As filed with the Securities and Exchange Commission on March 11, 1998
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
<PAGE>
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 per share(1) price(1) fee
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par 961,610 $26.71875 $25,693,017 $7,580
value $.01 per share
=======================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based on the average of the high and low prices
of the Common Stock on March 9, 1998, as reported on the New York Stock
Exchange.
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.
<PAGE>
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 SUBJECT TO COMPLETION
- ---------- DATED MARCH 11, 1998
961,610 Shares
FRANCHISE FINANCE CORPORATION OF AMERICA
Common Stock, $.01 Par Value
This Prospectus relates to 961,610 shares (the "Shares") of common
stock, $.01 par value per share (the "Common Stock") of Franchise Finance
Corporation of America, a Delaware corporation (the "Company"). The Shares will
be offered for sale or otherwise transferred from time to time by the
stockholder named herein (the "Selling Stockholder") in transactions (which may
include block transactions) on the New York Stock Exchange or in the
over-the-counter market, in negotiated transactions or otherwise, at fixed
prices, which may be changed, at market prices prevailing at the time of sale,
at negotiated prices, or without consideration, or by any other legally
available means. The Selling Stockholder may offer the Shares to third parties
(including purchasers) directly or by or through brokers, dealers, agents or
underwriters who may receive compensation in the form of discounts, concessions,
commissions or otherwise. The Selling Stockholder and any brokers, dealers,
agents or underwriters that participate in the distribution of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), in which event any discounts, concessions and
commissions received by any such brokers, dealers, agents or underwriters and
any profit on resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. The aggregate
net proceeds to the Selling Shareholder from the sale of the Shares will be the
purchase price of such Shares less any commissions. The Company will not receive
any proceeds from the sale of Shares by the Selling Stockholder. The Company
will pay all expenses incurred in connection with this offering, other than
underwriting discounts and selling commissions. See "Plan of Distribution."
The Shares initially were sold by the Company to Smith Barney Inc.
which thereafter deposited them with the Trustee of the Equity Focus Trusts -
REIT Portfolio Series, 1998-A (the "Trust"), a regulated unit investment trust
under the Investment Company Act of 1940, to which Smith Barney Inc. acts as
sponsor and depositor, in exchange for units in the Trust.
The Common Stock is listed for trading on the New York Stock Exchange
(the "NYSE") under the symbol "FFA." On March 9, 1998, the last reported sale
price of the Common Stock on the NYSE was $26.875 per share.
The Common Stock is subject to certain restrictions on ownership
designed to preserve the Company's status as a real estate investment trust for
federal income tax purposes. See "Restrictions on Transfers of Capital Stock."
-----------------------------------------------------
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
<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"). Such reports, proxy
statements and other information 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 NYSE and similar information
concerning the Company can be inspected and copied at the NYSE, 20 Broad Street,
New York, New York 10005.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect to
the Shares offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, 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. Items and information omitted from this
Prospectus but contained in the Registration Statement may be inspected and
copied at the Public Reference Room of the Commission.
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.
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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 Shares, 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, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request of such person, a copy of any or all of the information that has
been incorporated by reference in this Prospectus (not including exhibits to the
documents that have been incorporated herein by reference unless the exhibits
themselves are 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.
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 is a fully integrated and
self-administered real estate investment trust. The Company, together with its
predecessors, has been engaged in the financing of chain restaurant real estate
since 1980. As of December 31, 1997, the Company had interests (which include
interests in mortgage loan securitization transactions) in approximately 2,500
properties operated by more than 400 operators in approximately 50 chains
located in 47 states. 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 Common Stock trades on 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
The Company will receive no proceeds from the sale of the Shares by the
Selling Stockholder.
SELLING STOCKHOLDER
The following table sets forth (i) the name of the Selling Stockholder,
(ii) the number of shares of Common Stock currently beneficially owned by the
Selling Stockholder, and (iii) the number of such shares of Common Stock
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which will be beneficially owned by the Selling Stockholder after completion of
the offering, assuming the sale of all of the shares set forth in (ii) above.
Beneficial Beneficial
Ownership Ownership
Selling Before Shares After
Stockholder Offering Offered Offering(1)
----------- -------- ------- -----------
The Equity Focus Trusts - 961,610 961,610 ---
REIT Portfolio Series, 1998-A
(1) The exact number of Shares to be sold by the Selling Stockholder at any time
or from time to time cannot currently be determined.
See the cover page of this Prospectus for information regarding the
relationship between the Company and the Selling Stockholder.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a real estate investment trust (a "REIT")
under the Internal Revenue Code of 1986, as amended (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 Company's 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 Code, as modified by Section 856(h)(1)(B) of the Code.
"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, in its discretion, may 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. The 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 will bear a legend referring to the
restrictions described above. 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 Company must file a notice with the Company
containing information regarding their ownership of stock as set forth in the
United States Treasury Regulations promulgated under the Code (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.
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<PAGE>
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 currently
govern the federal income tax treatment of the Company and its stockholders. 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 Shares will vary depending
on his or her particular situation.
EACH INVESTOR IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR
REGARDING THE TAX CONSEQUENCES TO HIM OR HER OF THE ACQUISITION, OWNERSHIP AND
SALE OF THE OFFERED SHARES, 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, 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. However, the Company may 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. In that event,
shareholders must include in income their shares of undistributed gain and will
receive a credit equal to the tax paid by the Company.
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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, 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
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
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(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.
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 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
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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.
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 interest rate swaps. 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 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. The Company does not expect to generate nonqualifying
income in quantities which would cause it to fail either of 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.
8
<PAGE>
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 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.
Taxation of United States Stockholders
As used herein, the term "United States Stockholder" means a holder of
Common Stock that is for United States federal income tax purposes (a) a citizen
or resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political
9
<PAGE>
subdivision thereof, or (c) an estate or trust, the income of which is subject
to United States federal income taxation regardless of its source.
Distributions Generally. As long as the Company qualifies as a REIT,
distributions to a United States Stockholder up to the amount of the Company's
current or accumulated earnings and profits (and not designated as capital gains
dividends) will be taken into account as ordinary income and will not be
eligible for the dividends-received deduction for corporations. Distributions
that are designated by the Company as capital gain dividends will be treated as
long-term capital gain (to the extent they do not exceed the Company's actual
net capital gain) for the taxable year without regard to the period for which
the stockholder has held its stock. However, corporate stockholders may be
required to treat up to 20% of certain capital gains dividends as ordinary
income, pursuant to Section 291(d) of the Code. A distribution in excess of
current or accumulated earnings and profits will first be treated as a tax-free
return of capital, reducing the tax basis in the United States Stockholder's
Common Stock, and a distribution in excess of the United States Stockholder's
tax basis in its Common Stock will be taxable gain realized from the sale of
such shares. Dividends declared by the Company in October, November or December
of any year payable to a stockholder or record on a specified date in any such
month shall be treated as both paid by the Company and received by the
stockholder on December 31 of such year, provided that the dividend is actually
paid by the Company during January of the following calendar year. Stockholders
may not claim the benefit of any tax losses of the Company on their own income
tax returns.
The Company will have sufficient earnings and profits to treat as a
dividend any distribution by the Company up to the amount required to be
distributed in order to avoid imposition of the 4% excise tax discussed above.
As a result, stockholders may be required to treat as taxable dividends certain
distributions that would otherwise result in tax-free returns of capital.
Moreover, any "deficiency dividend" will be treated as a "dividend" (an ordinary
dividend or a capital gain dividend, as the case may be), regardless of the
Company's earnings and profits.
Losses incurred on the sale of exchange of Common Stock held for less
than six months will be deemed a long-term capital loss to the extent of any
capital gain dividends received by the selling stockholder with respect to such
stock. In the event the Company elects to retain capital gains, the Company may
designate a portion of its undistributed gains. In that event, the Company will
be required to pay a tax thereon. The holders of the Common Stock would be
required to include such amounts in income but will be entitled to a credit for
a corresponding share of the capital gain paid by the Company.
Treatment of Tax-Exempt Stockholders. Distributions from the Company to
a tax-exempt employee's pension trust or other domestic tax-exempt stockholder
will generally not constitute "unrelated business taxable income" unless the
stockholder has borrowed to acquire or carry its shares of the Company. A
tax-exempt employee's pension trust that holds more than 10% of the shares of
the capital stock of the Company may under certain circumstances be required to
treat a certain percentage of dividends as unrelated business taxable income if
the Company is "predominantly held" by qualified trusts. Under this provision, a
REIT is predominantly held by a qualified trust if: (a) at least one qualified
trust holds at least 25% of the interest of the REIT; or (b) one or more
qualified trusts each own at least 10% of the interests in the REIT and such
qualified trusts, in the aggregate, own at least 50% of the interests of the
REIT. For these purposes, a qualified trust is any trust defined under Section
401(a) of the Code and exempt from tax under Section 501(a) of the Code.
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 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 Common Stock under the
respective state laws applicable to them.
10
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholder that it may
sell or transfer all or a portion of the Shares offered hereby from time to time
to third parties (including purchasers) directly or by or through brokers,
dealers, agents or underwriters, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Stockholder
and/or from purchasers of the Shares for whom they may act as agent. Such sales
and transfers of the Shares may be effected from time to time in one or more
transactions on the NYSE, in the over-the-counter market, in negotiated
transactions or otherwise, at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at negotiated prices, or without
consideration, or by any other legally available means. Any or all of the Shares
may be sold or transferred from time to time by means of (a) a block trade in
which the broker or dealer so engaged will attempt to sell the Shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(d) through the writing of options on the Shares; (e) pledges as collateral to
secure loans, credit or other financing arrangements and any subsequent
foreclosure, if any, thereunder; (f) gifts, donations and contributions; and (g)
any other legally available means. To the extent required, the number of Shares
to be sold or transferred, the purchase price, the name of any such agent,
broker, dealer or underwriter and any applicable discounts or commissions and
any other required information with respect to a particular offer will be set
forth in an accompanying Prospectus Supplement. The aggregate net proceeds to
the Selling Stockholder from the sale of the Shares will be the purchase price
of such Shares less any commissions. This Prospectus also may be used, with the
Company's prior written consent, by donees and pledgees of the Selling
Stockholder.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholder and any brokers, dealers, agents or
underwriters that participate in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act, in which event any
discounts, concessions and commissions received by such brokers, dealers, agents
or underwriters and any profit on the resale of the Shares purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act.
No underwriter, broker, dealer or agent has been engaged by the Company
in connection with the distribution of the Shares.
Any Shares covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus. There is no assurance that the Selling Stockholder
will sell any or all of the Shares. The Selling Stockholder may transfer, devise
or gift Shares by other means not described herein.
The Company will pay all of the expenses incident to the registration
of the Shares, other than underwriting discounts and selling commissions, if
any.
The Company has agreed to indemnify Smith Barney Inc. and the Selling
Stockholder against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters relating to the Shares 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. Members and attorneys of Kutak Rock own approximately 32,000
shares of Common Stock of the Company.
11
<PAGE>
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.
12
<PAGE>
====================================== ======================================
No dealer, salesperson or any 961,610 Shares
other person has been authorized to
give any information or to make any
representations in connection with
this offering, other than those made
in this Prospectus and, if given or
made, such information or
representations must not be relied
upon as having been authorized by the
Company, the Selling Stockholder or
any broker, dealer or agent. Neither
the delivery of this Prospectus nor
any sale made hereunder shall under
any circumstance create an implication
that there has been no change in the
facts set forth in this Prospectus or
in the affairs of the Company since
the date hereof. This Prospectus does
not constitute an offer or [GRAPHIC OMITTED]
solicitation by anyone in any state in
which such offer or solicitation is
not authorized or in which the person
making such offer or solicitation is
not qualified to do so or to anyone
whom it is unlawful to make such offer
or solicitation.
FRANCHISE FINANCE
CORPORATION OF AMERICA
- --------------------------------------
TABLE OF CONTENTS
- --------------------------------------
COMMON STOCK
Page
----
AVAILABLE INFORMATION............. 2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE.......... 2
THE COMPANY....................... 3 ---------------------
USE OF PROCEEDS................... 3
SELLING STOCKHOLDER............... 3 PROSPECTUS
RESTRICTIONS ON TRANSFERS OF
CAPITAL STOCK................... 4 ---------------------
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS.................. 5
PLAN OF DISTRIBUTION.............. 11
LEGAL MATTERS..................... 11
EXPERTS ......................... 12
March __, 1998
====================================== ======================================
<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 Shares (other than underwriting discounts
and commissions, if any):
SEC Registration Fee......................................... $ 7,580
Printing and Engraving Expenses.............................. 5,000*
Accounting Fees and Expenses................................. 3,500*
Legal Fees and Expenses...................................... 15,000*
Miscellaneous................................................ 10,420*
Total......................................... $41,500*
=======
---------------
*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
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-1
<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
- ----------- -----------
4.01 Specimen of Common Stock Certificate (1)
4.02 The Second Amended and Restated Certificate of Incorporation of the
Company (2)
4.03 The Amended and Restated Bylaws of the Company (1)
5 Opinion of Kutak Rock Regarding Legality (3)
8 Opinion of Kutak Rock Regarding Tax Matters (4)
23.01 Consent of Arthur Andersen LLP (3)
23.02 Consents of Kutak Rock (included in Exhibit 5)
24 Power of Attorney (included on page II-5 of the Registration
Statement)
- ----------------
(1) Filed with the Securities and Exchange Commission as part of the Exhibits to
the Registration Statement on Form S-4 and amendments thereto, registration
number 33-65302, and incorporated herein by reference to such Registration
Statement.
(2) 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.
(3) Filed herewith.
(4) To be filed by amendment.
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:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended
("Securities Act");
(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;
II-2
<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if this 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, as amended ("Exchange Act") that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, 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, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement 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.
(c) Insofar as indemnification for liabilities arising under the
Securities 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
Securities 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 Securities
Act and will be governed by the final adjudication of such issue.
II-3
<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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Scottsdale, State of Arizona, on March 11, 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-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Morton H. Fleischer his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement on Form S-3 and file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto such attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, to all intents and purposes and as full as they might or
could do in person, hereby ratifying and confirming all that such
attorney-in-fact and agent, or his substitute, lawfully may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Morton H. Fleischer Chairman of the Board, President, March 11, 1998
- -------------------------- Chief Executive Officer and
Morton H. Fleischer Director
/s/ John Barravecchia Executive Vice President, Chief March 11, 1998
- -------------------------- Financial Officer, Treasurer and
John Barravecchia Assistant Secretary
/s/ Catherine F. Long Senior Vice President, Finance, March 11, 1998
- -------------------------- Principal Accounting Officer,
Catherine F. Long Assistant Secretary and Assistant
Treasurer
/s/ Willie R. Barnes Director March 11, 1998
- --------------------------
Willie R. Barnes
/s/ William C. Foxley Director March 9, 1998
- --------------------------
William C. Foxley
/s/ Robert W. Halliday Chairman Emeritus March 10, 1998
- --------------------------
Robert W. Halliday
II-5
<PAGE>
/s/ Donald C. Hannah Director March 11, 1998
- --------------------------
Donald C. Hannah
/s/ Dennis E. Mitchem Director March 9, 1998
- --------------------------
Dennis E. Mitchem
/s/ Louis P. Neeb Director March 11, 1998
- --------------------------
Louis P. Neeb
/s/ Kenneth B. Roath Director March 11, 1998
- --------------------------
Kenneth B. Roath
/s/ Wendell J. Smith Director March 10, 1998
- --------------------------
Wendell J. Smith
/s/ Casey J. Sylla Director March 11, 1998
- --------------------------
Casey J. Sylla
/s/ Shelby Yastrow Director March 11, 1998
- --------------------------
Shelby Yastrow
II-6
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.01 Specimen of Common Stock Certificate (1)
4.02 The Second Amended and Restated Certificate of Incorporation of the
Company (2)
4.03 The Amended and Restated Bylaws of the Company (1)
5 Opinion of Kutak Rock Regarding Legality (3)
8 Opinion of Kutak Rock Regarding Tax Matters (4)
23.01 Consent of Arthur Andersen LLP (3)
23.02 Consents of Kutak Rock (included in Exhibit 5)
24 Power of Attorney (included on page II-5 of the Registration
Statement)
- ----------------
(1) Filed with the Securities and Exchange Commission as part of the Exhibits to
the Registration Statement on Form S-4 and amendments thereto, registration
number 33-65302, and incorporated herein by reference to such Registration
Statement.
(2) 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.
(3) Filed herewith.
(4) To be filed by amendment.
II-7
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 11, 1998
Franchise Finance Corporation
of America
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Franchise Finance Corporation of America, a
Delaware corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended (the "Act"), of 961,610 shares of common
stock, $.01 par value per share (the "Common Stock"), which may be sold from
time to time by the selling stockholder identified in the Company's Registration
Statement on Form S-3 to be filed with the Securities and Exchange Commission
("SEC") on or about March 11, 1998. Such registration statement and the related
prospectus on file with the SEC at the time such registration statement becomes
effective (including financial statements and schedules, exhibits and all other
documents filed as a part thereof or incorporated therein) are herein called,
respectively, the "Registration Statement" and the "Prospectus."
In connection with this opinion, we have made such investigations and
examined such records, including the Company's Second Amended and Restated
Certificate of Incorporation, Amended and Restated Bylaws and corporate minutes
as we deemed necessary to the performance of our services and to give this
opinion. We have also examined and are familiar with the originals or copies,
certified or otherwise identified to our satisfaction, of such other documents,
corporate records and other instruments as we have deemed necessary for the
preparation of this opinion. In expressing this opinion, we have relied, as to
any questions of fact upon which our opinion is predicated, upon representations
and certificates of the officers of the Company.
<PAGE>
Franchise Finance Corporation
of America
March 11, 1998
Page 2
In giving this opinion, we assumed:
(a) the genuineness of all signatures and the authenticity and
completeness of all documents submitted to us as originals;
(b) the conformity to originals and the authenticity of all
documents supplied to us as certified, photocopied, conformed or
facsimile copies and the authenticity and completeness of the originals
of any such documents; and
(c) the proper, genuine and due execution and delivery of all
documents by all parties to them and that there has been no breach of
the terms thereof.
Based upon the foregoing and subject to the qualifications set forth
above, and assuming (i) that the Registration Statement has become effective
under the Act; (ii) that all required actions are taken and conditions satisfied
with respect to the issuance of the Common Stock as specified in the Prospectus;
and (iii) consideration is received for the Common Stock, we are of the opinion
that at the time the Common Stock is issued, the Common Stock will be legally
issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and the use of our name in the Registration Statement. In
giving such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Act or the Rules and
Regulations of the SEC promulgated pursuant thereto.
Very truly yours,
/s/ Kutak Rock
Kutak Rock
EXHIBIT 23.01
INDEPENDENT AUDITORS' CONSENT
As independent public accountants, we 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.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Phoenix, Arizona
March 11, 1998
