SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 27, 1999
FRANCHISE FINANCE CORPORATION OF AMERICA
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-13116 86-0736091
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification Number)
incorporation)
17207 North Perimeter Drive, Scottsdale, AZ 85255
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (602) 585-4500
NONE
----
(Former Name or Former Address, if Change Since Last Report)
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Item 5. Other Events.
On January 27, 1999, the Registrant entered into a Purchase Agreement
dated January 27, 1999 with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Bear, Stearns & Co. Inc., as representatives of the
several underwriters named therein (the "Underwriters"), with respect to the
issue and sale by the Registrant, and the purchase by the Underwriters, of an
aggregate of 6,000,000 shares of the Registrant's $.01 par value common stock,
with an option to purchase from the Registrant an additional 900,000 shares of
common stock to cover over-allotments, if any. The Purchase Agreement dated
January 27, 1999 is attached hereto and referenced as Exhibit 1.01. Kutak Rock
as counsel to the Registrant has issued its opinion as to the legality with
respect to the Common Stock. The opinion is attached hereto and referenced as
Exhibit 5.01
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
1.01 Underwriting Agreement
5.01 Legal Opinion of Kutak Rock
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRANCHISE FINANCE CORPORATION OF
AMERICA (Registrant)
Dated: January 28, 1999 By /s/ John Barravecchia
----------------------
John Barravecchia,
Executive Vice President
and Chief Financial Officer
FRANCHISE FINANCE CORPORATION OF AMERICA
(a Delaware corporation)
6,000,000 Shares of Common Stock
PURCHASE AGREEMENT
January 27, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Bear, Stearns & Co. Inc.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, NY 10281-1209
Ladies and Gentlemen:
Franchise Finance Corporation of America, a Delaware
corporation (the "Company"), confirms its agreement with Merrill Lynch & Co. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Bear,
Stearns & Co. Inc. ("Bear Stearns") and each of the other Underwriters named in
Schedule I hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch and Bear Stearns are acting as representatives
(in such capacity, the "Representatives") with respect to (i) the sale by the
Company and the purchase by the Underwriters, acting severally and not jointly,
of the respective number of shares of Common Stock, par value $.01 per share, of
the Company (the "Common Stock") set forth in Schedule I hereto (the "Initial
Securities") and (ii) the grant by the Company to the Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of 900,000 additional shares of Common Stock (the
"Option Securities" and, together with the Initial Securities, the "Securities")
to cover over-allotments, if any.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-26437) and pre-effective amendment no. 1 thereto relating to the offering
from time to time of debt securities, common stock or preferred stock in
accordance with Rule 415 under the Securities Act of 1933, as amended (the "1933
Act") and will file such additional amendments and supplements thereto as may
herein be required. Such registration statement has been declared effective by
the Commission. Such registration statement (as amended), and the prospectus
constituting a part thereof and each prospectus supplement relating to the
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offering of the Securities (including in each case all documents incorporated or
deemed to be incorporated by reference therein, and the information, if any,
deemed to be part thereof pursuant to Rule 434 of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations")), as from time to
time amended or supplemented pursuant to the 1933 Act, the Securities Exchange
Act of 1934, as amended (the "1934 Act"), or otherwise, are hereinafter referred
to as the "Registration Statement" and the "Prospectus," respectively, except
that if any revised prospectus shall be provided to the Underwriters by the
Company for use in connection with the offering of the Securities which differs
from the Prospectus on file (whether or not such revised prospectus is required
to be filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations),
the term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Underwriters for such use. All references in
this Agreement to financial statements and schedules and other information which
is "described," "disclosed," "contained," "included" or "stated" in the
Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include the
filing of any document under the 1934 Act which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be. If the Company elects to rely on Rule 434 under the 1933 Act
Regulations, all references to the Prospectus shall be deemed to include,
without limitation, the form of prospectus and the term sheet, taken together,
provided to the Underwriters by the Company in reliance on Rule 434 under the
1933 Act (the "Rule 434 Prospectus"). If the Company files a registration
statement to register a portion of the Securities and relies on Rule 462(b) for
such registration statement to become effective upon filing with the Commission
(the "Rule 462 Registration Statement"), then any reference to "Registration
Statement" herein shall be deemed to be to both the registration statement
referred to above (No. 333-26437) and the Rule 462 Registration Statement, as
each such registration statement may be amended pursuant to the 1933 Act.
The Company understands that the Underwriters propose to sell
the Securities in a public offering as soon as the Underwriters deem advisable
after this Agreement has been executed and delivered.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to the Underwriters as of the
date hereof and as of the Closing Time referred to in Section 2(c) hereof and as
of each Date of Delivery (if any) referred to in Section 2(b) hereof, and agrees
with the Underwriters, as follows:
(i) The Company meets the requirements for use of Form S-3
under the 1933 Act, and at the respective times the Registration
Statement became effective and any post-effective amendments thereto
become effective and on the date hereof, the Registration Statement did
and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the Trust Indenture Act of
1939, as amended (the "1939 Act"), and the rules and regulations of the
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Commission under the 1939 Act, and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, on the date hereof (unless the
term "Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of
the Securities which differs from the Prospectus on file at the
Commission at the time the Registration Statement first becomes
effective, in which case at the time it is first provided to the
Underwriters for such use), and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by the Underwriters
expressly for use in the Registration Statement or Prospectus. For
purposes of this Section l(a), all references to the Registration
Statement, any post-effective amendments thereto and the Prospectus
shall be deemed to include, without limitation, any electronically
transmitted copies thereof, including, without limitation, any copy
filed with the Commission pursuant to its Electronic Data Gathering,
Analysis, and Retrieval system ("EDGAR").
(ii) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) The financial statements included or incorporated by
reference in the Registration Statement and the Prospectus, together
with the related schedule and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statement of income, shareholders' equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
("GAAP") throughout the periods involved. The supporting schedules, if
any, included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included
in the Prospectus present fairly in accordance with GAAP the
information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the
Registration Statement. The pro forma financial information included in
the Prospectus presents fairly the information shown therein, has been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and has been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.
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(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business ("Material Adverse Change"), (B) there have been no
transactions entered into by the Company or any of its subsidiaries,
other than those in the ordinary course of business, which are material
with respect to the Company and its subsidiaries considered as one
enterprise, and (C) except for regular quarterly dividends on the
Common Stock in amounts per share that are consistent with past
practice, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement; the Company is duly qualified as a foreign corporation to
transact business and is in good standing in the State of Arizona and
the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify or to be in good standing would not, either
singly or in the aggregate, have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise (a "Material Adverse Effect").
(vi) Each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power
and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not, either singly or in the aggregate, have a Material
Adverse Effect; all of the issued and outstanding capital stock of each
such subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is owned directly by the Company, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity, none of the outstanding shares of capital stock of the
subsidiaries was issued in violation of the preemptive or similar
rights of any stockholder of such corporation arising by operation of
law, under the charter or by-laws of any subsidiary or under any
agreement to which the Company or any subsidiary is a party. The
Company does not own, directly or indirectly through a "qualified REIT
subsidiary" (within the meaning of Section 856(i) of the Internal
Revenue Code of 1986, as amended (the "Code")), any partnership,
limited liability company, association or other entity, any shares of
stock or any other debt or equity securities of, or other interests in,
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any corporation, firm, partnership, limited liability company,
association or other entity, other than (1) stock of a corporation or
equity of any entity that the Company has been advised by its legal
counsel qualifies as a "qualified REIT subsidiary" within the meaning
of Section 856(i) of the Code, (2) stock or other debt or equity
securities of any issuer (other than a partnership or limited liability
company, the ownership of which is governed by (3) below) where (i) the
Company has been advised by legal counsel that such ownership would not
constitute ownership of more than 9.8% of the voting securities of such
issuer (within the meaning of Section 856(c)(5) of the Code) and (ii)
the Company has determined in good faith that the fair market value of
the stock and securities of any one such issuer does not exceed 4.8% of
the value of the total assets of the Company, or (3) interests in a
partnership or limited liability company where (i) the Company has
received a written opinion of its legal counsel that such a partnership
or limited liability company is properly treated as a partnership,
rather than an association or publicly traded partnership taxable as a
corporation, for federal income tax purposes and (ii) such partnership
or limited liability company does not itself own debt or equity
securities of any issuer that could cause the Company to violate the
representation contained in clause (2) above. As used in this
Agreement, "subsidiary" shall mean (i) any corporation, trust,
association or other business entity of which more than 50% of the
total voting power of shares of capital stock or other equivalent
interests entitled to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by the Company or one or more of the other subsidiaries of
the Company (or a combination thereof) and (ii) any partnership (a) the
sole general partner or the managing general partner of which is the
Company or a subsidiary of the Company or (b) the only general partners
of which are the Company or one of more subsidiaries of the Company (or
any combination thereof).
(vii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to employee benefit plans referred to in
the Prospectus, pursuant to the exercise of options referred to in the
Prospectus or pursuant to the Company's dividend reinvestment plan),
and all of such outstanding shares of capital stock have been duly
authorized and validly issued and are fully paid and nonassessable and
were not issued in violation of, and, except for the preemptive rights
of Colony Investors III, L.P., a Delaware limited partnership
("Colony"), are not subject to preemptive rights.
(viii) Neither the Company nor any of its subsidiaries is (a)
in violation of its charter or bylaws or (b) in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which any of them may be bound, or to which any of the property
or assets of the Company or any of its subsidiaries is subject, except
for, in the case of (b), any such defaults which would not, either
singly or in the aggregate, have a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the
Securities and the consummation of the transactions contemplated herein
and therein and compliance by the Company with its obligations
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hereunder and thereunder (including the use of the proceeds from the
sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds") have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, (i) conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which it or any
of them may be bound, including the Second Amended and Restated Credit
Agreement between the Company and NationsBank of Texas, N.A. dated
December 29, 1997 (the "NationsBank Facility"), or to which any of the
property or assets of the Company or any of its subsidiaries is subject
except for any such conflict, breach, default or Repayment Event which
would not, either singly or in the aggregate, have a Material Adverse
Effect, (ii) violate Section 6.2 of the NationsBank Facility, or (iii)
result in any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or any applicable law, statute,
rule or regulation, or any judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries. As
used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its subsidiaries.
(ix) There is no existing labor dispute with the employees of
the Company or any of its subsidiaries that would have, either singly
or in the aggregate, a Material Adverse Effect.
(x) There is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any of its
subsidiaries, which is required to be disclosed in the Registration
Statement, or which might reasonably be expected to result in any
Material Adverse Change, or which might reasonably be expected to have
a Material Adverse Effect or materially and adversely affect the
consummation of this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Change.
(xi) There are no contracts or documents which are required to
be described in the Registration Statement, the Prospectus or the
documents incorporated by reference therein or to be filed as exhibits
thereto by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the
rules and regulations of the Commission under the 1934 Act (the "1934
Act Regulations") which have not been so described and filed as
required.
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(xii) To the extent applicable, the Company and its
subsidiaries own or possess, or can acquire on reasonable terms, the
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "patent and
proprietary rights") presently employed by them in connection with the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any patent or proprietary rights or of any facts or circumstances
which would render any patent and proprietary rights invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, either singly or in the aggregate, would result in any
Material Adverse Change.
(xiii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required in connection
with the offering, issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this Agreement, except
such as have already been obtained or as may be required under the 1933
Act or the 1933 Act Regulations or state securities laws.
(xiv) The Company and its subsidiaries possess such
certificates, authorities, permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them, except
where the failure to possess or comply with any such Governmental
License would not, either singly or in the aggregate, have a Material
Adverse Effect; the Company and its subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, either singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have,
either singly or in the aggregate, a Material Adverse Effect; and
neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses which, either singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(xv) This Agreement has been duly authorized, executed and
delivered by the Company.
(xvi) The Securities have been duly authorized for issuance
and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued,
fully paid and non-assessable and the Underwriters will receive valid
title to the Securities, free and clear of all security interests,
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mortgages, pledges, liens, encumbrances and claims; the capital stock
conforms to all statements relating thereto contained or incorporated
by reference in the Prospectus and the Registration Statement and such
description conforms to the rights set forth in the instruments
defining the same; and, except for the preemptive rights of Colony
which have been waived, the issuance of the Securities is not subject
to preemptive rights arising by operation of law, under contract, under
the charter and bylaws of the Company or otherwise. The Securities will
conform in all material respects to the respective statements thereto
contained in the Prospectus.
(xvii) Except as set forth in the Prospectus, the Company and
its subsidiaries are in compliance in all material respects with all
applicable laws, statutes, ordinances, rules or regulations, the
violation of which, either singly or in the aggregate, would be
reasonably expected to have a Material Adverse Effect.
(xviii) Except as otherwise disclosed in the Prospectus: (i)
the Company and its subsidiaries have good and marketable title to all
properties and assets (or a valid first lien as to mortgaged
properties) described in the Prospectus as being owned (or mortgaged)
by them, or reflected in the most recent consolidated balance sheet of
the Company contained in the Prospectus; (ii) all liens, charges,
claims, restrictions or encumbrances on or affecting the properties and
assets of the Company or any of its subsidiaries which are required to
be disclosed in the Prospectus are disclosed therein; (iii) no person
or entity, other than tenants under the leases or guarantors thereof
pursuant to which the Company and its subsidiaries lease all or a
portion of their properties, has an option or right of first refusal or
any other right to purchase any of such properties, except for such
options or rights which would not, either singly or in the aggregate,
have a Material Adverse Effect; (iv) each of the properties of the
Company and its subsidiaries, at the time such property was acquired or
at the time the loan by the Company with respect to such property was
made, had access to public rights of way, either directly or through
insured easements, except to the extent the failure to have such access
would not, either singly or in the aggregate, have a Material Adverse
Effect; (v) each of such properties, at the time such property was
acquired or at the time the loan by the Company with respect to such
property was made, was served by all public utilities necessary for the
current operations on such property in sufficient quantities for such
operations, except to the extent the failure to have such service would
not, either singly or in the aggregate, have a Material Adverse Effect;
(vi) each of such properties complies with all applicable codes and
zoning and subdivision laws and regulations, except for such failures
to comply which would not, either singly or in the aggregate, have a
Material Adverse Effect; (vii) the real property leases and equipment
leases, if any, relating to each of such properties are in full force
and effect, except where the failure to be in full force and effect
would not, singly or in the aggregate, have a Material Adverse Effect;
and (viii) there is no pending or threatened condemnation, zoning
change, or other proceeding or action that will in any manner affect
the size of, use of, improvements on, construction on or access to the
properties of the Company and its subsidiaries, except such proceedings
or actions which would not, either singly or in the aggregate, have a
Material Adverse Effect.
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(xix) The Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of
the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.
(xx) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus under the caption
"Use of Proceeds" will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xxi) Except as described in the Registration Statement, (A)
neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign laws or regulations relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), except where the Company or its subsidiaries have obtained one
or more policies of environmental insurance to cover such risks, with
deductible amounts, loss limits and aggregate liability limitations
which were deemed reasonably appropriate by the Company under the
circumstances, and, except such violations as would not, either singly
or in the aggregate, have a Material Adverse Effect, and (B) there are
no events or circumstances that could form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to any Hazardous Materials
or the violation of any Environmental Laws, which, either singly or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect (after taking into account any amounts to which the Company
would be entitled under its environmental liability insurance
policies).
(xxii) The documents incorporated or deemed to be incorporated
by reference in the Prospectus, when they became effective or at the
time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of the 1933
Act or the 1934 Act, as applicable, and the rules and regulations of
the Commission thereunder, and, when read together with the other
information in the Prospectus, at the time the Registration Statement
and any post-effective amendments thereto become effective and at the
Closing Time (and, if any Option Securities are purchased, at the
relevant Date of Delivery), will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
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(xxiii) The Company and its subsidiaries have filed all
federal, state, local and foreign tax returns that are required to be
filed or have duly requested extensions thereof and have paid all taxes
required to be paid by any of them and any related assessments, fines
or penalties, except for any such tax, assessment, fine or penalty that
is being contested in good faith and by appropriate proceedings; and
adequate charges, accruals and reserves have been provided for in the
financial statements referred to in Section 1(a)(iii) above in respect
of all federal, state, local and foreign taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has
not been finally determined or remains open to examination by
applicable taxing authorities.
(xxiv) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general and specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with GAAP and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorizations; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxv) The Company and its subsidiaries have not (i) taken,
directly or indirectly, any action designed to cause or to result in,
or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities or (ii) since the initial filing of the Registration
Statement (A) sold, bid for, purchased or paid anyone (other than, to
the extent applicable, payments made by the Company pursuant to the
terms of, and in accordance with, the Company's dividend reinvestment
plan) any compensation for soliciting purchases of, the Securities, or
(B) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(xxvi) No relationship, direct or indirect, exists between or
among any of the Company or any affiliate of the Company, on the one
hand, and any director, officer, stockholder, customer or supplier of
any of them, on the other hand, which is required by the 1933 Act or by
the 1933 Act Regulations to be described in the Registration Statement
or the Prospectus which is not so described or is not described as
required.
(xxvii) The Company has not distributed and, prior to the
later to occur of (i) the Closing Time and (ii) completion of the
distribution of the Securities, will not distribute any prospectus (as
such term is defined in the 1933 Act and the 1933 Act Regulations) in
connection with the offering and sale of the Securities other than the
Registration Statement, any preliminary prospectus, the Prospectus or
other materials, if any, permitted by the 1933 Act or by the 1933 Act
Regulations and approved by the Underwriters.
(xxviii) The Company has been and is organized in conformity
with the requirements for qualification and taxation as a real estate
investment trust ("REIT") under the Internal Revenue Code of 1986, as
amended (the "Code"), and its method of operation has at all times
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enabled, and its proposed method of operation will enable, the Company
to qualify as a REIT under the Code.
(xxix) The Company and each of its subsidiaries has title
insurance on all real property described in the Prospectus as being
owned (or held under a ground lease) or financed by any of them in an
amount at least equal to the cost of acquisition of such property or
the original principal amount of the loan provided by any of them, as
the case may be, and each such property is insured by extended coverage
hazard and casualty insurance in an amount not less than 90% of the
full replacement cost of the improvements located thereon (exclusive of
excavation and foundations), except for such properties which are
covered by insurance in an amount less than 90%, the total loss of
which would not have, either singly or in the aggregate, a Material
Adverse Effect, and there are in effect for such properties and assets
insurance policies covering risks and in amounts that are commercially
reasonable for such types of properties and assets and that are
consistent with the types and amounts of insurance typically maintained
by prudent owners of similar properties or assets or required by
commercial lenders with respect to similar properties or assets and all
such insurance is in full force and effect.
(b) Any certificate signed by any senior officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to the Underwriters as to
the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO UNDERWRITER; CLOSING.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each of the Underwriters, severally and not jointly, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company, at
the prices set forth on Schedule II hereto (which is a part hereof), the number
of Initial Securities set forth in Schedule I hereto opposite the name of such
Underwriter. The initial public offering price and the purchase price to be paid
by the Underwriters for the Securities are set forth on Schedule II hereto and a
prospectus supplement will be filed in accordance with Rule 424(b) of the 1933
Act.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters, severally and not jointly,
to purchase up to an additional 900,000 shares of Common Stock at the price per
share set forth in Schedule II, less an amount per share equal to any dividends
or distributions declared by the Company and payable on the Initial Securities
but not payable on the Option Securities. The option hereby granted will expire
30 days after the date hereof and may be exercised in whole or in part from time
to time only for the purpose of covering over-allotments which may be in
connection with the offering and distribution of the Initial Securities upon
notice by the Representatives to the Company setting forth the number of Option
Securities as to which the Underwriters are then exercising the option and the
time and date of payment and delivery for such Option Securities. Any such time
and date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of such option, nor in any event prior to the Closing Time, as
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hereinafter defined. If the option is exercised as to all or any portion of the
Option Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Securities then
being purchased which the number of Initial Securities set forth in Schedule I
opposite the name of such Underwriter bears to the total number of Initial
Securities, subject in each case to such adjustments as the Representatives in
their discretion shall make to eliminate any sales or purchase of fractional
shares.
(c) Payment of the purchase price for, and delivery of certificates
for, the Initial Securities shall be made at the office of Franchise Finance
Corporation of America, 17207 North Perimeter Drive, Scottsdale, Arizona, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 9:00 A.M. on the third business day (unless postponed in accordance with the
provisions of Section 10) following the date after execution of this Agreement,
or such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company in immediately available funds
against delivery to the Representatives for the respective accounts of the
Underwriters of certificates for the Securities to be purchased by them.
Certificates for the Securities shall be in such denominations and registered in
such names as the Underwriters may request in writing at least one business day
before the Closing Time or the relevant Date of Delivery, as the case may be.
The certificates for the Securities will be made available for examination and
packaging by the Underwriters in The City of New York not later than 3:00 P.M.
on the last business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
Section 3. COVENANTS OF THE COMPANY. The Company covenants with the
Underwriters as follows:
(a) Promptly following the execution of this Agreement, the
Company will prepare a prospectus supplement setting forth the terms of
such Securities not otherwise specified in the Prospectus, the price at
which the Securities are to be purchased by the Underwriters from the
Company, the initial public offering price, the selling concession and
reallowances, if any, and such other information as the Representatives
and the Company deem appropriate in connection with the offering of the
Securities. The Company will promptly transmit copies of the prospectus
supplement to the Commission for filing pursuant to Rule 424(b) of the
1933 Act Regulations and will furnish to the Underwriters as many
copies of the Prospectus and such prospectus supplement as the
Underwriters shall reasonably request.
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(b) The Company will notify each Underwriter immediately, and
confirm the notice in writing, (i) of the effectiveness of any
amendment to the Registration Statement, or when any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional
information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary
prospectus supplement, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes.
The Company will make every reasonable effort to prevent the issuance
of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment. If the Company elects
to rely on Rule 434, the Company will provide each Underwriter with
copies of the form of Rule 434 Prospectus, in such number as each
Underwriter may reasonably request, and file or transmit for filing
with the Commission the form of Prospectus complying with Rule
434(c)(2) of the 1933 Act in accordance with Rule 424(b) of the 1933
Act by the close of business in New York on the business day
immediately succeeding the date of this Agreement.
(c) At any time when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act in connection with sales
of the Securities, the Company will give each Underwriter notice of its
intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any amendment or
supplement to the Prospectus, whether pursuant to the 1933 Act, the
1934 Act or otherwise (including any revised prospectus which the
Company proposes for use by the Underwriters in connection with the
offering of the Securities which differs from the prospectus on file at
the Commission at the time the Registration Statement first becomes
effective, whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) of the 1933 Act Regulations or any term
sheet prepared in reliance on Rule 434 of the 1933 Act Regulations),
will furnish each Underwriter with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Underwriters or
counsel for the Underwriters shall reasonably object.
(d) The Company has furnished or will deliver to each
Underwriter and counsel for the Underwriters, without charge, signed
copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated
by reference therein and documents incorporated or deemed to be
incorporated by reference therein) and signed copies of all consents
and certificates of experts, and will also deliver to each Underwriter
a conformed copy of the Registration Statement as originally filed and
of each amendment thereto (without exhibits).
(e) The Company will furnish to each Underwriter, without
charge, from time to time during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as each
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Underwriter may reasonably request for the purposes contemplated by the
1933 Act or the 1934 Act or the respective applicable rules and
regulations of the Commission thereunder.
(f) If any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion
of such counsel, at any such time to amend the Registration Statement
or amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish
to each Underwriter such number of copies of such amendment or
supplement as each Underwriter may reasonably request.
(g) The Company will use its best efforts, in cooperation with
the Underwriters, to qualify the Securities for offering and sale under
the applicable securities laws of such states and other jurisdictions
of the United States as the Underwriters may designate and to maintain
such qualifications in effect for a period of not less than one year
from the effective date of the Registration Statement; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for
a period of not less than one year from the effective date of the
Registration Statement.
(h) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve month period beginning not later than the first day
of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
(i) The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(j) In accordance with the Cuba Act and without limitation to
the provisions of Sections 6 and 7 hereof, the Company agrees to
indemnify and hold harmless each Underwriter from and against any and
all loss, liability, claim, damage and expense whatsoever (including
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fees and disbursements of counsel), as incurred, arising out of any
violation by the Company of the Cuba Act.
(k) The Company, during the period when the Prospectus, is
required to be delivered under the 1933 Act or the 1934 Act, will file
all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the 1934
Act Regulations.
(l) During a period of 90 days from the date of the
Prospectus, the Company will not, without the prior written consent of
Merrill Lynch, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any share of Common Stock
or any securities convertible into or exercisable or exchangeable for
Common Stock or file any registration statement under the 1933 Act with
respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock of such
other securities, in cash or otherwise. The foregoing sentence shall
not apply to (A) the Securities to be sold hereunder, (B) any shares of
Common Stock issued by the Company upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof
and referred to in the Prospectus, (C) any shares of Common Stock
issued or options to purchase Common Stock granted pursuant to existing
employee benefit plans of the Company referred to in the Prospectus,
(D) any shares of Common Stock issued pursuant to any non-employee
director stock plan or dividend reinvestment plan, or (E) any shares of
Common Stock issued by the Company for use as consideration in a
financing transaction, provided that the recipient of the Company's
Common Stock pursuant to such a financing transaction complies with
this Section 3(l).
(m) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the 1934 Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(n) The Company will use its best efforts to have the shares
of Common Stock which it agrees to sell under this Agreement listed,
subject to notice of issuance, on the New York Stock Exchange on or
before Closing Time.
SECTION 4. PAYMENT OF EXPENSES. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the printing and filing of the Registration Statement as originally filed
and of each amendment thereto, (ii) the preparation, printing and delivery to
the Underwriters of this Agreement and such other documents as may be required
in connection with the offering, purchase, sale and delivery of the Securities,
(iii) the preparation, issuance and delivery of the certificates for the
Securities to the Underwriters, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(g) hereof,
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including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey, any supplement thereto and any Legal Investment Survey,
(vi) the printing and delivery to the Underwriters of copies of the Prospectus
and any amendments or supplements thereto including any term sheet delivered by
the Company pursuant to Rule 434 of the 1933 Act Regulations, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey, any supplement thereto and any Legal Investment Survey, (viii) the fees
and expenses of any transfer agent or registrar for the Securities, (xi) the fee
of any filing for review of the offering with the National Association of
Securities Dealers, Inc., if any, including the reasonable fees and expenses of
counsel for the Underwriters in connection therewith and (xii) the fees and
expenses incurred in connection with the listing of the Securities on the New
York Stock Exchange.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties of the Company herein contained, to the performance by the
Company of its obligations hereunder and to the following further conditions:
(a) The Registration Statement shall be effective prior to the
date hereof, and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters. A prospectus supplement
shall have been transmitted to the Commission for filing in accordance
with Rule 424(b) of the 1933 Act Regulations within the prescribed time
period and prior to Closing Time the Company shall have provided
evidence satisfactory to the Representatives of such timely filing, or
a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the
requirements of the 1933 Act Regulations.
(b) At the Closing Time the Representatives shall have
received:
(1) The favorable opinion, dated as of the Closing
Time, of Kutak Rock, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, to the
effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the State of Delaware.
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(ii) The Company has the corporate power and
authority to own, lease and operate its properties
and to conduct its business as described in the
Registration Statement and to enter into and perform
its obligations under this Agreement.
(iii) The Company is duly qualified as a
foreign corporation to transact business and is in
good standing in Arizona and in each other
jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of
property or the conduct of business, except in the
case of jurisdictions other than Arizona, where the
failure to so qualify or to be in good standing would
not, either singly or in the aggregate, have a
Material Adverse Effect.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the
Prospectus in the column entitled "Actual" under
the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to employee benefit plans
referred to in the Prospectus and pursuant to the
Company's dividend reinvestment plan and non-employee
director stock plan) and, to the best of their
knowledge, all of such outstanding shares of capital
stock have been duly authorized and validly issued
and are fully paid and nonassessable.
(v) Each subsidiary of the Company has been
duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its
properties and to conduct its business as described
in the Registration Statement and is duly qualified
as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such
qualification is required, whether by reason of the
ownership or leasing of property or the conduct of
its business, except where the failure to so qualify
or to be in good standing would not, either singly or
in the aggregate, have a Material Adverse Effect; all
of the issued and outstanding capital stock of each
such subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and, to the
best of their knowledge and information, is owned
directly by the Company, free and clear of any
security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(vi) This Agreement has been duly
authorized, executed and delivered by the Company.
(vii) The Securities have been duly
authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and
delivered by the Company to the Underwriters pursuant
to this Agreement against payment therefor in
accordance with the terms hereof, will be validly
issued, fully paid and non-assessable.
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(viii) The Securities, when issued and
delivered by the Company pursuant to this Agreement
against payment therefor in accordance with the terms
hereof, will be free of any preemptive rights arising
by operation of law, under contract or under the
charter or bylaws of the Company or, to their
knowledge, otherwise, except for the preemptive
rights of Colony which have been waived.
(ix) As of the date hereof, there are,
including the Securities to be issued to the
Underwriters, 55,064,330 shares of Common Stock
outstanding, as may be adjusted for shares issued
pursuant to the Company's employee benefit plans, the
dividend reinvestment plan and the non-employee
director stock plan and no shares of Preferred Stock
outstanding.
(x) The form of certificates for the
Securities conforms to the requirements of the
Delaware General Corporation Law.
(xi) The Securities conform in all material
respects to the descriptions thereof contained in the
Prospectus.
(xii) The Registration Statement has been
declared effective under the 1933 Act; any required
filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period
required by Rule 424(b); and, to the best of their
knowledge and information, no stop order suspending
the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(xiii) The Registration Statement, the
Prospectus and each amendment or supplement to the
Registration Statement and Prospectus, as of their
respective effective or issue dates (other than the
financial statements and schedules and other
financial data included or incorporated by reference
therein and the Trustee's Statement of Eligibility on
Form T-1 (the "Form T-1"), as to which no opinion
need be rendered) complied as to form in all material
respects with the requirements of the 1933 Act and
the 1933 Act Regulations.
(xiv) To the best of their knowledge and
information, there is not pending, and the Company
has not received any notice of any threatened,
action, suit, proceeding, inquiry or investigation,
to which the Company or any of its subsidiaries is a
party, or to which the property of the Company or any
of its subsidiaries is subject, before or brought by
any court or governmental agency or body, which might
reasonably be expected to result in any Material
Adverse Change, or which might reasonably be expected
to materially and adversely affect the properties or
assets thereof or the consummation of this Agreement
or the performance by the Company of its obligations
hereunder; and all pending legal or governmental
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proceedings to which the Company or any of its
subsidiaries is a party or that affect any of their
respective properties that are not described in the
Prospectus, including ordinary routine litigation
incidental to the business, could not reasonably be
expected to result in a Material Adverse Change.
(xv) The information in the Prospectus under
"Business and Properties -- Properties," "Business
and Properties -- Regulation," "Business and
Properties -- Legal Proceedings," "Description of the
Notes," "Description of Debt Securities," "Certain
Federal Income Tax Considerations," "Restrictions on
Transfers of Capital Stock," "Description of
Preferred Stock" and "Description of Common Stock"
and in the Registration Statement under Item 15 of
Part II thereof, to the extent that it constitutes
matters of law, summaries of legal matters, documents
or proceedings, or legal conclusions, has been
reviewed by them and is correct in all material
respects; to the best of such counsel's knowledge,
there are no statutes or regulations, and no legal or
governmental actions, suits or proceedings pending or
threatened against the Company that are required to
be described in the Prospectus that are not described
as required and the opinion of such firm set forth
under "Certain Federal Income Tax Considerations" is
confirmed.
(xvi) All descriptions in the Prospectus of
contracts and other documents to which the Company or
its subsidiaries are a party are accurate in all
material respects; to the best of their knowledge and
information, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases
or other instruments required to be described or
referred to in the Registration Statement or to be
filed as exhibits thereto other than those described
or referred to therein or filed or incorporated by
reference as exhibits thereto, the descriptions
thereof or references thereto are correct in all
material respects, and, to the best of their
knowledge or information, no default exists in the
due performance or observance of any material
obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument so
described, referred to, filed or incorporated by
reference.
(xvii) No authorization, approval, consent
or order of any court or governmental authority or
agency (other than under the 1933 Act and the 1933
Act Regulations, which have been obtained, or as may
be required under the securities or blue sky laws of
the various states) is required in connection with
the due authorization, execution and delivery of this
Agreement or for the offering, issuance or sale of
the Securities to the Underwriters; and the
execution, delivery and performance of this Agreement
and the Securities and the consummation of the
transactions contemplated herein and therein and
compliance by the Company with its obligations
hereunder and thereunder (including the use of the
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proceeds from the sale of the Securities as described
in the Prospectus under the caption "Use Of
Proceeds") will not, whether with or without the
giving of notice or lapse of time or both, conflict
with or constitute a breach of, or default or
Repayment Event under or result in the creation or
imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its
subsidiaries pursuant to (A) the NationsBank Facility
or (B) to the best of their knowledge and
information, any other contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease
or any other agreement or instrument to which the
Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any
of the property or assets of the Company or any of
its subsidiaries is subject except for any such
conflict, breach, default or Repayment Event which
would not, either singly or in the aggregate, have a
Material Adverse Effect, nor will such action result
in any violation of the provisions of the charter or
by-laws of the Company, or any applicable law,
statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality
or court, domestic or foreign, having jurisdiction
over the Company or any of its subsidiaries or any of
their respective properties, assets or operations.
(xviii) The documents incorporated by
reference in the Prospectus (other than the financial
statements and schedules and other financial or
statistical data included or incorporated by
reference therein, as to which no opinion need be
rendered), when they became effective or were filed
with the Commission, as the case may be, complied as
to form in all material respects with the
requirements of the 1933 Act or the 1934 Act, as
applicable, and the rules and regulations of the
Commission thereunder.
(xix) The Company is not an "investment
company" or an entity "controlled" by an "investment
company," as such terms are defined in the 1940 Act.
(xx) To the best of such counsel's
knowledge, neither the Company nor its subsidiaries
are in violation of their charter or bylaws; and the
Company and its subsidiaries are in compliance with
all laws, rules, regulations, judgments, decrees,
orders and statutes in the jurisdictions in which
they are conducting their business, except for such
failures to comply which, either singly or in the
aggregate, would not have a Material Adverse Effect.
(xxi) The Company has been and is organized
in conformity with the requirements for qualification
and taxation as a REIT under the Code and its method
of operation has at all times enabled, and its
proposed method of operation will enable, the Company
to qualify as a REIT under the Code.
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Such opinion shall be to such further effect with
respect to legal matters relating to this Agreement and the
sale of the Securities as counsel to the Underwriters may
reasonably request. In rendering such opinion, such counsel
may rely as to matters of fact (but not as to legal
conclusions), to the extent they deem proper, on certificates
of responsible officers of the Company and public officials.
Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
(2) The favorable opinion, dated as of the Closing
Time, of Latham & Watkins, counsel for the Underwriters, with
respect to the matters set forth in clauses (i), (vi), (vii),
(xii) and (xiii) of subsection (b)(1) of this Section, except
that, with respect to the matters referred to in (xiii), no
opinion need be expressed as to the documents incorporated by
reference in the Registration Statement.
(3) In giving their opinions required by subsections
(b)(1) and (b)(2), respectively, of this Section, Kutak Rock
and Latham & Watkins shall each additionally state that
nothing has come to their attention that led them to believe
that the Registration Statement (except for financial
statements and schedules and other financial data included or
incorporated by reference therein and the Form T-1, as to
which such counsel need make no statement), at the time it
became effective or on the date hereof, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus
(except for financial statements and schedules and other
financial data included or incorporated by reference therein,
as to which such counsel need make no statement), on the date
hereof (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for
use in connection with the offering of the Securities which
differs from the Prospectus on file at the Commission at the
time the Registration Statement becomes effective, in which
case at the date of such prospectus), or at the Closing Time,
included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) At the Closing Time there shall not have been, since the
date hereof or since the respective dates as of which information is
given in the Prospectus, any Material Adverse Change, whether or not
arising in the ordinary course of business, and the Underwriters shall
have received a certificate of a senior officer of the Company and of
the chief financial or chief accounting officer of the Company, dated
as of the Closing Time, to the effect that (i) there has been no such
Material Adverse Change, (ii) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement
21
<PAGE>
has been issued and no proceedings for that purpose have been initiated
or threatened by the Commission. As used in this Section 5(c) the term
"Prospectus" means the Prospectus in the form first used by the
Underwriters to confirm sales of the Securities.
(d) At the time of the execution of this Agreement, the
Representatives shall have received from Arthur Andersen LLP a letter
dated such date, in form and substance satisfactory to the
Representatives, to the effect that (i) they are independent public
accountants with respect to the Company and its subsidiaries within the
meaning of the 1933 Act and the 1934 Act and the applicable published
rules and regulations thereunder; (ii) in their opinion, the
consolidated financial statements and financial statement schedules
audited by them and included or incorporated by reference in the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the 1934 Act
and the related published rules and regulations; (iii) based upon
limited procedures set forth in detail in such letter (which shall
include, without limitation, the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in SAS No. 71, Interim Financial
Information, with respect to the unaudited consolidated financial
statements of the Company and its subsidiaries included or incorporated
by reference in the Registration Statement), nothing has come to their
attention which causes them to believe that (A) any material
modifications should be made to the unaudited consolidated financial
statements included or incorporated by reference in the Registration
Statement for them to be in conformity with generally accepted
accounting principles or (B) the unaudited consolidated financial
statements included or incorporated by reference in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act as it applies to
Form 10-Q and the related published rules and regulations or (C) at a
specified date not more than three days prior to the date of this
Agreement, there has been any change in the consolidated capital stock
of the Company or any increase in total liabilities or any decrease in
total assets as compared with the amounts shown in the June 30, 1998
balance sheet included in the Registration Statement or, during the
period from June 30, 1998 to a specified date not more than three days
prior to the date of this Agreement, there were any decreases as
compared with the corresponding period in the preceding year, in total
revenues, net income, net income per share or funds from operations of
the Company and its subsidiaries, except in all instances for changes,
increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur; (iv) in addition to the
examination referred to in their opinions and the limited procedures
referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information which are
included in the Registration Statement and Prospectus and which are
specified by the Representatives, and have found such amounts,
percentages and financial information to be in agreement with the
relevant accounting, financial and other records of the Company and its
subsidiaries identified in such letter; (v) based upon limited
procedures set forth in detail in such letter, nothing came to their
attention that caused them to believe that the pro forma financial
information included in the Registration Statement and the Prospectus
22
<PAGE>
does not comply as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of the unaudited pro forma information
included in the Prospectus; (vi) they have compared the information in
the Prospectus under selected captions with the disclosure requirements
of Regulation S-K and on the basis of limited procedures specified in
such letter nothing came to their attention as a result of the
foregoing procedures that caused them to believe that this information
does not conform in all material respects with the disclosure
requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K; (vii) based upon limited procedures set forth in detail
in such letter, nothing has come to their attention which causes them
to believe that (A) any material modifications should be made to the
unaudited consolidated financial statements incorporated by reference
in the Registration Statement for them to be in conformity with
generally accepted accounting principles or (B) the unaudited
consolidated financial statements included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1934 Act
Regulations, and (viii) the unaudited amounts set forth under "Summary
Financial Information" and "Selected Financial Data" in the Prospectus
agree with the amounts set forth in the unaudited consolidated
financial statements for those periods or were determined on a basis
substantially consistent with that of the corresponding amounts in the
audited consolidated financial statements included in the Registration
Statement and Prospectus.
(e) At the Closing Time the Underwriters shall have received
from Arthur Andersen LLP a letter, dated as of the Closing Time, to the
effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than three days prior to the
Closing Time.
(f) At the Closing Time, the Securities shall have been
approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(g) At the date of this Agreement, the Representatives shall
have received an agreement substantially in the form of Exhibit A
hereto signed by the persons listed on Schedule III hereto.
(h) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the
Option Securities, the representations and warranties of the Company
contained herein and the statements of any certificates furnished by
the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant date of Delivery, the Representatives
shall have received:
(i) A certificate, dated such Date of Delivery, of a senior
officer of the Company and of the chief financial or chief
accounting officer of the Company confirming that the
certificate delivered at Closing Time pursuant to Section 5(c)
hereof remains true and correct as of such Date of Delivery.
23
<PAGE>
(ii) The favorable opinion of Kutak Rock, counsel for the
Company, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by
Section 5(b)(1) hereof.
(iii) The favorable opinion of Latham & Watkins, counsel for
the Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by
section 5(b)(2) hereof.
(iv) A letter from Arthur Andersen LLP, in form and substance
satisfactory to the Representatives and dated such Date of
Delivery, substantially in the same form and substance as the
letter furnished to the Representatives pursuant to Section
5(e) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(i) At the Closing Time and each Date of Delivery, counsel for
the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass
upon the issuance and sale of the Securities as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
in connection with the issuance and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement, or, in the case
of any condition to the purchase of Option Securities on a Date of Delivery
which is after the Closing Time, the obligations of the Underwriters to purchase
the relevant Option Securities, may be terminated by the Representatives by
notice to the Company at any time at or prior to the Closing Time or such Date
of Delivery, and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 3(k), 6 and
7 shall survive any such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
information deemed to be part of the Registration Statement pursuant to
Rule 434 of the 1933 Act Regulations, if applicable, or the omission or
24
<PAGE>
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to the third sentence of Section 6(c) hereof, the
reasonable fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Merrill Lynch expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
25
<PAGE>
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) be counsel to the indemnified
party. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) For purposes of this Section 6, all references to the Registration
Statement, any preliminary prospectus or the Prospectus, or any amendment or
supplement to any of the foregoing, shall be deemed to include, without
limitation, any electronically transmitted copies thereof, including, without
limitation, any copies filed with the Commission pursuant to EDGAR.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand in connection with the offering
26
<PAGE>
of the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus, bear to the aggregate
initial public offering price of the Securities as set forth on such cover. The
relative fault of the Company on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of
this Section 7, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total underwriting discount received by it as
set forth on the cover of the Prospectus exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7, each person,
if any, who controls an Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Representatives may terminate this Agreement, by notice to the
Company, at any time at or prior to the Closing Time (i) if there has been,
since the time of execution of this Agreement or since the respective dates as
of which information is given in the Prospectus, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
27
<PAGE>
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or elsewhere, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representatives, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in the
Common Stock has been suspended or limited by the Commission or the New York
Stock Exchange or if trading generally on the American Stock Exchange or the New
York Stock Exchange or in the over-the-counter market has been suspended or
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal, New York or Arizona authorities. As used in
this Section 9(a), the term "Prospectus" means the Prospectus in the form first
used by the Underwriters to confirm sales of the Securities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided further that Sections 3(k), 6 and 7
shall survive such termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, such arrangements shall not have been
completed within such 24-hour period; then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters; or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the Underwriters to purchase and of the Company to sell the Option
Securities to be purchased and sold on such Date of Delivery, shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
28
<PAGE>
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the obligation
of the Underwriters to purchase and the Company to sell the relevant Option
Securities, as the case may be, either (i) the Representatives or (ii) the
Company shall have the right to postpone Closing Time or the relevant Date of
Delivery, as the case may be, for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at Merrill Lynch & Co.,
North Tower, World Financial Center, New York, New York 10281-1209, attention of
Cara Londin, Director and General Counsel; notices to the Company shall be
directed to it at 17207 North Perimeter Drive, Scottsdale, Arizona 85255,
attention of Morton H. Fleischer, with a copy to Dennis L. Ruben at the same
address.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein or therein
contained. This Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the Underwriters and
the Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
29
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
FRANCHISE FINANCE CORPORATION OF
AMERICA
By: /s/ JOHN BARRAVECCHIA
----------------------------------
Name: John Barravecchia
Title: Executive Vice President,
Chief Financial Officer and
Treasurer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BEAR, STEARNS & CO. INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By /s/ PAUL MEURER
--------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule I hereto.
S-1
<PAGE>
SCHEDULE I
to
PURCHASE AGREEMENT
Number of
Underwriter Initial Securities
- ----------- ------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ................................... 980,000
Bear, Stearns & Co. Inc. .................................. 980,000
Morgan Stanley & Co. Incorporated ......................... 980,000
NationsBanc Montgomery Securities LLC ..................... 980,000
Salomon Smith Barney Inc. ................................. 980,000
BT Alex. Brown Incorporated ............................... 100,000
Dreadner Kleinwort Benson North America LLC ............... 100,000
ING Baring Furman Selz LLC ................................ 100,000
Legg Mason Wood Walker, Incorporated ...................... 100,000
Lehman Brothers Inc. ...................................... 100,000
PaineWebber Incorporated .................................. 100,000
Sutro & Co. Incorporated .................................. 100,000
J.C. Bradford & Co. ....................................... 50,000
Dominick & Dominick LLC ................................... 50,000
EVEREN Securities, Inc. ................................... 50,000
Jefferies & Company, Inc. ................................. 50,000
Morgan Keegan & Company, Inc. ............................. 50,000
Raymond James & Associates, Inc. .......................... 50,000
The Robinson-Humphrey Company, LLC ........................ 50,000
Wheat First Securities, Inc. .............................. 50,000
---------
Total ............................................... 6,000,000
=========
I-1
<PAGE>
SCHEDULE II
to
PURCHASE AGREEMENT
The initial public offering price per share for the Securities,
determined as provided in Section 2, shall be $23.00.
The purchase price per share to be paid by the Underwriters for the
Securities shall be $21.82125, being an amount equal to the initial public
offering price set forth above less $1.17875 per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
II-1
<PAGE>
SCHEDULE III
to
PURCHASE AGREEMENT
Name Title
- ---- -----
Morton H. Fleischer Chairman, President and Chief Executive Officer
John R. Barravecchia Executive Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary
Christopher H. Volk Executive Vice President, Chief Operating
Officer, Secretary and Assistant Treasurer
Stephen G. Schmitz Executive Vice President, Chief Investment
Officer and Assistant Secretary
Dennis L. Ruben Executive Vice President, General Counsel and
Assistant Secretary
Catherine F. Long Sr. Vice President-Finance, Principal Accounting
Officer, Assistant Secretary and Assistant
Treasurer
Robin L. Roach Sr. Vice President, Corporate Finance
Harold W. Vinson Sr. Vice President, Property Management
Jon K. Taylor Sr. Vice President, Asset Management
Gregg A. Seibert Sr. Vice President, Corporate Finance
Stephen Y. Schwanz Sr. Vice President
Willie R. Barnes Director
Robert W. Halliday Director
Donald C. Hannah Director
Kelvin L. Davis Director
Dennis E. Mitchem Director
Louis P.Neeb Director
Kenneth B. Roath Director
Casey J. Sylla Director
Shelby Yastrow Director
III-1
<PAGE>
EXHIBIT A
Form of Lock-up Agreement
February __, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Bear, Stearns & Co. Inc.
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, NY 10281-1209
Re: PROPOSED PUBLIC OFFERING BY FRANCHISE FINANCE CORPORATION OF AMERICA
Ladies and Gentlemen:
The undersigned, a stockholder and an officer and/or director of
Franchise Finance Corporation of America, a Delaware corporation (the
"Company"), understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch") and Bear, Stearns & Co. Inc. ("Bear
Stearns") propose to enter into a Purchase Agreement (the "Purchase Agreement")
with the Company providing for the public offering of shares (the "Securities")
of the Company's common stock, par value $.01 per share (the "Common Stock"). In
recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder and an officer and/or director of the Company, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned agrees with each underwriter to be
named in the Purchase Agreement that, during a period of 90 days from the date
of the Purchase Agreement, the undersigned will not, without the prior written
consent of Merrill Lynch, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
A-1
<PAGE>
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise.
Very truly yours,
Signature: _____________________________
Print Name _____________________________
A-2
EXHIBIT 5.01
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
January 27, 1999
Board of Directors
Franchise Finance Corporation
of America
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, AZ 85255
Re: Issuance and Sale of Common Stock
Ladies and Gentlemen:
We have acted as counsel to Franchise Finance Corporation of America
(the "Company"), in connection with the preparation of the registration
statement on Form S-3 (Registration No. 333-26437), as amended (the
"Registration Statement"), filed with the Securities and Exchange Commission in
connection with the registration of $1,000,000,000 aggregate offering price of
securities. Further, we have acted as counsel to the Company in connection with
the preparation of the related Prospectus dated April 16, 1998 (the
"Prospectus"), and the Prospectus Supplement dated January 27, 1999 (the
"Prospectus Supplement") relating to the issuance of 6,000,000 shares of the
Company's common stock, $.01 par value per share (the "Common Stock"). We are
familiar with the proceedings heretofore taken by the Company in connection with
the authorization and registration, and in the preparation for the issuance and
sale, of the Common Stock.
For the purpose of rendering this opinion, we have examined such
corporate records, certificates and other documents of the Company, and have
made such investigations of law as we deemed necessary or appropriate and we are
<PAGE>
Board of Directors
Franchise Finance Corporation
of America
January 27, 1999
Page 2
familiar with the procedures taken or proposed to be taken by the Company in
connection with the issuance and sale of the Common Stock. We have examined the
Registration Statement, the Prospectus and the Prospectus Supplement. 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. Except as otherwise indicated herein, all terms defined in the
Registration Statement, Prospectus and Prospectus Supplement are used herein as
so defined.
We have assumed for purposes of the opinions set forth below (i) that
no stop orders relating to the Registration Statement have been issued by the
Securities and Exchange Commission as of the date of the issuance and sale of
the Common Stock; (ii) the genuineness of all signatures and the authenticity
and completeness of all documents submitted to us as originals; (iii) 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; (iv) 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; (v) that all required actions are
taken and conditions satisfied with respect to the issuance of the Common Stock
as specified in the Prospectus and Prospectus Supplement; and (vi) consideration
is received for the Common Stock.
Based upon the foregoing and subject to the qualifications set forth
above, 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.
This opinion is given for the sole benefit of the addressee hereof and
may not be relied upon by or delivered to any other person. In addition, this
opinion relates only to the matters and the transactions specifically referred
to, and no other opinions should be implied therefrom.
Respectfully submitted,
/s/ Kutak Rock
Kutak Rock
