Exhibit 1.2
NNN CAPITAL CORP.
a California corporation,
Santa Ana, California
PARTICIPATING BROKER-DEALER AGREEMENT
For Shares of Common Stock Offered By
G REIT, INC.
__________________, 2004
Ladies and Gentlemen:
The undersigned, NNN Capital Corp., a California corporation (the "Dealer
Manager"), has entered into an agreement dated January 5, 2004 (the "Selling
Agreement") with G REIT, Inc., a Virginia corporation (the "Company"), with
respect to the offer and sale of up to 27,000,000 shares of common stock of the
Company (the "Shares"). The terms of the offering (the "Offering") are set forth
in the Company's Prospectus dated January __, 2004 (with all exhibits,
appendices, addenda and supplements thereto, collectively the "Prospectus").
The Offering will terminate on the first to occur of (i) the sale of an
aggregate of 27,000,000 Shares (excluding any Shares sold pursuant to the
Company's Dividend Reinvestment Plan) and (ii) January 23, 2006 ("Offering
Termination Date").
You are invited to become one of the broker-dealers permitted to solicit
subscriptions for the Shares ("Soliciting Dealers"). By your confirmation
hereof, you agree to act in such capacity and to use your best efforts, in
accordance with the following terms and conditions, to sell the Shares.
1. You hereby confirm that you are (i) a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"), (ii) qualified and
duly registered to act as a broker-dealer within all states in which you will
sell the Shares, (iii) a broker-dealer duly registered with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and (iv) hereby required and will maintain all such
registrations and qualifications in good standing for the duration of your
involvement in the Offering. Further, you confirm that all persons who undertake
to offer and sell the Shares on your behalf are, and at all applicable times
during the Offering will be, properly registered and/or licensed with the NASD
and all applicable state securities regulators.
2. (a) You hereby agree to solicit in accordance with the Rules of the
NASD, specifically including, but not in any way limited to, NASD Rules 2420,
2730, 2740 and 2750.
(b) You hereby agree to solicit, as an independent contractor and
not as the agent of the Dealer Manager or of the Company (or their affiliates),
persons acceptable to the Company to purchase the Shares pursuant to the
subscription agreement in the form attached to the Prospectus (the "Subscription
Agreement") and in accordance with the terms of the Prospectus. You hereby agree
to diligently make inquiries as required by this Agreement, as set forth in the
Prospectus, and as required by all applicable laws of all prospective investors
in order to ascertain whether a purchase of the Shares is suitable for each such
investor. Further, all funds received by you with respect to any Subscription
Agreement shall be transmitted to the Dealer Manager by 12:00 p.m. (noon) on the
next business day following receipt thereof. The Dealer Manager will be
responsible for the prompt deposit of funds for purchase of Shares with PriVest
Bank, as escrow agent with such funds held in escrow (the "Escrow Account")
pursuant to an escrow agreement between the Company and PriVest Bank. No
Subscription Agreement shall be effective unless and until accepted by the
Company in its sole discretion.
(c) You agree that prior to participating in the Offering you will
have reasonable grounds to believe, based on information made available to you
by the Dealer Manager and/or the Company through the Prospectus, that all
material facts are adequately and accurately disclosed in the Prospectus and
provide a basis for evaluating an investment in the Company and the Shares.
(d) You agree not to rely upon the efforts of the Dealer Manager,
which is affiliated with the Company, in determining whether the Company has
adequately and accurately disclosed all material facts upon which to provide a
basis for evaluating the Company to the extent required by federal or state laws
or the NASD. You further agree to conduct your own investigation to make that
determination independent of the efforts of the Dealer Manager.
(e) You agree not to execute any sale of the Shares in an account
over which you have discretionary authority to make investments without prior
written approval of the transaction by the owner of the account.
(f) You agree to retain in your records and make available to the
Dealer Manager and to the Company for a period of at least six (6) years
following the Offering Termination Date, information establishing that each
investor who purchases the Shares pursuant to a Subscription Agreement solicited
by you is within the permitted class of investors under the requirements of the
jurisdiction in which such purchaser is a resident and the suitability standards
set forth in the Prospectus and the Subscription Agreement.
(g) All subscriptions solicited by you will be strictly subject to
confirmation by the Dealer Manager and acceptance thereof by the Company in its
sole discretion. The Dealer Manager and the Company reserve the right in their
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sole and absolute discretion to reject any such subscription and to accept or
reject subscriptions in the order of their receipt by the Company or otherwise.
Neither you nor any other person is authorized to give any information or make
any representation other than those contained in the Prospectus or in any
supplemental sales literature furnished by the Dealer Manager or the Company for
use in making solicitations in connection with the offer and sale of the Shares.
(h) Upon release by the Dealer Manager, you may offer the Shares at
the offering prices set forth in the Prospectus, subject to the terms and
conditions thereof.
(i) The Dealer Manager will provide you with such number of copies
of the Prospectus, and such number of copies of amendments and supplements
thereto as you may reasonably request. The Dealer Manager may provide you with
certain supplemental sales material to be used by you in connection with the
solicitation of purchasers of the Shares. In the event you elect to use such
supplemental sales material, you agree that such material shall not be used in
connection with the solicitation of purchasers of the Shares unless accompanied
or preceded by the Prospectus, as it may be amended or supplemented in the
future.
(j) The Dealer Manager shall have full authority to take such action
as it may deem advisable with respect to all matters pertaining to the Offering.
The Dealer Manager shall be under no liability to you except for lack of good
faith and for obligations expressly assumed by it in this Participating
Broker-Dealer Agreement. Nothing contained in this Section is intended to
operate as, and the provisions of this Section shall not constitute, a waiver by
you of compliance with any provision of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act, other applicable federal securities
laws, applicable state securities laws, the rules and regulations promulgated
thereunder and the rules of the NASD.
(k) Except as provided in the "Plan of Distribution" section of the
Prospectus, and in consideration of your services hereunder, the Dealer Manager
will pay you compensation (collectively, "Compensation") as follows: (i) up to
7.0% of the gross proceeds from the sale of Shares sold by you, and (ii) up to
1.0% of the gross proceeds from the sale of Shares sold by you for
non-accountable expenses. No Compensation of any kind shall be paid with respect
to Shares issued pursuant to the Company's Dividend Reinvestment Plan,
Independent Director Stock Option Plan, or Officer and Employee Stock Option
Plan, as described in the Prospectus. Payment of the Compensation shall be
subject to the following conditions:
(i) No Compensation will be payable with respect to any
subscriptions for Shares which are rejected by the Company or the Dealer
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Manager, or in the event the Company terminates the Offering for any
reason whatsoever prior to the Offering Termination Date.
(ii) No Compensation will be payable to you with respect to
any sale of the Shares by you unless and until such time as the Company
has received (A) the total proceeds of any such sale from the Escrow
Account and the Dealer Manager has received from the Company the aggregate
amount of Compensation to which it is entitled and (B) a completed and
executed Subscription Agreement from the investor who satisfies the
suitability standards and minimum purchase requirements set forth in the
Prospectus.
Except as otherwise provided herein, all expenses incurred by you in the
performance of your obligations hereunder, including but not limited to expenses
related to the Offering and any attorneys' fees, shall be at your sole cost and
expense, and the foregoing shall apply notwithstanding the fact that the
Offering is not consummated for any reason.
Once Compensation becomes payable, it will be paid on the first and
fifteenth day of each month.
(l) For the sale of Shares, you will instruct all prospective
investors to make their checks payable to "PriVest Bank as Escrow Agent for G
REIT, Inc." You agree to be bound by the terms of the Escrow Agreement dated as
of March __, 2003 between the Company and PriVest Bank.
(m) You agree that in recommending to a prospective investor the
purchase of the Shares, you shall:
(i) Have reasonable grounds to believe, on the basis of
information obtained from the prospective investor concerning his
investment objectives, other investments, financial situation and needs,
and any other information known by you, that:
(A) The prospective investor meets the investor
suitability standards set forth in the Prospectus;
(B) The prospective investor is or will be in a
financial position appropriate to enable him to realize to a significant
extent the benefits described in the Prospectus;
(C) The prospective investor has a fair market net worth
sufficient to sustain the risks inherent in the investment, including loss
of investment and lack of liquidity; and
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(D) The investment is otherwise suitable for the
prospective investor, and
(ii) Maintain in your files for six (6) years following the
Offering Termination Date information describing the basis upon which the
determination of suitability was reached as to each investor.
(n) You agree that, prior to accepting a subscription for the
Shares, you will inform the prospective investor of all pertinent facts relating
to the illiquidity and lack of marketability of the Shares, as appropriate,
during the term of the investment.
(o) You hereby undertake and agree to comply with all obligations
applicable to you under all applicable laws, rules and regulations, including
those set forth by the NASD.
3. This Agreement may be terminated by the Dealer Manager at any time upon
written notice to you.
4. In soliciting persons to acquire the Shares, you agree to comply with
any applicable requirements of the Securities Act, the Exchange Act, other
applicable federal securities laws, applicable state securities laws, the rules
and regulations promulgated thereunder and the rules of the NASD and, in
particular, you agree that you will not give any information or make any
representations other than those contained in the Prospectus and in any
supplemental sales literature furnished to you by the Dealer Manager for use in
making such solicitations.
5. It is understood and agreed that under no circumstances will you engage
in any activities hereunder in any state other than those for which permission
has been granted by the Dealer Manager to you, as evidenced by written
acknowledgment by the Dealer Manager that such state has been cleared for offer
and sale activity.
6. Nothing contained herein shall constitute the Soliciting Dealers, or
any of them, as an association, partnership, unincorporated business, or other
separate entity. The Dealer Manager shall be under no liability to make any
payment to you except out of the funds received by it from the Company as
hereinabove provided, and the Dealer Manager shall not be under any liability
for, or in respect of the value or validity of the Subscription Agreements, the
Shares, or the performance by any one of any agreement on its part, or for, or
in respect of any matter connected with, this Agreement, except for lack of good
faith by the Dealer Manager, and for obligations expressly assumed by the Dealer
Manager herein. You agree that the Company shall have no liability or obligation
to you for Compensation hereunder and you shall look solely to the Dealer
Manager for Compensation.
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7. Under the Selling Agreement, a copy of which you acknowledge receiving,
the Company has agreed to indemnify the Dealer Manager, the Soliciting Dealers,
and each person, if any, who controls the Dealer Manager or Soliciting Dealers
(within the meaning of the Securities Act and the Exchange Act) against certain
liabilities under the Securities Act, the Exchange Act, other applicable federal
securities laws, applicable state securities laws and the rules and regulations
promulgated thereunder. Each Soliciting Dealer agrees to indemnify the Dealer
Manager, the Company, its officers, directors and certain other persons to the
same extent and in the same manner as the Dealer Manager has agreed to indemnify
the Company, its officers, directors and certain other persons as provided in
Section 10 of the Selling Agreement and to indemnify each other Soliciting
Dealer to the same extent and in the same manner as such Soliciting Dealer
agrees to indemnify the Dealer Manager, the Company, its officers, directors and
certain other persons. In the execution of the Selling Agreement, the Dealer
Manager shall be deemed to have acted as a representative for each of the
Soliciting Dealers, and the Soliciting Dealers shall be deemed to be in privity
of contract with the Company for purposes of this Section 7.
8. All representations, warranties, covenants and agreements of the Dealer
Manager and each Soliciting Dealer contained herein shall survive the delivery,
execution and closing thereof.
9. This Agreement shall be governed by, subject to and construed in
accordance with the laws of the State of California. This Agreement constitutes
the entire understanding between the parties hereto and supersedes any prior
understandings or written or oral agreements between them respecting the subject
matter hereof.
10. Any notice from the Dealer Manager to you as Soliciting Dealer shall
be deemed to have been fully given if mailed or sent to you by facsimile at your
address set forth below.
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Please confirm this Agreement to solicit persons to acquire the Shares on
the foregoing terms and conditions by signing and returning the form enclosed
herewith.
Very truly yours,
NNN CAPITAL CORP.
By:
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Name:
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Title:
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NNN CAPITAL CORP.
1551 N. Tustin Avenue, Suite 200
Santa Ana, California 92705
Re: G REIT Inc. - Offering of Shares of Common Stock
Gentlemen:
The undersigned confirms its agreement to act as a Soliciting Dealer as
referred to in the foregoing Participating Broker-Dealer Agreement subject to
the terms and conditions of such agreement. The undersigned confirms that it is
a member in good standing of the National Association of Securities Dealers,
Inc., and is qualified under federal law and the laws of the states in which
sales are to be made by the undersigned to act as a broker-dealer.
Dated:________________, 2003
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(Print Name of Firm)
By:
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(Authorized Representative)
Address:
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Phone:
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Facsimile:
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