[Date]
__________________
__________________
__________________
RE: GEN-NET LEASE INCOME TRUST, INC.
SELECTED DEALER AGREEMENT
Gentlemen:
Gen-Net Lease Income Trust, Inc., a Michigan corporation (the
"Company") is currently offering up to 2,500,000 shares of its common stock (the
"Shares") through a public offering registered with the Securities and Exchange
Commission ("SEC") and various state securities agencies. The Company hereby
authorizes ("____________________") to offer and sell on a best efforts basis
said Shares.
The Shares must be sold for cash for $10.00 each and the minimum
purchase by any one person is one (1) Share. The parties further hereby agree as
follows:
1. Representations and Warranties of the Company.
The Company represents and warrants to ____________________ that:
1.1 A Registration Statement (File No. 333-72404), as amended
(collectively, the "Registration Statement") with respect to the Company has
been prepared by the Company in accordance with applicable requirements of the
Securities Act of 1933 as amended (the "Securities Act"), and the applicable
rules and regulations of the SEC thereunder (the "Rules and Regulations")
covering the Shares. The Registration Statement was declared effective by the
SEC on October 10, 2002. Copies of the final prospectus included in such
Registration Statement and the supplements dated October 10, 2002, December 16,
2002 and January 8, 2003, have been or will be promptly delivered to
____________________ as well as future supplements and post-effective amendments
to the Prospectus (hereinafter, collectively referred to as the "Prospectus").
For purposes of this Agreement, the "effective date" shall be the date of
receipt of the number of Prospectuses in effect at that time agreed to by the
parties as the first delivery installment of Prospectuses to __________________.
1.2 The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Michigan with
corporate power and authority to own its properties and conduct its business as
described in the Prospectus. The authorized and outstanding capital stock and
the financial position of the Company is as set forth in the Prospectus as of
the dates stated therein, and there has been no material adverse change therein
since such dates.
1.3 The Company has and will continue to use the funds received from
the sale of the Shares as set forth in the Prospectus.
1.4 The Registration Statement and Prospectus comply and will comply
with the Securities Act and the Rules and Regulations and do not and will not
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 not misleading.
1.5 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 Act or state
securities laws.
1.6 There are no actions, suits or proceedings pending, or to the
knowledge of the Company, threatened against the Company or any of its property,
at law or in equity or before or by any federal or state commission, regulatory
body or administrative agency or other governmental body, domestic or foreign,
which will have a material adverse effect on the business or property of the
Company.
1.7 The execution and delivery of this Agreement, the consummation of
the transactions herein contemplated and compliance with the terms of this
Agreement by the Company will not conflict with, or constitute a default under,
any charter, bylaw, indenture, mortgage, deed of trust, lease or rule or
regulation, writ, injunction or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company, or any of its property, except to the extent that the enforceability of
the indemnity or contribution provisions contained in Section 4 of this
Agreement may be limited under applicable securities laws, bankruptcy laws and
the rules of equity.
1.8 The Company has full legal right, power and authority to enter into
this Agreement and to perform the transactions contemplated hereby, except to
the extent that the enforceability of the indemnity or contribution provisions
contained in Section 4 of this Agreement may be limited under applicable
securities laws, bankruptcy laws and the rules of equity.
1.9 At the time of the issuance of the Shares, the Shares will have
been duly authorized and validly issued, and upon payment therefor, will be
fully paid and nonassessable, and will conform to the description thereof
contained in the Prospectus.
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1.10 The financial statements contained in the Registration Statement
and the Prospectus fairly present the financial condition of the Company and the
results of its operations as of the dates and for the periods therein specified;
such financial statements have been prepared in accordance with generally
accepted principles of accounting consistently maintained throughout the period
involved; and Zwick & Steinberger, P.L.L.C. has rendered an opinion on certain
of such financial statements and are independent public accountants within the
meaning of the Securities Act and the Rules and Regulations.
2. Covenants of the Company.
The Company covenants and agrees with ____________________ that:
2.1 It will, at no expense to ____________________, furnish to
____________________, as many copies as it may reasonably request of (i) the
Prospectus (in English) in final form and of every form of supplement or amended
prospectus, (ii) this Agreement, and (iii) any other printed sales literature or
other materials (provided that the use of said sales literature and other
materials has been first approved for use by the Company and all appropriate
regulatory agencies) which ____________________ may reasonably request in
connection with the offering of the Shares.
2.2 It will furnish such proper information and execute and file such
documents as may be necessary to qualify the Shares for offer and sale under the
"blue sky" laws of such jurisdictions as ____________________ may reasonably
designate and will file and make in each year such statements and reports as may
be required under such laws. It will furnish to ____________________, upon
request, a copy of all documents filed by the Company in connection with any
such qualification. As of the date of this Agreement, the Shares are registered
for sale in the states listed on Exhibit A hereto.
2.3 It will: (i) file every amendment or supplement of the
Registration Statement or Prospectus that may be required by the SEC; and (ii)
if at any time the SEC shall issue any stop order suspending the effectiveness
of the Registration Statement, use its best efforts to obtain the lifting of
such order at the earliest possible time.
2.4 If at any time when a prospectus relating to the Shares 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
Prospectus or any other prospectus then in effect would include an untrue
statement of a material fact or, in view of the circumstances under which they
were made, omit to state any material fact necessary to make any statement
therein not misleading, it will promptly notify ____________________ thereof
(unless the information shall have been received from ____________________) and
will effect the preparation of an amended or supplemental prospectus which will
correct such statement or omission. The Company will then promptly prepare such
amended or supplemental prospectus or prospectuses as may be necessary to comply
with the requirements of Section 10 of the Securities Act.
3. Obligations and Compensation of .
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3.1 The Company hereby appoints ____________________ as its
non-exclusive agent and one of its distributors for the purposes of having the
non-exclusive rights to offer and sell for cash the remaining Shares directly to
its clients and customers at the public offering subject to the terms and
conditions stated in the Prospectus.
____________________ shall be a member of the NASD. __________________
hereby accepts such agency and distributorship and agrees to use its best
efforts to sell the Shares on said terms and conditions. ____________________
represents to the Company that it is a member of the NASD and that it and its
employees and representatives have all the required licenses, registrations and
approval necessary to act under this Agreement.
3.2 Upon the Effective Date of this Agreement, ____________________
shall commence the offering of the Shares for cash to the public in
jurisdictions in which the Shares are registered or qualified for sale or in
which such offering is otherwise permitted. The Company shall be responsible for
handling, processing and documentation of investor funds. ____________________
agrees that it will transmit all checks received from investors for Shares,
together with an Order Form as attached to the Prospectus as Exhibit B properly
completed by the investor and the investor's registered representative and all
other investor documentation, to the Company by noon of the business day
following receipt. All checks shall be made payable to "Gen-Net Special Escrow
Account". All subscriptions shall be subject to acceptance by the Company. No
subscription agreement will be accepted unless the broker's representation
contained therein has been duly completed by the registered representative
soliciting such subscription.
____________________ will suspend or terminate offering of the Shares
upon request of the Company at any time and will resume offering the Shares upon
subsequent request of the Company, subject to any contrary terms and conditions
of this Agreement.
3.3 ____________________ has, or will have, prior to its participation
in the offering, reasonable grounds to believe that all material facts are
adequately and accurately disclosed in the Prospectus and provide a basis for
evaluating the Company, including information relating to items of compensation,
properties acquired to date (if any), tax aspects, financial stability and
experience of the Company, conflicts of interest, risk factors, and pertinent
documents and reports.
3.4 (i) The Company shall pay to ____________________ from the gross
proceeds of the offering, a maximum selling commission equal to seven and one
quarter percent (7.25%) of the gross proceeds of all Shares sold by
____________________, and accepted and confirmed by the Company, which includes
..25% for accountable due diligence expenses.
(ii) For purposes of determining the selling commission payable
with respect to subscriptions made by a single purchaser, cer
certain subscriptions may be combined and the selling commission
apportioned pro rata among the subscriptions. Separate subscriptions by
an individual, his or her spouse, their minor children, trusts
established on behalf of any of them, and a corporation, partnership,
association or similar organized group in which any of the foregoing
hold a controlling interest (provided such entity has
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been in existence for at least six months at the time of subscription
and was not formed for the purpose of subscribing) will be treated as
submitted by a single purchaser. Moreover, any purchaser (whether an
individual, a corporation, partnership, trust or other entity) that
subscribes for additional interests subsequent to an initial purchase
of Shares may combine all such prior and subsequent subscriptions for
the purpose of computing total selling commissions.
(iii) The following purchasers will be permitted to aggregate
their subscriptions as described below for purposes of the reduced
selling commissions for volume purchases: (a) all profit-sharing
pension and other retirement trusts (other than any self-employed
retirement plan or IRA) and all funds and foundations maintained by a
single corporation, partnership or other entity; (b) all
profit-sharing, pension and other retirement trusts and all funds or
foundations over which a single bank or entity (except an individual,
or an investment adviser registered under the Investment Advisers Act
of 1940) exercises discretionary authority with respect to an
investment in the Company; and (c) all clients of an investment adviser
registered under the Investment Advisers Act of 1940 who have been
advised by such adviser regarding an investment in the Company, and who
are not being charged by such adviser or its affiliates, through the
payment of commissions or otherwise, for the advice rendered by such
adviser in connection with the purchase of interests. No purchaser may
simultaneously combine subscriptions with purchasers in more than one
of the categories (a), (b) and (c).
(iv) In the event the Company elects to sell its Shares to those
categories of purchasers described below on terms that are net of all
commission otherwise applicable, it is agreed and understood by
____________________ that in such case no sales compensation will be
due or owed by the Company to ____________________ under this Agreement
or otherwise, regardless of the activities of ____________________ in
causing the said sale or the benefit to the Company. The categories of
purchasers are as follows:
(a) Registered investment advisers, trust companies, bank
trust departments, brokers purchasing for their own accounts, and
officers, directors and employees of the Company; or
(b) Any party who directly or through a registered
investment adviser acquires at least $1 million worth of Shares
from the Company.
3.5 ____________________ represents and warrants to the Company, and
each person and firm which 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 ____________________ in writing
expressly for the use in the Registration Statement, any preliminary prospectus,
the Prospectus, or any amendment or supplement thereto, 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.
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3.6 ____________________ represents that it has reasonable grounds to
believe, based on information obtained from the Company and through the
Prospectus or other materials, that all material facts relating to a sale of the
Shares (including facts relating to the items set forth in Section 4(a) of
Section 34 of the NASD's Rules of Fair Practice) are adequately and accurately
disclosed and provide a basis for evaluating an investment in the Company.
3.7 ____________________ covenants not to execute any subscriptions in
the Company on behalf of a customer for which it holds a discretionary account
without the prior written approval of such customer.
3.8 ____________________ covenants that it will maintain subscription
agreements with respect to investors in the Company and other documents relating
to the suitability of the investors in the Company for a period of not less than
six years after the termination of the offering with respect to the Company.
3.9 In recommending the purchase of Shares, and before confirming any
sale of such Shares to a customer, ____________________ shall have reasonable
grounds to believe, on the basis of information obtained from such customer
concerning his or her investment objectives, other investments, financial
condition and needs, and any other information known to ____________________,
that (i) the customer is or will be in a financial position appropriate to
enable him to realize to a significant extent that benefits described in the
Prospectus; (ii) the customer has a fair market net worth sufficient to sustain
the risks inherent in an investment in the Company, including loss of investment
and lack of liquidity; and (iii) an investment in the Company is otherwise
suitable for the customer.
3.10 ____________________ covenants not to execute any subscription in
the Company prior to informing the subscribing investor of all pertinent facts
relating to liquidity and marketability of the Shares during the term of the
investment.
3.11 No person is authorized to make any representations concerning the
Shares except those contained in the Company's then current Prospectus and the
Company's approved sales literature. ____________________ shall not sell any
Shares pursuant to this Agreement unless a copy of the Prospectus is furnished
to each purchaser prior to the acceptance of the purchaser's subscription.
____________________ agrees not to use any of the supplemental sales literature
of any kind without the prior written approval of the Company, unless the
literature is furnished by the Company for such purpose. ____________________
agrees that any document marked "Not for Distribution to the Public" will not be
distributed to any public investor. In offering and selling the Shares,
____________________ shall rely solely upon the representations contained in the
Company's Prospectus and the approved sales literature.
3.12 By accepting this Agreement, ____________________ represents that
it is registered as a broker-dealer under the Securities Exchange Act of 1934,
as amended, is a member in good standing of the NASD if located in the United
States, is licensed as broker-dealer in one or more jurisdictions in which the
Shares may legally be sold and will maintain such registration, membership and
licenses throughout the term of this Agreement. Furthermore, __________________
agrees to and represents that it will comply with all applicable federal
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laws, the rules and regulations of the NASD (including but not limited to Rules
2730, 2740, 2420 and 2750 of the NASD Conduct Rules), and those securities laws
(and rules promulgated thereunder) of those jurisdictions in which it offers and
sells the Shares. ____________________ also represents that it will use the
Prospectus and the approved sales literature strictly in conformance with
federal and state securities laws, and will only offer and sell the Company's
Shares to bona fide residents of those jurisdictions in which Shares may legally
be sold and which ____________________ is licensed. ____________________ shall
not be entitled to any compensation during any period in which its registration
with the Securities and Exchange Commission, membership with the NASD or license
in the jurisdiction where a sale occurred has been suspended or terminated.
3.13 By accepting this Agreement, ____________________ has assumed full
responsibility for thorough and prior training of its representatives concerning
the selling methods to be used in connection with the offer and sale of the
Shares, giving special emphasis to the principles of full and fair disclosure to
prospective purchasers and taking all necessary steps to ensure that all of its
representatives engaged in the offer and sale of the Shares are, if applicable,
properly registered with the NASD and licensed under the securities laws of
those jurisdictions in which the Shares may legally be offered and sold and in
which the representatives offer and sell such Shares.
4. Indemnification.
4.1 The Company will indemnify and hold harmless ____________________,
its officers and directors and each person, if any, who controls
____________________ within the meaning of Section 15 of the Securities Act,
from and against any losses, claims, damages or liabilities, joint or several,
to which ____________________, its officers and directors, or such controlling
persons may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liability (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
a material fact contained (a) in the Registration Statement, or any
post-effective amendment thereto or in the Prospectus or any amendment or
supplement to the Prospectus or (b) in any "blue sky" application or other
document executed by the Company on its behalf specifically for the purpose of
qualifying any or all of the Shares for sale under the securities laws of any
jurisdiction 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 (ii) the omission or alleged
omission to state in the Registration Statement, the Prospectus or any
supplement therein or any post-effective amendment therein, or in any Blue Sky
Application, a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made,
not misleading; and will reimburse ____________________, its officers and
directors and each such controlling person for any legal or other expenses
reasonably incurred by ____________________, its officers and directors, or such
controlling person in connection with investigating or defending such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that such loss, claim, damage or
liability arises out of or is based upon any 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
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____________________ specifically for use with reference to ____________________
in the preparation of the Registration Statement or any such post-effective
amendment therein or any such Blue Sky Application or any such preliminary
prospectus or the Prospectus or any such amendment or supplement thereto; and
provided further that the Company will not be liable in any case if it is
determined that ____________________ was at fault in connection with the loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
4.2 ____________________ agrees to indemnify and hold harmless the
Company, its officers and directors, each person or firm which has signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities to which any of the aforesaid parties may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment thereto,
the Prospectus or any amendment or supplement thereto, or any blue sky
application, or (ii) the omission or alleged omission to state in the
Registration Statement or any post-effective amendment thereto, the Prospectus
or any amendment or supplement thereto, or in any Blue Sky Application, 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; in each case 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 by or on behalf of ____________________ specifically for use with
reference to ____________________ in the preparation of the Registration
Statement or any such preliminary prospectus or the Prospectus or any such
amendment or supplement thereto, or (iii) any unauthorized use of sales
materials or use of unauthorized verbal representations concerning the Shares by
____________________, and will reimburse the aforesaid parties, in connection
with investigating or defending such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability that
____________________ may otherwise have.
4.3 Promptly after receipt by an indemnified party under this Section
4 of notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 4, notify in writing the indemnifying party of the commencement
thereof, and the omission to so notify the indemnifying party will relieve it
from any liability under this Section 4 as to the particular item for which
indemnification is then being sought, but not from any other liability which it
may have to any indemnified party. In case any such action is brought against
any indemnified party, and it notifies any 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
4.4) incurred by such indemnified party in defending himself, 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
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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.
4.4 The indemnifying party shall be obligated to 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
fees and expenses 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. In the case 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 against which such action is finally
brought, and in the event a majority of the indemnified parties against which
such action is finally brought, and in the event a majority of such indemnified
parties are 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.
4.5 The indemnity agreements contained in this Section 4 shall remain
operative and in full force and effect regardless of (i) an investigation made
by or on behalf of ____________________ or the Company, or any office or
director of either of them, (ii) delivery of any Shares and payment therefor, or
(iii) any termination of this Agreement. A successor of ____________________ or
of any of the parties to this Agreement, as the case may be, shall be entitled
to the benefits of the indemnity agreements contained in this Section 4.
5. Survival of Provisions.
The respective agreements, representations and warranties of the
Company and ____________________ set forth in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement; (ii) any investigation made by or on behalf of ____________________
or any person controlling ____________________ or by or on behalf of the
Company, or any person controlling the Company; or (iii) the acceptance of any
payment for the Shares.
6. Applicable Law.
This Agreement is executed and delivered in, and its validity,
interpretation and construction, shall be governed by the laws of the State of
Michigan.
7. 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.
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8. Successors and Amendment.
8.1 This Agreement shall inure to the benefit of, and be binding upon,
____________________, 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.
8.2 This Agreement may be amended in whole or part, upon the written
agreement of ____________________ and the Company.
9. Term.
After the first thirty (30) days that this Agreement is in effect,
either party shall have the right to terminate this Agreement on ten (10) days
prior written notice.
10. Notices.
Any notice under this Agreement shall be given or confirmed in writing,
delivered personally or sent by certified mail, postage prepaid, addressed as
specified in this Section:
Notice to the Company:
Gen-Net Lease Income Trust, Inc.
24081 West River Road, First Floor
Grosse Ile, Michigan 48138
Notice to ____________________:
___________________________
___________________________
___________________________
11. Confirmation.
The Company hereby agrees and assumes the duty to confirm on behalf of
itself, and on behalf of ____________________, all orders for the purchase of
Shares accepted by the Company. Such confirmations will comply with the
applicable rules of such other jurisdictions to the extent the Company is
advised of such laws in writing by ____________________.
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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,
GEN-NET LEASE INCOME TRUST, INC.
By:_______________________________________
Jerry D. Bringard, President
We hereby agree to the terms hereof.
By:_______________________________________
Its:______________________________________
Date:_____________________________________
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