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EXHIBIT 1.1
FORM OF DEALER MANAGEMENT AGREEMENT
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INLAND REAL ESTATE CORPORATION
21,875,000
SHARES OF COMMON STOCK
$.01 PAR VALUE
[FORM OF]
DEALER MANAGER AGREEMENT
JUNE __, ▇▇▇▇
▇▇▇▇▇▇ Securities Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
Inland Real Estate Corporation (the "Company"), a Maryland corporation, is
qualified as a real estate investment trust (a "REIT") under federal income tax
laws. The Company was formed on May 12, 1994 and is governed by the Bylaws, as
amended (the "Bylaws") and the Second Articles of Amendment and Restatement, as
amended (the "Articles") in the form included as Exhibits to the Registration
Statement, as described in Section 1(a) hereof (such Bylaws and Articles being
hereinafter referred to as the "Organizational Documents"). The advisor to the
Company is Inland Real Estate Advisory Services, Inc., an Illinois corporation
(the "Advisor"). Unless otherwise defined, capitalized terms used herein shall
have the same meaning as in the Registration Statement on Form S-11.
The Company is offering on a "best efforts" basis up to 20,000,000 shares
of common stock, $.01 par value per share (the "Shares") for a purchase price
of $10.00 per Share with a minimum initial investment of $3,000 ($1,000 in the
case of tax-exempt investors, except for residents of the State of Iowa where
Individual Retirement Accounts must have a minimum investment of $3,000, and
for residents of the State of Minnesota where Individual Retirement Accounts
and qualified plan accounts must have a minimum investment of $2,000), 875,000
Soliciting Dealer Warrants and the Shares issuable on exercise of the
Soliciting Dealer Warrants and up to 1,000,000 Shares for a purchase price of
$9.50 per Share for issuance through the Distribution Reinvestment Program,
all upon the other terms and conditions set forth in the Prospectus, as
described in Section 1(a) hereof. The subscribers, each of whom will be
required to enter into a subscription agreement substantially similar to the
form of Subscription Agreement (the "Subscription Agreement") attached as
Exhibit I to the Prospectus, will, upon acceptance of their subscriptions by
and in the discretion of the Company, become stockholders of the Company (the
"Stockholders").
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1. Representation and Warranties of the Company. The Company hereby
represents, warrants and agrees with you that:
(a) Registration Statement and Prospectus. A registration
statement (File No. 333-26701) on Form S-11 with respect to 21,875,000
Shares, including warrants (and shares issuable on exercise of the
warrants) which are issuable in certain circumstances in connection with
sale of the Shares and Shares issuable pursuant to the Company's
Distribution Reinvestment Program has been prepared by the
Company pursuant to the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission under the Act; one or more amendments to
such registration statement have been or may be so prepared and filed.
As used in this Agreement, the term "Registration Statement" means such
registration statement in the form in which it becomes effective, the
term "Effective Date" means the date upon which the Registration
Statement is or was first declared effective by the Commission and the
term "Prospectus" means the prospectus in the form constituting a part of
the Registration Statement as well as in the form first filed with the
Commission pursuant to its Rule 424 after the Registration Statement
becomes effective. The Commission has not issued any stop order
suspending the effectiveness of the Registration Statement and no
proceedings for that purpose have been instituted or are pending before
or threatened by the Commission under the Act.
(b) Compliance with the Act. From the time the Registration
Statement becomes effective and at all times subsequent thereto up to and
including the Termination Date (as defined in Section 2(c) hereof):
(i) the Registration Statement, the Prospectus and any
amendments or supplements thereto will contain all statements which
are required to be stated therein by the Act and the Rules and
Regulations and will comply in all material respects with the Act
and the Rules and Regulations; and
(ii) neither the Registration Statement nor the Prospectus nor
any amendment or supplement thereto will at any such time include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading.
(c) No Subsequent Material Events. Subsequent to the respective
dates as of which information is given in the Registration Statement and
Prospectus and prior to the Termination Date, except as contemplated in
the Prospectus or as disclosed in a supplement or amendment thereto or in
the periodic financial statements of the Company, the Company has not and
will not have:
(i) incurred any material liabilities or obligations, direct
or contingent; or
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(ii) entered into any material transaction, not in the
ordinary course of business and, except as so disclosed, there has
not been and will not be any material adverse change in the
financial position or results of operations of the Company.
(d) Corporation Status. The Company is a corporation duly formed
and validly existing under the Maryland General Corporation Law (the
"MGCL").
(e) Authorization of Agreement. This Agreement has been duly and
validly authorized, executed and delivered by or on behalf of the Company
and constitutes the valid and binding agreement of the Company
enforceable in accordance with its terms (except as 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); the
performance of this Agreement and the Organizational Documents and the
consummation of the transactions contemplated herein and therein,
respectively, and the fulfillment of the terms hereof and thereof,
respectively, do not and will not result in a breach of any of the terms
and provisions of, or constitute a default under, any statute, indenture,
mortgage, deed of trust, voting trust agreement, note, lease or other
agreement or instrument to which the Company is a party or by which the
Company or its property is bound, or under any rule or regulation or
order of any court or other governmental agency or body with jurisdiction
over the Company or any of its properties; and no consent, approval,
authorization or order of any court or governmental agency or body has
been or is required for the performance of this Agreement or by the
Organizational Documents, or for the consummation of the transactions
contemplated hereby and thereby, respectively (except as have been
obtained under the Act, from the National Association of
Securities Dealers, Inc. (the "NASD") or as may be required under state
securities or blue sky laws in connection with the offer and sale of the
Shares or under the laws of states in which the Company may own real
properties in connection with its qualification to transact business in
such states or as may be required by subsequent events which may occur).
(f) Pending Actions. There is no material action, suit or
proceeding pending or, to the knowledge of the Company, threatened, to
which the Company is a party, before or by any court or governmental
agency or body which adversely affects the offering of the Shares.
(g) Required Filings. There are no contracts or other documents
required to be filed by the Act or the Rules and Regulations of the
Commission thereunder as exhibits to the Registration Statement which
have not been so filed.
(h) Federal Income Tax Laws. The Corporation has obtained an
opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Ltd. stating that, under existing federal
income tax laws and regulations, assuming the Company acts as described
in the "Federal Income Tax Considerations" section of the Prospectus and
timely files the requisite elections, counsel is of the opinion that the
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Company has been organized in conformity with the requirements for
qualification as a REIT beginning with its taxable year ending December
31, 1995 and that its prior, current and anticipated methods of operation
(as described in the Prospectus and represented by management) has
enabled and should enable it to satisfy the REIT Requirements (as defined
in the Prospectus).
(i) Independent Public Accountants. To the best of the Company's
knowledge, the accountants who have certified certain financial
statements appearing in the Prospectus are independent public accountants
within the meaning of the Act and the Rules and Regulations.
(j) Escrow Agreement. The Company has entered into an escrow
agreement (the "Escrow Agreement") with Inland Securities Corporation,
Oak Brook, Illinois (the "Dealer Manager"), and LaSalle National Bank,
N.A., Chicago, Illinois (the "Escrow Agent"), in the form included as an
exhibit to the Registration Statement, which provides for the
establishment of an escrow account (the "Escrow Account"). During the
period commencing with the Effective Date and ending on the Termination
Date, the Company will deposit subscribers funds in the Escrow Account as
described in Section 2 below.
(k) Sales Literature. In addition to and apart from the Prospectus,
the Company may use certain supplemental sales material in connection
with the offering of the Shares. This material, prepared by the Advisor,
would consist of a brochure describing the Advisor and its Affiliates and
the objectives of the Company and may also contain pictures and summary
descriptions of properties similar to those to be acquired by the Company
that Affiliates of the Company have previously acquired. This material
may also include pictures and summary descriptions of properties similar
to those to be acquired by the Company, as well as a brochure,
audio-visual materials and tape presentations highlighting and explaining
various features of the Offering, properties of prior real estate
programs and real estate investments in general; and articles and
publications concerning real estate. Business reply cards, introductory
letters and seminar invitation forms may be sent to Soliciting Dealers
(as hereinafter defined) and prospective investors. These materials
shall be hereinafter referred to collectively as the "sales literature."
No person has been authorized to prepared for, or furnish to, a
prospective investor any sales literature other than: (i) that described
herein; and (ii) newspaper advertisements or solicitations of interested
limited to identifying the Offering and the location of sources of
further information. Use of any sales literature is conditioned upon
filing with and, if required, clearance by appropriate regulatory
agencies. Such clearance (if provided), however, does not indicate that
the regulatory agency allowing the use of the materials has passed on the
merits of the Offering or the adequacy or accuracy of the sales
materials. Except as described herein, the Company has not authorized
the use of other supplemental literature or sales material in connection
with this Offering. Although it is believed that the information
contained in the sales literature will not conflict with any of the
information set forth in the Prospectus, the sales literature will not
purport to be
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complete, and should not be considered as a part of the
Prospectus, or as incorporated in the Prospectus by reference, or as
forming the basis of the Offering.
(l) Authorization of the Shares. The Company has an authorized and
outstanding capitalization as set forth in the Registration Statement and
Prospectus. The sale of the Shares has been duly and validly authorized
by the Company, and when subscriptions for the Shares have been accepted
by the Company as contemplated in the Prospectus and the Shares have been
issued to the respective subscribers, the Shares will represent ownership
in the Company and will conform to the description thereof contained in
the Prospectus. Stockholders have no preemptive rights to purchase or
subscribe for securities of the Company, and the Shares are not
convertible or subject to redemption at the option of the Company. The
Shares are entitled to one vote per Share and do not have cumulative
voting rights. Subject to the rights of the holders of any class of
capital stock of the Company having any preference or priority over the
Shares, the Stockholders are entitled to distributions in such amounts as
may be declared by the Board of Directors from time to time out of funds
legally available for such payments and, in the event of liquidation, to
share ratably in any assets of the Company remaining after payment in
full of all creditors and provisions for any liquidation preferences on
any outstanding preferred stock ranking prior to the Shares.
2. Offering and Sale of the Shares. On the basis of the representations,
warranties and agreements herein contained, and subject to the terms and
conditions herein set forth, the Company hereby appoints you as its exclusive
Dealer Manager to solicit and to cause other dealers (as described in
subparagraph (a) below) to solicit subscriptions for the Shares at the
subscription price and upon the other terms and conditions set forth in the
Prospectus and in the Subscription Agreement, and you agree to use your best
efforts as such Dealer Manager to procure subscribers for the Shares, during
the period commencing with the Effective Date and ending on the Termination
Date (the "Offering Period"). The number of Shares, if any, to be reserved for
sale by each Soliciting Dealer may be decided by the mutual agreement, from
time to time, of you and the Company. In the absence of such mutual agreement,
the Company shall, subject to the provisions of Section 2(b) hereof, accept
Subscription Agreements based upon a first-come, first accepted reservation or
other similar method.
(a) Soliciting Dealers. The Shares offered and sold through you
under this Agreement shall be offered and sold only by you and, at your
sole option, any other securities dealers (collectively the "Soliciting
Dealers"), each of whom are members of the NASD, executing agreements
with you substantially in the form of the Soliciting Dealers Agreement
attached hereto as Exhibit A.
(b) Subscription Agreements and Subscribers' Funds. Each person
desiring to purchase Shares through you or any other Soliciting Dealer
will be required to complete and execute the Subscription Agreement and
to deliver such document to you or such Soliciting
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Dealer, together with a check payable to the order of "LNB, Escrow
Agent for IREC" in the amount of $10 per Share.
Each Soliciting Dealer shall forward any such Subscription Agreement
and check to you not later than noon of the next business day after
receipt of such Subscription Agreement, if the Soliciting Dealer conducts
its internal supervisory procedures at the location where the
Subscription Agreement and check were initially received. When such
internal supervisory procedures are performed at a different location
(the "Final Review Office"), the Subscription Agreement and check must be
transmitted to the Final Review Office by the end of the next business
day following receipt of the Subscription Agreement and check by the
Soliciting Dealer. The Final Review Office will, by the next business
day following receipt of the Subscription Agreement and check, forward
both to you as processing broker-dealer in order that you may complete
your review of the documentation and process the Subscription Agreement
and check. The Company will have representatives available to review the
Subscription Agreement at your location in order to determine whether it
wishes to accept the proposed purchaser as a Stockholder, it being
understood that the Company reserves the unconditional right to reject
the tender of any Subscription Agreement and to reject all tenders after
the Shares have been sold (exclusive of the Company s distribution
reinvestment program). Any check received by you directly or as
processing broker-dealer from the Soliciting Dealers will, in all cases,
be forwarded to the Escrow Agent as soon as practicable, but in any event
by the end of the second business day following receipt by you of the
Subscription Agreement and check. The Company will promptly notify you
or the Soliciting Dealer of any rejection, and you shall send the check
and the Subscription Agreement to the Escrow Agent with directions to
promptly return both to the rejected subscriber. All subscription funds
may be deposited directly with the Company.
Nothing contained in this Section 2 shall be construed to impose
upon the Company the responsibility of assuring that prospective
purchasers meet the suitability standards contained in the Prospectus or
to relieve you or any of the Soliciting Dealers of the responsibility of
complying with the Conduct Rules of the NASD.
(c) Termination of the Offering. The Offering Period will terminate
on a date on or before one year from the date of the Prospectus (subject
to requalification in certain states, the Company may extend the Offering
Period from time to time, but no event for longer than two years from the
date of the original Prospectus), subject in any event to the Company's
right to terminate the Offering at any time (the "Termination Date") and
the proceeds will be applied as set forth in the Prospectus.
(d) Dealer-Manager Compensation.
(i) The Company agrees to pay to you a sales commission of up
to 7% of the sales price (or up to $.70) for each Share sold, as
set forth in the Prospectus
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under the caption "Plan of Distribution," subject to the limitation
described below, as well as one Soliciting Dealer Warrant for every
40 Shares sold, of which such compensation may be retained or
reallowed, subject to federal and state securities laws, to the
Soliciting Dealer who sold the Shares as described more fully in
the Soliciting Dealers Agreement; provided, however, that
Soliciting Dealer Warrants will not be issued in connection with
the sale of Shares to residents of the States of Minnesota,
Nebraska, South Carolina and Texas and provided further that the
company will not issue more than 875,000 warrants in connection
with the Offering of the Shares. You will also receive a
marketing contribution and due diligence expense allowance fee
equal to 2.5% of the sale price, some portion of which may be
reallowed to the Soliciting Dealers.
Investors purchasing at least $250,000 worth of Shares (25,000
Shares) will be entitled to a reduction in selling commissions in
accordance with the following schedule:
Maximum
Commission
Amount of Purchaser's Investment Per Share
-------------------------------------- ----------
From To
---- --
$ 250,000 $499,999 5.5%
500,000 999,999 4.0
1,000,000 and over 2.5
Any reduction from the amount otherwise payable to you and
reallowable to a Soliciting Dealer in respect of a purchaser's
subscription will be credited to the purchaser in the form of
additional whole or fractional Shares purchased net of commissions.
Subscriptions may be combined for the purpose of crediting a
purchaser with additional Shares and determining commissions
payable to you and reallowable to Soliciting Dealers so long as all
such purchases are made through the same Soliciting Dealer and
approved by the Company. Tax-exempt entities may be combined in
computing amounts invested only if they each have the same person
who exercises investment discretion. The Subscription Agreement
Signature Page must indicate that subscriptions are to be combined.
The Company cannot be held responsible for failing to properly
combine subscriptions.
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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.
(ii) All sales commissions payable to you will be paid on a
monthly basis, substantially concurrently with the acceptance of a
subscriber as a Stockholder by the Company, in an amount equal to the
sales commissions payable with respect to such Shares.
3. Covenants of the Company. The Company covenants and agrees with you
as follows:
(a) Registration Statement. The Company will use its best efforts to
cause the Registration Statement and any subsequent amendments thereto to
become effective as promptly as possible and will not, at any time after
the Effective Date of the Registration Statement, file any amendment to the
Registration Statement or supplement to the Prospectus of which you shall
not previously have been advised and furnished a copy at a reasonable time
prior to the proposed filing or to which you shall have reasonably objected
or which is not, to the best of the Company's knowledge, in compliance with
the Act and the Rules and Regulations; the Company will prepare and file
with the Commission and will use its best efforts to cause to become
effective as promptly as possible:
(i) any amendments to the Registration Statement or supplements
to the Prospectus which may be required pursuant to the undertakings
in the Registration Statement; and
(ii) upon your reasonable request, any amendments to the
Registration Statement or supplements to the Prospectus which, in the
opinion of you or your counsel, may be necessary or advisable in view
of the requirements of the Act and the Rules and Regulations in
connection with the offer and sale of the Shares during the Offering
Period.
(b) SEC Orders. As soon as the Company is advised or obtains
knowledge thereof, it will advise you of any request made by the Commission
for amending the Registration Statement, supplementing the Prospectus or
for additional information, or of the issuance by the Commission of any
stop statement or of any order preventing or suspending the use of the
Prospectus or 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 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 you may reasonably request and to make
such applications, file such documents and furnish such information as may
be reasonably required for that purpose. The Company will, at your
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request, furnish you copies of all material documents and correspondence
sent to or received from such jurisdictions (including, but not limited
to, summaries of telephone calls and copies of telegrams) and will
promptly advise you as soon as the Company obtains knowledge thereof when
the Shares are qualified for offering and sale in each such jurisdiction.
The Company will promptly advise you of any request made by the
securities administrators of each such jurisdiction for revising the
Registration Statement or the Prospectus or for additional information or
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 obtain the removal thereof as promptly as possible. The Company will
furnish you with a Blue Sky Survey dated as of the Effective Date, which
will be supplemented to reflect changes or additions to the information
disclosed in such survey.
(d) Amendments and Supplements. If at any time when a Prospectus
relating to the Shares is required to be delivered under the Act, any
event shall have occurred to the knowledge of the Company as a result of
which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact, or omit to state a material fact
necessary to make the statements therein not misleading in light of the
circumstances existing at the time it is so required to be delivered to a
subscriber, or if it is necessary at any time to amend the Registration
Statement or supplement the Prospectus relating to the Shares to comply
with the Act, the Company will promptly notify you thereof and will
prepare and file with the Commission an amendment or supplement which
will correct such statement or effect such compliance.
(e) Copies of Registration Statement. The Company will furnish you
copies of the Registration Statement (only one of which need be signed
and need include all exhibits), the Prospectus and all amendments and
supplements thereto, including any amendment or supplement prepared after
the Effective Date, and such other information with respect to the
Company as you may from time to time reasonably request, in each case as
soon as available and in such quantities as you may reasonably request.
(f) Qualification to Transact Business. The Company will take all
steps necessary to ensure that at all times the Company will be validly
existing as a 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.
(g) 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 performance of
this Agreement and under the Organizational Documents or the
consummation of the transactions contemplated hereby and thereby,
respectively, or the conducting by the Company of the business described
in the Prospectus.
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(h) Copies of Reports. The Company will use its best efforts to
furnish to you as promptly as shall be practicable the following:
(i) a copy of each report or general communication (whether
financial or otherwise) sent to the Stockholders;
(ii) a copy of each report (whether financial or otherwise) filed
with the Commission; and
(iii) such other information as you may from time to time
reasonably request regarding the financial condition and operations of
the Company including, but not limited to, copies of operating
statements of properties acquired by the Company.
(i) Use of Proceeds. The Company will apply the proceeds from the
sale of the Shares as stated in the Prospectus or, if for any reason
whatsoever all or a portion of the proceeds of the Offering are not applied
or committed for use as stated within 12 months of the Termination Date,
the Company shall promptly return those proceeds from the sale of the
Shares not so applied or committed as stated in the Prospectus to the
subscribers, each subscriber sharing in the return in the ratio that the
number of the Shares owned by such subscriber bears to the total number of
the Shares owned by all subscribers.
(j) Organization and Offering Expenses. In no event shall the total
of the organizational expenses and expenses of the Offering to be paid
directly by the Company exceed 15% of the gross proceeds of the Offering.
4. Covenants of the Dealer Manager. You covenant and agree with the
Company on your behalf and on behalf of the Soliciting Dealers as follows:
(a) Compliance with Laws. With respect to your 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), you
agree, and each Soliciting Dealer agrees, to comply and shall comply with
any applicable requirements of the Act, the Securities Exchange Act of
1934, as amended, and the published rules and regulations of the Commission
thereunder, and the applicable state securities or blue sky laws, the
Conduct Rules of the NASD, specifically including, but not in any way
limited to, Rules 2440, 2730, 2740, and 2750 therein. In particular, you
agree not to deliver the sales literature to any person prior to the
Effective Date and, after the Effective Date, not to deliver the sales
literature to any person unless the sales literature is accompanied or
preceded by the Prospectus. In addition, you shall, in accordance with
applicable law or any state securities administrator, provide or cause
Soliciting Dealers to provide to any prospective investor copies of any
document which is part of the Registration Statement; including, without
limitation, the Articles and Bylaws to investors resident in the States of
Mississippi or Ohio.
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With respect to your and each Soliciting Dealer's participation in
any resales or transfers of the Shares, you agree, and each Soliciting
Dealer agrees, to comply and shall comply with any applicable
requirements, as set forth above. In addition, you and each Soliciting
Dealer agree that should you or they assist with the resale or transfer
of the Shares, you and each Soliciting Dealer will fulfill the
obligations pursuant to Sections 3(b) and 4(d) of Rule 2810 of the
Conduct Rules of the NASD.
(b) No Additional Information. In offering the Shares for sale, you
and each Soliciting Dealer shall not give or provide any information or
make any representation other than those contained in the Prospectus, the
sales literature or any other document provided to you for such purpose
by the Company.
(c) Sales of Shares. You and each Soliciting Dealer shall solicit
purchases of the Shares only in the jurisdictions in which you and such
Soliciting Dealer are legally qualified to so act and in which you and
each Soliciting Dealer have been advised by the Company that such
solicitations can be made.
(d) Subscription Agreement. Subscriptions will be submitted by you
and each Soliciting Dealer to the Company only on the form which is
included in Exhibit I to the Prospectus. You and each Soliciting Dealer
understand and acknowledge that the Subscription Agreement must be
executed and initialed by the subscriber.
(e) Suitability. In offering the Shares to any person, you and 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 has the capability of
understanding the fundamental aspects of the Company, which capacity may
be evidenced by the following: (A) the nature of employment experience;
(B) educational level achieved; (C) access to advice from qualified
sources, such as attorneys, accountants and tax advisors; and (D) prior
experience with investments of a similar nature; (ii) such person has
apparent understanding of: (A) the fundamental risks and possible
financial hazards of this type of investment; (B) the lack of liquidity
of this investment; (C) the Advisor's role in directing or managing the
investment; and (D) the tax consequences of the investment; and (iii)
such person has the financial capability to invest in the Company and you
or each Soliciting Dealer (as the case may be) shall maintain records
disclosing the basis upon which you and each Soliciting Dealer determined
the suitability of any persons offered Shares. Notwithstanding the
foregoing, you and each Soliciting Dealer shall have reasonable grounds
to believe that such person has either: (a) a minimum annual gross
income of $45,000 and a net worth (exclusive of home, home furnishing and
automobiles) of $45,000; or (b) a net worth (determined with the
foregoing exclusions) of $150,000. Suitability standards may be higher
in certain states as set forth in the Subscription Agreement. You and/or
the Soliciting Dealers shall maintain, for at least six years, a record
of the information obtained to determine that an investor meets the
suitability standards imposed on the offer and sale
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of the Shares (both at the time of the initial subscription and at the time
of any additional subscriptions) 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.
(f) Due Diligence. Prior to offering the Shares for sale, you and
each Soliciting Dealer shall have conducted an inquiry such that you have
reasonable grounds to believe, based on information made available to you
by the Company through the Prospectus or other materials, that all material
facts are adequately and accurately disclosed and provide a basis for
evaluating the purchase of the Shares. In determining the adequacy of
disclosed facts pursuant to the foregoing, you and each Soliciting Dealer
may obtain, upon request, information on material facts relating at a
minimum to the following:
(1) items of compensation;
(2) Company properties;
(3) tax aspects;
(4) conflicts and risk factors; and
(5) appraisals and other pertinent reports.
Notwithstanding the foregoing, you and each Soliciting Dealer may rely upon the
results of an inquiry conducted by another Soliciting Dealer, provided that:
(i) 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 or the Advisor.
Prior to the sale of the Shares, you and each Soliciting Dealer shall inform
the prospective purchaser of all pertinent facts relating to the liquidity and
marketability of the Shares during the term of the investment.
5. Expenses. The Company agrees with you that, whether or not the
transactions contemplated in this Agreement are consummated, the Company will
pay all fees and expenses incident to the performance of its obligations under
this Agreement, including, but not limited to:
(a) the Commission's registration fee;
(b) expenses of printing the Registration Statement, the Prospectus
and any amendment or supplement thereto and the expense of furnishing to
you copies of the
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Registration Statement, the Prospectus and any amendment or supplement
thereto as herein provided;
(c) fees and expenses of its and your accountants and counsel in
connection with the Offering contemplated by this Agreement;
(d) fees and expenses incurred in connection with any required filing
with the NASD;
(e) all of your expenses in connection with the Offering subject to
the limitations contained in the Prospectus, including, but not limited to,
the salaries, fringe benefits, travel expenses and similar expenses of your
employees and personnel incurred in connection with the Offering; and
(f) expenses of qualifying the Shares for offering and sale under
state blue sky and securities laws, and expenses in connection with the
preparation and printing of the Blue Sky Survey.
In no event, however, will the total of: (a) the selling commissions paid
to the Soliciting Dealers; (b) the marketing contribution and due diligence
expense allowance fee paid to the Soliciting Dealers; and (c) reimbursement of
certain expenses to be paid to Soliciting Dealers for special incentive
marketing programs as described in the Prospectus, exceed 10.5% of the gross
proceeds of the Offering.
6. Conditions of Obligations. Your obligations hereunder shall be subject
to the accuracy of the representations and warranties on the part of the
Company contained in Section 1 hereof, the accuracy of the statements of the
Company made pursuant to the provisions hereof, to the performance by the
Company of its covenants, agreements and obligations contained in Sections 3
and 5 hereof, and to the following additional conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement shall have become effective not later than 5:00 p.m., Chicago,
Illinois time, on the day following the date of this Agreement, or such
later time and date as you and the Company shall have agreed; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and, to the best knowledge of the Company or you, no proceedings for
that purpose shall have been instituted, threatened or contemplated by the
Commission; and any request by the Commission for additional information
(to be included in the Registration Statement or Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of you or your
counsel.
(b) Accuracy of Registration Statement. You shall not have advised
the Company that the Registration Statement or the Prospectus, or any
amendment or any supplement thereto, in the reasonable opinion of you or
your counsel, contains any untrue
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statement of fact which is material, or omits to state a fact which is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless you, each
Soliciting Dealer and each person, if any, who controls you or any
Soliciting Dealer within the meaning of the Act (collectively, the
"Indemnified Parties"), against any and all loss, liability, claim, damage
and expense whatsoever caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectus 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. Such indemnification shall be
subject to the provisions of Sections 7(b) and (c) of this Agreement.
The Company shall not provide indemnification for any liability or
loss suffered by you, nor shall it provide that you be held harmless for
any loss or liability suffered by the Company unless all of the following
conditions are met: (i) the party seeking indemnification has determined,
in good faith, that its course of conduct, if such course of conduct caused
the loss or liability, was in the best interest of the Company; (ii) the
other person seeking indemnification was acting on behalf of or performing
services on the part of the Company; (iii) such liability or loss was not
the result of negligence or misconduct on the part of the indemnified
party; and (iv) such indemnification or agreement to be held harmless is
recoverable only out of the assets of the Company and not from the
Stockholders.
In no case shall the Company be liable under this indemnity agreement
with respect to any claim made against any of the Indemnified Parties
unless the Company shall be notified in writing (as provided in Section 10)
of the nature of the claim within a reasonable time after the assertion
thereof, but failure to so notify the Company shall not relieve the Company
from any liability which the Company may have incurred otherwise than on
account of this indemnity agreement. The Company shall be entitled to
participate, at its own expense, in the defense of, or if it so elects
within a reasonable time after receipt of such notice, to assume the
defense of any claim or suit for which the Indemnified Parties seek
indemnification hereunder. If the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the Indemnified Parties. In the event that the Company
elects to assume the defense of any such suit and retain such counsel, the
Company shall not be liable to the Indemnified Parties in the suit under
this Section 7 for any legal or other expenses subsequently incurred by the
Indemnified Parties, and the Indemnified Parties shall bear the fees and
expenses of any additional counsel thereafter retained by the Indemnified
Parties unless: (A) the employment of counsel by the Indemnified Party has
been authorized by the Company; or (B) the Company shall not in fact
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have employed counsel to assume the defense of such action, in any of which
events such fees and expenses shall be borne by the Company.
The Company may advance amounts to the Indemnified Parties for legal
and other expenses and costs incurred as a result of any legal action for
which indemnification is being sought only if all of the following
conditions are satisfied: (i) the legal action relates to acts or
omissions with respect to the performance of duties or services by the
indemnified party for or on behalf of the Company; (ii) the legal action is
initiated by a third party who is not a Stockholder and a court of
competent jurisdiction specifically approves such advancement; and (iii)
the Indemnified Parties receiving such advances undertake to repay the
advanced funds to the Company, together with the applicable legal rate of
interest thereon, in cases in which such Indemnified Parties are found not
to be entitled to indemnification.
Notwithstanding the foregoing provisions of this Section 7, the
Company will not be liable in any such case to the extent that any loss,
liability, claim, damage or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of you or any Soliciting Dealer
specifically for use with reference to you or such Soliciting Dealer in the
preparation of the Registration Statement (or any amendment thereof) or the
Prospectus (or any supplement thereto). The foregoing indemnity agreement
is subject to the condition that, insofar as it relates to any untrue
statement, alleged untrue statement, omission or alleged omission made in
the Prospectus but eliminated or remedied in any amendment or supplement
thereto, such indemnity agreement shall not inure to your benefit or any
Soliciting Dealer from whom the person asserting any loss, liability,
claim, damage or expense purchased the Shares which are the subject thereof
(or to the benefit of any person who controls you or any Soliciting
Dealer), if a copy of the Prospectus as so amended or supplemented was not
sent or given to such person at or prior to the time the subscription of
such person was accepted by the Company but only if a copy of the
Prospectus (as so amended or supplemented) has been supplied by the Company
to you or any Soliciting Dealer prior to such acceptance. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(b) The Company agrees to indemnify and hold harmless you and the
Soliciting Dealers in the manner and to the extent provided in subparagraph
(a) of this Section 7; provided, however, that no such indemnification by
the Company of you or a Soliciting Dealer shall be permitted under this
Agreement from or out of an alleged violation of federal or state
securities laws unless one or more of the following conditions are met:
(i) there has been a successful adjudication on the merits of each count
involving alleged securities law violations by you or any Soliciting Dealer
and a court of competent jurisdiction has approved indemnification of the
litigation costs; (ii) such claims against you or any Soliciting Dealer
have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee and the court has approved
indemnification of the litigation costs; or (iii) a court of competent
jurisdiction approves a settlement of the claims against you or
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any Soliciting Dealer and finds that indemnification of the settlement and
related costs should be made and the court considering the request has been
advised of the position of the Commission and of the published positions of
the Tennessee Securities Division and any other state securities regulatory
authority in which securities of the Company were offered and sold as to
indemnification for securities law violations.
(c) You and each Soliciting Dealer agree to indemnify and hold
harmless the Company, and each person, if any, who controls the Company
within the meaning of the Act and any controlling person of the Company:
(i) to the same extent as in the foregoing indemnity from the Company to
you and each Soliciting Dealer but only with reference to statements or
omissions based upon the information relating to you or any Soliciting
Dealer furnished in writing by you or such Soliciting Dealer or on your or
their behalf expressly for use in the Registration Statement or the
Prospectus, or any amendment or supplement thereto; and (ii) for any
violation by you or any Soliciting Dealer, 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 in reliance on any
violation by the Company of such law, rule, regulation or instruction.
You and each Soliciting Dealer further agree to indemnify and hold
harmless the Company and any controlling person of the Company against any
losses, liabilities, claims, damages or expenses to which the Company or
any 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 without the assistance of a Soliciting
Dealer) or a Soliciting Dealer (with respect to sales effected by such
Soliciting Dealer) 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. This indemnity
agreement will be in addition to any liability which you or any Soliciting
Dealer may otherwise have.
(d) The notice provisions contained in Section 7(a) hereof, relating
to notice to the Company, shall be equally applicable to you and each
Soliciting Dealer if the Company or any controlling person of the Company
seeks indemnification pursuant to Section 7(c) hereof. In addition, you
and each Soliciting Dealer may participate in the defense, or assure the
defense, of any such suit so brought under Section 7(c) hereof and have the
same rights and privileges as the Company enjoys with respect to such suits
under Section 7(a) hereof.
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8. Termination of this Agreement. This Agreement may be terminated by you
in the event that the Company shall have materially failed to comply with any
of the material provisions of this Agreement on its part to be performed at or
prior to the Effective Date or if any of the representations, warranties,
covenants or agreements of the Company herein contained shall not have been
materially complied with or satisfied within the times specified.
In any case, this Agreement shall terminate at the close of business on
the Termination Date. Termination of this Agreement pursuant to this Section 8
shall be without liability of any party to any other party other than as
provided in Sections 5 and 7 hereof which shall survive such termination.
9. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of the Company submitted pursuant hereto shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of you or any person who controls you, or by or on behalf of the
Company and shall survive the Termination Date.
10. Notices. All communications hereunder shall be in writing and, if
sent to you, shall be mailed by registered mail or delivered or telegraphed and
confirmed in writing to Inland Securities Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇) and, if sent to
the Company, shall be mailed by registered mail or delivered or telegraphed and
confirmed in writing to Inland Real Estate Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇).
11. Reference to Inland Securities Corporation. All references herein to
Inland Securities Corporation or the Dealer Manager hereunder shall be deemed
to include all successors and assigns of Inland Securities Corporation.
12. Parties. This Agreement shall inure to the benefit of and be binding
upon you, the Company and its successors and assigns. This Agreement and the
conditions and provisions hereof, are intended to be and shall be for the sole
and exclusive benefit of the parties hereto and their respective successors and
controlling persons, and for the benefit of no other person, firm or
corporation, and the term "successors and assigns," as used herein, shall not
include any purchaser of Shares as such.
13. Applicable Law. This Agreement and any disputes relative thereto
shall be governed by and construed under the internal laws, as opposed to the
conflicts of laws provisions, of the State of Illinois.
14. Effectiveness of Agreement. This Agreement shall become effective at
5:00 p.m., Chicago, Illinois time, on the Effective Date, or at such earlier
time as you and the Company agree.
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15. Not a Separate Entity. Nothing contained herein shall constitute you
and/or the Soliciting Dealers or any of them an association, partnership,
limited liability company, unincorporated business or other separate entity.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return it to us, whereupon this instrument will
become a binding agreement between you and the Company in accordance with its
terms.
Inland Real Estate Corporation, Inc., a
Maryland corporation
By:_______________________________________
Title:_________________________________
Accepted as of the date
first above written:
Inland Securities Corporation
By:__________________________
Title:____________________
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