ATEL CAPITAL EQUIPMENT FUND XI, LLC SELECTED DEALERS AGREEMENT

 

 

 

 

                       ATEL CAPITAL EQUIPMENT FUND XI, LLC

 

                           SELECTED DEALERS AGREEMENT

 

 

                            San Francisco, California

 

                                ___________, 200_

 

Gentlemen:

 

         The undersigned, ATEL Securities Corporation (the "Dealer Manager"),

has entered into an agreement (the "Selling Agreement") with ATEL CAPITAL

EQUIPMENT FUND XI, LLC, a California limited liability company (the "Fund") and

the Manager, ATEL Financial Services, LLC (the "Manager") pursuant to which the

undersigned has agreed to use its best efforts to form and manage, as Dealer

Manager, a group of securities dealers (the "Soliciting Dealers") for the

purpose of soliciting offers for the purchase of units of limited liability

company interest ("Units") in the Fund. The terms of the offering are set forth

in the Fund's Registration Statement No. 333-__________, on Form S-1 which was

filed with the Securities and Exchange Commission (the "Commission") pursuant to

the Securities Act of 1933, as amended (the "1933 Act"). Such registration

statement in the form in which it became effective is referred to herein as the

"Registration Statement" and the prospectus included therein, in the form in

which it became effective and in the form as first filed with the Commission

pursuant to its Rule 424, is referred to herein as the "Prospectus." The terms

used but not otherwise defined in this Agreement have the same meanings as in

the Prospectus.

 

         You are invited to become one of the Soliciting Dealers and by your

confirmation hereof you agree to act in such capacity and to use your best

efforts, in accordance with the following terms and conditions, to find

purchasers for the Units. You hereby confirm that you are a member in good

standing of the National Association of Securities Dealers, Inc. ("NASD").

 

         l. You hereby agree to solicit, as an independent contractor and not as

our agent or as an agent of the Fund or the Manager, persons acceptable to the

Manager to enter into the Subscription Agreement in the form attached to the

Prospectus. Until such time as subscription proceeds for a total of not less

than 120,000 Units are received, accepted and deposited with the escrow agent,

all subscription checks shall be payable to "U. S. Bank - ACEF XI Escrow." All

Subscription Agreements solicited by you shall be transmitted promptly to the

Dealer Manager in accordance with the instructions set forth in the Subscription

Agreements, and all funds received by you with respect to any Subscription

Agreement shall be promptly transmitted to the Dealer Manager. As used herein

the term "promptly transmitted" shall have the meaning set forth in Rule 15c2-4

under the Securities Exchange Act of 1934 (the "1934 Act"), as interpreted in

NASD Notice to Members 84-64. You hereby agree to comply in full with such NASD

Notice to Members 84-64, as it may be amended from time to time. We in turn will

transmit subscriptions and funds received during the escrow period to the escrow

agent not later than noon of the second business day following receipt of same

by us. After subscriptions for a minimum of 120,000 Units have been received,

accepted and deposited with the escrow agent, and subscription proceeds are

thereafter released to the Fund pursuant to the terms of the escrow agreement,

all further subscription checks shall be payable directly to the Fund. No

Subscription Agreement shall be effective unless and until accepted by the

Manager, and in no event will a subscription be effective until five days after

the investor has received a Prospectus.

 

         You agree that you will:

 

                  (a) (i) diligently make inquiries as required by law of all

                  prospective investors in order to ascertain whether a purchase

                  of Units is suitable for the investors and (ii) inform each

                  prospective investor of all pertinent facts relating to the

                  liquidity and marketability of the Units during the term of

                  the investment;

 

 

 

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                  (b) 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 by you, that:

 

                                    (i) the participant 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 participant has a fair market net

                           worth sufficient to sustain the risks inherent in the

                           program, including loss of investment and lack of

                           liquidity; and

 

                                    (iii) the program is otherwise suitable for

                           the participant;

 

                  (c) maintain copies of all Subscription Agreements and

                  information relating to suitability determinations in your

                  records for the longer of (i) six years from the date of

                  investment, (ii) the period prescribed by Rule 17a-4 under the

                  1934 Act, or (iii) the period required by applicable state

                  blue sky laws;

 

                  (d) execute no transaction in a discretionary account without

                  prior written approval of the transaction by the investor; and

 

                  (e) comply in all respects with the Conduct Rules of the NASD

                  in the conduct of the offering of Units.

 

         Furthermore, you expressly agree to be bound by the escrow agreement

executed by the Fund for the deposit of subscription proceeds pending receipt

and acceptance of subscriptions for a minimum of 120,000 Units.

 

         All subscriptions solicited by you will be strictly subject to

confirmation by us and acceptance thereof by the Fund and we, the Fund and the

Manager, reserve the right in our and its uncontrolled discretion to reject any

such subscription and to accept or reject subscriptions in the order of their

receipt by the Fund or otherwise. A sale of a Unit shall be deemed to be

completed only after (i) the Fund receives a properly completed subscription

agreement from the Soliciting Dealer, together with payment of the full purchase

price of each purchased Unit from a buyer who satisfies each of the terms and

conditions of the Registration Statement and Prospectus; (ii) a period of five

days has passed following the receipt by the investor of a Prospectus; and (iii)

such subscription agreement has been accepted in writing by the Manager. Neither

you nor any other person is authorized to give any information or make any

representation other than those contained in the Prospectus or in any

supplemental sales literature furnished by the Dealer Manager or the Fund for

use in making solicitations in connection with the offer and sale of the Units.

 

         Upon release by us, you may offer the Units at the public offering

price, subject to the terms and conditions hereof.

 

         2. We understand that the Fund will provide you with such number of

copies of the enclosed Prospectus and such number of copies of amendments and

supplements thereto as you may reasonably request. In this connection, the Fund

and the Manager have represented and warranted to us that the Registration

Statement and the Prospectus, and all amendments or supplements thereto, will

contain all statements which are required to be stated therein in accordance

with the 1933 Act and the Rules and Regulations thereunder, and neither the

Registration Statement nor the Prospectus, nor any amendment or supplement

thereto, will contain any untrue statement of a material fact or omit any

material fact required to be stated therein or necessary to make the statements

therein not misleading. It is understood by the Fund and the Manager that

Section (b)(3) of Rule 2810 of the Conduct Rules of the NASD requires that you

determine that all material facts relating to the subject offering are

 

 

 

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adequately and accurately disclosed to prospective subscribers and provide a

basis for evaluating the offering, and the Fund and the Manager therefore have

specifically represented and warranted to us that:

 

         (a) all items of compensation payable to them and their affiliates are

         and will be set forth in the Prospectus under the caption "Management

         Compensation";

 

         (b) all types of Equipment to be acquired by the Fund are and will be

         described in the Prospectus under the caption "Investment Objectives

         and Policies - Types of Equipment" or in a supplement to be included

         inside the back cover of the Prospectus;

 

         (c) all material tax aspects are and will be set forth in the

         Prospectus under the captions "Income Tax Consequences" and "Risk

         Factors";

 

         (d) the financial position and business experience of the Manager and

         of those affiliates of the Manager who are of relevance to the subject

         offering are and will be accurately and adequately reflected in the

         Prospectus under the captions "Management" and "Prior Performance

         Summary";

 

         (e) all material conflicts of interest and risk factors are and will be

         set forth in the Prospectus under the captions "Conflicts of Interest"

         and "Risk Factors"; and

 

         (f) all pertinent facts relating to the liquidity and marketability of

         the Units are and will be set forth in the Prospectus under the

         captions "Risk Factors - Limited Transferability of Units" and "Summary

         of the Limited Liability Company Operating Agreement - Transferability

         of Units."

 

         We also understand that the Fund may provide you with certain

supplemental sales material to be used by you in connection with the

solicitation of Units in the Fund. We will comply with the filing requirements

of Section 2210(c)(2) of the NASD Conduct rules with respect to any

advertisements or sales literature to be used as supplemental sales material in

connection with the solicitation of Units. You agree not to use any

advertisement or sales literature, as those terms are defined in Section 2210(a)

of the NASD Conduct Rules, as supplemental sales literature in the solicitation

of Units except to the extent such materials are provided by us or we have given

our prior written approval for use of such materials. In the event you elect to

use supplemental sales material, you agree that such material shall not be used

in connection with the solicitations of Units unless accompanied or preceded by

the Prospectus as then currently in effect and as it may be amended or

supplemented in the future, unless you are notified by us that such material has

been prepared and cleared for use in compliance with the SEC's Rule 134. Upon

your request, we will furnish to you information necessary to confirm the

continued fairness, accuracy, and completeness of the Prospectus in all material

respects during the offering period.

 

         We shall have full authority to take such action as we may deem

advisable in respect of all matters pertaining to the offering. We shall be

under no liability to you except for lack of good faith and for obligations

expressly assumed by us in this Agreement. Nothing contained in this paragraph

is intended to operate as, and the provisions of this paragraph shall not

constitute, a waiver by you of compliance with any provision of the 1933 Act, or

of the rules and regulations thereunder.

 

         You confirm that you are familiar with Securities Act Release No. 4968

and Rule l5c2-8 under the 1934 Act, relating to the distribution of preliminary

and final prospectuses, and confirm that you have complied and will comply

therewith. We will make available to you, to the extent they are made available

to us by the Fund, such number of copies of the Prospectus as you may reasonably

request for the purposes contemplated by the 1933 Act and the applicable rules

and regulations thereunder.

 

         You agree that you will exercise due diligence in determining that all

material facts are adequately and accurately disclosed in the Prospectus. For

purposes of compliance with Sections (b)(3)(A) and (B) of Rule 2810 of the

Conduct Rules of the NASD regarding due diligence, it is understood and agreed

that you may rely upon the results of an inquiry conducted by another member or

members of the NASD, provided that:

 

 

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                  (i) you have reasonable grounds to believe that such inquiry

         was conducted with due care;

 

                  (ii) the results of the inquiry were provided to you with the

         consent of the member or members conducting or directing the inquiry;

         and

 

                  (iii) no member that participated in the inquiry is a sponsor

         of the Fund or an Affiliate of such sponsor.

 

         3. We will be entitled to receive from the Fund a selling commission

equal to 9% of the Gross Proceeds. For your services hereunder, subject to the

condition that Subscription Agreements for a minimum of 120,000 Units have been

received and accepted by the Manager by the termination date of