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EXHIBIT 1.1
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PARTICIPATING DEALER AGREEMENT
CAPTEC
Financial Group, Inc.
_____________________
_____________________, ________________,199__
_____________________
[Name and Address of Broker Dealer]
Attention:_________________
Dear_______________________:
Captec Franchise Capital Partners L.P. IV (the "Partnership") is a
Delaware limited partnership formed to acquire income-producing commercial real
properties ("Properties") and equipment ("Equipment") which will be leased on a
"triple net" basis to operators of national chain and nationally franchised
fast-food, family style and dinner house restaurants as well as other
franchised or chain businesses such as specialty retail businesses. The
Partnership also intends to acquire Properties that may be leased on a "double
net" (the Partnership being responsible for the maintenance of the roof,
exterior walls, and/or parking lot for such Properties) or "triple net" basis
to prominent national and regional retail concerns.
The Partnership is offering for sale units of limited partnership
interest (hereinafter, the "Units") as hereinafter described. The offering is
being made on a "best efforts, part or none" basis through certain selected
dealers (referred to herein as "Participating Dealers") who are members of the
National Association of Securities Dealers, Inc. (the "NASD"). References to
"you" or "your" shall include you and each of your officers, directors,
partners, agents, employees, or affiliates.
1. APPOINTMENT OF BROKER-DEALER.
(a) On the basis of, and subject to the representations,
warranties, covenants, terms and conditions herein set forth, you are hereby
appointed a broker-dealer for the Partnership, during the Offering Period
herein specified, solely for the purpose of obtaining subscriptions for the
purchase of up to $30,000,000 of Units. The Units are subject to prior sale
and to cancellation or modification of the offering without notice; the
Partnership reserves the right to accept or reject subscriptions in whole or in
part in the sole discretion of the Managing General Partner, and you shall be
entitled to no commissions or other compensation for subscriptions rejected by
the Partnership.
(b) The "Offering Period" shall mean that period during
which any offers to purchase Units are solicited and shall commence on the
effective date of the Registration Statement (as defined in Section 2) and
continue until the first to occur of the close of business on the Termination
Date (as defined in Section 5) or the acceptance by the Partnership of offers
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to purchase 30,000 Units ($30,000,000); provided, however, that if the
Termination Date occurs prior to acceptance of, and depositing of collected
funds representing subscriptions for 2,000 Units ($2,000,000) by the Managing
General Partner, at that time any and all funds shall be refunded to the
subscribers, without deduction, and all subscriptions and this agreement will
be cancelled. Subject to the performance by the Partnership of all of its
obligations hereunder and to the completeness and accuracy of all of its
representations and warranties contained herein, you hereby accept such
appointment and agree on the terms and conditions herein set forth to use your
best efforts during the Offering Period to obtain subscriptions for Units.
Subject to the performance by you of all of your obligations hereunder and to
the completeness and accuracy of all of your representations and warranties
contained herein, your appointment hereunder shall not be terminable by the
Partnership and shall continue until the Offering Period has ended.
Subscriptions will be received by Michigan National Bank (the "Escrow
Agent"). The General Partners reserve the right to close the subscription
books at any time without notice and to reject any subscription in whole or in
part, provided that subscriptions procured by it shall not be rejected
unreasonably. The Partnership shall notify you promptly of the rejection of
any subscription procured by it and of the reasons for such rejection.
2. REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNERS.
The General Partners represent and warrant to you as follows:
(a) STATEMENT AND PROSPECTUS. A Registration Statement
(Registration number 333-[ ] on Form S-11) with respect to the Units, including
a Preliminary Prospectus (as hereinafter defined), has been prepared by the
Partnership and the General Partners in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder and has been filed with the Commission under the Act.
Copies of the final Registration Statement will be or have been delivered to
you. As used in this Agreement, the term "Preliminary Prospectus" means each
preliminary prospectus filed with such Registration Statement and amendments,
the term "Registration Statement" means such registration statement in the form
in which it becomes effective and the term "Prospectus" means the prospectus in
the form first filed with the Commission pursuant to its Rule 424 (b) after the
Registration Statement becomes effective.
(b) COMPLIANCE WITH THE ACT. The Commission has not
issued any order preventing or suspending the use of any Preliminary Prospectus
or Prospectus. When the Registration Statement becomes effective and at all
times subsequent thereto up to and including the Termination Date (as
hereinafter defined): (i) the Registration Statement and the Prospectus and any
amendments or supplements thereto will contain all statements and information
which are required to be included therein by the Act and the Rules and
Regulations and will comply in all material respects with the Act and the Rules
and Regulations; and (ii) neither the Registration Statement nor the Prospectus
nor any amendment or supplement thereto will at any such time include any
untrue statement of a material fact or omit to state any material fact
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required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) NO SUBSEQUENT MATERIAL EVENTS. Subsequent to the
respective dates as of which information is given in the Registration Statement
and Prospectus and up to and including the Termination Date and except for the
acquisition of Properties and/or Equipment as contemplated in the Prospectus,
the Partnership has not: (i) incurred and will not have incurred any direct or
contingent liabilities or obligations except in the ordinary course of business
which are material to the Partnership or entered in to any other transaction
which is material to the Partnership, whether or not in the ordinary course of
business; or (ii) undergone or undertaken any material adverse change, or a
development which can be seen to involve a prospective material adverse change,
in the general affairs, business, capitalization, properties, financial
position or results of operation, as the case may be, of the Partnership.
(d) FINANCIAL STATEMENTS. The financial statements and
schedules of the Partnership and the General Partners included in the
Registration Statement and the Prospectus and in any amendment or supplement
thereto fairly present, or in the case of future amendments or supplements will
fairly present, the financial condition of such persons and the results of
their operations and changes in their financial position, if any, as of the
dates and for the periods therein specified, and said financial statements have
been and will be prepared in accordance with generally accepted accounting
principles which have been consistently maintained and applied throughout the
periods involved, except as specifically noted in the financial statements
included in the Registration Statement and Prospectus or any amendment or
supplement thereto, as the case may be.
(e) PARTNERSHIP STATUS. The Partnership is duly formed
and validly existing under the Revised Uniform Limited Partnership Act as
enacted and in effect in the State of Delaware (the "Uniform Act"), with full
power and authority to conduct its business as described in the Prospectus, and
to enter into and perform this Agreement.
(f) AUTHORIZATION. The filing of the Registration
Statement and of applications under the securities laws of various
jurisdictions (the "Blue Sky Applications") and the execution, delivery and
performance of this Agreement are authorized by the Partnership Agreement and
have been duly authorized by the Partnership and the General Partners. The
person or persons who have or will sign this Agreement on behalf of the
Managing General Partner and the Partnership are or will be duly authorized so
to sign. This Agreement is a valid and legally binding obligation of the
Partnership, except as rights to indemnity under Section 8 hereof may be
limited by federal or state securities laws. The performance of this Agreement
and the Partnership Agreement and the consummation of the transactions
contemplated herein and therein, respectively, and the fulfillment of the terms
hereof and thereof, respectively, will not result in a breach of any of the
terms and provisions of, or constitute a default (or any event which with
notice, lapse of time or both would constitute a default) under, any statute,
indenture, mortgage, deed of trust, voting trust agreement, note agreement,
lease or other agreement or instrument to which either the Partnership or any
of the General Partners are or will be a party or by which any of them or any
of their properties are or will be bound, or under any rule or regulation or
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order of any court or other governmental agency or body which is applicable or
will be applicable to the Partnership or the General Partners or any of their
properties or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of the General Partners or
property or assets of, or to be acquired by, the Partnership. No consent,
approval, authorization or order of any court or governmental agency or body
has been or is required for the performance of this Agreement or the
Partnership Agreement by the Partnership, or for the consummation of the
transactions contemplated hereby and thereby, respectively (except as may be
required under the Act, or under state securities laws in connection with the
distribution of the Units or from the NASD) regarding this Agreement.
(g) PENDING ACTIONS. Except as set forth in the
Prospectus, there is no action, suit or proceeding pending before any court or
governmental agency, authority or body, or to the knowledge of the General
Partners, threatened, which might result in any material adverse change in the
condition (financial or other), business or prospectus of the General Partners
or the Partnership. There is no contract or document of a character required
to be described in the Registration Statement or Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required.
(h) STATUS OF THE CORPORATE GENERAL PARTNER. Captec
Franchise Capital Corporation IV is a corporation duly organized as a
corporation under the laws of the State of Michigan, and it is validly existing
and in good standing as a corporation under such laws to conduct business as
described in the Prospectus, and has full right, power and authority to enter
into this Agreement.
(i) UNITS; PARTNERSHIP AGREEMENT. The General Partners
will appropriately amend the Partnership Agreement to add the names of
subscribers of Units whose funds have been disbursed to the Partnership as
Limited Partners in the Partnership (if necessary under the Uniform Act), and
the Units with respect to which such action has been taken will, when sold and
paid for as described in the Prospectus and the Partnership Agreement,
represent valid limited partnership interests in the Partnership, fully paid
and nonassessable, and will conform to the description thereof contained in the
Registration Statement and the Prospectus.
(j) The Partnership is not an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended, or the
General Rules and Regulations thereunder.
(k) There is no litigation or governmental proceeding
pending or known by the Partnership or the General Partners to be threatened
against, or involving the business of, the Partnership which, if adversely
determined, would materially and adversely affect the Partnership.
(l) This Agreement has been duly and validly authorized,
executed and delivered by the Partnership and is a legal, valid and binding
obligation of the Partnership, enforceable in accordance with its terms, except
to the extent that the enforceability hereof may be limited by (l) bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect and affecting the rights of creditors generally, (ii) limitations upon
the power
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of a court to grant specific performance or any other remedy with respect to
the enforcement of this Agreement, and (iii) except to the extent that the
indemnification provisions of this Agreement are or may be held to be violative
of public policy (under either state or federal law) in the context of the
offer, offer for sale, or sale of securities.
(m) The Units, upon the issuance thereof, will be duly
and validly authorized and issued.
3. YOUR REPRESENTATIONS AND WARRANTIES.
You represent and warrant to the Partnership as follows:
(a) You have the necessary power and authority to execute
this Agreement and to perform the obligations imposed upon you and consummate
the transactions contemplated hereby.
(b) You are an entity duly organized and validly existing
under the laws of the state of organization; you are duly authorized to execute
this Agreement and to perform hereunder, and the execution by you of this
Agreement and the performance of the obligations and consummation of the
transactions contemplated hereby will not result in any material breach or
violation of, or constitute a default under, any agreement or instrument to
which you are a party or by which your properties are bound, or any judgment,
decree, order or any statute, rule or regulation applicable to you.
(c) You are a member in good standing of the NASD and you
agree to comply with all applicable rules of the NASD, including the NASD's
Rules of Fair Practice and all applicable provisions of the Securities Exchange
Act of 1934, as amended, (the "1934 Act") including, without limitation, Rule
15c2-4 under the 1934 Act, and the securities laws of the jurisdictions in
which offers to purchase Units will be solicited by you in connection with the
sale of Units; you are also registered as a broker-dealer and in good standing
under the 1934 Act, and under the securities law of said jurisdictions in which
you may offer or sell Units.
(d) You agree to comply with the provisions contained in
NASD Notice to Members 84-64 relating to the forwarding of subscription
documents and subscription proceeds to the Escrow Agent and the return of such
subscription documents or subscription proceeds to a subscriber within the
periods specified. Specifically, you agree that:
(i) all investors will be instructed to make
their checks payable as follows:
Michigan National Bank Escrow Agent for Captec
Franchise L.P. IV;
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(ii) upon receipt of a check not conforming to the
instructions set forth in the Prospectus, you shall return
such check directly to such subscriber not later than the end
of the next business day following its receipt by you;
(iii) if you provide internal supervisory review of
subscriptions at the same location at which subscription
documents and checks are received from subscribers, checks,
together with a copy of the signature page of each
Subscription Agreement, will be transmitted to the Escrow
Agent or to the broker-dealer registered under the 1934 Act,
whose responsibility it is to handle, review investor
suitability, process and document the subscription and
investor funds, prior to the end of the next business day
following your receipt of such materials;
(iv) if final internal supervisory review is
conducted at a different location than that at which checks
and subscription documents are received, checks will be
transmitted to the office at which such final internal
supervisory review is performed by the end of the next
business day following receipt. In addition, such final
review office will, in turn, by the end of the next business
day following receipt, transmit such checks, together with a
copy of the signature page of each Subscription Agreement,
for deposit to the Escrow Agent or to the processing
broker-dealer; and
(v) if a processing broker-dealer is involved,
checks, together with a copy of the signature page of each
Subscription Agreement, will be transmitted by such processing
broker-dealer for deposit to the Escrow Agent as soon as
practicable, but in any event by the end of the second
business day following receipt by the processing
broker-dealer. In addition, if checks are rejected,
subscriptions will be promptly returned to such subscribers.
(e) You expressly agree that any and all compensation
payable pursuant hereto shall be earned and paid to you only if and after
subscription proceeds have been remitted to the Partnership by the Escrow Agent
as otherwise described herein.
4. COMPENSATION.
(a) Subject to the provisions of paragraph 3(e), you will
be paid a commission equal to 8% of the principal amount of all Units sold
directly by you on each Closing Date (hereafter defined).
(b) Subject to the provisions of paragraph 3(c), you also
will be reimbursed for your bona fide due diligence expense, including, but not
limited to, due diligence meetings, third party reports, and travel, provided
however that in no event will aggregate reimbursements to all Participating
Dealers exceed .5% of the proceeds of this Offering.
(c) The performance of your obligations hereunder and the
consummation of the transactions contemplated herein shall not entitle you to
any further compensation or remuneration, or any share in any of the profits or
losses of the Partnership or any equity interest in or right to influence,
manage or control the business, or conduct the affairs of the Partnership
except as expressly set forth in this Section 4.
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(d) Notwithstanding anything to the contrary contained
herein, in the event the payment of some or all of the compensation payable
hereunder is or will be violative of applicable state or federal broker-dealer
compensation requirements (including but not limited to applicable laws,
regulations and interpretive opinions), then you agree that such fee shall be
waived to the extent payment thereof is unlawful.
5. OFFERING.
Offers to purchase Units shall not be solicited other than at the
price and upon the terms and conditions set forth in the Prospectus. All funds
received by you in payment of subscriptions to purchase Units will be processed
in accordance with the procedures set forth in subparagraph 3(d) hereof.
All persons who subscribe for Units, and whose subscriptions for the
purchase of Units are accepted by the Managing General Partner, will be issued
Units for which they have subscribed as soon as practicable after the Managing
General Partner has accepted, and collected funds have been deposited with the
Escrow Agent representing, subscriptions for not less than 2,000 Units
($2,000,000; 2,000 Units is hereinafter referred to as the "Minimum Number of
Units"); provided, however, that if subscriptions to purchase the Minimum
Number of Units have not been received and accepted by the close of business
one year after the effective date of the Prospectus, the offering of Units, the
Offering Period and this Agreement shall terminate, and any and all funds
deposited with the Escrow Agent shall be refunded to subscribers as described
in subparagraph 1(b) hereof (the "Termination Date").
If, by the Termination Date, collected funds representing the Minimum
Number of Units have been deposited with the Escrow Agent, such funds shall be
paid to the Partnership by the Escrow Agent and the Partnership shall thereupon
pay to you amounts payable pursuant to paragraph 4(a) hereof.
6. YOUR COVENANTS.
You covenant and agree with the Partnership and the General Partners
that you will:
(a) Comply with all requirements imposed upon you by the
Act, the 1934 Act, the published rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder, and the Rules of Fair
Practice of the NASD including the requirements of: (i) Sections 8, 24, 25, 26
and 36 of Article III of the Rules of Fair Practice; and (ii) Appendix F of
Article III, Section 34 of such Rules of Fair Practice ("Appendix F") and in
particular the requirements of Sections 3 and 4 of Appendix F.
In connection with the foregoing, you specifically covenant that:
(i) you will have reasonable grounds to believe,
on the basis of information obtained from the participant
concerning his investment objectives, other investments,
financial situation and needs, and any other information known
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by it or any of its associated persons, that: (A) the subscriber is or
will be in a financial position appropriate to enable him to realize
to a significant extent the tax benefits in cases in which they are a
significant aspect of the Partnership; (B) the subscriber has a fair
market net worth sufficient to sustain the risks inherent in the
Partnership, including loss of investment and limited liquidity; and
(C) the Partnership is otherwise a suitable investment for the
subscriber;
(ii) you will not execute any transaction in the
Partnership in a discretionary account without the prior
written approval of the transaction by the customer;
(iii) you shall maintain in your files documents
disclosing the basis upon which the determination of
suitability was reached as to each subscriber;
(iv) you shall have reasonable grounds to believe,
based on information made available to you by the General
Partners through the Prospectus or other materials, that all
material facts are adequately and accurately disclosed and
provide a basis for evaluating the Partnership;
(v) in determining the adequacy of the disclosed
facts pursuant to subparagraph (iv) above, you shall obtain
information on material facts relating at a minimum to the
following, if relevant: (A) items of compensation; (B)
physical properties; (C) tax aspects; (D) financial stability
and experience of the General Partners; (E) the Partnership's
conflicts and risk factors; and (F) appraisals and other
pertinent reports;
(vi) you shall not permit the purchase of Units
unless you appropriately inform prospective subscribers of all
pertinent facts relating to the liquidity and marketability of
the Partnership during the term of the investment;
(vii) you agree not to commence the public
solicitation of subscriptions for the Units until authorized
to do so by the General Partners;
(viii) you will have obtained information on
material facts relating at a minimum to the items set forth in
Section 4(b) of Appendix F of the NASD Rules of Fair Practice;
and
(ix) to the extent you are relying on the results
of an inquiry conducted by another NASD member firm, you will
satisfy the conditions set forth in Section 4(c) of Appendix F
to the NASD Rules of Fair Practice.
In addition, you agree not to deliver any additional written, audio or
audiovisual material prepared by the Partnership for use in conjunction with
the offer or sale of the Units (the "Supplemental Literature") to any person
unless the Supplemental Literature is accompanied or
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preceded by the Prospectus. You confirm that you are registered and are in
good standing under the 1934 Act and a member of the NASD.
(b) You will solicit purchases of the Units only in the
states and other jurisdictions in which the Partnership's Blue Sky memoranda
indicate that such solicitation can be made and in which you have determined
that such solicitation can be made and in which you are qualified to so act,
and to solicit purchases of the Units only from those persons to whom offers
and sales will be made by the Partnership as described in the Prospectus under
"Who Should Invest."
(c) You 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 Literature furnished by the
General Partners. You agree not to publish, circulate or otherwise use any
other advertisement or solicitation material. You are not authorized to act as
agent of the Partnership or the General Partners in connection with any
transaction, and you agree not to act as such agent and not to purport to do so
without the prior written approval of the General Partners. You agree that, if
and when the General Partners supply you with copies of any supplement to the
Prospectus, you will affix copies of such supplement to copies of the
Prospectus already in your possession, and that thereafter you will only
distribute Prospectuses containing such supplement and that you will accept
subscriptions only from investors who have received a copy of the Prospectus
containing such supplement. Your further agree to comply with all instructions
from the General Partners concerning the destruction of out-dated Prospectuses
and the use of supplemented or amended Prospectuses.
(d) Upon the reasonable request of the General Partners,
you will furnish them with such information as may be reasonably necessary for
them to be apprised of the status of the solicitation of offers to purchase
Units.
(e) Maintain, for your benefit and the benefit of the
Partnership, for a period of not less than five (5) years, file memoranda and
other customary and appropriate documents and records substantiating your
compliance with the foregoing requirements.
(f) You will not use any offering or selling materials
other than materials furnished or approved by the Partnership, and than only in
such manner as shall be directed by the Partnership. To the extent that
information is provided to you marked "For Broker/Dealer Use Only," you
covenant and agree not to provide such information to prospective investors.
(g) During the Offering Period, you shall not take any
action or permit any action to occur which would result in any of the
representations and warranties contained herein being untrue in any material
respect as of a time immediately after such action is taken or permitted.
(h) Subject to your and the Partnership's right to
terminate this Agreement as set forth in Section 11 hereof, if at any time
during the Offering Period any event occurs as a result of which the Prospectus
would include an untrue statement of a material fact or, in view
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of the circumstances under which they were made, omit to state any material
fact necessary to make the statements therein not misleading, you will promptly
notify the Partnership thereof (unless the information shall have been received
from the Partnership) and you will assist the Partnership, by whatever means
are available to you, in the preparation of an amended or supplemented
Prospectus which will correct such statement or omission.
7. CONDITIONS OF CLOSING.
The purchase of, and payment for, the Units on a Closing Date shall be
subject to the continuing accuracy of the representations and warranties of the
Partnership and you as of the date hereof and as of the Closing Date; to the
performance by the Partnership and you of their respective obligations
hereunder; and to the following conditions:
(a) On or prior to the Closing Date, your counsel and our
counsel shall have been furnished such documents, certificates and opinions as
they may reasonably require in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions herein
contained.
(b) Prior to the Closing Date: (1) there shall have been
no materially adverse change in the condition of the Partnership or its
business activities from that as of the latest date as of which such conditions
are described in the Prospectus, (2) there shall have been no material
transactions not in the ordinary course of business, entered into by the
Partnership from the latest date as of which its financial conditions are
described in the Prospectus, other than transactions referred to or
contemplated therein or to which you have given your written consent, (3) the
Partnership shall not be in default under any provisions of any instruments
relating to any material outstanding indebtedness, (4) no material amount of
the assets of the Partnership shall be at the Closing Date pledged or
mortgaged, except as set forth in the Prospectus, and (5) no action, suit or
proceeding, at law or in equity, shall have been pending or to their knowledge
threatened against the Partnership or affecting its business before or by any
court or federal or state commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding would adversely affect the
offering of the Units, business, operations, prospects or financial condition
or income of the Partnership, except as set forth in the Prospectus.
(c) No order suspending the sale of the Units prior to
the Closing Date in any jurisdiction designated by you shall have been issued
on such Closing Date, and no proceedings for that purpose either shall have
been instituted, or, to your knowledge or to the knowledge of the Partnership,
shall be contemplated.
(d) At the Closing Date, you shall, upon request, be
delivered a certificate of the Partnership or the General Partners as the case
may be, dated as of such Closing Date, to the effect that the conditions set
forth in Subsections a and b above have been satisfied, and, as to the
accuracy, as of the Closing Date, of its representations and warranties set
forth in Section 2 hereof.
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(e) At the Closing Date, the Partnership and the General
Partners shall have received your certificate, dated as of such Closing Date,
as to your compliance with your covenants and agreements set forth in Sections
3 and 7 hereof.
If any condition to your obligations hereunder to be fulfilled prior
to or at the Closing Date is not so fulfilled, you may terminate this Agreement
or, if you so elect, waive any such conditions which have been unfulfilled or
extend the time for their fulfillment.
The Partnership shall be under no liability to make any payment to you
except out of funds received by the Partnership as hereinbefore provided, and
the Partnership shall not be under any liability for or in respect of the value
or validity of the Units, or the performance by anyone of any agreement on its
part, or for or in respect of any matter connected with this Agreement, except
for lack of good faith and for obligations expressly assumed by the Partnership
in this Agreement.
8. INDEMNIFICATION.
(a) Subject to the conditions set forth below, the
Partnership and the General Partners agree to indemnify and hold harmless you
and each person, if any, who controls you, within the meaning of Section 15 of
the Act (an "Indemnified Party") against any and all loss, liability, claim,
damage and expense whatsoever (including but not limited to all expenses
reasonably incurred in investigating, preparing or defending against any
litigation or arbitration, commenced or threatened, or any claim with respect
to which litigation or arbitration is reasonably foreseeable) arising out of or
based upon (a) any untrue statement or alleged untrue statement of a material
fact contained (i) in the Prospectus (as from time to time amended and
supplemented), or (ii) in any application or other document (in this Section 9
called an "Application") executed by the Partnership or based upon written
information provided by or on behalf of the Partnership filed in any
jurisdiction in order to secure registration of the Units under the securities
laws thereof; or (b) the omission or alleged omission from the Prospectus or
any Application of a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (c) the failure of the
Partnership or its agents to comply with any of the applicable provisions of
the Act, the General Rules and Regulations of the Commission or the 1934 Act;
or (d) any unauthorized verbal or written representations in connection with
the offer and sale of Units made by the Partnership or the agents, employees or
affiliates of such persons; or (e) any material breach of the representations,
warranties, covenants and/or agreements of the Partnership contained in this
Agreement; or (f) any actions, direct or indirect, in connection with the offer
and sale of Units by the Partnership or agents, employees or affiliates of such
persons in violation of the Act, the 1934 Act or the Rules and Regulations
promulgated thereunder or any state securities law and regulation.
(b) Subject to the conditions set forth below, you agree
to indemnify and hold harmless the Partnership and/or the General Partners and
each person, if any, who controls the Partnership and/or the General Partners
within the meaning of Section 15 of the Act against any and all loss,
liability, claim, damage and expense whatsoever (including but not limited to
all expenses reasonably incurred in investigating, preparing or defending
against any litigation or
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arbitration, commenced or threatened, or any claim with respect to which
litigation or arbitration is reasonably foreseeable) arising out of or based
upon (a) any untrue statement or alleged untrue statement of a material fact
contained (i) in the Prospectus (as from time to time amended and supplemented)
or (ii) in any Application executed by you or based upon written information
provided by you or on your behalf filed in any jurisdiction in order to secure
an exemption from the registration for the Units or the transaction in which
the Units are offered under the securities laws thereof; or (b) the omission or
alleged omission from the Prospectus or any Application of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only if you were the source of omission or alleged omission;
(c) your failure or the failure of your agents to comply with any of the
applicable provisions of the Act, the General Rules and Regulations of the
Commission or the 1934 Act; or (d) any unauthorized verbal or written
representations in connection with the offer and sale of Units made by you or
your agents, employees or affiliates; or (e) any material breach of your
representations, warranties, covenants and/or agreements contained in this
Agreement; or (f) any actions, direct or indirect, in connection with the offer
and sale of Units by you or your agents, employees or affiliates of such
persons in violation of the 1934 Act or any state securities law and
regulation.
(c) If any action is brought against any person entitled
to indemnification hereunder (an "Indemnified Party") with respect to which
indemnity may be sought against any person who is required to provide
indemnification hereunder (the "Indemnifying Party") such Indemnified Party
shall promptly notify the Indemnifying Party, in writing, of such action, and
the Indemnifying Party shall assume the defense of such action, including the
employment of counsel to be chosen by the Indemnifying Party and payment of
expenses. The Indemnified Party shall have the right to employ counsel in any
such case, but all fees and expenses of such counsel shall be at the
Indemnified Party's expense unless the Indemnifying Party shall not have
employed counsel to have charge of the defense of such action, or such
Indemnified Party shall have reasonably concluded in reliance upon a written
opinion of counsel that there may be defenses available to it which are
different from or in addition to those available to the Indemnifying Party (in
which case the Indemnifying Party shall not have the right to direct the
defense of such action on behalf of the Indemnified Party), in any of which
events such fees and expenses shall be borne by the Indemnifying Party. The
Indemnifying Party shall not be liable for any settlement of, or expenses
incurred with respect to, any such claim or action effected without their
written consent. The Indemnifying Party agrees to promptly notify the
Indemnified Party of the commencement of any litigation or proceedings against
the Indemnifying Party, or any of its officers, directors, or agents in
connection with the offer and sale of Units or in connection with the
Prospectus or this Agreement.
(d) Notwithstanding anything to the contrary provided in
Section 9 of this Agreement, an Indemnifying Party shall not be obliged to pay
legal expenses and fees to more than one law firm in connection with the
defense of similar claims arising out of the same alleged acts or omissions
giving rise to such claims, notwithstanding that such actions or claims arising
out of the same alleged acts or omissions giving rise to such claims,
notwithstanding that such actions or claims are alleged or brought by one or
more parties against more than one Indemnified Party. In case such claims or
actions are alleged or brought against more than one Indemnified Party, then
the Indemnifying Party shall only be obliged to reimburse the expenses
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and fees of the one law firm which has been selected by a majority of the
Indemnified Parties against which such action is finally brought. In the event
a majority of such Indemnified Parties are unable to agree on which law firm
for which expenses or fees will be reimbursable by the Partnership, then
payment shall be made to the first law firm of record representing an
Indemnified Party against the action or claim. Such law firm shall be paid
only to the extent of service performed by such law firm, and no reimbursement
shall be payable to such law firm on account of legal services performed by
another law firm. Notwithstanding anything contained herein to the contrary,
an Indemnified Party may not without the prior consent of the Partnership
settle or compromise any action brought against such Indemnified Party.
(e) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Sub-sections (a), (b), (c) and (d) of this Section 9 is for any reason held by
a court of competent jurisdiction to be unenforceable as to the Partnership or
you, the Partnership and you shall contribute to the aggregate losses, claims,
damages and liabilities (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted) to which the Partnership, and you
may be subject in such proportion so that you shall be responsible for that
portion represented by the percentage that the commissions paid on the
principal amount of the Units which you sold in this Offering.
9. REPRESENTATIONS AND AGREEMENTS TO SURVIVE SALE AND PAYMENT.
Except as the context otherwise requires, all representations,
warranties, covenants and agreements contained in this Agreement shall be
deemed to be representations, warranties, covenants and agreements at the
Closing Date; and such representations, warranties, covenants and agreements of
you and the Partnership shall remain operative and in full force and effect
regardless of any investigation made by you, or by the Partnership, and shall
survive the sale of, and payment for, the Units.
10. TERMINATION OF THIS AGREEMENT.
(a) You or the Partnership shall have the right to
terminate this Agreement at any time during the Offering Period, if any
domestic or international event or act or occurrence has materially disrupted,
or in your opinion will in the immediate future materially disrupt, securities
markets; or if the United States shall have become involved in a war or major
hostilities; or if a banking moratorium has been declared by a state or federal
authority; or if the changes in factors relating to the proposed business of
the Partnership shall, in your opinion or in the Partnership's opinion, make it
inadvisable to proceed with the delivery of the Units.
(b) If you elect to terminate this Agreement as provided
in this Section 10, you shall promptly notify the Partnership pursuant to
Section 11 of this Agreement. If the Partnership elects to terminate this
Agreement as provided in this Section 10, the Partnership shall promptly notify
you pursuant to Section 11 of this Agreement.
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14
(c) If you or the Partnership shall terminate this
Agreement pursuant to this Section 10, no party shall have any liability to any
other party, other than for obligations, if any, pursuant to Section 4 hereof,
as they relate to Units sold by you through the date of termination of this
Agreement.
(d) Notwithstanding any election hereunder or any
termination of this Agreement pursuant to this Section 11, and whether or not
this Agreement is otherwise carried out, the provisions of Section 9 shall not
be in any way affected by such election or termination pursuant to this Section
10.
11. NOTICES.
All notices provided for by this Agreement shall be made in writing
either (i) by actual delivery of the notice into the hands of the parties
thereto entitled, or by delivery via courier service to a person in the office
of the person entitled to notice; or (ii) by the mailing of the notice in the
United States mails to the address, as stated below (or at such other address
as may be designated by written notice), of the party entitled thereto, by
certified or registered mail, return receipt requested, postage prepaid. The
notice shall be deemed to be received on the date of deposit in the United
States mails if mailed per subparagraph (ii) above, or the date of delivery to
the office if sent per subparagraph (i) above.
All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to you, shall be mailed or delivered
to you at your address first set forth above; if sent to the Partnership, shall
be mailed or delivered to 24 Frank Lloyd Wright Drive, P.O. Box 544, Ann Arbor,
Michigan 48106-0544. Should a party change its address, following delivery of
notice of the new address, subsequent notices shall be sent to the new address.
12. CONSTRUCTION.
This Agreement shall be governed by, subject to, and construed in
accordance with, the laws of the state of Delaware.
13. SEVERABILITY.
If any portion of this Agreement is to be held invalid or
unenforceable by a court of competent jurisdiction, then, so far as is
reasonable and possible (i) the remainder of this Agreement shall be considered
valid and operative and (ii) effect shall be given to the intent manifested by
the portion held invalid or inoperative.
14. MULTIPLE COUNTERPARTS.
This Agreement may be executed in a number of identical counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute, collectively, one and the same agreement; however, in making proof
of this Agreement, it shall not be necessary to produce or
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15
account for more than one such counterpart, provided such counterpart has been
executed by the party to be charged with performance of this Agreement.
15. MODIFICATION OF AMENDMENT.
This Agreement may not be modified or amended except by written
agreement executed by all the parties hereto.
16. NUMBER AND GENDER OF WORDS.
Whenever the context so requires, the masculine shall include the
feminine and neuter, and the singular shall include the plural, and conversely.
17. OTHER INSTRUMENTS.
The parties hereto covenant and agree that they will execute such
other and further instruments and documents as are or may become necessary or
convenient to effectuate and carry out this Agreement.
18. CAPTIONS.
The captions used in this Agreement are for convenience only and shall
not be considered as part of this Agreement.
19. PARTIES.
This Agreement shall be binding upon and inure solely to the benefit
of the parties hereto, the persons referred to in Section 8 hereof and their
respective successors, legal representatives, heirs and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect to or by virtue of this Agreement or any provision
herein contained, including, but not limited to, persons who are or become
Limited Partners of the Partnership.
20. ENTIRE AGREEMENT.
This Agreement contains the entire understanding between the parties
and supersedes any prior understandings or written or oral agreements between
them respecting the subject matter hereof.
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If the foregoing correctly gets forth the understanding between you
and the Partnership, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
CAPTEC FRANCHISE CAPITAL PARTNERS
L.P. IV
By: CAPTEC FRANCHISE CAPITAL
CORPORATION IV, Managing General
Partner
By:_____________________________
Patrick L. Beach
President
Gentlemen:
We hereby confirm our agreement to abide by and conform to the terms and
conditions of the foregoing Participating Dealer Agreement and we acknowledge
the receipt of the Prospectus relating to the Units. We confirm that we are
members of the National Association of Securities Dealers, Inc.
Dated:____________________, 199__ By:___________________________
Authorized Representative
Address:
___________________________
___________________________
Phone Number:______________
Fax Number:________________
Tax ID Number: ____________
COMMISSION CHECKS:
Name:______________________
___________________________
___________________________
___________________________
STATES LICENSED:
___ All Fifty States
___ All Fifty States Except:
_______________________________________________________________________
_______________________________________________________________________
___ Licensed in the Following States:
_______________________________________________________________________
_______________________________________________________________________
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