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Exhibit 1.1
Form of Dealer Manager Agreement
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INLAND REAL ESTATE CORPORATION
[FORM OF]
DEALER MANAGER AGREEMENT
April __, ▇▇▇▇
▇▇▇▇▇▇ 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 25,000,000
shares of common stock, $.01 par value per share (the "Shares") for a purchase
price of $11.00 per Share with a minimum initial investment of $3,300 ($1,100 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 $3,300,
and for residents of the State of Minnesota where Individual Retirement Accounts
and qualified plan accounts must have a minimum investment of $2,200); 433,370
Shares issuable upon the exercise of warrants issued in Prior Offerings; 625,000
Soliciting Dealer Warrants and the Shares issuable on exercise of the Soliciting
Dealer Warrants; and up to 2,000,000 Shares for a purchase price of $10.45 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- 45233) on Form S-11 with respect to 28,058,370
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
(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.
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(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 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 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
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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 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
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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
Dealer, together with a check payable to the order of "LNB, Escrow
Agent for IREC" in the amount of $11 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
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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 $.77) for
each Share sold, as set forth in the Prospectus 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 and you will not transfer these warrants to Soliciting
Dealers in connection with the sale of Shares to residents of
the States of Minnesota, Nebraska, South Carolina, Tennessee
and Texas and provided further that the Company will not issue
more than 625,000 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 $220,000 worth of
Shares (20,000 Shares) will be entitled to a reduction in
selling commissions in accordance with the following schedule:
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Maximum
Commission
Amount of Purchaser's Investment Per Share
---------------------------------- -------------
From To
---- --
$ 220,000 $ 499,999 5.5%
500,000 999,999 4.0
1,000,000 1,999,999 2.5
2,000,000 and over 1.0
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 for Shares in the Company may be
combined: (i) with subscriptions in this Offering or (ii) with
subscriptions from any of the Company's prior offerings, 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. Additionally, subscriptions of persons holding as
joint tenants or tenants in common may be combined for
purposes of computing amounts invested. Subscriptions from
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.
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
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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 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 pos sible. 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
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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 neces sary 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.
(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.
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(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.
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
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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 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,
inform ation 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
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(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 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
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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 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
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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 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;
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or (iii) a court of competent jurisdiction approves a settlement of the
claims against you or 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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