Exhibit 10.1

 
 

January 9, 2014

Arete Wealth Management, LLC
1699 East Woodfield Road, Suite 565
Schaumburg, IL 60173-4920

Re:           Marketing Services Agreement

Dear Mr. Hock:

MacKenzie Realty Capital, Inc., a Maryland corporation (the “Fund”), is pleased
to establish the terms of its retention of Arete Wealth Management, LLC
(“Arete”) for the provision of marketing and placement agent services by Arete
to the Fund as described below.  The Fund proposes to offer publicly for
subscription and to sell to subscribers acceptable to the Fund, upon the terms
and subject to the conditions of this letter agreement (“Agreement”) and the
registration statement on Form N-2 (File No. 333-181853) (the “Registration
Statement”) filed by the Fund with the Securities and Exchange Commission
(“SEC”) and several state securities authorities (together, the “Authorities,”
and with the SEC, the “Securities Regulators”) under the Securities Act of 1933,
as amended (the “1933 Act”) and under applicable state law (collectively with
the 1933 Act, the “Securities Laws”), which Registration Statement contains a
prospectus, as it may be amended by the Fund from time to time (the
“Prospectus”) for the sale of shares of common stock of the Fund (the “Shares”),
up to a maximum of 5,000,000 Shares at a sale price per Share as indicated in
Section 2(a) below during the offering period of the Fund, as more fully
described in the Prospectus.  Arete will act as the syndicator and as one of the
placement agents for the Fund on a best efforts basis.

1.  Wholesaling Services.  Arete will assist the Fund in connection with its
offering of the Shares (the “Offering”) as provided herein.  Arete will serve as
a marketing consultant to the Fund by providing the Fund with the personal
securities wholesaling services (“Wholesaling”) of registered representatives of
Arete, who may include ________________, among others (collectively, the
“Representatives”).  The Representatives will identify other registered
broker-dealers who may wish to sell the Shares in the Offering to their
customers (“Sales Agents”) and obtain execution of dealer agreements between the
Sales Agents and the Fund (“Sales Agent Agreements”) pursuant to which the Sales
Agents will effect such sales, and Arete will make marketing support calls on,
and otherwise provide ongoing marketing services and support to, the Sales
Agents during the course of the Offering to promote the offer and sale of the
Shares.

2.  Share Sales.  In addition to its Wholesaling services, Arete will also
directly sell the Shares in the Offering on a best efforts basis and without any
commitment to purchase any Shares, on the terms as described in the Registration
Statement.  Arete will comply with the following when selling the Shares:

 
 

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a.      Arete will solicit, as an independent contractor and not as an agent of
the Fund or its affiliates, persons acceptable to the Fund to purchase the
Shares pursuant to the Subscription Agreement (the “Subscription Agreement”) in
the form filed with the Registration Statement and in accordance with the terms
of the Prospectus, and to diligently make inquiries as required by this
Agreement, the Prospectus, or the Securities Laws applicable to the prospective
purchasers’ jurisdictions of residence in order to ascertain whether a purchase
of the securities is suitable for the purchaser.  In accordance with the
instructions set forth in the Subscription Agreement, all funds received by
Arete with respect to any Subscription Agreement shall be transmitted to the
Fund by noon of the next business day following receipt thereof.  Arete shall at
all times handle subscription funds in accordance with Rule 15c2-4 promulgated
by the Securities and Exchange Commission (“SEC”) pursuant to the Securities
Exchange Act of 1934, as amended (the “1934 Act”).  No Subscription Agreement
will be effective unless and until accepted by the Fund, it being understood
that the Fund may accept or reject any purchaser in its sole and absolute
discretion and that the Fund may terminate the Offering at any time for any
reason.
 
b.           Before participating in the Offering, Arete will have reasonable
grounds to believe, based on its independent review of information made
available to it by the Fund through the Prospectus, that all material facts are
adequately and accurately disclosed in the Prospectus and provide a basis for
evaluating the Fund and the Shares.
 
c.           Arete agrees not to execute any sale of the Shares into a
discretionary account without prior written approval of the transaction by the
purchaser.

d.           Arete will retain in its records and make available to the Fund,
for a period of at least six (6) years following the last day of the Offering,
information establishing that each person who purchases the Shares pursuant to a
Subscription Agreement solicited by Arete is within the permitted class of
purchasers under the requirements of the jurisdiction in which such purchaser is
a resident and the suitability requirements contained in the Prospectus and the
Subscription Agreement.
 
e.           All subscriptions solicited by Arete will be strictly subject to
acceptance thereof by the Fund.  The Fund reserves the right in its sole and
absolute discretion to reject any such subscription and to accept or reject
subscriptions in any order received as determined by the Fund.  Neither Arete
nor any other person is authorized to give any information or make any
representation other than those contained in the Prospectus or in any
supplemental sales literature furnished by the Fund for use in making
solicitations in connection with the offer and sale of the Shares.
 
f.           The Fund will provide Arete with such number of copies of the
Prospectus and such number of copies of amendments and supplements thereto as
Arete may reasonably request.  The Fund may provide Arete with certain
supplemental sales material to be used by it in connection with the solicitation
of purchases of the Shares.  If Arete elects to use such supplemental sales
material, Arete agrees that such material shall not be used in connection with
the solicitation or purchase of the Shares unless accompanied or preceded by a
then-current Prospectus.
 

 
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g.           No commissions will be payable with respect to any subscriptions
for Shares that are rejected by the Fund, or in the event the Offering is
terminated for any reason whatsoever.
 
h.           No commissions will be payable to Arete with respect to any sale of
the Shares by Arete unless and until such time as the Fund has received the
total proceeds of any such sale.
 
i.           No commissions will be payable to Arete respecting any Shares
purchased through the Fund’s dividend reinvestment plan.

j.           Arete will instruct all purchasers to make their checks payable to
the Fund.

k.           In recommending to a purchaser the purchase of the Shares, Arete
will have reasonable grounds to believe, on the basis of information obtained
from the purchaser concerning the purchaser’s investment objectives, other
investments, financial situation, and needs, and any other information known by
Arete, that: (A) the purchaser meets the purchaser suitability requirements set
forth in the Prospectus; (B) the purchaser is or will be in a financial position
appropriate to enable the purchaser to realize to a significant extent the
benefits described in the Prospectus; (C) the purchaser has a fair market net
worth sufficient to sustain the risks inherent in the investment, including loss
of investment and lack of liquidity; and (D) the investment is otherwise
suitable for the purchaser.  Furthermore, Arete will ensure that each purchaser
of Shares meets the suitability requirements and maintain records as required in
the Fund’s First Amended and Restated Articles of Incorporation (the “Charter”),
and will not complete sales of Shares until five days after each purchaser has
received a Prospectus, as required in the Charter.

k.           Arete agrees it will inform the prospective purchaser of all
pertinent facts relating to the liquidity and marketability of the Shares, as
appropriate, during the term of the investment, prior to the purchaser executing
the Subscription Agreement.

l.           In soliciting persons to acquire the Shares, Arete agrees to comply
with any applicable requirements of the 1933 Act, the 1934 Act, applicable
Securities Laws, the published rules and regulations thereunder, rules of the
Financial Industry Regulatory Authority (“FINRA”), and, in particular, Arete
agrees that it will not give any information or make any representations other
than those contained in the Prospectus and in any supplemental sales literature
furnished to Arete by the Fund for use in making such solicitations, nor will it
offer or sell Shares in one state that are registered in a different state.

3.  Control.  It is understood and agreed that Arete will have exclusive
authority and control over the direction and supervision of the Representatives
in connection with the services to be rendered under this Agreement.

4.  Fees and Expenses.

As compensation for Share sales and Wholesaling, the Fund will pay Arete a fee
of up to 2.0% of the Share sale price.  Payments will be made by the Fund upon
its receipt and acceptance of a subscription.  No fees will be payable by the
Fund respecting any Shares distributed through the Fund’s dividend reinvestment
program.

 
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5.           Termination.  This Agreement may be terminated by either the Fund
or Arete at any time, with or without cause, upon written notice to that effect
to the other party.  Any termination of this engagement will be without
liability or continuing obligation for either party, except for the provisions
of paragraph 2 above and as otherwise provided herein.   The engagement for the
performance of services hereunder will terminate automatically upon completion
or termination of the Offering.

6.           Representations and Warranties.  Arete represents and warrants to
the Fund the following:

a.           Neither Arete nor any person associated with it is ineligible to
serve the Fund under the provisions of the Investment Company Act of 1940, as
amended (the “1940 Act”).

b.           Arete (i) is a member in good standing of the FINRA, (ii) is
qualified and duly registered to act as a broker-dealer within all states in
which it will sell the Shares or perform Wholesaling, (iii) is a broker-dealer
duly registered with the SEC pursuant to the 1934 Act, and (iv) will maintain
all such registrations and qualifications in good standing for the duration of
Arete’s involvement in the Offering.

c.           Arete has established and implemented anti-money laundering
compliance programs, in accordance with FINRA rules and federal law, which are
reasonably expected to detect and cause reporting of suspicious transactions in
connection with the sale of Shares.

7.           Miscellaneous.

a.           Independent Contractor.  An independent contractor relationship
will be created by this Agreement.  No partnership or employment relationship
between Arete and the Fund is intended to or will exist.

b.           Arete’s Role.  Arete’s role is limited to acting as marketing
consultant and providing wholesaling and solicitation services for the
Fund.  Arete is not rendering legal or tax advice to the Fund.  The Fund
acknowledges and agrees that Arete is not and shall not be construed as a
fiduciary of the Fund and shall have no duties or liabilities to the
stockholders or creditors of the Fund or any other person by virtue of the
Fund’s retention of Arete hereunder.  The Fund also agrees that Arete shall not
have any liability (whether direct or indirect, in contract, tort, or otherwise)
to the Fund or to any person (including, without limitation, equity holders, and
creditors of the Fund) claiming through the Fund for or in connection with the
engagement of Arete, this Agreement, or the transactions contemplated hereby
except by reason of Arete’s actions in breach of this Agreement, violation of
law, bad faith, gross negligence, willful misconduct, or reckless disregard of
Arete’s obligations or duties under this Agreement.  The Fund acknowledges that
Arete was induced to enter into this Agreement by, among other things, the
provisions of this paragraph.

c.           Responsibility for Disclosure.  The Fund will provide Arete any
information material to the Fund’s business and operations as well as any other
relevant information that

 
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Arete reasonably requests in connection with the performance of its services
hereunder.  The Fund represents and warrants to Arete that all such information
provided to Arete, all information set forth in the Prospectus, and all other
information released by the Fund to third parties, including, without
limitation, prospective investors or Sales Agents, and all information filed by
the Fund with any relevant Securities Regulator, is and will be accurate and
complete at the time it is furnished or filed, and the Fund agrees to keep Arete
advised of all material developments affecting the Fund through the term of
Arete’s engagement. The Fund recognizes that, in rendering its services, Arete
will be using information provided by the Fund, and that Arete does not assume
responsibility for and may rely, without independent verification, on the
accuracy and completeness of such information.  Arete will maintain in
confidence any and all information provided to Arete by the Fund in connection
with services contemplated by this Agreement and will not communicate any such
information to any third party, other than may be necessary in the performance
of services hereunder, without the express consent of the Fund.

d.           Indemnities.  The Fund agrees to indemnify Arete and hold Arete
harmless, to the fullest extent lawful against any and all claims, damages,
losses, liabilities, and expenses as incurred (including all reasonable fees and
disbursements of Arete and its counsel, and such persons’ reasonable travel and
other out-of-pocket expenses incurred in connection with the investigation of
and preparation for any such pending or threatened claims and any litigation or
other proceedings arising therefrom) arising out of (i) Arete’s engagement
hereunder or (ii) any untrue statement or alleged untrue statement of a material
fact contained in, or omissions or alleged omissions from, the Registration
Statement (“Claims”); provided, however, that this agreement to indemnify shall
not apply to any Claim to the extent that it arises out of or is based upon (y)
any action or failure to act by Arete (other than an action or failure to act
undertaken at the Fund’s request or with the Fund’s consent), or (z) that
constitutes a breach of this Agreement, violation of law, bad faith, gross
negligence, or willful misconduct on the part of Arete, or results from Arete’s
reckless disregard for its duties or obligations under this Agreement.

Arete agrees to indemnify and hold harmless the Fund and its managers, members,
and their partners, directors, officers, employees, and agents, including their
attorneys and accountants against any and all loss, liability, claim, damage,
and expense whatsoever arising out of or based upon: (i) any unauthorized verbal
or written representations in connection with the Offering made by Arete or its
agents (other than by the Fund or its employees or affiliates), employees, or
affiliates in violation of any Securities Laws or regulations; (ii) Arete’s
failure to comply with any of the applicable provisions of any Securities Laws
or regulations or FINRA rules; or (iii) Arete’s breach of any term, condition,
representation, warranty, or covenant of this Agreement.
 

If any action, suit, proceeding, or investigation is commenced, as to which a
party proposes to demand indemnification, it shall notify the other party
(“Indemnnitor”) with reasonable promptness; provided, however, that any failure
to so notify shall not relieve the obligated party from its obligations
hereunder.  The party to be indemnified (“Indemnitee”) shall have the right to
retain counsel of its own choice to represent it with respect to any claim, and
the Indemnitor shall pay the fees, expenses, and disbursements of such counsel
except to the extent that such claim is ultimately determined not to benefit
from the Indemnitor’s indemnity under this Agreement; and such counsel shall, to
the extent consistent with its professional

 
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responsibilities, cooperate with the Indemnitor and any counsel designated by
the Indemnitor.  The Indemnitor shall be liable for any settlement of any claim
against the Indemnitee for which indemnity from the Indemnitor is available
under this Agreement made with its written consent, which consent shall not be
unreasonably withheld.  The Indemnitor shall not, without the prior written
consent of Indemnitee, settle or compromise any claim for which indemnity from
the Indemnitor is available under this Agreement, or permit a default or consent
to the entry of any judgment in respect thereof, unless such settlement
compromise or consent includes, as an unconditional term thereof, the giving by
the claimant to Indemnitee of an unconditional and irrevocable release from all
liability in respect of such claim.

In order to provide for just and equitable contribution in circumstances in
which the indemnification provided above is for any reason held to be
unavailable from the Indemnitor, Fund on the one hand, and Arete on the other,
shall contribute to the aggregate losses, liabilities, claims, damages, and
expenses (including any amount paid in settlement of any action, suit, or
proceeding or any claims asserted) in such amounts as a court of competent
jurisdiction may determine (or in case of settlement, in such amounts as may be
agreed upon by the parties) in such proportion to reflect the relative fault of
the Fund, on the one hand, and Arete on the other hand, in connection with the
events described above as the case may be, which resulted in such losses,
liabilities, claims, damages, or expenses, as well as any other equitable
considerations.  The relative fault of the parties shall be determined by
reference to, among other things, whether any untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Fund, on the one hand, or Arete on the
other, and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such omission or statement.

e.           Survival.  The provisions of this Agreement relating to
indemnification and all other provisions necessary to the enforcement of the
intent of this Agreement will survive the termination or expiration of this
Agreement.  The provisions of this Agreement will inure to the benefit of and be
binding upon the successors and assigns of the Fund and Arete.

f.           Severability.  If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent
possible.  In any event, all other provisions of this Agreement will be deemed
valid and enforceable to the full extent possible.

g.           Assignment.  This Agreement and the rights and obligations
hereunder may not be assigned by a party without the express written consent of
the other party.   Subject to the foregoing, the benefits of this Agreement
shall inure to the parties hereto, their respective successors and assigns, and
to the indemnified parties hereunder and their respective successors and assigns
and representatives, and the obligations and liabilities assumed in this
Agreement by the parties hereto shall be binding upon their respective
successors and assigns.

If the above terms are acceptable to Arete, please return an executed copy of
this letter Agreement at your earliest convenience.

 
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  MacKenzie Realty Capital, Inc  

 

  By: /s/ Chip Patterson     Name: Chip Patterson     Title: Secretary  

 
 
 

Accepted by Arete:
Arete Wealth Management, LLC
   

 

        By: /s/ UnBo Chung     Name: UnBo Chung     Title: General Counsel    
Date:  1/13/14    

 
 
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