SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 14, 1996
FRANCHISE FINANCE CORPORATION OF AMERICA
(Exact Name of Registrant as Specified in Charter)
Delaware 33-62629 86-0736091
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification Number)
incorporation)
17207 North Perimeter Drive, Scottsdale, AZ 85255
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (602) 585-4500
NONE
(Former Name or Former Address, if Change Since Last Report)
<PAGE>
Item 5. Other Events.
(a) Registrant has entered into a Distribution Agreement with Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, NationsBanc
Capital Markets, Inc. and Smith Barney Inc. dated as of February 9, 1996
relating to the offering of Registrant's Medium-Term Notes Due Nine Months or
More From Date of Issue (the "Notes") attached hereto and referenced as Exhibit
1.02 to the Registration Statement.
(b) Kutak Rock, as counsel to the Registrant, has issued its opinion as
to legality with respect to the Notes. The opinion is attached hereto and
referenced as Exhibit 5.1.
(c) Registrant and Trustee have previously authorized, executed and
filed as an exhibit to the Registration Statement an Indenture, dated as of
November 21, 1995, which, together with the Officer's Certificate of the
Registrant attached hereto as Exhibit 99.1, establishes the form and terms of
the Notes.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
1.02 Distribution Agreement
5.1 Legal opinion of Kutak Rock
99.1 Officers' Certificate
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRANCHISE FINANCE CORPORATION OF
AMERICA (Registrant)
Dated: February 14, 1996 By /s/ John R. Barravecchia
John R. Barravecchia, Executive Vice
President and Chief Financial Officer
Dated: February 14, 1996 By /s/ Catherine F. Long
Catherine F. Long, Vice President, Finance
and Principal Accounting Officer
FRANCHISE FINANCE CORPORATION OF AMERICA
Medium-Term Notes
Due Nine Months or More From Date of Issue
DISTRIBUTION AGREEMENT
February 9, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
NATIONSBANC CAPITAL MARKETS, INC.
100 North Tryon Street
Charlotte, North Carolina 28255
SMITH BARNEY INC.
390 Greenwich Street
4th Floor
New York, New York 10013
Dear Sirs:
Franchise Finance Corporation of America, a Delaware corporation (the
"Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, NationsBanc Capital Markets, Inc. and Smith
Barney Inc. (each, an "Agent," and collectively, the "Agents") with respect to
the issue and sale by the Company of its Medium-Term Notes Due Nine Months or
More From Date of Issue (the "Notes"). The Notes are to be issued pursuant to an
Indenture, dated as of November 21, 1995, as amended, supplemented or modified
from time to time (the "Indenture"), between the Company and Norwest Bank
Arizona, National Association, as trustee (the "Trustee"). As of the date
hereof, the Company has authorized the issuance and sale of up to U.S.
$150,000,000 aggregate initial offering price of Notes to or through the Agents
pursuant to the terms of this Agreement. It is understood, however, that the
Company may from time to time authorize the issuance of additional Notes and
that such additional Notes may be sold to or through the Agents pursuant to the
terms of this Distribution Agreement (the "Agreement"), all as though the
issuance of such Notes were authorized as of the date hereof.
1
<PAGE>
This Agreement provides both for the sale of Notes by the Company to
one or more Agents as principal for resale to investors and other purchasers and
for the sale of Notes by the Company directly to investors (as may from time to
time be agreed to by the Company and the applicable Agent), in which case such
Agent will act as an agent of the Company in soliciting purchases of the Notes.
The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (No. 33-62629) for the registration
of common stock, preferred stock and debt securities, including the Notes, under
the Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the SEC under the 1933 Act (the "1933 Act Regulations"). Such
registration statement has been declared effective by the SEC and the Indenture
has been duly qualified under the Trust Indenture Act of 1939, as amended (the
"1939 Act"). Such registration statement (and any further registration
statements which may be filed by the Company for the purpose of registering
additional Notes and in connection with which this Agreement is included or
incorporated by reference as an exhibit) and the prospectus constituting a part
thereof, and any prospectus supplement and pricing supplement relating to the
Notes, including all documents incorporated therein by reference, as from time
to time amended or supplemented by the filing of documents pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act") or the 1933 Act or
otherwise, are referred to herein as the "Registration Statement" and the
"Prospectus," respectively, except that if any revised prospectus shall be
provided to the Agents by the Company for use in connection with the offering of
the Notes, whether or not such revised prospectus is required to be filed by the
Company pursuant to Rule 424(b) of the 1933 Act Regulations, the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Agents for such use. Unless the context otherwise
requires, all references in this Agreement to financial statements and schedules
and other information which is "described," "disclosed," "contained," "included"
or "stated" in the Registration Statement or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include the filing of any document under the 1934 Act which is or is
deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be. If the Company elects to rely on Rule 434 under
the 1933 Act Regulations, all references to the Prospectus shall be deemed to
include, without limitation, the form of prospectus and the term sheet, taken
together, provided to the Agents by the Company in reliance on Rule 434 under
the 1933 Act (the "Rule 434 Prospectus"). If the Company files a registration
statement to register a portion of the Notes and relies on Rule 462(b) for such
registration statement to become effective upon filing with the Commission (the
"Rule 462 Registration Statement"), then any reference to "Registration
Statement" herein shall be deemed to be to both the registration statement
referred to above (No. 33-62629) and the Rule 462 Registration Statement, as
each such registration statement may be amended pursuant to the 1933 Act.
2
<PAGE>
1. Appointment as Agent.
(a) Appointment. Subject to the terms and conditions stated herein and
subject to the reservation by the Company of the right to sell Notes directly on
its own behalf, the Company hereby agrees that Notes will be sold exclusively to
or through the Agents. The Company agrees that it will not appoint any other
agents to act on its behalf, or to assist it, in the placement of the Notes.
(b) Sale of Notes. The Company shall not sell or approve the
solicitation of purchases of Notes in excess of the amount which shall be
authorized by the Company from time to time or in excess of the aggregate
initial offering price of Notes registered pursuant to the Registration
Statement. The Agents shall have no responsibility for maintaining records with
respect to the aggregate initial offering price of Notes sold, or of otherwise
monitoring the availability of Notes for sale, under the Registration Statement.
(c) Purchases as Principal. The Agents shall not have any obligation to
purchase Notes from the Company as principal, but one or more Agents may agree
from time to time to purchase Notes as principal for resale to investors and
other purchasers determined by such Agent or Agents. Any such purchase of Notes
by an Agent as principal shall be made in accordance with Section 3(a) hereof.
(d) Solicitations as Agent. If agreed upon by an Agent and the Company,
such Agent, acting solely as agent for the Company and not as principal, will
solicit purchases of the Notes. Unless otherwise instructed by the Company, such
Agent will communicate to the Company, orally, each reasonable offer to purchase
Notes solicited by it on an agency basis. Such Agent shall have the right, in
its discretion reasonably exercised, to reject any proposed purchase of Notes,
as a whole or in part, and any such rejection shall not be deemed a breach of
its agreement contained herein. The Company may accept or reject any proposed
purchase of Notes, in whole or in part. Such Agent shall make reasonable efforts
to assist the Company in obtaining performance by each purchaser whose offer to
purchase Notes has been solicited by it and accepted by the Company. Such Agent
shall not have any liability to the Company in the event that any such purchase
is not consummated for any reason. If the Company shall default on its
obligation, pursuant to the provisions of this Agreement, to deliver Notes to a
purchaser whose offer it has accepted, the Company shall (i) hold such Agent
harmless against any loss, claim or damage arising from or as a result of such
default by the Company and (ii) pay to such Agent any commission to which it
would otherwise be entitled absent such default.
(e) Reliance. The Company and the Agents agree that any Notes purchased
by one or more Agents as principal shall be purchased, and any Notes the
placement of which an Agent arranges as agent shall be placed by such Agent, in
reliance on the representations, warranties, covenants and agreements of the
Company contained herein and on the terms and conditions and in the manner
provided herein.
2. Representations and Warranties.
3
<PAGE>
(a) The Company represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Company of an offer for the
purchase of Notes (whether to such Agent as principal or through such Agent as
agent), as of the date of each delivery of Notes (whether to such Agent as
principal or through such Agent as agent) (the date of each such delivery to the
Agent as principal being hereafter referred to as a "Settlement Date"), and as
of any time that the Registration Statement or the Prospectus shall be amended
or supplemented or there is filed with the SEC any document incorporated by
reference into the Prospectus (each of the times referenced above being referred
to herein as a "Representation Date"), as follows:
(i) Due Incorporation and Qualification. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the state of Delaware and has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement, the Notes and the Indenture; and the
Company is duly qualified as a foreign corporation to transact business and
is in good standing in the State of Arizona and in each other jurisdiction
in which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the failure
to so qualify or be in good standing would not, either singly or in the
aggregate, have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise (a "Material
Adverse Effect").
(ii) Subsidiaries. Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the corporate
power and authority to own, lease and operate its properties and conduct
its business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify or be in good standing would not, either
singly or in the aggregate, have a Material Adverse Effect; and all of the
issued and outstanding capital stock of each such subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of the subsidiaries
was issued in violation of the preemptive or similar rights of any
stockholder of such corporation arising by operation of law, under the
charter or by-laws of any subsidiary or under any agreement to which the
Company or any subsidiary is a party. The Company does not own, directly or
indirectly through a "qualified REIT subsidiary" (within the meaning of
Section 856(i) of the Internal Revenue Code of 1986, as amended (the
"Code")), partnership, limited liability company, association or other
entity, any shares of stock or any other debt or equity securities of, or
other interests in, any corporation, firm, partnership, limited liability
company, association or other entity, other than (1) stock of a corporation
that the Company has been advised by its legal counsel qualifies as a
4
<PAGE>
"qualified REIT subsidiary" within the meaning of Section 856(i) of the
Code, (2) stock or other debt or equity securities of any issuer (other
than a partnership or limited liability company, the ownership of which is
governed by (3) below) where (i) the Company has been advised by legal
counsel that such ownership would not constitute ownership of more than
9.8% of the voting securities of such issuer (within the meaning of Section
856(c)(5) of the Code) and (ii) the Company has determined in good faith
that the fair market value of the stock and securities of any one such
issuer does not exceed 4.8% of the value of the total assets of the
Company, or (3) interests in a partnership or limited liability company
where (i) the Company has received a written opinion of its legal counsel
that such a partnership or limited liability company is properly treated as
a partnership, rather than an association or publicly traded partnership
taxable as a corporation, for federal income tax purposes and (ii) such
partnership or limited liability company does not itself own debt or equity
securities of any issuer that could cause the Company to violate the
representation contained in clause (2) above.
(iii) Registration Statement and Prospectus. At the time the
Registration Statement became effective, the Registration Statement
complied, and as of each Representation Date will comply, in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
and the 1939 Act and the rules and regulations of the SEC promulgated
thereunder; the Registration Statement, at the time it became effective,
did not, and at each time thereafter at which any amendment to the
Registration Statement becomes effective and as of each Representation
Date, will not, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and the Prospectus, as of the date
hereof does not, and as of each Representation Date will not, include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by the Agents expressly for use in the
Registration Statement or Prospectus. For purposes of this Section 2(a),
all references to the Registration Statement, any post-effective amendments
thereto and the Prospectus shall be deemed to include, without limitation,
any electronically transmitted copies thereof, including, without
limitation, any copy filed with the SEC pursuant to its Electronic Data
Gathering, Analysis, and Retrieval system ("EDGAR").
(iv) Incorporated Documents. The documents incorporated by reference in
the Prospectus, at the time they were or hereafter are filed with the SEC,
complied or when so filed will comply, as the case may be, in all material
respects with the requirements of the 1934 Act and the rules and
regulations promulgated thereunder (the "1934 Act Regulations"), and, when
read together and with the other information in the Prospectus, did not and
will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
5
<PAGE>
in order to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading.
(v) Accountants. The accountants who certified the financial
statements included or incorporated by reference in the Prospectus are
independent public accountants within the meaning of the 1933 Act and the
1933 Act Regulations.
(vi) Financial Statements. The financial statements, the notes thereto
and any supporting schedules of the Company and its subsidiaries included
or incorporated by reference in the Registration Statement and the
Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of the dates indicated and the consolidated
results of their operations for the periods specified; except as stated
therein, said financial statements have been prepared in conformity with
United States generally accepted accounting principles applied on a
consistent basis; and the supporting schedules included or incorporated by
reference in the Registration Statement and the Prospectus present fairly
the information required to be stated therein.
(vii) Authorization and Validity of this Agreement, the Indenture and
the Notes. This Agreement has been duly authorized, executed and delivered
by the Company and, upon execution and delivery by the Agents, will be a
valid and legally binding agreement of the Company; the Indenture has been
duly qualified under the 1939 Act and has been duly authorized, executed
and delivered by the Company and is a valid and legally binding agreement
of the Company enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
enforcement of creditors' rights generally or by general equity principles;
the Notes have been duly and validly authorized for issuance, offer and
sale pursuant to this Agreement and the Indenture and, when issued,
authenticated and delivered pursuant to the provisions of this Agreement
and the Indenture against payment of the consideration therefor, the Notes
will constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
enforcement of creditors' rights generally or by general equity principles;
the Notes will be substantially in the form contemplated by the Indenture
and heretofore delivered to the Agents and will conform in all material
respects to all statements relating thereto contained in the Prospectus;
and the Notes will be entitled to the benefits of the Indenture.
(viii) Material Changes or Material Transactions. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (a) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business ("Material Adverse Change"), (b) there have
been no material transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with
6
<PAGE>
respect to the Company and its subsidiaries considered as one enterprise,
and (c) except for regular quarterly dividends on the common stock, par
value $.01 per share, of the Company (the "Common Stock"), there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(ix) No Defaults. Neither the Company nor any of its subsidiaries is
(a) in violation of its charter or bylaws, (b) in default in the
performance or observance of any provision of the Credit Agreement dated as
of December 27, 1995 between the Company and NationsBank of Texas, N.A., as
such agreement may be amended or modified from time to time (the
"NationsBank Agreement") that constitutes or will constitute an Event of
Default (as defined therein) under the NationsBank Agreement, or (c) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which any of them may be bound, or to which any of the property or assets
of the Company or any of its subsidiaries is subject, except for, in the
case of (c), any such defaults which would not, either singly or in the
aggregate, have a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Indenture and the Notes and the
consummation of the transactions contemplated herein and therein and
compliance by the Company with its obligations hereunder and thereunder
have been duly authorized by all necessary corporate action and do not and
will not (i) constitute an Event of Default (as defined in the NationsBank
Agreement) under the NationsBank Agreement, (ii) conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject except for any such conflict,
breach, default or Repayment Event which would not, either singly or in the
aggregate, have a Material Adverse Effect, or (iii) result in any violation
of the provisions of the charter or by-laws of the Company or any of its
subsidiaries or any applicable law, statute, rule or regulation, or any
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any of its
subsidiaries.
(x) Regulatory Approvals. No consent, approval, authorization, order or
decree of any court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by this
Agreement or in connection with the sale of Notes hereunder, except such as
have been obtained or rendered, as the case may be, or as may be required
under state securities laws.
7
<PAGE>
(xi) Legal Proceedings. Except as may be included or incorporated by
reference in the Registration Statement and the Prospectus, there is no
action, suit, proceeding, inquiry or investigation before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the Company
or any of its subsidiaries, which might reasonably be expected to result in
any Material Adverse Change or materially and adversely affect the
consummation of this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of which
any of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Change.
(xii) Contracts. There are no contracts or documents of the Company or
any of its subsidiaries which are required to be filed as exhibits to the
Registration Statement, the Prospectus or the documents incorporated by
reference therein by the 1933 Act, the 1933 Act Regulations, the 1934 Act
or the 1934 Act Regulations which have not been so filed.
(xiii) No Violation. Neither the Company nor any of its subsidiaries is
in violation of any law, statute, ordinance, governmental rule or
regulation or court decree which violation, either singly or together with
any other violation, would have a Material Adverse Effect.
(xiv) Licenses. The Company and its subsidiaries possess such
certificates, authorities, permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure to possess or comply with any such Governmental License would not,
either singly or in the aggregate, have a Material Adverse Effect; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so
to comply would not, either singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and effect
would not have, either singly or in the aggregate, a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, either singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(xv) Trademarks; Service Marks. To the extent applicable, the Company
and its subsidiaries own or possess, or can acquire on reasonable terms,
the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "patent
8
<PAGE>
and proprietary rights") presently employed by them in connection with the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any patent or proprietary rights or of any facts or circumstances which
would render any patent and proprietary rights invalid or inadequate to
protect the interest of the Company or any of its subsidiaries therein, and
which infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, either singly or in the
aggregate, would result in any Material Adverse Change.
(xvi) Labor Matters. There is no existing labor dispute with the
employees of the Company or any of its subsidiaries that would have, either
singly or in the aggregate, a Material Adverse Effect.
(xvii) Properties. Except as otherwise disclosed in the Prospectus: (i)
the Company and its subsidiaries have good and marketable title to all
properties and assets (or a valid first lien as to mortgaged properties)
described in the Prospectus as being owned (or mortgaged) by them, or
reflected in the most recent consolidated balance sheet of the Company
contained in the Prospectus; (ii) all liens, charges, claims, restrictions
or encumbrances on or affecting the properties and assets of the Company or
any of its subsidiaries which are required to be disclosed in the
Prospectus are disclosed therein; (iii) no person or entity, other than
tenants under the leases or guarantors thereof pursuant to which the
Company and its subsidiaries lease all or a portion of their properties,
has an option or right of first refusal or any other right to purchase any
of such properties; (iv) each of the properties of the Company and its
subsidiaries, at the time such property was acquired or at the time the
loan by the Company with respect to such property was made, had access to
public rights of way, either directly or through insured easements; (v)
each of such properties, at the time such property was acquired or at the
time the loan by the Company with respect to such property was made, was
served by all public utilities necessary for the operations on such
property in sufficient quantities for such operations; (vi) each of such
properties complies with all applicable codes and zoning and subdivision
laws and regulations, except for such failures to comply which would not,
either singly or in the aggregate, have a Material Adverse Effect; (vii)
the real property leases and equipment leases, if any, relating to each of
such properties are in full force and effect, except where the failure to
be in full force and effect would not, singly or in the aggregate, have a
Material Adverse Effect; and (viii) there is no pending or threatened
condemnation, zoning change, or other proceeding or action that will in any
manner affect the size of, use of, improvements on, construction on or
access to the properties of the Company and its subsidiaries, except such
proceedings or actions which would not, either singly or in the aggregate,
have a Material Adverse Effect.
(xviii) Environmental Matters. Neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign laws
or regulations relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata)
9
<PAGE>
or wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), except such violations as would not, either singly or in the
aggregate, have a Material Adverse Effect, and there are no events or
circumstances that could form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to any Hazardous Materials or the violation of any
Environmental Laws, which, either singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(xix) Taxes. The Company and its subsidiaries have filed all federal,
state, local and foreign tax returns that are required to be filed or have
duly requested extensions thereof and have paid all taxes required to be
paid by any of them and any related assessments, fines or penalties, except
for any such tax, assessment, fine or penalty that is being contested in
good faith and by appropriate proceedings; and adequate charges, accruals
and reserves have been provided for in the financial statements referred to
in Section 2(a)(vi) above in respect of all federal, state, local and
foreign taxes for all periods as to which the tax liability of the Company
or any of its subsidiaries has not been finally determined or remains open
to examination by applicable taxing authorities.
(xx) Accounting Matters. The Company and its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general and specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorizations; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxi) Company's Securities. The Company and its subsidiaries have not
(i) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Notes or (ii) (A)
sold, bid for, purchased or paid anyone (other than, to the extent
applicable, payments made by the Company pursuant to the terms of, and in
accordance with, the Company's dividend reinvestment plan) any compensation
for soliciting purchases of, the Notes, or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company.
(xxii) Legal Status. The Company has been and is organized in
conformity with the requirements for qualification and taxation as a real
estate
10
<PAGE>
investment trust ("REIT") under the Code, and its method of operation has
at all times enabled, and its proposed method of operation will enable, the
Company to qualify as a REIT under the Code.
(xxiii) Title Insurance. The Company and each of its subsidiaries has
title insurance on all real property described in the Prospectus as being
owned (or held under a ground lease) or financed by any of them in an
amount at least equal to the cost of acquisition of such property or the
original principal amount of the loan provided by any of them, as the case
may be, and each such property is insured by extended coverage hazard and
casualty insurance in an amount not less than 90% of the full replacement
cost of the improvements located thereon (exclusive of excavation and
foundations), except for such properties which are covered by insurance in
an amount less than 90%, the total loss of which would not have, either
singly or in the aggregate, a Material Adverse Effect, and there are in
effect for such properties and assets insurance policies covering risks and
in amounts that are commercially reasonable for such types of properties
and assets and that are consistent with the types and amounts of insurance
typically maintained by prudent owners of similar properties or assets and
all such insurance is in full force and effect, and to the extent any of
such properties are insured with rental guaranty insurance, such insurance
is in full force and effect and the Company is named as an insured on all
policies required under the leases for such properties.
(xxiv) Investment Company Act. Neither the Company, nor any of its
subsidiaries, is, and upon the issuance and sale of the Notes as herein
contemplated and the application of the net proceeds therefrom, will be, an
"investment company" or an entity "controlled" by an "investment company"
as such terms are defined in the Investment Company Act of 1940, as amended
(the "1940 Act").
(xxv) Commodity Exchange Act. The Notes, when issued, authen- ticated
and delivered pursuant to the provisions of this Agreement and the
Indenture, will be excluded or exempted under the provisions of the
Commodity Exchange Act.
(xxvi)Doing Business with Cuba. The Company has complied with, and is
and will be in compliance with, the provisions of Florida H.B. 1771,
codified as Section 517.075 of the Florida Statutes, 1987, as amended, and
all regulations promulgated thereunder relating to issuers doing business
in Cuba.
(xxvii) Ratings. The Notes are rated Baa3 by Moody's Investors Service,
Inc. and BBB- by Standard & Poor's Ratings Group.
(b) Additional Certifications. Any certificate signed by any director or
officer of the Company and delivered to one or more Agents or to counsel for the
Agents in connection with an offering of Notes to one or more Agents as
principal or through an Agent as agent shall be deemed a representation and
warranty by the Company to such Agent or Agents as to the matters covered
thereby on the date of such certificate and at each Representation Date
subsequent thereto.
11
<PAGE>
3. Purchases as Principal; Solicitations as Agent.
(a) Purchases as Principal. Unless otherwise agreed by an Agent and the
Company, Notes shall be purchased by one or more Agents as principal in
accordance with terms agreed upon by such Agent or Agents and the Company (which
terms, unless otherwise agreed, shall, to the extent applicable, include those
terms specified in Exhibit A hereto and be agreed upon orally, with written
confirmation prepared by such Agent or Agents and mailed to the Company). An
Agent's commitment to purchase Notes as principal shall be deemed to have been
made on the basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein set forth.
Unless the context otherwise requires, references herein to "this Agreement"
shall include the agreement of one or more Agents to purchase Notes from the
Company as principal. Each purchase of Notes, unless otherwise agreed, shall be
at a discount from the principal amount of each such Note equivalent to the
applicable commission set forth in Schedule A hereto. The Agents may engage the
services of any other broker or dealer in connection with the resale of the
Notes purchased by them as principal and may allow all or any portion of the
discount received in connection with such purchases from the Company to such
brokers and dealers. At the time of each purchase of Notes by one or more Agents
as principal, such Agent or Agents shall specify the requirements for the
stand-off agreement, officers' certificate, opinions of counsel and comfort
letter pursuant to Sections 4(k), 7(b), 7(c) and 7(d) hereof.
(b) Solicitations as Agent. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed by the Company and an Agent, such Agent, as an agent of the
Company, will use its reasonable efforts to solicit offers to purchase the Notes
upon the terms and conditions set forth in the Prospectus. The Agents are not
authorized to appoint sub-agents with respect to Notes sold through them as
agent. All Notes sold through an Agent as agent will be sold at 100% of their
principal amount, less the applicable discount referred to in the last paragraph
of this subsection (b), unless otherwise agreed to by the Company and such
Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Notes through an Agent, as agent, commencing at
any time for any period of time or permanently. As soon as practicable after
receipt of instructions from the Company, such Agent will suspend solicitation
of purchases from the Company until such time as the Company has advised such
Agent that such solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent as set
forth in Schedule A hereto.
(c) Administrative Procedures. The purchase price, interest rate or
formula, maturity date and other terms of the Notes (as applicable) specified in
Exhibit A hereto shall be agreed upon by the Company and the applicable Agent or
Agents and specified in a pricing supplement to the Prospectus (each, a "Pricing
Supplement") to be prepared in connection with each sale of Notes. Except as may
be otherwise specified in the applicable Pricing Supplement, the Notes will be
issued in denominations of U.S. $1,000 or any larger amount that is an integral
12
<PAGE>
multiple of U.S. $1,000. Administrative procedures with respect to the sale of
Notes shall be agreed upon from time to time by the Company, the Agents and the
Trustee (the "Procedures"). The Agents and the Company agree to perform, and the
Company agrees to cause the Trustee to agree to perform, their respective duties
and obligations specifically provided to be performed by them in the Procedures.
4. Covenants of the Company.
The Company covenants with the Agents as follows:
(a) Notice of Certain Events. The Company will notify the Agents
immediately, and confirm such notice in writing, of (i) the effectiveness of any
amendment to the Registration Statement, (ii) the transmittal to the SEC for
filing of any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or any document to be filed pursuant to the 1934
Act (other than any amendment, supplement or document relating solely to
securities other than the Notes), (iii) the receipt of any comments from the SEC
with respect to the Registration Statement or the Prospectus, (iv) any request
by the SEC for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (v) the issuance by
the SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose and (vi) any
change in the rating assigned by any nationally recognized statistical rating
organization to any debt securities of the Company or the public announcement by
any nationally recognized statistical rating organization that it has under
surveillance or review, with possible negative implications, its rating of any
debt securities of the Company. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) Notice of Certain Proposed Filings. The Company will give the
Agents advance notice of its intention to file or prepare any additional
registration statement with respect to the registration of additional Notes, any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus (other than any Annual Report on Form 10-K or Quarterly Report on
Form 10-Q, or an amendment or supplement providing solely for a change in the
interest rate or formula applicable to the Notes or relating solely to the
issuance and/or offering of securities other than the Notes), whether by the
filing of documents pursuant to the 1934 Act or the 1933 Act or otherwise, and
will furnish to the Agents copies of any such amendment or supplement or other
documents proposed to be filed or used a reasonable time in advance of such
proposed filing or use, as the case may be, and will not file any such amendment
or supplement or other documents in a form to which the Agents or counsel for
the Agents shall reasonably object.
(c) Copies of the Registration Statement and the Prospectus. The
Company will deliver to the Agents as many signed and conformed copies of the
Registration Statement (as originally filed) and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated by reference in the Prospectus) as the Agents reasonably
request. The Company will furnish to the Agents as many copies of the Prospectus
(as amended or supplemented) as the Agents reasonably request so long as the
13
<PAGE>
Agents are required to deliver a Prospectus in connection with sales or
solicitations of offers to purchase the Notes.
(d) Preparation of Pricing Supplements. The Company will prepare, with
respect to any Notes to be sold to or through one or more Agents pursuant to
this Agreement, a Pricing Supplement with respect to such Notes in a form
previously approved by the Agents and will file such Pricing Supplement pursuant
to Rule 424(b)(2) under the 1933 Act not later than the close of business of the
SEC on the second business day after the date on which such Pricing Supplement
is first used.
(e) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (l) of this Section, if at any time during the term of
this Agreement any event shall occur or condition exist as a result of which it
is necessary, in the opinion of counsel for the Agents or counsel for the
Company, to amend or supplement the Prospectus in order that the Prospectus will
not include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time the Prospectus is delivered to a
purchaser, or if it shall be necessary, in the opinion of either such counsel,
to amend or supplement the Registration Statement or the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company shall give immediate notice, confirmed in writing, to the Agents to
cease the solicitation of offers to purchase the Notes in their capacity as
agents and to cease sales of any Notes they may then own as principal, and the
Company will promptly amend the Registration Statement and the Prospectus,
whether by filing documents pursuant to the 1934 Act or the 1933 Act or
otherwise, as may be necessary to correct such untrue statement or omission or
to make the Registration Statement and Prospectus comply with such requirements.
(f) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (l) of this Section, on or prior to the date on
which there shall be released to the general public interim financial statement
information related to the Company with respect to each of the first three
quarters of any fiscal year or preliminary financial statement information with
respect to any fiscal year, the Company shall furnish such information to the
Agents, confirmed in writing, and shall cause the Prospectus to be amended or
supplemented to include or incorporate by reference financial information with
respect thereto as shall be required by the 1933 Act or the 1933 Act
Regulations.
(g) Prospectus Revisions -- Audited Financial Information. Except as
otherwise provided in subsection (l) of this Section, on or prior to the date on
which there shall be released to the general public financial information
included in or derived from the audited financial statements of the Company for
the preceding fiscal year, the Company shall furnish such information to the
Agents, confirmed in writing, and shall cause the Registration Statement and the
Prospectus to be amended, whether by the filing of documents pursuant to the
1934 Act or the 1933 Act or otherwise, to include or incorporate by reference
such audited financial statements and the report or reports, and consent or
consents to such inclusion or incorporation by reference, of the independent
accountants with respect thereto, as well as such
14
<PAGE>
other information and explanations as shall be necessary for an understanding of
such financial statements or as shall be required by the 1933 Act or the 1933
Act Regulations.
(h) Earnings Statements. The Company will make generally available to
its security holders as soon as practicable, but not later than 90 days after
the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations) covering
each twelve month period beginning, in each case, not later than the first day
of the Company's fiscal quarter next following the "effective date" (as defined
in such Rule 158) of the Registration Statement with respect to each sale of
Notes.
(i) Blue Sky Qualifications. The Company will endeavor, in cooperation
with the Agents, to qualify the Notes for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States as
the Agents may designate, and will maintain such qualifications in effect for as
long as may be required for the distribution of the Notes; provided, however,
that the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified. The Company will file such statements and reports as may
be required by the laws of each jurisdiction in which the Notes have been
qualified as above provided. The Company will promptly advise the Agents of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Notes for sale in any such state or jurisdiction or the
initiating or threatening of any proceeding for such purpose.
(j) 1934 Act Filings. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act in
connection with sales of the Notes, will file all documents required to be filed
with the SEC pursuant to Sections 13, 14 or 15(d) of the 1934 Act within the
time periods prescribed by the 1934 Act and the 1934 Act Regulations.
(k) Stand-Off Agreement. If specified by the applicable Agent or Agents
in connection with a purchase of Notes from the Company as principal, between
the date of the agreement to purchase such Notes and the Settlement Date with
respect to such purchase, the Company will not, without the prior written
consent of such Agent or Agents, offer or sell, grant any option for the sale
of, or enter into any agreement to sell, any debt securities of the Company
(other than the Notes that are to be sold pursuant to such agreement or
commercial paper in the ordinary course of business).
(l) Suspension of Certain Obligations. The Company shall not be
required to comply with the provisions of subsections (e), (f) or (g) of this
Section during any period from the time (i) the Agents shall have suspended
solicitation of purchases of the Notes in their capacity as agents pursuant to a
request from the Company and (ii) no Agent shall then hold any Notes purchased
as principal pursuant hereto, until the time the Company shall determine that
solicitation of purchases of the Notes should be resumed or an Agent shall
subsequently purchase Notes from the Company as principal.
5. Conditions of Obligations.
15
<PAGE>
The obligations of the Agents to purchase Notes from the Company as
principal and to solicit offers to purchase Notes as agent of the Company, and
the obligations of any purchasers of Notes sold through an Agent as agent, will
be subject to the accuracy of the representations and warranties on the part of
the Company herein and to the accuracy of the statements of the Company's
directors or officers made in any certificate furnished pursuant to the
provisions hereof, to the performance and observance by the Company of all its
covenants and agreements herein contained and to the following additional
conditions precedent:
(a) Legal Opinions. On the date hereof, the Agents shall have received the
following legal opinions, dated as of the date hereof and in form and substance
satisfactory to the Agents:
(1) Opinion of Company Counsel. The favorable opinion of
Kutak Rock, counsel to the Company, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) The Company has the corporate power and authority
to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and
perform its obligations under this Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in
Arizona and in each other jurisdiction in which such
qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except, in
the case of jurisdictions other than Arizona, where the
failure to so qualify or be in good standing would not,
either singly or in the aggregate, have a Material Adverse
Effect.
(iv) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own,
lease and operate its properties and conduct its business,
and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of its
business, except where the failure to so qualify or to be in
good standing would not, either singly or in the aggregate,
have a Material Adverse Effect; and all of the issued and
outstanding capital stock of each such subsidiary has been
duly authorized and validly issued, is fully paid and
non-assessable, and, to the best of their knowledge and
information, is owned directly by the Company, free and clear
of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
16
<PAGE>
(v) This Agreement has been duly authorized, executed
and delivered by the Company.
(vi) The Indenture has been duly authorized, executed
and delivered by the Company and (assuming the Indenture has
been duly authorized, executed and delivered by the Trustee)
constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with
its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting enforcement of creditors'
rights generally or by general equity principles.
(vii) The Notes, in the form(s) certified by the
Company as of the date hereof, have been duly authorized for
issuance, offer and sale pursuant to this Agreement and the
Indenture and, assuming they are issued, authenticated and
delivered pursuant to the provisions of this Agreement and
the Indenture against payment of the consideration therefor,
will constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with
their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting enforcement of creditors'
rights generally or by general equity principles; and the
Notes will be entitled to the benefits of the Indenture.
(viii) The Notes and the Indenture conform in all
material respects to the statements relating thereto in the
Prospectus; and the statements in the Prospectus under the
captions "Description of Notes" and "Description of Debt
Securities," insofar as they purport to summarize certain
provisions of documents specifically referred to therein, are
accurate summaries of such provisions in all material
respects.
(ix) The Indenture has been duly qualified under the
1939 Act.
(x) The Registration Statement has been declared
effective by the SEC under the 1933 Act and, to the best of
such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued
under the 1933 Act or proceedings therefor initiated or
threatened by the SEC.
(xi) The Registration Statement and the Prospectus,
excluding the documents incorporated by reference therein, as
of their respective effective or issue dates (other than the
financial statements and schedules and other financial or
statistical data included or incorporated by reference
therein and the Trustee's Statement of Eligibility on Form
T-1 (the "Form T-1"), as to which no opinion need be
rendered) comply as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
17
<PAGE>
(xii) Each document filed pursuant to the 1934 Act
(other than the financial statements and schedules and other
financial or statistical data included or incorporated by
reference therein) and incorporated by reference in the
Prospectus complied when so filed as to form in all material
respects with the 1934 Act and the 1934 Act Regulations.
(xiii) The Notes, in the form(s) certified by the
Company as of the date hereof, when issued, authenticated and
delivered pursuant to the provisions of this Agreement and
the Indenture, will be excluded or exempted from the
provisions of the Commodity Exchange Act.
(xiv) Neither the Company nor any of its subsidiaries
is required to be registered under the 1940 Act.
(xv) No consent, approval, authorization, order or
decree of any court or governmental authority or agency is
required that has not been obtained in connection with the
consummation by the Company of the transactions contemplated
by this Agreement or the Indenture, except such as have been
obtained or rendered, as the case may be, or as may be
required under state securities laws.
(xvi) The information contained in the Prospectus under
the captions "Certain United States Federal Income Tax
Considerations" and "Certain Federal Income Tax
Considerations," to the extent that such information
constitutes matters of law, summaries of legal matters or
legal conclusions, has been reviewed by such counsel and is
correct.
(xvii) To the best of their knowledge and information,
there is not pending, and the Company has not received any
notice of any threatened, action, suit, proceeding, inquiry
or investigation, to which the Company or any of its
subsidiaries is a party, or to which the property of the
Company or any of its subsidiaries is subject, before or
brought by any court or governmental agency or body, which
might reasonably be expected to result in any Material
Adverse Change, or which might reasonably be expected to
materially and adversely affect the properties or assets
thereof or the consummation of this Agreement or the
performance by the Company of its obligations hereunder; and
all pending legal or governmental proceedings to which the
Company or any of its subsidiaries is a party or that affect
any of their respective properties that are not described in
the Prospectus, including ordinary routine litigation
incidental to the business, could not reasonably be expected
to result in a Material Adverse Change.
(xviii) To the best of such counsel's knowledge,
neither the Company nor its subsidiaries are in violation of
their charter or bylaws; and the Company and its subsidiaries
are in compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes in the jurisdictions
in which they are
18
<PAGE>
conducting their business; the execution, delivery and
performance of this Agreement, the Indenture and the Notes and
the consummation of the transactions contemplated herein and
therein and compliance by the Company with its obligations
hereunder and thereunder will not (i) constitute an Event of
Default (as defined in the NationsBank Agreement) under the
NationsBank Agreement, or (ii) conflict with or constitute a
breach of, or default or Repayment Event under or result in
the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its
subsidiaries or, to the best of their knowledge and
information, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement
or instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any of
its subsidiaries is subject, except in the case of (i) for any
such conflict, breach, default or Repayment Event which would
not, either singly or in the aggregate, have a Material
Adverse Effect, nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or
any of its subsidiaries, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, assets or
operations.
(xix) The Company has been and is organized in
conformity with the requirements for qualification and
taxation as a REIT under the Code and its method of operation
has at all times enabled, and its proposed method of
operation will enable, the Company to qualify as a REIT under
the Code.
(2) Opinion of Counsel to the Agents. The favorable opinion
of Latham & Watkins, counsel to the Agents, covering the matters
referred to in subsection (a)(1) under the subheadings (i), (v) to
(xi), inclusive, above.
(3) Disclosure Documents. In giving their opinions required
by subsection (a)(1) and (a)(2), respectively, of this Section 5,
Kutak Rock and Latham & Watkins shall each additionally state that
nothing has come to their attention that led them to believe that the
Registration Statement (except for the financial statements and
schedules and other financial or statistical data included or
incorporated by reference therein and the Form T-1, as to which such
counsel need make no statement), at the time it became effective (or,
if an amendment to the Registration Statement or an Annual Report on
Form 10-K has been filed by the Company with the SEC subsequent to the
effectiveness of the Registration Statement, then at the time such
amendment became effective or at the time of the most recent such
filing, as the case may be) or on the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading or that the
Prospectus (except for the financial statements and schedules and
other financial or statistical data included or
19
<PAGE>
incorporated by reference therein, as to which such counsel need make
no statement), on the date hereof (or, if such opinion is being
delivered in connection with the purchase of Notes from the Company by
one or more Agents as principal pursuant to Section 7(c) hereof, at the
date of any agreement by such Agent or Agents to purchase Notes as
principal and at the Settlement Date with respect thereto, as the case
may be) included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading.
(b) Officer's Certificate. At the date hereof, the Agents shall have
received a certificate of the Chief Executive Officer, President or Vice
President and the principal financial officer or principal accounting officer of
the Company, dated as of the date hereof, to the effect that (i) since the
respective dates as of which information is given in the Prospectus or since the
date of any agreement by one or more Agents to purchase Notes from the Company
as principal, there has not been any Material Adverse Change, (ii) the
representations and warranties of the Company contained in Section 2 hereof are
true and correct with the same force and effect as though expressly made at and
as of the date of such certificate and (iii) the Company has performed or
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the date of such certificate. As used in
this Section 5(b), the term "Prospectus" means the Prospectus in the form first
provided to the applicable Agent or Agents for use in confirming sales of the
Notes.
(c) Comfort Letter of Arthur Andersen & Co. On the date hereof, the
Agents shall have received a letter from Arthur Andersen & Co., dated as of the
date hereof and in form and substance satisfactory to the Agents, to the effect
that:
(i) They are independent accountants with respect to the Company and
its subsidiaries within the meaning of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations.
(ii) It is their opinion that the consolidated financial statements
and supporting schedule(s) of the Company and its subsidiaries included or
incorporated by reference in the Registration Statement and the Prospectus
and covered by their opinions therein comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act, the
1933 Act Regulations, the 1934 Act and the 1934 Act Regulations.
(iii) They have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial
statements of the Company and its indicated subsidiaries, a reading of the
minute books of the Company and such subsidiaries since the end of the most
recent fiscal year with respect to which an audit report has been issued,
inquiries of and discussions with certain officials of the Company and such
subsidiaries responsible for financial and accounting matters with respect
to the unaudited consolidated financial statements included or incorporated
by reference in the Registration Statement and Prospectus and the latest
available interim unaudited financial statements of the Company and its
subsidiaries, and such other inquiries and procedures as may be specified
in such letter, and on the basis of such inquiries and
20
<PAGE>
procedures, nothing came to their attention that caused them to believe
that: (A) any material modifications should be made to the unaudited
consolidated financial statements of the Company and its subsidiaries
included or incorporated by reference in the Registration Statement and
Prospectus for them to be in conformity with generally accepted
accounting principles in the United States, (B) the unaudited
consolidated financial statements of the Company and its subsidiaries
included or incorporated by reference in the Registration Statement and
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act and the 1934 Act
Regulations or (C) at a specified date not more than three days prior
to the date of such letter, there was any change in the consolidated
capital stock, any increase in consolidated liabilities or any decrease
in the consolidated total assets or shareholder's equity of the Company
and its subsidiaries, in each case as compared with the amounts shown
on the most recent consolidated balance sheet of the Company and its
subsidiaries included or incorporated by reference in the Registration
Statement and Prospectus or, during the period from the date of such
balance sheet to a specified date not more than three days prior to the
date of such letter, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated revenues,
net income, net income per share or funds from operations of the
Company and its subsidiaries, except in all instances for changes,
increases or decreases that the Registration Statement and Prospectus
disclose have occurred or may occur or except for such exceptions
enumerated in such letter as shall have been agreed to by the Agents
and the Company.
(iv) In addition to the audit referred to in their opinions and
the limited procedures referred to in clause (iii) above, they have
carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information
which are included or incorporated by reference in the Registration
Statement and the Prospectus and which are specified by the Agents, and
have found such amounts, percentages and financial information to be in
agreement with the relevant accounting, financial and other records of
the Company and its subsidiaries identified in such letter.
(d) Other Documents. On the date hereof and on each Settlement Date,
counsel to the Agents shall have been furnished with such documents and opinions
as such counsel may reasonably require for the purpose of enabling such counsel
to pass upon the issuance and sale of Notes as herein contemplated and related
proceedings, or in order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of Notes as herein contemplated shall be satisfactory in
form and substance to the Agents and to counsel to the Agents.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the applicable Agent or Agents by notice to the Company at any time and any
such termination shall be without liability of any party to any other party,
except that the covenant regarding provision of an earnings statement set forth
in Section 4(h) hereof, the provisions concerning payment of expenses
21
<PAGE>
under Section 10 hereof, the indemnity and contribution agreement set forth in
Sections 8 and 9 hereof, the provisions concerning the representations,
warranties and agreements to survive delivery of Section 11 hereof, the
provisions relating to governing law and forum set forth in Section 14 and the
provisions relating to parties set forth in Section 15 hereof shall remain in
effect.
6. Delivery of and Payment for Notes Sold through an Agent.
Delivery of Notes sold through an Agent as agent shall be made by the
Company to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. In the event that a purchaser shall
fail either to accept delivery of or to make payment for a Note on the date
fixed for settlement, such Agent shall promptly notify the Company and deliver
such Note to the Company and, if such Agent has theretofore paid the Company for
such Note, the Company will promptly return such funds to such Agent. If such
failure occurred for any reason other than default by such Agent in the
performance of its obligations hereunder, the Company will reimburse such Agent
on an equitable basis for its loss of the use of the funds for the period such
funds were credited to the Company's account.
7. Additional Covenants of the Company.
The Company covenants and agrees with the Agents that:
(a) Reaffirmation of Representations and Warranties. Each acceptance by
the Company of an offer for the purchase of Notes (whether to one or more Agents
as principal or through an Agent as agent), and each delivery of Notes (whether
to one or more Agents as principal or through an Agent as agent), shall be
deemed to be an affirmation that the representations and warranties of the
Company contained in this Agreement and in any certificate theretofore delivered
to the Agents pursuant hereto are true and correct at the time of such
acceptance or sale, as the case may be, and an undertaking that such
representations and warranties will be true and correct at the time of delivery
to such Agent or Agents or to the purchaser or its agent, as the case may be, of
the Note or Notes relating to such acceptance or sale, as the case may be, as
though made at and as of each such time (and it is understood that such
representations and warranties shall relate to the Registration Statement and
Prospectus as amended and supplemented to each such time).
(b) Subsequent Delivery of Certificates. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for a change in the interest
rate or formula applicable to the Notes or relating solely to the issuance
and/or offering of securities other than the Notes), (ii) there is filed with
the SEC any document incorporated by reference into the Prospectus (other than
any Current Report on Form 8-K relating solely to the issuance and/or offering
of securities other than the Notes, unless the Agents shall otherwise specify),
(iii) (if required in connection with the purchase or Notes or similar matters
from the Company by one or more Agents as principal) the Company sells Notes to
such Agent or Agents as principal or (iv) the Company sells Notes in a form not
previously certified to the Agents by the Company, the Company shall furnish or
cause to be furnished to the Agent(s), forthwith a certificate dated
22
<PAGE>
the date of filing with the SEC of such supplement or document, the date of
effectiveness of such amendment, or the date of such sale, as the case may be,
in form satisfactory to the Agent(s) to the effect that the statements contained
in the certificate referred to in Section 5(b) hereof which were last furnished
to the Agents are true and correct at the time of such amendment, supplement,
filing or sale, as the case may be, as though made at and as of such time
(except that such statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such time) or, in
lieu of such certificate, a certificate of the same tenor as the certificate
referred to in Section 5(b) hereof, modified as necessary to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such certificate.
(c) Subsequent Delivery of Legal Opinions. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for a change in the interest
rate or formula applicable to the Notes or, unless the Agents shall otherwise
specify, relating solely to the issuance and/or offering of securities other
than the Notes), (ii) there is filed with the SEC any document incorporated by
reference into the Prospectus (other than any Current Report on Form 8-K
relating solely to the issuance and/or offering of securities other than the
Notes, unless the Agents shall otherwise specify), (iii) (if required in
connection with the purchase of Notes from the Company by one or more Agents as
principal) the Company sells Notes to such Agent or Agents as principal or (iv)
the Company sells Notes in a form not previously certified to the Agents by the
Company, the Company shall furnish or cause to be furnished forthwith to the
Agent(s) and to counsel to the Agents the written opinion of Kutak Rock, counsel
to the Company, or other counsel satisfactory to the Agent(s), dated the date of
filing with the SEC of such supplement or document, the date of effectiveness of
such amendment, or the date of such sale, as the case may be, in form and
substance satisfactory to the Agent(s), of the same tenor as the opinions
referred to in Sections 5(a)(1) and 5(a)(2) hereof, but modified, as necessary,
to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such opinion or, in lieu of such
opinion, counsel last furnishing such opinion to the Agents shall furnish the
Agent(s) with a letter substantially to the effect that the Agent(s) may rely on
such last opinion to the same extent as though it was dated the date of such
letter authorizing reliance (except that statements in such last opinion shall
be deemed to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such letter authorizing reliance);
provided, however, that counsel need not render the opinions required under
Section 5(a)(xix) upon the filing of any Quarterly Report on Form 10-Q which
does not include information relating to such tax matters, unless the Agents
shall otherwise specify.
(d) Subsequent Delivery of Comfort Letters. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information (other than by an amendment or
supplement relating solely to the issuance and/or offering of securities other
than the Notes), (ii) there is filed with the SEC any document incorporated by
reference into the Prospectus which contains additional financial information,
or (iii) (if required in connection with the purchase of Notes from the Company
by one or more Agents as principal) the Company sells Notes to such Agent or
Agents as principal, the Company shall cause Arthur Andersen & Co. forthwith to
furnish to the Agent(s) a letter, dated
23
<PAGE>
the date of effectiveness of such amendment, supplement or document with the
SEC, or the date of such sale, as the case may be, in form satisfactory to the
Agent(s), of the same tenor as the portions of the letter referred to in clauses
(i) and (ii) of Section 5(c) hereof but modified to relate to the Registration
Statement and Prospectus as amended and supplemented to the date of such letter,
and of the same general tenor as the portions of the letter referred to in
clauses (iii) and (iv) of said Section 5(c) with such changes as may be
necessary to reflect changes in the financial statements and other information
derived from the accounting records of the Company.
8. Indemnification.
(a) Indemnification of the Agents. The Company agrees to indemnify and
hold harmless each Agent and each person, if any, who controls such Agent within
the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in
the Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, unless such untrue statement or omission or
such alleged untrue statement or omission was made in reliance upon and
in conformity with written information furnished to the Company by the
Agents expressly for use in the Registration Statement or the
Prospectus;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever (including the fees
and disbursements of counsel chosen by such Agent), as incurred,
reasonably incurred in investigating, preparing or defending against
any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above.
(b) Indemnification of the Company. Each Agent agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against any and all loss, liability,
claim, damage and expense described in the
24
<PAGE>
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto).
(c) General. Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action with
counsel chosen by it (who shall not, except with the consent of the indemnified
party, be counsel to such indemnified party). In no event shall the indemnifying
parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) For purposes of this Section 8, all references to the Registration
Statement, the Prospectus, or any amendment or supplement to any of the
foregoing, shall be deemed to include, without limitation, any electronically
transmitted copies thereof, including, without limitation, any copies filed with
the Commission pursuant to EDGAR.
9. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 8 hereof
is for any reason held to be unavailable to or insufficient to hold harmless the
indemnified parties although applicable in accordance with its terms, the
Company and the Agents shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by the Company and the Agents, as incurred, in such
proportions that each Agent is responsible for that portion represented by the
percentage that the commission or underwriting discount received by such Agent
bears to the total sales price from the sale of the Notes sold to or through
such Agent that were the subject of the claim for indemnification, and the
Company is responsible for the balance; provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding the provision of this Section
9, no Agent shall be required to contribute any amount in excess of the discount
or commission received by such Agent from the sale of the Notes that were the
subject of the claim for indemnification. For purposes of this Section, each
person, if any, who controls an Agent within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as such Agent, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act shall have the same rights to contribution as the
Company.
25
<PAGE>
10. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The preparation and filing of the Registration Statement and all
amendments thereto and the Prospectus and any amendments or supplements thereto;
(b) The preparation, filing and reproduction of this Agreement;
(c) The preparation, printing, issuance and delivery of the Notes,
including any fees and expenses relating to the eligibility and issuance of
Notes in book-entry form;
(d) The fees and disbursements of the Company's accountants and counsel, of
the Trustee and its counsel, and of any calculation agent or exchange rate
agent;
(e) The reasonable fees and disbursements of counsel to the Agents incurred
in connection with the establishment of the program relating to the Notes and
incurred from time to time in connection with the transactions contemplated
hereby;
(f) The qualification of the Notes under state securities laws in
accordance with the provisions of Section 4(i) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Agents in connection
therewith and in connection with the preparation of any Blue Sky or Legal
Investment Survey;
(g) The printing and delivery to the Agents in quantities as hereinabove
stated of copies of the Registration Statement and any amendments thereto, and
of the Prospectus and any amendments or supplements thereto, and the delivery by
the Agents of the Prospectus and any amendments or supplements thereto in
connection with solicitations or confirmations of sales of the Notes;
(h) The preparation, reproducing and delivery to the Agents of copies of
the Indenture and all amendments, supplements and modifications thereto;
(i) Any fees charged by nationally recognized statistical rating
organizations for the rating of the Notes;
(j) The fees and expenses incurred in connection with any listing of Notes
on a securities exchange;
(k) The fees and expenses incurred with respect to any filing with the
National Association of Securities Dealers, Inc., if any;
(l) Any advertising and other out-of-pocket expenses of the Agents incurred
with the approval of the Company; and
26
<PAGE>
(m) The cost of providing any CUSIP or other identification numbers for the
Notes.
11. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this
Agreement or in certificates of directors or officers of the Company submitted
pursuant hereto or thereto shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Agents or any
controlling person of an Agent, or by or on behalf of the Company, and shall
survive each delivery of and payment for any of the Notes.
12. Termination.
(a) Termination of this Agreement. This Agreement (excluding any
agreement by one or more Agents to purchase Notes from the Company as principal)
may be terminated for any reason, at any time by either the Company or an Agent,
as to itself, upon the giving of 30 days' written notice of such termination to
the other party hereto.
(b) Termination of Agreement to Purchase Notes as Principal. The
applicable Agent or Agents may terminate any agreement by such Agent or Agents
to purchase Notes from the Company as principal, immediately upon notice to the
Company, at any time prior to the Settlement Date relating thereto, if (i) there
has been, since the date of such agreement or since the respective dates as of
which information is given in the Prospectus, any Material Adverse Change, or
(ii) there shall have occurred any material adverse change in the financial
markets in the United States or any outbreak or escalation of hostilities or
other national or international calamity or crisis the effect of which is such
as to make it, in the judgment of such Agent or Agents, impracticable to market
the Notes or enforce contracts for the sale of the Notes, or (iii) trading in
any securities of the Company has been suspended by the SEC or a national
securities exchange, or if trading generally on either the American Stock
Exchange or the New York Stock Exchange shall have been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said exchanges or by order of the
SEC or any other governmental authority, or if a banking moratorium shall have
been declared by either Federal, New York or Arizona authorities or (iv) the
rating assigned by any nationally recognized statistical rating organization to
any debt securities of the Company as of the date of such agreement shall have
been lowered since that date or if any such rating organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any debt securities of the Company, or (v)
there shall have come to the attention of such Agent or Agents any facts that
would cause them to believe that the Prospectus, at the time it was required to
be delivered to a purchaser of Notes, included an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time of such
delivery, not misleading. As used in this Section 12(b), the term "Prospectus"
means the Prospectus in the form first provided to the applicable Agent or
Agents for use in confirming sales of the related Notes.
(c) General. In the event of any such termination, neither party will have
any liability to the other party hereto, except that (i) the Agents shall be
entitled to any commission
27
<PAGE>
earned in accordance with the third paragraph of Section 3(b) hereof, (ii) if at
the time of termination (a) any Agent shall own any Notes purchased by it as
principal with the intention of reselling them or (b) an offer to purchase any
of the Notes has been accepted by the Company but the time of delivery to the
purchaser or his agent of the Note or Notes relating thereto has not occurred,
the covenants set forth in Sections 4 and 7 hereof shall remain in effect until
such Notes are so resold or delivered, as the case may be, and (iii) the
covenant set forth in Section 4(h) hereof, the provisions of Section 10 hereof,
the indemnity and contribution agreements set forth in Sections 8 and 9 hereof,
and the provisions of Sections 11, 14 and 15 hereof shall remain in effect.
13. Notices.
Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company:
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Attention: Morton H. Fleischer
With a copy to: Dennis Ruben, Esq.
Telecopy No.: (602) 585-2225
If to the Agents:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower - 10th Floor
New York, New York 10281-1310
Attention: MTN Product Management
Telecopy No.: (212) 449-2234
NationsBanc Capital Markets, Inc.
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: MTN Product Management
Telecopy No.: (704) 388-9939
28
<PAGE>
Smith Barney Inc.
390 Greenwich Street
4th Floor
New York, New York 10013
Attention: MTN Product Manager
Telecopy No.: (212) 723-8853
or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this Section 13.
14. Governing Law; Forum.
This Agreement and all the rights and obligations of the parties shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed in such State. Any suit,
action or proceeding brought by the Company against any Agent in connection with
or arising under this Agreement shall be brought solely in the state or federal
court of appropriate jurisdiction located in the Borough of Manhattan, The City
of New York.
15. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents and the Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to in
Sections 8 and 9 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and respective successors and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Notes shall be deemed to be a
successor by reason merely of such purchase.
16. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts hereof shall
constitute a single instrument.
29
<PAGE>
If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between the Agents and the Company in accordance with its terms.
Very truly yours,
FRANCHISE FINANCE CORPORATION OF AMERICA
By: /s/ Morton H. Fleischer
___________________
Name: Morton H. Fleischer
Title: President and Chief Executive Officer
Confirmed and Accepted,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:/s/ Scott G. Primrose
_________________
By: Scott G. Primrose
Title: Authorized Signatory
SMITH BARNEY INC.
By:/s/ Frank W. Hamilton, III
______________________
By: Frank W. Hamilton, III
Title: Managing Director
NATIONSBANC CAPITAL MARKETS, INC.
By:/s/ Hendrik W. Bouhuys
__________________
By: Hendrik W. Bouhuys
Title: Director
S-1
<PAGE>
EXHIBIT A
The following terms, if applicable, shall be agreed to by one or more
Agents and the Company in connection with each sale of Notes:
Principal Amount: $_______
Interest Rate or Formula:
If Fixed Rate Note,
Interest Rate:
Default Rate:
Interest Payment Dates:
If Floating Rate Note,
Interest Rate Basis(es):
If LIBOR,
o LIBOR Reuters
o LIBOR Telerate
Index Currency:
If CMT Rate,
Designated CMT Telerate Page:
Designated CMT Maturity Index:
Index Maturity:
Spread and/or Spread Multiplier, if any:
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Reset Dates:
Interest Payment Dates:
Default Rate:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date, if any:
Fixed Interest Rate, if any:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
If Repayable:
Optional Repayment Date(s):
A-1
<PAGE>
Original Issue Date:
Stated Maturity Date:
Authorized Denomination:
Purchase Price: ___%, plus accrued interest, if any, from ___________
Settlement Date and Time:
Additional/Other Terms:
Also, in connection with the purchase of Notes from the Company by one or more
Agents as principal, agreement as to whether the following will be required:
Officers' Certificate pursuant to Section 7(b) of the Distribution
Agreement. Legal Opinions pursuant to Section 7(c) of the Distribution
Agreement. Comfort Letter pursuant to Section 7(d) of the Distribution
Agreement. Stand-off Agreement pursuant to Section 4(k) of the
Distribution Agreement.
A-2
<PAGE>
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Note equal to the principal amount of such Note multiplied by the
appropriate percentage set forth below:
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
From 9 months to less than 1 year............................. .125%
From 1 year to less than 18 months............................ .150
From 18 months to less than 2 years........................... .200
From 2 years to less than 3 years............................. .250
From 3 years to less than 4 years............................. .350
From 4 years to less than 5 years............................. .450
From 5 years to less than 6 years............................. .500
From 6 years to less than 7 years............................. .550
From 7 years to less than 10 years............................ .600
From 10 years to less than 15 years........................... .625
From 15 years to less than 20 years........................... .700
From 20 years to 30 years..................................... .750
Greater than 30 years......................................... *
- --------
* As agreed to by the Company and the applicable Agent at the time of sale.
A-3
KUTAK ROCK ATLANTA
A PARTNERSHIP KANSAS CITY
INCLUDING PROFESSIONAL CORPORATIONS LITTLE ROCK
SUITE 2900 NEW YORK
717 SEVENTEENTH STREET OKLAHOMA CITY
DENVER, COLORADO 80202-3329 OMAHA
(303) 297-2400 PHOENIX
FACSIMILE (303) 292-7799 PITTSBURGH
WASHINGTON
February 9, 1996
Franchise Finance Corporation
of America
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Re: $150,000,000 Medium-Term Notes Due Nine Months or More From Date of
Issue
Ladies and Gentlemen:
We have acted as your counsel in connection with the preparation of
the Registration Statement on Form S-3, File No. 33-62629, as amended (the
"Registration Statement"), filed by Franchise Finance Corporation of America
(the "Company") with the Securities and Exchange Commission in connection with
the registration of $500,000,000 aggregate offering price of securities,
consisting of one or more series of secured or unsecured debt securities, shares
of common stock, par value $.01 per share, and one or more series of preferred
stock, when and if authorization of the issuance of preferred stock is approved
by the Company's stockholders and the Company's Restated Certificate of
Incorporation is amended to reflect such authorization. The Registration
Statement was declared effective under the Securities Act of 1933, as amended,
on October 18, 1995. Further, we have acted as your counsel in connection with
the preparation of the Prospectus Supplement dated February 9, 1996 (the
"Prospectus Supplement"), related to the establishment of a program for the
solicitation of offers of up to $150,000,000 Medium-Term Notes Due Nine Months
or More From Date of Issue (the "Notes"). We are familiar with the proceedings
heretofore taken by the Company in connection with the authorization and
registration, and in preparation for the acceptance of offers to purchase, and
the issuance and sale, of the Notes.
For the purpose of rendering this opinion, we have examined such
corporate records, certificates and other documents of the Company, and have
made such investigations of law as we deemed necessary or appropriate and we are
familiar with the procedures proposed to be taken by the Company in connection
<PAGE>
Franchise Finance Corporation of America
February 9, 1996
Page 2
with the issuance and sale of the Notes. We have examined the Registration
Statement, the Prospectus included therein, the Prospectus Supplement and the
Indenture of Trust, dated November 21, 1995, between the Company and the
Trustee. Except as otherwise indicated herein, all terms defined in the
Registration Statement, Prospectus and Prospectus Supplement are used herein as
so defined.
We have assumed for purposes of the opinions set forth below (i) that
no Stop Orders have been issued from the date of this opinion to the
Commencement Date; (ii) that the Notes, if issued and sold, will be duly
executed, authenticated and delivered in accordance with the provisions of the
Indenture and the Distribution Agreement; and (iii) the due receipt of payment
of the purchase price specified in the applicable Pricing Supplement related to
any sale of the Notes.
On the basis of and subject to the foregoing, it is our opinion that
the Notes will, upon issuance and sale thereof in the manner referred to in the
Registration Statement and Prospectus, Prospectus Supplement, Distribution
Agreement and the applicable Pricing Supplement constitute legally valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws relating to or affecting creditors' rights generally and by general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law and will be entitled to the benefits of the
Indenture.
This opinion is given for the sole benefit of the addressee hereof and
may not be relied upon by or delivered to any other person. In addition, this
opinion relates only to the matters and the transactions specifically referred
to, and no other opinions should be implied therefrom.
Respectfully submitted,
KUTAK ROCK
EXHIBIT 99.1
OFFICERS' CERTIFICATE
OFFICERS' CERTIFICATE
The undersigned, John R. Barravecchia and Christopher H. Volk, do
hereby certify that they are the duly appointed and acting Executive Vice
President, Chief Financial Officer and Treasurer and Executive Vice President,
Chief Operating Officer and Secretary, respectively, of FRANCHISE FINANCE
CORPORATION OF AMERICA, a Delaware corporation (the "Company"). Each of the
undersigned also hereby certifies, pursuant to the Indenture, dated as of
November 21, 1995, between the Company and Norwest Bank Arizona, National
Association, as Trustee (the "Indenture"), that:
A. There is hereby established pursuant to resolutions duly adopted by
the Board of Directors of the Company on December 22, 1995, and the Executive
Committee of the Board of Directors of the Company on February 8, 1996,
Securities (as defined in the Indenture) to be issued under the Indenture, with
the following terms:
(1) The title of the Securities is "Medium-Term Notes Due Nine
Months or More From Date of Issue" (the "Notes").
(2) The limit upon the aggregate principal amount of the Notes
which may be authenticated and delivered under the Indenture (except
for Notes authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Notes pursuant to the
Indenture is $150,000,000.
(3) The principal of the Notes shall be payable as set forth
in the applicable pricing supplement (the "Pricing Supplement").
(4) Unless otherwise specified in the applicable Pricing
Supplement, the Notes will bear interest at fixed rates or at floating
rates. Notes may also be issued that do not bear interest currently.
(5) Interest on the Notes shall be payable at the close of
business on the Interest Payment Date or Dates as set forth in the
applicable Pricing Supplement.
(6) Interest on the Notes shall be computed as set forth in
the applicable Pricing Supplement and in the Prospectus Supplement
dated February 9, 1996.
(7) The principal of, premium, if any, and interest on the
Notes shall be payable by the Company in immediately available funds.
(8) The Notes are not subject to optional redemption by the
Company unless otherwise specified in the applicable Pricing
Supplement.
(9) There is no obligation of the Company to redeem or
purchase the Notes pursuant to any sinking fund or analogous
provisions or to redeem or purchase any of the
<PAGE>
Notes prior to the Stated Maturity (as defined in the Indenture) at
the option of the Holder thereof, unless otherwise specified in the
applicable Pricing Supplement.
(10) There is no provision for the conversion or exchange of the
Notes, either at the option of the Holder thereof or the Company, into
or for another security or securities of the Company.
(11) Unless otherwise specified in the applicable Pricing
Supplement, the Notes shall be issued as Global Securities (as defined
in the Indenture) and The Depository Trust Company shall be the
depositary for the Notes.
B. The forms of the Notes attached hereto as Exhibits A and B,
respectively, are approved.
C. Pursuant to the Indenture, the Trustee is appointed as Paying
Agent.
D. The foregoing forms and terms of the Notes have been established in
conformity with the provisions of the Indenture.
E. This Officers' Certificate shall constitute evidence of, and shall
be, action by the undersigned as Officers designated in the resolution
referred to in Paragraph A above, determining and setting the specific
terms of the Notes.
F. Each of the undersigned has read the Indenture and the definitions
relating thereto and has examined the resolutions referred to in paragraph
A above and the Notes and has made such examination or investigation as is
necessary to enable the undersigned to represent as to whether or not all
conditions precedent to the authentication and delivery of the Notes have
been complied with. On the basis of the foregoing, all such conditions
precedent have been complied with.
IN WITNESS WHEREOF, the undersigned have hereunto executed this
Officers' Certificate as of the 9th day of February, 1996.
FRANCHISE FINANCE CORPORATION OF
AMERICA, a Delaware corporation
By: /s/ John R. Barravecchia
-------------------------------------------------
John R. Barravecchia, Executive Vice
President, Chief Financial Officer and
Treasurer
By: /s/ Christopher H. Volk
------------------------------------------------
Christopher H. Volk, Executive Vice
President, Chief Operating Officer and
Secretary
EXHIBIT A
[FORM OF FACE OF NOTE]
If the Holder of this Note (as indicated below) is The Depository Trust
Company ("DTC") or a nominee of DTC, this Note is a global note and the
following two legends apply:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
[IF THIS SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT -- FOR
PURPOSES OF SECTIONS 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS SECURITY IS ____% OF ITS PRINCIPAL
AMOUNT, THE ISSUE DATE IS __________, 19__ [AND] THE YIELD TO MATURITY IS ____%.
[THE METHOD USED TO DETERMINE THE AMOUNT OF ORIGINAL ISSUE DISCOUNT APPLICABLE
TO THE SHORT ACCRUAL PERIOD OF __________, 19__ TO __________, 19__, IS ____% OF
THE PRINCIPAL AMOUNT OF THIS SECURITY.]]
<PAGE>
REGISTERED PRINCIPAL AMOUNT: $_____________
No. FXR-__________
CUSIP No.:________
FRANCHISE FINANCE CORPORATION OF AMERICA
MEDIUM-TERM NOTE
(Fixed Rate)
ORIGINAL ISSUE DATE: INTEREST RATE: STATED MATURITY DATE:
INTEREST PAYMENT DATE(S): DEFAULT RATE: ___%
[ ]__________and__________
[ ] Other:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE
REDUCTION: %
OPTIONAL REPAYMENT [ ] CHECK IF AN ORIGINAL
DATE(S): ISSUE DISCOUNT NOTE
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION:
[X] United States dollars [ ] $1,000 and integral
multiples thereof
[ ] Other:
ADDENDUM ATTACHED OTHER/ADDITIONAL PROVISIONS:
[ ] Yes
[ ] No
2
<PAGE>
Franchise Finance Corporation of America, a Delaware corporation (the "Company,"
which terms include any successor under the Indenture hereinafter referred to),
for value received, hereby promises to pay to_______________ , or registered
assigns, the principal sum of__________________________________ Dollars, on the
Stated Maturity Date specified above (or any Redemption Date or Repayment Date,
each as defined on the reverse hereof) (each such Stated Maturity Date,
Redemption Date or Repayment Date being hereinafter referred to as the
"Maturity" with respect to the principal repayable on such date) and to pay
interest thereon, at the Interest Rate per annum specified above, until the
principal hereof is paid or duly made available for payment, and (to the extent
that the payment of such interest shall be legally enforceable) at the Default
Rate per annum specified above on any overdue principal, premium and/or
interest. The Company will pay interest in arrears on each Interest Payment
Date, if any, specified above (each, an "Interest Payment Date"), commencing
with the first Interest Payment Date next succeeding the Original Issue Date
specified above, and at Maturity; provided, however, that if the Original Issue
Date occurs between a Regular Record Date (as defined below) and the next
succeeding Interest Payment Date, interest payments will commence on the second
Interest Payment Date next succeeding the Original Issue Date to the Holder of
this Note on the Regular Record Date with respect to such second Interest
Payment Date. Interest on this Note will be computed on the basis of a 360-day
year consisting of twelve 30-day months.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for) to, but excluding, the applicable Interest Payment
Date or the date of Maturity, as the case may be (each, an "Interest Period").
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, subject to certain exceptions described herein, be
paid to the person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the fifteenth calendar day (whether or
not a Business Day, as defined below) immediately preceding such Interest
Payment Date (the "Regular Record Date"); provided, however, that interest
payable at Maturity will be payable to the person to whom the principal hereof
and premium, if any, hereon shall be payable. Any such interest not so
punctually paid or duly provided for ("Defaulted Interest") will forthwith cease
to be payable to the Holder on any Regular Record Date, and shall be paid to the
person in whose name this Note is registered at the close of business on a
special record date (the "Special Record Date") for the payment of such
Defaulted Interest to be fixed by the Trustee hereinafter referred to, notice
whereof shall be given to the Holder of this Note by the Trustee not less than
10 calendar days prior to such Special Record Date or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which this Note may be listed, and upon such notice as may be
required by such exchange, all as more fully provided for in the Indenture.
Payments of principal of, premium, if any, and interest, if any, on
Notes issued in fully registered book-entry form will be made by the Company
through the Trustee (as defined on the reverse hereof) to the Depository Trust
Company. In the case of certificated Notes, payment of principal, premium, if
any, and interest, if any, in respect of this Note due at Maturity will be made
in immediately available funds upon presentation and surrender of this Note
(and, with
3
<PAGE>
respect to any applicable repayment of this Note, a duly completed election form
as contemplated on the reverse hereof) at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
located at Norwest Trust Company New York, 3 New York Plaza, 15th Floor, New
York, New York 10004, or at such other paying agency in the Borough of
Manhattan, The City of New York, as the Company may determine. Payment of
interest due on certificated Notes on any Interest Payment Date other than at
maturity will be made at the office or agency referred to above maintained by
the Company for such purpose or, at the option of the Company, may be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the Security Register; provided, however, that a Holder of U.S.
$10,000,000 or more in initial aggregate principal amount of Notes (whether
having identical or different terms and provisions) will be entitled to receive
interest payments on such Interest Payment Date other than at Maturity by wire
transfer of immediately available funds if appropriate wire transfer
instructions have been received in writing by the Trustee not less than 15
calendar days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such Holder.
If any Interest Payment Date or Stated Maturity Date falls on a day
that is not a Business Day, the required payment of principal, premium, if any,
and/or interest shall be made on the next succeeding Business Day with the same
force and effect as if made on the date such payment was due, and no interest
shall accrue with respect to such payment for the period from and after such
Interest Payment Date or Stated Maturity Date, as the case may be, to the date
of such payment on the next succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or executive order to close in The City of New
York.
The Company is obligated to make payment of principal, premium, if any,
and interest in respect of this Note in United States dollars.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above, in the Addendum hereto,
which further provisions shall have the same force and effect as if set forth on
the face hereof.
Notwithstanding the foregoing, if an Addendum is attached hereto or
"Other/Additional Provisions" apply to this Note as specified above, this Note
shall be subject to the terms set forth in such Addendum or such
"Other/Additional Provisions."
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature of one of its authorized signatories, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
4
<PAGE>
IN WITNESS WHEREOF, Franchise Finance Corporation of America has caused
this Note to be duly executed.
FRANCHISE FINANCE CORPORATION OF
AMERICA
By_________________________________
John R. Barravecchia, Executive
Vice President, Chief Financial
Officer, Treasurer and Assistant
Secretary
Dated:___________________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This Note is one of the Securities of the series
designated as "Medium Term Notes Due Nine Months
or More From Date of Issue," pursuant to the within-
mentioned Indenture.
NORWEST BANK ARIZONA,
NATIONAL ASSOCIATION, as Trustee
By_______________________________________
Authorized Signatory
5
<PAGE>
[FORM OF REVERSE OF NOTE]
FRANCHISE FINANCE CORPORATION OF AMERICA
MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Securities (the
"Securities") of the Company issued and to be issued under an Indenture, dated
as of November 21, 1995, as amended, modified or supplemented from time to time
(the "Indenture"), between the Company and Norwest Bank Arizona, National
Association, as Trustee (the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Note is one of
the series of Securities to be designated as "Medium-Term Notes Due Nine Months
or More From Date of Issue" (the "Notes"). All terms used but not defined in
this Note specified on the face hereof or in an Addendum hereto shall have the
meanings assigned to such terms in the Indenture.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or repayable prior to its Stated Maturity
Date.
This Note will be subject to redemption at the option of the Company on
any date on or after the Initial Redemption Date, if any, specified on the face
hereof, in whole or from time to time in part in increments of U.S. $1,000 or
the minimum Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S. $1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together with unpaid
interest accrued thereon to the date fixed for redemption (each, a "Redemption
Date"), on notice given no more than 60 nor less than 30 calendar days prior to
the Redemption Date and in accordance with the provisions of the Indenture. The
"Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof multiplied by the unpaid principal amount of this
Note to be redeemed. The Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of unpaid principal amount to be redeemed. In the event of redemption of
this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having the same terms as this Note shall be issued in the
name of the Holder hereof upon the presentation and surrender hereof.
6
<PAGE>
This Note will be subject to repayment by the Company at the option of
the Holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S. $1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S. $1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form herein titled "Option to Elect Repayment" duly
completed, by the Trustee at its corporate trust office not more than 60 nor
less than 30 calendar days prior to the Repayment Date. Exercise of such
repayment option by the Holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the Holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the Holder of this Note in the event of
redemption, repayment or acceleration of the Stated Maturity Date will be equal
to the sum of (a) the Issue Price specified on the face hereof (increased by any
accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(b) any unpaid interest on this Note accrued from the Original Issue Date to the
Redemption Date, Repayment Date or accelerated Stated Maturity Date, as the case
may be. The difference between the Issue Price and 100% of the principal amount
of this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Repayment Date or accelerated Stated Maturity Date of
this Note, such Discount will be accrued so as to cause the yield on the Note to
be constant. The constant yield will be calculated using a 30-day month, 360-day
year convention, a compounding period that, except for the Initial Period (as
defined below), corresponds to the shortest period between Interest Payment
Dates (with ratable accruals within a compounding period) and an assumption that
the Maturity of this Note will not be accelerated. If the period from the
Original Issue Date to the initial Interest Payment Date (the "Initial Period")
is shorter than the compounding period for this Note, a proportionate amount of
the yield for an entire compounding period will be accrued. If the Initial
Period is longer than the compounding period, then such period will be divided
into a regular compounding period and a short period, with the short period
being treated as provided in the preceding sentence.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to this Note.
7
<PAGE>
In addition to the covenants of the Company contained in the Indenture,
the following covenants will apply to the Notes:
Limitation on Incurrence of Total Debt. The Company will not,
and will not permit any Subsidiary to, incur any Debt (as defined below) if,
immediately after giving effect to the incurrence of such additional Debt and
the application of the proceeds therefrom, the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with generally accepted accounting principles is
greater than 60% of the sum of (i) the Company's Total Assets as of the end of
the calendar quarter prior to the incurrence of such additional Debt and (ii)
the increase in Total Assets from the end of such quarter including, without
limitation, any increase in Total Assets caused by the incurrence of such
additional Debt.
Limitation on Incurrence of Secured Debt. In addition to the
foregoing limitation on the incurrence of Debt, the Company will not, and will
not permit any Subsidiary to, incur any Debt secured by any mortgage, lien,
charge, pledge, encumbrance or security interest of any kind on any of its
properties, and will not otherwise grant or convey any such mortgage, charge,
pledge, encumbrance or security interest of any kind, if immediately after
giving effect thereto, the aggregate principal amount of all outstanding Debt of
the Company and its Subsidiaries on a consolidated basis determined in
accordance with generally accepted accounting principles which is secured by any
mortgage, charge, pledge, encumbrance or security interest of any kind on
property of the Company or any Subsidiary is greater than 40% of the sum of (i)
the Company's Total Assets as of the end of the calendar quarter prior to the
incurrence of such Debt, and (ii) any increase in Total Assets from the end of
such quarter including, without limitation, any increase in Total Assets caused
by the incurrence of such additional Debt.
Debt Service Coverage. In addition to the foregoing
limitations on the incurrence of Debt, the Company will not, and will not permit
any Subsidiary to, incur any Debt if the ratio of Consolidated Income Available
for Debt Service (as defined below) to Annual Service Charge (as defined below)
for the four consecutive calendar quarters most recently ended prior to the date
on which such additional Debt is to be incurred is less than 1.5 to 1.0 on a pro
forma basis after giving effect to the incurrence of such Debt and the
application of the proceeds therefrom.
Maintenance of Total Unencumbered Assets. The Company will
maintain at all times Total Unencumbered Assets (as defined below) of not less
than 150% of the aggregate outstanding principal amount of all outstanding
unsecured Debt of the Company and its Subsidiaries.
As used herein:
"Annual Service Charge" means the interest expense of the
Company and its Subsidiaries for the four consecutive fiscal quarters most
recently ended, including, without limitation, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers' acceptance
financings, net costs pursuant to hedging obligations, the interest
8
<PAGE>
component of all payments associated with Capitalized Leases, amortization of
debt issuance costs, amortization of original issue discount, non-cash interest
payments and the interest component of any deferred payment obligations.
"Capitalized Lease" means any lease of property by the Company
or any Subsidiary as lessee that is reflected on the Company's consolidated
balance sheet as a capitalized lease in accordance with generally accepted
accounting principles.
"Consolidated Income Available for Debt Service" for any
period means Consolidated Net Income (as defined below) of the Company and its
Subsidiaries plus amounts which have been deducted, and minus amounts which have
been added, for (a) interest on Debt of the Company and its Subsidiaries, (b)
provision for taxes of the Company and its Subsidiaries based on income, (c)
amortization of debt discount, (d) provisions for gains and losses on
properties, (e) depreciation, (f) the effect of any non-cash charge resulting
from a change in accounting principles in determining Consolidated Net Income
for such period and (g) amortization of deferred charges.
"Consolidated Net Income" for any period means the amount of
consolidated net income (or loss) of the Company and its Subsidiaries for such
period determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Debt" means any indebtedness of the Company or any
Subsidiary, whether or not contingent, in respect of (i) borrowed money or
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness
secured by any mortgage, pledge, lien, charge, encumbrance or any security
interest existing on property owned by the Company or any Subsidiary, (iii)
letters of credit or amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) Capitalized Leases, in the case of
items of indebtedness under (i) through (iii) above to the extent that any such
items (other than letters of credit) would appear as liabilities on the
Company's consolidated balance sheet in accordance with generally accepted
accounting principles, and also includes, to the extent not otherwise included,
any obligation by the Company or any Subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), indebtedness of another person (other than the
Company or any Subsidiary) (it being understood that Debt shall be deemed to be
incurred by the Company or any Subsidiary whenever the Company or such
Subsidiary shall create, assume, guarantee or otherwise become liable in respect
thereof).
"Subsidiary" means (a) any corporation, association, joint
venture or other business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled to vote in the
election of the directors, managers, trustees or other persons having the power
to direct or cause the direction of the management and policies thereof is at
the time owned or controlled, directly or indirectly, by the Company or one or
more of the other Subsidiaries of the Company, and (b) any partnership or
limited liability company in which the Company or one or more of the other
Subsidiaries of the Company, directly or indirectly,
9
<PAGE>
possesses more than a 50% interest in the total capital or total income of such
partnership or limited liability company.
"Total Assets" as of any date means the sum of (i)
Undepreciated Real Estate Assets and (ii) all other assets of the Company and
its Subsidiaries determined in accordance with generally accepted accounting
principles (but excluding accounts receivable and intangibles).
"Total Unencumbered Assets" means Total Assets minus the value
of any properties of the Company and its Subsidiaries that are encumbered by any
mortgage, charge, pledge, lien, security interest or other encumbrance of any
kind, including the value of any stock of any Subsidiary that is so encumbered.
For purposes of this definition, the value of each property shall be equal to
the purchase price or cost of each such property and the value of any stock
subject to any encumbrance shall be determined by reference to the value of the
properties owned by the issuer of such stock as aforesaid.
"Undepreciated Real Estate Assets" as of any date means the
amount of real estate assets of the Company and its Subsidiaries on such date,
before depreciation and amortization determined on a consolidated basis in
accordance with generally accepted accounting principles.
As provided in and subject to the provisions of the Indenture,
the Holder of this Note shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities at any time by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of all Outstanding Securities of a series affected
thereby. The Indenture also contains provisions permitting the Holders of not
less than a majority of the aggregate principal amount of the Outstanding
Securities of any series, on behalf of the Holders of all such Securities, to
waive compliance by the Company with certain provisions of the Indenture.
Furthermore, provisions in the Indenture permit the Holders of not less than a
majority of the aggregate principal amount of the Outstanding Securities of any
series, in certain instances, to waive, on behalf of all of the Holders of Debt
Securities of such
10
<PAGE>
series, certain past defaults under the Indenture and their consequences. Any
such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and other
Notes issued upon the registration of transfer hereof or in exchange heretofore
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the Security
Register of the Company upon surrender of this Note for registration of transfer
at the office or agency of the Company in any place where the principal hereof
and any premium or interest hereon are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or by his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the Holder hereof surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the correctness
11
<PAGE>
or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be
placed only on the other identification numbers printed hereon.
12
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -_________ Custodian _________
(Cust) (Minor)
under Uniform Gifts to Minors
Act ____________________
(State)
Additional abbreviations may also be used though not in the above list.
13
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE | |
|_________________________|____________________________________________________
__________________________(Please print or typewrite name and address including
postal zip code of assignee_________________________________________________
this Note and all rights thereunder hereby irrevocably constituting and
appointing Attorney to transfer this Note on the books of the Company, with full
power of substitution in the premises.
Dated:_____________________ _________________________________________________
Notice: The signature(s) on this Assignment must
correspond with the name(s) as written upon the
face of this Note in every particular, without
alteration or enlargement or any change
whatsoever.
14
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at_____________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate
trust office in the Borough of Manhattan, The City of New York, currently
located at Norwest Trust Company New York, 3 New York Plaza, 15th Floor, New
York, New York 10004, not more than 60 nor less than 30 calendar days prior to
the Repayment Date, this Note with this "Option to Elect Repayment" form duly
completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S. $1,000 or other
Authorized Denomination specified on the face of this Note) which the Holder
elects to have repaid and specify the denomination or denominations (which shall
be an Authorized Denomination) of the Notes to be issued to the Holder for the
portion of this Note not being repaid (in the absence of any such specification,
one such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $__________
Date:_________________ ______________________________________________________
Notice: The signature(s) on this Option to Elect
Repayment must correspond with the name(s) as written
upon the face of this Note in every particular, without
alteration or enlargement or any change whatsoever.
15
<PAGE>
EXHIBIT B
[FORM OF FACE OF NOTE]
If the Holder of this Note (as indicated below) is The Depository Trust
Company ("DTC") or a nominee of DTC, this Note is a global note and the
following two legends apply:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
[IF THIS SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT -- FOR
PURPOSES OF SECTIONS 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS SECURITY IS ____% OF ITS PRINCIPAL
AMOUNT, THE ISSUE DATE IS __________, 19__ [AND] THE YIELD TO MATURITY IS ____%.
[THE METHOD USED TO DETERMINE THE AMOUNT OF ORIGINAL ISSUE DISCOUNT APPLICABLE
TO THE SHORT ACCRUAL PERIOD OF __________, 19__ TO __________, 19__, IS ____% OF
THE PRINCIPAL AMOUNT OF THIS SECURITY.]]
<PAGE>
REGISTERED PRINCIPAL AMOUNT: $_____________
No. FLR- ________
CUSIP No.: ________
FRANCHISE FINANCE CORPORATION OF AMERICA
MEDIUM-TERM NOTE
(Floating Rate)
INTEREST RATE BASIS ORIGINAL ISSUE DATE: STATED MATURITY DATE:
OR BASES:
IF LIBOR: IF CMT RATE:
[] LIBOR Reuters [] Designated CMT Telerate Page:
[] LIBOR Telerate [] Designated CMT Maturity Index:
INDEX CURRENCY:
INDEX MATURITY: INITIAL INTEREST RATE: % INTEREST PAYMENT DATE(S):
SPREAD (PLUS OR MINUS): SPREAD MULTIPLIER: INITIAL INTEREST RESET
DATE:
MINIMUM INTEREST RATE: % MAXIMUM INTEREST RATE: % INTEREST RESET DATE(S):
INITIAL REDEMPTION DATE: INITIAL REDEMPTION ANNUAL REDEMPTION
PERCENTAGE: % PERCENTAGE REDUCTION: %
OPTIONAL REPAYMENT DATE(S): CALCULATION AGENT:
Norwest Bank Arizona, National
Association
INTEREST CATEGORY: DAY COUNT CONVENTION:
[] Regular Floating Rate Note [] 30/360 for the period from to
------ -----
[] Floating Rate/Fixed Rate Note
Fixed Rate Commencement Date: [] Actual/360 for the period from
Fixed Interest Rate: % from to
------ -----
[] Inverse Floating Rate Note [] Actual/Actual for the period from
Fixed Interest Rate: % from to
----- -----
[] Original Issue Discount Note Applicable Interest Rate Basis:
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION:
[X] United States dollars [] $1,000 and integral multiples thereof
[] Other:
DEFAULT RATE: %
ADDENDUM ATTACHED OTHER/ADDITIONAL PROVISIONS:
[] Yes
[] No
2
<PAGE>
Franchise Finance Corporation of America, a Delaware corporation (the
"Company," which terms include any successor under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
____________________, or registered assigns, the principal sum of
____________________, on the Stated Maturity Date specified above (or any
Redemption Date or Repayment Date, each as defined on the reverse hereof) (each
such Stated Maturity Date, Redemption Date or Repayment Date being hereinafter
referred to as the "Maturity" with respect to the principal repayable on such
date) and to pay interest thereon, at a rate per annum equal to the Initial
Interest Rate specified above until the Initial Interest Reset Date specified
above and thereafter at a rate determined in accordance with the provisions
specified above and on the reverse hereof with respect to one or more Interest
Rate Bases specified above until the principal hereof is paid or duly made
available for payment, and (to the extent that the payment of such interest
shall be legally enforceable) at the Default Rate per annum specified above on
any overdue principal, premium and/or interest. The Company will pay interest in
arrears on each Interest Payment Date, if any, specified above (each, an
"Interest Payment Date"), commencing with the first Interest Payment Date next
succeeding the Original Issue Date specified above, and at Maturity; provided,
however, that if the Original Issue Date occurs between a Regular Record Date
(as defined below) and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date next succeeding the
Original Issue Date to the Holder of this Note on the Regular Record Date with
respect to such second Interest Payment Date.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for) to, but excluding, the applicable Interest Payment
Date or the date of Maturity, as the case may be (each, an "Interest Period").
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, subject to certain exceptions described herein, be
paid to the person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the 15th calendar day (whether or not a
Business Day, as defined on the reverse hereof) immediately preceding such
Interest Payment Date (the "Regular Record Date"); provided, however, that
interest payable at Maturity will be payable to the person to whom the principal
hereof and premium, if any, hereon shall be payable. Any such interest not so
punctually paid or duly provided for ("Defaulted Interest") will forthwith cease
to be payable to the Holder on any Regular Record Date, and shall be paid to the
person in whose name this Note is registered at the close of business on a
special record date (the "Special Record Date") for the payment of such
Defaulted Interest to be fixed by the Trustee hereinafter referred to, notice
whereof shall be given to the Holder of this Note by the Trustee not less than
10 calendar days prior to such Special Record Date or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which this Note may be listed, and upon such notice as may be
required by such exchange, all as more fully provided for in the Indenture.
Payments of principal of, premium, if any, and interest, if any, on
Notes issued in fully registered book-entry form will be made by the Company
through the Trustee (as defined on the reverse hereof) to the Depository Trust
Company. In the case of certificated Notes, payment
3
<PAGE>
of principal, premium, if any, and interest, if any, in respect of this Note due
at Maturity will be made in immediately available funds upon presentation and
surrender of this Note (and, with respect to any applicable repayment of this
Note, a duly completed election form as contemplated on the reverse hereof) at
the corporate trust office of the Trustee maintained for that purpose in the
Borough of Manhattan, The City of New York, currently located at Norwest Trust
Company New York, 3 New York Plaza, 15th Floor, New York, New York 10004, or at
such other paying agency in the Borough of Manhattan, The City of New York, as
the Company may determine. Payment of interest due on certificated Notes on any
Interest Payment Date other than at Maturity will be made at the office or
agency referred to above maintained by the Company for such purpose or, at the
option of the Company, may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register;
provided, however, that a Holder of U.S. $10,000,000 or more in initial
aggregate principal amount of Notes (whether having identical or different terms
and provisions) will be entitled to receive interest payments on such Interest
Payment Date by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by the Trustee not less than
15 calendar days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such Holder.
If any Interest Payment Date other than the date of Maturity would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day. If the Stated Maturity Date falls on a day that is not a
Business Day, the required payment of principal, premium, if any, and interest
shall be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due, and no interest shall accrue with
respect to such payment for the period from and after the Stated Maturity Date
to the date of such payment on the next succeeding Business Day.
The Company is obligated to make payment of principal, premium, if any,
and interest in respect of this Note in United States dollars.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above, in the Addendum hereto,
which further provisions shall have the same force and effect as if set forth on
the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the
face of this Note specifies that an Addendum is attached hereto or that
"Other/Additional Provisions" apply, this Note shall be subject to the terms set
forth in such Addendum or such "Other/Additional Provisions."
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature of one of its authorized signatories, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
4
<PAGE>
IN WITNESS WHEREOF, Franchise Finance Corporation of America has caused
this Note to be duly executed.
FRANCHISE FINANCE CORPORATION OF
AMERICA
By____________________________________________________
John R. Barravecchia, Executive Vice
President, Chief Financial Officer, Treasurer
and Assistant Secretary
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This Note is one of the Securities of the series designated "Medium Term Notes
due Nine Months or More from date of Issue" pursuant to the
within-mentioned Indenture.
Norwest Bank Arizona, National Association,
as Trustee
By_______________________________
Authorized Signatory
02/90750.4
5
<PAGE>
[FORM OF REVERSE OF NOTE]
FRANCHISE FINANCE CORPORATION OF AMERICA
MEDIUM-TERM NOTE
(Floating Rate)
This Note is one of a duly authorized series of Securities (the
"Securities") of the Company issued and to be issued under an Indenture, dated
as of November 21, 1995, as amended, modified or supplemented from time to time
(the "Indenture"), between the Company and Norwest Bank Arizona, National
Association, as Trustee (the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Note is one of
the series of Securities to be designated as "Medium-Term Notes Due Nine Months
or More From Date of Issue" (the "Notes"). All terms used but not defined in
this Note specified on the face hereof or in an Addendum hereto shall have the
meanings assigned to such terms in the Indenture.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or repayable prior to its Stated Maturity
Date.
This Note will be subject to redemption at the option of the Company on
any date on or after the Initial Redemption Date, if any, specified on the face
hereof, in whole or from time to time in part in increments of U.S. $1,000 or
the minimum Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S. $1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together with unpaid
interest accrued thereon to the date fixed for redemption (each, a "Redemption
Date"), on notice given no more than 60 nor less than 30 calendar days prior to
the Redemption Date and in accordance with the provisions of the Indenture. The
"Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof multiplied by the unpaid principal amount of this
Note to be redeemed. The Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of unpaid principal amount to be redeemed. In the event of redemption of
this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having the same terms as this Note shall be issued in the
name of the Holder hereof upon the presentation and surrender hereof.
6
<PAGE>
This Note will be subject to repayment by the Company at the option of
the Holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S. $1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S. $1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form herein entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not more than 60
nor less than 30 calendar days prior to the Repayment Date. Exercise of such
repayment option by the Holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the Holder hereof upon the presentation and surrender hereof.
If the Interest Category of this Note is specified on the face hereof
as an Original Issue Discount Note, the amount payable to the Holder of this
Note in the event of redemption, repayment or acceleration of the Stated
Maturity Date of this Note will be equal to the sum of (i) the Issue Price
specified on the face hereof (increased by any accruals of the Discount, as
defined below) and, in the event of any redemption of this Note (if applicable),
multiplied by the Initial Redemption Percentage (as adjusted by the Annual
Redemption Percentage Reduction, if applicable) and (ii) any unpaid interest on
this Note accrued from the Original Issue Date to the Redemption Date, Repayment
Date or accelerated Stated Maturity Date, as the case may be. The difference
between the Issue Price and 100% of the principal amount of this Note is
referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Repayment Date or accelerated Stated Maturity Date of
this Note, such Discount will be accrued so as to cause an assumed yield on the
Note to be constant. The assumed constant yield will be calculated using a
30-day month, 360-day year convention, a compounding period that, except for the
Initial Period (as defined below), corresponds to the shortest period between
Interest Payment Dates (with ratable accruals within a compounding period), a
constant coupon rate equal to the initial interest rate applicable to this Note
and an assumption that the Maturity of this Note will not be accelerated. If the
period from the Original Issue Date to the initial Interest Payment Date (the
"Initial Period") is shorter than the compounding period for this Note, a
proportionate amount of the yield for an entire compounding period will be
accrued. If the Initial Period is longer than the compounding period, then such
period will be divided into a regular compounding period and a short period,
with the short period being treated as provided in the preceding sentence.
The interest rate borne by this Note will be determined as follows:
(a) Unless the Interest Category of this Note is specified on
the face hereof as a "Floating Rate/Fixed Rate Note" or an "Inverse
Floating Rate Note," this Note shall be designated as a "Regular
Floating Rate Note" and, except as set forth below or on the
7
<PAGE>
face hereof, shall bear interest at the rate determined by reference to
the applicable Interest Rate Basis or Bases (i) plus or minus the
Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if
any, in each case as specified on the face hereof. Commencing on the
Initial Interest Reset Date, the rate at which interest on this Note
shall be payable shall be reset as of each Interest Reset Date
specified on the face hereof; provided, however, that the interest rate
in effect for the period, if any, from the Original Issue Date to the
Initial Interest Reset Date shall be the Initial Interest Rate.
(b) If the Interest Category of this Note is specified on the
face hereof as a "Floating Rate/Fixed Rate Note," then, except as set
forth below or on the face hereof, this Note shall bear interest at the
rate determined by reference to the applicable Interest Rate Basis or
Bases (i) plus or minus the Spread, if any, and/or (ii) multiplied by
the Spread Multiplier, if any. Commencing on the Initial Interest Reset
Date, the rate at which interest on this Note shall be payable shall be
reset as of each Interest Reset Date; provided, however, that (A) the
interest rate in effect for the period, if any, from the Original Issue
Date to the Initial Interest Reset Date shall be the Initial Interest
Rate and (B) the interest rate in effect for the period commencing on
the Fixed Rate Commencement Date specified on the face hereof to
Maturity shall be the Fixed Interest Rate specified on the face hereof
or, if no such Fixed Interest Rate is specified, the interest rate in
effect hereon on the day immediately preceding the Fixed Rate
Commencement Date.
(c) If the Interest Category of this Note is specified on the
face hereof as an "Inverse Floating Rate Note," then, except as set
forth below or on the face hereof, this Note shall bear interest at the
Fixed Interest Rate minus the rate determined by reference to the
applicable Interest Rate Basis or Bases (i) plus or minus the Spread,
if any, and/or (ii) multiplied by the Spread Multiplier, if any;
provided, however, that, unless otherwise specified on the face hereof,
the interest rate hereon shall not be less than zero. Commencing on the
Initial Interest Reset Date, the rate at which interest on this Note
shall be payable shall be reset as of each Interest Reset Date;
provided, however, that the interest rate in effect for the period, if
any, from the Original Issue Date to the Initial Interest Reset Date
shall be the Initial Interest Rate.
Unless otherwise specified on the face hereof, the rate with respect to
each Interest Rate Basis will be determined in accordance with the applicable
provisions below. Except as set forth above or on the face hereof, the interest
rate in effect on each day shall be (i) if such day is an Interest Reset Date,
the interest rate determined as of the Interest Determination Date (as defined
below) immediately preceding such Interest Reset Date or (ii) if such day is not
an Interest Reset Date, the interest rate determined as of the Interest
Determination Date (as defined below) immediately preceding the most recent
Interest Reset Date.
If any Interest Reset Date would otherwise be a day that is not a
Business Day, such Interest Reset Date shall be postponed to the next succeeding
Business Day, except that if LIBOR is an applicable Interest Rate Basis and such
Business Day falls in the next succeeding
8
<PAGE>
calendar month, such Interest Reset Date shall be the immediately preceding
Business Day. In addition, if the Treasury Rate is an applicable Interest Rate
Basis and the Interest Determination Date would otherwise fall on an Interest
Reset Date, then such Interest Reset Date will be postponed to the next
succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law or executive order to close in The City of New
York. "London Business Day" means (i) if the Index Currency (as hereinafter
defined) is other than European Currency Units ("ECU"), any day on which
dealings in such Index Currency are transacted in the London interbank market or
(ii) if the Index Currency is ECU, any day that does not appear as an ECU
non-settlement day on the display designated as "ISDE" on the Reuter Monitor
Money Rates Service (or a day so designated by the ECU Banking Association) or,
if ECU non-settlement days do not appear on that page (and are not so
designated), is not a day on which payments in ECU cannot be settled in the
international interbank market.
"Principal Financial Center" means the capital city of the country
issuing the currency or composite currency in which any payment in respect of
the related Notes is to be made or, solely with respect to the calculation of
LIBOR, the Index Currency, except that with respect to U.S. dollars, Australian
dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs and ECUs,
the Principal Financial Center shall be The City of New York, Sydney, Frankfurt,
Amsterdam, Milan, Zurich and Luxembourg, respectively.
The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate will
be the second Business Day immediately preceding the applicable Interest Reset
Date; the "Interest Determination Date" with respect to the Eleventh District
Cost of Funds Rate shall be the last working day of the month immediately
preceding the applicable Interest Reset Date on which the Federal Home Loan Bank
of San Francisco (the "FHLB of San Francisco") publishes the Index (as defined
below); and the "Interest Determination Date" with respect to LIBOR shall be the
second London Business Day immediately preceding the applicable Interest Reset
Date. The "Interest Determination Date" with respect to the Treasury Rate shall
be the day in the week in which the applicable Interest Reset Date falls on
which day Treasury Bills (as defined below) are normally auctioned (Treasury
Bills are normally sold at an auction held on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding
Friday); provided, however, that if an auction is held on the Friday of the week
preceding the applicable Interest Reset Date, the Interest Determination Date
shall be such preceding Friday. If the interest rate of this Note is determined
with reference to two or more Interest Rate Bases specified on the face hereof,
the "Interest Determination Date" pertaining to this Note shall be the most
recent Business Day which is at least two Business Days prior to the applicable
Interest Reset Date on which each Interest Rate Basis is determinable. Each
Interest Rate Basis shall be determined as of such date, and the applicable
interest rate shall take effect on the related Interest Reset Date.
9
<PAGE>
CD Rate. If an Interest Rate Basis for this Note is specified on the
face hereof as the CD Rate, the CD Rate shall be determined as of the applicable
Interest Determination Date (a "CD Rate Interest Determination Date") as the
rate on such date for negotiable United States dollar certificates of deposit
having the Index Maturity specified on the face hereof as published by the Board
of Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)," or, if not published by 3:00 p.m., New York
City time, on the related Calculation Date (as defined below), the rate on such
CD Rate Interest Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30 p.m.
Quotations for United States Government Securities" or any successor publication
("Composite Quotations") under the heading "Certificates of Deposit." If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
p.m., New York City time, on the related Calculation Date, then the CD Rate on
such CD Rate Interest Determination Date will be calculated by the Calculation
Agent specified on the face hereof and will be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New York City time, on such CD
Rate Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in The City of New York selected by
the Calculation Agent for negotiable certificates of deposit of major United
States money market banks for negotiable United States dollar certificates of
deposit with a remaining maturity closest to the Index Maturity in an amount
that is representative for a single transaction in that market at that time;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate determined as of such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
CMT Rate. If an Interest Rate Basis for this Note is specified on the
face hereof as the CMT rate, the CMT Rate shall be determined as of the
applicable Interest Determination Date (a "CMT Rate Interest Determination
Date") as the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption "...Treasury Constant Maturities...Federal Reserve
Board Release H.15...Mondays Approximately 3:45 p.m.," under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date and
(ii) if the Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the related CMT Rate
Interest Determination Date occurs. If such rate is no longer displayed on the
relevant page or is not displayed by 3:00 p.m., New York City time, on the
related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published or is not published by 3:00 p.m., New York City
time, on the related Calculation Date, then the CMT Rate on such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines
10
<PAGE>
to be comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in the relevant H.15(519). If such information is not
provided by 3:00 p.m., New York City time, on the related Calculation Date, then
the CMT Rate on the CMT Rate Interest Determination Date will be calculated by
the Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately 3:30
p.m., New York City time, on such CMT Rate Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent is unable to obtain three such Treasury
Note quotations, the CMT Rate on such CMT Rate Interest Determination Date will
be calculated by the Calculation Agent and will be a yield to maturity based on
the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on such CMT Rate Interest
Determination Date of three Reference Dealers in The City of New York (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the next
highest to the Designated CMT Maturity Index and a remaining term to maturity
closest to the Designated CMT Maturity Index and in an amount of at least U.S.
$100 million. If three or four (and not five) of such Reference Dealers are
quoting as described above, then the CMT Rate will be based on the arithmetic
mean of the offer prices obtained and neither the highest nor the lowest of such
quotes will be eliminated; provided, however, that if fewer than three Reference
Dealers selected by the Calculation Agent are quoting as mentioned herein, the
CMT Rate determined as of such CMT Rate Interest Determination Date will be the
CMT Rate in effect on such CMT Rate Interest Determination Date. If two Treasury
Notes with an original maturity as described in the second preceding sentence
have remaining terms to maturity equally close to the Designated CMT Maturity
Index, quotes for the Treasury Note with the shorter remaining term to maturity
will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page specified on the face hereof (or any other page as
may replace such page on that service for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519)) for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519). If no such page is
specified on the face hereof, the Designated CMT Telerate Page shall be 7052,
for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity
of the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified on the face hereof
11
<PAGE>
with respect to which the CMT Rate will be calculated. If no such maturity as
specified on the face hereof, the Designated CMT Maturity Index shall be 2
years.
Commercial Paper Rate. If an Interest Rate Basis for this Note is
specified on the face hereof as the Commercial Paper Rate, the Commercial Paper
Rate shall be determined as of the applicable Interest Determination Date (a
"Commercial Paper Rate Interest Determination Date") as the Money Market Yield
(as defined below) on such date of the rate for commercial paper having the
Index Maturity as published in H.15(519) under the heading "Commercial Paper."
In the event that such rate is not published by 3:00 p.m., New York City time,
on such Calculation Date, then the Commercial Paper Rate on such Commercial
Paper Rate Interest Determination Date will be the Money Market Yield of the
rate for commercial paper having the Index Maturity as published in Composite
Quotations under the heading "Commercial Paper" (with an Index Maturity of one
month or three months being deemed to be equivalent to an Index Maturity of 30
days or 90 days, respectively). If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on such
Calculation Date, then the Commercial Paper Rate on such Commercial Paper Rate
Interest Determination Date will be calculated by the Calculation Agent and
shall be the Money Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 a.m., New York City time, on such Commercial Paper Rate
Interest Determination Date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for commercial paper having
the Index Maturity placed for an industrial issuer whose bond rating is "AA," or
the equivalent from a nationally recognized statistical rating organization;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the Commercial Paper Rate determined
as of such Commercial Paper Rate Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula: where "D" refers to the
applicable per annum rate for commercial paper quoted on
Money Market yield = Dx360
------- x 100
360(DxM)
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
Eleventh District Cost of Funds Rate. If an Interest Rate Basis for
this Note is specified on the face hereof as the Eleventh District Cost of Funds
Rate, the Eleventh District Cost of Funds Rate shall be determined as of the
applicable Interest Determination Date (an "Eleventh District Cost of Funds Rate
Interest Determination Date") as the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month in which
such Eleventh District Cost of Funds Rate Interest Determination Date falls, as
set forth under the caption "11th District" on Telerate Page 7058 as of 11:00
a.m., San Francisco time,
12
<PAGE>
on such Eleventh District Cost of Funds Rate Interest Determination Date. If
such rate does not appear on Telerate Page 7058 on such Eleventh District Cost
of Funds Rate Interest Determination Date, then the Eleventh District Cost of
Funds Rate on such Eleventh District Cost of Funds Rate Interest Determination
Date shall be the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal Home Loan Bank District that was most
recently announced (the "Index") by the FHLB of San Francisco as such cost of
funds for the calendar month immediately preceding such Eleventh District Cost
of Funds Rate Interest Determination Date. If the FHLB of San Francisco fails to
announce the Index on or prior to such Eleventh District Cost of Funds Rate
Interest Determination Date for the calendar month immediately preceding such
Eleventh District Cost of Funds Rate Interest Determination Date, the Eleventh
District Cost of Funds Rate determined as of such Eleventh District Cost of
Funds Rate Interest Determination Date will be the Eleventh District Cost of
Funds Rate in effect on such Eleventh District Cost of Funds Rate Interest
Determination Date.
Federal Funds Rate. If an Interest Rate Basis for this Note is
specified on the face hereof as the Federal Funds Rate, the Federal Funds Rate
shall be determined as of the applicable Interest Determination Date (a "Federal
Funds Rate Interest Determination Date") as the rate on such date for United
States dollar federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not published by 3:00 p.m., New York City time, on the
Calculation Date, the rate on such Federal Funds Rate Interest Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate." If such rate is not published in either H.15(519) or
Composite Quotations by 3:00 p.m., New York City time, on the related
Calculation Date, then the Federal Funds Rate on such Federal Funds Interest
Determination Date shall be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight United States
dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York selected by the Calculation Agent, prior to
9:00 a.m., New York City time, on such Federal Funds Rate Interest Determination
Date; provided, however, that if the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate
determined as of such Federal Funds Rate Interest Determination Date will be the
Federal Funds Rate in effect on such Federal Funds Rate Interest Determination
Date.
LIBOR. If an Interest Rate Basis for this Note is specified on the face
hereof as LIBOR, LIBOR shall be determined by the Calculation Agent as of the
applicable Interest Determination Date (a "LIBOR Interest Determination Date")
in accordance with the following provisions:
(a) if (i) "LIBOR Reuters" is specified on the face hereof,
the arithmetic mean of the offered rates (unless the Designated LIBOR
Page (as defined below) by its terms provides only for a single rate,
in which case such single rate will be used) for deposits in the Index
Currency having the Index Maturity, commencing on the applicable
Interest Reset Date, that appear (or, if only a single rate is required
as aforesaid, appears) on the Designated LIBOR Page (as defined below)
as of 11:00 a.m., London time, on such LIBOR Interest Determination
Date, or (ii) "LIBOR Telerate" is specified on the face hereof, or if
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on the face
13
<PAGE>
hereof as the method for calculating LIBOR, the rate for deposits in
the Index Currency having the Index Maturity, commencing on such
Interest Reset Date, that appears on the Designated LIBOR Page as of
11:00 a.m., London time, on such LIBOR Interest Determination Date. If
fewer than two such offered rates appear, or if no such rate appears,
as applicable, LIBOR on such LIBOR Interest Determination Date shall be
determined in accordance with the provisions described in clause (b)
below.
(b) With respect to a LIBOR Interest Determination Date on
which fewer than two offered rates appear, or no rate appears, as the
case may be, on the Designated LIBOR Page as specified in clause (a)
above, the Calculation Agent shall request the principal London offices
of each of four major reference banks in the London interbank market,
as selected by the Calculation Agent, to provide the Calculation Agent
with its offered quotation for deposits in the Index Currency for the
period of the Index Maturity, commencing on the applicable Interest
Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for
a single transaction in such Index Currency in such market at such
time. If at least two such quotations are so provided, then LIBOR on
such LIBOR Interest Determination Date will be the arithmetic mean of
such quotations. If fewer than two such quotations are so provided,
then LIBOR on such LIBOR Interest Determination Date will be the
arithmetic mean of the rates quoted at approximately 11:00 a.m., in the
applicable Principal Financial Center, on such LIBOR Interest
Determination Date by three major banks in such Principal Financial
Center selected by the Calculation Agent for loans in the Index
Currency to leading European banks, having the Index Maturity and in a
principal amount that is representative for a single transaction in
such Index Currency in such market at such time; provided, however/
that if the banks so selected by the Calculation Agent are not quoting
as mentioned in this sentence, LIBOR determined as of such LIBOR
Interest Determination Date shall be LIBOR in effect on such LIBOR
Interest Determination Date.
"Index Currency" means the currency or composite currency specified on
the face hereof as to which LIBOR shall be calculated. If no such currency or
composite currency is specified on the face hereof, the Index Currency shall be
United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on
the face hereof, the display on the Reuter Monitor Money Rates Service (or any
successor service) for the purpose of displaying the London interbank rates of
major banks for the Index Currency, or (b) if "LIBOR Telerate" is specified on
the face hereof or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on
the face hereof as the method for calculating LIBOR, the display on the Dow
Jones Telerate Service (or any successor service) for the purpose of displaying
the London interbank rates of major banks for the Index Currency.
Prime Rate. If an Interest Rate Basis for this Note is specified on the
face hereto as the Prime Rate, the Prime Rate shall be determined as of the
applicable Interest Determination Date
14
<PAGE>
(a "Prime Rate Interest Determination Date") as the rate on such date as such
rate is published in H.15(519) under the heading "Bank Prime Loan." If such rate
is not published prior to 3:00 p.m., New York City time, on the related
Calculation Date, then the Prime Rate shall be the arithmetic mean of the rates
of interest publicly announced by each bank that appears on the Reuters Screen
USPRIME1 (as defined below) as such bank's prime rate or base lending rate as
in effect for such Prime Rate Interest Determination Date. If fewer than four
such rates appear on the Reuters Screen USPRIME1 for such Prime Rate Interest
Determination Date, the Prime Rate shall be the arithmetic mean of the prime
rates quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than four such quotations are so
provided, the Prime Rate shall be the arithmetic mean of four prime rates quoted
on the basis of the actual number of days in the year divided by a 360-day year
as of the close of business on such Prime Rate Interest Determination Date as
furnished in The City of New York by the major money center banks, if any, that
have provided such quotations and by as many substitute banks or trust companies
as necessary to obtain such four prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of the
United States, or any State thereof, each having total equity capital of at
least U.S. $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates; provided, however, that if the banks or trust companies so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Prime Rate determined as of such Prime Rate Interest Determination Date will
be the Prime Rate in effect on such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or such other page as may
replace the USPRIME1 page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
Treasury Rate. If an Interest Rate Basis for this Note is specified on
the face hereof as the Treasury Rate, the Treasury Rate shall be determined as
of the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity, as such rate is published
in H.15(519) under the heading "Treasury bills-auction average (investment)" or,
if not published by 3:00 p.m., New York City time, on the related Calculation
Date, the auction average rate of such Treasury Bills (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the results of the Auction of Treasury Bills having
the Index Maturity are not reported as provided above by 3:00 p.m., New York
City time, on such Calculation Date, or if no such Auction is held, then the
Treasury Rate shall be calculated by the Calculation Agent and shall be a yield
to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City time,
15
<PAGE>
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent,
for the issue of Treasury Bills with a remaining maturity closest to the Index
Maturity; provided, however, that if the dealers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate
determined as of such Treasury Rate Interest Determination Date will be the
Treasury Rate in effect on such Treasury Rate Interest Determination Date.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, in each case as specified on the face hereof. The
interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
The Calculation Agent shall calculate the interest rate hereon on or
before each Calculation Date. The "Calculation Date," if applicable, pertaining
to any Interest Determination Date shall be the earlier of (a) the 10th calendar
day after such Interest Determination Date or, if such day is not a Business
Day, the next succeeding Business Day or (b) the Business Day immediately
preceding the applicable Interest Payment Date or the Maturity Date, as the case
may be. At the request of the Holder hereof, the Calculation Agent will provide
to the Holder hereof the interest rate hereon then in effect and, if determined,
the interest rate that will become effective as a result of a determination made
for the next succeeding Interest Reset Date.
Accrued interest hereon shall be an amount calculated by multiplying
the principal amount hereof by an accrued interest factor. Such accrued interest
factor shall be computed by adding the interest factor calculated for each day
in the applicable Interest Period. Unless otherwise specified as the Day Count
Convention on the face hereof, the interest factor for each such date shall be
computed by dividing the interest rate applicable to such day by 360 if the CD
Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Rate, LIBOR or the Prime Rate is an applicable Interest Rate Basis
or by the actual number of days in the year if the CMT Rate or the Treasury Rate
is an applicable Interest Rate Basis. Unless otherwise specified as the Day
Count Convention on the face hereof, the interest factor for this Note, if the
interest rate is calculated with reference to two or more Interest Rate Bases,
shall be calculated in each period in the same manner as if only the applicable
Interest Rate Basis specified on the face hereof applied.
All percentages resulting from any calculation on this Note shall be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards, and all amounts used in or
resulting from such calculation on this Note shall be rounded to the nearest
cent.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
16
<PAGE>
The Indenture contains provisions for defeasance of (a) the entire
indebtedness of the Notes or (b) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to this Note.
In addition to the covenants of the Company contained in the Indenture,
the following covenants will apply to the Notes:
Limitation on Incurrence of Total Debt. The Company will not, and will not
permit any Subsidiary to, incur any Debt (as defined below) if, immediately
after giving effect to the incurrence of such additional Debt and the
application of the proceeds therefrom, the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with generally accepted accounting principles is
greater than 60% of the sum of (i) the Company's Total Assets as of the end of
the calendar quarter prior to the incurrence of such additional Debt and (ii)
the increase in Total Assets from the end of such quarter including, without
limitation, any increase in Total Assets caused by the incurrence of such
additional Debt.
Limitation on Incurrence of Secured Debt. In addition to the
foregoing limitation on the incurrence of Debt, the Company will not, and will
not permit any Subsidiary to, incur any Debt secured by any mortgage, lien,
charge, pledge, encumbrance or security interest of any kind on any of its
properties, and will not otherwise grant or convey any such mortgage, charge,
pledge, encumbrance or security interest of any kind, if immediately after
giving effect thereto, the aggregate principal amount of all outstanding Debt of
the Company and its Subsidiaries on a consolidated basis determined in
accordance with generally accepted accounting principles which is secured by any
mortgage, charge, pledge, encumbrance or security interest of any kind on
property of the Company or any Subsidiary is greater than 40% of the sum of (i)
the Company's Total Assets as of the end of the calendar quarter prior to the
incurrence of such Debt, and (ii) any increase in Total Assets from the end of
such quarter including, without limitation, any increase in Total Assets caused
by the incurrence of such additional Debt.
Debt Service Coverage. In addition to the foregoing
limitations on the incurrence of Debt, the Company will not, and will not permit
any Subsidiary to, incur any Debt if the ratio of Consolidated Income Available
for Debt Service (as defined below) to Annual Service Charge (as defined below)
for the four consecutive calendar quarters most recently ended prior to the date
on which such additional Debt is to be incurred is less than 1.5 to 1.0 on a pro
forma basis after giving effect to the incurrence of such Debt and the
application of the proceeds therefrom.
Maintenance of Total Unencumbered Assets. The Company will maintain at all
times Total Unencumbered Assets (as defined below) of not less than 150% of the
aggregate outstanding principal amount of all outstanding unsecured Debt of the
Company and its Subsidiaries.
17
<PAGE>
As used herein:
"Annual Service Charge" means the interest expense of the
Company and its Subsidiaries for the four consecutive fiscal quarters most
recently ended, including, without limitation, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers' acceptance
financings, net costs pursuant to hedging obligations, the interest component of
all payments associated with Capitalized Leases, amortization of debt issuance
costs, amortization of original issue discount, non-cash interest payments and
the interest component of any deferred payment obligations.
"Capitalized Lease" means any lease of property by the Company
or any Subsidiary as lessee that is reflected on the Company's consolidated
balance sheet as a capitalized lease in accordance with generally accepted
accounting principles.
"Consolidated Income Available for Debt Service" for any
period means Consolidated Net Income (as defined below) of the Company and its
Subsidiaries plus amounts which have been deducted, and minus amounts which have
been added, for (a) interest on Debt of the Company and its Subsidiaries, (b)
provision for taxes of the Company and its Subsidiaries based on income, (c)
amortization of debt discount, (d) provisions for gains and losses on
properties, (e) depreciation, (f) the effect of any non-cash charge resulting
from a change in accounting principles in determining Consolidated Net Income
for such period and (g) amortization of deferred charges.
"Consolidated Net Income" for any period means the amount of
consolidated net income (or loss) of the Company and its Subsidiaries for such
period determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Debt" means any indebtedness of the Company or any
Subsidiary, whether or not contingent, in respect of (i) borrowed money or
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness
secured by any mortgage, pledge, lien, charge, encumbrance or any security
interest existing on property owned by the Company or any Subsidiary, (iii)
letters of credit or amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) Capitalized Leases, in the case of
items of indebtedness under (i) through (iii) above to the extent that any such
items (other than letters of credit) would appear as liabilities on the
Company's consolidated balance sheet in accordance with generally accepted
accounting principles, and also includes, to the extent not otherwise included,
any obligation by the Company or any Subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), indebtedness of another person (other than the
Company or any Subsidiary) (it being understood that Debt shall be deemed to be
incurred by the Company or any Subsidiary whenever the Company or such
Subsidiary shall create, assume, guarantee or otherwise become liable in respect
thereof).
18
<PAGE>
"Subsidiary" means (a) any corporation, association, joint
venture or other business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled to vote in the
election of the directors, managers, trustees or other persons having the power
to direct or cause the direction of the management and policies thereof is at
the time owned or controlled, directly or indirectly, by the Company or one or
more of the other Subsidiaries of the Company, and (b) any partnership or
limited liability company in which the Company or one or more of the other
Subsidiaries of the Company, directly or indirectly, possesses more than a 50%
interest in the total capital or total income of such partnership or limited
liability company.
"Total Assets" as of any date means the sum of (i)
Undepreciated Real Estate Assets and (ii) all other assets of the Company and
its Subsidiaries determined in accordance with generally accepted accounting
principles (but excluding accounts receivable and intangibles).
"Total Unencumbered Assets" means Total Assets minus the value
of any properties of the Company and its Subsidiaries that are encumbered by any
mortgage, charge, pledge, lien, security interest or other encumbrance of any
kind, including the value of any stock of any Subsidiary that is so encumbered.
For purposes of this definition, the value of each property shall be equal to
the purchase price or cost of each such property and the value of any stock
subject to any encumbrance shall be determined by reference to the value of the
properties owned by the issuer of such stock as aforesaid.
"Undepreciated Real Estate Assets" as of any date means the
amount of real estate assets of the Company and its Subsidiaries on such date,
before depreciation and amortization determined on a consolidated basis in
accordance with generally accepted accounting principles.
As provided in and subject to the provisions of the Indenture,
the Holder of this Note shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities at any time by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of all Outstanding Securities of a Series
19
<PAGE>
affected thereby. The Indenture also contains provisions permitting the Holders
of not less than a majority of the aggregate principal amount of the Outstanding
Securities of any series, on behalf of the Holders of all such Securities, to
waive compliance by the Company with certain provisions of the Indenture.
Furthermore, provisions in the Indenture permit the Holders of not less than a
majority of the aggregate principal amount of the Outstanding Securities of any
series, in certain instances, to waive, on behalf of all of the Holders of
Securities of such series, certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and other Notes issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the Security
Register of the Company upon surrender of this Note for registration of transfer
at the office or agency of the Company in any place where the principal hereof
and any premium or interest hereon are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or by his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the Holder hereof surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK
20
<PAGE>
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH
STATE.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the correctness or accuracy of such CUSIP numbers
as printed on the Notes, and reliance may be placed only on the other
identification numbers printed hereon.
21
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
ENT - as tenants by the entireties
right of under
survivorship and not as
tenants in common
UNIF GIFT MIN ACT -_______ Custodian _______ TEN
(Cust) (Minor) JT TEN - as joint tenants with
Uniform Gifts to Minors
Act ____________________
(State)
Additional abbreviations may also be used though not in the above list.
22
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
| |
|_______________________|______________________________________________________
_______________________(Please print or typewrite name and address including zip
code of assignee)_____________________________________________ this Note and
all rights thereunder hereby irrevocably constituting and appointing
____________________________ Attorney to transfer this Note on the books of the
Company, with full power of substitution in the premises.
Dated:_________________________ ____________________________________________
Notice: The signature(s) on this Assignment
must correspond with the name(s) as written
upon the face of this Note in every
particular, without alteration or enlargement
or any change whatsoever.
02/90750.4
23
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at_____________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate
trust office in the Borough of Manhattan, The City of New York, currently
located at Norwest Trust Company New York, 3 New York Plaza, 15th Floor, New
York, New York 10004, not more than 60 nor less than 30 calendar days prior to
the Repayment Date, this Note with this "Option to Elect Repayment" form duly
completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S. $1,000 or the
minimum Authorized Denomination specified on the face of this Note) which the
Holder elects to have repaid and specify the denomination or denominations
(which shall be an Authorized Denomination) of the Notes to be issued to the
Holder for the portion of this Note not being repaid (in the absence of any such
specification, one such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $__________
_____________________________________________
Date:____________________ Notice: The signature(s) on this Option to
Elect Repayment must correspond with the
name(s) as written upon the face of this
Note in every particular, without alteration
or enlargement or any change whatsoever.
24
