FORM OF SOLICITING DEALERS AGREEMENT LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST II, INC.
FORM
OF SOLICITING DEALERS AGREEMENT
LIGHTSTONE
VALUE PLUS REAL ESTATE INVESTMENT TRUST II, INC.
Ladies
and Gentlemen:
We
have
entered into an agreement (the “Dealer Manager Agreement”) which is a part
hereof and attached hereto, with Lightstone Value Plus Real Estate Investment
Trust II, Inc., a Maryland corporation (the “Company”), under which we have
agreed to use our best efforts to solicit subscriptions for the shares of Common
Stock (the “Shares”) in the Company. The Company is offering to the public an
aggregate maximum of up to 50,000,000 Shares at a price of $10 per Share on
a
“best efforts” basis, up to 6,500,000 Shares issued pursuant to the Distribution
Reinvestment Program at a price of $9.50 per Share (the “Offering”). Unless
otherwise defined, capitalized terms used herein shall have the same meaning
as
in the Registration Statement.
In
connection with the performance of our obligations under Section 2 of the Dealer
Manager Agreement, we are authorized to retain the services of securities
dealers who are members of the Financial Industry Regulatory Authority (the
“Soliciting Dealers”) to solicit subscriptions. You are hereby invited to become
a Soliciting Dealer and, as such, to use your best efforts to solicit
subscribers for Shares, in accordance with the following terms and
conditions:
(1)
A
registration statement (the “Registration Statement”) with respect to the
56,500,000 Shares has been filed with the Securities and Exchange Commission
(the “Commission”) under the Securities Act of 1933, as amended (the “Act”), and
has become effective. The 56,500,000 Shares and the Offering are more
particularly described in the enclosed prospectus (the “Prospectus”) which is
part of the Registration Statement. Additional copies of the Prospectus will
be
supplied to you in reasonable quantities upon request. We will also provide
you
with reasonable quantities of any supplemental literature prepared by the
Company in connection with the offering of the Shares.
(2)
Solicitation and other activities by the Soliciting Dealers hereunder shall
be
undertaken only in accordance with the Dealer Manager Agreement, this Agreement,
the Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
the applicable rules and regulations of the Commission, the Blue Sky Survey
hereinafter referred to and the Rules of the Financial Industry Regulatory
Association, Inc. (“FINRA”), specifically including, but not in any way limited
to, Rules 2440, 2730, 2740, and 2750 of the FINRA Rules. In offering the sale
of
Shares to any person, each Soliciting Dealer shall have reasonable grounds
to
believe (based on such information as the investment objectives, other
investments, financial situation and needs of the person or any other
information known by you after due inquiry) that: (i) such person is or will
be
in a financial position appropriate to enable such person to realize to a
significant extent the benefits described in the Prospectus and has a net worth
sufficient to sustain the risks inherent in the program, including loss of
investment and lack of liquidity; (ii) the purchase of the Shares is otherwise
suitable for such person, and each Soliciting Dealer shall maintain records
disclosing the basis upon which each Soliciting Dealer determined the
suitability of any persons offered Shares; and (iii) such person has either:
(a)
a minimum annual gross income of $75,000 and a minimum net worth (exclusive
of
home, home furnishings and automobiles) of $75,000; or (b) a minimum net worth
(determined with the foregoing exclusions) of $250,000.
If
the
investor is a resident of Kentucky, the investor must have either (a) a net
worth of $250,000 or (b) a minimum gross annual income of at least $70,000
and a
minimum net worth of at least $70,000, with the amount invested in the Offering
not to exceed 10% of the Kentucky investor’s liquid net worth.
If
the
investor is a resident of Massachusetts, Michigan Ohio or Pennsylvania, the
investor must have either (a) a net worth of $250,000 or (b) a minimum gross
annual income of at least $70,000 and a minimum net worth of at least $70,000.
The investor’s maximum investment in the Company and its affiliates cannot
exceed 10% of the Massachusetts, Ohio or Pennsylvania resident’s net worth.
If
the
investor is a resident of Alabama, the investor must have either (a) a net
worth
of $250,000 or (b) a minimum gross annual income of at least $70,000 and a
minimum net worth of at least $70,000, and shares will only be sold to Alabama
residents that represent that they have a liquid net worth of at least 10 times
the amount of their investment in this real estate investment program and other
similar programs.
Each
Soliciting Dealer agrees: (i) to deliver to each person who subscribes for
the
Shares, a Prospectus, as then supplemented or amended, prior to the tender
of
his subscription agreement (the “Subscription Agreement”); (ii) to comply
promptly with the written request of any person for a copy of the Prospectus
during the period between the effective date of the Registration Statement
and
the later of the termination of the distribution of the Shares or the expiration
of 40 days after the first date upon which the Shares were offered to the
public; (iii) to deliver in accordance with applicable law or as prescribed
by
any state securities administrator to any person a copy of any prescribed
document included within the Registration Statement; and (iv) to maintain in
its
files for at least six years, documents disclosing the basis upon which the
determination of suitability was reached as to each purchaser of
Shares.
(3)
Subject to the terms and conditions set forth herein and in the Dealer Manager
Agreement, the Company shall pay to you a selling commission of 7% of the price
paid per Share for all Shares sold (except for Special Sales) from the up to
50,000,000 Shares offered on a “best efforts” basis for which you have acted as
Soliciting Dealer pursuant to this Agreement.
Single
Purchasers (as defined below) purchasing more than $250,000 worth of Shares
(25,000 Shares) will be entitled to a reduced Share purchase price and a
reduction in selling commissions payable in connection with the purchase of
such
Shares in accordance with the following schedule:
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Amount
of Single
Purchaser’s
Investment
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Purchase price per Share for
incremental Share in discount
range
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Maximum Commission
Per
Share
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$ 1,000
- $ 250,000
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$
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10.00
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$
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0.70
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$ 250,001
- $ 500,000
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$
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9.85
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$
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0.55
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$ 500,001
- $ 750,000
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$
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9.70
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$
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0.40
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$ 750,001
- $ 1,000,000
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$
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9.60
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$
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0.30
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$ 1,000,001
- $ 5,000,000
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$
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9.50
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$
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0.20
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Any
reduction from the amount of selling commissions otherwise payable to you in
respect of a purchaser’s subscription will be credited to the purchaser in the
form of additional whole Shares purchased net of commissions. No fractional
Shares will be issued. As to sales of Shares which are entitled to the above
described volume discounts, only the reduced selling commissions set forth
above
will be paid.
Selling
commissions for purchases of $5,000,000 or more may, in the Company’s sole
discretion, be reduced to $0.20 per Share or less, but in no event will the
proceeds to the Company from the sale of such Shares be less than $9.30 per
Share (except for Shares sold to affiliates of the Company at a price of $9.10
per share, which is the purchase price per Share net of any selling commissions
and organization and offering expenses). Selling commissions paid will in all
cases be the same for the same level of sales. In the event of a sale of
$5,000,000 or more, the Company will supplement the Prospectus in the manner
described in the Prospectus under the section “Volume Discounts”.
Certain
subscriptions may be combined for the purpose of crediting a purchaser or
purchasers with additional Shares for the above described volume discount and
for determining commissions reallowable to you so long as all such combined
purchases are made through you and approved by the Company. As used herein,
the
term “Single Purchaser” will include (i) any person or entity, or persons or
entities, acquiring Shares as joint purchasers; (ii) all profit-sharing, pension
and other retirement trusts maintained by a given corporation, partnership
or
other entity; (iii) all funds and foundations maintained by a given corporation
partnership or other entity; and (iv) all profit-sharing, pension and other
retirement trusts and all funds or foundations over which a designated bank
or
other trustee, person or entity (except an investment advisor registered under
the Investment Advisors Act of 1940) exercises discretionary authority with
respect to an investment in the Company.
The
investor must ▇▇▇▇ the “Additional Investment” space on the Subscription
Agreement Signature Page, and set forth the basis for the discount and identify
the orders to be combined in order for subscriptions to be combined. The Company
is not responsible for failing to combine subscriptions, where the investor
fails to ▇▇▇▇ the “Additional Investment” space.
If
the
Subscription Agreements for the subscriptions to be combined are submitted
at
the same time, then the additional Shares to be credited to the purchasers
as a
result of such combined purchases will be credited on a pro-rata basis. If
the
Subscription Agreements for the subscriptions to be combined are not submitted
at the same time, then any additional Shares to be credited as a result of
such
combined purchases will be credited to the last component purchase, unless
the
Company is otherwise directed in writing at the time of such submission; except
however, the additional Shares to be credited to any tax-exempt entities whose
subscriptions 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.
In
the
event the dollar amount of commissions paid for such combined purchases exceeds
the maximum commissions for such combined purchases (taking the volume discount
into effect), you will be obligated to forthwith return to the us (for credit
to
the Company) any excess commissions received. We may adjust any future
commissions due to you for any such excess commissions that have not been
returned.
Certain
marketing and due diligence expenses such as Soliciting Dealer conferences
and
due diligence fees may be advanced to a Soliciting Dealer and later deducted
from that Soliciting Dealer’s sales credit. If the Offering is not consummated,
the Soliciting Dealer will repay any such advance to the extent not expended
on
marketing and due diligence expenses. Any sales credit shall be deducted from
the maximum Marketing Contribution, which may otherwise be reallowable to the
Soliciting Dealer.
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Employees
and associates of the Company and its Affiliates, the Advisor, Affiliates of
the
Advisor, we and the Soliciting Dealers will be permitted to purchase Shares
net
of sales commissions, and you shall not be entitled to receive any compensation
attributable to any such purchase(s).
You
will
not receive any compensation for sales of common stock under the Company’s
distribution reinvestment plan.
Your
compensation may also be adjusted in the manner set forth in Section 4(g) of
the
Dealer Manager Agreement.
Notwithstanding
the foregoing, it is understood and agreed that no commission shall be payable
with respect to particular Shares if the Company rejects a proposed subscriber’s
Subscription Agreement, which it may do, as provided in the form of Subscription
Agreement for any reason or for no reason. Accordingly, you shall have no
authority to issue a confirmation (pursuant to Exchange Act Rule 10b-10) to
any
subscriber; such authority residing solely in us, as the Dealer Manager and
processing broker-dealer.
Volume
discounts will not be available to California residents to the extent that
such
discounts do not comply with the provisions of Rule 260.145.51 adopted pursuant
to the California Corporate Securities Law of 1968,
which provides that volume discounts can be made available to California
residents only in accordance with the following conditions: (i) there can be
no
variance in the net proceeds to the Company from the sale of the Shares to
difference purchasers of the same offering; (ii) all purchasers of the Shares
must be informed of the availability of quantity discounts; (iii) the same
volume discounts must be allowed to all purchasers of Shares which are part
of
the offering; (iv) the minimum amount of shares as to which volume discounts
are
allowed cannot be less than $10,000; (v) the variance in the price of the shares
must result solely from a different range of commissions, and all discounts
must
be based on a uniform scale of commissions; and (vi) no discounts are allowed
to
any group of purchasers. Accordingly, volume discounts for California residents
will be available in accordance with the foregoing table of uniform discount
levels based on dollar volume of shares purchased, but no discounts are allowed
to any group of purchasers, and no subscriptions may be aggregated as part
of a
combined order for purposes of determining the number of Shares
issued.
(4)
We
reserve the right to notify you by telegram or by other means of the number
of
Shares reserved for sale by you. Such Shares will be reserved for sale by you
until the time specified in our notification to you. Sales of any reserved
Shares after the time specified in the notification to you or any requests
for
additional Shares will be subject to rejection in whole or in part.
(5)
Payments for Shares shall be made by checks payable to “ Escrow
Agent for Lightstone Value Plus
Real Estate Investment Trust II, Inc.” and forwarded together with a copy of the
Subscription Agreement, which is attached as Appendix C to the Prospectus,
executed by the subscriber, to Lightstone Securities, LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ not later than noon of the next business day
after
receipt of such Subscription Agreement and check (when your internal supervisory
procedures are completed at the site at which the Subscription Agreement
and
check were received by you) or, when your internal supervisory procedures
are
performed at a different location (the “Final Review Office”), you shall
transmit the check and Subscription Agreement to the Final Review Office
by the
end of the next business day following your receipt of the Subscription
Agreement and check. The Final Review Office will, by the end of the next
business day following its receipt of the Subscription Agreement and check,
forward both the Subscription Agreement and check to us as processing
broker-dealer. If any Subscription Agreement solicited by you is rejected
by the
Company, the Subscription Agreement and check will be forwarded to the Escrow
Agent for prompt return to the rejected subscriber.
(6)
We
will inform you as to the jurisdictions in which we have been advised by the
Company that the Shares have been qualified for sale or are exempt under the
respective securities or “blue sky” laws of such jurisdictions; but we have not
assumed and will not assume any obligation or responsibility as to your right
to
act as a broker and/or dealer with respect to the Shares in any such
jurisdiction. You agree that you will not make any offers except in states
in
which we may advise you that the Offering has been qualified or is exempt and
further agree to assure that each person to whom you sell Shares (at both the
time of the initial purchase as well as at the time of any subsequent purchases)
meets any special suitability standards which apply to sales in a particular
jurisdiction, as described in the Blue Sky Survey and the Subscription
Agreement. Neither we nor the Company assume any obligation or responsibility
in
respect of the qualification of the Shares covered by the Prospectus under
the
laws of any jurisdiction or your qualification to act as a broker and/or dealer
with respect to the Shares in any jurisdiction. The Blue Sky Survey which has
been or will be furnished to you indicates the jurisdictions in which it is
believed that the offer and sale of Shares covered by the Prospectus is exempt
from, or requires action under, the applicable blue sky or securities laws
thereof, and what action, if any, has been taken with respect
thereto.
It
is
understood and agreed that under no circumstances will you, as a Soliciting
Dealer, engage in any activities hereunder in any jurisdiction in which you
may
not lawfully so engage or in any activities in any jurisdiction with respect
to
the Shares in which you may lawfully so engage unless you have complied with
the
provisions hereof.
(7)
Neither you nor any other person is authorized by the Company or by us to give
any information or make any representations in connection with this Agreement
or
the offer of Shares other than those contained in
the
Prospectus, as then amended or supplemented, or any sales literature approved
by
us and the Company. You agree not to publish, circulate or otherwise use any
other advertisement or solicitation material without our prior written approval.
You are not authorized to act as our agent in any respect, and you agree not
to
act as such agent and not to purport to act as such agent.
3
(8)
We
shall have full authority to take such action as we may deem advisable with
respect to all matters pertaining to the Offering or arising thereunder. We
shall not be under any liability (except for (i) our own lack of good faith
and
(ii) for obligations expressly assumed by us hereunder) for or in respect of
the
validity or value of or title to, the Shares; the form of, or the statements
contained in, or the validity of, the Registration Statement, the Prospectus
or
any amendment or supplement thereto, or any other instrument executed by
Lightstone Value Plus REIT II LLC, the Company’s advisor (the “Advisor”), the
Company or by others; the form or validity of the Dealer Manager Agreement
or
this Agreement; the delivery of the Shares; the performance by the Advisor,
the
Company or by others of any agreement on its or their part; the qualification
of
the Shares for sale under the laws of any jurisdiction; or any matter in
connection with any of the foregoing; provided, however, that nothing in this
paragraph shall be deemed to relieve the Company or the undersigned from any
liability imposed by the Act. No obligations on the part of the Company or
the
undersigned shall be implied or inferred herefrom.
(9)
Under
the Dealer Manager Agreement, the Company has agreed to indemnify you and us
and
each person, if any, who controls you or us, in certain instances and against
certain liabilities, including liabilities under the Act in certain
circumstances. You agree to indemnify the Company and each person who controls
it as provided in the Dealer Manager Agreement and to indemnify us to the extent
and in the manner that you agree to indemnify the Company in such Dealer Manager
Agreement.
In
furtherance, and not in limitation of, the immediately preceding sentence,
you
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) for any violation by you in the sale of the Shares of any
applicable state or federal law or any rule, regulation or instruction
thereunder, provided that such violation is not committed in reliance on any
violation by the Company of such law, rule, regulation or instruction, (ii)
from
and 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 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 and
(iii) from and against any losses, liabilities, claims, damages or expenses
to
which the Company or any such controlling person may become subject under the
securities or blue sky laws of any jurisdiction insofar as such 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 by you) which is
effected other than in accordance with the Blue Sky Survey supplied to you
by
the Company (a “Non Permitted Sale”), whether such 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 such 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.
(10)
You
hereby authorize and ratify the execution and delivery of the Dealer Manager
Agreement by us as Dealer Manager for ourselves and on behalf of the Soliciting
Dealers (including you) and authorize us to agree to any variation of its terms
or provisions and to execute and deliver any amendment, modification or
supplement thereto. Each Soliciting Dealer hereby agrees to be bound by all
provisions of the Dealer Manager Agreement relating to Soliciting Dealers.
You
also authorize us to exercise, in our discretion, all the authority or
discretion now or hereafter vested in us by the provisions of the Dealer Manager
Agreement and to take all such actions as we may believe desirable in order
to
carry out the provisions of the Dealer Manager Agreement and of this
Agreement.
(11)
This
Agreement, except for the provisions of Sections 8 and 9 hereof, may be
terminated at any time by either party hereto by two days prior written notice
to the other party and, in all events, this Agreement shall terminate on the
termination date of the Dealer Manager Agreement, except for the provisions
of
Sections 8 and 9 hereof.
(12)
Any
communications from you should be in writing addressed to us at Lightstone
Securities, LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Any notice
from
us to you shall be deemed to have been duly given if mailed, communicated by
telegraph or telefacsimile or delivered by overnight courier to you at your
address shown below.
(13)
Nothing herein contained shall constitute the undersigned, you, the other
Soliciting Dealers or any of them as an association, partnership, limited
liability company, unincorporated business or other separate
entity.
(14)
Prior to offering the Shares for sale, you shall have conducted an inquiry
such
that you have reasonable grounds to believe, based on information made available
to you by the Company or the Advisor through the Prospectus or other materials,
that all material facts are adequately and accurately disclosed and provide
a
basis for evaluating a purchase of Shares. In determining the adequacy of
disclosed facts pursuant to the foregoing, each Soliciting Dealer may obtain,
upon request, information on material facts relating at a minimum to the
following:
4
(1)
items
of compensation;
(2)
physical properties if available;
(3)
tax
aspects;
(4)
financial stability and experience of the Company and the Advisor;
(5)
conflicts and risk factors; and
(6)
appraisals and other pertinent reports.
Notwithstanding
the foregoing, each Soliciting Dealer may rely upon the results of an inquiry
conducted by another Soliciting Dealer, provided that:
(i)
such
Soliciting Dealer has reasonable grounds to believe that such 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.
Prior
to
the sale of the Shares, each Soliciting Dealer shall inform the prospective
purchaser of all pertinent facts relating to the liquidity and marketability
of
the Shares during the term of the investment.
[Remainder
of Page Intentionally Left Blank]
5
If
the
foregoing is in accordance with your understanding and agreement, please sign
and return the attached duplicate of this Agreement. Your indicated acceptance
thereof shall constitute a binding agreement between you and us.
We
confirm our agreement to act as a Soliciting Dealer pursuant to all the terms
and conditions of the above Soliciting Dealer Agreement and the attached Dealer
Manager Agreement. We hereby represent that we will comply with the applicable
requirements of the Act and the Exchange Act and the published Rules and
Regulations of the Commission thereunder, and applicable blue sky or other
state
securities laws. We confirm that we are a member in good standing of FINRA.
We
hereby represent that we will comply with the Rules of FINRA and all rules
and
regulations promulgated by FINRA.
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Name
of Soliciting Dealer
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Federal
Identification Number
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By:
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Authorized
Signature
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Kindly
have checks representing commissions forwarded as follows (if different than
above): (Please type or print)
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Name
of Firm:
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Address:
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Street
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City
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State
and Zip Code
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(Area
Code) Telephone No.
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Attention:
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