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EXHIBIT 1.3
DEALER-MANAGER AGREEMENT
THIS DEALER-MANAGER AGREEMENT (the "Agreement") is entered into this ___
day of _______________________, 1997, by and among CAPTEC SECURITIES
CORPORATION, a Michigan corporation (the "Dealer-Manager"), CAPTEC FRANCHISE
CAPITAL PARTNERS L.P. IV, a Delaware limited partnership (the "Partnership"),
and its managing general partner, CAPTEC FRANCHISE CAPITAL CORPORATION IV a
Michigan corporation (the "Managing Partner"), with respect to the following:
R E C I T A L S
A. The Partnership proposes to offer Partnership units ("Units") for sale
on the basis set forth in this Agreement (the "Offering").
B. The Dealer-Manager desires to sell Units on a best efforts basis as set
forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the parties
hereto agree as follows:
1. DEFINITIONS. All terms not otherwise defined herein shall have the
meaning set forth in Section 2 of the Partnership's Amended and Restated
Agreement of Limited Partnership (the "Partnership Agreement"), as set forth in
Exhibit B to the Prospectus (as defined in Section 4 below).
2. DEALER-MANAGER. The Partnership appoints the Dealer-Manager to
select and coordinate the activities of the Participating Dealers (as defined in
Section 4) to be its exclusive agents to sell for the Partnership's account up
to thirty thousand (30,000) Units at the offering price of One Thousand and
00/100 Dollars ($1,000) per Unit ("Purchase Price") and the Dealer-Manager
agrees to use its best efforts to encourage the Participating Dealers to sell
such Units to prospective investors as contemplated by this Agreement and the
Participating Dealer Agreement (as defined in Section 4).
3. SALE OF UNITS. Sales of the Units may commence at any time on or
after the effective date of the Registration Statement, as defined in Section
4, and shall terminate on the date twenty-four (24) months from the date of the
Prospectus unless the Offering is terminated earlier by the Managing Partner.
The Managing Partner and its Affiliates may purchase up to ten percent (10%) of
the total Units purchased in the Offering; however, none of such purchases may
be included in determining whether the Minimum Offering has been achieved. The
proceeds from the sale of the Units prior to the Closing Date will be paid to
the Partnership's escrow account, and on the Closing Date the Managing Partner
will pay the commissions and the reimbursements set forth in Section 5 with
respect to the Units sold at or prior to the Closing Date. Thereafter,
commissions will be paid upon admission of subscribers to the Partnership.
4. PROSPECTUS. The Partnership intends to offer its Units for sale in
an offering which is intended to be registered under the Securities Act of 1933
(the "Securities Act") with the Commission in compliance with the rules and
regulations of the Commission (the "Rules and
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Regulations") pursuant to a Registration Statement on Form S-11 (File No.
333-9371) and amendments thereto. Such Registration Statement, as amended, at
the time it becomes effective, and the final Prospectus included therein, are
herein respectively called the "Registration Statement" and the "Prospectus".
The terms and conditions of the Offering are set forth in the Prospectus. The
Units offered and sold under this Agreement shall be offered and sold only by
broker-dealers selected by the Dealer-Manager ("Participating Dealers"), all of
which shall enter into a Participating Dealer Agreement in the form annexed
hereto as Exhibit A (the "Participating Dealer Agreement").
5. SALES COMMISSION AND DEALER-MANAGER FEE. In consideration for the
execution of this Agreement, and for the performance of Dealer-Manager's
obligations hereunder, the Partnership agrees to pay to the Dealer-Manager a
commission of eight percent (8%) of the offering price of each Unit sold in the
Offering, from which the Dealer-Manager shall reallow a Sales commission to the
Participating Dealers of eight percent (8%) of the offering price of Units sold
thereby (or more if the Dealer-Manager so desires and if approved by the
Managing Partner). The Dealer-Manager shall also be paid an amount equal to
two percent (2%) of the offering price of each Unit sold in the Offering as
reimbursement for certain non-accountable expenses related to the Offering. In
addition, the Partnership may (directly or indirectly through the Managing
Partner or the Dealer-Manager reimburse the Participating Dealers for bona fide
due diligence expenses of the lesser of up to one-half of one percent (.50%) of
the price of Units sold or the maximum amount payable under the Rules of Fair
Practice of the National Association of Securities Dealers (the "NASD"). To
the extent that the Managing Partner or the Dealer-Manager has, on the
Partnership's behalf, reimbursed one or more Participating Dealers for such
bona fide due diligence expenses, the Partnership shall reimburse the Managing
Partner or Dealer-Manager for such amounts paid.
The Unit price shall be One Thousand and 00/100 Dollars ($1,000). However,
the commission rate and Unit Price on sales of five hundred one (501) or more
Units will be reduced (the "Volume Discount") in accordance with the schedule
set forth in the section of the Prospectus titled "Who Should Invest-Plan of
Distribution-Compensation". For purposes of computing Volume Discounts,
subscriptions for Units may be aggregated if: (i) the legal and beneficial
ownership of Units to be purchased is identical to the legal and beneficial
ownership of all other Units to be aggregated; (ii) all such Units are
purchased through the same Participating Dealer; and (iii) the request to
combine more than one subscription for Units is made at the time of the
subsequent subscription. Any request for aggregating subscriptions will be
subject to verification by the Dealer-Manager, whose determination will be
final.
Notwithstanding the foregoing, however, the obligation of the Partnership
to pay commissions to the Dealer-Manager and to reimburse due diligence
expenses as aforesaid shall be subject to the following conditions and
limitations:
(a) The Managing Partner has reserved the right to accept or
reject any subscriptions for Units as set forth in the Prospectus
and no commission will be payable to the Dealer-Manager with
respect to the tender of any Subscription Agreement which is
rejected by the Managing Partner.
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(b) None of such commissions or due diligence reimbursements
as set forth above will be payable or paid until release on the
Closing Date to the Partnership, from the escrow account in which
they are to be deposited, of the initial Three Million and 00/100
Dollars ($3,000,000.00) of subscription proceeds, representing
subscriptions for the Minimum Offering amount of three thousand
(3,000) Units. After the Closing Date, commissions will become
payable on the date the investor becomes a limited partner of the
Partnership.
6. AGREEMENTS OF THE PARTNERSHIP AND THE MANAGING PARTNER. The
Partnership and Managing Partner, jointly and severally, agree as follows:
6.1. The Partnership will furnish to the Dealer-Manager for the
Dealer-Manager's use and for transmittal to the Participating Dealers,
without charge, as many copies of the Prospectus as the Dealer-Manager
may reasonably request.
6.2. Neither the Partnership nor the Managing Partner will make
amendments to the Prospectus of which the Dealer-Manager shall not
previously have been advised.
6.3. The Partnership will not sell or dispose of any Units otherwise
than pursuant to the Agreement.
6.4. The Partnership will take any and all action which will be
necessary to comply with the requirements of every jurisdiction in which
it proposes to own property or conduct its business.
7. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP AND THE MANAGING
PARTNER. The Partnership and the Managing Partner, jointly and severally,
represent and warrant to the Dealer-Manager that:
7.1. The Partnership has been duly formed as a limited partnership
and is validly existing as such in good standing under the laws of
Dealers with full power and authority to conduct its business as
described in the Prospectus.
7.2. The capitalization of the Partnership and the Units conform, or
will conform when the Units are issued, in all material respects to the
description thereof and to all statements made in relation thereto in the
Prospectus.
7.3. The Managing Partner has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Michigan with full corporate and other power and authority to conduct its
business as described in the Prospectus and is duly qualified to transact
business as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required.
7.4. The Registration Statement and Prospectus will contain all
statements which are required to be stated therein in accordance with the
Securities Act and the Rules and
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Regulations thereunder and will conform in all material respects with the
requirements of the Securities Act and the Rules and Regulations; and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein and necessary to make the
statements therein not misleading.
7.5. Except as set forth in the Prospectus, there is not now
pending, or, to the knowledge of the Partnership and the Managing
Partner, threatened, any action, suit or proceeding to which the
Partnership or the Managing Partner is a party before or by any court or
governmental agency or body, which might result in any material adverse
change in the condition, business of prospects of the Partnership or
might have a materially adverse effect on the ability of the Managing
Partner to carry out its obligations as Managing Partner.
7.6. The performance of this Agreement, and the consummation of the
transactions herein contemplated by the Partnership will not result in a
breach or violation of any of the terms and provisions of, or constitute
a default under, any purchase agreement, lease, mortgage note agreement
or other agreement or instrument to which the Partnership is a party or
by which it is bound or to which any of its property is subject, or any
regulation or order of any court or governmental agency or body having
jurisdiction over the Partnership or any of its activities or properties;
and no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Partnership of the transactions herein contemplated; and the Partnership
has full power and lawful authority to issue and sell the Units to be
sold by it hereunder by the terms and conditions herein set forth.
8. REPRESENTATIONS AND WARRANTIES OF THE DEALER-MANAGER. The
Dealer-Manager represents and warrants to the Partnership and the Managing
Partner that:
8.1. The Dealer-Manager has been duly formed as a corporation and is
validly existing as such in good standing under the laws of Michigan with
full power and authority to conduct its business as required by this
Agreement.
8.2. The Dealer-Manager is registered as a broker-dealer with the
Commission and is a member in good standing of the NASD and will maintain
such registration and qualification throughout the term of this
Agreement.
8.3. There is not now pending, or, to the knowledge of the
Dealer-Manager, threatened, any action, suit or proceeding to which the
Dealer-Manager is a party, before or by any court or governmental agency
or body, which might result in any material adverse change in the
condition, business or prospects of the Dealer-Manager or might have a
materially adverse effect on the ability of the Dealer-Manager to carry
out its obligations under this Agreement.
8.4. The performance of this Agreement, and the consummation of the
acts required to be performed by the Dealer-Manager hereunder will not
result in a breach or
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violation of any of the terms and provisions of, or constitute a default
under any statute, regulation or agreement to which the Dealer-Manager is
a party; and no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Dealer-Manager of the transactions herein contemplated.
8.5. With respect to the Dealer-Manager's performance hereunder, the
Dealer-Manager will comply with all provisions of the Securities Act, the
Rules and Regulations and other federal laws and regulations pertaining
to the sales of securities pursuant to the Offering, the securities or
"blue sky" laws and regulations and other applicable laws of the states
or other jurisdictions in which Units are offered and sold, and the
Bylaws and the Rules of Fair Practice of the NASD, and all NASD
interpretations thereof, whether issued by the Board of Governors of the
NASD, contained in any NASD Notice to Members or otherwise (the "NASD
Rules of Fair Practice").
8.6. Except for sales of not more than 300 Units, the Dealer-Manager
shall not solicit any Persons as prospective investors in the Offering,
but shall coordinate the activities of the Participating Dealers in
connection with such solicitations made by them.
8.7. The Participating Dealers to be selected by the Dealer-Manager
to sell the Units shall each be registered as a broker-dealer with the
Commission and a member in good standing of the NASD and duly licensed
and authorized to act as a broker-dealer for the sale of securities in
those jurisdictions in which such Participating Dealer intends to make
offers and sales of Units.
8.8. The Dealer-Manager shall require that each Participating Dealer
make every reasonable effort to determine whether a purchase of the Units
is suitable for the prospective investor.
8.9. The Dealer-Manager shall require that each Participating Dealer
transmit any check received from any prospective investor in the Units in
accordance with the procedure described in Section 3(d) of the
Participating Dealer Agreement.
8.10. During the term of this Agreement, the Dealer-Manager will
promptly supply the Partnership with all information required from the
Dealer-Manager for the completion of all Form SRs or other information
required to be filed with the Commission and all other information as the
Partnership may request to be supplied to the securities authorities of
any state or jurisdiction in connection with the Offering.
9. INDEMNIFICATION.
9.1. The Managing Partner agrees to indemnify and hold harmless
Dealer-Manager 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
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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) other than that based upon written information provided by
the Dealer-Manager or on behalf of the Dealer-Manager, 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 other than an omission related to
written information provided by the Dealer-Manager or on behalf of the
Dealer-Manager; or (c) the failure of the Partnership or its agents to
comply with any of the applicable provisions of the Securities Act, the
Rules and Regulations of the Commission or the Exchange Act of 1934 (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 Securities Act, the 1934 Act or the Rules and Regulations
promulgated thereunder or any state securities law and regulation.
9.2. The Dealer-Manager agrees to indemnify and hold harmless the
Partnership and Managing Partner to the same extent as the foregoing
indemnity from the Managing Partner to the Dealer-Manager, but only with
respect to (i) any statement in or omission from the Registration
Statement or Prospectus, or any amendment or supplement thereto, any
application or other document filed in any state or jurisdiction in
connection with the Offering or any sales literature, if such statement
or omission was made in reliance on information furnished in writing by
the Dealer-Manager to the Partnership for use in the Registration
Statement or Prospectus, or any amendment or supplement thereto, any such
application or other document filed in any state or jurisdiction in
connection with the Offering or any sales literature, (ii) any act,
statement or representation by the Dealer-Manager which shall be in any
manner inconsistent with information set forth in the Prospectus
concerning the Dealer-Manager or (iii) by breach of the representations
and warranties of the Dealer-Manager set forth herein.
10. TERMINATION. This Agreement shall terminate (i) on the Termination
Date of the Offering, (ii) at any time prior thereto at the will of the
Dealer-Manager or the Partnership upon ten (10) days' prior written notice,
(iii) immediately upon written notice from the Partnership to the
Dealer-Manager if the Dealer-Manager has breached any provision hereof or
immediately upon any assignment or attempted assignment of this Agreement by
the Dealer-Manager without the prior written consent of the Partnership;
provided, however, that the indemnification obligations set forth in Section 9
shall survive termination of this Agreement.
11. MISCELLANEOUS. Notice given pursuant to any of the provisions of
this Agreement shall be given (a) to the Partnership and the Managing Partner
at 24 Frank Lloyd Wright Drive,
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P.O. Box 544, Ann Arbor, Michigan 48106-0544, or (b) to the Dealer-Manager at
24 Frank Lloyd Wright Drive, P.O. Box 544, Ann Arbor, Michigan 48106-0544 and
if given by telephone or telegraph shall subsequently be confirmed in writing.
The agreements set forth herein have been and are made solely for the benefit
of and are intended to bind the Dealer-Manager, the Partnership and the
Managing Partner and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement.
The terms "successors and assigns" as used in this Agreement shall not include
a purchaser of any of the Units.
IN WITNESS WHEREOF, the parties have executed this Agreement, as of the
date set forth above.
PARTNERSHIP:
CAPTEC FRANCHISE CAPITAL PARTNERS
L.P.IV
By: CAPTEC FRANCHISE CAPITAL
CORPORATION IV, Managing General
Partner
By:
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Patrick L. Beach, President
MANAGING PARTNER:
CAPTEC FRANCHISE CAPITAL
CORPORATION IV
By:
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Patrick L. Beach, President
DEALER-MANAGER
CAPTEC SECURITIES CORPORATION
By:
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Its:
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