Exhibit 1.1
Phillips Edison – ARC
Shopping Center REIT Inc.
UP TO 180,000,000 SHARES OF
COMMON STOCK
EXCLUSIVE DEALER MANAGER
AGREEMENT
January 11, 2010
Realty Capital Securities,
LLC
Three Copley Place, Suite 3300
Boston, Massachusetts 02116
Ladies and Gentlemen:
Phillips Edison – ARC
Shopping Center REIT Inc. (the “ Company
”) is a Maryland corporation that intends to qualify to be
taxed as a real estate investment trust (a “
REIT ”) for federal income tax purposes
beginning with the taxable year ending December 31, 2010, or
the first year during which the Company begins material operations.
The Company proposes to offer (a) up to 150,000,000 shares of
common stock, $.01 par value per share (the “
Shares ”), for a purchase price of $10.00 per
Share, with a minimum initial investment of $2,500, in the primary
offering (the “ Primary Offering ”), and
(b) up to 30,000,000 Shares for a purchase price of $9.50 per
Share for issuance through the Company’s distribution
reinvestment program (the “ DRP ” and
together with the Primary Offering, the “
Offering ”) (subject to the right of the
Company to reallocate such Shares between the Primary Offering and
the DRP), all upon the other terms and subject to the conditions
set forth in the Prospectus (as defined in Section 1(a)
).
The Company will be managed by
American Realty Capital II Advisors, LLC (the “
Advisor ”) pursuant to the advisory agreement
to be entered into between the Company and the Advisor (the “
Advisory Agreement ”) substantially in the form
included as an exhibit to the Registration Statement (as defined in
Section 1(a)) . The Advisor will enter into a
sub-advisory agreement (the “ Sub-Advisory
Agreement ”) with Phillips Edison & Company
SubAdvisor LLC (the “ Sub-advisor ”)
substantially in the form included as an exhibit to the
Registration Statement.
Upon the terms and subject to the
conditions contained in this Exclusive Dealer Manager Agreement
(this “ Agreement ”), the Company hereby
appoints Realty Capital Securities, LLC, a Delaware limited
liability company (the “ Dealer Manager
”), to act as the exclusive dealer manager for the Offering,
and the Dealer Manager desires to accept such
engagement.
1. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SUB-ADVISOR . The Company and the
Sub-advisor hereby represent, warrant and agree as
follows:
(a) REGISTRATION STATEMENT AND
PROSPECTUS. In connection with the Offering, the Company has
prepared and filed with the Securities and Exchange Commission (the
“ Commission ”) a registration statement
on Form S-11 for the registration of the Shares under the
Securities Act of 1933, as amended (the “ Securities
Act ”), and the rules and regulations of the
Commission promulgated thereunder (the
“ Securities Act Rules
and Regulations ”); one or more amendments to such
registration statement have been or may be so prepared and filed.
The registration statement on Form S-11 and the prospectus
contained therein, as finally amended at the date the registration
statement is declared effective by the Commission (the “
Effective Date ”) are respectively hereinafter
referred to as the “ Registration Statement
” and the “ Prospectus ”, except
that (i) if the Company files a post-effective amendment to
such registration statement, then the term “Registration
Statement” shall, from and after the declaration of the
effectiveness of such post-effective amendment by the Commission,
refer to such registration statement as amended by such
post-effective amendment, and the term “Prospectus”
shall refer to the amended prospectus then on file with the
Commission, and (ii) if the Company files a prospectus or
prospectus supplement pursuant to either Rule 424(b) or 424(c) of
the Securities Act Rules and Regulations which differs from the
prospectus on file at the time the Registration Statement or the
most recent post-effective amendment thereto, if any, shall have
become effective, then the term “Prospectus” shall
refer to such prospectus or include such prospectus supplement, as
applicable, filed pursuant to either Rule 424(b) or 424(c), as the
case may be, from and after the date on which it shall have been
filed. The term “preliminary Prospectus” as used herein
shall mean a preliminary prospectus related to the Shares as
contemplated by Rule 430 or Rule 430A of the Securities Act Rules
and Regulations included at any time as part of the Registration
Statement. As used herein, the terms “Registration
Statement”, “preliminary Prospectus” and
“Prospectus” shall include the documents, if any,
incorporated by reference therein. As used herein, the term
“Effective Date” also shall refer to the effective date
of each post-effective amendment to the Registration Statement,
unless the context otherwise requires.
(b) DOCUMENTS INCORPORATED BY
REFERENCE. The documents incorporated or deemed to be incorporated
by reference in the Prospectus, at the time they hereafter are
filed with the Commission, will comply in all material respects
with the requirements of the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”) and the
rules and regulations promulgated thereunder (the “
Exchange Act Rules and Regulations ”), and,
when read together with the other information in the Prospectus, at
the time the Registration Statement became effective and as of the
applicable Effective Date of each post-effective amendment to the
Registration Statement, did not and will not include an 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.
(c) COMPLIANCE WITH THE SECURITIES
ACT, ETC. During the term of this Agreement:
(i) on (A) each applicable
Effective Date, (B) the date of the preliminary Prospectus,
(C) the date of the Prospectus and (D) the date any
supplement to the Prospectus is filed with the Commission, the
Registration Statement, the Prospectus and any amendments or
supplements thereto, as applicable, have complied, and will comply,
in all material respects with the Securities Act, the Securities
Act Rules and Regulations, the Exchange Act and the Exchange Act
Rules and Regulations; and
2
(ii) the Registration Statement does
not, and any amendment thereto will not, in each case as of the
applicable Effective Date, include any untrue statement of material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading
and the Prospectus does not, and any amendment or supplement
thereto will not, as of the applicable filing date, 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
are made, not misleading; provided , however , that
the foregoing provisions of this Section 1(c) will not
extend to any statements contained in, incorporated by reference in
or omitted from the Registration Statement, the Prospectus or any
amendment or supplement thereto that are based upon written
information furnished to the Company by the Dealer Manager
expressly for use therein.
(d) SECURITIES MATTERS. There has
not been (i) any request by the Commission for any further
amendment to the Registration Statement or the Prospectus or for
any additional information, (ii) any issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or, to the
Company’s knowledge, threat of any proceeding for that
purpose, or (iii) any notification with respect to the
suspension of the qualification of the Shares for sale in any
jurisdiction or any initiation or, to the Company’s
knowledge, threat of any proceeding for such purpose. The Company
is in compliance in all material respects with all federal and
state securities laws, rules and regulations applicable to it and
its activities, including, without limitation, with respect to the
Offering and the sale of the Shares.
(e) CORPORATION STATUS. The Company
is a corporation duly formed and validly existing under the General
Corporation Law of Maryland, with all requisite power and authority
to enter into this Agreement and to carry out its obligations
hereunder.
(f) AUTHORIZATION OF AGREEMENT. This
Agreement has been duly and validly authorized, executed and
delivered by or on behalf of the Company and constitutes a valid
and binding agreement of the Company enforceable in accordance with
its terms (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 or
except to the extent that the enforceability of the indemnity and
contribution provisions contained in this Agreement may be limited
under applicable securities laws).
The execution and delivery of this
Agreement and the performance of this Agreement, the consummation
of the transactions contemplated herein and the fulfillment of the
terms hereof, do not and will not (i) conflict with, or result
in a breach of any of the terms and provisions of, or constitute a
default under: (1) the Company’s or any of its
subsidiaries’ declaration of trust, charter, by-laws, or
other organizational documents, as the case may be, or (2) any
indenture, mortgage, deed of trust, voting trust agreement, note,
lease or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their properties is bound
3
except, for purposes of this clause
(2) only, for such conflicts, breaches or defaults that do not
result in and could not reasonably be expected to result in,
individually or in the aggregate, a Company MAE (as defined below
in this Section 1(f) ); or (ii) result in and
could not reasonably be expected to result in, individually or in
the aggregate, in any material respect any conflict with, breach
of, or default under, any statute, rule or regulation or order of
any court or other governmental agency or body having jurisdiction
over the Company, any of its subsidiaries or any of their
properties. No consent, approval, authorization or order of any
court or other governmental agency or body has been or is required
for the performance of this Agreement or for the consummation by
the Company of any of the transactions contemplated hereby (except
as have been obtained under the Securities Act, the Exchange Act,
from the Financial Industry Regulatory Authority (the “
FINRA ”) or as may be required under state
securities or applicable 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). Neither the Company
nor any of its subsidiaries is in violation of its declaration of
trust, charter, by-laws or other organizational documents, as the
case may be.
As used in this Agreement, “
Company MAE ” means any event, circumstance,
occurrence, fact, condition, change or effect, individually or in
the aggregate, that is, or could reasonably be expected to be,
materially adverse to (A) the condition, financial or
otherwise, earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, or
(B) the ability of the Company to perform its obligations
under this Agreement or the validity or enforceability of this
Agreement or the Shares.
(g) ACTIONS OR PROCEEDINGS. As of
the initial Effective Date, there are no actions, suits or
proceedings against, or investigations of, the Company or its
subsidiaries pending or, to the knowledge of the Company,
threatened, before any court, arbitrator, administrative agency or
other tribunal (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the issuance of the Shares or the
consummation of any of the transactions contemplated by this
Agreement, or (iii) that if determined adversely to the
Company or its subsidiaries, would reasonably be expected to result
in Company MAE or affect adversely the federal income tax
attributes of the Shares, except as may be described in the
Prospectus. The Company promptly will give notice to the Dealer
Manager of the occurrence of any action, suit, proceeding or
investigation of the type referred to above arising or occurring on
or after the initial Effective Date.
(h) ESCROW AGREEMENT. The Company
will enter into an escrow agreement (the “ Escrow
Agreement ”) with the Dealer Manager and a bank to be
agreed upon by the parties hereto (the “ Escrow
Agent ”), substantially in the form included as an
exhibit to the Registration Statement, which provides for the
establishment of an escrow account (the “ Escrow
Account ”) to receive and hold subscription funds in
respect of Shares of the Company. Once a minimum of $2,500,000 of
subscription funds from Persons (as defined below) not affiliated
with the Company or the Advisor (the “ Minimum
Offering ”) has been deposited in the Escrow Account,
upon determination by the Company that it intends to break escrow,
the Company shall deposit (or cause to be
4
deposited) all subscription funds to
a designated deposit account in the name of the Company (the
“ Deposit Account ”) at a bank which
shall be subject to the reasonable prior approval of the Dealer
Manager, subject to any higher or continuing escrow obligations
imposed by certain states as described in the Prospectus. The
Deposit Account shall be subject to a deposit control agreement
executed by the depositary, the Company, and the Dealer Manager,
which shall be substantially in the form included as an exhibit to
the Registration Statement (the “ Control
Agreement ”). As used herein, “
Person ” or “ Persons
” means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company, governmental
authority or agency, or other entity of any kind.
(i) SALES LITERATURE. Any
supplemental sales literature or advertisement (including, without
limitation any “broker-dealer use only” material)
furnished or approved by the Company for use in connection with
this Offering (collectively, “ Approved Sales
Literature ”), shall, to the extent required, be
filed with and approved by the appropriate securities agencies and
bodies, provided that the Dealer Manager will make all FINRA
filings of such material. Any and all Approved Sales Literature did
not or will not at the time provided for use include any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(j) AUTHORIZATION OF SHARES. The
Shares have been duly authorized and, when issued and sold as
contemplated by the Prospectus and upon payment therefor as
provided in this Agreement and the Prospectus, will be validly
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus.
(k) TAXES. Any taxes, fees and other
governmental charges owed by the Company in connection with the
execution and delivery of this Agreement or the execution, delivery
and sale of the Shares have been or will be paid when
due.
(l) INVESTMENT COMPANY. The Company
is not, and neither the offer or sale of the Shares nor any of the
activities of the Company will cause the Company to be, an
“investment company” or under the control of an
“investment company” as such terms are defined in the
Investment Company Act of 1940, as amended.
(m) TAX RETURNS. The Company has
filed all material federal, state and foreign income tax returns
required to be filed by or on behalf of the Company on or before
the due dates therefor (taking into account all extensions of time
to file) and has paid or provided for the payment of all such
material taxes indicated by such tax returns and all material
assessments received by the Company to the extent that such taxes
or assessments have become due, except as may be described in the
Prospectus.
(n) REIT QUALIFICATIONS. The Company
will make a timely election to be subject to tax as a REIT pursuant
to Sections 856 through 860 of the Internal Revenue Code of 1986,
as amended (the “ Code ”) for its taxable
year ended December 31, 2010, or the first year during which
the Company begins material operations. The Company has been
organized and operated in conformity with the requirements for
qualification and
5
taxation as a REIT. The
Company’s current and proposed method of operation as
described in the Registration Statement and the Prospectus will
enable it to continue to meet the requirements for qualification
and taxation as a REIT under the Code.
(o) INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM. The accountants who have certified certain
financial statements appearing in the Prospectus are an independent
registered public accounting firm within the meaning of the
Securities Act and the Securities Act Rules and Regulations. Such
accountants have not been engaged by the Company to perform any
“prohibited activities” (as defined in Section 10A
of the Exchange Act).
The Company and its subsidiaries
each maintains a system of internal accounting and other controls
sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with
management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles as applied in the United States and
to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
Except as described in the Registration Statement, since the end of
the Company’s most recent audited fiscal year, there has been
(A) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated), and
(B) no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting.
(p) PREPARATION OF THE FINANCIAL
STATEMENTS. The financial statements filed with the Commission as a
part of the Registration Statement and included in the Prospectus
present fairly the financial position of the Company and its
consolidated subsidiaries as of and at the dates indicated and the
results of their operations and cash flows for the periods
specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles as applied
in the United States applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related
notes thereto. No other financial statements or supporting
schedules are required by the Securities Act, the Securities Act
Rules and Regulations, the Exchange Act or the Exchange Act Rules
and Regulations to be included in the Registration Statement or any
applicable Prospectus.
(q) MATERIAL ADVERSE CHANGE. Since
the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as may otherwise
be stated therein or contemplated thereby, there has not occurred a
Company MAE, whether or not arising in the ordinary course of
business.
(r) GOVERNMENT PERMITS. The Company
and its subsidiaries possess such certificates, authorities or
permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by them, other than those the failure of which to possess
or own would not have and could not
6
reasonably be expected to result in
a Company MAE. Neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which, if
the subject of an unfavorable decision, ruling or finding, would
result in a Company MAE.
(s) SUB-ADVISOR; SUB-ADVISORY
AGREEMENT.
(i) The Sub-advisor is a limited
partnership duly formed and validly existing under the laws of the
State of Delaware, with all requisite power and authority to enter
into this Agreement and to carry out its obligations
hereunder.
(ii) Each of this Agreement and the
Sub-advisory Agreement is duly and validly authorized, executed and
delivered by or on behalf of the Sub-advisor and constitutes a
valid and binding agreement of the Sub-advisor enforceable in
accordance with its terms (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
or except to the extent that the enforceability of the indemnity
and contribution provisions contained in this Agreement may be
limited under applicable securities laws).
(iii) The execution and delivery of
each of this Agreement and the Sub-advisory Agreement and the
performance thereunder by the Sub-advisor do not and will not
(i) conflict with, or result in a breach of any of the terms
and provisions of, or constitute a default under: (1) the
Sub-advisor’s or any of its subsidiaries’ charter or
by-laws, or other organizational documents, or (2) any
indenture, mortgage, deed of trust, voting trust agreement, note,
lease or other agreement or instrument to which the Sub-advisor or
any of its subsidiaries is a party or by which the Sub-advisor or
any of its subsidiaries or any of their properties is bound except,
for purposes of this clause (2) only, for such conflicts,
breaches or defaults that could not reasonably be expected to have
or result in, individually or in the aggregate, (A) a material
adverse effect on the condition, financial or otherwise, earnings,
business affairs or business prospects of the Sub-advisor, or
(B) a Company MAE; or (ii) result in and could not
reasonably be expected to result in, individually or in the
aggregate, in any material respect any conflict with, breach of, or
default under, any statute, rule or regulation or order of any
court or other governmental agency or body having jurisdiction over
the Sub-advisor or any of its properties. No consent, approval,
authorization or order of any court or other governmental agency or
body has been or is required for the performance of the
Sub-advisory Agreement by the Sub-advisor. The Sub-advisor is not
in violation of its agreement of limited partnership or other
organizational documents.
(iv) There is no action, suit,
proceeding, inquiry or investigation before or brought by any court
or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Sub-advisor, threatened against or
affecting the Sub-advisor, except as may be described in the
Prospectus or that would not result in or
7
have, individually or in the
aggregate, a Company MAE or a material adverse effect on the
condition, financial or otherwise, earnings, business affairs or
business prospects of the Sub-advisor.
(v) The Sub-advisor possesses such
certificates, authorities or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary
to conduct the business now operated by it, other than those the
failure to possess or own would not have or result in, individually
or in the aggregate, (A) a material adverse effect on the
condition, financial or otherwise, earnings, business affairs or
business prospects of the Sub-advisor, (B) a Company MAE, or
(C) a material adverse effect on the performance of the
services under the Sub-advisory Agreement by the Sub-advisor, and
the Sub-advisor has received any notice of proceedings relating to
the revocation or modification of any such certificate, authority
or permit.
(t) PROPERTIES. Except as may be
disclosed in the Prospectus and except as would not result in a
Company MAE, (i) all properties and assets described in the
Prospectus are owned with good and marketable title by the Company
and its subsidiaries, and (ii) all liens, charges,
encumbrances, claims or restrictions on or affecting any of the
properties and assets of any of the Company or its subsidiaries
which are required to be disclosed in the Prospectus are disclosed
therein.
(u) HAZARDOUS MATERIALS. Except as
may be described in the Prospectus, the Company does not have any
knowledge of (i) the unlawful presence of any hazardous
substances, hazardous materials, toxic substances or waste
materials (collectively, “ Hazardous Materials
”) on any of the properties owned by it or its subsidiaries
or subject to mortgage loans owned by the Company or any of its
subsidiaries, or (ii) any unlawful spills, releases,
discharges or disposal of Hazardous Materials that have occurred or
are presently occurring off such properties as a result of any
construction on or operation and use of such properties, which
presence or occurrence in the case of clauses (i) and
(ii) would result in a Company MAE. In connection with the
properties owned by the Company and its subsidiaries or subject to
mortgage loans owned by the Company or any of its subsidiaries, the
Company has no knowledge of any material failure to comply with all
applicable local, state and federal environmental laws,
regulations, ordinances and administrative and judicial orders
relating to the generation, recycling, reuse, sale, storage,
handling, transport and disposal of any Hazardous Materials, except
as may be disclosed in the Prospectus.
2. REPRESENTATIONS AND WARRANTIES
OF THE DEALER MANAGER . The Dealer Manager represents and
warrants to the Company during the term of this Agreement
that:
(a) ORGANIZATION STATUS. The Dealer
Manager is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of
Delaware, with all requisite power and authority to enter into this
Agreement and to carry out its obligations hereunder.
8
(b) AUTHORIZATION OF AGREEMENT. This
Agreement has been duly authorized, executed and delivered by the
Dealer Manager, and assuming due authorization, execution and
delivery of this Agreement by the Company and the Sub-advisor, will
constitute a valid and legally binding agreement of the Dealer
Manager enforceable against the Dealer Manager in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles
relating to enforceability and except that rights to indemnity and
contribution hereunder may be limited by applicable law and public
policy.
(c) ABSENCE OF CONFLICT OR DEFAULT.
The execution and delivery of this Agreement, the consummation of
the transactions herein contemplated and compliance with the terms
of this Agreement by the Dealer Manager will not conflict with or
constitute a default under (i) its organizational documents,
(ii) any indenture, mortgage, deed of trust or lease to which
the Dealer Manager is a party or by which it may be bound, or to
which any of the property or assets of the Dealer Manager is
subject, or (iii) any rule, regulation, writ, injunction or
decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Dealer Manager or
its assets, properties or operations, except in the case of clause
(ii) or (iii) for such conflicts or defaults that would
not individually or in the aggregate have or reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), business affairs, properties or results of operations
of the Dealer Manager.
(d) BROKER-DEALER REGISTRATION;
FINRA MEMBERSHIP. The Dealer Manager is, and during the term of
this Agreement will be, duly registered as a broker-dealer pursuant
to the provisions of the Exchange Act, a member in good standing of
FINRA, and a broker or dealer duly registered as such in those
states where the Dealer Manager is required to be registered in
order to carry out the Offering as contemplated by this Agreement.
Moreover, the Dealer Manager’s employees and representatives
have all required licenses and registrations to act under this
Agreement. There is no provision in the Dealer Manager’s
FINRA membership agreement that would restrict the ability of the
Dealer Manager to carry out the Offering as contemplated by this
Agreement.
(e) DISCLOSURE. The information
under the caption “Plan of Distribution” in the
Prospectus insofar as it relates to the Dealer Manager, and all
other information furnished to the Company by the Dealer Manager in
writing specifically for use in the Registration Statement, any
preliminary Prospectus or the Prospectus, does not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading.
3. OFFERING AND SALE OF THE
SHARES . Upon the terms and subject to the conditions set forth
in this Agreement, the Company hereby appoints the Dealer Manager
as its agent and exclusive distributor to solicit and to retain the
Soliciting Dealers (as defined in Section 3(a) ) to
solicit subscriptions for the Shares at the subscription price to
be paid in cash. The Dealer Manager hereby accepts such agency and
exclusive distributorship and agrees to use its reasonable best
efforts to sell or cause to be sold the Shares in such quantities
and to such Persons
9
in accordance with such terms as are set forth
in this Agreement, the Prospectus and the Registration Statement.
Unless this Agreement is earlier terminated pursuant to
Section 11 , the Dealer Manager shall use such
reasonable best efforts during the Offering Period (as defined
below).
As used in this Agreement, “
Offering Period ” means the period commencing
on the initial Effective Date and ending on the earliest to occur
of the following: (1) the acceptance by the Company of
subscriptions for 150,000,000 Shares; (2) the termination of
the Offering by the Company, which the Company shall have the right
to terminate in its sole and absolute discretion at any time (it
being understood and agreed that the termination of the Offering by
the Company pursuant this clause (2) shall not constitute a
termination of the Agreement pursuant to Section 11 );
(3) the termination or expiration of the effectiveness of the
Registration Statement; and (4) the liquidation or dissolution
of the Company.
Notwithstanding the foregoing,
if the Company or an affiliate of the Company commences a
public offering pursuant to the Registration Statement or another
registration statement filed pursuant to the Securities Act within
nine months from the date of the termination or expiration of the
Offering Period, then, at the election of the Dealer Manager (such
election to be given by notice thereof to the Company), the Dealer
Manager’s exclusive retention pursuant to this Agreement and
the Offering Period shall be reinstated, and this Agreement shall
be deemed amended mutatis mutandis in connection therewith;
provided , however, that neither the Dealer
Manager’s exclusive retention nor the Offering Period shall
be reinstated (x) if the public offering by the Company or an
affiliate of the Company is for securities listed or approved for
listing upon notice of issuance on a national securities exchange,
(y) with respect to a public offering by an affiliate of the
Company only, if the Offering Period lasted for at least three
years or was terminated due to the acceptance by the Company of
subscriptions for 150,000,000 Shares, or (z) if the Company
previously has terminated this Agreement pursuant to
Section 11(b) .
The number of Shares, if any, to be
reserved for sale by each Soliciting Dealer may be determined, from
time to time, by the Dealer Manager upon prior consultation with
the Company. In the absence of such determination, the Company
shall, subject to the provisions of Section 3(b) ,
accept Subscription Agreements based upon a first-come, first
accepted reservation or other similar method. Under no
circumstances will the Dealer Manager be obligated to underwrite or
purchase any Shares for its own account and, in soliciting
purchases of Shares, the Dealer Manager shall act solely as the
Company’s agent and not as an underwriter or
principal.
(a) SOLICITING DEALERS. The Shares
offered and sold through the Dealer Manager under this Agreement
shall be offered and sold only by the Dealer Manager and other
securities dealers the Dealer Manager may retain (collectively the
“ Soliciting Dealers ”); provided,
however, that (i) the Dealer Manager reasonably believes
that all Soliciting Dealers are registered with the Commission,
members of FINRA and are duly licensed or registered by the
regulatory authorities in the jurisdictions in which they will
offer and sell Shares or exempt from broker dealer registration
with the Commission and all other applicable regulatory
authorities, (ii) all such engagements are evidenced by
written agreements, the terms and conditions of which substantially
conform to the form of Soliciting Dealers Agreement approved by the
Company and the Dealer Manager (the
10
“ Soliciting Dealers
Agreement ”), and (iii) the Company shall have
previously approved each Soliciting Dealer (such approval not to be
unreasonably withheld or delayed).
(b) SUBSCRIPTION DOCUMENTS. Each
Person desiring to purchase Shares through the Dealer Manager, or
any other Soliciting Dealer, will be required to complete and
execute the subscription documents described in the
Prospectus.
(c) COMPLETED SALE. A sale of a
Share shall be deemed by the Company to be completed for purposes
of Section 3(d) if and only if (i) the Company has
received a properly completed and executed subscription agreement,
together with payment of the full purchase price of each purchased
Share, from an investor who satisfies the applicable suitability
standards and minimum purchase requirements set forth in the
Registration Statement as determined by the Soliciting Dealer, or
the Dealer Manager, as applicable, in accordance with the
provisions of this Agreement, (ii) the Company has accepted
such subscription, and (iii) such investor has been admitted
as a shareholder of the Company. In addition, no sale of Shares
shall be completed until at least five (5) business days after
the date on which the subscriber receives a copy of the Prospectus.
The Dealer Manager hereby acknowledges and agrees that the Company,
in its sole and absolute discretion, may accept or reject any
subscription, in whole or in part, for any reason whatsoever or no
reason, and no commission or dealer manager fee will be paid to the
Dealer Manager with respect to that portion of any subscription
which is rejected.
(d) DEALER-MANAGER
COMPENSATION.
(i) Subject to the volume discounts
and other special circumstances described in or otherwise provided
in the “Plan of Distribution” section of the Prospectus
or this Section 3(d) , the Company agrees to pay the
Dealer Manager selling commissions in the amount of seven percent
(7%) of the selling price of each Share for which a sale is
completed from the Shares offered in the Primary Offering. The
Company will not pay selling commissions for sales of Shares
pursuant to the DRP, and the Company will pay reduced selling
commissions or may eliminate commissions on certain sales of
Shares, including the reduction or elimination of selling
commissions in accordance with, and on the terms set forth in, the
Prospectus. The Dealer Manager will reallow all the selling
commissions, subject to federal and state securities laws, to the
Soliciting Dealer who sold the Shares, as described more fully in
the Soliciting Dealers Agreement.
(ii) Subject to the special
circumstances described in or otherwise provided in the “Plan
of Distribution” section of the Prospectus or this
Section 3(d) , as compensation for acting as the dealer
manager, the Company will pay the Dealer Manager, a dealer manager
fee in the amount of three percent (3%) of the selling price
of each Share for which a sale is completed from the Shares offered
in the Primary Offering (the “ Dealer Manager
Fee ”). No Dealer Manager Fee will be paid in
connection with Shares sold pursuant to the DRP. The Dealer Manager
may retain or re-allow all or a portion of the Dealer Manager Fee,
subject to federal and state securities laws, to the Soliciting
Dealer who sold the Shares, as described more fully in the
Soliciting Dealers Agreement.
11
(iii) All selling commissions
payable to the Dealer Manager will be paid within thirty
(30) days after the investor subscribing for the Share is
admitted as a shareholder of the Company, in an amount equal to the
selling commissions payable with respect to such Shares.
(iv) In no event shall the total
aggregate underwriting compensation payable to the Dealer Manager
and any Soliciting Dealers participating in the Offering,
including, but not limited to, selling commissions and the Dealer
Manager Fee exceed ten percent (10.0%) of gross offering
proceeds from the Primary Offering in the aggregate.
(v) Notwithstanding anything to the
contrary contained herein, if the Company pays any selling
commission to the Dealer Manager for sale by a Soliciting Dealer of
one or more Shares and the subscription is rescinded as to one or
more of the Shares covered by such subscription, then the Company
shall decrease the next payment of selling commissions or other
compensation otherwise payable to the Dealer Manager by the Company
under this Agreement by an amount equal to the commission rate
established in this Section 3(d) , multiplied by the
number of Shares as to which the subscription is rescinded. If no
payment of selling commissions or other compensation is due to the
Dealer Manager after such withdrawal occurs, then the Dealer
Manager shall pay the amount specified in the preceding sentence to
the Company within a reasonable period of time not to exceed thirty
(30) days following receipt of notice by the Dealer Manager
from the Company stating the amount owed as a result of rescinded
subscriptions.
(vi) Notwithstanding the foregoing,
no commissions, payments or amounts whatsoever will be paid to the
Dealer Manager under this Section 3(d) until an
investment or a subscription is accepted and such investor is
admitted pursuant to the terms set forth in the Prospectus and
herein.
(vii) The Company will not be liable
or responsible to any Soliciting Dealer for direct payment for
selling commissions to such Soliciting Dealer; the Dealer Manager
is solely and exclusively responsible for the payment of selling
commissions to Soliciting Dealers.
(e) REASONABLE BONA FIDE DUE
DILIGENCE EXPENSES. The Company or the Sub-advisor shall reimburse
the Dealer Manager or any Soliciting Dealer for reasonable bona
fide due diligence expenses incurred by the Dealer Manager or
any Soliciting Dealer, subject to the Company having given its
prior approval of the incurrence of such expenses (such approval
not to be unreasonably withheld or delayed). The Company shall only
reimburse the Dealer Manager or any Soliciting Dealer for such
approved bona fide due diligence expenses to the extent such
expenses have actually been incurred and are supported by detailed
and itemized invoice(s) provided to the Company.
4. EXCLUSIVITY AND
RESTRICTION .
12
(a) As set forth in
Section 3 , the Company has appointed the Dealer
Manager as its agent and exclusive distributor to solicit and to
retain the Soliciting Dealers to solicit subscriptions for the
Shares during the Offering Period (including any reinstatement
thereof pursuant to the provisions of Section 3 ).
During the period from the date hereof until the earlier to occur
of (i) the end of the Offering Period (including any
reinstatement thereof pursuant to the provisions of
Section 3 ) and (ii) the termination of this
Agreement pursuant to Section 11 , the Company will not
(and will cause its affiliates to not) engage or appoint any Person
other than the Dealer Manager to distribute, solicit and/or retain
securities dealers to solicit subscriptions for the Shares or other
securities of the Company.
(b) During the period from the date
hereof until the earlier to occur of (i) the end of the
Offering Period (including any reinstatement thereof pursuant to
the provisions of Section 3 ) and (ii) the
termination of this Agreement pursuant to Section 11 ,
the Dealer Manager will not (and will cause its affiliates to not)
distribute or market any non-traded REIT significantly engaged in
the acquisition, ownership, leasing, operation and/or management of
anchored shopping centers in the United States with a purchase
price of less than $20,000,000 (the “ Target
Activities ”). For the avoidance of doubt, American
Realty Capital Trust, Inc. and American Realty Capital New York
Recovery REIT Inc., to the extent the primary investment focus of
each such entity remains as set forth in such entity’s
respective prospectus on file with the Commission as of the date
hereof, shall not be considered a non-traded REIT significantly
engaged in the Target Activities for purposes of this
Section 4(b) .
5. CONDITIONS TO THE DEALER
MANAGER’S OBLIGATIONS . The Dealer Manager’s
obligations hereunder shall be subject to the following terms and
conditions (and if all such conditions are not satisfied or waived
by the Dealer Manager on or before the initial Effective Date or at
any time thereafter until the Termination Date (as defined in
Section 11(a) ), then no funds shall be released
(1) from the Escrow Account if the Dealer Manager provides
notice to this effect to the Company and the Escrow Agent, and
(2) from the Deposit Account if the Dealer Manager provides
notice to this effect to the Company and Escrow Agent:
(a) The representations and
warranties on the part of the Company and the Sub-advisor contained
in this Agreement hereof shall be true and correct in all material
respects and the Company and the Sub-advisor shall have complied
with their covenants, agreements and obligations contained in this
Agreement in all material respects;
(b) The Registration Statement shall
have become effective and 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 and the
Sub-advisor, 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 the
Dealer Manager.
(c) The Registration Statement and
the Prospectus, and any amendment or any supplement thereto, shall
not contain any untrue statement of material fact, or omit to
state
13
a material fact that is required to
be stated therein or is necessary to make the statements therein
not misleading.
(d) On the initial Effective Date
and at or prior to the fifth business day following the Effective
Date of each post-effective amendment to the Registration Statement
that includes or incorporates by reference new audited financial
statements for the Company, the Dealer Manager shall have received
from Deloitte & Touche LLP or such other independent
registered public accountants for the Company, (i) a letter,
dated the applicable date, addressed to the Dealer Manager, in form
and substance satisfactory to the Dealer Manager, containing
statements and information of the type ordinarily included in
accountant’s “comfort letters” to placement
agents or dealer managers, delivered according to Statement of
Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited financial statements and certain financial
information contained in the Registration Statement and the
Prospectus, and (ii) confirming that they are
(A) independent registered public accountants as required by
the Securities Act, and (B) in compliance with the applicable
requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X.
(e) At or prior to the fifth
business day following the Effective Date of each
post-effective amendment to the Registration Statement (other than
post-effective amendments filed solely pursuant to Rule 462(d)
under the Securities Act and other than the post-effective
amendments referred to in Section 5(d) ), the Dealer
Manager shall have received from Deloitte & Touche LLP or
such other independent public or certified public accountants for
the Company, a letter, dated such date, in form and substance
satisfactory to the Dealer Manager, to the effect that they
reaffirm the statements made in the most recent letter furnished
pursuant to Section 5(d) , except that the specified
date referred to therein for the carrying out of procedures shall
be no more than three business days prior to the date of the letter
furnished pursuant to this Section 5(e) .
(f) On the Effective Date the Dealer
Manager shall have received the opinion of DLA Piper LLP (US),
counsel for the Company, and a supplemental “negative
assurances” letter from such counsel, each dated as of the
Effective Date, and each in the form and substance reasonably
satisfactory to the Dealer Manager.
(g) At or prior to the Effective
Date and at or prior to the fifth business day following the
effective date of each post-effective amendment to the Registration
Statement (other than post-effective amendments filed solely
pursuant to Rule 462(d) under the Securities Act), the Dealer
Manager shall have received a written certificate executed by the
Chief Executive Officer or President of the Company and the Chief
Financial Officer of the Company, in their capacities as officers
of the Company, dated as of the applicable date, to the effect
that: (i) the representations and warranties of the Company
and the Sub-advisor set forth in this Agreement are true and
correct in all material respects with the same force and effect as
though expressly made on and as of the applicable date; and
(ii) the Company and the Sub-advisor have comp
