Exhibit 1.1
NNN HEALTHCARE/OFFICE REIT, INC.
UP TO $2,200,000,000 IN SHARES OF COMMON STOCK
DEALER MANAGER AGREEMENT
September 20, 2006
NNN Capital Corp.
4 Hutton Centre Drive, Suite 700
Santa Ana, CA 92707
Ladies and Gentlemen:
NNN Healthcare/Office REIT, Inc., a Maryland corporation (the "COMPANY"),
has registered shares of its common stock, $.01 par value per share (the
"SHARES"), for sale to the public (the "OFFERING"), of which (i) $2,000,000,000
in Shares are intended to be offered in the primary offering and (ii)
$200,000,000 in Shares are intended to be offered pursuant to the Company's
distribution reinvestment plan (the "DRP"). The Company reserves the right to
reallocate the Shares being offered between the primary offering and the DRP.
Except as described in the Prospectus or in Section 5.1 hereof, the Shares are
to be sold in the primary offering for a cash price of $10.00 per Share and the
Shares are to be sold pursuant to the DRP for a cash price of $9.50 per Share.
The Company hereby appoints NNN Capital Corp., a California corporation
(the "DEALER MANAGER") as its agent and principal distributor during the
Offering Period (as defined below) for the purpose of finding, on a best efforts
basis, purchasers for the Shares for cash through such securities dealers that
the Dealer Manager may retain (individually, a "DEALER" and collectively, the
"DEALERS"), all of whom shall be members of the NASD, pursuant to a
Participating Broker-Dealer Agreement in the form attached to this Agreement as
Exhibit A (the "PARTICIPATING BROKER-DEALER AGREEMENT"). The Dealer Manager may
also arrange for the sale of Shares for cash directly to its own clients and
customers at the public offering price and subject to the terms and conditions
stated in the Prospectus. The Dealer Manager hereby accepts such agency and
distributorship and agrees to use its best efforts to find purchasers for the
Shares on said terms and conditions, commencing as soon as practicable following
the Effective Date (as defined in Section 1.1).
The term "OFFERING PERIOD" shall mean that period during which Shares may
be offered for sale, commencing on the date the Registration Statement (as
defined below) was filed with the Securities Exchange Commission ("SEC"), during
which period offers and sales of the Shares shall occur continuously unless and
until the Offering is terminated as provided in Section 11 hereof, except that
the Dealer Manager and the Dealers shall suspend or terminate the offering of
the Shares upon request of the Company at any time and shall resume offering the
Shares upon subsequent request of the Company. The Offering Period shall in all
events terminate upon the sale of all of the Shares. Upon termination of the
Offering Period, the Dealer Manager's agency and this Agreement shall terminate
without obligation on the part of the Dealer Manager or the Company except as
set forth in this Agreement.
In connection with the sale of Shares, the Company hereby agrees with you,
the Dealer Manager, as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As an inducement to the
Dealer Manager to enter into this Agreement, the Company represents and
warrants to the Dealer Manager that:
1.1 The Company has prepared and filed with the SEC a registration
statement on Form S-11 for the registration of the Shares under the
Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the applicable rules and regulations of the
SEC promulgated thereunder (the "SECURITIES ACT RULES AND
REGULATIONS"). Copies of such registration statement as initially
filed and each amendment thereto have been or will be delivered to
the Dealer Manager. The registration statement on Form S-11 and the
prospectus contained therein, as finally amended at the effective
date of the registration statement (the "EFFECTIVE DATE"), are
respectively hereinafter referred to as the "REGISTRATION STATEMENT"
and the "PROSPECTUS", except that if the Company files a prospectus
or prospectus supplement pursuant to Rule 424(b) under the
Securities Act, or if the Company files a post - effective amendment
to the Registration Statement, the term "PROSPECTUS" includes the
prospectus filed pursuant to Rule 424(b) and any prospectus included
in such post-effective amendment. The term "PRELIMINARY PROSPECTUS"
as used herein shall mean a preliminary prospectus related to the
Shares as contemplated by Rule 430 or Rule 430A of the Securities
Act Rules and Regulations included at any time as part of the
Registration Statement.
1.2 On the date that any Preliminary Prospectus was filed with the SEC,
on the Effective Date, on the date of the Prospectus, on the date
the Minimum Offering (as defined in Section 5.1 hereof) is obtained
and when any post - effective amendment to the Registration
Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the SEC, the Registration Statement, each
Preliminary Prospectus and the Prospectus, as applicable, including
the financial statements contained therein, complied or will comply
with the Securities Act and the Securities Act Rules and
Regulations. On the Effective Date, the Registration Statement did
not or will not, as the case may be, contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. On the date of the Prospectus, as amended or
supplemented, as applicable, and on the date the Minimum Offering is
obtained, the Prospectus did not or will not, as the case may be,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
foregoing provisions of this Section 1.2 will not extend to such
statements contained in or omitted from the Registration Statement
or the Prospectus, as amended or supplemented, as are primarily
within the knowledge of the Dealer Manager or any of the Dealers and
are based upon information furnished by the Dealer Manager in
writing to the Company specifically for inclusion therein.
1.3 No order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus has been issued and no proceedings for
that purpose are pending, threatened, or, to the knowledge of the
Company, contemplated by the SEC; and to the knowledge of the
Company, no order suspending the offering of the Shares in any
jurisdiction has been issued and no proceedings for that purpose
have been instituted or threatened or are contemplated.
1.4 The Company intends to use the funds received from the sale of the
Shares as set forth in the Prospectus.
1.5 The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Maryland, and has full legal right, power and authority to enter
into this Agreement and to perform the transactions contemplated
hereby, and the Company has duly authorized, executed and delivered
this Agreement.
1.6 This Agreement, when executed by the Company will have been duly
authorized and will be a valid and binding agreement of the Company,
enforceable in accordance with its terms,
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except to the extent that the enforceability of the indemnity and
contribution provisions contained in Section 6 of this Agreement may
be limited under applicable securities laws.
1.7 The execution and delivery of this Agreement, the consummation of
the transactions herein contemplated and the compliance with the
terms of this Agreement by the Company will not conflict with or
constitute a default or violation under any charter, by-law,
contract, indenture, mortgage, deed of trust, lease, rule,
regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company.
1.8 No consent, approval, authorization or other order of any
governmental authority is required in connection with the execution
or delivery by the Company of this Agreement or the issuance and
sale by the Company of the Shares, except such as may be required
under the securities laws of certain states, if any, which we have
identified to you.
1.9 The Shares have been duly authorized and, upon payment therefor as
provided in this Agreement, will be validly issued, fully paid and
nonassessable and will conform to the description thereof contained
in the Prospectus.
2. REPRESENTATIONS AND WARRANTIES OF THE DEALER MANAGER. As an inducement to
the Company to enter into this Agreement, the Dealer Manager represents
and warrants to the Company that:
2.1 The Dealer Manager is, and during the term of this Agreement will
be, a member of the National Association of Securities Dealers, Inc.
(the "NASD") in good standing and a broker-dealer registered as such
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") and under the securities laws of the states in which the
Shares are to be offered and sold. The Dealer Manager and its
employees and representatives possess all required licenses and
registrations to act under this Agreement. The Dealer Manager will
comply with all applicable laws, rules, regulations and requirements
of the Securities Act, the Exchange Act, other federal securities
laws, state securities laws and the rules of the NASD, specifically
including, but not in any way limited to, NASD Rules 2340, 2420,
2730, 2740 and 2750. Each Dealer and each salesperson acting on
behalf of the Dealer Manager or a Dealer will be registered with the
NASD and duly licensed by each state regulatory authority in each
jurisdiction in which it or he will offer and sell Shares.
2.2 The Dealer Manager has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
California, and has full legal right, power and authority to enter
into this Agreement and to perform the transactions contemplated
hereby, and the Dealer Manager has duly authorized, executed and
delivered this Agreement.
2.3 This Agreement, when executed by the Dealer Manager, will have been
duly authorized and will be a valid and binding agreement of the
Dealer Manager, enforceable in accordance with its terms, except to
the extent that the enforceability of the indemnity and contribution
provisions contained in Section 6 of this Agreement may be limited
under applicable securities laws.
2.4 The execution and delivery of this Agreement, the consummation of
the transactions herein contemplated and the compliance with the
terms of this Agreement by the Dealer Manager will not conflict with
or constitute a default or violation under any charter, by-law,
contract, indenture, mortgage, deed of trust, lease, rule,
regulation, writ, injunction or decree of any
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government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Dealer Manager.
2.5 No consent, approval, authorization or other order of any
governmental authority is required in connection with the execution,
delivery or performance by the Dealer Manager of this Agreement.
2.6 The Dealer Manager represents and warrants to the Company and each
person that signs the Registration Statement that the information
under the caption "Plan of Distribution" in the Prospectus and all
other information furnished to the Company by the Dealer Manager in
writing expressly for use in the Registration Statement, any
Preliminary Prospectus, or the Prospectus, does not contain 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 not misleading.
2.7 The Dealer Manager has reasonable grounds to believe, based on
information made available to it by the Company, that the Prospectus
discloses all material facts adequately and accurately and provides
an adequate basis for evaluating an investment in the Shares.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with the Dealer
Manager that:
3.1 It will, at no expense to the Dealer Manager, furnish the Dealer
Manager with such number of printed copies of the Registration
Statement, including all amendments and exhibits thereto, as the
Dealer Manager may reasonably request. It will similarly furnish to
the Dealer Manager and others designated by the Dealer Manager as
many copies as the Dealer Manager may reasonably request in
connection with the offering of the Shares of: (a) the Prospectus;
(b) this Agreement; and (c) any other printed sales literature or
other materials (provided that the use of said sales literature and
other materials have been first approved for use by the Company and
all appropriate regulatory agencies).
3.2 It will furnish such information and execute and file such documents
as may be necessary for the Company to qualify the Shares for offer
and sale under the securities laws of such jurisdictions as the
Dealer Manager may reasonably designate and will file and make in
each year such statements and reports as may be required. The
Company will furnish to the Dealer Manager a copy of such papers
filed by the Company in connection with any such qualification.
3.3 It will: (a) furnish copies of any proposed amendment or supplement
of the Registration Statement or the Prospectus to the Dealer
Manager; (b) file every amendment or supplement to the Registration
Statement or the Prospectus that may be required by the SEC or any
state securities administration; and (c) if at any time the SEC
shall issue any stop order suspending the effectiveness of the
Registration Statement or any state securities administration shall
issue any order or take other action to suspend or enjoin the sale
of the Shares, it will promptly notify the Dealer Manager and will
use its best efforts to obtain the lifting of such order or to
prevent such other action at the earliest possible time.
3.4 If at any time when a prospectus is required to be delivered under
the Securities Act any event occurs as a result of which, in the
opinion of either the Company or the Dealer Manager, the Prospectus
would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, the Company will promptly
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notify the Dealer Manager thereof (unless the information shall have
been received from the Dealer Manager) and will effect the
preparation of an amendment or supplement to the Prospectus which
will correct such statement or omission.
3.5 It will comply with all requirements imposed upon it by the
Securities Act, the Securities Act Rules and Regulations, the
Exchange Act and the applicable rules and regulations of the SEC
promulgated thereunder (the "EXCHANGE ACT RULES AND REGULATIONS" and
collectively with the Securities Act Rules and Regulations, the
"RULES AND REGULATIONS"), and by all state securities laws and
regulations of those states in which an exemption has been obtained
or qualification of the Shares has been effected, to permit the
continuance of offers and sales of the Shares in accordance with the
provisions hereof and of the Prospectus.
3.6 All expenses incident to the performance of the Company's
obligations under this Agreement, including (a) the preparation,
filing and printing of the Registration Statement as originally
filed and of each amendment thereto, (b) the preparation, printing
and delivery to the Dealer Manager of this Agreement, the
Participating Broker-Dealer Agreement and such other documents as
may be required in connection with the offering, sale, issuance and
delivery of the Shares, (c) the fees and disbursements of the
Company's counsel, accountants and other advisers, (d) the fees and
expenses related to the review of the terms and fairness of the
Offering by the NASD, (e) the fees and expenses related to the
qualification of the Shares under the securities laws in accordance
with the provisions of Section 3.2 hereof, including the fees and
disbursements of counsel in connection with the preparation of any
Blue Sky survey and any supplement thereto, (f) the printing and
delivery to the Dealer Manager of copies of any Preliminary
Prospectus and the Prospectus, (g) the fees and expenses of any
registrar, transfer agent or paying agent in connection with the
Shares and (h) the costs and expenses of the Company relating to
investor presentations undertaken in connection with the marketing
of the offering of the Shares, including, without limitation,
expenses associated with the production of slides and graphics, fees
and expenses of any consultants engaged in connection with
presentations with the prior approval of the Company, and travel and
lodging expenses of the representatives of the Company and any such
consultants, will be paid for by the Company or, to the extent such
expenses exceed 1.5% of the gross offering proceeds received by the
Company in the primary offering, by NNN Healthcare/Office REIT
Advisor, LLC., a Delaware limited liability company and the
Company's advisor (the "ADVISOR").
3.7 It will deliver to the Dealer Manager copies of each report
delivered to the holders of Shares ("STOCKHOLDERS") as described in
the Prospectus under "Reports to Stockholders" at the time that such
reports are furnished to the Stockholders, and such other
information concerning the Company as the Dealer Manager may
reasonably request from time to time.
4. COVENANTS OF THE DEALER MANAGER. The Dealer Manager covenants and agrees
with the Company that:
4.1 In connection with the offer and sale of the Shares, the Dealer
Manager will comply with all requirements imposed upon it by the
Securities Act, the Exchange Act, the Rules and Regulations or other
federal regulations applicable to the Offering, the sale of Shares
or its activities and by all applicable state securities laws and
regulations and the rules of the NASD, as from time to time in
effect, and by this Agreement, including the obligation to deliver a
copy of the Prospectus as required by the Securities Act, the
Exchange Act or the Rules and Regulations. The Dealer Manager will
not offer the Shares for sale in any
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jurisdiction unless and until it has been advised that the Shares
are either registered in accordance with, or exempt from, the
securities and other laws applicable thereto.
4.2 The Dealer Manager will make no representations concerning the
Offering except as set forth in the Prospectus.
4.3 The Dealer Manager will provide the Company with such information
relating to the offer and sale of the Shares by it as the Company
may from time to time reasonably request or as may be requested to
enable the Company to prepare such reports of sale as may be
required to be filed under applicable federal or state securities
laws.
4.4 All engagements of the Dealers will be evidenced by a Participating
Broker-Dealer Agreement, except when the Dealer Manager obtains the
prior written consent of the Company. When Dealers are used in this
Offering, the Dealer Manager will use commercially reasonable
efforts to cause such Dealers to comply with all their respective
obligations pursuant to the Participating Broker-Dealer Agreement.
4.5 The Dealer Manager will provide each prospective investor with a
copy of the Prospectus and any supplements thereto during the course
of the Offering and prior to the sale. The Company may also provide
the Dealer Manager with certain supplemental sales material to be
used by the Dealer Manager and the Dealers in connection with the
solicitation of purchasers of the Shares. In the event the Dealer
Manager elects to use such supplemental sales material, the Dealer
Manager agrees 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 then currently in effect, and as
it may be amended or supplemented in the future. The Dealer Manager
agrees that it will not use any sales materials other than those
either provided to the Dealer Manager by the Company or approved by
the Company for use in the Offering. The use of any other sales
material is expressly prohibited.
4.6 The Dealer Manager will comply in all material respects with the
subscription procedures and "Plan of Distribution" set forth in the
Prospectus.
4.7 The Dealer Manager agrees to be bound by the terms of an escrow
agreement among Trust Company of America, as escrow agent (the
"ESCROW AGENT"), the Dealer Manager and the Company, in a form
reasonably acceptable to the parties thereto, as such agreement may
be amended from time to time.
5. COMPENSATION OF DEALER MANAGER.
5.1 Except as may be provided in the "Plan of Distribution" section of
the Prospectus, as compensation for the services rendered by the
Dealer Manager, the Company agrees that it will pay to the Dealer
Manager a selling commission equal to 7.0% of the $10.00 per Share
cash price for Shares sold in the primary offering plus a marketing
support fee of 2.5% of the $10.00 per Share cash price for Shares
sold in the primary offering. The Company will also reimburse the
Dealer Manager for the bona fide due diligence expenses it incurs as
well as such expenses incurred by the Dealers in the aggregate
amount of up to 0.5% of the gross offering proceeds from the primary
offering.
No selling commissions will be paid, and the per Share cash price
shall be reduced to $9.30, in connection with Shares sold in the
primary offering in the event that the investor has
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engaged the services of a registered investment advisor or other
financial advisor, paid on a fee-for-service basis by the investor.
No selling commissions will be paid, and the per Share cash price
shall be reduced to $9.30, in connection with Shares sold to (i)
retirement plans of participating Dealers, (ii) participating
Dealers in their individual capacities, (iii) IRAs and qualified
plans of their registered representatives or (iv) any one of their
registered representatives in their individual capacities.
No selling commissions, marketing support fees or due diligence
reimbursements will be paid, and the per Share cash price shall be
reduced to $9.00, in connection with Shares sold to executive
officers and directors of the Company, as well as officers and
employees of the Advisor and its affiliates.
No selling commissions, marketing support fees or due diligence
expense reimbursement will be paid in connection with Shares sold
under the DRP.
Reduced selling commissions will be paid to the Dealer Manager and
reduced per share selling prices shall be offered for large
purchases in the primary offering in accordance with the following
table:
SHARES PURCHASED BY A PURCHASER COMMISSION RATE PRICE PER SHARE
- ------------------------------- --------------- ---------------
1 - 50,000 7.00% $ 10.00
50,001 - 100,000 6.00% $ 9.90
100,001 - 200,000 5.00% $ 9.80
200,001 - 500,000 4.00% $ 9.70
500,001 - 750,000 3.00% $ 9.60
750,001 - 1,000,000 2.00% $ 9.50
1,000,001 - and up 1.00% $ 9.40
The discounts noted in the above table will be applied on a
transaction-by-transaction basis and in a progressive fashion. All
commissions will be paid based on a $10.00 per share issue price
without regarding to any discounts based on volume. By way of
example, an investment transaction of $1,250,000 would pay 7.00%
commission on the first $500,000 (or $35,000), which would purchase
50,000 shares, and then 6.00% on the next $495,000 (or $30,000),
which would purchase 50,000 shares, and then 5.00% on the amount
remaining $255,000 (or $12,750), which would purchase 26,020 shares
($255,000 divided by $9.80 per share).
For the purposes of such volume discounts, the term "purchaser"
includes:
- an individual, his or her spouse and their children
under the age of 21 who purchase the shares for his, her
or their own accounts;
- a corporation, partnership, association, joint-stock
company, trust fund or any organized group of persons,
whether incorporated or not;
- an employees' trust, pension, profit sharing or other
employee benefit plan qualified under the federal income
tax laws; and
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- all commingled trust funds maintained by a given bank.
Notwithstanding the foregoing, no commissions, payments or amounts
whatsoever will be paid to the Dealer Manager under this Section 5.1
unless or until $2,000,000 has been raised from the sale of Shares
in the Offering (the "MINIMUM OFFERING"). Until the Minimum Offering
is obtained, investments will be held in escrow. If the Minimum
Offering is not obtained within the time periods specified in the
Prospectus, investments will be returned to the investors in
accordance with the Prospectus.
The Company will not be liable or responsible to any Dealer for
direct payment of commissions to such Dealer, it being the sole and
exclusive responsibility of the Dealer Manager for payment of
commissions to Dealers.
5.2 Notwithstanding anything to the contrary contained herein, in the
event that the Company pays any commission to the Dealer Manager for
sale by a Dealer of one or more Shares and the subscription is
rescinded as to one or more of the Shares covered by such
subscription, the Company shall decrease the next payment of
commissions or other compensation otherwise payable to the Dealer
Manager by the Company under this Agreement by an amount equal to
the commission rate established in Section 5.4 of this Agreement,
multiplied by the number of Shares as to which the subscription is
rescinded. In the event that no payment of commissions or other
compensation is due to the Dealer Manager after such withdrawal
occurs, the Dealer Manager shall pay the amount specified in the
preceding sentence to the Company within ten (10) days following
receipt of notice by the Dealer Manager from the Company stating the
amount owed as a result of rescinded subscriptions.
5.3 The Company will reimburse the Dealer Manager for legal fees and
expenses, travel, food and lodging for employees of the Dealer
Manager to sponsor educational meetings, attendance fees and expense
reimbursements for broker-dealer sponsored conferences, attendance
fees and expenses for industry sponsored conferences, and
informational seminars.
5.4 In no event shall the total aggregate underwriting compensation
payable to the Dealer Manager and any Dealers participating in the
Offering, including, but not limited to, selling commissions, the
marketing support fee and expenses reimbursable pursuant to Section
5.3, but excluding due diligence expense reimbursements, exceed
10.0% of gross offering proceeds in the aggregate. In addition,
expense reimbursements for bona fide due diligence expenses of the
Dealer Manager and any Dealers will not exceed the amount specified
in the rules of the NASD.
6. INDEMNIFICATION.
6.1 The Company will indemnify and hold harmless the Dealers and (to the
extent permitted by the Company's charter) the Dealer Manager, their
officers and directors and each person, if any, who controls such
Dealer or Dealer Manager within the meaning of Section 15 of the
Securities Act (the "INDEMNIFIED PERSONS") from and against any
losses, claims, damages or liabilities ("LOSSES"), joint or several,
to which such Indemnified Persons may become subject, under the
Securities Act or otherwise, insofar as such Losses (or actions in
respect thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of a material fact contained
(i) in the Registration Statement or any post-effective amendment
thereto or in the Prospectus or (ii) in any blue sky application or
other document executed by the Company or on its behalf specifically
for the purpose of qualifying any or
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all of the Shares for sale under the securities laws of any
jurisdiction or based upon written information furnished by the
Company under the securities laws thereof (any such application,
document or information being hereinafter called a "BLUE SKY
APPLICATION"), or (b) the omission or alleged omission to state in
the Registration Statement (including the Prospectus as a part
thereof) or any post-effective amendment thereto or in any Blue Sky
Application a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (c) any
untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, if used prior to the
Effective Date, or in the Prospectus or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The Company will reimburse each Indemnified Person for
any legal or other expenses reasonably incurred by such Indemnified
Person, in connection with investigating or defending such Loss.
Notwithstanding the foregoing provisions of this Section 6.1, the
Company will not be liable in any such case to the extent that any
such Loss 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 (x) to the Company by the Dealer Manager or
(y) to the Company or the Dealer Manager by or on behalf of any
Dealer specifically for use in the preparation of the Registration
Statement or any such post-effective amendment thereto, any such
Blue Sky Application or any such Preliminary Prospectus or the
Prospectus, and, further, the Company will not be liable in any such
case if it is determined that such Dealer or the Dealer Manager was
at fault in connection with the Loss, expense or action.
Notwithstanding the foregoing, the Company shall not indemnify or
hold harmless an Indemnified Person for any Losses or expenses
arising from or out of an alleged violation of federal or state
securities laws by such party unless one or more of the following
conditions are met: (a) there has been a successful adjudication on
the merits of each count involving alleged securities law violations
as to the particular Indemnified Person, (b) such claims have been
dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular Indemnified Person and (c) a court
of competent jurisdiction approves a settlement of the claims
against a particular Indemnified Person and finds that
indemnification of the settlement and the related costs should be
made, and the court considering the request for indemnification has
been advised of the position of the SEC and of the published
position of any state securities regulatory authority in which
securities of the Company were offered or sold as to indemnification
for violations of securities laws.
6.2 The Dealer Manager will indemnify and hold harmless the Company,
each director of the Company (including any person named in the
Registration Statement, with his consent, as about to become a
director), each other person who has signed the Registration
Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act (each a "COMPANY
INDEMNITEE"), from and against any Losses to which any of the
Company Indemnitees may become subject, under the Securities Act or
otherwise, insofar as such Losses (or actions in respect thereof)
arise out of or are based upon (a) any untrue statement of a
material fact contained (i) in the Registration Statement (including
the Prospectus as a part thereof) or any post-effective amendment
thereto or (ii) any Blue Sky Application, or (b) the omission to
state in the Registration Statement (including the Prospectus as a
part thereof) or any post-effective amendment thereto or in any Blue
Sky Application a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (c) any
untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, if used prior to the
Effective Date, or in the Prospectus or the omission to state
therein a material fact required to be stated therein or
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necessary in order to make the statements therein in the light of
the circumstances under which they were made not misleading, in the
case of each of clauses (a)-(c) to the extent, but only to the
extent, that such untrue statement or omission was made in reliance
upon and in conformity with written information furnished to the
Company by or on behalf of the Dealer Manager specifically for use
with reference to the Dealer Manager in the preparation of the
Registration Statement or an such post-effective amendments thereto
or any such Blue Sky Application or any such Preliminary Prospectus
or the Prospectus, or (d) any unauthorized use of sales materials or
use of unauthorized verbal representations concerning the Shares by
the Dealer Manager. The Dealer Manager will reimburse the aforesaid
parties for any legal or other expenses reasonably incurred by them
in connection with investigating or defending such Loss, expense or
action. This indemnity agreement will be in addition to any
liability that the Dealer Manager may otherwise have.
6.3 Each Dealer severally will indemnify and hold harmless the Company,
the Dealer Manager, each of their directors (including any person
named in the Registration Statement, with his consent, as about to
become a director), each other person who has signed the
Registration Statement and each person, if any, who controls the
Company and the Dealer Manager within the meaning of Section 15 of
the Securities Act (each, a "DEALER INDEMNIFIED PERSON") from and
against any Losses to which a Dealer Indemnified Person may become
subject, under the Securities Act or otherwise, insofar as such
Losses (or actions in respect thereof) arise out of or are based
upon (a) any untrue statement or alleged untrue statement of a
material fact contained (i) in the Registration Statement (including
the Prospectus as a part thereof) or any post-effective amendment
thereto or (ii) in any Blue Sky Application, or (b) the omission or
alleged omission to state in the Registration Statement (including
the Prospectus as a part thereof) or any post-effective amendment
thereto or in any Blue Sky Application a material fact required to
be stated therein or necessary to make the statements therein not
misleading, or (c) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, if used
prior to the Effective Date, or in the Prospectus or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, in the case of each of clauses (a)-(c) to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company
or the Dealer Manager by or on behalf of such Dealer specifically
for use with reference to such Dealer in the preparation of the
Registration Statement or any such post-effective amendments thereto
or any such Blue Sky Application or any such Preliminary Prospectus,
or (d) any unauthorized use of sales materials or use of
unauthorized verbal representations concerning the Shares by such
Dealer or Dealer's representatives or agents in violation of Section
VII of the Participating Broker-Dealer Agreement or otherwise. Each
such Dealer will reimburse each Dealer Indemnified Person for any
legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Loss, expense or action.
This indemnity agreement will be in addition to any liability that
such Dealer may otherwise have.
6.4 Promptly after receipt by an indemnified party under this Section 6
of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 6, notify in writing the
indemnifying party of the commencement thereof. The failure of an
indemnified party so to notify the indemnifying party will relieve
the indemnifying party from any liability under this Section 6 as to
the particular item for which indemnification is then being sought,
but
- 10 -
not from any other liability that it may have to any indemnified
party. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled, to the extent it
may wish, jointly with any other indemnifying party similarly
notified, to participate in the defense thereof, with separate
counsel. Such participation shall not relieve such indemnifying
party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses (subject to Section 6.5)
incurred by such indemnified party in defending itself, except for
such expenses incurred after the indemnifying party has deposited
funds sufficient to effect the settlement, with prejudice, of the
claim in respect of which indemnity is sought. Any such indemnifying
party shall not be liable to any such indemnified party on account
of any settlement of any claim or action effected without the
consent of such indemnifying party. Any indemnified party shall not
be bound to perform or refrain from performing any act pursuant to
the terms of any settlement of any claim or action effected without
the consent of such indemnified party.
6.5 The indemnifying party shall pay all legal fees and expenses of the
indemnified party in the defense of such claims or actions;
provided, however, that the indemnifying party shall not be obliged
to pay legal expenses and fees to more than one law firm in
connection with the defense of similar claims arising out of the
same alleged acts or omissions giving rise to such claims
notwithstanding that such actions or claims are alleged or brought
by one or more parties against more than one indemnified party. If
such claims or actions are alleged or brought against more than one
indemnified party, then the indemnifying party shall only be obliged
to reimburse the expenses and fees of the one law firm that has been
selected by a majority of the indemnified parties against which such
action is finally brought; and in the event a majority of such
indemnified parties is unable to agree on which law firm for which
expenses or fees will be reimbursable by the indemnifying party,
then payment shall be made to the first law firm of record
representing an indemnified party against the action or claim. Such
law firm shall be paid only to the extent of services performed by
such law firm and no reimbursement shall be payable to such law firm
on account of legal services performed by another law firm.
7. SURVIVAL OF PROVISIONS.
7.1 The respective agreements, representations and warranties of the
Company and the Dealer Manager set forth in this Agreement shall
remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of the Dealer Manager or any
Dealer or any person controlling the Dealer Manager or any Dealer or
by or on behalf of the Company or any person controlling the
Company, and (b) the acceptance of any payment for the Shares.
7.2 The obligations of the Company to pay the Dealer Manager pursuant to
Section 5.1 of this Agreement, and the provisions of Section 5.2,
Sections 6 through 10 and Sections 12 and 17 of this Agreement shall
survive the termination of this Agreement.
8. APPLICABLE LAW. This Agreement was executed and delivered in, and its
validity, interpretation and construction shall be governed by, the laws
of the State of California; provided, however, that causes of action for
violations of federal or state securities laws shall not be governed by
this Section.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts. Each counterpart, when executed and delivered, shall be an
original contract, but all counterparts, when taken together, shall
constitute one and the same Agreement.
- 11 -
10. SUCCESSORS AND AMENDMENT.
10.1 This Agreement shall inure to the benefit of and be binding upon the
Dealer Manager and the Company and their respective successors.
Nothing in this Agreement is intended or shall be construed to give
to any other person any right, remedy or claim, except as otherwise
specifically provided herein.
10.2 This Agreement may be amended by the written agreement of the Dealer
Manager and the Company.
11. TERM.
11.1 Any party to this Agreement shall have the right to terminate this
Agreement on 60 days' written notice.
11.2 In addition to any other obligations of the Dealer Manager that
survive the expiration or termination of this Agreement, the Dealer
Manager, upon the expiration or termination of this Agreement, shall
use its best efforts to cooperate with the Company to accomplish an
orderly transfer of management of the Offering to a party designated
by the Company. 11.3 In addition to any other obligations of the
Company that survive the expiration or termination of this
Agreement, the Company, upon expiration or termination of this
Agreement, shall pay to the Dealer Manager all commissions and fees
to which the Dealer Manager is or becomes entitled under Section 5.1
of this Agreement at such time or times as such commissions and fees
become payable pursuant to this Agreement.
12. CONFIRMATION. The Company hereby agrees and assumes the duty to confirm on
its behalf and on behalf of Dealers and the Dealer Manager all orders for
purchase of Shares accepted by the Company. Such confirmations will comply
with the rules of the SEC and the NASD.
13. SUITABILITY OF INVESTORS; COMPLIANCE WITH PRIVACY AND ANTI-MONEY
LAUNDERING REGULATIONS.
13.1 The Dealer Manager will offer Shares, and in its agreements with
Dealers will require that the Dealers offer Shares, only to persons
who meet the financial qualifications set forth in the Prospectus or
in any suitability letter or memorandum sent to it by the Company
and will only make offers to persons in the states in which it is
advised in writing that the Shares are qualified for sale or that
such qualification is not required. In offering Shares, the Dealer
Manager will comply, and in its agreements with Dealers, the Dealer
Manager will require that the Dealers comply, with the provisions of
all applicable rules and regulations relating to suitability of
investors, including without limitation, the provisions of Article
III.C. of the Statement of Policy Regarding Real Estate Investment
Trusts of the North American Securities Administrators Association,
Inc. (the "NASAA GUIDELINES"). In making the determinations as to
suitability required by the NASAA Guidelines, the Dealer Manager may
rely on representations from (i) investment advisers who are not
affiliated with a Dealer or (ii) banks acting as trustees or
fiduciaries. With respect to the maintenance of records required by
the NASAA Guidelines, the Company agrees that the Dealer Manager can
satisfy its obligation by contractually requiring such information
to be maintained by the investment advisers or banks discussed in
the preceding sentence.
13.2 The Company, the Dealer Manager and each Dealer shall: (x) abide by
and comply with (i) the privacy standards and requirements of the
Gramm-Leach-Bliley Act of 1999 ("GLB
- 12 -
ACT"), (ii) the privacy standards and requirements of any other
applicable federal or state law, and (iii) its own internal privacy
policies and procedures, each as may be amended from time to time;
and (y) refrain from the use or disclosure of nonpublic personal
information (as defined under the GLB Act) of all customers.
13.3 The Company, the Dealer Manager and each Dealer agree to comply with
the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA
PATRIOT ACT") and any applicable U.S. Department of Treasury
regulations issued thereunder that require reasonable efforts to
verify the identity of new customers, maintain customer records, and
check the names of new customers against the list of Specially
Designated Nationals and Blocked Persons. In addition, the Company,
the Dealer Manager, and each Dealer agree to comply with all
Executive Orders and federal regulations administered by the U.S.
Department of Treasury Department's Office of Foreign Asset Control.
Further, the Dealer Manager agrees, upon receipt of an "information
request" issued under Section 314 (a) of the USA Patriot Act, to
provide the Financial Crimes Enforcement Network with information
regarding: (i) the identity of a specified individual or
organization; (ii) account number; (iii) all identifying information
provided by the account holder; and (iv) the date and type of
transaction. The Dealer Manager from time to time will monitor
account activity to identify patterns of unusual size or volume,
geographic factors, and any other potential signals of suspicious
activity, including possible money laundering or terrorist
financing. The Company reserves the right to reject account
applications from new customers who fail to provide necessary
account information or who intentionally provide misleading
information.
14. SUBMISSION OF ORDERS.
14.1 Those persons who purchase Shares will be instructed by the Dealer
Manager or the Dealer to make their checks payable to "Trust Company
of America, as escrow agent for NNN H/O REIT" unless and until the
Minimum Offering is obtained. Thereafter, persons who purchase
Shares will be instructed by the Dealer Manager or the Dealer to
make their checks payable to "NNN Healthcare/Office REIT, Inc." The
Dealer Manager may authorize certain Dealers who have "net capital,"
as defined in the applicable federal securities regulations, of
$250,000 or more to instruct their customers to make their checks
for Shares subscribed for payable directly to the Dealer. In such
case, the Dealer will collect the proceeds of the subscribers'
checks and issue a check made payable to the order of the Company
for the aggregate amount of the subscription proceeds or wire such
funds to the Escrow Agent. The Dealer Manager and any Dealer
receiving a check prior to the time that the Minimum Offering is
obtained that does not conform to the foregoing instructions shall
promptly return such check directly to such subscriber. Checks
received by the Dealer Manager or Dealer which conform to the
foregoing instructions shall be transmitted for deposit pursuant to
one of the methods described in this Section 14.
14.2 If the Dealer Manager or any Dealer receives a check that is made
payable to the Escrow Agent after the Minimum Offering is obtained,
the Dealer Manager or Dealer shall deposit such check with the
Escrow Agent.
14.3 It is understood and agreed that the Company reserves the right in
its sole discretion to refuse to sell any of the Shares to any
person. A sale of a Share shall be deemed to be completed if and
only if (i) the Company has received a properly completed and
executed subscription documents, together with payment of the full
purchase price of each purchased Share, from or on behalf of an
investor who satisfies the applicable suitability standards and
- 13 -
minimum purchase requirements set forth in the Registration
Statement as determined by the Dealer Manager in accordance with the
provisions of this Agreement and (ii) the Company has accepted such
subscription.
15. SEVERABILITY. If any portion of this Agreement shall be held invalid
or inoperative, then so far as is reasonable and possible the
remainder of this Agreement shall be considered valid and operative
and effect shall be given the intent manifested by the portion held
invalid or inoperative.
16. MODIFICATION OR AMENDMENT. This Agreement may not be modified or amended
except by written agreement executed by the parties hereto.
17. NOTICES. All communications hereunder, except as herein otherwise
specifically provided, shall be sufficiently given or made if sent by hand
delivery, national commercial courier service for next day delivery,
United States mail, first-class, postage prepaid, addressed or sent by
facsimile Notice delivered by hand or by commercial courier shall be
effective at the time of delivery. Notice deposited by mail shall be
effective 48 hours after such deposit. Notice delivered by facsimile shall
be effective at the time evidenced on the written confirmation of
delivery:
If to the Company: NNN Healthcare/Office REIT, Inc.
Suite 200
1551 N. Tustin Avenue
Santa Ana, CA 92705
Facsimile No.: (714) 667-6860
Attention: Scott D. Peters, Chief
Executive Officer
If to the Dealer Manager: NNN Capital Corp.
Suite 700
4 Hutton Centre Drive
Santa Ana, CA 92707
Facsimile No.: (714) 667-6843
Attention: Kevin K. Hull, President
and Chief Executive Officer
18. DELAY. Except as expressly provided otherwise in this Agreement, neither
the failure nor any delay on the part of any party to this Agreement to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall a waiver of any right remedy, power
or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power, or privilege with respect to any subsequent
occurrence.
19. NO PARTNERSHIP. Nothing in this Agreement shall be construed or
interpreted to constitute the Dealer Manager as in association with or in
partnership with the Company, and instead, this Agreement only shall
constitute the Dealer Manager as a broker-dealer authorized by the Company
to sell and to manage the sale by others of the Shares according to the
terms set forth in the Registration Statement, the Prospectus or this
Agreement.
20. NO THIRD PARTY BENEFICIARIES. Except as expressly provided otherwise in
this Agreement, no provision of this Agreement is intended to be for the
benefit of any person or entity not a party to this Agreement, and no
third party shall be deemed to be a beneficiary of any provision of this
Agreement. Further, no third party shall, by virtue of any provision of
this Agreement, have a right of action or an enforceable remedy against
either party to this Agreement.
- 14 -
21. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
[SIGNATURES APPEAR ON NEXT PAGE]
- 15 -
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us
as of the date first above written.
Very truly yours,
NNN HEALTHCARE/OFFICE REIT, INC.
By: /s/ Scott D. Petters
------------------------------------------
Scott D. Peters
Chief Executive Officer
Accepted and agreed as of the date first
above written.
NNN CAPITAL CORP.
By: /s/ Kevin K. Hull
-----------------------------------------
Kevin K. Hull
President and Chief Executive Officer
[SIGNATURE PAGE TO DEALER MANAGER AGREEMENT]
EXHIBIT A
NNN HEALTHCARE/OFFICE REIT, INC.
UP TO $2,200,000,000 IN SHARES OF COMMON STOCK
PARTICIPATING BROKER-DEALER AGREEMENT
Ladies and Gentlemen:
NNN Capital Corp., a California corporation, as the dealer manager
("DEALER MANAGER") for NNN Healthcare/Office REIT, Inc., a Maryland corporation
(the "COMPANY"), invites you ("DEALER") to participate in the distribution of
shares of common stock ("SHARES") of the Company subject to the following terms.
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Dealer Manager Agreement between the Dealer Manager and the Company dated
_____________ ____, 2006 in the form attached hereto as Exhibit "A" (the "DEALER
MANAGER AGREEMENT").
I. DEALER MANAGER AGREEMENT
By Dealer's acceptance of this Agreement, Dealer will become one of the
Dealers referred to in the Dealer Manager Agreement and will be entitled and
subject to the terms and conditions of the Dealer Manager Agreement, including,
but not limited to, Section 6.3 of the Dealer Manager Agreement wherein the
Dealers severally agree to indemnify and hold harmless the Dealer Indemnified
Persons.
Dealer hereby agrees to use its best efforts to sell the Shares for cash
on the terms and conditions stated in the Prospectus. Nothing in this Agreement
shall be deemed or construed to make Dealer an employee, agent, representative
or partner of the Dealer Manager or of the Company, and Dealer is not authorized
to act for the Dealer Manager or the Company or to make any representations on
their behalf except as set forth in the Prospectus and such other printed
information furnished to Dealer by the Dealer Manager or the Company to
supplement the Prospectus ("SUPPLEMENTAL INFORMATION").
II. SUBMISSION OF ORDERS
Dealer hereby agrees 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 and in accordance with the
terms of the Prospectus. Dealer hereby agrees 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.
Those persons who purchase Shares will be instructed by the Dealer to make
their checks payable to "Trust Company of America, as escrow agent for NNN H/O
REIT" unless and until the Minimum Offering is obtained. Thereafter, persons who
purchase Shares will be instructed by the Dealer to make their checks payable to
"NNN Healthcare/Office REIT, Inc." Any Dealer receiving a check prior to the
time that the Minimum Offering is obtained that does not conform to the
foregoing instructions shall return such check directly to such subscriber not
later than the end of the next business day following its receipt. Checks
received by the Dealer which conform to the foregoing instructions shall be
transmitted for deposit pursuant to one of the following methods:
1. Where, pursuant to the Dealer's internal supervisory procedures,
internal supervisory review is conducted at the same location at which
subscription documents and checks are received from subscribers, checks will be
transmitted by the end of the next business day following
- 2 -
receipt by Dealer for deposit either to an escrow agent for the Company or,
after the Minimum Offering has been achieved, to the Company.
2. Where, pursuant to the Dealer's internal supervisory procedures,
final internal supervisory review is conducted at a different location, checks
will be transmitted by the end of the next business day following receipt by
Dealer to the office of the Dealer conducting such final internal supervisory
review (the "FINAL REVIEW OFFICE"). The Final Review Office will in turn by the
end of the next business day following receipt by the Final Review Office,
transmit such checks for deposit to either the escrow agent for the Company or,
after the Minimum Offering has been achieved, to the Company.
3. If the Dealer receives a check that is made payable to the Escrow
Agent after the Minimum Offering is obtained, the Dealer shall deposit such
check with the Escrow Agent.
III. PRICING
Except as described in the Prospectus, set forth in Article IV or with
respect to volume discounts as described below, Dealer agrees to sell the Shares
for a per Share cash price as follows:
DISTRIBUTION CHANNEL PRIMARY SHARES DRP SHARES
- -------------------- -------------- ----------
Dealers $ 10.00 $ 9.50
The Shares shall be sold at reduced prices as follows:
SHARES PURCHASED BY A PURCHASER PRICE PER SHARE
- ------------------------------- ---------------
1 - 50,000 $ 10.00
50,001 - 100,000 $ 9.90
100,001 - 200,000 $ 9.80
200,001 - 500,000 $ 9.70
500,001 - 750,000 $ 9.60
750,001 - 1,000,000 $ 9.50
1,000,001 - and up $ 9.40
The discounts noted in the above table will be applied on a
transaction-by-transaction basis and in a progressive fashion. All commissions
will be paid based on a $10.00 per share issue price without regarding to any
discounts based on volume. By way of example, an investment transaction of
$1,250,000 would pay 7.00% commission on the first $500,000 (or $35,000), which
would purchase 50,000 shares, and then 6.00% on the next $495,000 (or $30,000),
which would purchase 50,000 shares, and then 5.00% on the amount remaining
$255,000 (or $12,750), which would purchase 26,020 shares ($255,000 divided by
$9.80 per share).
For the purposes of such volume discounts, the term "purchaser" includes:
- an individual, his or her spouse and their children under the age of
21 who purchase the shares for his, her or their own accounts;
- a corporation, partnership, association, joint-stock company, trust
fund or any organized group of persons, whether incorporated or not;
- an employees' trust, pension, profit sharing or other employee
benefit plan qualified under the federal income tax laws; and
- all commingled trust funds maintained by a given bank.
- 3 -
IV. DEALERS' COMMISSIONS
Except for discounts described in or as otherwise provided in the "Plan of
Distribution" section of the Prospectus, Dealer's selling commission applicable
to the total public offering price of Shares sold in the primary offering by
Dealer which it is authorized to sell hereunder is as follows:
DISTRIBUTION CHANNEL PRIMARY SHARES
- -------------------- --------------
Dealers 7.00%
No selling commissions will be paid, and the per Share cash price shall be
reduced to $9.30, in connection with Shares sold in the primary offering in the
event that the investor has engaged the services of a registered investment
advisor or other financial advisor, paid on a fee-for-service basis by the
investor.
No selling commissions will be paid, and the per Share cash price shall be
reduced to $9.30, in connection with Shares sold to (i) retirement plans of
Dealer, (ii) Dealer in its individual capacity, (iii) IRAs and qualified plans
of Dealer's registered representatives or (iv) any one of Dealer's registered
representatives in their individual capacities.
No selling commissions, marketing support fees or due diligence expense
reimbursement will be paid in connection with Shares sold under the DRP.
Except as otherwise provided herein, all expenses incurred by Dealer in
the performance of Dealer's obligations hereunder, including, but not limited
to, expenses related to the Offering and any attorneys' fees, shall be at
Dealer's sole cost and expense, and the foregoing shall apply notwithstanding
the fact that the Offering is not consummated for any reason.
The preceding commissions (for the Dealer distribution channel) shall be
adjusted for sales under the volume discount program discussed above as follows:
SHARES PURCHASED BY A PURCHASER COMMISSION RATE
- ------------------------------- ---------------
1 - 50,000 7.00%
50,001 - 100,000 6.00%
100,001 - 200,000 5.00%
200,001 - 500,000 4.00%
500,001 - 750,000 3.00%
750,001 - 1,000,000 2.00%
1,000,001 - and up 1.00%
The above selling commissions shall be based on the gross proceeds of
Shares sold by such Dealer and accepted and confirmed by the Company, which
commission will be paid by the Dealer Manager. For these purposes, a "sale of
Shares" shall occur if and only if a transaction has closed with a securities
purchaser pursuant to all applicable offering and subscription documents and the
Company has thereafter distributed the commission to the Dealer Manager in
connection with such transaction. The Dealer affirms that the Dealer Manager's
liability for commissions payable is limited solely to the proceeds of
commissions receivable associated therewith, and the Dealer hereby waives any
and all rights to receive payment of commissions due until such time as the
Dealer Manager is in receipt of the commission from the Company. In addition, as
set forth in the Prospectus, the Dealer Manager may, in its sole discretion,
reallow a portion of the marketing support fee earned on the proceeds raised by
a Dealer for sales of Shares in the primary offering of up to 0.5% of such
proceeds. This reallowance would
- 4 -
be in the form of a marketing fee and may also include a reimbursement of
certain of a Dealer's distribution-related costs, such as the costs and expenses
of attending educational conferences sponsored by the Dealer Manager and direct
attendance fees the Company may pay for employees of the Dealer Manager or its
affiliates to attend a seminar sponsored by a Dealer. The Dealer Manager may
also reimburse bona fide due diligence expenses of a Dealer in an amount up to
0.5% of the gross offering proceeds attributable to such Dealer.
The parties hereby agree that the foregoing commission is not in excess of
the usual and customary distributors' or sellers' commission received in the
sale of securities similar to the Shares, that Dealer's interest in the offering
is limited to such commission from the Dealer Manager and Dealer's indemnity
referred to in Section 6 of the Dealer Manager Agreement, and that the Company
is not liable or responsible for the direct payment of such commission to the
Dealer.
V. PAYMENT
Payments of selling commissions or any reallowance of a portion of the
marketing support fee will be made by the Dealer Manager to Dealer within 30
days of the receipt by the Dealer Manager of the gross commission payments from
the Company. Dealer acknowledges that if the Company pays selling commissions to
the Dealer Manager, Company is relieved of any obligation for selling
commissions to Dealer. The Company may rely on and use the preceding
acknowledgment as a defense against any claim by Dealer for selling commissions
Company pays to Dealer Manager but that Dealer Manager fails to remit to Dealer.
VI. COVENANTS OF DEALER
Prior to participating in the Offering, Dealer will have reasonable
grounds to believe, based on information made available to Dealer 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.
Dealer agrees 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. Dealer further agrees to conduct its own investigation to make that
determination independent of the efforts of the Dealer Manager.
Dealer agrees to retain in its records and make available to the Dealer
Manager and to the Company for a period of at least six (6) years following the
termination of the Offering, information establishing that each investor who
purchases the Shares solicited by Dealer 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.
Dealer agrees that, prior to accepting a subscription for the Shares, it
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.
Dealer hereby undertakes and agrees to comply with all obligations
applicable to Dealer under all applicable laws, rules and regulations, including
those set forth by the NASD. In soliciting persons to acquire the Shares, Dealer
further agrees 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, Dealer agrees that it
- 5 -
will not give any information or make any representations other than those
contained in the Prospectus and in any supplemental sales literature furnished
to Dealer by the Dealer Manager for use in making such solicitations.
VII. RIGHT TO REJECT ORDERS OR CANCEL SALES
All orders, whether initial or additional, are subject to acceptance by
and shall only become effective upon confirmation by the Company, which reserves
the right to reject any order. Orders not accompanied by a Subscription
Signature Page and the required check in payment for the Shares may be rejected.
Issuance and delivery of the Shares will be made only after actual receipt of
payment therefor. If any check is not paid upon presentment, or if the Company
is not in actual receipt of clearinghouse funds or cash, certified or cashier's
check or the equivalent in payment for the Shares within 15 days of sale, the
Company reserves the right to cancel the sale without notice. In the event an
order is rejected, canceled or rescinded for any reason, the Dealer agrees to
return to the Dealer Manager any commission theretofore paid with respect to
such order.
VIII. PROSPECTUS AND SUPPLEMENTAL INFORMATION
Dealer is not authorized or permitted to give, and will not give, any
information or make any representation concerning the Shares except as set forth
in the Prospectus and the Supplemental Information. The Dealer Manager will
supply Dealer with reasonable quantities of the Prospectus, as well as any
Supplemental Information, for delivery to investors, and Dealer will deliver a
copy of the Prospectus as required by the Securities Act, the Exchange Act, and
the Rules and Regulations. The Dealer agrees that it will not send or give any
Supplemental Information to an investor unless it has previously sent or given a
Prospectus to that investor or has simultaneously sent or given a Prospectus
with such Supplemental Information. Dealer agrees that it will not show or give
to any investor or prospective Investor or reproduce any material or writing
that is supplied to it by the Dealer Manager and marked "dealer only" or
otherwise bearing a legend denoting that it is not to be used in connection with
the sale of Shares to members of the public. Dealer agrees that it will not use
in connection with the offer or sale of Shares any material or writing that
relates to another company supplied to it by the Company or the Dealer Manager
bearing a legend that states that such material may not be used in connection
with the offer or sale of any securities of the Company. Dealer further agrees
that it will not use in connection with the offer or sale of Shares any
materials or writings that have not been previously approved by the Dealer
Manager. Each Dealer agrees, if the Dealer Manager so requests, to furnish a
copy of any revised Preliminary Prospectus to each person to whom it has
furnished a copy of any previous Preliminary Prospectus, and further agrees that
it will itself mail or otherwise deliver all preliminary and final Prospectuses
required for compliance with the provisions of Rule 15c2-8 under the Securities
Exchange Act of 1934. Regardless of the termination of this Agreement, Dealer
will deliver a Prospectus in transactions in the Shares for a period of 90 days
from the effective date of the Registration Statement or such longer period as
may be required by the Exchange Act or the Exchange Act Rules and Regulations
thereunder.
IX. LICENSE AND ASSOCIATION MEMBERSHIP
Dealer's acceptance of this Agreement constitutes a representation to the
Company and the Dealer Manager that Dealer is a broker-dealer properly
registered with the SEC, duly authorized to sell Shares under federal and state
securities laws and regulations and in all states where it offers or sells
Shares, and that it is a member in good standing of the NASD. This Agreement
shall automatically terminate if the Dealer ceases to be a member in good
standing of such association. Dealer agrees to notify the Dealer Manager
immediately if Dealer ceases to be a member in good standing.
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X. ANTI-MONEY LAUNDERING COMPLIANCE PROGRAMS
Dealer's acceptance of this Agreement constitutes a representation to the
Company and the Dealer Manager that Dealer has established and implemented
anti-money laundering compliance programs in accordance with NASD Rule 3011,
Section 352 of the Money Laundering Abatement Act and Sections 103.19, 103.35,
and 103.122 of the regulations of the U.S. Treasury Department, and is in
compliance with all Executive Orders and Federal Regulations administered by the
U.S. Treasury Department's Office of Foreign Assets Control. [Further, Dealer
agrees, upon receipt of an "information request" issued under Section 314 (a) of
the USA Patriot Act to provide the Financial Crimes Enforcement Network with
information regarding: (i) the identity of a specified individual or
organization; (ii) account number; (iii) all identifying information provided by
the account holder; and (4) the date and type of transaction. The Dealer Manager
from time to time will monitor account activity to identify patterns of unusual
size or volume, geographic factors, and any other potential signals of
suspicious activity, including possible money laundering or terrorist
financing.] The Company and the Dealer Manager reserve the right to reject
account applications from new customers who fail to provide necessary account
information or who intentionally provide misleading information.
XI. LIMITATION OF OFFER
Dealer will offer Shares only to persons who meet the financial
qualifications set forth in the Prospectus or in any suitability letter or
memorandum sent to it by the Company or the Dealer Manager and will only make
offers to persons in the states in which it is advised in writing that the
Shares are qualified for sale or that such qualification is not required. In
offering Shares, Dealer will comply with the provisions of the Rules of Fair
Practice set forth in the NASD Manual, as well as all other applicable rules and
regulations relating to suitability of investors, including without limitation,
the provisions of Article III.C. of the Statement of Policy Regarding Real
Estate Investment Trusts of the North American Securities Administrators
Association, Inc.
XII. TERMINATION
Dealer will suspend or terminate its offer and sale of Shares upon the
request of the Company or the Dealer Manager at any time and will resume its
offer and sale of Shares hereunder upon subsequent request of the Company or the
Dealer Manager. Any party may terminate this Agreement by written notice. Such
termination shall be effective 48 hours after the mailing of such notice. This
Agreement and the exhibits hereto are the entire agreement of the parties and
supersede all prior agreements, if any, relating to the subject matter hereof
between the parties hereto.
This Agreement may be amended at any time by the Dealer Manager by written
notice to Dealer, and any such amendment shall be deemed accepted by Dealer upon
placing an order for sale of Shares after he has received such notice.
XIII. PRIVACY LAWS
The Dealer Manager and Dealer (each referred to individually in this
section as "party") agree as follows:
A. Each party agrees to abide by and comply with (i) the privacy standards
and requirements of the Gramm-Leach-Bliley Act of 1999 ("GLB ACT"), (ii) the
privacy standards and requirements of any other applicable federal or state law,
and (iii) its own internal privacy policies and procedures, each as may be
amended from time to time.
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B. Each party agrees to refrain from the use or disclosure of nonpublic
personal information (as defined under the GLB Act) of all customers.
XIV. NOTICE
All notices or other communications required or permitted hereunder shall
be in writing and shall be deemed given or delivered: (i) when delivered
personally or by commercial messenger; (ii) one business day following deposit
with a recognized overnight courier service, provided such deposit occurs prior
to the deadline imposed by such service for overnight delivery; (iii) when
transmitted, if sent by facsimile copy, provided confirmation of receipt is
received by sender and such notice is sent by an additional method provided
hereunder, in each case above provided such communication is addressed to the
intended recipient thereof as set forth below:
If to the Dealer Manager: NNN Capital Corp.
Suite 700
4 Hutton Centre Drive
Santa Ana, CA 92707
Facsimile No.: (714) 667-6843
Attention: Kevin K. President, President
and Chief Executive Officer
If to Dealer, to the address or facsimile number and address specified by
Dealer on the signature page hereto.
X. ATTORNEY'S FEES AND APPLICABLE LAW
In any action to enforce the provisions of this Agreement or to secure
damages for its breach, the prevailing party shall recover its costs and
reasonable attorney's fees. This Agreement shall be construed under the laws of
the State of California and shall take effect when signed by Dealer and
countersigned by the Dealer Manager.
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We have read the foregoing Agreement and we hereby accept and agree to
the terms and conditions set forth therein.
Company: _______________________________________________________________________
Attention: _____________________________________________________________________
Address: ______________________________________________________________________
City, State and Zip Code: ______________________________________________________
Telephone No.: _________________________________________________________________
Facsimile No.: _________________________________________________________________
E-mail Address: ________________________________________________________________
AGREED TO AND ACCEPTED BY THE DEALER:
By: ______________________________________________
Signature
Printed Name: ____________________________________
Title: ___________________________________________
AGREED TO AND ACCEPTED BY THE DEALER MANAGER:
NNN CAPITAL CORP.
By: ______________________________________________
Kevin K. Hull
President and Chief Executive Officer
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