FRANCHISE FINANCE CORPORATION OF AMERICA
OFFICER'S CERTIFICATE
The undersigned, John Barravecchia and Dennis L. Ruben, do hereby certify
that they are the duly appointed and acting Executive Vice President, Chief
Financial Officer, Treasurer and Assistant Secretary and Executive Vice
President, General Counsel and Secretary, respectively, of Franchise Finance
Corporation of America, a Delaware corporation (the "Company"). Each of the
undersigned also hereby certifies, pursuant to the Indenture dated as of
November 21, 1995 (the "Indenture"), by and between the Company and Wells Fargo
Bank Arizona, National Association, as successor in interest to Norwest Bank
Arizona, National Association, as Trustee (the "Trustee"), that:
1. Pursuant to the resolutions adopted by the Executive Committee of the
Board of Directors of the Company on September 13, 2000, a series of Debt
Securities (as defined in the Indenture) to be issued under the Indenture has
been established: the 8.75% Senior Notes due 2010 (the "Notes"), and such series
is to have the following terms:
(a) The Notes shall constitute a series of Securities having the title
"8.75% Senior Notes due 2010."
(b) The aggregate principal amount of the Notes that may be
authenticated and delivered under the Indenture (except for Notes
authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes pursuant to Section 3.04, 3.05,
3.06 or 9.06 of the Indenture) shall be $150,000,000.
(c) The entire outstanding principal of the Notes shall be payable on
October 15, 2010 (the "Maturity Date"), unless earlier redeemed as provided
below.
(d) The rate at which the Notes shall bear interest shall be 8.75% per
annum; the date from which such interest shall accrue shall be September
21, 2000; the Interest Payment Dates on which such interest will be payable
shall be April 15 and October 15 of each year, beginning April 15, 2001;
the Regular Record Dates for the interest payable on the Notes on any
Interest Payment Date shall be the preceding April 1 (in the case of
interest payable on any April 15) and October 1 (in the case of interest
payable on any October 15); and the basis upon which interest shall be
calculated shall be that of a 360-day year consisting of twelve 30 day
months.
(e) The place in addition to the Borough of Manhattan, The City of New
York, where the principal of and interest on the Notes shall be payable and
Notes may be surrendered for the registration of transfer or exchange shall
be the Corporate Trust Office of the Trustee at 100 West Washington,
Phoenix, Arizona, 85003. The place in addition to the Borough of Manhattan,
The City of New York, where notices or demands to or upon the Company in
respect of the Notes and the Indenture may be served shall be the Corporate
Trust Office of the Trustee at 100 West Washington, Phoenix, Arizona,
85003.
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(f) The Notes will be redeemable, at the option of the Company, in
whole or in part at any time or from time to time, upon not less than 30
and not more than 60 days' notice, on any date prior to maturity (the
"Redemption Date") at a redemption price equal to 100% of the principal
amount of the Notes to be redeemed plus accrued interest to the Redemption
Date (subject to the right of holders of record on the relevant record date
to receive interest due on an Interest Payment Date that is on or prior to
the Redemption Date) plus a Make-Whole Premium, if any (the "Redemption
Price"). In no event will the Redemption Price ever be less than 100% of
the principal amount of the Notes plus accrued interest to the Redemption
Date.
The amount of the Make-Whole Premium with respect to any Note (or
portion thereof) to be redeemed will be equal to the excess, if any, of:
(1) the sum of the present values, calculated as of the
Redemption Date, of:
(a) each interest payment that, but for such redemption,
would have been payable on the Note (or portion thereof) being
redeemed on each interest payment date occurring after the
Redemption Date (excluding any accrued interest for the period
prior to the Redemption Date); and
(b) the principal amount that, but for such redemption,
would have been payable at the final maturity of the Note (or
portion thereof) being redeemed;
over
(2) the principal amount of the Note (or portion thereof) being
redeemed.
The present values of interest and principal payments referred to in
clause (1) above will be determined in accordance with generally accepted
principles of financial analysis. Such present values will be calculated by
discounting the amount of each payment of interest or principal from the
date that each such payment would have been payable, but for the
redemption, to the Redemption Date at a discount rate equal to the Treasury
Yield (as defined below) plus 35 basis points.
The Make-Whole Premium will be calculated by an independent investment
banking institution of national standing appointed by the Company;
PROVIDED, that if the Company fails to make such appointment at least 30
calendar days prior to the Redemption Date, or if the institution so
appointed is unwilling or unable to make such calculation, such calculation
will be made by Salomon Smith Barney Holdings Inc., or an affiliate
thereof, or, if such firm is unwilling or unable to make such calculation,
by an independent investment banking institution of national standing
appointed by the Trustee (in any such case, an "Independent Investment
Banker").
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For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to
maturity of United States Treasury Notes that have a constant maturity that
corresponds to the remaining term to maturity of the Notes, calculated to
the nearest 1/12th of a year (the "Remaining Term"). The Treasury Yield
will be determined as of the third business day immediately preceding the
applicable Redemption Date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by
the Federal Reserve Bank of New York and designated "H.15(519) Selected
Interest Rates" or any successor release (the "H.15 Statistical Release").
If the H.15 Statistical Release sets forth a weekly average yield for
United States Treasury Notes having a constant maturity that is the same as
the Remaining Term, then the Treasury Yield will be equal to such weekly
average yield. In all other cases, the Treasury Yield will be calculated by
interpolation. On a straight-line basis, between the weekly average yields
on the United States Treasury Notes that have a constant maturity closest
to and greater than the Remaining Term and the United States Treasury Notes
that have a constant maturity closest to and less than the Remaining Term
(in each case as set forth in the H.15 Statistical Release). Any weekly
average yields so calculated by interpolation will be rounded to the
nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being
rounded upward. If weekly average yields for United States Treasury Notes
are not available in the H.15 Statistical Release or otherwise, then the
Treasury Yield will be calculated by interpolation of comparable rates
selected by the Independent Investment Banker.
Any notice to the holders of Notes of such a redemption need not set
forth the redemption price of such Notes but need only set forth the
calculation thereof as described in the immediately preceding paragraph.
The redemption price, calculated as aforesaid, shall be set forth in an
Officers' Certificate delivered to the Trustee no later than two business
days prior to the Redemption Date.
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by
such other method as the Trustee in its sole discretion shall deem to be
fair and appropriate, although no Note of $1,000 in original principal
amount or less shall be redeemed in part. If any Note is to be redeemed in
part only, the notice of redemption relating to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in
the name of the holder thereof upon cancellation of the original Note.
(g) The Notes shall not be redeemable at the option of any Holder
thereof, upon the occurrence of any particular circumstances or otherwise.
The Notes will not have the benefit of any sinking fund.
(h) The Notes shall be issued in denominations of $1,000 and any
integral multiple thereof.
(i) The Trustee shall be the Security Registrar and Paying Agent.
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(j) The entire outstanding principal amount of the Notes shall be
payable upon declaration of acceleration of its maturity pursuant to
Section 5.02 of the Indenture.
(k) Payments of the principal of and interest on the Notes shall be
made in Dollars, and the Notes shall be denominated in Dollars.
(l) The Notes will be payable on the Maturity Date in an amount equal
to the principal amount thereof plus unpaid interest accrued to such
Maturity Date.
(m) The Holders of the Notes shall have no special rights in addition
to those provided in the Indenture upon the occurrence of any particular
events.
(n) (i) There shall be no deletions from, modifications of or addition
to the Events of Default with respect to the Notes set forth in the
Indenture.
(ii) There shall be the following additions to the covenants set
forth in the Indenture with respect to the Notes:
LIMITATIONS ON INCURRENCE OF TOTAL DEBT. The Company will
not, and will not permit any Subsidiary to, incur any Debt (as
defined below) if, immediately after giving effect to the
incurrence of such additional Debt and the application of the
proceeds therefrom, the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries on a
consolidated basis determined in accordance with generally
accepted accounting principles is greater than 60% of the sum of
(A) the Company's Total Assets (as defined below) as of the end
of the calendar quarter prior to the incurrence of such
additional Debt and (B) the increase in Total Assets from the end
of such quarter including, without limitation, any increase in
Total Assets caused by the incurrence of such additional Debt.
LIMITATION ON INCURRENCE OF SECURED DEBT. In addition to the
foregoing limitation on the incurrence of Debt, the Company will
not, and will not permit any Subsidiary to, incur any Debt
secured by any mortgage, lien, charge, pledge, encumbrance or
security interest of any kind on any of its properties, and will
not otherwise grant or convey any such mortgage, charge, pledge,
encumbrance or security interest of any kind, if immediately
after giving effect thereto, the aggregate principal amount of
all outstanding Debt of the Company and its Subsidiaries on a
consolidated basis determined in accordance with generally
accepted accounting principles which is secured by any mortgage,
charge, pledge, encumbrance or security interest of any kind on
property of the Company or any Subsidiary is greater than 40% of
the sum of (A) the Company's Total Assets as of the end of the
calendar quarter prior to the incurrence of such Debt, and (B)
any increase in Total Assets from the end of such quarter
including, without limitation, any increase in Total Assets
caused by the incurrence of such additional Debt.
DEBT SERVICE COVERAGE. In addition to the foregoing
limitations on the incurrence of Debt, the Company will not, and
will not permit any Subsidiary to, incur any Debt if the ratio of
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Consolidated Income Available for Debt Service (as defined below)
to Annual Service Charge (as defined below) for the four
consecutive calendar quarters most recently ended prior to the
date on which such additional Debt is to be incurred is less than
1.5 to 1.0 on a pro forma basis after giving effect to the
incurrence of such Debt and the application of the proceeds
therefrom.
MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Company will
maintain at all times Total Unencumbered Assets (as defined
below) of not less than 150% of the aggregate outstanding
principal amount of all outstanding unsecured Debt of the Company
and its Subsidiaries.
(iii) As used in Paragraph (n)(ii), the following terms have the
meanings set forth below:
"ANNUAL SERVICE CHARGE" means the interest expense of the
Company and its Subsidiaries for the four consecutive fiscal
quarters most recently ended, including, without limitation,
commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings,
net costs pursuant to hedging obligations, the interest component
of all payments associated with Capitalized Leases, amortization
of debt issuance costs, amortization of original issue discount,
non-cash interest payments and the interest component of any
deferred payment obligations.
"CAPITALIZED LEASE" means any lease of property by the
Company or any Subsidiary as lessee that is reflected on the
Company's consolidated balance sheet as a capitalized lease in
accordance with generally accepted accounting principles.
"CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE" for any
period means Consolidated Net Income (as defined below) of the
Company and its Subsidiaries plus amounts which have been
deducted, and minus amounts which have been added, for (A)
interest on Debt of the Company and its Subsidiaries, (B)
provision for taxes of the Company and its Subsidiaries based on
income, (C) amortization of debt discount, (D) provisions for
gains and losses on properties, (E) depreciation, (F) the effect
of any non-cash charge resulting from a change in accounting
principles in determining Consolidated Net Income for such period
and (G) amortization of deferred charges.
"CONSOLIDATED NET INCOME" for any period means the amount of
consolidated net income (or loss) of the Company and its
Subsidiaries for such period determined on a consolidated basis
in accordance with generally accepted accounting principles.
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"DEBT" means any indebtedness of the Company or any
Subsidiary, whether or not contingent, in respect of (A) borrowed
money or evidenced by bonds, notes, debentures or similar
instruments, (B) indebtedness secured by any mortgage, pledge,
lien, charge, encumbrance or any security interest existing on
property owned by the Company or any Subsidiary, (C) letters of
credit or amounts representing the balance deferred and unpaid of
the purchase price of any property except any such balance that
constitutes an accrued expense or trade payable or (D)
Capitalized Leases, in the case of items of indebtedness under
(A) through (C) above to the extent that any such items (other
than letters of credit) would appear as liabilities on the
Company's consolidated balance sheet in accordance with generally
accepted accounting principles, and also includes, to the extent
not otherwise included, any obligation by the Company or any
Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary
course of business), indebtedness of another person (other than
the Company or any Subsidiary) (it being understood that Debt
shall be deemed to be incurred by the Company or any Subsidiary
whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"SUBSIDIARY" means (A) any corporation, association, joint
venture or other business entity of which more than 50% of the
total voting power of shares of stock or other ownership
interests entitled to vote in the election of the directors,
managers, trustees or other persons having the power to direct or
cause the direction of the management and policies thereof is at
the time owned or controlled, directly or indirectly, by the
Company or one or more of the other Subsidiaries of the Company,
and (B) any partnership or limited liability company in which the
Company or one or more of the other Subsidiaries of the Company,
directly or indirectly, possesses more than a 50% interest in the
total capital or total income of such partnership or limited
liability company.
"TOTAL ASSETS" as of any date means the sum of (A)
Undepreciated Real Estate Assets and, (B) all other assets of the
Company and its Subsidiaries determined in accordance with
generally accepted accounting principles (but excluding accounts
receivable and intangibles).
"TOTAL UNENCUMBERED ASSETS" means Total Assets minus the
value of any properties of the Company and its Subsidiaries that
are encumbered by any mortgage, charge, pledge, lien, security
interest or other encumbrance of any kind, including the value of
any stock of any Subsidiary that is so encumbered. For purposes
of this definition, the value of each property shall be equal to
the purchase price or cost of each such property and the value of
any stock subject to any encumbrance shall be determined by
reference to the value of the properties owned by the issuer of
such stock as aforesaid.
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"UNDEPRECIATED REAL ESTATE ASSETS" as of any date means the
amount of real estate assets of the Company and its Subsidiaries
on such date, before depreciation and amortization determined on
a consolidated basis in accordance with generally accepted
accounting principles.
(iv) There shall be the following modification to the definition
of "Subsidiary" set forth in the indenture with respect to the Notes:
"SUBSIDIARY" means (A) any corporation, association, joint
venture or other business entity of which more than 50% of the
total voting power of shares of stock or other ownership
interests entitled to vote in the election of the directors,
managers, trustees or other persons having the power to direct or
cause the direction of the management and policies thereof is at
the time owned or controlled, directly or indirectly, by the
Company or one or more of the other Subsidiaries of the Company,
and (B) any partnership or limited liability company in which the
Company or one or more of the other Subsidiaries of the Company,
directly or indirectly, possesses more than a 50% interest in the
total capital or total income of such partnership or limited
liability company.
(o) The Notes shall be issuable only as Registered Securities in
permanent global form (without coupons). Beneficial owners of interests in
the permanent global Note may exchange such interests for Notes of like
tenor or any authorized form and denomination only in the manner provided
in Section 3.05 of the Indenture. DTC shall be the depository with respect
to each permanent global Note.
(p) The Notes shall not be issuable as Bearer Securities.
(q) Interest on the Notes shall be payable only to the Person in whose
name the Note (or one or more predecessor Notes thereof) is registered at
the close of business on the Regular Record Date for such interest payment.
(r) Sections 14.02 and 14.03 of the Indenture shall be applicable to
the Notes, including the Company's ability to defease "its obligations
under any other covenant" as provided in Section 14.03 of the Indenture.
(s) The Notes shall not be issuable in definitive form except under
the circumstances described in Section 3.05 of the Indenture.
(t) The Notes will be authenticated and delivered as provided in
Section 3.03 of the Indenture.
(u) The Company shall not pay Additional Amounts with respect to the
Notes as contemplated by Section 10.10 of the Indenture.
(v) The Notes shall not be convertible into Common Stock or Preferred
Stock.
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(w) The Notes shall not be subordinated to any other Debt of the
Company, and shall constitute senior unsecured obligations of the Company.
2. The foregoing form and terms of the Notes have been established in
conformity with the provisions of the Indenture.
3. Each of the undersigned has read the Indenture and the definitions
relating thereto and has examined the resolutions referred to in paragraph 1
above and the Notes and has made such examination or investigation as is
necessary to enable the undersigned to represent as to whether or not all
conditions precedent provided in the Indenture relating to the establishment,
authentication and delivery of the Notes have been complied with. On the basis
of the foregoing, all such conditions precedent have been complied with.
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IN WITNESS WHEREOF, we have hereunto signed our names this 21st day of
September, 2000.
By /s/ John Barravecchia
-------------------------------------
John Barravecchia,
Executive Vice President, Chief
Financial Officer, Treasurer and
Assistant Secretary
By /s/ Dennis L. Ruben
-------------------------------------
Dennis L. Ruben,
Executive Vice President, General
Counsel and Secretary
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