<PAGE> 1
As filed with the Securities and Exchange Commission on May 7, 1997
Registration No. 333-09371
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
(EXACT NAME OF REGISTRANT AS SPECIFIED IN GOVERNING INSTRUMENTS)
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24 FRANK LLOYD WRIGHT DRIVE
P.O. BOX 544
ANN ARBOR, MICHIGAN 48106-0544
(800) 522-7832
(Address and telephone number of principal executive offices)
---------------
W. ROSS MARTIN
CHIEF FINANCIAL OFFICER
24 FRANK LLOYD WRIGHT DRIVE
P.O. BOX 544
ANN ARBOR, MICHIGAN 48106-0544
(800) 522-7832
(Name, address and telephone number of agent for service)
---------------
COPIES TO:
JOEL J. MORRIS, ESQ.
JEFFREY L. FORMAN, ESQ.
JAFFE, RAITT, HEUER & WEISS,
PROFESSIONAL CORPORATION
ONE WOODWARD AVENUE, SUITE 2400
DETROIT, MICHIGAN 48226
(313) 961-8380
---------------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under The Securities Act
of 1933, check the following box. [X]
---------------------------------
<PAGE> 2
SUPPLEMENT NO. 2
DATED MAY 1, 1997
TO THE PROSPECTUS OF
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
DATED DECEMBER 23, 1996
This Supplement No. 2 is provided for the purpose of supplementing the
prospectus of Captec Franchise Capital Partners L.P. IV, a Delaware limited
partnership (the "Partnership"), dated December 23, 1996 (the "Prospectus").
This Supplement No. 2 expands upon, supplement, modifies and supersedes certain
information contained in the Prospectus and consolidates and/or supersedes
information in Supplement No. 1 dated April 1, 1997. This Supplement No. 2
must be read in conjunction with the Prospectus. Unless otherwise defined,
capitalized terms used herein shall have the same meanings accorded such terms
in the Prospectus.
As of April 30, 1997, the Partnership had raised $3,616,848 through the
sale of 3,616.848 Units. The following material sets forth certain information
regarding (i) the Partnership's purchase of a Property and Equipment Packages,
(ii) revisions to the Partnership Agreement in response to comments made by
certain securities administrators in states in which the Partnership intends to
sell Units, and (iii) events that happened after the date of the Prospectus.
PROPERTY ACQUISITIONS
Boston Market Restaurant (Rochester, Minnesota)
On March 10, 1997 the Partnership acquired the land and 3,035 square foot
building comprising a Boston Market restaurant located at 1201 S. Broadway,
Rochester, Minnesota (the "Minnesota Property"). The Minnesota Property was
constructed for its present use in November of 1995 and was fully operational
at the time of the purchase. The Minnesota Property was purchased from, and
leased back to Finest Foodservice L.L.C., a Delaware limited liability company
("Finest Foodservice"). Finest Foodservice operates casual dining restaurants
under the primary trade name of Boston Market. The Partnership purchased the
Minnesota Property for a purchase price of $964,000 which was negotiated by an
affiliate of the Managing General Partner who considered factors such as the
potential value of the site, the financial condition and business and operating
history of Finest Foodservice, and demographic data for the area in which the
Minnesota Property is located. The purchase price for the Minnesota Property
is supported by an independent MAI appraisal. The Partnership purchased the
Minnesota Property with cash from Offering proceeds. It is anticipated that
the Minnesota Property will be leveraged as provided for in the Prospectus.
However, the Partnership presently does not have a financing commitment.
Finest Foodservice and the Partnership have entered into a lease (the
"Finest Foodservice Lease"), which is an absolute net lease, whereby Finest
Foodservice is responsible for all expenses related to the Minnesota Property,
including real estate taxes, insurance, maintenance and repair costs. The
Finest Foodservice Lease term expires on April 1, 2012 with five renewal
options of five years each. Annual rental (the "Annual Rental") is payable
according to the following schedule:
<TABLE>
<CAPTION>
PERIOD ANNUAL RENTAL
<S> <C>
Lease Years 1-5 $101,220
Lease Years 6-10 $111,342
Lease Years 11-15 $122,525
Lease Years 16-20 $134,777
Lease Years 21-25 $148,255
Lease Years 26-30 $163,081
Lease Years 31-40 Fair market value determined for each
subsequent five-year period at the beginning of
the 31st and 36th Lease Years
</TABLE>
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Beginning in the sixth lease year, and in addition to the Annual Rental
provided above, Finest Foodservice will pay percentage rent on an annual basis
equal to the difference between five percent of "gross sales" (as defined in
the Finest Foodservice Lease) during such lease year less the Annual Rental
payable for such lease year.
Boston Chicken, Inc., a Delaware corporation (the "Option Holder"), has an
option to purchase and first right of refusal to purchase the Minnesota
Property. The Option Holder has the right to purchase the Minnesota Property
on the same terms and conditions as set forth in the offer or the Option Holder
may elect an alternate purchase price as follows: (a) during the first and
second lease years, an alternate purchase price equal to the total Annual
Rental payable for the lease year subsequent to the lease year in which the
option is exercised divided by 9.462%; (b) during the third lease year, an
alternate purchase price equal to the total Annual Rental for the third ease
year divided by 9.978%; (c) during the fourth lease year, an alternative
purchase price equal to the Annual Rental for the fourth lease year divided by
9.785%; and (d) during the fifth lease year, an alternative purchase price
equal to the Annual Rental for the fifth lease divided by 9.580%.
The Option Holder has the option to purchase the Minnesota Property at the
following times and option prices:
<TABLE>
<CAPTION>
PERIOD OPTION PRICE
<S> <C>
Lease Years 6-8 Annual Rent payable for the Lease Year
subsequent to the Lease Year in which the
option is exercised divided by ten percent
(10%)
Last ninety (90) days of the Annual Rent payable for the 16th Lease Year
15th Lease Year divided by ten percent (10%)
Last ninety (90) days of The lesser of (i) fair market value or (ii)
the 30th Lease Year one hundred ten percent (110%) of the Annual
Rent payable for the 31st Lease Year divided
by ten percent (10%)
Last ninety (90) days of The lesser of (i) fair market value or (ii) one
the 40th Lease Year hundred ten percent (110%) of the Annual Rent
payable for the 40th Lease Year divided by ten
percent (10%)
</TABLE>
An Affiliate of the Managing General Partner analyzed demographic,
geographic and market diversification data for the area in which the Minnesota
Property is located and reviewed the appraisal of the Minnesota Property and
the analysis regarding comparable properties contained therein. Based upon the
foregoing, the General Partners believe that the amount of insurance carried by
Finest Foodservice is adequate.
The current annual rent per square foot for the Minnesota Property is
$33.35 per square foot. The depreciable basis of the Minnesota Property for
federal tax purposes if $614,000 and it will be depreciated using the straight
line method over 39 years, a rate of $15,744 per year.
An Affiliate of the Managing General Partner has received an Acquisition
Fee from the Partnership in an amount equal to $38,560 and expects to receive
an additional fee of $9,640 from the Partnership after leveraging the Property,
as provided for in the Prospectus. As provided in the Partnership Agreement,
these fees are being paid for services rendered in connection with the
selection, evaluation and acquisition of the Minnesota Property. In addition,
Finest Foodservice has paid to the same affiliate a closing fee equal to $4,820
as provided for in the Partnership Agreement. Finest Foodservice also paid all
of the expenses incident to the closing of the transaction contemplated by this
commitment including, without limitation, title insurance premiums, recording
fees and expenses and transfer taxes.
The Finest Foodservice Lease contains a substitution option that provides
in the event that Finest Foodservice determines the Minnesota Property is
inadequate or unprofitable or is rendered unsuitable by condemnation or
casualty, Finest Foodservice, subject to the Partnership's approval, may
substitute another property of equal or greater current value having a Boston
Market restaurant located thereon. All obligations under the Finest
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Foodservice Lease, including Annual Rental, percentage rent and taxes
attributable to rent and the Minnesota property, are unconditionally guaranteed
by Boston Chicken, Inc., a Delaware corporation.
The Finest Foodservice Lease contains material default provisions that
include, but are not limited to: (i) the vacating or abandonment of the
Minnesota Property by Finest Foodservice; (ii) the failure by Finest
Foodservice to make any payment due under the Finest Foodservice Lease; (iii)
the failure by Finest Foodservice to observe or perform any of the covenants,
conditions, or provisions of the Finest Foodservice Lease; and (iv) Finest
Foodservice making any general arrangement or general assignment for the
benefit of creditors. In the event of a material default by Finest
Foodservice, the Finest Foodservice Lease contains remedy provisions which are
summarized as follows: (i) the Partnership may terminate the Finest
Foodservice Lease and take possession of the Minnesota Property, in which case
the Partnership would be entitled to damages incurred by reason of the material
default; (ii) the Partnership may permit Finest Foodservice to remain in
possession of the Minnesota Property, in which case the Finest Foodservice
Lease would continue to be in effect; or (iii) the Partnership may pursue any
other legal remedy available.
Applebee's Neighborhood Grill & Bar Equipment Package (Midvale, Utah)
On March 31, 1997, the Partnership acquired, effective as of February 20,
1997, restaurant equipment (the "Applebee's Equipment") to be used in the
operation of an Applebee's Neighborhood Grill & Bar, located at 7045 South 1300
East, Midvale, Utah for $402,000.00. The Applebee's Equipment was acquired
from Captec Financial Group, Inc. ("Captec"), an affiliate of the General
Partners, which purchased the Applebee's Equipment from various vendors for a
total cost of $402,000 and leased it to J.M.C. Limited Partnership, a Utah
limited partnership, DBA Applebees ( "JMC"), by entering into a lease dated
March 1, 1997 (the "JMC Lease") with JMC on the Partnership's standard form of
equipment lease. JMC owns and operates the Applebee's Neighborhood Grill & Bar
restaurant under a franchise agreement. The purchase was made in cash from
Offering proceeds. It is anticipated that the Applebee's Equipment will
subsequently be leveraged as provided for in the Prospectus. However, the
Partnership presently does not have a financing commitment.
On March 31, 1997, Captec assigned the JMC Lease to the Partnership,
effective as of February 20, 1997. Under the terms of the JMC Lease, JMC is
responsible for all expenses related to the Applebee's Equipment including
taxes, insurance, maintenance and repair costs. The lease term is 84 months
and the minimum annual rent is $82,056 payable in monthly installments of
$6,838 on the 1st day of each month. The annual rent remains fixed for the
entire JMC Lease term. The JMC Lease is guaranteed by the following: John B.
Prince, an individual; and William Tell, Inc., a Utah corporation.
At the end of the JMC Lease term, upon at least 90 days prior irrevocable
notice to the Partnership, JMC may purchase all of the Equipment for the lesser
of fair market value or Forty Thousand Two Hundred Dollars ($40,200). The
General Partners believe that the amount of insurance carried by JMC is
adequate.
JMC paid the first and last month's rent of $13,676 and interim rent in
the amount of $2,051 to the Partnership. An affiliate of the Managing General
Partner received an Acquisition Fee from the Partnership in an amount equal to
$16,080, and expects to receive an additional fee of $4,020 from the
Partnership after leveraging the Applebee's Equipment, as provided for in the
Partnership Agreement. In addition, JMC paid a commitment fee equal to $4,020
to the same affiliate as provided for in the Partnership Agreement.
Black-Eyed Pea Equipment Lease (Plano, Texas)
On April 3, 1997, the Partnership acquired restaurant equipment (the
"Black-Eyed Pea Equipment") to be used in the operation of a Black-Eyed Pea
restaurant located at 1905 Preston Road, Plano, Texas for $350,000. The
Black-Eyed Pea Equipment was acquired from DenAmerica Corp., which purchased
the Black-Eyed Pea Equipment from various vendors for a total cost of $350,000.
The Partnership leased the Black-Eyed Pea Equipment to DenAmerica Corporation,
a Georgia corporation d/b/a Black-Eyed Pea ("DenAmerica"), by entering into a
lease dated as of April 15, 1997 (the "DenAmerica Lease") with DenAmerica on
the Partnership's standard form of equipment lease. DenAmerica operates and
franchises restaurants under the primary trade names of Denny's and
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Black-Eyed Pea. The purchase was made in cash from Offering proceeds. It is
anticipated that the Black-Eyed Pea Equipment will subsequently be leveraged as
provided for in the Prospectus. However, the Partnership presently does not
have a financing commitment.
Under the terms of the DenAmerica Lease, DenAmerica is responsible for all
expenses related to the Black-Eyed Pea Equipment including taxes, insurance,
maintenance and repair costs. The lease term is 84 months and the minimum
annual rent is $70,392 payable in monthly installments of $5,866 on the 15th
day of each month. The annual rent remains fixed for the entire DenAmerica
Lease term.
At the end of the DenAmerica Lease term, upon at least 90 days prior
irrevocable notice to the Partnership, DenAmerica may purchase all of the
Black-Eyed Equipment for its fair market value at the date of the exercise of
the option. The General Partners believe that the amount of insurance carried
by DenAmerica is adequate.
The Partnership consented to a sublease between DenAmerica and Texas BEP.,
LP., a Texas limited partnership, on the same terms and conditions as the
DenAmerica Lease. DenAmerica remains the obligor under the DenAmerica Lease.
DenAmerica paid the first and last month's rent of $11,732 and interim
rent in the amount of $2,346 to the Partnership. An affiliate of the Managing
General Partner received an Acquisition Fee from the Partnership in an amount
equal to $14,000 and expects to receive an additional fee of $3,500 from the
Partnership after leveraging the Black-Eyed Pea Equipment, as provided for in
the Partnership Agreement. In addition, DenAmerica paid a commitment fee equal
to $3,500 to the same affiliate as provided for in the Partnership Agreement.
RISK FACTORS
The following paragraph is added to the end of the section of the
Prospectus entitled "Risk Factors - Litigation against General Partner and
Possible Adverse Effect on Net Worth":
On January 31, 1997, the Court's decision was reversed on
appeal by the Michigan Court of Appeals and the case will either
be dismissed or subject to further proceedings if the plaintiffs
appeal the Court of Appeals decision.
PRIOR OFFERINGS
The following text has been added to the first paragraph of this Section
of the Prospectus:
On January 29, 1997, effective as of January 1, 1997, Captec L.P.
II sold all of its equipment packages and real estate properties
to an Affiliate of the Managing General Partner for $2,760,000 in
a transaction that was consented to by a majority in interest of
the limited partners. Simultaneously with such sale, Captec L.P.
II paid all of its expenses and distributed its remaining
$2,000,569 to its limited partners.
PLAN OF DISTRIBUTION
The subsections of this section of the Prospectus titled "General",
"Compensation", and "Indemnification" are amended, effective as of the date of
this Prospectus Supplement, to read in their entirety as follows:
GENERAL
The Offering is being made on a "best efforts, part or none" basis through
broker-dealers who are members of the National Association of Securities
Dealers, Inc. (the "Participating Dealers") and Captec Securities Corporation,
which will act as Dealer-Manager. The individual General Partner and the
corporate General Partner are each an Affiliate of the Dealer-Manager. The
Offering is conditioned upon sale of the Minimum Number of Units prior to the
close of business one year after the effective date of this Prospectus (the
"Termination Date"). Since the Minimum
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Number of Units was sold on March 5, 1997, prior to the Termination Date, the
General Partners may extend the Offering to a date not later than the earlier
to occur: (i) sale of all Units offered hereby; or (ii) two years after the
effective date of this Prospectus (the "Extended Termination Date"). After the
Minimum Number of Units was sold, the Partnership has and will schedule interim
closings at which subscribers will be admitted as Limited Partners on at least
a monthly basis.
The Offering is made pursuant to agreements among the General Partners,
the Partnership, the Dealer-Manager and the Participating Dealers pursuant to
which the Participating Dealers are acting as agents of the Partnership for the
purpose of offering and selling Units. The Units are being offered on a "best
efforts, part or none" basis, which means that Participating Dealers are not
obligated to purchase any Units but are required only to use their best efforts
to sell Units to investors.
COMPENSATION
Subject to the provisions for reduced selling commissions, the Partnership
will pay selling commissions equal to 8.0% of Gross Proceeds to the
Dealer-Manager for Units sold by it. The Dealer-Manager may reallow fees of
up to 8% to the Participating Dealers with respect to Units sold by them. The
General Partners also paid an additional selling commission equal to 1% of
Gross Proceeds to Participating Dealers from Units sold until the Minimum
Number of Units was sold. The Dealer-Manager may also receive up to 0.5% of
Gross Proceeds as reimbursement for bona fide due diligence expenses. The
Dealer-Manager may reallow to any Participating Dealer or its registered
representatives all or any portion of this fee based upon the bona fide due
diligence expenses incurred. The General Partners will receive a
Non-Accountable Expense Allowance in an amount equal to 2% of Gross Proceeds to
cover certain expenses relating to the offer and sale of Units (including the
additional 1% selling commission payable until the Minimum Number of Units is
sold). In no event will sales commissions, the Non-Accountable Expense
Allowance, Organization and Offering Expenses, wholesaling salaries and
expenses and expenses of sales seminars, exceed in the aggregate, 13% of Gross
Proceeds.
The General Partners, their Affiliates and Participating Dealers may
purchase up to 10% of the Units, net of any selling commissions but otherwise
on the same terms as purchasers who are not Affiliates. Purchase of Units by
the General Partners and their Affiliates will not be counted for purposes of
reaching the Minimum Number of Units. Any purchases by the General Partners
will be for investment purposes only and not with a view toward resale.
Investors will not have a right to withdraw and receive a return of their
contributions. Neither the General Partners nor any of their Affiliates will
directly or indirectly pay or award any compensation to a third party engaged
as an investment adviser as inducement to advise favorably toward investment in
the Partnership. In addition, the selling commissions to the Dealer-Manager and
Participating Dealers will be reduced on sales of 501 or more Units in
accordance with the following Schedule:
<TABLE>
<CAPTION>
Dollar Amount Purchased Investor's Purchase Selling Commission Per Unit
- ----------------------- Price ------------------------------
Per Unit Percent Dollar Amount
-------------------- -------------- --------------
<S> <C> <C> <C>
$1,000 - $500,000 $1,000 8.0% $80.00
$501,000 - $750,000 $980 6.0% $60.00
$751,000 - $1,000,000 $970 5.0% $50.00
$1,001,000 - $1,500,000 $960 4.0% $40.00
$1,501,000 - $2,000,000 $950 3.0% $30.00
$2,001,000 and above $940 2.0% $20.00
</TABLE>
The purchaser of such Units will be credited with such reduced commission
and the net proceeds to the Partnership will not be affected by the discount.
Subscriptions may be combined for purposes of determining the volume discounts
applicable to subscriptions from a purchaser.
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INDEMNIFICATION
The Partnership, General Partners, and Dealer-Manager have agreed to
indemnify the Participating Dealers and the Participating Dealers have agreed
to indemnify the General Partners, Dealer-Manager, and the Partnership against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Act"). In the opinion of the Securities and Exchange Commission,
indemnification for liabilities under the Act is against public policy and
therefore unenforceable. The Participating Dealers may be deemed to be
underwriters as that term is defined in the Act.
AMENDMENT TO THE AGREEMENT OF LIMITED
PARTNERSHIP OF CAPTEC FRANCHISE
CAPITAL PARTNERS IV
Sections 12, 14, and 15 of the Partnership's Agreement of Limited
Partnership included as Exhibit B to the Prospectus (the "Partnership
Agreement"), have been corrected and amended, consistent with the disclosures
in the Prospectus as set forth below:
12. TRANSFERABILITY OF UNITS
Section 12.1.4 of the Partnership Agreement has been amended so as to read in
its entirety as follows:
12.1.4 if the Managing General Partner determines in its sole
discretion that such assignment would prevent the Partnership from
being able to satisfy either the 2% or 5% "safe harbors" contained
in Service Advance Notice 88-75 or in corresponding regulations or
the Partnership has received an opinion of counsel or a favorable
service ruling that such transfer would result in the Partnership
being classified as a "publicly-traded partnership" for federal
income tax purposes.
14. RIGHTS, AUTHORITY, POWERS, RESPONSIBILITIES AND DUTIES OF THE MANAGING
GENERAL PARTNER
The first sentence of Section 14.4.5 has been amended so as to permit the
Partnership to only enter into co-tenancy arrangements, joint ventures or
general partnerships with non-affiliates that own one or more Assets, and
Section 14.4.5 now reads in its entirety as follows:
cause the Partnership to invest in any Asset with unaffiliated
parties that own one or more Assets through co-tenancy
arrangements, joint ventures or general partnerships except on
substantially the same terms and conditions (although not
necessarily the same percentage interest) as such unaffiliated
parties; provided, however, that no such investment shall be
entered into by the Partnership (i) if it involves the payment of
duplicative property management or other fees which would have the
effect of circumventing any of the restrictions on and prohibited
transactions involving conflicts of interest contained in this
Partnership Agreement, and (ii) unless the Partnership acquires a
controlling interest in such joint venture or partnership.
15. RIGHTS AND POWERS OF THE LIMITED PARTNERS
The last sentence of Section 15.3 has been deleted so as to remove the
General Partners' right to vote the Units of those Limited Partners that do not
submit a vote within a certain time period, and Section 15.3 reads in its
entirety as follows:
15.3 Consent Without a Meeting. The Managing General Partner may and,
upon receipt of a request in writing signed by ten percent (10%) or more in
interest of the Limited Partners, the Managing General Partner shall,
submit any matter upon which the Limited Partners are entitled to act, to
the Limited Partners for a vote by written consent without a meeting.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 30. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of the fees and
expenses (other than underwriting commissions and discounts) payable in
connection with the issuance and distribution of Units assuming 30,000 Units
are sold.
<TABLE>
<S> <C>
Securities and Exchange Commission, registration fee $10,345
NASD filing fee..................................... 3,500
Printing and Mailing................................ 50,000
Accountants (fees and expenses)..................... 6,155
Blue Sky fees and expenses (including legal fees)... 60,000
Legal fees and expenses............................. 65,000
Sales Activities and Seminars....................... 805,000
Due Diligence....................................... 500,000
----------
Total............................................... $1,500,000
==========
</TABLE>
ITEM 32. RECENT SALE OF UNREGISTERED SECURITIES.
The Partnership has sold .1 Units for $100 to Patrick L. Beach in order
that Mr. Beach may become the initial Limited Partner and permit the filing of
a Certificate of Limited Partnership. This sale was made pursuant to the
exemption contained in Section 4(2) of the Securities Act of 1933, as amended
(the "Act"), as a transaction not involving any public offering.
ITEM 33. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Partnership Agreement, neither the General Partners nor any
affiliate of the General Partners will be liable, responsible, accountable in
damages or otherwise to the Partnership or to any Limited Partners for any
action taken or failure to act on behalf of the Partnership within the
authority granted to them by the Partnership Agreement provided that the
General Partners or such Person believed in good faith that the course of
conduct which caused the loss or liability was in the best interest of the
Partnership and such liability or loss was not the result of negligence or
misconduct by such Person. The Partnership will indemnify the General Partners
and their Affiliates against any losses, judgments, liabilities, expenses and
amounts paid in settlement of any claims sustained by them on behalf of the
Partnership within the scope of the authority conferred on them by the
Partnership Agreement or by law or in furtherance of the Partnership's
interests, provided that the same were not the result of negligence or
misconduct on the part of the General Partners or their Affiliates and the
General Partners have determined in good faith that the conduct was in the best
interest of the Partnership.
ITEM 35. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(b) Financial Statement Schedule
Report of Independent Accountants
Schedule XI -- Real Estate and Accumulated Depreciation
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(c) Exhibits - See Exhibit Index following signature page
ITEM 36.UNDERTAKINGS.
The Registrant hereby undertakes as follows:
(a) to file a sticker supplement pursuant to Rule 424(c) under the Act
during the distribution period describing each property not identified in the
Prospectus at such time as there arises a reasonable probability that such
property will be acquired and to consolidate all such stickers into a
post-effective amendment filed at least once every three months, with the
information contained in such amendment provided simultaneously to the existing
Limited Partners. Each sticker supplement will disclose all compensation and
fees received by the General Partners or their affiliates in connection with
any such acquisition. Audited financial statements meeting the requirements of
Rule 3-14 of Regulation S-X for properties acquired during the distribution
period will only be filed with the post-effective amendment;
(b) to submit all sales literature to the staff of the Commission as
supplemental literature prior to its use;
(c) (i) to file any prospectuses required by Section 10(a)(3) as
post-effective amendments to the Registration Statement; (ii) that for the
purpose of determining any liability under the Act each such post-effective
amendment may be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time may
be deemed to be the initial bona fide offering thereof; (iii) that all
post-effective amendments will comply with the applicable forms, rules and
regulations of the Commission in effect at the time such post-effective
amendments are filed; and (iv) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain at
the termination of the offering;
(d) to file, after the end of the distribution period, a current report on
Form 8-K containing the financial statements and any additional information
required by Rule 3-14 of Regulation S-K, to reflect each commitment (i.e., the
signing of a binding purchase agreement) made after the end of the distribution
period involving the use of 10% or more (on a cumulative basis) of the net
proceeds of the offering and to provide the information contained in such
report to the Limited Partners at least once each quarter after the
distribution period of the offering has expired;
(e) to provide to the Limited Partners the financial statements required
by Form 10-K for the first full fiscal year of operations of the Partnership;
(f) to send to each Limited Partner at least on an annual basis a detailed
statement of any transactions with the General Partners or their Affiliates,
and of fees, commissions, compensation and other benefits paid or accrued to
the General Partners or their Affiliates for the fiscal year completed, showing
the amount paid or accrued to each recipient and the services performed;
(g) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20%
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change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table set forth in this
registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
(h) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the Securities offered herein, and
the offering of such Securities at that time shall be deemed to be the initial
bona fide offering thereof;
(i) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering;
(j) That, for the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed a part of
this Registration Statement as of the time it was declared effective; and
(k) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering.
(l) insofar as indemnification for liabilities arising under the Act may
be permitted to the General Partners and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a General Partner or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such General Partners and the controlling persons in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 11
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all the requirements of filing on Form S-11 and authorized this
Post-Effective Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, in the City of Ann Arbor, State of Michigan, on
May 6, 1997.
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
By: Captec Franchise Capital Corporation IV,
General Partner
By: /s/ Patrick L. Beach
-------------------------------------
Patrick L. Beach
Chairman of the Board, President and
Chief Executive Officer
By: /s/ Patrick L. Beach
-------------------------------------
Patrick L. Beach, General Partner
In accordance with the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 1 to Registration Statement was
signed by the following persons in the capacities and on the dates indicated:
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
By: Captec Franchise Capital Corporation IV, General Partner
/s/ Patrick L. Beach Chairman of the May 6, 1997
- -------------------- Board, President
Patrick L. Beach and Chief Executive
Officer
/s/ W. Ross Martin Director, Senior May 6, 1997
- -------------------- Vice President,
W. Ross Martin Treasurer,
Secretary, and
Chief Financial
Officer (principal
financial officer
and principal
accounting officer)
II-4
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1.1** Proposed Form of Participating Dealer Agreement
1.2* Proposed Form of Amended and Restated
Participating Dealer Agreement
1.3* Dealer-Manager Agreement
3.1** Agreement of Limited Partnership of the
Partnership (included in prospectus)
3.2** Articles of Incorporation of Captec Franchise
Capital Corporation IV (the General Partner)
3.3** Bylaws of Captec Franchise Capital Corporation IV
3.4** Certificate of Limited Partnership
3.5** Certificate of Limited Partnership Interest
3.6* First Amendment to Agreement of Limited
Partnership of the Partnership
5.1** Opinion letter of Jaffe, Raitt, Heuer & Weiss,
Professional Corporation, regarding the validity
of the securities being registered
8.1** Opinion Letter of Jaffe, Raitt, Heuer & Weiss,
Professional Corporation, regarding tax matters
10.1** Proposed Form of Escrow Agreement
23.1** Consent of Jaffe, Raitt, Heuer & Weiss, P.C.
(included in Exhibits 5.1 and 8.1)
23.2** Consent of Coopers & Lybrand, L.L.P.
24.1** Power of Attorney (included on signature page)
99.1** Table VI Acquisitions of Properties by Programs
</TABLE>
*Filed herewith.
**Previously filed.
<PAGE> 1
EXHIBIT 1.2
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
AMENDED AND RESTATED 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"). The Partnership and
Captec Securities Corporation, a Michigan corporation (the "Dealer-Manager")
are entering into this Amended and Restated Participating Dealer Agreement (the
"Agreement") with you. References to "you" or "your" shall include you and
each of your officers, directors, partners, agents, employees, or affiliates.
The Partnership and you previously entered into a Participating Dealer
Agreement (the "Original Agreement"). The Partnership, Dealer-Manager, and you
wish to restate the Original Agreement as set forth below
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 as an agent 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 to purchase 30,000
Units ($30,000,000). 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
- 1 -
<PAGE> 2
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 DEALER-MANAGER AND THE GENERAL
PARTNERS.
The General Partners and the Dealer-Manager jointly and severally
represent and warrant to you as follows:
(a) STATEMENT AND PROSPECTUS. A Registration Statement (Registration
number 333-9371 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 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
- 2 -
<PAGE> 3
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 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
- 3 -
<PAGE> 4
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 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 Dealer-Manager and 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:
- 4 -
<PAGE> 5
(i) all investors will be instructed to make their checks
payable as follows:
Michigan National Bank Escrow Agent for
Captec Franchise L.P. IV;
(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), the Partnership agrees
that the Dealer-Manager will pay you a commission equal to 8% of the principal
amount of all Units sold directly by you on each Closing Date (hereafter
defined). However, the commission rate on sales of 501 or more Units will be
reduced in accordance with the schedule set forth in the section of the
Prospectus titled "Who Should Invest-Plan of Distribution-Compensation".
(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.
- 5 -
<PAGE> 6
(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, General Partners, and
Dealer-Manager 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 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;
- 6 -
<PAGE> 7
(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 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
- 7 -
<PAGE> 8
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 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
- 8 -
<PAGE> 9
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.
(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, the
General Partners, and Dealer-Manager 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) other than that based upon written information provided by you or
on your behalf, or (ii) in any application or other document (in this Section 8
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 you or on your behalf; 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.
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<PAGE> 10
(b) Subject to the conditions set forth below, you agree to indemnify
and hold harmless the Partnership, Dealer-Manager, 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 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) based upon written information provided by you
or on your behalf, 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 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
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<PAGE> 11
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 8 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.
(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
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<PAGE> 12
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 or
Dealer-Manager, 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 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
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<PAGE> 13
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.
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
CAPTEC SECURTIES CORPORATION
By:
-----------------------------------
Its:
----------------------------------
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<PAGE> 14
Gentlemen:
We hereby confirm our agreement to abide by and conform to the terms and
conditions of the foregoing Amended and Restated 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
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All Fifty States Except:
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Licensed in the Following States:
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<PAGE> 1
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
<PAGE> 2
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.
2
<PAGE> 3
(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
3
<PAGE> 4
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
4
<PAGE> 5
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
5
<PAGE> 6
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,
6
<PAGE> 7
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:
-----------------------------
Patrick L. Beach, President
MANAGING PARTNER:
CAPTEC FRANCHISE CAPITAL
CORPORATION IV
By:
-------------------------------------
Patrick L. Beach, President
DEALER-MANAGER
CAPTEC SECURITIES CORPORATION
By:
-------------------------------------
Its:
------------------------------------
7
<PAGE> 1
EXHIBIT 3.6
FIRST AMENDMENT TO AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
CAPTEC FRANCHISE CAPITAL PARTNERS L.P.IV
This First Amendment (the "Amendment") to the Amended and Restated
Agreement of Limited Partnership of Captec Franchise Capital Partners L.P. IV
(the "Partnership Agreement") is entered into as of the 31st day of March,
1997, by Captec Franchise Capital Corporation IV, a Michigan corporation (the
"Managing General Partner") and general partner of the Partnership.
RECITALS:
A. Any capitalized term that is not defined herein shall have the meaning
assigned to it in the Partnership Agreement.
B. The securities administrators of the States of Minnesota and Missouri
have requested that certain changes be made to the Partnership Agreement.
C. Section 14.2.15(c) provides that the Managing General Partner, without
the approval of the Limited Partners, may amend the Partnership Agreement as so
required by a state securities commission or similar such official if such
revision is deemed by such commission or official to be for the benefit or
protection of the Limited Partners.
D. The General Partners have determined that the amendments to the
Partnership Agreement required by the securities administrators of the States
of Minnesota and Missouri are deemed by such officials to be for the benefit
or protection of the Limited Partners.
E. The parties desire to amend the Partnership Agreement as set forth
below.
NOW, THEREFORE, in consideration of mutual promises made herein, the
parties hereto hereby agree as follows:
1. Section 12.1.4 of the Partnership Agreement is amended to read in its
entirety as follows:
if the Managing General Partner determines in its sole discretion that
such assignment would prevent the Partnership from being able to satisfy
either the 2% or 5% "safe harbors" contained in Service Advance Notice
88-75 or in corresponding regulations or the Partnership has received an
opinion of counsel or a favorable service ruling that such transfer would
result in the Partnership being classified as a "publicly-traded
partnership" for federal income tax purposes.
2. The first sentence of Section 14.4.5 of the Partnership Agreement is
amended to read in its entirety as follows:
cause the Partnership to invest in any Asset with unaffiliated parties
that own one or more Assets through co-tenancy arrangements, joint
ventures or general partnerships except on substantially the same terms
and conditions (although not necessarily the same percentage interest) as
such unaffiliated parties; provided, however, that no such investment
shall be entered into by the Partnership (i) if it involves the payment of
duplicative property management or other fees which would have the effect
of circumventing any of the restrictions on and prohibited transactions
involving conflicts of interest contained in this Partnership Agreement,
and (ii) unless the Partnership acquires a controlling interest in such
joint venture or partnership.
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<PAGE> 2
3. Section 15.3 of the Partnership Agreement is amended to read in its
entirety as follows:
15.3 Consent Without a Meeting. The Managing General Partner may and,
upon receipt of a request in writing signed by ten percent (10%) or more
in interest of the Limited Partners, the Managing General Partner shall,
submit any matter upon which the Limited Partners are entitled to act, to
the Limited Partners for a vote by written consent without a meeting.
4. Except as modified herein, the Partnership Agreement remains unchanged,
and, as modified, continues in full force and effect.
IN WITNESS WHEREOF, the Managing General Partner has executed this
Amendment as of the date first above written.
CAPTEC FRANCHISE CAPITAL CORPORATION IV
By:
----------------------------------------
Patrick L. Beach
President and
Chief Executive Officer
President and Chief Executive Officer
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