are disbursed to the Company in accordance with the terms of
the Escrow Agreement.
(iv) In
no event shall the total aggregate underwriting compensation payable to the
Dealer Manager and any Soliciting Dealers participating in the Offering,
including, but not limited to, selling commissions and the Dealer Manager
Fee exceed ten percent (10.0%) of gross offering proceeds from the
Primary Offering in the aggregate.
(v) Notwithstanding
anything to the contrary contained herein, if the Company pays any selling
commission to the Dealer Manager for sale by a Soliciting Dealer of one or more
Shares and the subscription is rescinded as to one or more of the Shares covered
by such subscription, then the Company shall decrease the next payment of
selling commissions or other compensation otherwise payable to the Dealer
Manager by the Company under this Agreement by an amount equal to the commission
rate established in this Section 3(d),
multiplied by the number of Shares as to which the subscription is
rescinded. If no payment of selling commissions or other compensation
is due to the Dealer Manager after such withdrawal occurs, then the Dealer
Manager shall pay the amount specified in the preceding sentence to the Company
within a reasonable period of time not to exceed thirty (30) days following
receipt of notice by the Dealer Manager from the Company stating the amount owed
as a result of rescinded subscriptions.
(e) REASONABLE
BONA FIDE DUE DILIGENCE
EXPENSES. In addition to any payments to the Dealer Manager pursuant
to Section
3(d), the Company shall reimburse the Dealer Manager or any Soliciting
Dealer for reasonable bona
fide due diligence expenses incurred by the Dealer Manager or any
Soliciting Dealer to the extent permitted pursuant to the rules and regulations
of FINRA, including expenses, fees and taxes incurred in connection with: (a)
legal counsel to the Dealer Manager, including fees and expenses incurred prior
to the initial Effective Date; (b) customary travel, lodging, meals and
reasonable entertainment expenses incurred in connection with the Offering; (c)
attendance at broker-dealer sponsored conferences, educational conferences
sponsored by the Company, industry sponsored conferences and informational
seminars; and (d) customary promotional items; provided, however, that no
due diligence expenses shall be reimbursed by the Company pursuant to this Section 3(e) which
would cause the aggregate of all of the Company’s expenses described in Section 3(f) and
compensation paid to the Dealer Manager and any Soliciting Dealer pursuant to
Section 3(d) to
exceed 15% of the gross proceeds from the sale of the Primary
Shares.
(f) COMPANY
EXPENSES. Subject to the limitations described above, the Company
agrees to pay all costs and expenses incident to the Offering, whether or not
the transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with: (a) the
registration fee, the preparation and filing of the Registration Statement
(including without limitation financial statements, exhibits, schedules and
consents), the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Dealer Manager and to
Soliciting Dealers (including costs of mailing and shipment); (b) the
preparation, issuance and delivery of certificates, if any, for the Shares,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares; (c) all fees and expenses of the Company’s legal counsel,
independent public or certified public accountants and other advisors; (d) the
qualification of the Shares for offering and sale under state laws in the states
that the Company shall designate as appropriate and the determination of their
eligibility for sale under state law as aforesaid and the printing and
furnishing of copies of blue sky surveys; (e) filing for review by FINRA of all
necessary documents and information relating to the Offering and the Shares
(including the reasonable legal fees and filing fees and other disbursements of
counsel relating thereto); (f) the fees and expenses of any transfer agent or
registrar for the Offered Shares and miscellaneous expenses referred to in the
Registration Statement; (g) all costs and expenses incident to the travel and
accommodation of the personnel of Empire American Advisors, LLC, advisor to the
Company (the “Advisor”),
and the personnel of any sub-advisor designated by the Advisor and acting on
behalf of the Company, in making road show presentations and presentations to
Soliciting Dealers and other broker-dealers and financial advisors with respect
to the offering of the Shares; and (h) the performance of the Company’s other
obligations hereunder. Notwithstanding the foregoing, the Company shall not
directly pay, or reimburse the Advisor for, the costs and expenses described in
this Section
3(f) if the payment or reimbursement of such expenses would cause the
aggregate of the Company’s “organization and offering expenses” as defined by
FINRA Rule 2810 (including the Company expenses paid or reimbursed pursuant to
this Section
3(f), all items of underwriting compensation including Dealer Manager
expenses described in Section 3(d) and due
diligence expenses described in Section 3(e)) to
exceed 15.0% of the gross proceeds from the sale of the Primary
Shares.
4. CONDITIONS
TO THE DEALER MANAGER’S OBLIGATIONS. The Dealer Manager’s obligations
hereunder shall be subject
to the following terms and
conditions:
(a) The
representations and warranties on the part of the Company contained in this
Agreement hereof shall be true and correct in all material respects and the
Company shall have complied with its covenants, agreements and obligations
contained in this Agreement in all material respects;
(b) The
Registration Statement shall have become effective and 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, no proceedings for that
purpose shall have been instituted, threatened or contemplated by the
Commission; and 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 the Dealer
Manager.
5. COVENANTS OF
THE COMPANY. The Company covenants and
agrees with the Dealer Manager as follows:
(a) REGISTRATION STATEMENT. The
Company will its best efforts to cause the Registration Statement and any
subsequent amendments thereto to become effective as promptly as possible and
will furnish a copy of any proposed amendment or supplement of the Registration
Statement or the Prospectus to the Dealer Manager.
(b) COMMISSION ORDERS. If the
Commission shall issue any stop order or any other order preventing or
suspending the use of the Prospectus, or shall institute any proceedings for
that purpose, then the Company will promptly notify the Dealer Manager and use
its best efforts to prevent the issuance of any such order and, if any such
order is issued, to use its best efforts to obtain the removal thereof as
promptly as possible.
(c) BLUE SKY QUALIFICATIONS. The Company
will use its best efforts to qualify the Shares for offering and sale under the
securities or blue sky laws of such jurisdictions as the Dealer Manager and the
Company shall mutually agree upon and to make such applications, file such
documents and furnish such information as may be reasonably required for that
purpose. The Company will, at the Dealer Manager’s request, furnish the Dealer
Manager with a copy of such papers filed by the Company in connection with any
such qualification. The Company will promptly advise the Dealer
Manager of the issuance by such securities administrators 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 best efforts to prevent the
issuance of any such order and if any such order is issued, to use its best
efforts to obtain the removal thereof as promptly as possible. The Company will
furnish the Dealer Manager with a Blue Sky Survey dated as of the initial
Effective Date, which will be supplemented to reflect changes or additions to
the information disclosed in such survey.
(d) AMENDMENTS AND SUPPLEMENTS. If, at any time
when a Prospectus relating to the Shares is required to be delivered under the
Securities Act, any event shall have occurred to the knowledge of the Company,
or the Company receives notice from the Dealer Manager that it believes such an
event has occurred, as a result of which the Prospectus or any Approved Sales
Literature 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, in light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend the Registration
Statement or supplement the Prospectus relating to the Shares to comply with the
Securities Act, then the Company will promptly notify the Dealer Manager thereof
(unless the information shall have been received from the Dealer Manager) and
will prepare and file with the Commission an amendment or supplement which will
correct such statement or effect such compliance to the extent required, and
shall make available to the Dealer Manager thereof sufficient copies for its own
use and/or distribution to the Soliciting Dealers.
(e) REQUESTS FROM COMMISSION. The
Company will promptly
advise the Dealer Manager
of any request made by the
Commission or a state
securities administrator
for amending the Registration Statement, supplementing the Prospectus or for
additional information.
(f) COPIES OF REGISTRATION STATEMENT. The
Company will furnish the Dealer Manager with one signed copy of the Registration
Statement, including its exhibits, and such additional copies of the
Registration Statement, without exhibits, and the Prospectus and all amendments
and supplements thereto, which are finally approved by the Commission, as the
Dealer Manager may reasonably request for sale of the
Shares.
(g) QUALIFICATION TO TRANSACT
BUSINESS. The Company will take all steps necessary to ensure that at
all times the Company will validly exist as a Maryland corporation and will be
qualified to do business in all jurisdictions in which the conduct of its
business requires such qualification and where such qualification is required
under local law.
(h) AUTHORITY TO PERFORM AGREEMENTS. The
Company undertakes to obtain all consents, approvals, authorizations or orders
of any court or governmental agency or body which are required for the Company’s
performance of this Agreement and under the Bylaws and the Articles of Amendment
and Restatement in the form included as exhibits to the Registration
Statement for the
consummation of the transactions contemplated hereby and thereby, respectively,
or the conducting by the Company of the business described in the
Prospectus.
(i) SALES LITERATURE. The Company
will furnish to the Dealer Manager as promptly as shall be practicable upon
request any Approved Sales Literature (provided that the use of said material
has been first approved for use by all appropriate regulatory
agencies). Any
supplemental sales literature or advertisement, regardless of how labeled or
described, used in addition to the Prospectus in connection with the Offering
which is furnished or approved by the Company (including, without limitation,
Approved Sales Literature) shall, to the extent required, be filed with and, to
the extent required, approved by the appropriate securities agencies and bodies,
provided that the Dealer Manager will make all FINRA filings, to the extent
required.
(j) USE
OF PROCEEDS. The Company will apply the proceeds from the sale of the
Shares as set forth in the Prospectus.
(k) CUSTOMER
INFORMATION. The Company shall:
(i) abide
by and comply with (A) the privacy standards and requirements of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 (the “GLB Act”), (B) the
privacy standards and requirements of any other applicable federal or state law,
and (C) its own internal privacy policies and procedures, each as may be amended
from time to time;
(ii) refrain
from the use or disclosure of nonpublic personal information (as defined under
the GLB Act) of all customers who have opted out of such disclosures except as
necessary to service the customers or as otherwise necessary or required by
applicable law; and
(iii) determine
which customers have opted out of the disclosure of nonpublic personal
information by periodically reviewing and, if necessary, retrieving an
aggregated list of such customers from the Soliciting Dealers (the “List”) to identify
customers that have exercised their opt-out rights. If either party
uses or discloses nonpublic personal information of any customer for purposes
other than servicing the customer, or as otherwise required by applicable law,
that party will consult the List to determine whether the affected customer has
exercised his or her opt-out rights. Each party understands that it
is prohibited from using or disclosing any nonpublic personal information of any
customer that is identified on the List as having opted out of such
disclosures.
(l) DEALER
MANAGER’S REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS. Prior to
amending or supplementing the Registration Statement, any preliminary prospectus
or the Prospectus (including any amendment or supplement through incorporation
of any report filed under the Exchange Act), the Company shall furnish to the
Dealer Manager for review, a reasonable amount of time prior to the proposed
time of filing or use thereof, a copy of each such proposed amendment or
supplement, and the Company shall not file or use any such proposed amendment or
supplement without the Dealer Manager’s consent, which consent shall not be
unreasonably withheld or delayed.
6. COVENANTS OF
THE DEALER MANAGER. The
Dealer Manager covenants and agrees with the Company as
follows:
(a) COMPLIANCE WITH LAWS. With respect to the Dealer Manager’s
participation and the participation by each Soliciting Dealer in the offer and
sale of the Shares (including, without limitation, any resales and transfers of
Shares), the Dealer Manager agrees, and each Soliciting Dealer in its Soliciting
Dealer Agreement will agree, to comply in all material respects with all
applicable requirements of the Securities Act, the Securities Act Rules and
Regulations, the Exchange Act, the Exchange Act Rules and Regulations and all
other federal regulations applicable to the Offering, the sale of Shares and
with all applicable state securities or blue sky laws, and the Rules of the
FINRA applicable to the Offering, from time to time in effect, specifically
including, but not in any way limited to, Conduct Rules 2340, 2420, 2730, 2740,
2750 and 2810 therein. The Dealer Manager will not offer the Shares
for sale in any jurisdiction unless and until it has been advised that the
Shares are either registered in accordance with, or exempt from, the securities
and other laws applicable thereto.
In addition, the Dealer Manager shall,
in accordance with applicable law or as prescribed by any state securities
administrator, provide, or require in the Soliciting Dealer Agreement that the
Soliciting Dealer shall provide, to any prospective investor copies of any
prescribed document which is part of the Registration Statement and any
supplements thereto during the course of the Offering and prior to the
sale. The Company may provide the Dealer Manager with certain
Approved Sales Literature to be used by the Dealer Manager and the Soliciting
Dealers in connection with the solicitation of purchasers of the
Shares. The Dealer Manager agrees not to deliver the Approved Sales
Literature to any person prior to the initial Effective Date. If the
Dealer Manager elects to use such Approved Sales Literature after the initial
Effective Date, then the Dealer Manager agrees that such material shall not be
used by it in connection with the solicitation of purchasers of the Shares and
that it will direct Soliciting Dealers not to make such use unless accompanied
or preceded by the Prospectus, as then currently in effect, and as it may be
amended or supplemented in the future. The Dealer Manager agrees that
it will not use any Approved Sales Literature other than those provided to the
Dealer Manager by the Company for use in the Offering. The use of any
other sales material is expressly prohibited.
(b)
NO ADDITIONAL INFORMATION. In
offering the Shares for sale, the Dealer Manager shall not, and each Soliciting
Dealer shall agree not to, give or provide any information or make any
representation other than those contained in the Prospectus or the Approved
Sales Literature.
(c) SALES OF SHARES. The Dealer Manager
shall, and each Soliciting
Dealer shall agree to, solicit purchases of the Shares only in the jurisdictions
in which the Dealer Manager and such Soliciting Dealer are legally qualified to
so act and in which the Dealer Manager and each Soliciting Dealer have been
advised by the Company or counsel to the Company that such solicitations can be
made.
(d) SUBSCRIPTION AGREEMENT. The Dealer
Manager will comply in all material respects with the subscription procedures
and “Plan of Distribution” set forth in the Prospectus. Subscriptions
will be submitted by the Dealer Manager and each Soliciting Dealer to the
Company only on the form which is included as Exhibit C to the Prospectus. The
Dealer Manager understands and acknowledges, and each Soliciting Dealer shall
acknowledge, that the Subscription Agreement must be executed and initialed by
the subscriber as provided for by the Subscription
Agreement.
(e) SUITABILITY. The Dealer Manager will
offer Shares, and in its agreement with each Soliciting Dealer will require that
the Soliciting Dealer offer Shares, only to persons that it has reasonable
grounds to believe 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 by
the Company that the Shares are qualified for sale or that such qualification is
not required. In offering Shares, the Dealer Manager will comply, and
in its agreements with the Soliciting Dealers, the Dealer Manager will require
that the Soliciting Dealers comply, with the provisions of all applicable rules
and regulations relating to suitability of investors, including without
limitation the FINRA Conduct Rules and the provisions of Article III.C. of the
Statement of Policy Regarding Real Estate Investment Trusts of the North
American Securities Administrators Association, Inc., as revised and amended on
May 7, 2007 and as may be further revised and amended (the “NASAA
Guidelines”). The Dealer Manager agrees that in
recommending the purchase of the Shares in the Primary Offering to an investor,
the Dealer Manager and each person associated with the Dealer Manager that make
such recommendation shall have, and each Soliciting Dealer in its Soliciting
Dealer Agreement shall agree with respect to investors to which it makes a
recommendation shall agree that it shall have, reasonable grounds to believe, on
the basis of information obtained from the investor concerning the investor’s
investment objectives, other investments, financial situation and needs, and any
other information known by the Dealer Manager, the person associated with the
Dealer Manager or the Soliciting Dealer that: (i) the investor is or
will be in a financial position appropriate to enable the investor to realize to
a significant extent the benefits described in the Prospectus, including the tax
benefits where they are a significant aspect of the Company; (ii) 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 (iii) an
investment in the Shares offered in the Primary Offering is otherwise suitable
for the investor. The Dealer Manager agrees as to investors to whom
it makes a recommendation with respect to the purchase of the Shares in the
Primary Offering (and each Soliciting Dealer in its Soliciting Dealer Agreement
shall agree, with respect to Investors to whom it makes such recommendations) to
maintain in the files of the Dealer Manager (or the Soliciting Dealer, as
applicable) documents disclosing the basis upon which the determination of
suitability was reached as to each investor. In making the determinations as to
financial qualifications and as to suitability required by the NASAA Guidelines,
the Dealer Manager and Soliciting Dealers may rely on (A) representations
from investment advisers who are not affiliated with a Soliciting Dealer, banks
acting as trustees or fiduciaries, and (B) information it has obtained
from a prospective investor, including such information as the investment
objectives, other investments, financial situation and needs of the person or
any other information known by the Dealer Manager (or Soliciting Dealer, as
applicable), after due inquiry. Notwithstanding the foregoing, the
Dealer Manager shall not, and each Soliciting Dealer shall agree not to, execute
any transaction in the Company in a discretionary account without prior written
approval of the transaction by the customer.
(f) SOLICITING DEALER
AGREEMENTS. All engagements of the Soliciting Dealers will be
evidenced by a Soliciting Dealer Agreement.
(g) ELECTRONIC DELIVERY. If it
intends to use electronic delivery to distribute the Prospectus to any person,
that it will comply with all applicable requirements of the Commission, the Blue
Sky laws and/or FINRA and any other laws or regulations related to the
electronic delivery of documents.
(h) COORDINATION. The Company and the Dealer
Manager shall have the right, but not the obligation, to meet with key personnel
of the other on an ongoing and regular basis to discuss the conduct of the
officers.
(i) AML
COMPLIANCE. The Dealer Manager represents to the Company that it has
established and implemented anti-money laundering compliance programs (“AML Program”) in
accordance with applicable law, including applicable FINRA Conduct Rules,
Exchange Act Rules and Regulations and the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
(USA PATRIOT Act) of 2001, as amended (the “USA PATRIOT Act”),
specifically including, but not limited to, Section 352 of the International
Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 (the “Money Laundering Abatement
Act”, and together with the USA PATRIOT Act, the “AML Rules”),
reasonably expected to detect and cause the reporting of suspicious transactions
in connection with the offering and sale of the Shares. The Dealer
Manager further represents that it is currently in compliance with all AML
Rules, specifically including, but not limited to, the
Customer Identification Program requirements under Section 326 of the Money
Laundering Abatement Act, and the Dealer Manager hereby covenants to remain in
compliance with such requirements and shall, upon request by the Company,
provide a certification to the Company that, as of the date of such
certification (i) its AML Program is consistent with the AML Rules, and (ii) it
is currently in compliance with all AML Rules, specifically including, but not
limited to, the Customer Identification Program requirements under Section 326
of the Money Laundering Abatement Act.
(j) COOPERATION. Upon
the expiration or earlier termination of this Agreement, the Dealer Manager will
use reasonable efforts to cooperate fully with the Company and any other party
that may be necessary to accomplish an orderly transfer and transfer to a
successor dealer manager of the operation and management of the services the
Dealer Manager is providing to the Company under this Agreement. The
Dealer Manager will not be entitled to receive any additional fee in connection
with the foregoing provisions of this Section 6(j), but the
Company will pay or reimburse the Dealer Manager for any out-of-pocket expenses
reasonably incurred by the Dealer Manager in connection therewith.
(k) CUSTOMER
INFORMATION. The Dealer Manager will use its best efforts to provide
the Company with any and all subscriber information that the Company requests in
order for the Company to comply with the requirements under Section 5(l)
above.
(l) RECORDKEEPING. The
Dealer Manager will comply, and will require each Soliciting Dealer to comply,
with the record keeping requirements of the Exchange Act, including, but not
limited to, Rules 17a-3 and 17a-4 promulgated under the Exchange Act, and shall
maintain, for at least six years or for a period of time not less than that
required in order to comply with all applicable federal, state and other
regulatory requirements, whichever is later, such records with respect to each
investor who purchases Primary Shares, information used to determine that the
investor meets the suitability standards imposed on the offer and sale of the
Primary Shares, the amount of Primary Shares sold, and a representation of 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 met the suitability standards.
(m) SUSPENSION
OR TERMINATION OF OFFERING. The Dealer Manager agrees, and will
require that each of the Soliciting Dealers agree, to suspend or terminate the
offering and sale of the Primary Shares upon request of the Company at any time
and to resume the offering and sale of the Primary Shares upon subsequent
request of the Company.
7. INDEMNIFICATION.
(a) INDEMNIFIED PARTIES DEFINED. For the purposes of this
Agreement, an “Indemnified
Party” shall mean a person
or entity entitled to indemnification under Section 7, as well as such person’s or entity’s
officers, directors, employees, members, partners, affiliates, agents and
representatives, and each person, if any, who controls such person or entity
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.
(b) INDEMNIFICATION OF THE DEALER MANAGER
AND SOLICITING DEALERS. The Company will indemnify,
defend and hold harmless the Dealer Manager and the Soliciting Dealers, and
their respective Indemnified Parties, from and against any losses, claims,
expenses (including reasonable legal and other expenses incurred in
investigating and defending such claims or liabilities), damages or liabilities,
joint or several, to which any such Soliciting Dealers or the Dealer Manager, or
their respective Indemnified Parties, may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, claims, expenses,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon: (i) in whole or in part, any material inaccuracy in a
representation or warranty contained herein by the Company, any material breach
of a covenant contained herein by the Company, or any material failure by the
Company to perform its obligations hereunder or to comply with state or federal
securities laws applicable to the Offering; (ii) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Registration Statement
or any post-effective amendment thereto or in the Prospectus or any amendment or
supplement to the Prospectus, (B) in any Approved Sales Literature or (C) 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 Offered 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 (iii)
the omission or alleged omission to state a material fact required to be stated
in the Registration Statement or any post-effective amendment thereof to make
the statements therein not misleading or the omission or alleged omission to
state a material fact required to be stated in the Prospectus or any amendment
or supplement to the prospectus to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company will
reimburse each Soliciting Dealer or the Dealer Manager, and their respective
Indemnified Parties, for any reasonable legal or other expenses incurred by such
Soliciting Dealer or the Dealer Manager, and their respective Indemnified
Parties, in connection with investigating or defending such loss, claim,
expense, damage, liability or action; provided,
however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
expense, damage or liability arises out of, or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with written information furnished to the Company by the
Dealer Manager expressly for use in the Registration Statement or any
post-effective amendment thereof or the Prospectus or any such amendment thereof
or supplement thereto. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
Notwithstanding the foregoing, as
required by Section II.G. of the NASAA REIT Guidelines, the indemnification and
agreement to hold harmless provided in this Section
8(b) is further limited to
the extent that no such indemnification by the Company of a Soliciting Dealer or
the Dealer Manager, or their respective Indemnified Parties, shall be permitted
under this Agreement for, or arising out of, an alleged violation of federal or
state securities laws, unless one or more of the following conditions are
met: (a) there has been a successful adjudication on the merits of
each count involving alleged securities law violations as to the particular
Indemnified Party; (b) such claims have been dismissed with prejudice on the
merits by a court of competent jurisdiction as to the particular Indemnified
Party; or (c) a court of competent jurisdiction approves a settlement of the
claims against the particular Indemnified Party 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 Commission and of the published position of any state securities regulatory
authority in which the securities were offered or sold as to indemnification for
violations of securities laws.
(c) DEALER MANAGER INDEMNIFICATION OF THE
COMPANY. The
Dealer Manager will indemnify, defend and hold harmless the Company and each of
its Indemnified Parties and each person who has signed the Registration
Statement, from and against any losses, claims, expenses (including the
reasonable legal and other expenses incurred in investigating and
defending any such claims or liabilities), damages or liabilities to which any
of the aforesaid parties may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, expenses, damages (or
actions in respect thereof) arise out of or are based upon: (i) in
whole or in part, any material inaccuracy in a representation or warranty
contained herein by the Dealer Manager or any material breach of a covenant
contained herein by the Dealer Manager; (ii) any untrue statement or
any alleged untrue statement of a material fact contained (A) in any
Registration Statement or any post-effective amendment thereto or in the
Prospectus or any amendment or supplement to the Prospectus, (B) in any Approved
Sales Literature, or (C) any Blue Sky Application; or (iii) the omission or
alleged omission to state a material fact required to be stated in the
Registration Statement or any post-effective amendment thereof to make the
statements therein not misleading, or the omission or alleged omission to state
a material fact required to be stated in the Prospectus or any amendment or
supplement to the Prospectus to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that in each case
described in clauses (ii) and (iii) 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 the Dealer Manager
expressly for use in the Registration Statement or any such post-effective
amendments thereof or the Prospectus or any such amendment thereof or supplement
thereto; (iv) any use of sales literature, including “broker-dealer use only”
materials, by the Dealer Manager that is not Approved Sales Literature; or (v)
any untrue statement made by the Dealer Manager or omission by the Dealer
Manager 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 Offering, in each case, other than statements or omissions made in
conformity with the Registration Statement, the Prospectus, any Approved Sales
Literature or any other materials or information furnished by or on behalf on
the Company. The Dealer Manager will reimburse the aforesaid parties
for any reasonable legal or other expenses incurred in connection with
investigation or defense of such loss, claim, expense, damage, liability or
action. This indemnity agreement will be in addition to any liability
which the Dealer Manager may otherwise have.
(d) SOLICITING DEALER INDEMNIFICATION OF THE
COMPANY. By
virtue of entering into the Soliciting Dealer Agreement, each Soliciting Dealer
severally will agree to indemnify, defend and hold harmless the Company, the
Dealer Manager, each of their respective Indemnified Parties, and each person
who signs the Registration Statement, from and against any losses, claims,
expenses, damages or liabilities to which the Company, the Dealer Manager, or
any of their respective Indemnified Parties, or any person who signed the
Registration Statement, may become subject, under the Securities Act or
otherwise, as more fully described in the Soliciting Dealer
Agreement.
(e) ACTION AGAINST PARTIES;
NOTIFICATION. Promptly after receipt by
any Indemnified Party under this Section
7 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
7, promptly notify the
indemnifying party of the commencement thereof; provided,
however, that the failure
to give such notice shall not relieve the indemnifying party of its obligations
hereunder except to the extent it shall have been actually prejudiced by such
failure. 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 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, and
unconditional release of all liabilities from, 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, such consent not
to be unreasonably withheld or delayed.
(f) REIMBURSEMENT OF FEES AND EXPENSES. An indemnifying party under
Section
7 of this Agreement shall
be obligated to reimburse an Indemnified Party for reasonable legal and other
expenses as follows:
(i) In the case of the Company indemnifying
the Dealer Manager, the advancement of funds to the Dealer Manager for legal
expenses and other costs incurred as a result of any legal action for which
indemnification is being sought shall be permissible (in accordance with
Section II.G. of the NASAA REIT Guidelines) only if
all of the following conditions are satisfied: (A) the legal action
relates to acts or omissions with respect to the performance of duties or
services on behalf of the Company; (B) the legal action is initiated by a third
party who is not a shareholder of the Company or the legal action is initiated
by a shareholder of the Company acting in his or her capacity as such and a
court of competent jurisdiction specifically approves such advancement; and (C)
the Dealer Manager undertakes to repay the advanced funds to the Company,
together with the applicable legal rate of interest thereon, in cases in which
the Dealer Manager is found not to be entitled to
indemnification.
(ii) In any case of indemnification other
than that described in Section
7(f)(i) above, the
indemnifying party shall pay all legal fees and expenses reasonably incurred by
the Indemnified Party in the defense of such claims or actions; provided, however, that the indemnifying party shall not
be obligated 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 (in addition
to local counsel) that has been participating by a majority of the indemnified
parties against which such action is finally brought; and if 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.
8. CONTRIBUTION.
(a) If the indemnification provided for in
Section
7 is for any reason
unavailable to or insufficient to hold harmless an Indemnified Party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such Indemnified
Party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Dealer Manager and the Soliciting
Dealer, respectively, from the proceeds received in Primary Offering pursuant to
this Agreement and the relevant Soliciting Dealer Agreement, or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, the Dealer
Manager and the Soliciting Dealer, respectively, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable
considerations.
(b) The relative benefits received by the
Company, the Dealer Manager and the Soliciting Dealer, respectively, in
connection with the proceeds received in the Primary Offering pursuant to this
Agreement and the relevant Soliciting Dealer Agreement shall be deemed to be in
the same respective proportion as the total net proceeds from the Primary
Offering pursuant to this Agreement and the relevant Soliciting Dealer Agreement
(before deducting expenses), received by the Company, and the total selling
commissions and dealer manager fees received by the Dealer Manager and the
Soliciting Dealer, respectively, in each case as set forth on the cover of the
Prospectus bear to the aggregate offering price of the Shares sold in the
Primary Offering as set forth on such cover.
(c) The relative fault of the Company, the
Dealer Manager and the Soliciting Dealer, respectively, shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact related to information supplied by the Company, by the Dealer Manager or by
the Soliciting Dealer, respectively, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(d) The Company, the Dealer Manager and the
Soliciting Dealer (by virtue of entering into the Soliciting Dealer Agreement)
agree that it would not be just and equitable if contribution pursuant to this
Section
8 were determined by
pro rata allocation or by any other method of
allocation which does not take account of the equitable contributions referred
to above in this Section
8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
Indemnified Party and referred to above in this Section
8 shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission or alleged omission.
(e) Notwithstanding the provisions of this
Section
8, the Dealer Manager and
the Soliciting Dealer shall not be required to contribute any amount by which
the total price at which the Shares sold in the Primary Offering to the public
by them exceeds the amount of any damages which the Dealer Manager and the
Soliciting Dealer have otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission.
(f) No party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any party who was not guilty of such
fraudulent misrepresentation.
(g) For the purposes of this Section
8, the Dealer Manager’s
officers, directors, employees, members, partners, agents and representatives,
and each person, if any, who controls the Dealer Manager within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution of the Dealer Manager, and each officers,
directors, employees, members, partners, agents and representatives of the
Company, each officer of the Company who signed the Registration Statement and
each person, if any, who controls the Company, within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution of the Company. The Soliciting Dealers’
respective obligations to contribute pursuant to this Section
8 are several in proportion
to the number of Shares sold by each Soliciting Dealer in the Primary Offering
and not joint.
9. TERMINATION
OF THIS AGREEMENT.
(a) TERM; EXPIRATION. This
Agreement shall become effective on the initial Effective Date and the
obligations of the parties hereunder shall not commence until the initial
Effective Date. This Agreement may
be terminated by either party upon 60 calendar days’ written notice to the other
party. This Agreement shall automatically expire on the termination
date of the Offering as described in the Prospectus.
(b) DELIVERY
OF RECORDS UPON EXPIRATION OR EARLY TERMINATION. Upon the expiration
or early termination of this Agreement for any reason, the Dealer Manager shall
(i) promptly forward any and all funds, if any, in its possession which were
received from investors for the sale of Shares into the Escrow Account for the
deposit of investor funds, (ii) to the extent not previously provided to the
Company a list of all investors who have subscribed for or purchased shares and
all broker-dealers with whom the Dealer Manager has entered into a Soliciting
Dealer Agreement, (iv) notify Soliciting Dealers
of such termination, and (v) promptly deliver to the Company copies of any sales
literature designed for use specifically for the Offering that it is then in the
process of preparing. Upon expiration or earlier termination of this Agreement,
the Company shall pay to the Dealer Manager all compensation to which the Dealer
Manager is or becomes entitled under Section 3(d) at such
time as such compensation becomes payable.
10. MISCELLANEOUS
(a) SURVIVAL. The following
provisions of the Agreement shall survive the expiration or earlier termination
of this Agreement: Section
3(d); Section
5(l); Section
6(i); Section
7; Section
8; Section
9 and this Section
10. Notwithstanding anything
else that may be to the contrary herein, the expiration or earlier termination
of this Agreement shall not relieve a party for liability for any breach
occurring prior to such expiration or earlier termination.
(b) NOTICES. All notices or other
communications required or permitted hereunder, except as herein otherwise
specifically provided, 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, 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:
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If to the
Company:
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Empire
American Realty Trust, Inc.
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00
Xxxxxxx Xxxxxxx
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Xxxxxxxx,
Xxx Xxxxxx 00000
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Facsimile No.: (000)
000-0000
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Attention: Xxxx
Xxxxxx
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with a copy
to:
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Proskauer Rose,
LLP
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0000
Xxxxxxxx
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Xxx Xxxx, Xxx Xxxx 00000
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Facsimile No.: (000)
000-0000
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Attention: Xxxxx X.
Xxxx, Esq.
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If to the Dealer
Manager:
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Empire American Realty,
LLC
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00
Xxxxxxx Xxxxxxx
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Xxxxxxxx,
Xxx Xxxxxx 00000
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Facsimile No.: (000)
000-0000
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Attention: Xxxxxx
Day
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with a copy
to:
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Proskauer Rose
LLP
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0000
Xxxxxxxx
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Xxx Xxxx, XX 00000
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Facsimile No: (000)
000-0000
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Attention: Xxxxx X.
Xxxx, Esq.
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Any party
may change its address specified above by giving each party notice of such
change in accordance with this Section
10(b).
(c) SUCCESSORS AND ASSIGNS. No party shall assign (voluntarily, by
operation of law or otherwise) this Agreement or any right, interest or benefit
under this Agreement without the prior written consent of each other party.
Subject to the foregoing, this Agreement shall be fully binding upon, inure to
the benefit of, and be enforceable by, the parties hereto and their respective
successors and assigns.
(d) INVALID PROVISION. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision were
omitted.
(f) 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 New York.
(g) WAIVER. EACH
OF THE PARTIES HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT
OR OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT. The
parties hereto each hereby irrevocably submits to the exclusive jurisdiction of
the courts of the State of New York and the Federal courts of the United States
of America located in the Borough of Manhattan, New York City, in respect of the
interpretation and enforcement of the terms of this Agreement, and in respect of
the transactions contemplated hereby, and each hereby waives, and agrees not to
assert, as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement may not be enforced
in or by such courts, and the parties hereto each hereby irrevocably agrees that
all claims with respect to such action or proceeding shall be heard and
determined in such a New York State or Federal court.
(h) ATTORNEYS’ FEES. If a dispute
arises concerning the performance, meaning or interpretation of any provision of
this Agreement or any document executed in connection with this Agreement, then
the prevailing party in such dispute shall be awarded any and all costs and
expenses incurred by the prevailing party in enforcing, defending or
establishing its rights hereunder or thereunder, including, without limitation,
court costs and attorneys and expert witness fees. In addition to the
foregoing award of costs and fees, the prevailing also shall be entitled to
recover its attorneys’ fees incurred in any post-judgment proceedings to collect
or enforce any judgment.
(i) NO PARTNERSHIP. Nothing in this Agreement shall be
construed or interpreted to constitute the Dealer Manager or the Soliciting
Brokers as being in association with or in partnership with the Company or one
another, and instead, this Agreement only shall constitute the Soliciting Dealer
as a broker authorized by the Company to sell and to manage the sale by others
of the Shares according to the terms set forth in the Registration Statement,
the Prospectus or this Agreement. Nothing herein contained shall render the
Dealer Manager or the Company liable for the obligations of any of the
Soliciting Brokers or one another.
(j) THIRD PARTY BENEFICIARIES. Except for the persons and
entities referred to in Section
7 and Section
8, there shall be no third
party beneficiaries of this Agreement, and no provision of this Agreement is
intended to be for the benefit of any person or entity not a party to this
Agreement, and no third party shall be deemed to be a beneficiary of any
provision of this Agreement. Except for the persons and entities
referred to in Section
7 and Section
8, no third party shall by
virtue of any provision of this Agreement have a right of action or an
enforceable remedy against any party to this Agreement. Each of the
persons and entities referred to in Section
7 and Section
8 shall be a third party
beneficiary of this Agreement.
(k) ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.
(l) NONWAIVER. The failure of any party to
insist upon or enforce strict performance by any other party of any provision of
this Agreement or to exercise any right under this Agreement shall not be
construed as a waiver or relinquishment to any extent of such party’s right to
assert or rely upon any such provision or right in that or any other instance;
rather, such provision or right shall be and remain in full force and
effect.
(m) ACCESS TO INFORMATION. The Company may authorize the
Company’s transfer agent to provide information to the Dealer Manager and each
Soliciting Dealer regarding recordholder information about the clients of such
Soliciting Dealer who have invested with the Company on an on-going basis for so
long as such Soliciting Dealer has a relationship with such clients. The Dealer
Manager shall require in the Soliciting Dealer Agreement that Soliciting Dealers
not disclose any password for a restricted website or portion of website
provided to such Soliciting Dealer in connection with the Offering and not
disclose to any person, other than an officer, director, employee or agent of
such Soliciting Dealers, any material downloaded from such a restricted website
or portion of a restricted website.
(n) COUNTERPARTS. This Agreement may be executed
(including by facsimile transmission) with counterpart signature pages or in
counterpart copies, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument comprising this
Agreement.
(o) ABSENCE OF FIDUCIARY
RELATIONSHIPS. The parties acknowledge and agree that (i) the Dealer
Manager’s responsibility to the Company is solely contractual in nature, and
(ii) the Dealer Manager does not owe the Company, any of its affiliates or any
other person or entity any fiduciary (or other similar) duty as a result of this
Agreement or any of the transactions contemplated hereby.
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.
[Signatures on following
page]
IN WITNESS WHEREOF, the parties hereto
have each duly executed this Dealer Manager Agreement as of the day and year set
forth above.
THE COMPANY:
EMPIRE AMERICAN REALTY TRUST,
INC.
By:_________________________________
Name:
Title:
Accepted as of the date first above
written:
THE
DEALER MANAGER:
EMPIRE
AMERICAN ADVISORS, LLC
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By:___________________________________
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Name:
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Title:
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EXHIBIT
A
FORM OF
SOLICITING DEALER AGREEMENT
