As filed with the Securities and Exchange Commission on March 20, 1998
Registration No. 333-26437
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
PRE-EFFECTIVE AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
FRANCHISE FINANCE CORPORATION OF AMERICA
(Exact name of registrant as specified in its charter)
DELAWARE 86-0736091
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17207 North Perimeter Drive
Scottsdale, Arizona 85255
(602) 585-4500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Morton H. Fleischer
President and Chief Executive Officer
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, Arizona 85255
(602) 585-4500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies sent to:
Paul E. Belitz, Esq.
Brian V. Caid, Esq.
Kutak Rock
717 17th Street, Suite 2900
Denver, Colorado 80202
Approximate date of commencement of the proposed sale to the public: From time
to time after this Registration Statement becomes effective.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
<PAGE>
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed Proposed
maximum maximum
Title of each class Amount offering aggregate Amount of
of securities to to be price offering registration
be registered registered(1)(2) per unit price(1)(3) fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities.............. * * * *
- -------------------------------------------------------------------------------------------------------------------------
Preferred Stock(4)........... * * * *
- -------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 * * * *
per share(5).................
- -------------------------------------------------------------------------------------------------------------------------
Total...................... $1,000,000,000 (6) $1,000,000,000 $295,000(7)
=========================================================================================================================
</TABLE>
(1) In U.S. Dollars or the equivalent thereof denominated in one or more
foreign currencies or units of two or more foreign currencies or
composite currencies (such as European Currency Units).
<PAGE>
(2) Includes $64,978,000 of securities carried forward from Registration
Statement No. 33-62629 pursuant to Rule 429 under the Securities Act of
1933, for which a filing fee of $22,406 was previously paid.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended. No separate consideration will be
received for Common Stock or Preferred Stock that is issued upon
conversion of Debt Securities or Preferred Stock registered hereunder,
as the case may be. The aggregate maximum public offering price of all
Securities (as defined) issued pursuant to this Registration Statement
will not exceed $1,000,000,000.
(4) Such indeterminate number of shares of Preferred Stock as may from time
to time be issued at indeterminate prices or issuable upon conversion
of Debt Securities.
(5) Such indeterminate number of shares of Common Stock as may from time to
time be issued at indeterminate prices or issuable upon conversion of
Debt Securities or Preferred Stock registered hereunder, as the case
may be.
(6) Omitted pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1933, as amended.
(7) Of this amount, $151,515 was previously paid with the filing of the
registration statement on May 2, 1997. A filing fee of $22,406 was
previously paid for the $64,978,000 of securities carried forward from
Registration Statement No. 33-62629
pursuant to Rule 429.
* Initially left blank pursuant to General Instruction II.D.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT ALSO RELATES TO SECURITIES REGISTERED
AND REMAINING UNISSUED UNDER REGISTRATION STATEMENT NO. 33-62629 PREVIOUSLY
FILED BY THE REGISTRANT.
<PAGE>
SUBJECT TO COMPLETION
DATED MARCH 20, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
FRANCHISE FINANCE CORPORATION OF AMERICA
$1,000,000,000
DEBT SECURITIES, PREFERRED STOCK AND COMMON STOCK
Franchise Finance Corporation of America (the "Company") may from time
to time offer in one or more series (i) its debt securities (the "Debt
Securities"), or (ii) shares of its preferred stock (the "Preferred Stock"), or
(iii) shares of its Common Stock, par value $.01 per share (the "Common Stock"),
with an aggregate public offering price of up to $1,000,000,000 on terms to be
determined at the time of offering. The Debt Securities, the Preferred Stock and
the Common Stock (collectively, the "Securities") may be offered, separately or
together, in separate series, in amounts, at prices and on terms to be set forth
in one or more supplements to this Prospectus (each, a "Prospectus Supplement").
The specific terms of the Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, currency, form
(which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the Company's option or repayment
at the holder's option, terms for sinking fund payments, terms for conversion
into Preferred Stock or Common Stock, covenants and any initial public offering
price; and (ii) in the case of Preferred Stock, the specific designation and
stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, and any initial public offering price; and (iii) in the case of
Common Stock, any initial public offering price. In addition, such specific
<PAGE>
terms may include limitations on actual or constructive ownership and
restrictions on transfer of the Securities, in each case as may be appropriate
to preserve the status of the Company as a real estate investment trust ("REIT")
for federal income tax purposes. See "Restrictions on Transfers of Capital
Stock."
The applicable Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.
The Securities may be offered directly, through agents designated from
time to time by the Company, or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of any of the Securities, their
names, and any applicable purchase price, fee, commission or discount
arrangement between or among them, will be set forth, or will be calculable from
the information set forth, in the applicable Prospectus Supplement. See "Plan of
Distribution." No Securities may be sold without delivery of the applicable
Prospectus Supplement describing the method and terms of the offering of such
series of Securities.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------------------------------
The date of this Prospectus is March ___, 1998
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<PAGE>
Certain persons participating in an offering of Securities may engage
in transactions that stabilize, maintain or otherwise affect the price of the
Securities. Such transactions may include stabilizing, the purchase of
Securities to cover syndicate short positions and the imposition of penalty
bids.
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The registration
statement on Form S-3 (of which this Prospectus is a part) (the "Registration
Statement"), the exhibits and schedules forming a part thereof and the reports,
proxy statements and other information filed by the Company with the Commission
in accordance with the Exchange Act can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company makes its
filings electronically. The Commission maintains a website that contains
reports, proxy and information statements and other information regarding
registrants that file electronically, which information can be accessed at
http://www.sec.gov. In addition, the Common Stock is listed on the New York
Stock Exchange and similar information concerning the Company can be inspected
and copied at the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission the Registration Statement
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities. This Prospectus does not contain all the information
set forth in the Registration Statement, certain portions of which have been
omitted as permitted by the Commission's rules and regulations. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto.
4
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
(i) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997;
(iii) the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997;
(iv) the Company's Current Report on Form 8-K dated June 9, 1997;
(v) the Company's Current Report on Form 8-K dated August
5, 1997;
(vi) the Company's Current Report on Form 8-K dated September 11,
1997;
(vii) the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997;
(viii) the Company's Current Report on Form 8-K dated December 29,
1997;
(ix) the Company's Current Report on Form 8-K dated January
27, 1998;
(x) the Company's Current Report on Form 8-K dated February
17, 1998; and
(xi) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A
filed June 28, 1994.
5
<PAGE>
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to termination of the offering of the Securities, shall be
deemed to be incorporated by reference in this Prospectus from the date of the
filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded to the extent that a statement contained in this Prospectus or in any
document filed after the date of this Prospectus which is deemed to be
incorporated by reference in this Prospectus modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated by reference in this Prospectus (not
including exhibits to the documents that have been incorporated herein by
reference unless the exhibits are themselves specifically incorporated by
reference). Such written or oral request should be directed to the Corporate
Secretary at 17207 North Perimeter Drive, Scottsdale, Arizona 85255, telephone
number (602) 585-4500.
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<PAGE>
THE COMPANY
Franchise Finance Corporation of America (the "Company") is a specialty
retail finance company dedicated primarily to providing real estate financing to
the chain restaurant industry, as well as to the convenience store and
automotive parts and service industries. The Company's primary strategy is to
provide all necessary financing for multi-unit operators and franchisors who own
retail properties in which the Company invests. The Company's investments are
diversified by geographic region, operator and chain. The Company's Common Stock
trades on the New York Stock Exchange (the "NYSE") under the symbol FFA. The
Company is a Delaware corporation and maintains its corporate offices at 17207
North Perimeter Drive, Scottsdale, Arizona 85255 and its telephone number is
(602) 585-4500.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes, which may include investment in additional
properties, the expansion and improvement of certain properties in the Company's
portfolio and the repayment of indebtedness.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth ratios of earnings to fixed charges for
the periods shown. The ratio shown for the year ended December 31, 1993 is
derived from the combined historical financial information of Franchise Finance
Corporation of America I, a Delaware corporation, and eleven real estate limited
partnerships, the predecessors to the Company (the "Combined Predecessors"). The
ratio shown for the year ended December 31, 1994 is derived from the financial
information of both the Combined Predecessors and the Company. The ratios shown
for the years ended December 31, 1995, 1996 and 1997 are for the Company.
The Company commenced operations on June 1, 1994 as a result of the
merger of the Combined Predecessors. The information for the periods prior to
that date is, in effect, a restatement of the historical operating results of
Franchise Finance Corporation of America I and eleven real estate limited
partnerships as if they had been consolidated since January 1, 1993. The
predecessor companies were primarily public real estate limited partnerships
which were prohibited from borrowing for real estate acquisitions and had no
opportunity for growth through acquisitions; therefore, the investment
objectives of the Company are different than the objectives of the Combined
Predecessors, and the information presented below does not necessarily present
the ratios of earnings to fixed charges as they would have been had the Company
operated as a REIT for all periods presented.
Year Ended December 31,
- --------------------------------------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
43.73 16.78 4.16 3.54 3.04
7
<PAGE>
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. For this purpose, earnings consist of income
(including gain or loss on the sale of property) before REIT transaction related
costs plus fixed charges. Fixed charges consist of interest expense (including
interest costs capitalized, if any) and the amortization of debt issuance costs.
To date, the Company has not issued any Preferred Stock; therefore, the ratios
of earnings to combined fixed charges and preferred share dividends are the same
as the ratios presented above.
DESCRIPTION OF DEBT SECURITIES
General
The Debt Securities will be direct obligations of the Company, which
may be secured or unsecured, and which may be senior or subordinated
indebtedness of the Company. An unqualified opinion of counsel as to legality of
the Debt Securities will be obtained by the Company and filed by means of a
post-effective amendment or Form 8-K prior to the time any sales of the Debt
Securities are made. The Debt Securities may be issued under one or more
indentures, each dated as of a date on or before the issuance of the Debt
Securities to which it relates, subject to such amendments or supplements as may
be adopted from time to time. Each such indenture (collectively, the
"Indenture") will be entered into between the Company and a trustee (the
"Trustee"), which may be the same Trustee. The applicable Indenture will be
subject to, and governed by, the Trust Indenture Act of 1939, as amended. The
statements made hereunder relating to the Indenture and the Debt Securities to
be issued thereunder are summaries of certain provisions thereof, do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all provisions of the Indenture and such Debt Securities.
Capitalized terms used but not defined herein shall have the respective meanings
set forth in the Indenture.
Terms
The particular terms of the Debt Securities offered by a Prospectus
Supplement will be described in the particular Prospectus Supplement, along with
any applicable modifications of or additions to the general terms of the Debt
Securities as described herein and in the applicable Indenture and any
applicable material federal income tax considerations. Accordingly, for a
description of the terms of any series of Debt Securities, reference must be
made to both the Prospectus Supplement relating thereto and the description of
the Debt Securities set forth in this Prospectus.
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<PAGE>
The Indenture provides that the Debt Securities may be issued without
limits as to aggregate principal amount, in one or more series, in each case as
established from time to time by the Company's Board of Directors or as
established in one or more indentures supplemental to the Indenture. All Debt
Securities of one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the holders
(the "Holders") of the Debt Securities of such series, for issuances of
additional Debt Securities of such series.
The applicable Indenture will provide that the Company may, but need
not, designate more than one Trustee thereunder, each with respect to one or
more series of Debt Securities. Any Trustee under an Indenture may resign or be
removed with respect to one or more series of Debt Securities, and a successor
Trustee may be appointed to act with respect to such series. If two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a Trustee of a trust under the applicable
Indenture separate and apart from the trust administered by any other Trustee
and, except as otherwise indicated herein, any action described herein to be
taken by a Trustee may be taken by each such Trustee with respect to, and only
with respect to, the one or more series of Debt Securities for which it is
Trustee under the applicable Indenture.
Reference is made to the Prospectus Supplement relating to the series
of Debt Securities offered thereby for the specific terms thereof, including:
(a) the title of such Debt Securities;
(b) the aggregate principal amount of such Debt Securities and
any limit on such aggregate principal amount (subject to certain
exceptions described in the Indenture);
(c) the price (expressed as a percentage of the principal
amount thereof or otherwise) at which such Debt Securities will be
issued and, if other than the principal amount thereof, the portion of
the principal amount thereof payable upon declaration of acceleration
of the maturity thereof, or (if applicable) the portion of the
principal amount of such Debt Securities that is convertible into
Common Stock or Preferred Stock or the method by which any such portion
shall be determined;
(d) if convertible into Common Stock, Preferred Stock, or
both, the terms on which such Debt Securities are convertible
(including the initial conversion price or rate and conversion period)
and, in connection with the preservation of the Company's status as a
REIT, any applicable limitations on conversion or on the ownership or
transferability of the Common Stock or the Preferred Stock into which
such Debt Securities are convertible;
9
<PAGE>
(e) the date or dates, or the method for determining such date
or dates, on which the principal of such Debt Securities will be
payable;
(f) the rate or rates, at which such Debt Securities will bear
interest, if any, or the method by which such rate or rates shall be
determined, the date or dates, or the method for determining such date
or dates, from which any interest will accrue, the dates upon which any
such interest will be payable, the record dates for payment of such
interest, or the method by which any such dates shall be determined,
and the basis upon which interest shall be calculated if other than
that of a 360-day year of twelve 30-day months;
(g) the place or places where the principal of (and premium,
if any) and interest, if any, on such Debt Securities will be payable,
where such Debt Securities may be surrendered for conversion,
registration of transfer, or exchange (each to the extent applicable),
and where notices or demands to or upon the Company in respect of such
Debt Securities and the Indenture may be served;
(h) the period or periods, if any, within which, the price or
prices at which, and the terms and conditions upon which such Debt
Securities may be redeemed, as a whole or, in part, at the Company's
option (if the Company has the option to redeem);
(i) the obligation, if any, of the Company to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or
periods within which, the price or prices at which and the terms and
conditions upon which such Debt Securities will be redeemed, repaid or
purchased, as a whole or in part, pursuant to such obligation;
(j) if other than U.S. dollars, the currency or currencies in
which such Debt Securities are denominated and payable, which may be a
foreign currency, currency unit, or a composite currency or currencies,
and the terms and conditions relating thereto;
(k) whether the amount of payments of principal of (and
premium, if any) or interest, if any, on such Debt Securities may be
determined with reference to an index, formula or other method (which
index, formula or method may, but need not, be based on a currency,
currencies, currency unit or units or composite currency or currencies)
and the manner in which such amounts shall be determined;
(l) whether such Debt Securities will be issued in
certificated and/or book-entry form, and the identity of any applicable
depositary for such Debt Securities;
10
<PAGE>
(m) whether such Debt Securities will be in registered or
bearer form and, if in registered form, the denominations thereof if
other than $1,000 and any integral multiple thereof and, if in bearer
form, the denominations thereof and terms and conditions relating
thereto;
(n) the applicability, if any, of the defeasance and covenant
defeasance provisions described herein or set forth in the applicable
Indenture, or any modification thereof or addition thereto;
(o) any deletions from, modifications of or additions to the
events of default or covenants of the Company, described herein or in
the applicable Indenture with respect to such Debt Securities, and any
change in the right of any Trustee or any of the Holders to declare
the principal amount of any such Debt Securities due and payable;
(p) whether and under what circumstances the Company will pay
any additional amounts on such Debt Securities in respect of any tax,
assessment or governmental charge to Holders that are not United
States persons, and, if so, whether the Company will have the option to
redeem such Debt Securities in lieu of making such payment (and the
terms of any such option);
(q) the subordination provisions, if any, relating to such
Debt Securities;
(r) the provisions, if any, relating to any security provided
for such Debt Securities; and
(s) any other terms of such Debt Securities not inconsistent
with the provisions of the applicable Indenture.
If so provided in the applicable Prospectus Supplement, the Debt
Securities may be issued at a discount below their principal amount and provide
for less than the entire principal amount thereof to be payable upon declaration
of acceleration of the maturity thereof ("Original Issue Discount Securities").
In such cases, any special U.S. federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable Prospectus Supplement.
Except as may be set forth in any Prospectus Supplement, the Debt
Securities will not contain any provisions that would limit the Company's
ability to incur indebtedness or that would afford Holders of Debt Securities
protection in the event of a highly leveraged or similar transaction involving
the Company or in the event of a change of control. Certain existing
restrictions on ownership and transfers of the Common Stock and Preferred Stock
are, however, designed to preserve the Company's status as a REIT and,
therefore, may act to prevent or hinder a change of control. See "Restrictions
on Transfers of Capital Stock." Reference is made to the applicable Prospectus
Supplement for information with respect to any deletions from, modifications of
or additions to the events of default or covenants of the Company that are
described below, including any addition of a covenant or other provision
providing event risk or similar protection.
11
<PAGE>
Denominations, Interest, Registration and Transfer
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof.
Unless otherwise described in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series of Debt
Securities will be payable at the applicable Trustee's corporate trust office,
the address of which will be set forth in the applicable Prospectus Supplement;
provided, however, that, at the Company's option, payment of interest may be
made by check mailed to the address of the person entitled thereto as it appears
in the applicable register for such Debt Securities or by wire transfer of funds
to such person at an account maintained within the United States.
Subject to certain limitations imposed on Debt Securities in the
Indenture, the Debt Securities of any series will be exchangeable for any
authorized denomination of other Debt Securities of the same series and of a
like aggregate principal amount and tender upon surrender of such Debt
Securities at the applicable Trustee's corporate trust office or at the
applicable office of any agency of the Company. In addition, subject to certain
limitations imposed on Debt Securities in the Indenture, the Debt Securities of
any series may be surrendered for registration by transfer thereof at the
applicable Trustee's corporate trust office or at the applicable office of any
agency of the Company. Every Debt Security surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer and evidence of title and identity satisfactory to the
Trustee, the Company, or its transfer agent, as applicable. No service charge
will be made for any registration of transfer or exchange of any Debt
Securities. However, (with certain exceptions) the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. If the applicable Prospectus Supplement refers to any
transfer agent (in addition to the applicable Trustee) initially designated by
the Company with respect to any series of Debt Securities, the Company may at
any time rescind the designation of any such transfer agent or approve a change
in the location through which any such transfer agent acts, except that the
Company will be required to maintain a transfer agent in each place of payment
for such series. The Company may at any time designate additional transfer
agents with respect to any series of Debt Securities.
Neither the Company nor any Trustee shall be required to (a) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business
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<PAGE>
15 days before the day of mailing of notice of redemption of any Debt Securities
of that series that may be selected for redemption and ending at the close of
business on the day of mailing the relevant notice of redemption (or publication
of such notice with respect to bearer securities); (b) register the transfer of
or exchange any Debt Security, or portion thereof, so selected for redemption,
in whole or in part, except the unredeemed portion of any Debt Security being
redeemed in part; or (c) issue, register the transfer of or exchange any Debt
Security that has been surrendered for repayment at the Holder's option, except
the portion, if any, of such Debt Security not to be so repaid.
Merger, Consolidation or Sale of Assets
The applicable Indenture will provide that the Company may, with or
without the consent of the Holders of any outstanding Debt Securities,
consolidate with, or sell, lease or convey all or substantially all of its
assets to, or merge with or into, any other entity, provided that (a) either the
Company shall be the continuing entity, or the successor entity (if other than
the Company) formed by or resulting from any such consolidation or merger or
which shall have received the transfer of such assets shall be an entity
organized and existing under the laws of the United States or a state thereof
and such successor entity shall expressly assume the Company's obligation to pay
the principal of (and premium, if any) and interest on all the Debt Securities
and shall also assume the due and punctual performance and observance of all the
covenants and conditions contained in the Indenture; (b) immediately after
giving effect to such transaction and treating any indebtedness that becomes an
obligation of such successor entity, the Company or any subsidiary as a result
thereof as having been incurred by such successor entity, the Company or such
subsidiary at the time of such transaction, no event of default under the
Indenture, and no event that, after notice or the lapse of time, or both, would
become such an event of default, shall have occurred and be continuing; and (c)
an officers' certificate and legal opinion covering such conditions shall be
delivered to each Trustee.
Certain Covenants
Existence. Except as permitted under "Merger, Consolidation or Sale of
Assets," the applicable Indenture will require the Company to do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence, material rights (by certificate of incorporation, bylaws
and statute) and material franchises; provided, however, that the Company shall
not be required to preserve any right or franchise if its Board of Directors
determines that the preservation thereof is no longer desirable in the conduct
of its business.
Maintenance of Properties. The applicable Indenture will require the
Company to cause all of its material properties used or useful in the conduct of
its business or the business of any
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subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and to cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the Company's judgment may be necessary so that the business carried on or in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that the Company and its subsidiaries shall not be prevented
from selling or otherwise disposing of their properties for value in the
ordinary course of business.
Insurance. The applicable Indenture will require the Company to, and to
cause each of its subsidiaries to, keep in force upon all of its properties and
operations policies of insurance carried with responsible companies in such
amounts and covering all such risks as shall be customary in the industry in
accordance with prevailing market conditions and availability.
Payment of Taxes and Other Claims. The applicable Indenture will
require the Company to pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed on it or any subsidiary or on the income,
profits or property of the Company or any subsidiary and (b) all lawful claims
for labor, materials and supplies that, if unpaid, might by law become a lien
upon the property of the Company or any subsidiary; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim the amount, applicability
or validity of which is being contested in good faith by appropriate
proceedings.
Provision of Financial Information. Whether or not the Company is
subject to Section 13 or 15(d) of the Exchange Act, the Indenture will require
the Company, within 15 days after each of the respective dates by which the
Company would have been required to file annual reports, quarterly reports and
other documents with the Commission if the Company were so subject, (a) to
transmit by mail to all Holders of Debt Securities, as their names and addresses
appear in the applicable register for such Debt Securities, without cost to such
Holders, copies of the annual reports, quarterly reports and other documents
that the Company would have been required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act if the Company were subject to such
Sections, (b) to file with the Trustee copies of the annual reports, quarterly
reports and other documents that the Company would have been required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act if the
Company were subject to such Sections, and (c) to supply, promptly upon written
request and payment of the reasonable cost of duplication and delivery, copies
of such documents to any prospective Holder of Debt Securities.
Additional Covenants. Any additional covenants of the Company with
respect to any of the series of Debt Securities will be set forth in the
Prospectus Supplement relating thereto.
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Events of Default, Notice and Waiver
Unless otherwise provided in the applicable Indenture, each Indenture
will provide that the following events are "events of default" with respect to
any series of Debt Securities issued thereunder: (a) default for 30 days in the
payment of any installment of interest on any Debt Security of such series; (b)
default in the payment of the principal of (or premium, if any, on) any Debt
Security of such series at its Maturity; (c) default in making any sinking fund
payment as required for any Debt Security of such series; (d) default in the
performance or breach of any other covenant or warranty of the Company contained
in the Indenture (other than a covenant or warranty a default in the performance
of which or the breach of which is elsewhere in this paragraph specifically
dealt with), continued for 60 days after written notice as provided in the
applicable Indenture; (e) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company or any of its
subsidiaries (including obligations under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting principles),
in an aggregate principal amount in excess of $10 million or under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the Company or any
of its subsidiaries (including such leases), in an aggregate principal amount in
excess of $10 million, whether such indebtedness now exists or shall hereafter
be created, which default shall have resulted in such indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable or such obligations being accelerated, without such
acceleration having been rescinded or annulled; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Company or any Significant Subsidiary of the
Company; and (g) any other Event of Default as defined with respect to a
particular series of Debt Securities. The term "Significant Subsidiary" has the
meaning ascribed to such term in Regulation S-K promulgated under the Securities
Act.
If an event of default under any Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the applicable Trustee or the holders of not less than 25% in
principal amount of the outstanding Debt Securities of that series may declare
the principal amount (or, if the Debt Securities of that series are Original
Issue Discount Securities or indexed securities, such portion of the principal
amount as may be specified in the terms thereof) of all the Debt Securities of
that series to be due and payable immediately by written notice thereof to the
Company (and to the applicable Trustee if given by the holders). However, at any
time after such a declaration of acceleration with respect to Debt Securities of
such series has been made, but before a judgment or decree for payment of the
money due has been obtained by the applicable Trustee, the holders of not less
than a majority of the principal amount of the outstanding Debt
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Securities of such series may rescind and annul such declaration and its
consequences if (a) the Company shall have deposited with the applicable Trustee
all required payments of the principal of (and premium, if any) and overdue
interest on the Debt Securities of such series, plus certain fees, expenses,
disbursements and advances of the applicable Trustee and (b) all events of
default, other than the nonpayment of accelerated principal (or specified
portion thereof), with respect to Debt Securities of such series have been cured
or waived as provided in the Indenture. The applicable Indenture will also
provide that the holders of not less than a majority in principal amount of the
outstanding Debt Securities of any series may waive any past default with
respect to such series and its consequences, except a default (y) in the payment
of the principal of (or premium, if any) or interest on any Debt Security of
such series or (z) in respect of a covenant or provision contained in the
Indenture that cannot be modified or amended without the consent of the holder
of each outstanding Debt Security affected thereby.
The applicable Indenture will require each Trustee to give notice to
the holders of Debt Securities within 90 days of a default under the Indenture
unless such default shall have been cured or waived; provided, however; that
such Trustee may withhold notice to the holders of any series of Debt Securities
of any default with respect to such series (except a default in the payment of
the principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if specified responsible officers of the Trustee
consider such withholding to be in such holders' interest.
The applicable Indenture will provide that no holders of Debt
Securities of any series may institute any proceedings, judicial or otherwise,
with respect to the Indenture or for any remedy thereunder, except in the case
of failure of the Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an event of default from the
holders of not less than 25% in principal amount of the outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it and no contrary directions from the holders of more than 50%
of the outstanding Debt Securities of such series. This provision will not
prevent, however, any holder of Debt Securities from instituting suit for the
enforcement of payment of the principal of (and premium, if any) and interest on
such Debt Securities at the respective due dates thereof.
The applicable Indenture will provide that the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any holders of any series of Debt Securities then
outstanding under the Indenture, unless such holders shall have offered to the
Trustee reasonable security or indemnity. The holders of not less than a
majority in principal amount of the outstanding Debt Securities of any series
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the
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Trustee, or of exercising any trust or power conferred upon the Trustee. The
Trustee may, however, refuse to follow any direction that is in conflict with
any law or the Indenture or that may involve the Trustee in personal liability
or that may be unduly prejudicial to the holders of Debt Securities of such
series not joining therein.
Modification of the Indenture
Modifications and amendments of any Indenture with respect to any
series will be permitted only with the consent of the holders of not less than a
majority in principal amount of all outstanding Debt Securities of such series;
provided, however, that no such modification or amendment may, without the
consent of the holder of each Debt Security of such series, (a) change the
Stated Maturity of the principal of (or premium, if any, on), or any installment
of principal of or interest on any such Debt Security; (b) reduce the principal
amount of, or the rate or amount of interest on, or any premium payable on
redemption of, any such Debt Security, or reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon declaration
of acceleration of the Maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the holder of any such Debt Security;
(c) change the place of payment, or the coin or currency, for payment of
principal of (or premium, if any), or interest on any such Debt Security; (d)
impair the right to institute suit for the enforcement of any payment on or with
respect to any such Debt Security on or after the Stated Maturity or redemption
date thereof; (e) reduce the above-stated percentage of Outstanding Debt
Securities of any series necessary to modify or amend the Indenture, to waive
compliance with certain provisions thereof or certain defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth in the
Indenture; or (f) modify any of the foregoing provisions or any of the
provisions relating to the waiver of certain past defaults or certain covenants,
except to increase the required percentage to effect such action or to provide
that certain other provisions may not be modified or waived without the consent
of the holder of such Debt Security.
The holders of a majority in aggregate principal amount of outstanding
Debt Securities of each series may, on behalf of all holders of Debt Securities
of that series waive, insofar as that series is concerned, compliance by the
Company with certain restrictive covenants in the applicable Indenture.
Modifications and amendments of the Indenture will be permitted to be
made by the Company and the Trustee without the consent of any holder of Debt
Securities for any of the following purposes: (a) to evidence the succession of
another person to the Company as obligor under the Indenture; (b) to add to the
covenants of the Company for the benefit of the holders of all or any series of
Debt Securities or to surrender any right or power conferred upon the Company in
the Indenture; (c) to add additional events of default for the benefit of the
holders of
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all or any series of Debt Securities; (d) to add or change certain provisions of
the Indenture to facilitate the issuance of, or to liberalize certain terms of,
Debt Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided that such action shall not adversely
affect the interests of the holders of the Debt Securities of any series in any
material respect; (e) to change or eliminate any provisions of the Indenture,
provided that any such change or elimination shall become effective only when
there are no Debt Securities outstanding of any series created prior thereto
that are entitled to the benefit of such provision; (f) to secure the Debt
Securities; (g) to establish the form or terms of Debt Securities of any Series,
including the provisions and procedures, if applicable, for the conversion of
such Debt Securities into Common Stock or Preferred Stock; (h) to provide for
the acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one Trustee; (i)
to cure any ambiguity, defect or inconsistency in the Indenture; provided,
however, that such action shall not adversely affect the interests of holders of
Debt Securities of any series in any material respect; or (j) to supplement any
of the provisions of the Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt Securities,
provided, however, that such action shall not adversely affect the interests of
the holders of the Debt Securities of any series in any material respect.
The applicable Indenture will provide that in determining whether the
holders of the requisite principal amount of outstanding Debt Securities of a
series have given any request, demand, authorization, direction, notice, consent
or waiver thereunder or whether a quorum is present at a meeting of holders of
Debt Securities, (a) the principal amount of an Original Issue Discount Security
that shall be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (b) the principal amount of
any Debt Security denominated in a foreign currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (a) above), (c) the
principal amount of an indexed security that shall be deemed outstanding shall
be the principal face amount of such indexed security at original issuance,
unless otherwise provided with respect to such indexed security in the
applicable Indenture, and (d) Debt Securities owned by the Company or any other
obligor upon the Debt Securities or any affiliate of the Company or of such
other obligor shall be disregarded.
The applicable Indenture will contain provisions for convening meetings
of the holders of Debt Securities of a series. A meeting may be permitted to be
called at any time by the Trustee, and also, upon request, by the Company or the
holders of at least 10% in principal amount of the outstanding Debt Securities
of such series, in any such case upon notice given as
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provided in the Indenture. Except for any consent that must be given by the
holder of each Debt Security affected by certain modifications and amendments of
the Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; provided, however, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
holders of a specified percentage, which is less than a majority, in principal
amount of the outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of holders of Debt Securities of any series duly
held in accordance with the Indenture will be binding on all holders of Debt
Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver that may be given by the holders of
not less than a specified percentage in principal amount of the outstanding Debt
Securities of a series, the persons holding or representing such specified
percentage in principal amount of the outstanding Debt Securities of such series
will constitute a quorum.
Notwithstanding the foregoing provisions, the applicable Indenture will
provide that if any action is to be taken at a meeting of holders of Debt
Securities of any series with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that the Indenture expressly
provides may be made, given or taken by the holders of a specified percentage in
principal amount of all outstanding Debt Securities affected thereby, or of the
holders of such series and one or more additional series: (a) there shall be no
minimum quorum requirement for such meeting and (b) the principal amount of the
outstanding Debt Securities of such series that vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made,
given or taken under the Indenture.
Discharge, Defeasance and Covenant Defeasance
If provided for in the applicable Prospectus Supplement, the Company
will be permitted, at its option, to discharge certain obligations to holders of
any series of Debt Securities by irrevocably depositing with the applicable
Trustee, in trust, funds in such currency or currencies, currency unit or units
or composite currency or currencies in which such Debt Securities
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are payable in an amount sufficient to pay the entire indebtedness on such Debt
Securities in respect of principal (and premium, if any) and interest.
If provided for in the applicable Prospectus Supplement, the Company
may elect either to (a) defease and be discharged from any and all obligations
with respect to any series of Debt Securities (except for the obligation to pay
additional amounts, if any, upon the occurrence of certain events of tax,
assessment or governmental charge with respect to payments on such Debt
Securities and the obligations to register the transfer or exchange of such Debt
Securities, to replace temporary or mutilated, destroyed, lost or stolen Debt
Securities, to maintain an office or agency in respect of such Debt Securities
and to hold money for payment in trust) ("defeasance") or (b) be released from
certain obligations with respect to such Debt Securities under the applicable
Indenture (generally being the restrictions described under "Certain Covenants",
herein) or, if provided in the applicable Prospectus Supplement, its obligations
with respect to any other covenant, and any omission to comply with such
obligations shall not constitute a default or an event of default with respect
to such Debt Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Company with the applicable Trustee, in trust, of an
amount, in such currency or currencies, currency unit or units or composite
currency or currencies in which such Debt Securities are payable at Stated
Maturity, or Government Obligations (as defined below), or both, applicable to
such Debt Securities that through the scheduled payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any) and interest on such
Debt Securities, and any mandatory sinking fund or analogous payments thereon,
on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the
Company has delivered to the applicable Trustee an opinion of counsel (as
specified in the applicable indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such opinion of counsel, in the case of
defeasance, must refer to and be based on a ruling of the Internal Revenue
Service (the "IRS") or a change in applicable U.S. federal income tax law
occurring after the date of the Indenture. In the event of such defeasance, the
holders of such Debt Securities would thereafter be able to look only to such
trust fund for payment of principal (and premium, if any) and interest.
"Government Obligations" means securities that are (a) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged, or (b)
obligations of
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a person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
Currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit Obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt; provided, however, that (except
as required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of interest on or principal of the Government Obligation
evidenced by such depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the applicable Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security or (b)
a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security will be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency, currency unit or composite currency in which
such Debt Security becomes payable as a result of such election or Conversion
Event based on the applicable market exchange rate. "Conversion Event" means the
cessation of use of (i) a currency, currency unit or composite currency both by
the government of the country which issued such currency and for the settlement
of transactions by a central bank or other public institution of or within the
international banking community, (ii) the ECU both within the European Monetary
System and for the settlement of transactions by public institutions of or
within the European Communities, or (iii) any currency unit or composite
currency other than the ECU for the purposes for which it was established.
Unless otherwise provided in the applicable Prospectus Supplement, all payments
of principal of (and premium, if any) and interest on any Debt Security that is
payable in a foreign currency that ceases to be used by its government of
issuance shall be made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to
any Debt Securities and such Debt Securities are declared due and payable
because of the occurrence of any event
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of default other than the event of default described in clause (d) under "Events
of Default, Notice and Waiver" with respect to the specified sections of the
applicable Indenture (which sections would no longer be applicable to such Debt
Securities) or clause (g) thereunder with respect to any other covenant as to
which there has been covenant defeasance, the amount in such currency, currency
unit or composite currency in which such Debt Securities are payable, and
Government Obligations on deposit with the applicable Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
stated maturity, but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such event of default.
The Company would, however, remain liable to make payment of such amounts due at
the time of acceleration.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance, including
any modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
Conversion Rights
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Stock or Preferred Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Common Stock or Preferred
Stock, the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be, at the option of the
holders or the Company, the events requiring an adjustment of the conversion
price and provisions affecting conversion in the event of the redemption of such
Debt Securities and any restrictions on conversion, including restrictions
directed at maintaining the Company's REIT status.
Payment
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any Series of Debt
Securities will be payable at the Trustee's corporate trust office, the address
of which will be stated in the applicable Prospectus Supplement; provided,
however, that, at the Company's option, payment of interest may be made by check
mailed to the address of the person entitled thereto as it appears in the
applicable register for such Debt Securities or by wire transfer of funds to
such person at an account maintained within the United States.
All amounts paid by the Company to a paying agent or a Trustee for the
payment of the principal of or any premium or interest on any Debt Security that
remain unclaimed at the end of two years after such principal, premium or
interest has become due and payable will be repaid to the Company, and the
holder of such Debt Security thereafter may look only to the Company for payment
thereof, subject to applicable state escheat laws.
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Global Securities
The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary identified in the applicable
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such Series.
DESCRIPTION OF COMMON STOCK
The Company has authority to issue 200,000,000 shares of Common Stock,
par value $.01 per share (the "Common Stock"). At March 13, 1998, the Company
had outstanding 47,855,638 shares of Common Stock.
General
The following description of the Common Stock sets forth certain
general terms and provisions of the Common Stock to which any Prospectus
Supplement may relate, including a Prospectus Supplement providing that the
Common Stock will be issuable upon conversion of Debt Securities or Preferred
Stock. An unqualified opinion of counsel as to legality of the Common Stock will
be obtained by the Company and filed by means of a post-effective amendment or
Form 8-K prior to the time any sales of Common Stock are made. The statements
below describing the Common Stock are in all respects subject to and qualified
in their entirety by reference to the applicable provisions of the Company's
Second Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") and Bylaws.
Terms
Subject to the preferential rights of any other shares or series of
stock, holders of Common Stock will be entitled to receive dividends when, as
and if declared by the Company's Board of Directors out of funds legally
available therefor. Payment and declaration of dividends on the Common Stock and
purchases of shares thereof by the Company will be subject to certain
restrictions if the Company fails to pay dividends on the Preferred Stock, if
any. See "Description of Preferred Stock." Upon any liquidation, dissolution or
winding up of the Company, holders of Common Stock will be entitled to share
equally and ratably in any assets available for distribution to them, after
payment or provision for payment of the debts and other liabilities of the
Company and the preferential amounts owing with respect to any outstanding
Preferred Stock. The Common Stock will possess ordinary voting rights for the
election of directors and in respect of other corporate matters, each share
entitling the holder thereof to one vote. Holders of Common Stock will not have
cumulative voting rights in the election of
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directors, which means that holders of more than 50% of all the shares of the
Company's Common Stock voting for the election of directors can elect all the
directors if they choose to do so and the holders of the remaining shares of
Common Stock cannot elect any directors. Holders of shares of Common Stock will
not have preemptive rights, which means they have no right to acquire any
additional shares of Common Stock that may be issued by the Company at a
subsequent date. All shares of Common Stock now outstanding are, and additional
shares of Common Stock offered will be when issued, fully paid and
nonassessable; and no shares of Common Stock are or will be subject to any
exchange or conversion rights.
Restrictions on Ownership
For the Company to qualify as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"), not more than 50% in value of its outstanding
capital stock may be owned, actually or constructively, by five or fewer
individuals (defined in the Code to include certain entities) during the last
half of a taxable year. To assist the Company in meeting this requirement, the
Company may take certain actions to limit the beneficial ownership, actually or
constructively, by a single person or entity of the Company's outstanding equity
securities. See "Restrictions on Transfers of Capital Stock."
Transfer Agent
The registrar and transfer agent for the Common Stock is Gemisys
Transfer Agents, 7103 South Revere Parkway, Englewood, CO 80112.
DESCRIPTION OF PREFERRED STOCK
The Company has authority to issue up to 10,000,000 shares of Preferred
Stock as described below. At March 13, 1998, there were no shares of Preferred
Stock issued or outstanding.
General
The following description of the Preferred Stock sets forth certain
general terms and provisions of the Preferred Stock to which any Prospectus
Supplement may relate. An unqualified opinion of counsel as to legality of the
Preferred Stock will be obtained by the Company and filed by means of a
post-effective amendment or Form 8-K prior to the time any sales of Preferred
Stock are made. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Certificate of Incorporation (including the
applicable Certificate of Designations) and Bylaws.
Shares of Preferred Stock may be issued from time to time in one or
more series as authorized by the Company's Board of Directors. Subject to
limitations prescribed by the Delaware General Corporation Law and the
Certificate of Incorporation, the
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Company's Board of Directors is authorized to fix the number of shares
constituting each series of Preferred Stock and the designations and powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution by the Board of Directors or a duly
authorized committee thereof. Notwithstanding the foregoing (i) any series of
Preferred Stock may be voting or non-voting, provided that the voting rights of
any voting shares of Preferred Stock will be limited to no more than one vote
per share on matters voted upon by the holders of such series, and (ii) in the
event any person acquires 20% or more of the outstanding shares of Common Stock
and/or Preferred Stock, the Board of Directors cannot issue any series of
Preferred Stock unless such issuance is approved by the vote of holders of at
least 50% of the outstanding shares of Common Stock. The Preferred Stock will,
when issued, be fully paid and nonassessable and will have no preemptive rights.
Reference is made to the Prospectus Supplement relating to the
Preferred Stock offered thereby for specific terms, including:
(a) the title and stated value of such Preferred Stock;
(b) the number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such
Preferred Stock;
(c) the dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Stock;
(d) the date from which dividends on such Preferred Stock
shall accumulate;
(e) the procedures for any auction and remarketing, if any,
for such Preferred Stock;
(f) the provision for a sinking fund, if any, for such
Preferred Stock;
(g) any voting rights of such Preferred Stock;
(h) the provision for redemption, if applicable, of such
Preferred Stock;
(i) any listing of such Preferred Stock on any securities
exchange;
(j) the terms and conditions, if applicable, upon which such
Preferred Stock will be convertible into Common Stock, including the
conversion price (or manner of
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calculation thereof);
(k) a discussion of material federal income tax considerations
applicable to such Preferred Stock;
(l) any limitations on actual, beneficial or constructive
ownership and restrictions on transfer, in each case as may be
appropriate to preserve the Company's REIT status;
(m) the relative ranking and preferences of such Preferred
Stock as to dividend rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company;
(n) any limitations on issuance of any series of Preferred
Stock ranking senior to or on a parity with such series of Preferred
Stock as to dividend rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company; and
(o) any other specific terms, preferences, rights, limitations
or restrictions of such Preferred Stock.
Rank
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the affairs of the Company, rank (a)
senior to all Common Stock and to all equity or other securities ranking junior
to such Preferred Stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Company; (b) on a parity with all
equity securities issued by the Company the terms of which specifically provide
that such equity securities rank on a parity with the Preferred Stock with
respect to dividend rights or rights upon liquidation, dissolution or winding up
of the affairs of the Company; and (c) junior to all equity securities issued by
the Company the terms of which specifically provide that such equity securities
rank senior to the Preferred Stock with respect to dividend rights or rights
upon liquidation, dissolution or winding up of the affairs of the Company. For
these purposes, the term "equity securities" does not include convertible debt
securities.
Dividends
Holders of shares of the Preferred Stock of each series shall be
entitled to receive, when, as and if declared by the Company's Board of
Directors, out of the Company's assets legally available for payment, cash
dividends at such rates and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record
as they appear on the Company's stock transfer books on such record dates as
shall be fixed by the Company's Board of Directors.
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Dividends on any series of Preferred Stock will be cumulative.
Dividends will be cumulative from and after the date set forth in the applicable
Prospectus Supplement.
If any shares of Preferred Stock of any series are outstanding, full
dividends shall not be declared or paid or set apart for payment on the
Preferred Stock of any other series ranking, as to dividends, on a parity with
or junior to the Preferred Stock of such series for any period unless full
cumulative dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof is set apart for such
payment on the Preferred Stock of such series for all past dividend periods and
the then current dividend period. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the shares of
Preferred Stock of any series and the shares of any other series of Preferred
Stock ranking on a parity as to dividends with the Preferred Stock of such
series, all dividends declared on shares of Preferred Stock of such series and
any other series of Preferred Stock ranking on a parity as to dividends of such
Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share on the Preferred Stock of such series and such other series
of Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the shares of Preferred Stock of such series and
such other series of Preferred Stock bear to each other. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on Preferred Stock of such series that may be in arrears.
Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Preferred Stock of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for payment for all past dividend periods and the
then current dividend period, no dividends (other than in the Common Stock or
other capital stock of the Company ranking junior to the Preferred Stock of such
series as to dividends and upon liquidation) shall be declared or paid or set
aside for payment nor shall any other distribution be declared or made on the
Common Stock or any other capital stock of the Company ranking junior to or on a
parity with the Preferred Stock of such series as to dividends or upon
liquidation, nor shall the Common Stock or any other capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of such series
as to dividends or upon liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any amounts be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the Company (except
by conversion into or exchange for other capital stock of the Company ranking
junior to the Preferred Stock of such series as to dividends and upon
liquidation).
Any dividend payment made on shares of a series of Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to shares of such series that
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remains payable.
Redemption
If so provided in the applicable Prospectus Supplement, the shares of
Preferred Stock will be subject to mandatory redemption or redemption at the
Company's option, as a whole or in part, in each case on the terms, at the times
and at the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that
is subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accumulated and unpaid dividends thereon to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of capital stock of the Company, the terms of such
Preferred Stock may provide that, if no such capital stock shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be converted into shares of the applicable capital
stock of the Company pursuant to conversion provisions specified in the
applicable Prospectus Supplement.
Notwithstanding the foregoing, unless full cumulative dividends on all
shares of such series of Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for payment for all past dividend periods and the then current
dividend period, no shares of such series of Preferred Stock shall be redeemed
unless all outstanding shares of Preferred Stock of such series are
simultaneously redeemed; provided, however, that the foregoing shall not prevent
the purchase or acquisition of shares of Preferred Stock of such series to
preserve the Company's REIT status or pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of Preferred Stock
of such series. In addition, unless full cumulative dividends on all outstanding
shares of such series of Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for payment for all past dividend periods and the then current
dividend period, the Company shall not purchase or otherwise acquire directly or
indirectly any shares of Preferred Stock of such series (except by conversion
into or exchange for capital stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation); provided,
however, that the foregoing shall not prevent the purchase or acquisition of
shares of Preferred Stock of such series to preserve the Company's REIT status
or pursuant to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of Preferred Stock of such series.
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If fewer than all the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
by such holders (with adjustments to avoid redemption of fractional shares) or
any other equitable method determined by the Company that is consistent with the
Certificate of Incorporation.
Notice of redemption will be mailed at least 30, but not more than 60,
days before the redemption date to each holder of record of a share of Preferred
Stock of any series to be redeemed at the address shown on the Company's stock
transfer books. Each notice shall state: (a) the redemption date; (b) the number
of shares and series of the Preferred Stock to be redeemed; (c) the redemption
price; (d) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (e) that dividends on the
shares to be redeemed will cease to accumulate on such redemption date; and (f)
the date on which the holder's conversion rights, if any, as to such shares
shall terminate. If fewer than all the shares of Preferred Stock of any series
are to be redeemed, the notice mailed to each such holder thereof shall also
specify the number of shares of Preferred Stock to be redeemed from each such
holder and, upon redemption, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof. If notice of redemption of
any shares of Preferred Stock has been given and if the funds necessary for such
redemption have been set aside by the Company in trust for the benefit of the
holders of any shares of Preferred Stock so called for redemption, then from and
after the redemption date dividends will cease to accrue on such shares of
Preferred Stock, such shares of Preferred Stock shall no longer be deemed
outstanding and all rights of the holders of such shares will terminate, except
the right to receive the redemption price. In order to facilitate the redemption
of shares of Preferred Stock of any series, the Board of Directors may fix a
record date for the determination of shares of such series of Preferred Stock to
be redeemed.
Subject to applicable law and the limitation on purchases when
dividends on a series of Preferred Stock are in arrears, the Company may, at any
time and from time to time purchase any shares of such series of Preferred Stock
in the open market, by tender or by private agreement.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company, then, before any distribution or payment shall
be made to the holders of the Common Stock or any other class or series of
capital stock of the Company ranking junior to any series of the Preferred Stock
in the distribution of assets upon any liquidation, dissolution or winding up of
the affairs of the Company, the holders of such
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series of Preferred Stock shall be entitled to receive out of assets of the
Company legally available for distribution to shareholders liquidating
distributions in the amount of the liquidation preference per share (set forth
in the applicable Prospectus Supplement), plus an amount equal to all dividends
accrued and unpaid thereon. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Preferred Stock will
have no right or claim to any of the remaining assets of the Company. If, upon
any such voluntary or involuntary liquidation, dissolution or winding up, the
legally available assets of the Company are insufficient to pay the amount of
the liquidating distributions on all outstanding shares of any series of
Preferred Stock and the corresponding amounts payable on all shares of other
classes or series of capital stock of the Company ranking on a parity with such
series of Preferred Stock in the distribution of assets upon liquidation,
dissolution or winding up, then the holders of such series of Preferred Stock
and all other such classes or series of capital stock shall share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all
holders of any series of Preferred Stock, the remaining assets of the Company
shall be distributed among the holders of any other classes or series of capital
stock ranking junior to such series of Preferred Stock upon liquidation,
dissolution or winding up, according to their respective rights and preferences
and in each case according to their respective number of shares. For such
purposes, the consolidation or merger of the Company with or into any other
entity, or the sale, lease, transfer or conveyance of all or substantially all
of the Company's property or business, shall not be deemed to constitute a
liquidation, dissolution or winding up of the affairs of the Company.
Voting Rights
Holders of the Preferred Stock will not have any voting rights, except
as set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Stock, so long as
any shares of Preferred Stock of a series remain outstanding, the Company shall
not, without the affirmative vote or consent of the holders of at least a
majority of the shares of such series of Preferred Stock outstanding at the
time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (a) authorize or create, or increase the
authorized or issued amount of, any class or series of capital stock ranking
prior to such series of Preferred Stock with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up or
reclassify any authorized capital stock of the Company into any such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such
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shares; or (b) amend, alter or repeal the provisions of the Certificate of
Incorporation or the Certificate of Designations for such series of Preferred
Stock, whether by merger, consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of such series
of Preferred Stock or the holders thereof; provided, however, that any increase
in the amount of the authorized Preferred Stock or the creation or issuance of
any other series of Preferred Stock, or any increase in the amount of authorized
shares of such series or any other series of Preferred Stock, in each case
ranking on a parity with or junior to the Preferred Stock of such series with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of such series of Preferred Stock
shall have been redeemed or called for redemption upon proper notice and
sufficient funds shall have been deposited in trust to effect such redemption.
Under Delaware law, notwithstanding anything to the contrary set forth
above, holders of each series of Preferred Stock will be entitled to vote as a
class upon a proposed amendment to the Certificate of Incorporation, whether or
not entitled to vote thereon by the Restated Certificate of Incorporation, if
the amendment would increase or decrease the aggregate number of authorized
shares of such series, increase or decrease the par value of the shares of such
series, or alter or change the powers, preferences or special rights of the
shares of such series so as to affect them adversely.
Conversion Rights
The terms and conditions, if any, upon which shares of any series of
Preferred Stock are convertible into Common Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include the
number of shares of Common Stock into which the Preferred Stock is convertible,
the conversion price or manner of calculation thereof, the conversion period,
provisions as to whether conversion will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such Preferred Stock.
Restrictions on Ownership
For the Company to qualify as a REIT under the Code, not more than 50%
in value of its outstanding capital stock may be owned, actually or
constructively, by five or fewer individuals (defined in the Code to include
certain entities) during the last half of a taxable year. To assist the Company
in meeting this requirement, the Company may take certain actions to limit the
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beneficial ownership, actually or constructively, by a single person or entity
of the Company's outstanding equity securities. See "Restrictions on Transfers
of Capital Stock."
Transfer Agent
The transfer agent and registrar for any series of Preferred Stock will
be set forth in the applicable Prospectus Supplement.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a REIT under the Code, among other
things, not more than 50% in value of its outstanding capital stock may be
owned, actually or constructively, by five or fewer individuals (defined in the
Code to include certain entities) during the last half of a taxable year, and
such capital stock must be beneficially owned by 100 or more persons during at
least 355 days of a taxable year of 12 months or during a proportionate part of
a shorter taxable year. To ensure that the Company remains qualified as a REIT,
the Certificate of Incorporation, subject to certain exceptions, provides that a
transfer of Common Stock is void if it would result in Beneficial Ownership (as
defined below) of the Common Stock in excess of the Ownership Limit (as defined
below) or would result in the Common Stock being beneficially owned by less than
100 persons. "Transfer" generally means any sale, transfer, gift, assignment,
devise or other disposition of Common Stock, whether voluntary or involuntary,
whether of record or beneficially and whether by operation of law or otherwise.
"Beneficial Ownership" generally means ownership of Common Stock by a person who
would be treated as an owner of such shares of Common Stock either actually or
constructively through the application of Section 544 of the Internal Revenue
Code of 1986, as modified by Section 856(h)(1)(B) of the Internal Revenue Code
of 1986. "Ownership Limit" generally means 9.8% of the outstanding Common Stock
of the Company and, after certain adjustments pursuant to the Certificate of
Incorporation, means such greater percentage of the outstanding Common Stock as
so adjusted. The Board of Directors may, in its discretion, adjust the Ownership
Limit of any Person provided that after such adjustment, the Ownership Limit of
all other persons shall be adjusted such that in no event may any five persons
Beneficially Own more than 49% of the Common Stock. Any class or series of
Preferred Stock may be subject to these restrictions if so stated in the
resolutions providing for the issuance of such Preferred Stock. The Restated
Certificate of Incorporation provides certain remedies to the Board of Directors
in the event the restrictions on Transfer are not met.
All certificates of Common Stock, any other series of the Company's
Common Stock and any class or series of Preferred Stock will bear a legend
referring to the restrictions described above and as described in the
certificate of designation relating to any issuance of Preferred Stock. All
persons who have Beneficial Ownership or who are a shareholder of record of a
specified percentage (or more) of the outstanding capital stock of the
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Company must file a notice with the Company containing information regarding
their ownership of stock as set forth in the Treasury Regulations. Under current
Treasury Regulations, the percentage is set between .5% and 5%, depending on the
number of record holders of capital stock.
This ownership limitation may have the effect of precluding acquisition
of control of the Company by a third party unless the Board of Directors
determines that maintenance of REIT status is no longer in the best interests of
the Company.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
General
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a summary of the material provisions which govern the
federal income tax treatment of the Company. The summary is based on current
law, is for general information only, and is not tax advice. The tax treatment
of a holder of any of the Securities will vary depending on the terms of the
specific Securities acquired by such holder, as well as his or her particular
situation. This discussion does not attempt to address any aspects of federal
income taxation relating to holders of Securities. Certain federal income tax
considerations relevant to a holder of Securities will be provided in the
Prospectus Supplement relating thereto.
EACH INVESTOR IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS
SUPPLEMENT, AS WELL AS HIS OR HER OWN TAX ADVISOR, REGARDING THE TAX
CONSEQUENCES TO HIM OR HER OF THE ACQUISITION, OWNERSHIP AND SALE OF THE OFFERED
SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF SUCH ACQUISITION, OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN
APPLICABLE LAWS.
Qualification of the Company as
a REIT; Opinion of Counsel
The Company has elected to be taxed as a REIT under Sections 856
through 860 of the Code, commencing with its fiscal year ended December 31,
1994. The election to be taxed as a REIT will continue until it is revoked or
otherwise terminated. The most important consequence to the Company of being
treated as a REIT for federal income tax purposes is that it will not be subject
to federal corporate income taxes on net income that is currently distributed to
its stockholders. This treatment substantially eliminates the "double taxation"
(at the corporate and stockholder levels) that typically results when a
corporation earns income and distributes that income to stockholders in the form
of a dividend. Accordingly, if the Company at any time fails to qualify as a
REIT, the Company will be taxed on its distributed income, thereby reducing the
amount of cash available for distribution to its stockholders.
In the opinion of Kutak Rock, counsel to the Company,
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commencing with the taxable year ended December 31, 1994, the Company has been
organized in conformity with the requirements for qualification as a REIT and
its proposed method of operation will enable it to continue to meet the
requirements for qualification and taxation as a REIT under the Code. This
opinion is based on various assumptions and is conditioned upon the
representations of the Company as to factual matters. Moreover, continued
qualification and taxation as a REIT will depend on the Company's ability to
satisfy on a continuing basis certain distribution levels, diversity of stock
ownership and various income and asset limitations, including certain
limitations concerning the ownership of securities, imposed by the Code as
summarized below. While the Company intends to operate so that it will continue
to qualify as a REIT, given the highly complex nature of the rules governing
REITs, the ongoing importance of factual determinations, and the possibility of
future changes in the circumstances of the Company, no assurance can be given by
counsel or the Company that the Company will so qualify for any particular year.
Kutak Rock will not review compliance with these tests on a continuing basis,
and will not undertake to update its opinion subsequent to the date hereof.
Taxation of the Company as a REIT
If the Company qualifies for taxation as a REIT, it generally will not
be subject to federal income tax on net income that is currently distributed to
its stockholders. The Company may, however, be subject to certain federal taxes
based on the amount of its distributions or its inability to meet certain REIT
qualification requirements. These taxes are the following:
Tax on Undistributed Income. First, if the Company does not distribute
all of its net taxable income, including any net capital gain, the Company would
be taxed at regular corporate rates on the undistributed income or gains. The
Company may elect to retain and pay tax on its capital gains.
Tax on Prohibited Transactions. Second, if the Company has net income
from certain prohibited transactions, including sales or dispositions of
property held primarily for sale to customers in the ordinary course of
business, such net income would be subject to a 100% confiscatory tax.
Tax on Failure to Meet Gross Income Requirements. Third, if the Company
should fail to meet either the 75% or 95% gross income test as described below
but still qualify for REIT status because, among other requirements, it was able
to show that such failure was due to reasonable cause, it will be subject to a
100% tax on an amount equal to (a) the gross income attributable to the greater
of the amount, if any, by which the Company failed either the 75% or the 95%
gross income test, multiplied by (b) a fraction intended to reflect the
Company's profitability.
Tax on Failure to Meet Distribution Requirements. Fourth,
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if the Company should fail to distribute during each calendar year at least the
sum of (a) 85% of its REIT ordinary income for such year, (b) 95% of its REIT
capital gain net income for such year, and (c) any undistributed taxable income
from prior periods, the Company would be subject to a 4% excise tax on the
excess of such required distribution over the amounts actually distributed.
Alternative Minimum Tax. Fifth, the Company may be subject to
alternative minimum tax on certain items of tax preference.
Tax on Foreclosure Property. Sixth, if the Company has (a) net income
from the sale or other disposition of foreclosure property that is held
primarily for sale to customers in the ordinary course of business or (b) other
nonqualifying income from foreclosure property, it will be subject to tax at the
highest corporate rate on such income.
Tax on Built-in Gain. Seventh, if during the 10-year period (the
"Recognition Period") beginning on the date that the Company's corporate
predecessor merged with and into the Company, the Company recognizes gain on the
disposition of any asset acquired by the Company from the corporate predecessor,
then to the extent of the excess of (a) the fair market value of such asset as
of the beginning of such Recognition Period over (b) the Company's adjusted
basis in such asset as of the beginning of such Recognition Period, such gain
will be subject to tax at the highest regular corporate rate pursuant to IRS
regulations that have not yet been promulgated.
Overview of REIT Qualification Rules
The following summarizes the basic requirements for REIT status:
(a) The Company must be a corporation, trust or association
that is managed by one or more trustees or directors.
(b) The Company's stock or beneficial interests must be
transferable and held by more than 100 stockholders, and no more than
50% of the value of the Company's stock may be held, actually or
constructively, by five or fewer individuals (defined in the Code to
include certain entities).
(c) Generally, 75% (by value) of the Company's investments
must be in real estate, mortgages secured by real estate, cash or
government securities.
(d) The Company must meet three gross income tests:
(i) First, at least 75% of the gross income must be
derived from specific real estate sources;
(ii) Second, at least 95% of the gross income must be
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from the real estate sources includable in the 75% test, or
from dividends, interest or gains from the sale or disposition
of stock and securities; and
(iii) Third, for taxable years beginning on or before
August 5, 1997, less than 30% of the gross income may be
derived from the sale of real estate assets held for less than
four years, from the sale of certain "dealer" properties or
from the sale of stock or securities having a short-term
holding period.
(e) The Company must distribute to its stockholders in each
taxable year an amount at least equal to 95% of the Company's "REIT
taxable income" (which is generally equivalent to taxable ordinary
income and is defined below).
The discussion set forth below explains these REIT qualification
requirements in greater detail. It also addresses how these highly technical
rules may be expected to impact the Company in its operations, noting areas of
uncertainty that perhaps could lead to adverse consequences to the Company and
its stockholders.
Share Ownership. The Company's shares of stock are fully transferable
and are subject to transfer restrictions set forth in its Certificate of
Incorporation. Furthermore, the Company has more than 100 shareholders and its
Certificate of Incorporation, as a general matter, provides, to decrease the
possibility that the Company will ever be closely held, that no individual,
corporation or partnership is permitted to actually or constructively own more
than 9.8% of the number of outstanding shares of Common Stock. The Ownership
Limit may be adjusted, however, by the Company's Board of Directors in certain
circumstances. Purported transfers which would violate the Ownership Limit will
be void. In addition, shares of Common Stock acquired in excess of the Ownership
Limit may be redeemed by the Company. The ownership and transfer restrictions
pertaining generally to a particular issue of Preferred Stock will be described
in the Prospectus Supplement relating to such issue.
Nature of Assets. On the last day of each calendar quarter, at least
75% of the value of the Company's total assets must consist of (a) real estate
assets (including interests in real property and mortgages on loans secured by
real property), (b) cash and cash items (including receivables), and (c)
government securities (collectively, the "real estate assets"). Except for
certain partnerships and "qualified REIT subsidiaries," as described below, the
securities of any issuer, other than the United States government, may not
represent more than 5% of the value of the Company's total assets or 10% of the
outstanding voting securities of any one issuer.
While, as noted above, a REIT cannot own more than 10% of the
outstanding voting securities of any single issuer, an exception to this rule
permits REITs to own "qualified REIT
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subsidiaries." A "qualified REIT subsidiary" is any corporation in which 100% of
its stock is owned by the REIT . The Company owns the stock or beneficial
interests of several entities which will be treated as "qualified REIT
subsidiaries" and will not adversely affect the Company's qualification as a
REIT.
The Company may acquire interests in partnerships that directly or
indirectly own and operate properties similar to those currently owned by the
Company. The Company, for purposes of satisfying its REIT asset and income
tests, will be treated as if it owns a proportionate share of each of the assets
of these partnerships attributable to such interests. For these purposes, the
Company's interest in each of the partnerships will be determined in accordance
with its capital interest in such partnership. The character of the various
assets in the hands of the partnership and the items of gross income of the
partnership will remain the same in the Company's hands for these purposes.
Accordingly, to the extent the partnership receives qualified real estate
rentals and holds real property, a proportionate share of such qualified income
and assets, based on the Company's capital interest in the partnerships, will be
treated as qualified rental income and real estate assets of the Company for
purposes of determining its REIT characterization. It is expected that
substantially all the properties of the partnerships will constitute real estate
assets and generate qualified rental income for these REIT qualification
purposes.
This treatment for partnerships is conditioned on the treatment of
these entities as partnerships for federal income tax purposes (as opposed to
associations taxable as corporations). If any of the partnerships were treated
as an association (or, in some cases, a publicly traded partnership), it would
be taxable as a corporation. In such situation, if the Company's ownership in
any of the partnerships exceeded 10% of the partnership's voting interests or
the value of such interest exceeded 5% of the value of the Company's assets, the
Company would cease to qualify as a REIT. Furthermore, in such a situation,
distributions from any of the partnerships to the Company would be treated as
dividends, which are not taken into account in satisfying the 75% gross income
test described below and which could therefore make it more difficult for the
Company to qualify as a REIT for the taxable year in which such distribution was
received. In addition, in such a situation, the interest in any of the
partnerships held by the Company would not qualify as "real estate assets,"
which could make it more difficult for the Company to meet the 75% asset test
described above. Finally, in such a situation, the Company would not be able to
deduct its share of any losses generated by the partnerships in computing its
taxable income. The Company will take all steps reasonably necessary to ensure
that any partnership in which it acquires an interest will be treated for tax
purposes as a partnership (and not as an association taxable as a corporation).
However, there can be no assurance that the IRS may not successfully challenge
the tax status of any such partnership.
37
<PAGE>
Income Tests. To maintain its qualification as a REIT, the Company must
meet three gross income requirements that must be satisfied annually. First, at
least 75% of the REIT's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived directly or indirectly from
investments relating to real property or mortgages on real property (including
"rents from real property" and, in certain circumstances, interest) or from
certain types of temporary investments. Second, at least 95% of the REIT's gross
income (excluding gross income from prohibited transactions) for each taxable
year must be derived from such real property investments, and from dividends,
interest and gain from the sale or disposition of stock or securities, from any
combination of the foregoing or from certain hedging agreements entered into to
reduce interest rate risks. Third, for taxable years commencing on or before
August 5, 1997, short-term gain from the sale or other disposition of stock or
securities, gain from prohibited transactions and gain from the sale or other
disposition of real property held for less than four years (apart from
involuntary conversions and sales of foreclosure property) must represent less
than 30% of the REIT's gross income (including gross income from prohibited
transactions) for each taxable year.
Rents received by the Company on the lease of its properties will
qualify as "rents from real property" in satisfying the gross income
requirements for a REIT described above only if several conditions are met.
First, the amount of rent must not be based in whole or in part on the income or
profits of any person. However, an amount received or accrued generally will not
be excluded from the term "rents from real property" solely by reason of being
based on a fixed percentage or percentages of receipts or sales. Second, the
Code provides that rents received from a tenant will not qualify as "rents from
real property" in satisfying the gross income test if the Company, or an owner
of 10% or more of the Company, actually or constructively owns 10% or more of
such tenant (a "Related-Party Tenant"). Third, if rent attributable to personal
property leased in connection with the lease of real property is greater than
15% of the total rent received under the lease, then the portion of rent
attributable to such personal property will not qualify as "rents from real
property." The Company does not anticipate charging rent for any property that
is based in whole or in part on the income or profits of any person (other than
rent based on a fixed percentage or percentages of receipts or sales) and the
Company does not anticipate receiving any rents from Related-Party Tenants.
Furthermore, the Company expects that in substantially all cases the rents
attributable to its leased personal property will be less than 15% of the total
rent payable under such lease.
Finally, for rents to qualify as "rents from real property," the
Company must not operate or manage the property or furnish or render services to
tenants unless the Company furnishes or renders such services through an
independent contractor from whom the Company derives no revenue. The Company
need not utilize an independent contractor to the extent that services provided
by the Company are usually and customarily rendered in connection
38
<PAGE>
with the rental of space for occupancy only and are not otherwise considered
"rendered to the occupant." The Company does not anticipate that it will provide
any services with respect to its properties.
The Company intends to monitor the percentage of nonqualifying income
and reduce the percentage of nonqualifying income if necessary. Because the
income tests are based on a percentage of total gross income, increases in
qualifying rents will reduce the percentage of nonqualifying income. In
addition, the Company intends to acquire additional real estate assets that
would generate qualifying income, thereby lowering the percentage of total
nonqualifying income. Increases in other nonqualifying income may similarly
affect these calculations. Reference is made to the applicable Prospectus
Supplement for a current discussion, if any, relating to the amount of
nonqualifying income expected to be generated by the Company. The Company does
not expect to generate nonqualifying income in quantities which would cause it
to fail either at the foregoing 75% or 95% gross income tests.
If the Company fails to satisfy one or both of the 75% and 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code.
These relief provisions generally will be available if the Company's failure to
meet such test was due to reasonable cause and not willful neglect and the
Company attaches a schedule of its income sources to its tax return that does
not fraudulently or intentionally exclude any income sources. As discussed
above, even if these relief provisions apply, a tax would be imposed with
respect to such excess income.
Annual Distribution Requirements. Each year, the Company must have a
deduction for dividends paid (determined under Section 561 of the Code) to its
stockholders in an amount equal to (a) 95% of the sum of (i) its "REIT taxable
income" as defined below (computed without a deduction for dividends paid and
excluding any net capital gain), (ii) any net income from foreclosure property
less the tax on such income, minus (b) any "excess noncash income," as defined
below. "REIT taxable income" is the taxable income of a REIT subject to certain
adjustments, including, without limitation, an exclusion for net income from
foreclosure property, a deduction for the excise tax on the greater of the
amount by which the REIT fails the 75% or the 95% income test, and an exclusion
for an amount equal to any net income derived from prohibited transactions.
"Excess noncash income" means the excess of certain amounts that the REIT is
required to recognize as income in advance of receiving cash, such as original
issue discount on purchase money debt, over 5% of the REIT taxable income before
deduction for dividends paid and excluding any net capital gain. Such
distributions must be made in the taxable year to which they relate, or in the
following taxable year if declared before the REIT timely files its tax return
for such year and is paid on or before the first regular dividend payment after
such declaration.
It is possible that the Company, from time to time, may not
39
<PAGE>
have sufficient cash or other liquid assets to meet the 95% distribution
requirement due to timing differences between (a) the actual receipt of income
and the actual payment of deductible expenses and (b) the inclusion of such
income and deduction of such expenses in arriving at taxable income of the
Company. Furthermore, principal payments on Company indebtedness, which would
have the effect of lowering the amount of distributable cash without an
offsetting deduction to Company taxable income, may adversely affect the
Company's ability to meet this distribution requirement. In the event that such
timing differences or reduction to distributable cash occurs, in order to meet
the 95% distribution requirement, the Company may find it necessary to arrange
for short-term, or possible long-term, borrowings or to pay dividends in the
form of taxable stock dividends.
Under certain circumstances, the Company may be able to rectify a
failure to meet the distribution requirement for a year by paying "deficiency
dividends" to stockholders in a later year that may be included in the Company's
deduction for dividends paid for the earlier year. Thus, the Company may be able
to avoid being taxed on amounts distributed as deficiency dividends; however,
the Company will be required to pay to the IRS interest based on the amount of
any deduction taken for deficiency dividends.
Failure of the Company to Qualify as a REIT
If the Company fails to qualify for taxation as a REIT in any taxable
year, and the relief provisions do not apply, the Company would be subject to
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates, thereby reducing the amount of cash available for
distribution to its stockholders. Distributions to stockholders in any year in
which the Company fails to qualify would not be deductible by the Company nor
would they be required to be made. In such an event, to the extent of current
and accumulated earnings and profits, all distributions to stockholders would be
taxable as ordinary income and, subject to certain limitations in the Code,
corporate distributees may be eligible for the dividends-received deduction.
Unless entitled to relief under specific statutory relief provisions, the
Company would also be disqualified from taxation as a REIT for the four taxable
years following the year during which such qualification was lost. It is not
possible to state whether in all circumstances the Company would be entitled to
such statutory relief.
State and Local Taxes
The Company may be subject to state or local taxes in other
jurisdictions such as those in which the Company may be deemed to be engaged in
activities or own property or other interests. Such tax treatment of the Company
in states having taxing
40
<PAGE>
jurisdiction over it may differ from the federal income tax treatment described
in this summary. Each stockholder should consult his or her tax advisor as to
the status of the Company and the Securities under the respective state laws
applicable to them.
PLAN OF DISTRIBUTION
The terms of any offering of Securities under this Registration
Statement will be set forth in the applicable Prospectus Supplement. The Company
may sell the Securities to one or more underwriters for public offering and sale
by them or may sell the Securities to investors directly or through agents or
dealers. Any such underwriter or agent involved in the offer and sale of the
Securities will be named in the applicable Prospectus Supplement .
Underwriters may offer and sell the Securities at a fixed price or
prices, which may be changed, at market prices prevailing at the time of sale,
at prices relating to such prevailing market prices or at negotiated prices. The
Company also may, from time to time, authorize dealers acting as the Company's
agents to offer and sell the Securities upon the terms and conditions as are set
forth in the applicable Prospectus Supplement. In connection with the sale of
Securities, underwriters may receive compensation from the Company in the form
of underwriting discounts or commissions and may also receive commissions from
purchasers of Securities for whom they may act as agent. Underwriters may sell
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent. Any underwriting
compensation paid by the Company to underwriters or agents in connection with
the offering of Securities, and any discounts, concessions or commissions
allowed by underwriters to participating dealers, will be set forth in the
applicable Prospectus Supplement. Dealers and agents participating in the
distribution of the Securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the Securities may be deemed to be underwriting discounts and
commissions.
Underwriters, dealers and agents may be entitled, under agreements
entered into with the Company, to indemnification against and contribution
toward certain civil liabilities, including liabilities under the Securities
Act.
Certain of the underwriters, dealers and agents and their affiliates
may be customers of, engage in transactions with and perform services for the
Company and its subsidiaries in the ordinary course of business.
Unless otherwise specified in the related Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Common Stock. The Common Stock is currently listed on the NYSE.
Unless otherwise
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<PAGE>
specified in the related Prospectus Supplement, any shares of Common Stock sold
pursuant to a Prospectus Supplement will be listed on the NYSE, subject to
official notice of issuance. The Company may elect to list any series of Debt
Securities or Preferred Stock on the NYSE or other exchange, but is not
obligated to do so. It is possible that one or more underwriters may make a
market in a series of Securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, there can
be no assurance as to the liquidity of, or the trading market for, the
Securities.
If so indicated in the Prospectus Supplement, the Company will
authorize agents and underwriters or dealers to solicit offers by certain
purchasers to purchase Securities from the Company at the public offering price
set forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject to only those conditions set forth in the Prospectus
Supplement, and the Prospectus Supplement will set forth the commission payable
for solicitation of such offers.
42
<PAGE>
LEGAL MATTERS
Certain legal matters relating to the Securities to be offered hereby,
and certain REIT matters relating to the Company, will be passed upon for the
Company by the national law firm of Kutak Rock, 717 Seventeenth Street, Suite
2900, Denver, Colorado
80202.
EXPERTS
The financial statements and schedules for the fiscal year ended
December 31, 1996 incorporated by reference in this Prospectus and elsewhere in
the registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report, with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
43
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following are the estimated expenses in connection with the
registration and distribution of the Securities (other than underwriting
discounts and commissions, if any):
SEC Registration Fee....................................... $295,000
Printing and Engraving Expenses............................ 150,000*
Accounting Fees and Expenses............................... 40,000*
Legal Fees and Expenses................................... 500,000*
Miscellaneous.............................................. 75,000*
--------
Total........................... $1,060,000*
---------------
*Estimated.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides generally
and in pertinent part that a Delaware corporation may indemnify its directors
and officers against expenses, judgements, fines and settlements actually and
reasonably incurred by them in connection with any civil suit or action, except
actions by or in the right of the corporation, or any administrative or
investigative proceeding if, in connection with the matters in issue, they acted
in good faith and in a manner they reasonably believed to be in, or not opposed
to, the best interests of the corporation, and in connection with any criminal
suit or proceeding, if in connection with the matters in issue, they had no
reasonable cause to believe their conduct was unlawful. Section 145 further
provides that in connection with the defense or settlement of any action by or
in the right of the corporation, a Delaware corporation may indemnify its
directors and officers against expenses actually and reasonably believed to be
in, or not opposed to, the best interests of the corporation. Section 145
permits a Delaware corporation to grant its directors and officers additional
rights of indemnification through bylaw provisions and otherwise and to purchase
indemnity insurance on behalf of its directors and officers.
Article III, Section 13 of the Amended and Restated Bylaws of the
Registrant requires the Registrant to indemnify every person who was or is a
party or is or was threatened to be made a party to any action, suit, or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director or officer of the Registrant or, while
a director or officer of the Registrant, is or was serving at the request of the
Registrant as a director, officer, employee, agent or trustee of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including counsel fees), judgments, fines and
II-1
<PAGE>
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, to the full extent permitted by applicable
law.
The Registrant's Second Amended and Restated Certificate of
Incorporation also provides in Article Six that directors shall not be liable to
the Registrant or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption or limitation thereof is
not permitted under the Delaware General Corporation Law.
II-2
<PAGE>
Item 16. Exhibits.
The following is a complete list of Exhibits filed as part of this
Registration Statement. Exhibit numbers correspond to the numbers in the Exhibit
Table of Item 601 of Regulation S-K.
Exhibit No. Description
1.01 Form of Underwriting Agreement for Debt Securities (1)
1.02 Form of Underwriting Agreement for Equity Securities (1)
4.01 Indenture dated as of November 21, 1995, between the Company
and Norwest Bank Arizona, National Association, as trustee (2)
4.02 Form of Debt Security (included in Exhibit 4.01) (2)
4.03 Specimen of Common Stock Certificate (1)
4.04 The Second Amended and Restated Certificate of Incorporation
(3)
4.05 Amended and Restated Bylaws of the Company (4)
5 Opinion of Kutak Rock Regarding Legality (5)
8 Opinion of Kutak Rock Regarding Tax Matters (5)
12 Statement of Computation of Ratios of Earnings to Fixed
Charges (5)
23.01 Consent of Arthur Andersen LLP (5)
23.02 Consents of Kutak Rock (included in Exhibit 5) (5)
24 Power of Attorney (6)
25 Statement of Eligibility of Trustee on Form T-1 (5)
- ----------------
(1) To be incorporated by reference in connection with the specified offering of
securities.
(2) Filed with the Securities and Exchange Commission as an exhibit to the
Registrant's Current Report of Form 8-K dated November 24, 1995, and
incorporated by reference to such Current Report on Form 8-K.
(3) Filed with the Securities and Exchange Commission as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997,
and incorporated herein by reference to such Quarterly Report on Form 10-Q.
(4) Filed with the Securities and Exchange Commission as an exhibit to the
Registration Statement on Form S-4 and amendments thereto, registration number
33-65302, and incorporated herein by reference to such Registration Statement.
(5) Filed herewith.
(6) Previously filed.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
II-3
<PAGE>
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the registration statement is on Form S-3, Form S-8, or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
II-4
<PAGE>
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Pre-Effective Amendment No. 1 to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Scottsdale,
State of Arizona, on March 20, 1998.
FRANCHISE FINANCE CORPORATION OF
AMERICA
By /s/ Morton H. Fleischer
-------------------------------------
Morton H. Fleischer, Chairman
of the Board, President, Chief
Executive Officer and Director
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Pre-Effective Amendment No. 1 to the registration statement has been signed
by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Morton H. Fleischer Chairman of the Board, President, Chief March 20,1998
- --------------------------- Executive Officer and Director
Morton H. Fleischer
** Executive Vice President, Chief March 20, 1998
- --------------------------- Financial Officer, Treasurer and
John Barravecchia Assistant Secretary
II-7
<PAGE>
** Senior Vice President, Finance, March 20, 1998
- --------------------------- Principal Accounting Officer,
Catherine F. Long Assistant Secretary and Assistant
Treasurer
/s/ Willie R. Barnes Director March 20, 1998
- ---------------------------
Willie R. Barnes
Director March __, 1998
- ---------------------------
Kelvin L. Davis
** Director March 20, 1998
- ----------------------------
William C. Foxley
/s/ Robert W. Halliday Chairman Emeritus March 20, 1998
- ----------------------------
Robert W. Halliday
</TABLE>
II-8
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Donald C. Hannah Director March 20, 1998
- ----------------------------
Donald C. Hannah
** Director March 20, 1998
- ----------------------------
Dennis E. Mitchem
** Director March 20, 1998
- ----------------------------
Louis P. Neeb
** Director March 20, 1998
- ----------------------------
Kenneth B. Roath
** Director March 20, 1998
- ----------------------------
Wendell J. Smith
** Director March 20, 1998
- ----------------------------
Casey J. Sylla
/s/ Shelby Yastrow Director March 20, 1998
- ----------------------------
Shelby Yastrow
** By: /s/ Morton H. Fleischer
---------------------------
Morton H. Fleischer
Attorney-in-fact
March 20, 1998
Pursuant to a power of attorney previously filed.
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
1.01 Form of Underwriting Agreement for Debt Securities (1)
1.02 Form of Underwriting Agreement for Equity Securities (1)
4.01 Indenture dated as of November 21, 1995, between the Company
and Norwest Bank Arizona, National Association, as trustee (2)
4.02 Form of Debt Security (included in Exhibit 4.01) (2)
4.03 Specimen of Common Stock Certificate (1)
4.04 The Second Amended and Restated Certificate of Incorporation
(3)
4.05 Amended and Restated Bylaws of the Company (4)
5 Opinion of Kutak Rock Regarding Legality (5)
8 Opinion of Kutak Rock Regarding Tax Matters (5)
12 Statement of Computation of Ratios of Earnings to Fixed
Charges (5)
23.01 Consent of Arthur Andersen LLP (5)
23.02 Consents of Kutak Rock (included in Exhibit 5) (5)
24 Power of Attorney (6)
25 Statement of Eligibility of Trustee on Form T-1 (5)
- ----------------
(1) To be incorporated by reference in connection with the specified offering of
securities.
(2) Filed with the Securities and Exchange Commission as an exhibit to the
Registrant's Current Report of Form 8-K dated November 24, 1995, and
incorporated by reference to such Current Report on Form 8-K.
(3) Filed with the Securities and Exchange Commission as an exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997,
and incorporated herein by reference to such Quarterly Report on Form 10-Q.
(4) Filed with the Securities and Exchange Commission as an exhibit to the
Registration Statement on Form S-4 and amendments thereto, registration number
33-65302, and incorporated herein by reference to such Registration Statement.
II-10
<PAGE>
(5) Filed herewith.
(6) Previously filed.
II-11
EXHIBIT 5
KUTAK ROCK ATLANTA
A PARTNERSHIP KANSAS CITY
INCLUDING PROFESSIONAL CORPORATIONS LITTLE ROCK
SUITE 2900 NEWPORT BEACH
717 SEVENTEENTH STREET NEW YORK
DENVER, COLORADO 80202-3329 OKLAHOMA CITY
(303) 297-2400 OMAHA
FACSIMILE (303) 292-7799 PHOENIX
PITTSBURGH
http://www.kutakrock.com WASHINGTON
March 20, 1998
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Re: $1,000,000,000 Aggregate Offering Price of Securities of Franchise
Finance Corporation of America
Ladies and Gentlemen:
We have acted as your counsel in connection with the preparation of the
Registration Statement on Form S-3, File No. 333-26437, 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 $1,000,000,000 aggregate offering price of securities (the
"Securities"), consisting of one or more series of secured or unsecured debt
securities (the "Debt Securities"), which may be issued in the form of senior
Debt Securities or subordinated Debt Securities; shares of common stock, par
value $.01 per share (the "Common Stock") and one or more series of shares of
preferred stock. We are familiar with the proceedings heretofore taken by the
Company in connection with the authorization, registration, issuance and sale of
the Securities.
We have made such investigations of law as we deemed appropriate and we
have examined the proceeding heretofore taken and are familiar with the
procedures proposed to be taken by the Company in connection with the
authorization, issuance and sale of the Securities. We have examined the
Registration Statement, the Prospectus included therein (the "Prospectus") and
such other documents as we have deemed necessary or advisable for purposes of
rendering this opinion. Except as otherwise indicated herein, all terms defined
in the Prospectus are used herein as so defined.
We have assumed for purposes of the opinions set forth below (a) the
effectiveness of the Registration Statement under the Securities Act of 1933, as
amended (the "Act"); (b) the due authorization, execution and delivery of the
Indenture relating to each series of Debt Securities and the establishment of
the terms of the senior Debt Securities or subordinated Debt Securities, as
applicable, substantially in accordance with the terms of the Indenture relating
to the Debt Securities; (c) that the Securities of each series will be duly
authorized by all necessary action, duly executed, authenticated and delivered
in accordance with the
<PAGE>
Franchise Finance Corporation of America
March 20, 1998
Page 2
provisions of the Indenture and related corporate documents; (d) that each
Indenture will be duly authorized by all necessary action and duly executed and
delivered by the parties thereto; and (e) the due receipt of payment for the
Securities.
On the basis of and subject to the foregoing, it is our opinion that:
1. The Debt Securities will, upon the issuance and sale thereof in the
manner referred to in the Registration Statement, constitute legally valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally (including, without limitation, fraudulent conveyance laws) 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.
2. The Common Stock, including any Common Stock that may be issuable
pursuant to the conversion of any Debt Securities or Preferred Stock will, upon
the issuance and sale thereof in the manner specified in the Registration
Statement, be validly issued, fully paid and nonassessable.
3. The Preferred Stock will, upon due authorization, issuance and sale
thereof in the manner referred to in the Registration Statement, be validly
issued, fully paid and nonassessable, and, if entitled to preferences, such
preferences will be legally valid obligations of the Company enforceable against
the Company in accordance with their terms except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally (including, without limitation,
fraudulent conveyance laws) 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.
We consent to the filing of this opinion as an exhibit to the
Registration Statement, and to references to this firm under the headings of
"CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" and "LEGAL MATTERS" in the
Prospectus, without admitting that we are "experts" within the meaning of the
Act or the rules and regulations of the Securities and Exchange Commission
issued thereunder, with respect to any part of the Registration Statement,
including this exhibit.
Very truly yours,
/s/ Kutak Rock
KUTAK ROCK
2
EXHIBIT 8
KUTAK ROCK ATLANTA
A PARTNERSHIP KANSAS CITY
INCLUDING PROFESSIONAL CORPORATIONS LITTLE ROCK
SUITE 2900 NEWPORT BEACH
717 SEVENTEENTH STREET NEW YORK
DENVER, COLORADO 80202-3329 OKLAHOMA CITY
(303) 297-2400 OMAHA
FACSIMILE (303) 292-7799 PHOENIX
PITTSBURGH
http://www.kutakrock.com WASHINGTON
March 20, 1998
Franchise Finance Corporation
of America
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Re: Certain Federal Income Tax Issues
Ladies and Gentlemen:
We have acted as your tax counsel, in connection with the proposed
issuance of certain debt securities, preferred stock and common stock pursuant
to your registration statement on Form S-3, Registration No. 333-26437, as
amended from time to time and including all supplements thereto (the
"Registration Statement"), filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended.
You have requested our opinion concerning certain federal income tax
matters, including but not limited to, your continued characterization as a real
estate investment trust (a "REIT") under the provisions of Section 856 of the
Internal Revenue Code of 1986, as amended (the "Code"). This opinion is based on
various facts and assumptions including the facts set forth in the Registration
Statement concerning your business, operations and properties. In connection
with rendering this opinion, you will deliver certain representations to us and,
with your permission, we will rely upon such representations.
Based on such facts, assumptions and representations, it our opinion
that as of the date hereof: (i) beginning with the taxable year ended December
31, 1994 you have been organized in conformity with the requirements for
qualification and taxation as a REIT and your methods of operation and your
proposed methods of operation described in the Registration Statement
<PAGE>
Franchise Finance Corporation
of America
March 20, 1998
Page 2
have enabled and will enable you to qualify as a REIT; (ii) each of FFCA
Acquisition Corporation, FFCA Institutional Advisors, Inc., FFCA Residual
Interest Corporation, FFCA Secured Assets Corporation, FFCA Secured Lending
Corporation, FFCA Secured Franchise Loan Trust 1997-1, FFCA Franchise Loan Owner
Trust 1998-1 and FFCA Loan Warehouse Corporation has been (at all times during
the period each such entity has been in existence) and will be treated as a
qualified REIT subsidiary within the meaning of Section 856(i) of the Code; and
(iii) FFCA Co-Investment Limited Partnership has been (at all times on and after
June 1, 1994) and will be treated as a partnership, rather than as an
association or publicly traded partnership taxable as a corporation for federal
income tax purposes.
This opinion is based in part on the Code, Treasury Regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, each as of the
date hereof and all of which are subject to change either prospectively or
retroactively. Also, any variation or difference in the facts from those set
forth in the Registration Statement or the representations furnished to us by
you may affect the conclusions stated herein. Moreover, your qualification and
taxation as a REIT depends upon your ability to meet, through actual annual
operating results, distribution levels and diversity of stock ownership, the
various qualification tests imposed under the Code, the results of which have
not and will not be reviewed by Kutak Rock. Accordingly, no assurance can be
given that the actual results of your operation for any taxable year will
satisfy such requirements.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose or furnished to, quoted to, or relied upon by
any other person, firm or corporation for any purpose, without our prior written
consent. Please be advised that we have rendered no opinion regarding any tax
issues, other than as set forth herein.
Very truly yours,
/s/ Kutak Rock
KUTAK ROCK
EXHIBIT 12
Statement of Computation of Ratios of Earnings to Fixed Charges
(Amounts in thousands except ratio data)
<TABLE>
<CAPTION>
YTD YTD YTD YTD YTD
31-DEC-97 31-DEC-96 31-DEC-95 31-DEC-94 31-DEC-93
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Income 72,897 68,539 51,329 25,905 53,711
Plus REIT Transaction Related Costs -- -- -- 28,198 --
Plus Fixed Charges 35,750 26,947 16,237 3,428 1,257
------ ------ ------ ----- -----
108,647 95,486 67,566 57,531 54,968
Divided by Fixed Charges 35,750 26,947 16,237 3,428 1,257
Ratio of Earnings to Fixed Charges 3.04 3.54 4.16 16.78 43.73
</TABLE>
Exhibit 23.01
Consent of Accountants
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Registration Statement on Form S-3 of Franchise Finance Corporation of America
of our report dated January 23, 1997, included in the Annual Report on Form 10-K
of Franchise Finance Corporation of America for the year ended December 31,
1996, and incorporated by reference in the Prospectus, which is part of this
Registration Statement. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
Arthur Andersen LLP
Phoenix, Arizona
March 20, 1998
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
__CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305 (b) (2)
NORWEST BANK ARIZONA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A NATIONAL BANKING ASSOCIATION 86-0069410
(Jurisdiction of incorporation or (I.R.S Employer
organization if not a U.S. national Identification No.)
bank)
3300 N. Central Avenue
Phoenix, Arizona 85012
(Address of principal executive offices) (Zip code)
Margaret M. Moore, Assistant Vice President
Norwest Bank Arizona, National Association
3300 N. Central Ave.
Phoenix, AZ 85012
(602) 248-2341
(Agent for Service)
Franchise Finance Corporation of America
(Exact name of obligor as specified in its charter)
DELAWARE 86-0736091
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17207 North Perimeter Drive
Scottsdale, Arizona 85255
(Address of principal executive offices) (Zip code)
<PAGE>
Medium Term Notes
(Title of the indenture securities)
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each
examining or supervising
authority to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust
powers.
The trustee is authorized, as a national bank, to
exercise corporate trust powers.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-15 of this Form T-1 because the obligor is
not in default as provided under Item 13.
Item 16. List of Exhibits. List below all exhibits filed as a part of
this Statement of Eligibility. Exhibits are
included with this form.
Exhibit 1. a. A copy of the articles of association of the
trustee now in effect. Incorporated by
reference to Exhibit 1 a. of Form T-1 filed
with registration statement number 33-62629.
Exhibit 2. a. Authorization of the trustee to commence
business contained in the articles of
association of the trustee now in effect.
Incorporated by reference to Exhibit 2 a.
of Form T-1 filed with registration
statement number 33-62629.
b. A copy of the letter of the Comptroller of
the Currency dated July 18, 1988, approving
the consolidation of the Norwest Capital
Management & Trust Company, Scottsdale,
Arizona under the title of Norwest Bank
Arizona, National Association. Incorporated
by reference to Exhibit 2 b. of Form T-1
filed with registration statement number
33-62629.
<PAGE>
c. A copy of the Resolution Establishing and
Appointing Trust Oversight Committee,
pursuant to the proper exercise of fiduciary
powers of the trustee under state and
federal law including 12 C.F.R. 9, dated
April 5, 1994. Incorporated by reference
to Exhibit 2 c. of Form T-1 filed with
registration statement number 33-62629.
d. A copy of the Authorization to Designate
Signers of Written Instruments, Documents
and Agreements,relating to authorizations
effective October 20, 1997. Incorporated by
reference to Exhibit 2 d. of Form T-1 filed
with registration statement number
333-47355.
e. A copy of the Resolution Relating to
Execution of Written Instruments, dated July
22, 1996. Incorporated by reference to
Exhibit 2 e. of Form T-1 filed with
registration statement number 333-47355.
f. A copy of the Certificate of Norwest Bank
Arizona, National Association dated March
20, 1998.
g. A copy of the Signing Authority for
Countersignatures of Bonds dated December 8,
1997. Incorporated by reference to Exhibit
2 g. of Form T-1 filed with registration
statement number 333-47355.
Exhibit 3. a. Authorization of the trustee to exercise
corporate trust powers is contained in the
articles of association, by-laws of the
trustee and the Certificate of Norwest Bank
Arizona, National Association.
Exhibit 4. a. A copy of the existing by-laws of the
trustee. Incorporated by reference to
Exhibit 4 a. of Form T-1 filed with
registration statement number 33-62629.
Exhibit 5. a. Not applicable.
Exhibit 6. a. The consent of the trustee required by
Section 321 (b) of the Act.
Exhibit 7. a. A copy of the latest report of condition of
the trustee published pursuant to law or the
requirement of its supervising or examining
authority, that is, the Consolidated Reports
of Condition and Income for A Bank With
Domestic Offices Only and Total Assets of
$300 Million or More - FFIEC 032 - report as
of close of business December 31, 1997.
Incorporated by reference to Exhibit 7a of
Form T-1 filed with registration statement
number 333-47355.
Exhibit 8. a. Not applicable
Exhibit 9. a. Not applicable
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939. as amended, the
trustee, Norwest Bank Arizona, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of Phoenix
and the State of Arizona on the 20th day of March 1998.
NORWEST BANK ARIZONA,
NATIONAL ASSOCIATION
/s/ Margaret M. Moore
Margaret M. Moore
Assistant Vice President
<PAGE>
Exhibit 2.f
CERTIFICATE OF NORWEST BANK ARIZONA, National Association
The undersigned, a duly authorized officer of Norwest Bank Arizona,
National Association (the "Bank"), hereby certifies as follows:
1. The Bank is a national banking association, validly existing and in
good standing under the laws of the United States with trust powers.
2. The Bank has full corporate power to undertake the duties and
obligations of the Trustee under the Trust Indenture Act of 1939, as amended.
3. To the best knowledge of the undersigned, no authorization,
approval, consent, or other order of any governmental agency or regulatory
authority having jurisdiction over the trust powers of the Bank that has not
been obtained is required for the authorization, execution and delivery by the
Bank of the agreements relating to the issuance of $1,000,000,000 of securities
of Franchise Finance Corporation of America (the "Agreement").
4. To the best knowledge of the undersigned, the execution, delivery
and performance by the Bank of the Agreements does not contravene any law or
governmental regulation applicable to the Bank or the Articles of Association or
Bylaws of the Bank or contravene any governmental order binding upon the Bank.
5. To the best knowledge of the Bank, there is no litigation pending
against the Bank to restrain the Bank's participation in, or in any way
contesting the powers of the Bank with respect to the transactions contemplated
by the Agreements.
Dated: March 20, 1998
NORWEST BANK ARIZONA, N.A.
By: /a/ Margaret M. Moore
Margaret M. Moore
Title: Assistant Vice President
<PAGE>
Exhibit 6.a
20 March, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of the examination of the
undersigned made by Federal or State authorities authorized to make such
examination may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Sincerely,
NORWEST BANK ARIZONA,
NATIONAL ASSOCIATION
Margaret M. Moore
Assistant Vice President
