FRANCHISE FINANCE CORPORATION OF AMERICA
(a Delaware corporation)
$150,000,000 8.75% Senior Notes due 2010
PURCHASE AGREEMENT
September 18, 2000
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Banc of America Securities LLC
c/o Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Franchise Finance Corporation of America, a Delaware corporation (the
"Company"), confirms its agreement with Xxxxxxx Xxxxx Xxxxxx Inc. ("Salomon"),
Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated, Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation and Banc of America Securities LLC (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), with respect to the issue and sale
by the Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective principal amounts set forth in Schedule I of
$150,000,000 aggregate principal amount of the Company's 8.75% Senior Notes due
2010 (the "Securities"). The Securities will mature on October 15, 2010. The
Securities are to be issued pursuant to an indenture dated as of November 21,
1995 (the "Indenture"), which term, as used herein, includes the Officer's
Certificate (as defined in the Indenture) establishing the form and terms of the
Securities pursuant to Sections 2.01 and 3.01 of the Indenture between the
Company and Xxxxx Fargo Bank Arizona, National Association, as successor in
interest to Norwest Bank Arizona, National Association, as trustee (the
"Trustee").
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 and the
Indenture has been qualified under the Trust Indenture Act of 1939, as amended
(the "1939 Act"). Such registration statement (as amended), and the prospectus
constituting a part thereof and each prospectus supplement relating to the
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(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 1939 Act and the rules and regulations of the
Commission under the 1939 Act, and did not and will not contain an untrue
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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
Underwriter 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 Underwriter for such use), and at
the Closing Time, 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
Underwriter 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 ("XXXXX").
(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 (as defined below) 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.
(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
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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, par value $.01 per share, of the
Company (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 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 all of the capital
stock of each Subsidiary other than FFCA Funding Corporation, a Delaware
corporation ("Funding Corp."), and 100 % of the preferred stock of Funding
Corp., which represents 99% of the equity interest in Funding Corp., 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, any corporation, firm, partnership, limited liability
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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 any of the following: (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), (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 or more Subsidiaries of the Company (or any combination
thereof), and (iii) Funding Corp.
(vii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus in the column entitled
"Historical" 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 are not subject to, preemptive or other similar
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, the
Indenture 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 proceeds
from the sale of the Securities as described in the Prospectus under the
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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 Third Amended and Restated Credit
Agreement and the Credit Agreement between the Company, certain lenders and
Bank of America, N.A., both dated as of September 15, 2000 (collectively,
the "Bank of America Facility"), and the Master Loan Purchase Agreement
between FFCA Funding Corporation, as successor by assignment from FFCA
Acquisition Corporation, and Washington Mutual Bank, FA, dated December 14,
1999, as amended, (the "WMB 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 Bank of America 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
6
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations") which have not been so described and filed as required.
(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 Indenture has been duly authorized by the Company and has
been duly qualified under the 1939 Act and duly executed and delivered by
the Company and (assuming the due authorization, execution and delivery of
the Indenture by the Trustee) will constitute a valid and binding agreement
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of the Company, enforceable against the Company in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditor's rights generally or by general equitable principles.
(xvii) The Securities have been duly authorized and, at the Closing
Time, will have been duly executed by the Company and, when authenticated
in the manner provided for in the Indenture and delivered against payment
of the purchase price therefor as specified on Exhibit A hereto, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles, and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture.
(xviii) The Securities and the Indenture will conform in all material
respects to the respective statements relating thereto contained in the
Prospectus and will be in substantially the respective forms filed or
incorporated by reference, as the case may be, as exhibits to the
Registration Statement.
(xix) 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.
(xx) Except as otherwise disclosed in the Prospectus: (i) the Company
and its Subsidiaries have good and marketable title to all properties and
assets (or a valid first lien as to mortgaged properties) described in the
Prospectus as being owned (or mortgaged) by them, or reflected in the most
recent consolidated balance sheet of the Company contained in the
Prospectus; (ii) all liens, charges, claims, restrictions or encumbrances
on or affecting the properties and assets of the Company or any of its
Subsidiaries which are required to be disclosed in the Prospectus are
disclosed therein; (iii) no person or entity, other than tenants under the
leases or guarantors thereof pursuant to which the Company and its
Subsidiaries lease all or a portion of their properties, has an option or
right of first refusal or any other right to purchase any of such
properties; (iv) each of the properties of the Company and its
Subsidiaries, at the time such property was acquired or at the time the
loan by the Company with respect to such property was made, had access to
public rights of way, either directly or through insured easements; (v)
each of such properties, at the time such property was acquired or at the
time the loan by the Company with respect to such property was made, was
served by all public utilities necessary for the current operations on such
property in sufficient quantities for such operations; (vi) each of such
properties complies with all applicable codes and zoning and subdivision
laws and regulations, except for such failures to comply which would not,
either singly or in the aggregate, have a Material Adverse Effect; (vii)
the real property leases and equipment leases, if any, relating to each of
such properties are in full force and effect, except where the failure to
be in full force and effect would not, singly or in the aggregate, have a
Material Adverse Effect; and (viii) there is no pending or threatened
8
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.
(xxi) 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.
(xxii) 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").
(xxiii) 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).
(xxiv) 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, 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
9
therein, in the light of the circumstances under which they were made, not
misleading.
(xxv) 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.
(xxvi) 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.
(xxvii) 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.
(xxviii) 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.
(xxix) 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.
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(xxx) 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 enabled, and its
proposed method of operation will enable, the Company to qualify as a REIT
under the Code.
(xxxi) 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. 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, except such properties where the
Company allows the operator thereof to self-insure the property, either
singly or in the aggregate, a Material Adverse Effect, and, except for such
properties where the Company allows the operators thereof to self-insure
the property, 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 officer of the Company and delivered to
the Underwriters 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 Exhibit A hereto (which is a part hereof), the aggregate
principal amount of 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, and the interest rate on the
Securities are set forth on Exhibit A hereto and a prospectus supplement will be
filed in accordance with Rule 424(b) of the 1933 Act.
(b) Payment of the purchase price for, and delivery of certificates for,
the Securities shall be made at the office of Franchise Finance Corporation of
America, 00000 Xxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx, or at such other
place as shall be agreed upon by the Underwriters and the Company, at 9:00 A.M.
Scottsdale, Arizona time 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 Underwriters and the Company (such time
and date of payment and delivery being herein called "Closing Time"). Payment
shall be made to the Company in immediately available funds against delivery to
11
the Underwriters for their respective accounts 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. The certificates
for the Securities will be made available for examination 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.
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 or the Indenture, 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 Underwriters 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.
(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
12
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 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
13
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 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) 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. Notwithstanding the foregoing, the
Company may make repurchases of its common stock in compliance with Rule
10b-18 promulgated under the 1934 Act.
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, the Indenture 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, 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, if any, 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,
14
(vii) the preparation, printing and delivery to the Underwriters of copies of
any Blue Sky Survey, any supplement thereto and any Legal Investment Survey,
(viii) the fees and expenses of the Trustee, including the fees and
disbursements of counsel for the Trustee, (xi) the fee of any filing for review
of the offering with the National Association of Securities Dealers, Inc., if
any, including the fees and expenses of counsel for the Underwriters in
connection therewith, and (xii) any fees payable in connection with the rating
of the Securities.
If this Agreement is terminated by the Underwriters 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 Underwriters 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. The Indenture
shall have been qualified under the 1939 Act.
(b) At the Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of the Closing Time, of Xxxxx
Xxxx LLP, 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.
(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,
15
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 "Historical" 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, 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, all of the outstanding
capital stock of each Subsidiary other than Funding Corp., and
100% of the outstanding preferred stock of Funding Corp., 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 Indenture has been duly authorized, executed and
delivered by the Company and (assuming the due authorization,
execution and delivery thereof by the Trustee) constitutes a
valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles.
16
(viii) The Securities are in the form contemplated by the
Indenture, have been duly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in the
manner provided in the Indenture (assuming the due authorization,
execution and delivery of the Indenture by the Trustee) and
delivered against payment of the purchase price therefor as
specified in Exhibit A hereto, will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
creditor's rights generally or by general equitable principles,
and will be entitled to the benefits of the Indenture.
(ix) The Indenture has been qualified under the 1939 Act.
(x) The Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Prospectus.
(xi) 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.
(xii) 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.
(xiii) To the best of their knowledge and information, there
is not pending, and the Company has not received any notice of
any threatened, action, suit, proceeding, inquiry or
investigation, to which the Company or any of its Subsidiaries is
a party, or to which the property of the Company or any of its
Subsidiaries is subject, before or brought by any court or
governmental agency or body, which might reasonably be expected
to result in any Material Adverse Change, or which might
reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of this
Agreement or the performance by the Company of its obligations
hereunder; and all pending legal or governmental proceedings to
which the Company or any of its Subsidiaries is a party or that
affect any of their respective properties that are not described
17
in the Prospectus, including ordinary routine litigation
incidental to the business, could not reasonably be expected to
result in a Material Adverse Change.
(xiv) 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.
(xv) 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.
(xvi) 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 and except for the qualification of the
Indenture under the 1939 Act, which has been obtained) is
required in connection with the due authorization, execution and
delivery of this Agreement and the Indenture or for the offering,
issuance or sale of the Securities to the Underwriters; and the
execution, delivery and performance of this Agreement, the
Indenture 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 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
18
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 Bank of America Facility or the WMB 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.
(xvii) 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.
(xviii) The Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the 1940 Act.
(xix) 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 where such non-compliance would not have, either
singly or in the aggregate, a Material Adverse Effect.
(xx) 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.
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
19
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
Xxxxxx & Xxxxxxx, counsel for the Underwriters, with respect to the
matters set forth in clauses (i) and (vi) through (xii), inclusive, of
subsection (b)(1) of this Section, except that, with respect to the
matters referred to in (xii), 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, Xxxxx Xxxx LLP and Xxxxxx &
Xxxxxxx 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 Underwriter shall have received a certificate of the President
or a Vice President 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 the 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 the Closing Time, and
(iv) no stop order suspending the effectiveness of the Registration Statement
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.
20
(d) At the time of the execution of this Agreement, the Underwriters shall
have received from Xxxxxx Xxxxxxxx LLP a letter dated such date, in form and
substance satisfactory to the Underwriters, 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, 2000 balance sheet included in the
Registration Statement or, during the period from June 30, 2000 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 Underwriters, 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 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
21
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 Xxxxxx
Xxxxxxxx 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 be rated at least Baa3 by
Xxxxx'x Investor's Service Inc. and BBB- by Standard & Poor's Corporation; and
since the date of this Agreement, there shall not have occurred a downgrading in
the rating assigned to any of the Company's other debt by any nationally
recognized securities rating agency, and no such securities rating agency shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the Company's
other debt.
(g) At the Closing Time, 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 Underwriters 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 may be terminated by the
Underwriters by notice to the Company at any time at or prior to the Closing
Time, 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
22
(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 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 Xxxxxxx), 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 Salomon 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 Salomon 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
23
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 XXXXX.
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
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
24
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 Underwriters 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
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
25
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 Underwriters, 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 the Closing Time to purchase the Securities which
it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the other Underwriters 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 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.
In the event of any such default which does not result in a termination of
this Agreement, either (i) the other Underwriters or (ii) the Company shall have
the right to postpone Closing Time 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.
26
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
Underwriter shall be directed to Xxxxxxx Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, xxxxxxxxx of Xxxx Xxxx, Director and General
Counsel; notices to the Company shall be directed to it at 00000 Xxxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000, xxxxxxxxx of Xxxxxxxxxxx X. Xxxx, with a copy
to Xxxxxx X. Xxxxx 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.
27
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/ Xxxx Xxxxxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxxxxx
Title: Executive Vice President, Chief
Financial Officer, Treasurer and
Assistant Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX XXXXXX INC.
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX INCORPORATED
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
BANC OF AMERICA SECURITIES LLC
By: XXXXXXX XXXXX XXXXXX INC.
By /s/ Xxxx Xxxxxxxxx
---------------------------------
Authorized Signatory
28
SCHEDULE I
to
PURCHASE AGREEMENT
PRINCIPAL AMOUNT
UNDERWRITER OF THE NOTES
----------- ------------
Xxxxxxx Xxxxx Xxxxxx Inc.................................... $ 80,000,000
Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated 40,000,000
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation......... 20,000,000
Banc of America Securities LLC.............................. 10,000,000
Total..................................................... $150,000,000
============
S-1
EXHIBIT A
The initial public offering price of the Securities is 99.205% of the principal
amount thereof, plus accrued interest, if any, from the date of issuance. The
purchase price to be paid by the Underwriters for the Securities shall be
98.555% of the principal amount thereof.
The interest rate on the Securities shall be 8.75% per annum.
A-1
