EXHIBIT 1.1
DEALER MANAGER AGREEMENT
_________________, 2000
Western American Securities Corporation
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
The undersigned, Reef Partners LLC, a Nevada limited liability
company ("Reef Partners"), the Managing General Partner of Reef Millennium
Energy Fund, a series of limited partnerships to be organized under the laws
of Nevada (referred to herein as the "Partnerships"), hereby confirms and
agrees as follows:
1. GENERAL.
This Agreement sets forth the understandings and agreements between
Reef Partners and you whereby, subject to the terms and conditions contained
herein, you will offer to sell, on a best efforts basis, preformation
partnership interests in the Partnerships (the "Units") which are described
more fully in a Prospectus (the "Prospectus"). The date as of which you are
notified by Reef Partners that Units may be offered and sold in a Partnership
shall constitute the "Effective Date" of the offering of Units in such
Partnership under this Agreement. The "Termination Date" of each such
offering shall be the earlier of the following dates:
(a) Any date specified by Reef Partners after the minimum number of
Units has been subscribed for in such Partnership;
(b) The date upon which subscriptions for the maximum number of
Units to be offered in such Partnership have been sold in accordance with the
procedures set forth in the Prospectus; or
(c) December 31, 2000 with respect to the Millennium Energy Fund A,
B and C partnerships, December 31, 2001 with respect to the Millennium Energy
Fund D, E and F partnerships, and December 31, 2002 with respect to the
Millennium Energy Fund G, H, I and J partnerships.
The period from the Effective Date through the Termination Date for
each Partnership shall constitute an "Offering Period" for the offering and
sale of Units by you pursuant to this Agreement. During the Offering Period
for each Partnership you, and Reef Partners shall designate certain dates,
each of which shall constitute a "Closing Date" for such Partnership under
this Agreement. The first such Closing Date (the "Initial Closing Date")
shall occur on or before the tenth business day following the receipt of
Subscriptions from suitable investors acceptable to Reef Partners for a
minimum of 50 Units ($1,000,000) (the "Minimum Offering") in such
Partnership. Subsequent Closing Dates shall be dates mutually agreed upon by
you and Reef Partners during the Offering Period for such Partnership.
2. REPRESENTATIONS AND WARRANTIES OF REEF PARTNERS.
Reef Partners represents and warrants to you that:
(a) Reef Partners has prepared and reviewed the Prospectus, and the
Prospectus does not include and will not include during any Offering Period
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; provided, however, that no representations or warranties are made
with respect to statements or
DEALER MANAGER AGREEMENT - Page 1
omissions made in reliance upon and in conformity with written information
furnished to Reef Partners with respect to you, by you or on your behalf
expressly for use in the Prospectus or any amendment or supplement thereof;
(b) Each Partnership, upon the due execution of the Partnership
Agreement in the Prospectus (the "Partnership Agreement") and the filing of a
certificate of limited partnership as required under the laws of the State of
Nevada, will be a limited partnership duly formed and validly existing
pursuant to the Uniform Limited Partnership Act of the State of Nevada (the
"Nevada Act"), with all authority necessary to acquire, own and manage the
investments which are described as proposed investments of the Partnership in
the Prospectus and to conduct the business which it proposes to conduct, all
as described in the Prospectus; the Partnership Agreement pursuant to which
the partnership will be organized provides for the issuance and sale of the
Units; all action required to be taken by Reef Partners or the Partnership as
a condition to the offering or sale of the Units to qualified subscribers has
been or, prior to the Effective Date, will have been taken; upon payment of
the consideration therefor specified in the Subscription Agreement contained
in the Prospectus and the due execution and delivery to Reef Partners of the
Subscription Documents (as hereinafter described) by each subscriber for the
Units (the "Subscription"), acceptance of such Subscription by Reef Partners,
the execution of the Partnership Agreement by Reef Partners as managing
general partner and on behalf of such subscribers pursuant to the terms of
the Partnership Agreement and execution and filing for record of a
certificate of limited partnership of the Partnership (the "Certificate") as
shall be required or appropriate to organize the Partnership with the
accepted subscribers for the Units as additional general or limited partners
in accordance with the requirements of the Nevada Act, such subscribers will
become additional general or limited partners of the Partnership (the
"Partners") entitled to all the benefits of Partners under the Partnership
Agreement and the Nevada Act;
(c) The Units, when issued, will constitute valid partnership
interests in accordance with the terms of, and shall be entitled to the
rights provided in, the Partnership Agreement and the Nevada Act, will be
fully paid upon payment in cash of the consideration therefor specified in
the Subscription Agreement contained in the Prospectus, and the liability of
a Partner to make payments to the Partnership or on behalf of the Partnership
may or may not be limited to the amount which such Partner has agreed to pay
in accordance with the terms of his Subscription and the Partnership
Agreement, depending on whether he chooses to be an additional general or
limited partner;
(d) Reef Partners has been, and on each Closing Date will be, duly
and validly organized and validly existing as a limited liability company in
good standing under the laws of the State of Nevada; has all requisite power
and authority to act as a Managing General Partner of each Partnership; is or
will be qualified to do business and in good standing as a foreign limited
liability company in each other jurisdiction in which its acting in such
capacity requires or may require such qualification if the failure to so
qualify might result in material adverse consequences to the Partnership; has
the requisite power and authority and all necessary authorization, approvals
and orders required as of the date hereof to enter into this Agreement and
the Limited Partnership Agreement and to be bound by the provisions and
conditions hereof and thereof; and its audited balance sheet included in the
Prospectus presents fairly its financial position as at the date indicated;
said balance sheet has been prepared in conformity with generally accepted
accounting principles applied on a consistent basis; and the certified public
accountants whose report thereon is included in the Prospectus are
independent accountants as required by the Securities Act of 1933, as amended
(the "Act");
(e) Except to the extent disclosed in the Prospectus there is no
litigation or governmental proceeding pending or, to Reef Partners'
knowledge, threatened against, or involving the business or proposed business
of, the Partnership or Reef Partners, which might materially and adversely
affect the proposed operations and business of the Partnership;
(f) The condition, financial or otherwise, of Reef Partners, and the
proposed business of the
DEALER MANAGER AGREEMENT - Page 2
Partnership, conform in all material respects to the descriptions thereof
contained in the Prospectus;
(g) Neither the execution and delivery of this Agreement and the
Partnership Agreement, the incurrence of the obligations herein and therein
set forth, the consummation of the transactions herein and therein
contemplated, nor compliance with the terms and provisions hereof or thereof,
will conflict with or result in a breach or violation of any of the terms,
provisions or conditions of any agreement or instrument to which Reef
Partners is a party or by which it is bound, or any order, rule or regulation
applicable to Reef Partners of any court or any governmental body or
administrative agency having jurisdiction over Reef Partners;
(h) The Units, when issued, will conform to the descriptions thereof
contained in the Prospectus;
(i) This Agreement has been duly and validly authorized, executed
and delivered by or on behalf of Reef Partners and constitutes the valid and
binding agreement of Reef Partners; and
(j) The Partnership Agreement, upon its execution by Reef Partners,
will have been duly and validly authorized, executed and delivered by or on
behalf of Reef Partners as the Managing General Partner and will constitute
the valid and binding agreement of the Managing General Partner.
3. OFFERING AND SALE OF UNITS.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth,
Reef Partners hereby appoints you as the Dealer Manager during each Offering
Period to offer all of the Units to potential investors in the Partnership in
accordance with the terms of the Prospectus, and you agree to use your best
efforts as Dealer Manager, promptly following the Effective Date, to offer
the Units to suitable investors at the price and in accordance with the terms
stated in the Prospectus.
(b) The offering of Units by you and the Soliciting Dealers will
only be made to potential investors residing in the states designated to you
by Reef Partners.
(c) All sales of Units will be conditioned upon receipt of
Subscriptions from suitable investors acceptable to Reef Partners for the
Minimum Offering on or before each Termination Date. All checks received with
Subscription Documents shall be made payable to "Bank One as Escrow Agent for
Millennium Energy Fund __, L.P." and shall be transferred to the Escrow Agent
by noon of the next business day after receipt for deposit in the Escrow
Account established pursuant to the Prospectus.
(d) All sales of Units will be conditioned upon acceptance by Reef
Partners of the Subscription Documents of each subscriber (consisting of the
Subscription Agreement, all in the form as may be approved by you, the
Soliciting Dealers and Reef Partners, or as may be required by the Prospectus
and the Partnership Agreement), which shall be duly executed by each
subscriber and be accompanied by payment in cash of the purchase price of
Units subscribed to by each such subscriber. Reef Partners shall have the
right, in its sole discretion, to reject the Subscription of any potential
purchaser of Units.
(e) The Units will be sold only to persons who warrant or represent
that they or their beneficiaries meet the financial suitability requirements
as set forth in the Prospectus and such other requirements as may be required
by the states in which the Units are sold.
(f) In consideration of your execution of this Agreement, and the
performance of your obligations hereunder, and in further consideration of
your supervising the offering of Units in each Partnership, Reef Partners
agrees to cause each Partnership to pay to you, upon each Closing Date for
such Partnership, six percent (6%) of the Partnership Subscriptions (as
defined in the Partnership Agreement)
DEALER MANAGER AGREEMENT - Page 3
received and accepted by Reef Partners as of such Closing Date, out of which
you may pay commissions, reimbursement of due diligence expenses, marketing
support fees, and other compensation, totaling no more than six percent (6%)
to the Soliciting Dealers as provided in the Soliciting Dealer Agreement. In
the event the Minimum Offering is not achieved on or before the Termination
Date for a Partnership and this Agreement is terminated with respect to such
Partnership, neither you nor the Soliciting Dealers shall receive any sales
commissions or fees. Prior to the time a partnership reaches the Minimum
Offering, the Managing General Partner may advance from its own funds sales
commissions and due diligence expenses which would otherwise be payable in
connection with subscription funds received and cleared from subscribers that
the Managing General Partner deems suitable to be Investor Partners.
4. SUITABILITY.
(a) As Dealer Manager, you are aware of the suitability standards,
as set forth in the Prospectus, that an offeree must meet and represent. As
such, you will make reasonable inquiry and cause the Soliciting Dealers to
make reasonable inquiry to assure that there is compliance with such
standards.
(b) In recommending the purchase of Units in the Partnership, you
shall (and you shall cause the Soliciting Dealers to):
(1) Have reasonable grounds to believe, on the basis of
information obtained from the offeree concerning his investment
objectives, other investments, financial situation and needs, and any
other information known by you or any associated person, that:
(i) the offeree is or will be in a financial position
appropriate to enable him to realize to a
significant extent the benefits described in the
Prospectus;
(ii) the offeree has a fair market net worth sufficient
to sustain the risks inherent in the program,
including loss of investment and lack of liquidity;
(iii) the program is otherwise suitable for the offeree;
and
(2) Maintain in your file documents disclosing the basis upon
which the determination of suitability was reached as to each offeree.
(c) Notwithstanding the provisions of subsection (b) above, you
shall not execute any transaction of Units of the Partnership in any
discretionary account without prior written approval of the transaction by
the offeree.
(d) Prior to executing a purchase transaction of Units of the
Partnership, you shall inform the offeree of all the pertinent facts relating
to the liquidity and marketability of the Units during the term of the
Partnership.
5. DISCLOSURE.
(a) Prior to participating in the offering, you shall have reasonable
grounds to believe, based on information made available to you by Reef Partners
through a prospectus or other materials, that all material facts are adequately
and accurately disclosed and provide a basis for evaluating the program.
(b) In determining the adequacy of disclosed facts pursuant to
subsection (a) hereof, you shall obtain information on material facts relating
at a minimum to the following, if relevant in view of the nature of the program:
(1) items of compensation;
DEALER MANAGER AGREEMENT - Page 4
(2) physical properties;
(3) tax aspects;
(4) financial stability and experience of Reef Partners;
(5) the program's conflicts and risk factors; and
(6) appraisals and other pertinent reports.
(c) For the purposes of subsections (a) or (b) hereof, you may rely
upon the results of an inquiry conducted by another NASD member or members,
provided that:
(1) the member or persons associated with a member has
reasonable grounds to believe that such inquiry was conducted with due
care;
(2) the results of the inquiry were provided to you with the
consent of the member or members conducting or directing the inquiry;
and
(3) no member that participated in the inquiry is a sponsor
of the program or an affiliate of such sponsor.
6. COVENANTS OF REEF PARTNERS.
Reef Partners covenants that it will:
(a) During each Offering Period and prior to each Closing Date,
notify you and the Soliciting Dealers immediately, and confirm the notice in
writing, of any event relating to or affecting the Partnership or Reef
Partners which might reasonably result in the Prospectus containing an untrue
statement of a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
existing at the time they were made, not misleading; and if in the opinion of
counsel to Reef Partners, the content of such disclosure to you requires an
amendment or supplement to the Prospectus, Reef Partners will forthwith
prepare and furnish to you and the Soliciting Dealers, at Reef Partners'
expense, a reasonable number of copies of such amendment or amendments, or
supplement or supplements, to the Prospectus so as to render it not
misleading prior to the consummation of any sale of Units to an Investor or
any prospective investor;
(b) Qualify or register the Units for offering and sale or make
filings under the securities laws of the states designated by Reef Partners
and such additional states as you or the Soliciting Dealers may reasonably
designate; provided, however, neither the Partnership nor Reef Partners shall
be obligated to file any general consent to service of process under the laws
of any such jurisdiction or subject themselves to taxation as doing business
in such jurisdiction;
(c) File registration statements with the Securities and Exchange
Commission and applicable regulatory authorities of the States, as and when
such filings are required under the securities laws of those States, and
promptly furnish to you two signed or conformed copies thereof;
(d) Deliver promptly to you and the Soliciting Dealers, upon
request, true and complete copies of such contracts, notes, mortgages,
commitments, loan agreements and other documents relating to the formation of
the Partnership, the acquisition, ownership, operation and management of any
oil and gas properties or interests acquired or to be acquired by the
Partnership, the business experience and financial condition of Reef
Partners, and such other information, financial or otherwise, relating to the
business,
DEALER MANAGER AGREEMENT - Page 5
assets and liabilities of the Partnership or Reef Partners, as you or the
Soliciting Dealers may reasonably request prior to each Closing Date;
(e) Deliver to you and the Soliciting Dealers one copy of each
report, letter, statement or other written information furnished by the
Partnership to the Partners during the term of the Partnership;
(f) Apply the proceeds of the sale of the Units substantially
as set forth in the Prospectus;
(g) From and after each Closing Date, not offer or sell interests in
the Partnership or other securities which offers or sales, in the opinion of
counsel to Reef Partners, would be integrated with offers and sales of
interest in the Partnership pursuant to this Agreement.
7. COVENANTS OF WESTERN AMERICAN SECURITIES CORPORATION.
Western American Securities Corporation agrees:
(a) To offer the Units for sale and to sell the Units solely on the
basis of the information furnished to prospective investors in the
Prospectus. If you prepare any materials or presentations supplementary to
the Prospectus, you assume complete responsibility for such materials and
presentations and agree to deliver no written information other than the
Prospectus to any potential subscriber unless authorized to do so in writing
by the Partnership;
(b) To obtain written evidence sufficient to permit you and Reef
Partners to reasonably determine that a subscriber purporting to qualify is,
in fact, so qualified;
(c) Prior to obtaining a Subscription from any potential subscriber
to obtain evidence satisfactory to you and Reef Partners that each subscriber
meets the financial suitability requirements established in the Prospectus;
(d) Not to commence the offer or sale of Units in any State until
you have received advice from Reef Partners or its counsel that the Units may
be offered and sold in such state; and
(e) To furnish to Reef Partners or its designee at Reef Partners'
request during each Offering Period, and in any event within five (5) days
after the Termination Date, the Subscription Documents (or true copies
thereof) of subscribers solicited by you to permit Reef Partners or its
designee to review such Subscription Documents and to evaluate the
qualifications of such subscribers as potential Partners.
8. PAYMENT OF EXPENSES.
Reef Partners will pay all expenses incident to the performance of
its obligations under this Agreement, including:
(a) the preparation of the Prospectus;
(b) the preparation of this Agreement;
(c) the fees and disbursements of Reef Partners' counsel,
accountants and consultants related to the preparation of the Prospectus;
(d) the qualification of the Units for the offer and sale thereof
under the securities laws of the States that you or the Soliciting Dealers
may reasonably designate, including filing fees and the fees and
disbursements of counsel in connection therewith; and
DEALER MANAGER AGREEMENT - Page 6
(e) the printing and delivery to you of such quantities of the
Prospectus as you may reasonably request and all amendments or supplements
thereto.
9. CLOSING CONDITIONS.
Your obligation to deliver the Subscriptions Documents to Reef
Partners for acceptance by it and funds received for Subscriptions is subject
to the satisfaction on or before each Closing Date (as above defined) of the
following conditions:
(a) On the Effective Date and during each Offering Period no order
suspending the offering or sale of the Units shall have been issued, and on
the Effective Date and during each Offering Period no proceedings for that
purpose shall have been instituted, or to your knowledge or that of Reef
Partners, shall be contemplated.
(b) You and the Soliciting Dealers shall have received a sworn
certificate, dated the Closing Date, signed by an officer of Reef Partners,
to the effect that he has carefully read the Prospectus and that:
(i) as of its date, the Prospectus did not contain an untrue
statement of a material fact and, to the best of his
knowledge after reasonable inquiry, did not omit to state
a material fact necessary to make the statements made
therein, in light of the circumstances under which they
were made, not misleading;
(ii) since the date of the Prospectus, no event has occurred
which should have been set forth in an amendment or
supplement to the Prospectus which has not been so set
forth;
(iii) since the date of the Prospectus, there has not been any
adverse change in the business or proposed business,
interests, oil and gas properties or proposed oil and
gas properties or condition, financial or otherwise, of
the Partnership or Reef Partners, whether or not arising
from transactions in the ordinary course of business,
which might materially and adversely affect the
properties or operations or proposed properties and
operations of the Partnership or Reef Partners or the
ability of Reef Partners to perform the services
proposed to be performed by it as described in the
Prospectus; and
(iv) to the best of his knowledge, based upon reasonable
investigation, the representations and warranties of
Reef Partners in Section 2 of this Agreement are true
and correct as if made at and as of the Closing Date.
If any condition to your obligations hereunder shall not have been
fulfilled when and as required by this Agreement to be fulfilled, you may
waive any such condition which has not been fulfilled, extend the time for
its fulfillment or terminate this Agreement. In the event that you elect to
terminate this Agreement, all Subscription Documents, checks and other
documents and instruments delivered to you for the purchase of the Units
shall be returned to the subscribers solicited by you, accompanied by a
notice from you of the cancellation and termination of the offering of the
Units.
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE.
Except as the context otherwise requires, all representations,
warranties and agreements contained in this Agreement shall remain operative
and in full force and effect and shall survive the Closing Dates.
11. EFFECTIVE DATE, TERM AND TERMINATION OF THIS AGREEMENT.
DEALER MANAGER AGREEMENT - Page 7
(a) This Agreement shall become effective on the Effective Date. You
or Reef Partners may elect to prevent this Agreement from becoming effective
without liability of any party to any other party by giving notice of such
election to the other parties hereto before the time this Agreement otherwise
would become effective.
(b) You shall have the right to terminate this Agreement at any time
during each Offering Period if any representation or warranty hereunder shall
be found to have been incorrect or misleading or Reef Partners shall fail,
refuse or be unable to perform any of its agreements hereunder or to fulfill
any condition of your obligations hereunder or if the Prospectus shall have
been amended or supplemented despite your objection to such amendment or
supplement or
(i) if all trading on the New York Stock Exchange or the
American Stock Exchange (in this Section collectively
called "Exchange") shall have been suspended, or
minimum or maximum prices for trading generally shall
have been fixed, or maximum ranges for prices for all
securities shall have been required on the Exchange
by the Exchange or by order of the Securities and
Exchange Commission or any other governmental
authority having jurisdiction; or
(ii) if the United States shall have become involved in a war
or major hostilities; or
(iii) if a banking moratorium has been declared by a state
or federal authority; or
(iv) if Reef Partners or its properties shall have
sustained a material or substantial loss by fire,
flood, accident, earthquake or other calamity or
malicious act which, whether or not said loss shall
have been insured, will in your opinion make it
inadvisable to proceed with the offering and sale of
the Units; or if there shall have been such change in
the condition or prospects of the Partnership or Reef
Partners or in the levels of the prime interest rate
or long-term mortgage rate or in the condition of
securities markets generally as in your judgment
would make it inadvisable to proceed with the
offering and sale of the Units.
12. NOTICES.
(a) All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, or telegraphed and confirmed to you at Western American
Securities Corporation, 0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxx 00000, Attention: Xxxx Xxxxxxx; if sent to Reef Partners and/or the
Partnership shall be mailed, delivered or telegraphed and confirmed to Reef
Partners at Reef Partners, LLC; c/o Reef Exploration, 0000 X. Xxxxxxx
Xxxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx.
(b) Notice shall be deemed to be given by you to Reef Partners or the
Partnership or by Reef Partners or the Partnership to you as of the third
business day after it is mailed, delivered, or telegraphed, and confirmed as
provided.
13. PARTIES.
This Agreement shall inure solely to the benefit of you and shall be
binding upon you and Reef Partners and your respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person or corporation, other than the parties
hereto and their respective successors and assigns any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. No purchaser of any of the Units from you or Reef Partners
shall be construed a successor or assign by reason merely of such purchase.
DEALER MANAGER AGREEMENT - Page 8
14. CONSTRUCTION.
This Agreement shall be construed in accordance with the laws of the
State of Texas.
DEALER MANAGER AGREEMENT - Page 9
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
REEF PARTNERS LLC
By:___________________________________________
Name:__________________________________
Title:_________________________________
ACCEPTED AS OF THE DATE
FIRST ABOVE WRITTEN.
WESTERN AMERICAN SECURITIES
CORPORATION
By:___________________________________
Name:________________________
Title:_______________________
DEALER MANAGER AGREEMENT - Page 10
