EXHIBIT 1.1
CORNERSTONE {INDUSTRIAL PROPERTIES INCOME AND GROWTH FUND I} [REALTY FUND], LLC
FORM OF
DEALER-MANAGER AGREEMENT
Private Investors Equity Group
23279 Park Basilico
Calabasas, California 91302
Dear Sirs:
Cornerstone {Industrial Properties Income and Growth Fund I} [Realty
Fund], LLC, a California limited liability company (the "Fund"), and its
managing member, Cornerstone Industrial Properties, a California limited
liability company (the "Managing Member"), propose to offer and sell to selected
persons or entities acceptable to the Managing Member, upon the terms and
subject to the conditions set forth in the enclosed Prospectus, up to {40,000}
[100,000] units of limited liability company interest ("Units") aggregating a
maximum of {$20,000,000} [$50,000,000], and to enter into the Operating
Agreement in the form included in such Prospectus as Exhibit "A" ("Operating
Agreement") [with such persons or entities].
The Fund hereby invites you, {Pacific Cornerstone Financial Incorporated}
[Private Investors Equity Group], a California corporation ("Dealer Manager"),
to become the Dealer Manager in connection with the offer and sale of the Units.
By your acceptance hereof, you agree to act in such capacity and to use {your
best} [commercially reasonable] efforts to find purchasers for the Units in
accordance with the terms and conditions of the Prospectus and this Agreement{.
You agree to use your best}[, but with no obligation or understanding, express
or implied, that you are making a commitment to purchase or sell the Units. You
agree to use commercially reasonable] efforts to find purchasers of Units both
directly and indirectly through a selling group consisting of participating
brokers ("Participating Brokers") with whom you shall contract pursuant to a
Participating Broker Agreement substantially in the form attached as Attachment
1 hereto or such other form as may be requested by a Participating Broker
provided the consent of the Managing Member is obtained for the use of such
form.
Accompanying this Agreement is a copy of the Prospectus and the
Supplemental Material (as hereinafter defined) prepared by the Fund for use in
conjunction with the offer and sale of the Units. You are not authorized to use
any solicitation material other than that referred to in this section, which
material has been furnished by the Fund.
1. Representations and Warranties of the Fund and the Managing
Member.
The Fund and the Managing Member, jointly and severally,
represent and warrant to Dealer Manager and Participating Brokers that:
(a)The Fund is a limited liability company duly organized under
the laws of the State of California, is validly existing as a limited liability
company under such laws and has power and authority to conduct business as
described in the Prospectus under the laws of the State of California and every
other jurisdiction in which it conducts business or owns or leases property.
(b)The Fund has prepared and filed with the Securities and
Exchange Commission ("SEC") a Registration Statement on Form S-11 ("Registration
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Statement") and may have prepared and filed amendments thereto for the offer and
sale of the Units together with a Prospectus to be used in connection with the
offer and sale of the Units to persons and entities which are residents of the
States of ___________________________ only. Copies of the Registration Statement
and amendments thereto, if any, will be made available to Dealer Manager upon
request. The Registration Statement, including the Prospectus, financial
statements and exhibits and all amendments, if any, as of the time when the
Registration Statement became effective ("Effective Date") and the Prospectus
included therein, is referred to herein as the "Prospectus".
(c)The SEC has not issued any order preventing or suspending the
use of the Prospectus, and no proceedings for that purpose have been instituted
or are pending before or threatened by the SEC.
(d)From the Effective Date and at all times subsequent thereto up
to and including the Termination Date (as defined in Section 3 below), the
Registration Statement and the Prospectus, and all amendments or supplements
thereto, have fully complied with and will fully comply with the provisions of
the Securities Act of 1933, as amended (the "Act") and the published rules and
regulations thereunder and have not contained and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that none of the representations and warranties in this subparagraph
shall apply to statements in, or omissions from, the Registration Statement or
the Prospectus or any amendment thereof or supplement thereto based upon and in
conformity with written information furnished to the Fund by Dealer Manager or
on Dealer Manager's behalf specifically for use with reference to Dealer Manager
in the preparation of the Registration Statement or the Prospectus or any such
amendment or supplement.
(e)All additional written, audio or audio-visual material,
including an investment summary, {CD Rom,} audio tape, video tape and internet
site prepared by the Fund for use in conjunction with the offer or sale of the
Units ("Supplemental Material") will be distributed by the Fund and the Managing
Member only in full compliance with the requirements of the Act (including,
without limitation, the requirement that such Supplemental Material not be
delivered to any prospective purchaser unless accompanied or preceded by a
Prospectus), and at the time the Registration Statement is declared effective
and at all times subsequent thereto up to and including the Termination Date,
such Supplemental Material has not contained and will not contain any untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(f)The Fund will obtain an opinion of Oppenheimer Wolff &
Donnelly LLP confirming that the Fund will be classified as a partnership
subject to subchapter K of the Internal Revenue Code of l986, as amended, and
not as an association taxable as a corporation for federal income tax purposes.
The conditions on which the opinion will be issued will be met at the time of
such issuance and will continue to exist.
(g)The accountants who have certified or shall certify the
financial statements filed and to be filed with the SEC as part of the
Registration Statement and the Prospectus are independent certified public
accountants, as required by the Act and the rules and regulations thereunder.
(h)Subsequent to the respective dates as of which information is
given in the Prospectus and up to and including the Termination Date, and except
as contemplated by or reflected in the Prospectus or an amendment or supplement
to the Prospectus, (i) neither the Managing Member nor the Fund have incurred or
will have incurred any liabilities or obligations, direct or contingent, not in
the ordinary course of business, or entered into any transaction not in the
ordinary course of business {and}[,] (ii) neither the Managing Member nor the
Fund has become or will have become a party to any legal or governmental
proceedings which may result in any material adverse change in condition
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(financial or other) of the Managing Member or the Fund[, and (iii) there has
not been any material adverse change in the condition, financial or otherwise,
of the Managing Member or the Fund, or in the earnings, affairs or business
prospects of the Managing Member or the Fund, whether or not arising in the
ordinary course of business. ]{.}
{(i) The balance sheet}[(i) The balance sheets] (including the
related notes) of the [Fund and] Managing Member set forth in the Prospectus
fairly {presents} [present] the [respective] financial {position} [positions] of
the [Fund and] Managing Member at the {date} [respective dates] thereof. {The}
[Each of the] balance {sheet} [sheets] has been prepared in accordance with
generally accepted accounting principles.
(j)There are no contracts or other documents required to be filed
by the Act or the rules and regulations thereunder as exhibits to the
Registration Statement which have not been so filed.
(k)The sale of the Units has been duly and validly authorized by
the Fund, and when subscriptions for the Units have been accepted by the
Managing Member as contemplated in the Prospectus, the Units will represent
valid membership interests in the Fund and will conform to the description
thereof contained in the Prospectus.
(l)The liability of each member of the Fund {based upon current
law} will be limited to the amount actually paid by each such member to the
Fund, and each such member will not be subject to personal liability for the
debts, obligations or liabilities of the Fund, by reason of being such a member,
beyond such amount except in the event of the member's participation in tortious
conduct or the member's agreement to be personally liable for the debts,
obligations or liabilities of the Fund.
(m)The person or persons who have signed this Agreement on behalf
of the Fund and the Managing Member and the person or persons who have signed
the Operating Agreement on behalf of the Managing Member are duly authorized to
so sign, and this Agreement and the Operating Agreement are valid, legal, and
binding agreements of the Fund and the Managing Member enforceable in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the rights of creditors
generally.
(n)The Managing Member is a limited liability company organized
under the laws of the State of California and is validly existing as a limited
liability company under such laws. The Managing Member has power and authority
to conduct business as described in the Prospectus under the laws of the State
of California, and every other jurisdiction in which it conducts business or
owns or leases property.
(o)At all times subsequent to the date of this Agreement and up
to and including the Termination Date, the representations and warranties made
in this Section l will be true and correct with the same effect as if they had
been made on and as of such time, except as may subsequently be disclosed in
writing to the Dealer Manager.
[(p) The execution and delivery of this Agreement, the incurrence
of the obligations herein set forth and the consummation of the transactions
contemplated herein and in the Prospectus will not violate, or constitute a
breach of, or default under, any instrument by which either the Managing Member
or the Fund is bound, or any law, order, rule or regulation applicable to the
Managing Member or the Fund of any court or any governmental body or
administrative agency having jurisdiction over the Managing Member or the Fund.
(q)No closing will take place unless and until funds in respect
of subscriptions for an aggregate of at least 6,000 Units, acceptable to the
Managing Member, have been received by the Fund and payment for such Units has
been deposited in the Escrow Account and classified as "cleared funds" by the
Escrow Agent.
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(r)Prior to accepting any subscription for Units, the Managing
Member will review the file memoranda or other records maintained by Dealer
Manager substantiating the suitability of the subscribers to purchase Units, and
will have reasonable grounds to believe and will in fact believe that the
subscribers meet the suitability standards as set forth in the Prospectus or as
required by law and will reject the subscriptions of any subscribers whom the
Managing Member does not have reasonable grounds to believe or does not in fact
believe meet said suitability standards.]
2. Sale of the Units.
A subscription agreement ("Subscription Agreement") must be
completed by each person desiring to purchase Units, or, at Dealer Manager's or
Participating Broker's option, by Dealer Manager or Participating Broker on
behalf of each such person, and returned by Dealer Manager or Participating
Broker together with any other documents that may be required under state
securities laws or by the Managing Member, to the Managing Member at 4590
MacArthur Blvd., Suite 610, Newport Beach, California 92660, Attention: Terry G.
Roussel. The Dealer Manager or Participating Broker shall ascertain that the
Subscription Agreement has been properly completed in full and signed by the
prospective purchaser prior to its return.
All subscription checks shall be made payable to the order of SCB
ESCROW NO. 12563-GG FOR CORNERSTONE {FUNDI} [REALTY FUND until the Minimum
Subscription Date (as hereinafter defined) and thereafter all subscription
checks shall be made payable to CORNERSTONE REALTY FUND, LLC]. If Dealer Manager
or Participating Broker receives a check not conforming to the foregoing
instructions, Dealer Manager and/or Participating Broker must return such check
directly to the subscriber not later than the end of the next business day
following its receipt. [On or before the Minimum] Subscription [Date,] checks
conforming to the foregoing instructions shall be transmitted by Dealer Manager
or Participating Broker for deposit directly to Southern California Bank
("Escrow Agent"), at 4100 Newport Place, Suite 130, Newport Beach, California
92660 by the end of the next business day following receipt by Dealer Manager or
Participating Broker. [Following the Minimum Subscription Date, checks
conforming to the foregoing instructions shall be transmitted by Dealer Manager
or Participating Broker for deposit directly to the Fund, at 4590 MacArthur
Blvd., Suite 610, Newport Beach, CA 92660 by the end of the next business day
following receipt by Dealer Manager or Participating Broker.] In the event
Dealer Manager's or Participating Broker's final internal supervisory review is
conducted at a different location, then checks must be transmitted to Dealer
Manager's or Participating Broker's final review office by the end of the next
business day following receipt by Dealer Manager or Participating Broker and
Dealer Manager's or Participating Broker's final review office must in turn by
the end of the next business day following receipt by it, transmit the check for
deposit directly to the Escrow Agent [on or before the Minimum Subscription Date
or to the Fund after the Minimum Subscription Date].
Upon receipt of the Subscription Agreement, the Managing Member,
on behalf of the Fund, will determine promptly (and in any event within ten (10)
days after such receipt) whether it wishes to accept the proposed purchaser as a
member in the Fund, it being understood that the Managing Member reserves the
right to reject the tender of any Subscription Agreement and to reject all
tenders after the Termination Date. Should the Managing Member determine to
accept the tender of the Subscription Agreement, the Managing Member will
promptly advise Dealer Manager or Participating Broker of such action. Should
the Managing Member determine to reject the tender it will promptly notify in
writing the prospective purchaser, Dealer Manager and Participating Broker, if
any, of such determination and will promptly return the tendered Subscription
Agreement and instruct the Escrow Agent to return the purchase price of the
Units directly to the prospective purchaser [if the determination is made on or
before the Minimum Subscription Date or the Fund will return the purchase price
of the Units directly to the prospective purchaser is the determination is made
after the Minimum Subscription Date].
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All payments received on or prior to the Minimum Subscription
Date, except as hereinafter provided, from purchasers of Units shall be
transmitted directly to the Escrow Agent and deposited in an escrow account (the
"Escrow Account") with Escrow Agent. Such funds may be temporarily invested in
bank savings accounts, bank or money market accounts, bank short-term
certificates of deposit of U.S. banks having a net worth of $100 million, or
short-term U.S. government issued or guaranteed obligations. Prior to the
Minimum Subscription Date, the Fund will have no right to obtain any funds from
the Escrow Agent. Funds for Units purchased on or before the Minimum
Subscription Date shall be made available to the Fund, or its order, by the
Escrow Agent, on the Minimum Subscription Date.
{Nothing} [Except as set forth in Section 1(r), nothing]
contained in this Section 2 shall be construed to impose upon the Managing
Member the responsibility of assuring that prospective purchasers meet the
suitability standards contained in the Prospectus and the Subscription Agreement
or to relieve Dealer Manager and Participating Brokers of the responsibility of
complying with the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD").
3. Termination Date and Minimum Subscription Closing Date.
As used herein, the term "Termination Date" shall mean the
earliest to occur of (i) the date upon which subscriptions for the maximum
number of Units offered have been accepted by the Managing Member which date the
Managing Member shall designate by notice to Dealer Manager in writing; or (ii)
_____________, {2001} [2002]. The Managing Member may terminate the offering of
Units at any time for any reason by written notice to the Dealer Manager at
least two (2) business days prior to the date of termination.
As used herein, the term "Minimum Subscription Date" shall mean
the earlier of the date on which the Managing Member shall mail or otherwise
furnish to Dealer Manager notification that subscriptions and payments for an
aggregate of at least 6,000 Units have been received and accepted by the
Managing Member and deposited with the Escrow Agent. In the event that
subscriptions and payments for an aggregate of at least 6,000 Units shall not
have been received and accepted by the Managing Member on or prior to
____________, {2000} [2001, subject to Section 9], this Agreement will terminate
and neither the Fund nor the Managing Member shall have any further obligation
or liability hereunder to Dealer Manager or Participating Brokers. In the event
of such termination, all purchase payments deposited with the Escrow Agent shall
be returned to the subscribers and no selling commissions (as described below)
will be payable.
4. Compensation.
Except in such cases where the Dealer Manager grants a Volume
Discount (as defined in the Prospectus), for your services as Dealer Manager in
soliciting and obtaining purchasers of the Units, the Fund agrees to pay a
selling commission of {seven (7%) of the }[eight percent (8%) of the first
$3,000,000 of] gross offering proceeds realized from the sale of {each Unit
sold} [Units and seven percent (7%) of the gross offering proceeds realized from
the sale of each Unit sold thereafter]. All or a portion of these selling
commissions may be reallowed by Dealer Manager to Participating Brokers, as
compensation for their services in soliciting and obtaining subscribers for the
purchase of Units. An additional two percent (2%) of the gross offering proceeds
[less $30,000], all or a portion of which may be reallowed to Participating
Brokers, will be paid to the Dealer Manager as a marketing support fee for
marketing services, wholesaling fees, expense reimbursements, bonuses and
incentive compensation. An additional one percent (1%) of the gross offering
proceeds, all or a portion of which may be reallowed to Participating Brokers,
will be paid to the Dealer Manager as a non-accountable expense reimbursement
allowance. An additional one-half percent (1/2%) of the gross offering proceeds,
all or a portion of which may be reallowed to Participating Brokers, will be
paid to the Dealer Manager as a due diligence expense allowance. The selling
commissions, marketing support fee, non-accountable expenses allowance and due
diligence expense allowance will be paid as follows: (i) on or promptly
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following the Minimum Subscription Date, the Fund will pay the selling
commissions, marketing support fees, non-accountable expense allowance and due
diligence expense allowance payable with respect to the Units purchased on or
before the Minimum Subscription Date, and (ii) after the Minimum Subscription
Date, the Fund will pay the selling commissions, marketing support fees,
non-accountable expense allowance and due diligence expense allowance payable
with respect to Units purchased during the period commencing with the first
business day following the Minimum Subscription Date and ending on the
Termination Date unless otherwise agreed, no later than the 15th day of the
month with respect to purchases made through the end of the prior month. Subject
to the provisions of Section 8 below, in the event the offer and sale of Units
is terminated prior to the Minimum Subscription Date, you shall not be entitled
to any reimbursement for your due diligence expenses incurred in connection with
the offering of Units.
In the event the Managing Member gives you any advances of any
portion of the marketing support fee, non-accountable expense allowance or due
diligence expense allowance, the amount of the advance shall be deducted by the
Fund from amounts owed to Dealer Manager for selling commissions, marketing
support fees, non-accountable expense allowance or due diligence expense
allowance and such amount shall be promptly reimbursed to the Managing Member
[by the Fund].
No person will be entitled to a selling commission, marketing
support fee, non-accountable expense allowance or due diligence expense
allowance in any case in which it is determined that the solicitation or
obtaining of purchasers by such person was made in violation of the securities
laws of the United States or any state or other jurisdiction.
In addition to the foregoing compensation payable by the Fund,
the Managing Member may, but is not required to, pay the Dealer Manager an
annual soliciting dealer servicing fee of up to 15% of the Managing Member's
share of Net Cash Flow from Operations and Net Sales Proceeds. The Dealer
Manager may pay all or any part of any amount it receives to Participating
Brokers whose clients own Units.
5. Further Agreements of the Fund and the Managing Member.
(a)The Fund and the Managing Member, jointly and severally,
covenant and agree that they will pay or cause to be paid (i) all expenses and
fees in connection with the preparation, printing, filing, delivery and shipping
of the Registration Statement (including this Agreement and all other exhibits
to the Registration Statement), the Prospectus and any amendments or supplements
thereto and the Supplemental Material, (ii) filing fees, Fund counsel's fees and
expenses paid and incurred in connection with the registration and qualification
of the Units for offer and sale by Dealer Manager and Participating Brokers
under the Act and the securities or Blue Sky laws of the states in which offers
are to be made, and (iii) filing fees, Fund counsel's fees and expenses paid and
incurred in connection with the review by the NASD of the terms of the offering
of the Units.
(b)The Fund will advise Dealer Manager and Participating Brokers
promptly of the issuance of any stop order withdrawing the qualification for the
offer and sale of the Units or of the institution of any proceedings for that
purpose, and will use its best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible the lifting thereof, if issued.
(c)If at any time when a Prospectus relating to the Units is
required to be delivered under the Act any event shall have occurred as a result
of which, in the opinion of counsel for the Fund, the Prospectus as amended or
supplemented includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Fund promptly will prepare and file with the SEC an
appropriate amendment or supplement.
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(d)The Fund will deliver to Dealer Manager and Participating
Brokers from time to time without charge as many copies of the Prospectus (and,
in the event of an amendment or supplement to the Prospectus pursuant to the
provisions of this Agreement, of such amended or supplemented Prospectus) and
the Supplemental Material as Dealer Manager or Participating Brokers may
reasonably request, which Prospectus(s), as from time to time amended or
supplemented, and Supplemental Material the Fund authorizes Dealer Manager and
Participating Brokers to use in connection with the sale of the Units.
(e)The Fund will use its best efforts to register and qualify the
Units for sale under the laws of those states and other jurisdictions where it
is intended that offers and sales will be made and will comply to the best of
its ability with the laws of those states so as to permit the continuance of
sales of the Units thereunder. The Fund and the Managing Member, jointly and
severally, covenant and agree that neither the Fund nor the Managing Member, nor
any officer, manager or employee of either of them will make any offer or sale
of the Units unless such offer or sale is made in compliance with the Act and
the rules and regulations thereunder.
(f)The Managing Member and the Fund, jointly and severally, agree
to execute or cause to be executed all such certificates and other documents
required by and conforming to the Operating Agreement and to do or cause to be
done all such filing, recording, publishing and other acts as may be appropriate
to comply with the requirements of law for the operation of a foreign limited
liability company in all jurisdictions, other than California, where the Fund
shall desire to conduct business or own properties as the case may be.
6. Agreements of Dealer Manager.
(a)Dealer Manager covenants and agrees to comply, and to use {its
best} [commercially reasonable] efforts to cause the Participating Brokers to
comply, with any applicable requirements of the Act, and of the l934 Act, and
the published rules and regulations thereunder, and the Conduct Rules of the
NASD and, in particular, the Conduct Rules which require Dealer Manager (i) to
recommend the purchase of Units only when Dealer Manager has reasonable grounds
to believe that the investment is suitable for the investor, and that the
investor is in a financial position to sustain the risks inherent in the
investment including loss of investment and lack of liquidity, (ii) to maintain
certain files concerning the basis for Dealer Manager's determination of the
suitability of the investor, (iii) to determine the adequacy and accuracy of the
disclosure in the Prospectus, and (iv) to inform the prospective investor of all
pertinent facts relating to the liquidity and marketability of the investment
during the term of the investment. { Dealer Manager agrees not to, and to use
its best efforts to cause the Participating Brokers, not to execute any
transaction in a discretionary account without the prior written approval of the
transaction by the customer. In determining the adequacy of disclosed facts,
Dealer Manager shall, and shall use its best efforts to cause the Participating
Brokers to, obtain facts relating at a minimum to the following to the extent
relevant to the investment: (1)items of compensation; (2)physical properties;
(3)tax aspects; (4)financial stability and experience of the sponsor; (5)the
investment's conflicts and risk factors; and (6)appraisals and other pertinent
reports. Dealer Manager may only rely upon the results of an inquiry conducted
by another NASD member or members if: (x)Dealer Manager has reasonable grounds
to believe that such inquiry was conducted with due care; (y)the results of the
inquiry were provided to Dealer Manager with the consent of the NASD member or
members conducting or directing the inquiry; and (z)no NASD member that
participated in the inquiry is a sponsor of the investment or an affiliate of
such sponsor.} Dealer Manager also agrees not to deliver the Supplemental
Material to any person unless the Supplemental Material is accompanied or
preceded by the Prospectus. Dealer Manager confirms that Dealer Manager is
registered as a broker-dealer and is in good standing under the l934 Act. Dealer
Manager also confirms that Dealer Manager is a member in good standing of the
NASD. Dealer Manager agrees that Dealer Manager will reallow commissions only to
other broker-dealers who are members of the NASD or not subject to registration
pursuant to the Securities Exchange Act of l934.
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(b)Dealer Manager will not give any information or make any
representation in connection with the offering of the Units other than those
contained in the Prospectus and Supplemental Material furnished by the Managing
Member and the Fund. Dealer Manager agrees not to publish, circulate or
otherwise use any other advertisement or solicitation material. Dealer Manager
is not authorized to act as agent of the Fund or the Managing Member in any
connection or transaction, and Dealer Manager agrees not to act as such agent
and not to purport to do so without the prior written approval of the Managing
Member. Dealer Manager agrees that if and when the Managing Member supplies
Dealer Manager with copies of any supplement to the Prospectus, Dealer Manager
will affix such copies of such supplement to copies of the Prospectus already in
Dealer Manager's possession, and that thereafter Dealer Manager will only
distribute Prospectuses containing such supplement and that Dealer Manager will
accept subscriptions only from investors who have received a copy of the
Prospectus containing such supplement. Dealer Manager further agrees to comply
with all instructions from the Managing Member concerning the destruction of
out-dated Prospectuses and the use of supplemented or amended Prospectuses.
(c)Dealer Manager agrees to solicit purchases of Units only in
the States and other jurisdictions in which the Managing Member indicates that
such solicitation can be made and in which Dealer Manager has determined that
such solicitation can be made by Dealer Manager and in which Dealer Manager is
qualified to so act.
(d)Dealer Manager will not sell the Units pursuant to this
Agreement unless the Prospectus is furnished to the purchaser at least five (5)
business days prior to the execution of the Subscription Agreement and Power of
Attorney, or is sent to such person under circumstances that it would be
received by him five (5) business days prior to his execution of the
Subscription Agreement and Power of Attorney.
(e)Dealer Manager will use reasonable efforts to select investors
who Dealer Manager reasonably believes meet the investor suitability
requirements which are set forth in the Prospectus and Subscription Agreement
(Exhibit "C" to the Prospectus) and such additional individual state
requirements as are specified in the Subscription Agreement and which are
confirmed by the investors by payment of the purchase price for the Units
including that each investor be of legal age in the state of his or her
residence. Dealer Manager will, for a period of six years, maintain in Dealer
Manager's files a copy of the Subscription Agreement for each investor for whom
Dealer Manager acts as Dealer Manager.
(f)To the extent that information is provided to Dealer Manager
marked "For Broker-Dealer Use Only," Dealer Manager covenants and agrees not to
provide such information to prospective investors.
{(g) Dealer Manager shall take all action necessary to assure that its
computer-based systems are able to effectively process data including dates and
date sensitive functions. Dealer Manager represents and warrants that Dealer
Manager's ability to perform its obligations under this Agreement will be
unaffected by the transition to the Year 2000. Upon request, Dealer Manager
shall provide assurance acceptable to the Fund and Managing Member that Dealer
Manager's computer systems and software are or will be Year 2000 compliant on a
timely basis. Dealer Manager shall immediately advise the Fund and Managing
Member in writing of any material changes in Dealer Manager's Year 200 plan
timetable.
}7. Indemnification.
(a)Dealer Manager agrees to indemnify, defend and hold harmless
the Fund and the Managing Member from all losses, claims, demands, liabilities
and expenses, including reasonable legal and other expenses incurred in
defending such claims or liabilities, whether or not resulting in any liability
to the Fund or the Managing Member, which the Fund or the Managing Member may
incur in connection with the offer or sale of any Units{, either} by Dealer
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Manager pursuant to this {Agreement or any Participating Broker acting on the
Dealer Manager's behalf pursuant to the Participating Broker} Agreement which
arise out of or are based upon (i) an untrue statement or alleged untrue
statement of a material fact, or any omission or alleged omission of a material
fact, other than a statement or omission contained in the Prospectus, the
Registration Statement, or any state securities filing which was not based on
[written] information supplied to the Fund or the Managing Member by Dealer
Manager {or a Participating Broker}, or (ii) the breach by Dealer Manager {or
any Participating Broker acting on its behalf} of any of the terms and
conditions of this Agreement {or any Participating Broker Agreement}, including,
but not limited to, alleged violations of the Securities Act of 1933, as
amended; or (iii) the violation by Dealer Manager {or any Participating Broker}
of the NASD Conduct Rules.
(b)The Fund [and the Managing Member, jointly and severally,]
will indemnify[, defend,] and hold harmless the Dealer Manager, its affiliates,
and each of its officers, directors and employees, and each person, if any, who
"controls" the Dealer Manager (within the meaning of the 1933 Act) from and
against any and all losses, claims, [demands,] damages, liabilities, costs {or}
[and] expenses (including reasonable attorney's fees {), joint or several} [and
other expenses incurred in defending such claims or liabilities, whether or not
resulting in any liability to the Dealer Manager or any Participating Broker)],
to which the Dealer Manager, its affiliates, or any such officer or employee or
such controlling person may become subject, under the 1933 Act or any other
federal or state securities law or otherwise, insofar as such losses, claims,
[demands,] damages, liabilities, costs {or} [and] expenses (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus or Supplemental Material or in information furnished pursuant to this
Agreement or otherwise by the Fund, {or its representatives, in each case taken
together with all other such documents and information,} [the Managing Member or
their respective representatives, ]or in any "blue sky" application or other
document filed under state securities laws or regulations (collectively, "Blue
Sky Documents"); (ii) the omission or alleged omission from the Prospectus or
Supplemental Material, [or] from information furnished pursuant to this
Agreement or otherwise by the Fund {or its representatives, in each case taken
together with all other such documents and information,}[, the Managing Member
or their respective representatives,] or from any Blue Sky Documents, of any
statement or information which is required to be stated therein or is necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; (iii) the making of an offer by the Fund {or its}[,
the Managing Member or their respective] affiliates, or anyone acting on behalf
of {it} [them], other than the Dealer Manager, of any interests or securities;
(iv) violations by the Fund or {any of its} [the Managing Member of any of their
respective] representations, warranties, covenants and agreements contained in
this Agreement; or (v) the failure of the offer and sale of the Units to be
registered or qualified for exemption from registration under any state
securities {of} [or] "blue sky" laws other than as a result of the
non-compliance by the Dealer Manager with its obligations hereunder; and the
Fund [and the Managing Member, jointly and severally,] will reimburse the Dealer
Manager for any legal or other expenses reasonably incurred by it, its
affiliates, or any such officer, director or employee or any such controlling
person in connection with investigating, defending or preparing to defend any
such loss, claim, damage, liability or action. The indemnity agreement in this
Section 7(b) shall be in addition to any liability which the Fund [or the
Managing Member] may otherwise have to {such} [the] Dealer Manager, its
affiliates, or any such officer or employee or any such controlling person.
8. Effective Date and Termination.
Provided that at least one counterpart of this Agreement shall
then have been executed and delivered, this Agreement shall become effective at
12:00 noon, California time, of the first full business day following the
effective date of the Registration Statement or at such later time after the
Registration Statement becomes effective as the Managing Member shall first
release the Units for sale to the public. For the purpose of this section the
Units shall be deemed to have been released for sale to the public upon release
by the Managing Member of correspondence or other notification to Dealer Manager
indicating the effectiveness of the Registration Statement, whichever shall
first occur.
9
Until the Minimum Subscription [Closing] Date, this Agreement may be
terminated by Dealer Manager at Dealer Manager's option by giving [written]
notice to the Fund and the Managing {Member} [Manager] if[: (a)] the Fund or the
Managing Member shall have become a defendant in any litigation which, in Dealer
Manager's opinion, may reasonably be expected to result in a judgment having
materially adverse consequences for the Fund or the Managing Member or there
shall have been, since the respective dates as of which information is given in
the Registration Statement or the Prospectus, any material adverse change in the
condition, financial or otherwise, of the Fund or the Managing Member, which
change in Dealer Manager's judgment shall render it inadvisable to proceed with
the delivery of the Units[, or (b) there shall have been any important change in
market levels, major catastrophe, substantial change in national, international
or world affairs, national calamity, postal strike, act of God, or other event
or occurrence which, in Dealer Manager's judgment will materially disrupt the
financial markets of the United States, or (c) trading in securities generally
on the New York Stock Exchange shall have been suspended or minimum prices shall
have been established on such Exchange by the Commission or by such Exchange, or
(d) a general banking moratorium shall have been declared by federal or state
authorities, or (e) the Managing Member has terminated the offering of Units as
provided in Section 2 hereof, or (f) the Fund or the Managing Member is in
breach of this Dealer Manager Agreement and has failed to cure such breach
within 30 days notice from Dealer Manager to the Fund or the Managing Member of
such breach].
Following the Minimum Subscription Date, this Agreement may be
terminated by Dealer Manager at Dealer Manager's option by giving notice to the
Fund and the Managing Member. In any case, {this} [his] Agreement will terminate
at the close of business on the Termination Date; provided, however, that all
fees payable to Dealer Manager under the terms and conditions hereof shall be
paid when due although this Agreement shall have theretofore been terminated.
{Any} [Except as otherwise provided in Section 9, any]
termination of this Agreement pursuant to this Section 8 shall be without
liability of the Fund and the Managing Member to Dealer Manager and without
liability on Dealer Manager's part to the Fund or the Managing Member.
9. Survival of Indemnities, Warranties and Representations.
The indemnity agreements contained in Section 7 hereof, and the
representations and warranties of the Fund and the Managing Member set forth in
Sections l and 5(f) hereof, shall remain operative and in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Fund, the Managing Member, Dealer
Manager or any controlling person referred to in Section 7, and shall survive
the delivery of and payment for the Units, and any successor of Dealer Manager
or the Fund or the Managing Member or of any such controlling person or any
legal representative of any such controlling person, as the case may be, shall
be entitled to the benefit of the respective indemnity agreements and
representations and warranties.
l0. Notices.
Except as in this Agreement otherwise provided, (a) whenever
notice is required by the provisions of this Agreement or otherwise to be given
to the Fund, or the Managing Member, such notice shall be in writing addressed
to the Fund or the Managing Member at 4590 MacArthur Blvd., Suite 610, Newport
Beach, California 92660, Attention: Terry G. Roussel, and (b) whenever notice is
required by the provisions of this Agreement or otherwise to be given to Dealer
Manager, such notice shall be in writing addressed to Dealer Manager at P.O. Box
8489, Calabasas, California 91372-8489. Any notice referred to herein may be
given in writing or by facsimile or telephone and if by facsimile or telephone
shall be immediately confirmed in writing. Notice (unless actual) shall be
effective upon mailing or facsimile transmission with confirmation of receipt,
as the case may be.
11. Persons Entitled To Benefit of Agreement.
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Except as provided in the next sentence, this Agreement is made
solely for the benefit of Dealer Manager, Participating Brokers, the Fund and
the Managing Member or controlling persons thereof, and their respective
successors and assigns, and no other person shall acquire or have any right by
virtue of this Agreement, and the term "successors and assigns," as used in this
Agreement, shall not include any purchaser, as such purchaser, of any of the
Units. The agreements of the Fund and the Managing Member specified in Section
{5(f)} [7(b)] are made also for the benefit of the purchasers of the Units and
such purchasers and their successors and assigns shall be entitled to the
indemnification therein provided.
12. Not a Separate Entity.
Nothing contained herein shall constitute the Dealer Manager and
Participating Brokers, or any of them, as an association, partnership,
unincorporated business or other separate entity.
Please confirm your agreement to become Dealer Manager under the terms
and conditions herein set forth by signing and returning the enclosed duplicate
copy of this Agreement at once to the Managing Member at the address specified
in Section 10 above.
Very truly yours,
CORNERSTONE [REALTY FUND] {INDUSTRIAL PROPERTIES
INCOME AND GROWTH FUND I}, LLC,
a California limited liability company
By: CORNERSTONE INDUSTRIAL PROPERTIES, LLC
a California limited liability company
By: CORNERSTONE VENTURES, INC.,
its Operating {Partner} [Member
By:
--------------------------------
CORNERSTONE INDUSTRIAL PROPERTIES, LLC.,
a California limited liability company
By: CORNERSTONE VENTURES, INC.,
its Operating Member]
By:
-----------------------------
Terry G. Roussel, President
AGREED AND ACCEPTED:
PRIVATE INVESTORS EQUITY GROUP[,]
{[}a California corporation
{]} [By ]
--------------------------
{By }[Leonard Robbins, President]
{Dated: , 1999} [Dated: , 2000]
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