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EXHIBIT 1.1
INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.
270,000,000
SHARES OF COMMON STOCK
$.001 PAR VALUE PER SHARE
DEALER MANAGER AGREEMENT
_____________, 2003
Inland Securities Corporation
2901 Butterfield Road
Oak Brook, Illinois 60521
Ladies/Gentlemen:
Inland Western Retail Real Estate Trust, Inc. (the "Company"), a Maryland
corporation, is qualified as a real estate investment trust (a "REIT") under
federal income tax laws. The Company was formed on March 5, 2003, and is
governed by the Bylaws (as may be amended from time to time, the "Bylaws") and
the Articles of Incorporation (as may be amended from time to time, the
"Articles") in the form incorporated by reference into the Registration
Statement, as described in Section 1(a) hereof (such Bylaws and Articles being
hereinafter referred to as the "Organizational Documents"). The advisor to the
Company is Inland Western Retail Real Estate Advisory Services, Inc., an
Illinois corporation (the "Advisor").
The Company is offering (i) on a "best efforts" basis up to 250,000,000
shares of common stock, $.00l par value per share (the "Shares") for a purchase
price of $10.00 per Share with a minimum initial investment of $3,000 ($1,000 in
the case of tax-exempt investors, except for residents of the State of Iowa
where Individual Retirement Accounts must have a minimum investment of $3,000,
and for residents of the State of Minnesota where Individual Retirement Accounts
and qualified plan accounts must have a minimum investment of $2,000), (ii) and
up to 20,000,000 Shares for a purchase price of $9.50 per Share for issuance
through the Company's distribution reinvestment program, all upon the other
terms and conditions set forth in the Prospectus, as described in Section 1(a)
hereof (the "Offering"). The subscribers, each of whom will be required to enter
into a subscription agreement substantially similar to the form of the
Subscription Agreement attached as Appendix C to the Prospectus (the
"Subscription Agreement"), will, upon acceptance of their subscriptions by and
in the discretion of the Company, become stockholders of the Company (the
"Stockholders").
1. REPRESENTATION AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and agrees with you that:
1.1. REGISTRATION STATEMENT AND PROSPECTUS. A registration statement
(File 333-103799) on Form S-11 with respect to an aggregate of 250,000,000
Shares and
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20,000,000 Shares issuable pursuant to the Company's distribution
reinvestment program, has been prepared by the Company pursuant to the
Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder and has been filed with the
Commission under the Act; one or more amendments to such registration
statement have been or may be so prepared and filed. As used in this
Agreement, the term "Registration Statement" means such registration
statement in the form in which it becomes effective, the term "Effective
Date" means the date upon which the Registration Statement is or was first
declared effective by the Commission and the term "Prospectus" means the
prospectus in the form constituting a part of the Registration Statement as
well as in the form first filed with the Commission pursuant to its Rule
424 after the Registration Statement becomes effective. The Commission has
not issued any stop order suspending the effectiveness of the Registration
Statement and no proceedings for that purpose have been instituted or are
pending before or threatened by the Commission under the Act.
1.2 COMPLIANCE WITH THE ACT. From the time the Registration
Statement becomes effective and at all times subsequent thereto up to and
including the Termination Date (as defined in Section 2(c) hereof):
the Registration Statement, the Prospectus and any amendments or supplements
thereto will contain all statements which are required to be stated therein by
the Act and the Rules and Regulations and will comply in all material respects
with the Act and the Rules and Regulations; and
neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto will at any such time include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
1.3 NO SUBSEQUENT MATERIAL EVENTS. Subsequent to the respective
dates as of which information is given in the Registration Statement and
Prospectus and prior to the Termination Date, except as contemplated in the
Prospectus or as disclosed in a supplement or amendment thereto or in the
periodic financial statements of the Company, the Company has not and will
not have:
incurred any material liabilities or obligations, direct or contingent; or
entered into any material transaction, not in the ordinary course of business
and, except as so disclosed, there has not been and will not be any material
adverse change in the financial position or results of operations of the
Company.
1.4 CORPORATION STATUS. The Company is a corporation duly formed
and validly existing under the General Corporation Law of Maryland.
1.5 AUTHORIZATION OF AGREEMENT. This Agreement has been duly and
validly authorized, executed and delivered by or on behalf of the Company
and constitutes the valid and binding agreement of the Company enforceable
in accordance with its terms
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(except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws of the United States, any
state or any political subdivision thereof which affect creditors' rights
generally or by equitable principles relating to the availability of
remedies). The performance of this Agreement, the consummation of the
transactions contemplated herein and the fulfillment of the terms hereof,
do not and will not result in a breach of any of the terms and provisions
of, or constitute a default under, any statute, indenture, mortgage, deed
of trust, voting trust agreement, note, lease or other agreement or
instrument to which the Company is a party or by which the Company or its
property is bound, or under any rule or regulation or order of any court or
other governmental agency or body with jurisdiction over the Company or any
of its properties; and no consent, approval, authorization or order of any
court or governmental agency or body has been or is required for the
performance of this Agreement or for the consummation of the transactions
contemplated hereby (except as have been obtained under the Act, from the
National Association of Securities Dealers, Inc. (the "NASD") or as may be
required under state securities or blue sky laws in connection with the
offer and sale of the Shares or under the laws of states in which the
Company may own real properties in connection with its qualification to
transact business in such states or as may be required by subsequent events
which may occur).
1.6 PENDING ACTIONS. There is no material action, suit or
proceeding pending or, to the knowledge of the Company, threatened, to
which the Company is a party, before or by any court or governmental agency
or body which adversely affects the Offering of the Shares.
1.7 REQUIRED FILINGS. There are no contracts or other documents
required to be filed by the Act or the Rules and Regulations of the
Commission thereunder as exhibits to the Registration Statement which have
not been so filed.
1.8 FEDERAL INCOME TAX LAWS. The Corporation has obtained an
opinion of Duane Morris LLP, Philadelphia, Pennsylvania, stating that,
under existing federal income tax laws and regulations, assuming the
Company acts as described in the "Federal Income Tax Considerations"
section of the Prospectus and timely files the requisite elections, counsel
is of the opinion that the Company has been organized in conformity with
the requirements for qualification as a REIT beginning with its taxable
year ending December 31, 2003, and that its prior, current and anticipated
methods of operation (as described in the Prospectus and represented by
management) has enabled and should enable it to satisfy the REIT
Requirements (as defined in the Prospectus).
1.9 INDEPENDENT PUBLIC ACCOUNTANTS. To the best of the Company's
knowledge, the accountants who have certified certain financial statements
appearing in the Prospectus are independent public accountants within the
meaning of the Act and the Rules and Regulations.
1.10 ESCROW AGREEMENT. The Company has entered into an escrow
agreement (the "Escrow Agreement") with Inland Securities Corporation, Oak
Brook, Illinois (the "Dealer Manager"), and LaSalle Bank National
Association, Chicago, Illinois (the "Escrow Agent"), in the form included
as an exhibit to the Registration
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Statement, which provides for the establishment of an escrow account (the
"Escrow Account"). During the period commencing with the Effective Date and
ending on the Termination Date, the Company will deposit subscribers funds
in the Escrow Account as described in Section 2 below.
1.11 SALES LITERATURE. In addition to and apart from the Prospectus,
the Company may use certain supplemental sales material in connection with
the Offering of the Shares. This material, prepared by the Advisor, would
consist of a brochure describing the Advisor and its Affiliates and the
objectives of the Company and may also contain pictures and summary
descriptions of properties similar to those to be acquired by the Company
that Affiliates of the Company have previously acquired. This material may
also include pictures and summary descriptions of properties similar to
those to be acquired by the Company, as well as a brochure, audiovisual
materials and tape presentations highlighting and explaining various
features of the Offering, properties of prior real estate programs and real
estate investments in general; and articles and publications concerning
real estate. Business reply cards, introductory letters and seminar
invitation forms may be sent to Soliciting Dealers (as hereinafter defined)
and prospective investors. These materials shall be hereinafter referred to
collectively as the "sales literature." No person has been authorized to
prepare for, or furnish to, a prospective investor, any sales literature
other than: (i) that described herein; and (ii) so-called "tombstone"
newspaper advertisements/solicitations of interest, limited to identifying
the Offering and the location of sources of further information. Use of any
sales literature is conditioned upon filing with and, if required,
clearance by appropriate regulatory agencies (including, without
limitation, the NASD and any state securities regulator or commissioner).
Such clearance (if provided), however, does not indicate that the
regulatory agency allowing the use of the materials has passed on the
merits of the Offering or the adequacy or accuracy of the sales materials.
Except as described herein, the Company has not authorized the use of other
supplemental literature or sales material in connection with this Offering.
Although it is believed that the information contained in the sales
literature or sales material will not conflict with any of the information
set forth in the Prospectus, the sales literature will not purport to be
complete, and should not be considered as a part of the Prospectus, or as
incorporated in the Prospectus by reference, or as forming the basis of the
Offering.
1.12 AUTHORIZATION OF THE SHARES. The Company has an authorized and
outstanding capitalization as set forth in the Registration Statement and
Prospectus. The sale of the Shares has been duly and validly authorized by
the Company, and when subscriptions for the Shares have been accepted by
the Company as contemplated in the Prospectus and the Shares have been
issued to the respective subscribers, the Shares will represent ownership
in the Company and will conform to the description thereof contained in the
Prospectus. Stockholders have no preemptive rights to purchase or subscribe
for securities of the Company, and the Shares are not convertible or
subject to redemption at the option of the Company. The Shares are entitled
to one vote per Share and do not have cumulative voting rights. Subject to
the rights of the holders of any class of capital stock of the Company
having any preference or priority over the Shares, the Stockholders are
entitled to distributions in such amounts as may be declared by the Board
of Directors from time to time out of funds legally available for such
payments
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and, in the event of liquidation, to share ratably in any assets of the
Company remaining after payment in full of all creditors and provisions for
any liquidation preferences on any outstanding preferred stock ranking
prior to the Shares.
2. OFFERING AND SALE OF THE SHARES. On the basis of the representations,
warranties and agreements herein contained, and subject to the terms and
conditions herein set forth, the Company hereby appoints you as its exclusive
Dealer Manager to solicit and to cause other dealers (as described in Section 2
(a) hereof) to solicit subscriptions for the Shares at the subscription price to
be paid and otherwise upon the other terms and conditions set forth in the
Prospectus and in the Subscription Agreement, and you agree to use your best
efforts as such Dealer Manager to procure subscribers for the Shares, during the
period commencing with the Effective Date and ending on the Termination Date
(the "Offering Period"). The number of Shares, if any, to be reserved for sale
by each Soliciting Dealer may be decided by the mutual agreement, from time to
time, of you and the Company. In the absence of such mutual agreement, the
Company shall, subject to the provisions of Section 2(b) hereof accept
Subscription Agreements based upon a first come, first accepted reservation or
other similar method.
2.1 SOLICITING DEALERS. The Shares offered and sold through you
under this Agreement shall be offered and sold only by you and, at your
sole option, any other securities dealers whom you may retain (collectively
the "Soliciting Dealers"), each of whom are members of the NASD, executing
agreements with you substantially in the form of the Soliciting Dealers
Agreement attached hereto as Exhibit A.
2.2 SUBSCRIPTION AGREEMENTS AND SUBSCRIBERS' FUNDS. Each person
desiring to purchase Shares through you or any other Soliciting Dealer will
be required to complete and execute the Subscription Agreement and to
deliver such document to you or such Soliciting Dealer, together with a
check payable to the order of "LBNA/Escrow Agent for IWRRET" in the amount
of $10.00 per Share.
Each Soliciting Dealer shall forward any such Subscription Agreement
and check to you not later than noon of the next business day after receipt
of such Subscription Agreement, if the Soliciting Dealer conducts its
internal supervisory procedures at the location where the Subscription
Agreement and check were initially received. When such internal supervisory
procedures are to be performed at a different location (the "Final Review
Office"), the Subscription Agreement and check must be transmitted to the
Final Review Office by the end of the next business day following receipt
of the Subscription Agreement and check by the Soliciting Dealer. The Final
Review Office will, by the next business day following receipt of the
Subscription Agreement and check, forward both the Subscription Agreement
and check to you as processing broker-dealer in order that you may complete
your review of the documentation and process the Subscription Agreement and
check. The Company will have representatives available to review the
Subscription Agreement at your location in order to determine whether it
wishes to accept the proposed purchaser as a Stockholder, it being
understood that the Company reserves the unconditional right to reject the
tender of any Subscription Agreement and check (exclusive of the Company's
distribution reinvestment program). Any check received by you directly or
as processing broker-dealer from the Soliciting
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Dealers will, in all cases, be forwarded to the Escrow Agent as soon as
practicable, but in any event by the end of the second business day
following receipt by you of the Subscription Agreement and check. The
Company will promptly notify you or the Soliciting Dealer, as appropriate,
of any rejection, and you shall send the check and the Subscription
Agreement to the Escrow Agent with directions to promptly return the check
and the Subscription Agreement to the rejected subscriber. All subscription
funds may be deposited directly with the Company.
Nothing contained in this Section 2 shall be construed to impose upon
the Company the responsibility of assuring that prospective purchasers meet
the suitability standards contained in the Prospectus or to relieve you or
any of the Soliciting Dealers of the responsibility of complying with the
Rules of the NASD.
2.3 TERMINATION OF THE OFFERING. The Offering Period will terminate
on a date on or before one year from the date of the Prospectus (subject to
requalification in certain states, the Company may extend the Offering
Period from time to time, but in no event for longer than two years from
the date of the Prospectus), subject in any event to the Company's right to
terminate the Offering at any time (the "Termination Date") and the
proceeds will be applied as set forth in the Prospectus.
2.4 DEALER-MANAGER COMPENSATION.
The Company agrees to pay to you a selling commission of 7.5% of the
sales price for each Share sold (except for Special Sales) from the
250,000,000 Shares offered on a "best efforts" basis, as set forth in the
Prospectus under the caption "Plan of Distribution," subject to the
limitations described below. In lieu of reimbursement of specific expenses,
you will also receive, subject to the limitations described herein and in
the Prospectus, a marketing contribution (equal to 2.5%) and due diligence
expense allowance (equal to 0.5%), both aggregating 0.5% of the sale price
from the 250,000,000 Shares offered on a "best efforts" basis (except for
certain Special Sales), some portion of which may be reallowed by you to
the Soliciting Dealers.
Subject to certain conditions and exceptions explained below,
investors making an initial cash investment of at least $3,000 through the
same Soliciting Dealer may receive a reduction of the customary 7.5%
selling commission payable in connection with the purchase of those Shares
in accordance with the following schedule:
<Table>
<Caption>
Amount
of Selling Maximum
Volume Amount of Purchaser's Commission Per
Discount Investment Share
From To
1% $ 250,010 $ 500,000 6%
2% $ 500,010 $ 1,000,000 5%
3% $ 1,000,010 $ 2,500,000 4%
</Table>
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<Table>
4% $ 2,500,010 $ 5,000,000 3%
5% $ 5,000,010 $ 10,000,000 2%
6% $ 10,000,010 more than 1%
$ 10,000,010
</Table>
Any reduction in the amount of the selling commissions in respect of
volume discounts received will be credited to the investor in the form of
additional whole shares or fractional shares. Selling commissions will not
be paid on any such whole shares or fractional shares issued for a volume
discount.
Certain purchases may be combined for the purpose of qualifying for a
volume discount and crediting a purchaser or purchasers with additional
Shares for the above described volume discount, and for determining
commissions payable to you and reallowable to Soliciting Dealers, so long
as all such combined purchases are made through the same Soliciting Dealer
and approved by the Company. A purchaser may combine subscriptions made in
the Offering with other subscriptions in the Offering for the purpose of
computing amounts invested. Purchases by spouses may also be combined and
purchases by any investor may be combined with other purchases of Shares to
be held as a joint tenant or a tenant in common by such investor with
others for purposes of computing amounts invested. Purchases by Tax-Exempt
Entities may only be combined with purchases by other Tax-Exempt Entities
for purposes of computing amounts invested only if investment decisions are
made by the same Person, provided that if the investment decisions are made
by an independent investment adviser, that investment adviser may not have
any direct or indirect beneficial interest in any of the Tax-Exempt
Entities whose purchases are sought to be combined. The investor must mark
the "Additional Investment" space on the Subscription Agreement Signature
Page in order for purchases to be combined. The Company is not responsible
for failing to combine purchases, where the investor fails to mark the
"Additional Investment" space.
If the Subscription Agreements for the purchases to be combined are
submitted at the same time, then the additional Shares to be credited to
the purchasers as a result of such combined purchases will be credited on a
pro rata basis. If the Subscription Agreements for the purchases to be
combined are not submitted at the same time, then any additional Shares to
be credited as a result of such combined purchases will be credited to the
last component purchase, unless the Company is otherwise directed in
writing at the time of such submission; except however, the additional
Shares to be credited to any Tax-Exempt Entities whose purchases are
combined for purposes of the volume discount will be credited only on a pro
rata basis based on the amount of the investment of each Tax-Exempt Entity
and their combined purchases.
Notwithstanding the preceding paragraphs, in no event shall any
investor receive a discount greater than 5% on any purchase of Shares if
such investor already owns, or may be deemed to already own, any Shares.
This restriction may limit the amount of the volume discount available to a
purchaser after the purchaser's initial purchase and the amount of
additional Shares that may be credited to a purchaser as a result of the
combination of purchases.
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In the event the dollar amount of commissions paid for such combined
purchases exceeds the maximum commissions for such combined purchases
(taking the volume discount into effect), you will be obligated to
forthwith return to the Company any excess commissions received. The
Company may adjust any future commissions due to you for any such excess
commissions that have not been returned.
Notwithstanding the foregoing, it is understood and agreed that no
commission shall be payable with respect to particular Shares if the
Company rejects a proposed subscriber's Subscription Agreement, which it
may do for any reason or for no reason, as set forth in the form of
Subscription Agreement. In addition, no selling commission, Marketing
Contribution or Due Diligence Expense Allowance shall be payable in
connection with the sale of Shares directly by the Company, in connection
with the performance of services, to employees and associates of the
Company and its Affiliates, the Advisor, Affiliates of the Advisor, the
Dealer Manager or their respective officers and employees and certain of
their affiliates who request and are entitled to such discount.
All selling commissions payable to you will be paid on a weekly basis,
substantially concurrently with the acceptance of a subscriber as a
Stockholder by the Company, in an amount equal to the selling commissions
payable with respect to such Shares; provided however, the Company reserves
the right, at its sole discretion, to change the frequency of the payment
of such commissions to a monthly basis.
Certain other Special Sales shall be effected directly by the Company
and not pursuant to this Agreement, and no selling commission shall be
payable in connection with such Special Sales, including sales to one or
more Soliciting Dealers and their respective officers and employees and
certain of their respective affiliates who request and are entitled to
purchase Shares net of selling commissions. Furthermore, no selling
commission shall be payable on the Shares credited to an investor as a
result of a volume discount or on sales of Shares to certain investors
whose contracts for investment advisory and related brokerage services
include a fixed or "wrap" fee feature. The term "Special Sales" shall have
the meaning ascribed to it in the Prospectus. The Marketing Contribution
and Due Diligence Expense Allowance will, however, be allowed and paid with
respect to those sales which are "Special Sales" solely by virtue of (a)
the presence of a contract for investment advisory and related brokerage
services with the proposed investor/subscriber which includes a fixed or
"wrap" fee feature , (b) being sales to the Soliciting Dealers and their
respective officers and employees and certain of their respective
affiliates who request and are entitled to purchase Shares net of selling
commissions, and (c) being sales of Shares which are entitled to a volume
discount, including the Shares credited to an investor as a result of a
volume discount. Any subsequent purchases of Shares by investors who
initially purchased Shares net of the 7.5% selling commission are limited
to a maximum discount of 5% of the public offering price per Share.
Certain subscribers to the Company's Shares may agree with their
participating Soliciting Dealer and the Dealer Manager to have selling
commissions due with respect to the purchase of their Shares paid over a
period of up to six years pursuant to a deferred commission option
arrangement (the "Deferred Commission Option"), as more fully
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explained, and subject to the conditions set forth, under the section "Plan
of Distribution--Deferred Commission Option" in the Company's Prospectus,
which section is incorporated by reference herein. Stockholders electing
the Deferred Commission Option will be required to pay a total of $9.40 per
Share purchased upon subscription, rather than $10.00 per Share, with
respect to which $0.10 per Share will be payable by the Company to the
Dealer Manager as selling commissions due upon subscription, which may be
reallowed to the participating Soliciting Dealer by the Dealer Manager. For
each of the six years following such subscription on a date or dates to be
determined by the Dealer Manager, $0.10 per Share will be paid by the
Company to the Dealer Manager as deferred selling commissions with respect
to Shares sold pursuant to the Deferred Commission Option, which amounts
will be deducted from and paid out of cash distributions otherwise payable
to such stockholders holding such Shares, and may be reallowed to the
participating Soliciting Dealer by the Dealer Manager. The net proceeds to
the Company will not be affected by the election of the Deferred Commission
Option. Under this arrangement and based on a $10.00 per Share deemed value
for each Share issued, a stockholder electing the Deferred Commission
Option will pay a 1% selling commission upon subscription, rather than a
7.5% selling commission, and an amount equal to up to a 1.08% selling
commission per year thereafter for up to the next six years which will be
deducted from and paid by the Company out of cash distributions otherwise
payable to such stockholder.
As in any volume discount situation, selling commissions are not paid
on any Shares issued for a volume discount. Therefore, when the deferred
commission option is used, no deductions will be made for deferred
commission obligations from cash distributions payable on the Shares issued
for a volume discount, because there will not be any deferred commission
obligation as to those particular Shares. The number of Shares issued, if
any, for a volume discount, will be determined as described above in
Section 2(d)(i) of the Agreement.
At such time, if any, that the Company's Shares are listed on a
national securities exchange or included for quotation on a national market
system, or such listing or inclusion is reasonably anticipated to occur at
any time prior to the satisfaction of the remaining deferred commission
obligations, the Company shall accelerate all outstanding payment
obligations under the Deferred Commission Option. The amount of the
remaining selling commissions due shall be deducted and paid by the Company
out of cash distributions otherwise payable to such Stockholders during the
time period prior to any such listing of the Shares for trading on a
national securities exchange or inclusion for quotation on a national
market system; provided that, in no event may the Company withhold in
excess of $.65 per Share in the aggregate during the six-year period
following the subscription. The maximum amount that may be withheld and the
maximum number of years for which selling commissions may be deferred will
be lower when the volume discount provisions are also applicable and less
than 6.5% of the selling commissions are deferred. To the extent that the
cash distributions during such time period are insufficient to satisfy the
remaining deferred selling commissions due, the obligations of the Company
and the Company's Stockholders to make any further payments of deferred
selling commissions under the Deferred Commission Option shall terminate
and the Dealer Manager (and participating Soliciting Dealers if the
deferred selling commissions
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are reallowed to them by the Dealer Manager) will not be entitled to
receive any further portion of the unpaid deferred selling commissions
following any such listing for trading or inclusion for quotation of the
Shares.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with you as
follows:
3.1 REGISTRATION STATEMENT. The Company will use its best efforts
to cause the Registration Statement and any subsequent amendments thereto
to become effective as promptly as possible and will not, at any time after
the Effective Date, file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been
advised and furnished a copy at a reasonable time prior to the proposed
filing or to which you shall have reasonably objected or which is not, to
the best of the Company's knowledge in compliance with the Act and the
Rules and Regulations. The Company will prepare and file with the
Commission and will use its best efforts to cause to become effective as
promptly as possible:
any amendments to the Registration Statement or supplements to the Prospectus
which may be required pursuant to the undertakings in the Registration
Statement; and
upon your reasonable request any amendments to the Registration Statement or
supplements to the Prospectus which, in the opinion of you or your counsel, may
be necessary or advisable in view of the requirements of the Act and the Rules
and Regulations in connection with the offer and sale of the Shares during the
Offering Period.
3.2 SEC ORDERS. As soon as the Company is advised or obtains
knowledge thereof, it will advise you of any request made by the Commission
for amending the Registration Statement, supplementing the Prospectus or
for additional information, or of the issuance by the Commission of any
stop order or of any other order preventing or suspending the use of the
Prospectus or the institution of any proceedings for that purpose, and will
use its best efforts to prevent the issuance of any such order and, if any
such order is issued, to obtain the removal thereof as promptly as
possible.
3.3 BLUE SKY QUALIFICATIONS. The Company will use its best efforts
to qualify the Shares for offering and sale under the securities or blue
sky laws of such jurisdictions as you may reasonably request and to make
such applications, file such documents and furnish such information as may
be reasonably required for that purpose. The Company will, at your request,
furnish you copies of all material documents and correspondence sent to or
received from such jurisdictions (including, but not limited to, summaries
of telephone calls and copies of telegrams) and will promptly advise you as
soon as the Company obtains knowledge thereof to the effect that the Shares
are qualified for offering and sale in each such jurisdiction. The Company
will promptly advise you of any request made by the securities
administrators of each such jurisdiction for revising the Registration
Statement or the Prospectus or for additional information or of the
issuance by such securities administrators of any stop order preventing or
suspending the use of the Prospectus or of the institution of any
proceedings for that purpose, and will use its best efforts to prevent the
issuance of any such order and if any such order is
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issued, to obtain the removal thereof as promptly as possible. The Company
will furnish you with a Blue Sky Survey dated as of the Effective Date,
which will be supplemented to reflect changes or additions to the
information disclosed in such survey.
3.4 AMENDMENTS AND SUPPLEMENTS. If at any time when a Prospectus
relating to the Shares is required to be delivered under the Act, any event
shall have occurred to the knowledge of the Company as a result of which
the Prospectus as then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact necessary to
make the statements therein not misleading in light of the circumstances
existing at the time it is so required to be delivered to a subscriber, or
if it is necessary at any time to amend the Registration Statement or
supplement the Prospectus relating to the Shares to comply with the Act,
the Company will promptly notify you thereof and will prepare and file with
the Commission an amendment or supplement which will correct such statement
or effect such compliance.
3.5 COPIES OF REGISTRATION STATEMENT. The Company will furnish you
copies of the Registration Statement (only one of which need be signed and
need include all exhibits), the Prospectus and all amendments and
supplements thereto, including any amendment or supplement prepared after
the Effective Date, and such other information with respect to the Company
as you may from time to time reasonably request, in each case as soon as
available and in such quantities as you may reasonably request.
3.6 QUALIFICATION TO TRANSACT BUSINESS. The Company will take all
steps necessary to ensure that at all times the Company will be validly
existing as a Maryland corporation and will be qualified to do business in
all jurisdictions in which the conduct of its business requires such
qualification and where such qualification is required under local law.
3.7 AUTHORITY TO PERFORM AGREEMENTS. The Company undertakes to
obtain all consents, approvals, authorizations or orders of any court or
governmental agency or body which are required for the performance of this
Agreement and under the Organizational Documents or the consummation of the
transactions contemplated hereby and thereby, respectively, or the
conducting by the Company of the business described in the Prospectus.
3.8 COPIES OF REPORTS. The Company will use its best efforts to
furnish to you as promptly as shall be practicable the following:
a copy of each report or general communication (whether financial or otherwise)
sent to the Stockholders;
a copy of each report (whether financial or otherwise) filed with the
Commission; and
such other information as you may from time to time reasonably request regarding
the financial condition and operations of the Company including, but not limited
to, copies of operating statements of properties acquired by the Company.
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3.9 USE OF PROCEEDS. The Company will apply the proceeds from the
sale of the Shares as stated in the Prospectus or, if for any reason
whatsoever all or a portion of the proceeds of the Offering are not applied
or committed for use as stated within 12 months of the Termination Date,
the Company shall promptly return those proceeds from the sale of the
Shares not so applied or committed as stated in the Prospectus, with
interest, to the subscribers, each subscriber sharing in the return in the
ratio that the number of the Shares owned by such subscriber bears to the
total number of the Shares owned by all subscribers.
3.10 ORGANIZATION AND OFFERING EXPENSES. In no event shall the total
of the organizational expenses and expenses of the Offering to be paid
directly by the Company exceed 15% of the gross proceeds of the Offering.
4. COVENANTS OF THE DEALER MANAGER. You covenant and agree with the
Company on your behalf and on behalf of the Soliciting Dealers as follows:
4.1 COMPLIANCE WITH LAWS. With respect to your participation and
the participation by each Soliciting Dealer in the offer and sale of the
Shares (including, without limitation any resales and transfers of Shares),
you agree, and each Soliciting Dealer agrees, to comply and shall comply
with any applicable requirements of the Act, the Securities Exchange Act of
1934, as amended, and the published rules and regulations of the Commission
thereunder, and the applicable state securities or blue sky laws, and the
Rules of the NASD, specifically including, but not in any way limited to,
Rules 2440, 2730, 2740, and 2750 therein. In particular, you agree not to
deliver the sales literature (as defined above) to any person prior to the
Effective Date and, after the Effective Date, not to deliver the sales
literature to any person unless the sales literature is accompanied or
preceded by the Prospectus. In addition, you shall, in accordance with
applicable law or as prescribed by any state securities administrator,
provide or cause Soliciting Dealers to provide to any prospective investor
copies of any prescribed document which is part of the Registration
Statement. If you intend to use electronic delivery means in the
distribution of the Prospectus to any person, you represent and agree that
you will comply with all appropriate procedures in compliance with
requirements of the Commission.
With respect to your and each Soliciting Dealer's participation in any
resales or transfers of the Shares, you agree, and each Soliciting Dealer
agrees, to comply and shall comply with any applicable requirements as set
forth above. In addition, you and each Soliciting Dealer agree that should
you or they assist with the resale or transfer of the Shares, you and each
Soliciting Dealer will fulfill the obligations pursuant to Sections 3(b)
and 4(d) of Rule 2810 of the Rules of the NASD.
4.2 NO ADDITIONAL INFORMATION. In offering the Shares for sale, you
and each Soliciting Dealer shall not give or provide any information or
make any representation other than those contained in the Prospectus, the
sales literature or any other document provided to you for such purpose by
the Company.
4.3 SALES OF SHARES. You and each Soliciting Dealer shall solicit
purchases of the Shares only in the jurisdictions in which you and such
Soliciting Dealer are legally
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qualified to so act and in which you and each Soliciting Dealer have been
advised by the Company that such solicitations can be made.
4.4 SUBSCRIPTION AGREEMENT. Subscriptions will be submitted by you
and each Soliciting Dealer to the Company only on the form which is
included as Appendix C to the Prospectus or as such form of Subscription
Agreement may be revised by the Company. You and each Soliciting Dealer
understand and acknowledge that the Subscription Agreement must be executed
by the subscriber. In addition, you and each Soliciting Dealer shall ensure
that no Subscription Agreement is presented to the Company for acceptance
until at least five (5) business days after the date on which the
subscriber received the Prospectus.
4.5 SUITABILITY. In offering the Shares to any person, you and each
Soliciting Dealer shall have reasonable grounds to believe (based on such
information as the investment objectives, other investments, financial
situation and needs of the person or any other information known by you
after due inquiry) that: (i) such person has the capability of
understanding the fundamental aspects of the Company, which capacity may be
evidenced by the following: (A) the nature of employment experience; (B)
educational level achieved; (C) access to advice from qualified sources,
such as attorneys, accountants and tax advisors; and (D) prior experience
with investments of a similar nature; (ii) such person has apparent
understanding of: (A) the fundamental risks and possible financial hazards
of this type of investment; (B) the lack of liquidity of this investment;
(C) the Advisor's role in directing or managing the investment; and (D) the
tax consequences of the investment; (iii) such person has the financial
capability to invest in the Company and you or each Soliciting Dealer (as
the case may be) shall maintain records disclosing the basis upon which you
and each Soliciting Dealer determined the suitability of any persons
offered Shares; and (iv) such other information as we may reasonably
request. Notwithstanding the foregoing, you and each Soliciting Dealer
shall have reasonable grounds to believe that such person has either: (a) a
minimum annual gross income of $45,000 and a minimum net worth (exclusive
of home, home furnishing and automobiles) of $45,000; or (b) a minimum net
worth (determined with the foregoing exclusions) of $150,000. Suitability
standards are higher in certain states as set forth in the Subscription
Agreement and the Prospectus. You and/or the Soliciting Dealers shall
maintain, for at least six years, a record of the information obtained to
determine that an investor meets the suitability standards imposed on the
offer and sale of the Shares (both at the time of the initial subscription
and at the time of any additional subscriptions) and a representation of
the investor that the investor is investing for the investor's own account
or, in lieu of such representation, information indicating that the
investor for whose account the investment was made met the suitability
standards.
4.6 DUE DILIGENCE. Prior to offering the Shares for sale, you and
each Soliciting Dealer shall have conducted an inquiry such that you have
reasonable grounds to believe, based on information made available to you
by the Company through the Prospectus or other materials, that all material
facts are adequately and accurately disclosed and provide a basis for
evaluating the purchase of the Shares. In determining the adequacy of
disclosed facts pursuant to the foregoing, you and each Soliciting Dealer
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may obtain, upon request, information on material facts relating at a
minimum to the following:
4.6.1.1 items of compensation;
4.6.1.2 Company properties;
4.6.1.3 tax aspects;
4.6.1.4 conflicts and risk factors; and
4.6.1.5 appraisals and other pertinent reports.
Notwithstanding the foregoing, you and each Soliciting Dealer may rely
upon the results of an inquiry conducted by another Soliciting Dealer,
provided that:
(i) such Soliciting Dealer has reasonable grounds to
believe that such inquiry was conducted with due care;
(ii) the results of the inquiry were provided to you with
the consent of the Soliciting Dealer conducting or directing the
inquiry; and
(iii) no Soliciting Dealer that participated in the inquiry
is an affiliate of the Company or the Advisor.
4.7 OFFERING PRICE ADJUSTMENT. If, after the Effective Date, the
Company shall adjust the initial purchase price of $10.00 per Share for the
250,000,000 Shares to be offered for sale on a "best efforts" basis in the
Offering, you agree (and each Soliciting Dealer agrees) that the total of
all compensation payable to the Dealer Manager as provided in Section 2(d)
above, shall be adjusted proportionally. In no event shall the total of all
such compensation paid to you and to all Soliciting Dealers (i.e., the
aggregate of the selling commission and the marketing contribution and due
diligence expense allowance) exceed five-tenths of one percent (0.5%) of
the total of all subscription proceeds received by the Company.
Prior to the sale of the Shares, you and each Soliciting Dealer shall inform the
prospective purchaser of all pertinent facts relating to the liquidity and
marketability of the Shares during the term of the investment.
5. EXPENSES. The Company agrees with you that, whether or not the
transactions contemplated in this Agreement are consummated, the Company will
pay all actual fees and expenses incident to the performance of its obligations
under this Agreement, including, but not limited to:
(a) the Commission's registration fee;
(b) expenses of printing the Registration Statement, the Prospectus
and any amendment or supplement thereto and the expense of furnishing to
you copies of the
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Registration Statement, the Prospectus and any amendment or supplement
thereto as herein provided;
(c) fees and expenses of its and your accountants and counsel in
connection with the Offering contemplated by this Agreement;
(d) fees and expenses incurred in connection with any required
filing with the NASD;
(e) all of your expenses in connection with the Offering, subject
to the limitations contained in the Prospectus, including, but not limited
to, the travel expenses and similar expenses of your employees and
personnel incurred in connection with the Offering; and
(f) expenses of qualifying the Shares for offering and sale under
state blue sky and securities laws, and expenses in connection with the
preparation and printing of the Blue Sky Survey.
6. CONDITIONS OF OBLIGATIONS. Your obligations hereunder shall be subject
to the accuracy of the representations and warranties on the part of the Company
contained in Section 1 hereof, the accuracy of the statements of the Company
made pursuant to the provisions hereof, to the performance by the Company of its
covenants, agreements and obligations contained in Sections 3 and 5 hereof, and
to the following additional conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement shall have become effective not later than 5:00 p.m., Chicago,
Illinois time, on the day following the date of this Agreement, or such
later time and date as you and the Company shall have agreed; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the Commission and, to the best knowledge of the Company or you,
no proceedings for that purpose shall have been instituted, threatened or
contemplated by the Commission; and any request by the Commission for
additional information (to be included in the Registration Statement or
Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of you or your counsel.
(b) ACCURACY OF REGISTRATION STATEMENT. You shall not have advised
the Company that the Registration Statement or the Prospectus, or any
amendment or any supplement thereto, in the reasonable opinion of you or
your counsel, contains any untrue statement of fact which is material, or
omits to state a fact which is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you, each
Soliciting Dealer and each person, if any, who controls you or any
Soliciting Dealer within the meaning of the Act (collectively, the
"Indemnified Parties"), against any and all loss, liability, claim, damage
and expense whatsoever caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
15
<Page>
Prospectus or any amendment or supplement thereto, or the omission or
alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Such indemnification shall be
subject to the provisions of Sections 7(b) and (c) of this Agreement.
The Company shall not provide indemnification for any liability or
loss suffered by you, nor shall it provide that you be held harmless for
any liability suffered by the Company unless all of the following
conditions are met: (i) the party seeking indemnification has determined,
in good faith, that its course of conduct, if such course of conduct caused
the loss or liability, was in the best interests of the Company; (ii) the
person seeking indemnification was acting on behalf of or performing
services on behalf of the Company; (iii) such liability or loss was not the
result of negligence or misconduct on the part of the party seeking
indemnification or the Indemnified Party; and (iv) such indemnification or
agreement to be held harmless is recoverable only out of the assets of the
Company and not from the Stockholders.
In no case shall the Company be liable under this indemnity agreement
with respect to any claim made against any of the Indemnified Parties
unless the Company shall have been notified in writing (in the manner
provided in Section 10 hereof) of the nature of the claim within a
reasonable time after the assertion thereof; but the failure to so notify
the Company shall not relieve the Company from any liability which the
Company would have incurred otherwise than on account of this indemnity
agreement. The Company shall be entitled to participate, at its own
expense, in the defense of, or if it so elects within a reasonable time
after receipt of such notice, to assume the defense of any claim or suit
for which any of the Indemnified Parties seek indemnification hereunder. If
the Company elects to assume said defense, such defense shall be conducted
by counsel chosen by it and reasonably satisfactory to the Indemnified
Parties.
In the event that the Company elects to assume the defense of any such
suit and retains such counsel, the Company shall not be liable under this
Section 7 to the Indemnified Parties in the suit for any legal or other
expenses subsequently incurred by the Indemnified Parties, and the
Indemnified Parties shall bear the fees and expenses of any additional
counsel retained by the Indemnified Parties unless: (A) the employment of
counsel by the Indemnified Party has been authorized by the Company; or (B)
the Company shall not in fact have employed counsel to assume the defense
of such action, in either of which events such fees and expenses shall be
borne by the Company.
The Company may advance amounts to the Indemnified Parties for legal
and other expenses and costs incurred as a result of any legal action for
which indemnification is being sought only if all of the following
conditions are satisfied: (i) the legal action relates to acts or omissions
with respect to the performance of duties or services by one or more
Indemnified Parties for or on behalf of the Company; (ii) the legal action
is initiated by a third party who is not a Stockholder and a court of
competent jurisdiction specifically approves such advancement; and (iii)
the Indemnified Parties receiving such advances undertake to repay the
advanced funds to the Company, together
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<Page>
with the applicable legal rate of interest thereon, in cases in which such
Indemnified Parties are thereafter found not to be entitled to
indemnification.
Notwithstanding the foregoing provisions of this Section 7, the
Company will not be liable in any such case to the extent that any loss,
liability, claim, damage or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of you or any Soliciting Dealer
for use in the preparation of the Registration Statement (or any amendment
thereof) or the Prospectus (or any supplement thereto). The foregoing
indemnity agreement is subject to the further condition that, insofar as it
relates to any untrue statement, alleged untrue statement, omission or
alleged omission made in the Prospectus but eliminated or remedied in any
amendment or supplement thereto, such indemnity agreement shall not inure
to your benefit or to any Soliciting Dealer from whom the person asserting
any loss, liability, claim, damage or expense purchased the Shares which
are the subject thereof (or to the benefit of any person who controls you
or any Soliciting Dealer), if a copy of the Prospectus as so amended or
supplemented was not sent or given to such person at or prior to the time
the subscription of such person was accepted by the Company; but only if a
copy of the Prospectus (as so amended or supplemented) had been supplied by
the Company to you or any Soliciting Dealer prior to such acceptance. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) The indemnification and agreement to hold harmless provided in
subparagraph (a) of this Section 7 is further limited to the extent that no
such indemnification by the Company of you or a Soliciting Dealer shall be
permitted under this Agreement for or arising out of an alleged violation
of federal or state securities laws unless one or more of the following
conditions are met: (i) there has been a successful adjudication on the
merits of each count involving alleged securities law violations by you or
any Soliciting Dealer and a court of competent jurisdiction has approved
indemnification of the litigation costs; (ii) such claims against you or
any Soliciting Dealer have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee and the
court has approved indemnification of the litigation costs; or (iii) a
court of competent jurisdiction approves a settlement of the claims against
you or any Soliciting Dealer and finds that indemnification of the
settlement and related costs should be made and the court considering the
request has been advised of the position of the Commission and of the
published positions of the Tennessee Securities Division and any other
state securities regulatory authority in which securities of the Company
were offered and sold respecting the availability and/or propriety of
indemnification for securities law violations.
(c) You and each Soliciting Dealer agree to indemnify and hold
harmless the Company, and each person, if any, who controls the Company
within the meaning of the Act and any controlling person of the Company:
(i) to the same extent as in the foregoing indemnity from the Company to
you and each Soliciting Dealer, but only with reference to statements or
omissions based upon the information relating to you or any Soliciting
Dealer furnished in writing by you or such Soliciting Dealer or on your or
their behalf for use in the Registration Statement or the Prospectus, or
any amendment or supplement
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<Page>
thereto; and (ii) for any violation by you or any Soliciting Dealer in the
sale of the Shares of any applicable state or federal law or any rule,
regulation or instruction thereunder, provided that such violation is not
committed in reliance on any violation by the Company of such law, rule,
regulation or instruction.
You and each Soliciting Dealer further agree to indemnify and hold
harmless the Company and any controlling person of the Company against any
losses, liabilities, claims, damages or expenses to which the Company or
any such controlling person may become subject under the securities or blue
sky laws of any jurisdiction insofar as such losses, liabilities, claims,
damages or expenses (or actions, proceedings or investigations in respect
thereof) arise by reason of a sale of the Shares through the efforts of you
(with respect to sales effected without the assistance of a Soliciting
Dealer) or a Soliciting Dealer (with respect to sales effected by such
Soliciting Dealer) which is effected other than in accordance with the Blue
Sky Survey supplied to you by the Company (a "NonPermitted Sale"), whether
such NonPermitted Sale is caused by a sale in a jurisdiction other than
those specified in the Blue Sky Survey, by a sale in a jurisdiction in
which you or the Soliciting Dealer is not registered to sell the Shares or
which results in a sale in a jurisdiction in excess of the number of Shares
permitted to be sold in such jurisdiction, and will reimburse the Company
or any such controlling person for any legal fees, monetary penalties or
other expenses reasonably incurred by any of them in connection with
investigating, curing or defending against any such losses, liabilities,
claims, damages, actions, proceedings or investigations. This indemnity
agreement will be in addition to any liability which you or any Soliciting
Dealer may otherwise have.
(d) The notice provisions contained in Section 7(a) hereof,
relating to notice to the Company, shall be equally applicable to you and
each Soliciting Dealer if the Company or any controlling person of the
Company seeks indemnification pursuant to Section 7(c) hereof. In addition,
you and each Soliciting Dealer may participate in the defense, or assure
the defense, of any such suit so sought under Section 7(c) hereof and have
the same rights and privileges as the Company enjoys with respect to such
suits under Section 7(a) hereof.
8. TERMINATION OF THIS AGREEMENT. This Agreement may be terminated by you
in the event that the Company shall have materially failed to comply with any of
the material provisions of this Agreement on its part to be performed at or
prior to the Effective Date or if any of the representations, warranties,
covenants or agreements of the Company herein contained shall not have been
materially complied with or satisfied within the times specified.
In any case, this Agreement shall terminate at the close of business on the
Termination Date. Termination of this Agreement pursuant to this Section 8 shall
be without liability of any party to any other party other than as provided in
Sections 5 and 7 hereof, which shall survive such termination.
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of the Company submitted pursuant hereto shall remain
operative and in full force
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and effect, regardless of any investigation made by or on behalf of you or any
person who controls you, or by or on behalf of the Company, and shall survive
the Termination Date.
10. NOTICES. All communications hereunder shall be in writing and, if sent
to you, shall be mailed by registered mail or delivered, telefacsimilied or
telegraphed and confirmed in writing to Inland Securities Corporation, 2901
Butterfield Road, Oak Brook, Illinois 60523, (Attention: Ms. Brenda G. Gujral,
President) and, if sent to the Company, shall be mailed by registered mail or
delivered, telefacsimilied or telegraphed and confirmed in writing to Inland
Western Retail Real Estate Trust, Inc., 2901 Butterfield Road, Oak Brook,
Illinois 60523, (Attention: Ms. Roberta S. Matlin, Vice President -
Administration).
11. REFERENCE TO INLAND SECURITIES CORPORATION. All references herein to
Inland Securities Corporation or the Dealer Manager hereunder shall be deemed to
include all successors and assigns of Inland Securities Corporation.
12. PARTIES. This Agreement shall inure to the benefit of and be binding
upon you, the Company and the successors and assigns of you and the Company.
This Agreement and the conditions and provisions hereof, are intended to be and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and controlling persons, and for the benefit of no other
person, firm or corporation, and the term "successors and assigns," as used
herein, shall not include any purchaser of Shares as such.
13. APPLICABLE LAW. This Agreement and any disputes relative to the
interpretation or enforcement hereto shall be governed by and construed under
the internal laws, as opposed to the conflicts of laws provisions, of the State
of Illinois.
14. EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective at
5:00 p.m., Chicago, Illinois time, on the Effective Date, or at such earlier
time as you and the Company agree.
15. NOT A SEPARATE ENTITY. Nothing contained herein shall constitute you
and/or the Soliciting Dealers or any of them an association, partnership,
limited liability company, unincorporated business or other separate entity.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return it to us, whereupon this instrument will become a binding
agreement between you and the Company in accordance with its terms.
Inland Western Retail Real Estate Trust, Inc.,
a Maryland corporation
By:
-------------------------------------------
Title: Chairman
----------------------------------------
Accepted as of the date
first above written:
Inland Securities Corporation
By:
-----------------------------
Title: President
--------------------------
<Page>
EXHIBIT A TO DEALER MANAGER AGREEMENT
INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.
FORM OF SOLICITING DEALERS AGREEMENT
Ladies and Gentlemen:
We have entered into an agreement (the "Dealer Manager Agreement") which is
a part hereof and attached hereto, with Inland Western Retail Real Estate Trust,
Inc., a Maryland corporation (the "Company"), under which we have agreed to use
our best efforts to solicit subscriptions for the shares of common stock (the
"Shares") in the Company. The Company is offering to the public an aggregate
maximum of up to 250,000,000 Shares at a price of $10.00 per Share on a "best
efforts" basis and up to 20,000,000 Shares issued pursuant to the Company's
distribution reinvestment program at a price of $9.50 per Share (the
"Offering").
In connection with the performance of our obligations under Section 2 of
the Dealer Manager Agreement, we are authorized to retain the services of
securities dealers who are members of the National Association of Securities
Dealers, Inc. (the "Soliciting Dealers") to solicit subscriptions. You are
hereby invited to become a Soliciting Dealer and, as such, to use your best
efforts to solicit subscribers for Shares, in accordance with the following
terms and conditions:
1. A registration statement (the "Registration Statement") with respect
to the 270,000,000 Shares has been filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), and has become effective. The 270,000,000 Shares and the Offering are
more particularly described in the enclosed prospectus (the "Prospectus") which
is part of the Registration Statement. Additional copies of the Prospectus will
be supplied to you in reasonable quantities upon request and may be provided to
you in electronic version by us or by the Company. We will also provide you with
reasonable quantities of any supplemental literature prepared by the Company in
connection with the offering of the Shares (the "Offering").
2. Solicitation and other activities by the Soliciting Dealers hereunder
shall be undertaken only in accordance with the Dealer Manager Agreement, this
Agreement, the Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the applicable rules and regulations of the Commission, the
Blue Sky Survey hereinafter referred to and the Rules of the National
Association of Securities Dealers, Inc. (the "NASD"), specifically including,
but not in any way limited to, NASD Rules 2440, 2730, 2740, and 2750. In
offering the sale of Shares to any person, each Soliciting Dealer shall have
reasonable grounds to believe (based on such information as the investment
objectives, other investments, financial situation and needs of the person or
any other information known by you after due inquiry) that: (i) such person is
or will be in a financial position appropriate to enable such person to realize
to a significant extent the benefits described in the Prospectus and has a net
worth sufficient to sustain the risks inherent in the program, including loss of
investment and lack of liquidity; (ii) the purchase of the Shares is otherwise
suitable for such person, and each Soliciting Dealer shall maintain records
disclosing the basis upon which each Soliciting Dealer determined the
suitability of any persons offered
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Shares; and (iii) such person has either: (a) a minimum annual gross income of
$45,000 and a minimum net worth (exclusive of home, home furnishings and
automobiles) of $45,000; or (b) a minimum net worth (determined with the
foregoing exclusions) of $150,000.
If the investor is a resident of California, Michigan, Iowa, Massachusetts,
Missouri, Oregon or Tennessee, the investor must have either: (i) a minimum net
worth (excluding home, home furnishings and automobiles) of $225,000; or (ii) a
minimum annual gross income of $60,000 and a minimum net worth (exclusive of
home, home furnishings and automobiles) of $60,000.
If the investor is a resident of Maine, the investor must have either: (i)
a minimum net worth (excluding home, home furnishings and automobiles) of
$200,000; or (ii) a minimum annual gross income of $50,000 and a minimum net
worth (exclusive of home, home furnishings and automobiles) of $50,000.
In addition, if the investor is a resident of Kansas, Missouri, Ohio or
Pennsylvania, the investment may not exceed 10% of the investor's liquid net
worth.
Each Soliciting Dealer agrees: (i) to deliver to each person who subscribes
for the Shares, a Prospectus, as then supplemented or amended, prior to the
tender of his subscription agreement (the "Subscription Agreement"); (ii) to
comply promptly with the written request of any person for a copy of the
Prospectus during the period between the effective date of the Registration
Statement and the later of the termination of the distribution of the Shares or
the expiration of 40 days after the first date upon which the Shares were
offered to the public; (iii) to deliver in accordance with applicable law or as
prescribed by any state securities administrator to any person a copy of any
prescribed document included within the Registration Statement; and (iv) to
maintain in its files for at least six years, documents disclosing the basis
upon which the determination of suitability was reached as to each purchaser of
Shares. If any such Soliciting Dealer intends to use electronic delivery means
in distributing the Prospectus to any person, such Soliciting Dealer represents
and agrees that it will comply with all appropriate procedures in compliance
with requirements of the Commission.
3. Subject to the terms and conditions set forth herein and in the Dealer
Manager Agreement, the Company shall pay to you a selling commission of 7.5% of
the price paid per Share for all Shares sold (except for Special Sales) from the
250,000,000 Shares offered on a "best efforts" basis for which you have acted as
Soliciting Dealer pursuant to this Agreement.
Subject to certain conditions and exceptions explained below, investors
making an initial cash investment of at least $3,000 through the same Soliciting
Dealer may receive a reduction of the customary 7.5% selling commission payable
in connection with the purchase of those Shares in accordance with the following
schedule:
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<Table>
<Caption>
Amount of Purchaser's Investment
Amount of Selling ------------------------------------------------ Maximum Commission
Volume Discount From To Per Share
- ----------------- --------------------- ------------------------ ------------------
1% $ 250,010 $ 500,000 6%
2% $ 500,010 $ 1,000,000 5%
3% $ 1,000,010 $ 2,500,000 4%
4% $ 2,500,010 $ 5,000,000 3%
5% $ 5,000,010 $ 10,000,000 2%
6% $ 10,000,010 more than $ 10,000,010 1%
</Table>
Any reduction in the amount of the selling commissions in respect of volume
discounts received will be credited to the investor in the form of additional
whole shares or fractional shares. Selling commissions will not be paid on any
such whole shares or fractional shares issued for a volume discount.
The agreement between the subscriber and the Soliciting Dealer as to the
method of effecting the volume discount and the amount of the volume discount
must be set forth in writing in an instrument satisfactory in form and substance
to the Company and to the Dealer Manager.
Certain purchases may be combined for the purpose of qualifying for a
volume discount and crediting a purchaser or purchasers with additional Shares
for the above described volume discount, and for determining commissions
reallowable to you, so long as all such combined purchases are made through you
and approved by the Company. A purchaser may combine subscriptions made in the
Offering with other subscriptions in the Offering, for the purpose of computing
amounts invested. Purchases by spouses may be combined and purchases by any
investor may be combined with other purchases of Shares to be held as joint
tenants or a tenant in common by such investor with others for purposes of
computing amounts invested. Purchases by tax-exempt entities may only be
combined with purchases by other tax-exempt entities for purposes of computing
amounts invested only if investment decisions are made by the same Person,
provided that if the investment decisions are made by an independent investment
adviser, that investment adviser may not have any direct or indirect beneficial
interest in any of the tax-exempt entities whose purchases are sought to be
combined. The investor must mark the "Additional Investment" space on the
Subscription Agreement Signature Page in order for purchases to be combined. The
Company is not responsible for failing to combine purchases, where the investor
fails to mark the "Additional Investment" space.
If the Subscription Agreements for the purchases to be combined are
submitted at the same time, then the additional Shares to be credited to the
purchasers as a result of such combined purchases will be credited on a pro rata
basis. If the Subscription Agreements for the purchases to be combined are not
submitted at the same time, then any additional Shares to be credited as a
result of such combined purchases will be credited to the last component
purchase, unless the Company is otherwise directed in writing at the time of
such submission; except however, the additional Shares to be credited to any
Tax-Exempt Entities whose purchases are combined for purposes of the volume
discount will be credited only on a pro rata basis based on the amount of the
investment of each Tax-Exempt Entity and their combined purchases.
Notwithstanding the preceding paragraphs, in no event shall any investor
receive a discount greater than 6% on any purchase of Shares if such investor
already owns, or may be
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deemed to already own, any Shares. This restriction may limit the amount of the
volume discount available to a purchaser after the purchaser's initial purchase
and the amount of additional Shares that may be credited to a purchaser as a
result of the combination of purchases.
In the event the dollar amount of commissions paid for such combined
purchases exceeds the maximum commissions for such combined purchases (taking
the volume discount into effect), you will be obligated to forthwith return to
the Dealer Manager (for credit to the Company) any excess commissions received.
The Dealer Manager may adjust any future commissions due to you for any such
excess commissions that have not been returned.
You (and other Soliciting Dealers) also may receive an amount equal to a
maximum of an additional 0.5% of the price per Share for all Shares sold (except
for certain Special Sales) from the 250,000,000 Shares offered on a "best
efforts" basis for which you have acted as Soliciting Dealer hereunder, as a
sales credit (as described in the following paragraph) (equal to 2.5%) and due
diligence expense allowance (equal to 0.5%). However, except to the extent set
forth below, such amounts will only be paid to a Soliciting Dealer for actual
marketing and due diligence expenses. Furthermore, you (and other Soliciting
Dealers) will not be paid any portion of the wholesaling fees paid in connection
with the Offering. Such wholesaling fees and the sales credit described in the
following paragraph are included within the maximum Marketing Contribution.
You (and other Soliciting Dealers) who sell more than a predetermined
number of Shares (to be determined by the Dealer Manager annually on a calendar
year basis) shall be entitled to receive a sales credit in the amount of 1% of
the price of all Shares sold by that Soliciting Dealer, which amount(s) shall be
paid quarterly, in arrears, upon first reaching the predetermined annual
threshold and each quarter thereafter during the calendar year in which the
Soliciting Dealer is credited with additional sales. Certain marketing and due
diligence expenses such as Soliciting Dealer conferences and due diligence fees
may be advanced to a Soliciting Dealer and later deducted from that Soliciting
Dealer's sales credit. Any sales credit shall be deducted from the maximum
Marketing Contribution, which may otherwise be reallowable to the Soliciting
Dealer.
You (and other Soliciting Dealers) may reallow any portion of the above
sales credit to its registered representatives as is permitted under applicable
law and regulations including, without limitation, the federal and any
applicable state securities laws, any rules and/or regulations thereunder and
the rules and regulations of the NASD.
In connection with the performance of services, employees, Directors and
associates of the Company and its Affiliates, the Advisor, Affiliates of the
Advisor, the Dealer Manager and their respective officers and employees and
certain of their affiliates will be permitted to purchase Shares, as Special
Sales, net of selling commissions, the Marketing Contribution and the Due
Diligence Expense Allowance, and you shall not be entitled to receive any
compensation attributable to any such purchase(s).
Certain other Special Sales shall be effected directly by the Company and
not pursuant to this Agreement, and no selling commission shall be payable in
connection with such Special Sales, including sales to one or more Soliciting
Dealers and their respective officers and employees and certain of their
respective affiliates who request and are entitled to purchase
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Shares net of selling commissions. Furthermore, no selling commission shall be
payable on the Shares credited to an investor as a result of a volume discount
or on sales of Shares to certain investors whose contracts for investment
advisory and related brokerage services include a fixed or "wrap" fee feature.
The term "Special Sales" shall have the meaning ascribed to it in the
Prospectus. The Marketing Contribution and Due Diligence Expense Allowance will,
however, be allowed and paid with respect to those sales which are "Special
Sales" solely by virtue of (a) the presence of a contract for investment
advisory and related brokerage services with the proposed investor/subscriber
which includes a fixed or "wrap" fee feature , (b) being sales to the Soliciting
Dealers and their respective officers and employees and certain of their
respective affiliates who request and are entitled to purchase Shares net of
selling commissions, and (c) being sales of Shares which are entitled to a
volume discount, including the Shares credited to an investor as a result of a
volume discount. Any subsequent purchases of Shares by investors who initially
purchased Shares net of the 7.5% selling commission are limited to a maximum
discount of 6% of the public offering price per Share.
Your compensation may also be adjusted in the manner set forth in Section
4.7 of the Dealer Manager Agreement.
Notwithstanding the foregoing, it is understood and agreed that no
commission shall be payable with respect to particular Shares if the Company
rejects a proposed subscriber's Subscription Agreement, which it may do, as
provided in the form of Subscription Agreement for any reason or for no reason.
Accordingly, you shall have no authority to issue a confirmation (pursuant to
Exchange Act Rule 10b-10) to any subscriber; such authority residing solely in
us, as the Dealer Manager and processing broker-dealer.
Certain subscribers to the Company's Shares may agree with their
participating Soliciting Dealer and the Dealer Manager to have selling
commissions due with respect to the purchase of their Shares paid over a period
of up to six years pursuant to a deferred commission option arrangement (the
"Deferred Commission Option"), as more fully explained, and subject to the
conditions set forth, under the section "Plan of Distribution--Deferred
Commission Option" in the Company's Prospectus, which section is incorporated by
reference herein. Stockholders electing the Deferred Commission Option will be
required to pay a total of $9.40 per Share purchased upon subscription, rather
than $10.00 per Share, with respect to which $0.10 per Share will be payable by
the Company to the Dealer Manager as selling commissions due upon subscription,
which may be reallowed to the participating Soliciting Dealer by the Dealer
Manager. For each of the six years following such subscription on a date or
dates to be determined by the Dealer Manager, $0.10 per Share will be paid by
the Company to the Dealer Manager as deferred selling commissions with respect
to Shares sold pursuant to the Deferred Commission Option, which amounts will be
deducted from and paid out of cash distributions otherwise payable to such
stockholders holding such Shares, and may be reallowed to the participating
Soliciting Dealer by the Dealer Manager. The net proceeds to the Company will
not be affected by the election of the Deferred Commission Option. Under this
arrangement and based on a $10.00 per Share deemed value for each Share issued,
a stockholder electing the Deferred Commission Option will pay a 1% selling
commission upon subscription, rather than a 7.5% selling commission, and an
amount equal to up to a 1.08% selling commission per year thereafter for up to
the next six years which will be deducted from and paid by the Company out of
cash distributions otherwise payable to such stockholder.
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As in any volume discount situation, selling commissions are not paid on
any Shares issued for a volume discount. Therefore, when the deferred commission
option is used, no deductions will be made for deferred commission obligations
from cash distributions payable on the Shares issued for a volume discount,
because there will not be any deferred commission obligation as to those
particular Shares. The number of Shares issued, if any, for a volume discount,
will be determined as described above in Section 2(d)(i) of the Agreement.
At such time, if any, that the Company's Shares are listed on a national
securities exchange or included for quotation on a national market system, or
such listing or inclusion is reasonably anticipated to occur at any time prior
to the satisfaction of the remaining deferred commission obligations, the
Company shall accelerate all outstanding payment obligations under the Deferred
Commission Option. The amount of the remaining selling commissions due shall be
deducted and paid by the Company out of cash distributions otherwise payable to
such Stockholders during the time period prior to any such listing of the Shares
for trading on a national securities exchange or inclusion for quotation on a
national market system; provided that, in no event may the Company withhold in
excess of $.65 per Share in the aggregate during the six-year period following
the subscription. The maximum amount that may be withheld and the maximum number
of years for which selling commissions may be deferred will be lower when the
volume discount provisions are also applicable and less than 6.5% of the selling
commissions are deferred. To the extent that the cash distributions during such
time period are insufficient to satisfy the remaining deferred selling
commissions due, the obligations of the Company and the Company's Stockholders
to make any further payments of deferred selling commissions under the Deferred
Commission Option shall terminate and the Dealer Manager (and participating
Soliciting Dealers if the deferred selling commissions are reallowed to them by
the Dealer Manager) will not be entitled to receive any further portion of the
unpaid deferred selling commissions following any such listing for trading or
inclusion for quotation of the Shares.
4. We reserve the right to notify you by telegram or by other means of
the number of Shares reserved for sale by you. Such Shares will be reserved for
sale by you until the time specified in our notification to you. Sales of any
reserved Shares after the time specified in the notification to you or any
requests for additional Shares will be subject to rejection in whole or in part.
5. Payments for Shares shall be made by checks payable to "LBNA/Escrow
Agent for IWRRET" and forwarded together with a copy of the Subscription
Agreement, which is attached as Appendix C to the Prospectus or such other form
of Subscription Agreement as may be revised by the Company, executed by the
subscriber, to Inland Securities Corporation, 2901 Butterfield Road, Oak Brook,
Illinois 60523, not later than noon of the next business day after receipt of
such Subscription Agreement and check (when your internal supervisory procedures
are completed at the site at which the Subscription Agreement and check were
received by you) or, when your internal supervisory procedures are performed at
a different location (the "Final Review Office"), you shall transmit the check
and Subscription Agreement to the Final Review Office by the end of the next
business day following your receipt of the Subscription Agreement and check. The
Final Review Office will, by the end of the next business day following its
receipt of the Subscription Agreement and check, forward both the Subscription
Agreement and check to the Dealer Manager as processing broker-dealer. If any
Subscription Agreement
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solicited by you is rejected by the Company, the Subscription Agreement and
check will be forwarded to the escrow agent for prompt return to the rejected
subscriber.
6. We will inform you as to the jurisdictions in which we have been
advised by the Company that the Shares have been qualified for sale or are
exempt under the respective securities or "blue sky" laws of such jurisdictions;
but we have not assumed and will not assume any obligation or responsibility as
to your right to act as a broker and/or dealer with respect to the Shares in any
such jurisdiction. You agree that you will not make any offers except in states
in which we may advise you that the Offering has been qualified or is exempt and
further agree to assure that each person to whom you sell Shares (at both the
time of the initial purchase as well as at the time of any subsequent purchases)
meets any special suitability standards which apply to sales in a particular
jurisdiction, as described in the Blue Sky Survey and the Subscription
Agreement. Neither we nor the Company assumes any obligation or responsibility
in respect of your qualification to act as a broker and/or dealer with respect
to the Shares in any jurisdiction. The Blue Sky Survey which has been or will be
furnished to you indicates the jurisdictions in which it is believed that the
offer and sale of Shares covered by the Prospectus is exempt from, or requires
action under, the applicable blue sky or securities laws thereof, and what
action, if any, has been taken with respect thereto.
It is understood and agreed that under no circumstances will you, as a
Soliciting Dealer, engage in any activities hereunder in any jurisdiction in
which you may not lawfully so engage or in any activities in any jurisdiction
with respect to the Shares in which you may lawfully so engage unless you have
complied with the provisions hereof.
7. Neither you nor any other person is authorized by the Company or by us
to give any information or make any representations in connection with this
Agreement or the offer of Shares other than those contained in the Prospectus,
as then amended or supplemented, or any sales literature approved by us and the
Company. You agree not to publish, circulate or otherwise use any other
advertisement or solicitation material without our prior written approval. You
are not authorized to act as our agent in any respect, and you agree not to act
as such agent and not to purport to act as such agent.
8. We shall have full authority to take such action as we may deem
advisable with respect to all matters pertaining to the Offering or arising
thereunder. We shall not be under any liability (except for (i) our own lack of
good faith and (ii) for obligations expressly assumed by us hereunder) for or in
respect of the validity or value of or title to, the Shares; the form of, or the
statements contained in, or the validity of, the Registration Statement, the
Prospectus or any amendment or supplement thereto, or any other instrument
executed by Inland Western Retail Real Estate Advisory Services, Inc., the
Company's advisor (the "Advisor"), the Company or by others; the form or
validity of the Dealer Manager Agreement or this Agreement; the delivery of the
Shares; the performance by the Advisor, the Company or by others of any
agreement on its or their part; the qualification of the Shares for sale under
the laws of any jurisdiction; or any matter in connection with any of the
foregoing; provided, however, that nothing in this paragraph shall be deemed to
relieve the Company or the undersigned from any liability imposed by the Act. No
obligations on the part of the Company or the undersigned shall be implied or
inferred herefrom.
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9. Under the Dealer Manager Agreement, the Company has agreed to
indemnify you and us and each person, if any, who controls you or us, in certain
instances and against certain liabilities, including liabilities under the Act
in certain circumstances. You agree to indemnify the Company and each person who
controls it as provided in the Dealer Manager Agreement and to indemnify us to
the extent and in the manner that you agree to indemnify the Company in such
Dealer Manager Agreement.
10. You hereby authorize and ratify the execution and delivery of the
Dealer Manager Agreement by us as Dealer Manager for ourselves and on behalf of
the Soliciting Dealers (including you) and authorize us to agree to any
variation of its terms or provisions and to execute and deliver any amendment,
modification or supplement thereto. Each Soliciting Dealer hereby agrees to be
bound by all provisions of the Dealer Manager Agreement relating to Soliciting
Dealers. You also authorize us to exercise, in our discretion, all the authority
or discretion now or hereafter vested in us by the provisions of the Dealer
Manager Agreement and to take all such actions as we may believe desirable in
order to carry out the provisions of the Dealer Manager Agreement and of this
Agreement.
11. This Agreement, except for the provisions of Sections 8 and 9 hereof,
may be terminated at any time by either party hereto by two days' prior written
notice to the other party and, in all events, this Agreement shall terminate on
the termination date of the Dealer Manager Agreement, except for the provisions
of Sections 8 and 9 hereof.
12. Any communications from you should be in writing addressed to us at
Inland Securities Corporation, 2901 Butterfield Road, Oak Brook, Illinois 60523,
Attention: Ms. Brenda G. Gujral, President. Any notice from us to you shall be
deemed to have been duly given if mailed, communicated by telegraph or
telefacsimile or delivered by overnight courier to you at your address shown
below.
13. Nothing herein contained shall constitute the undersigned, you, the
other Soliciting Dealers or any of them as an association, partnership, limited
liability company, unincorporated business or other separate entity.
14. Prior to offering the Shares for sale, you shall have conducted an
inquiry such that you have reasonable grounds to believe, based on information
made available to you by the Company or the Advisor through the Prospectus or
other materials, that all material facts are adequately and accurately disclosed
and provide a basis for evaluating a purchase of Shares. In determining the
adequacy of disclosed facts pursuant to the foregoing, each Soliciting Dealer
may obtain, upon request, information on material facts relating at a minimum to
the following:
1. items of compensation;
2. physical properties;
3. tax aspects;
4. financial stability and experience of the Company and the Advisor;
5. conflicts and risk factors; and
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6. appraisals and other pertinent reports.
Notwithstanding the foregoing, each Soliciting Dealer may rely upon the
results of an inquiry conducted by another Soliciting Dealer, provided that:
(i) such Soliciting Dealer has reasonable grounds to believe that
such inquiry was conducted with due care;
(ii) the results of the inquiry were provided to you with the
consent of the Soliciting Dealer conducting or directing the
inquiry; and
(iii) no Soliciting Dealer that participated in the inquiry is an
affiliate of the Company.
Prior to the sale of the Shares, each Soliciting Dealer shall inform the
prospective purchaser of all pertinent facts relating to the liquidity and
marketability of the Shares during the term of the investment.
If the foregoing is in accordance with your understanding and agreement,
please sign and return the attached duplicate of this Agreement. Your indicated
acceptance thereof shall constitute a binding agreement between you and us.
Very truly yours,
INLAND SECURITIES CORPORATION
By:
----------------------------------------
Title:
----------------------------------------
__________ ____, 200_
We confirm our agreement to act as a Soliciting Dealer pursuant to all the
terms and conditions of the above Soliciting Dealer Agreement and the attached
Dealer Manager Agreement. We hereby represent that we will comply with the
applicable requirements of the Act and the Exchange Act and the published Rules
and Regulations of the Commission thereunder, and applicable blue sky or other
state securities laws. We confirm that we are a member in good standing of the
NASD. We hereby represent that we will comply with the Rules of the NASD and all
rules and regulations promulgated by the NASD.
Dated: __________ ___, 2003
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Name of Soliciting Dealer: _____________________________________________________
Federal Identification Number: ______________________________
By:
---------------------------------------
Authorized Signature
Kindly have checks representing commissions forwarded as follows (if different
than above):
- --------------------------------------------------------------------------------
(Please type or print)
Name of Firm: _____________________________________________
Address
Street: _______________________________________
City: _________________________________________
State and Zip Code: ___________________________
(Area Code) Telephone No.: ____________________
Attention: ________________________________________________
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