EXHIBIT 1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement"), dated February
13, 1998, is by and between Franchise Finance Corporation of America, a
real estate investment trust and a Delaware corporation (the "Company"),
and Colony Investors III, L.P., a Delaware limited partnership
("Purchaser").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to Purchaser (i)
certain shares of the Company's common stock, $.01 par value per share (the
"Common Stock"), and warrants (the "Warrants") to acquire additional shares
of Common Stock for an aggregate purchase price of $100,000,000 (the
"Purchase Price") on the terms and subject to the conditions set forth
herein and in the Other Documents (as defined herein); and
WHEREAS, Purchaser wishes to purchase such securities on the
terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1. THE SECURITIES
Section 1.1 ISSUANCE, SALE AND PURCHASE OF THE SECURITIES. In
reliance upon the representations and warranties made herein and subject to
the satisfaction or waiver of the conditions set forth herein, the Company
agrees to issue and sell to Purchaser, and Purchaser agrees to purchase
from the Company, for the Purchase Price, (i) 3,792,112 shares (the "Common
Shares" and, collectively with the Warrants, the "Securities") of Common
Stock and (ii) the Warrants, exercisable for seven years (except as
provided in a customary Warrant Agreement relating thereto to be entered
into between the Company and Purchaser (the "Warrant Agreement")), to
acquire an additional 1,476,908 shares (the "Warrant Shares") of Common
Stock at an initial exercise price of $31.64 per share, subject to
adjustment as provided in the Warrant Agreement.
Section 1.2 OTHER AGREEMENTS. Concurrently with the Closing (as
hereinafter defined), the Company will enter into (a) the Warrant Agreement
in form and substance reasonably satisfactory to the parties, (b) the
Investor's Agreement with Purchaser in substantially the form attached as
Exhibit A hereto (the "Investor's Agreement") and (c) a Registration Rights
Agreement in favor of Purchaser and its permitted assignees (the "Holders")
in form and substance reasonably satisfactory to the parties providing for
(i) three "demand" registrations in favor of the Holders (one of which may,
at the election of the Holders, be a "resale shelf registration" having a
duration of four years, (ii) customary "piggyback" registrations in favor
of the Holders and (iii) such other reasonable provisions as the parties
negotiate in good faith (the "Registration Rights Agreement" and,
collectively with the Warrant Agreement and the Investor's Agreement, the
"Other Documents").
Section 1.3 CLOSING. The closing (the "Closing") shall take place
at the offices of the Company, The Perimeter Center, 00000 Xxxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000, on the tenth business day after the
satisfaction or waiver of the conditions set forth in Section 3 below, or
at such other location, date and time as may be agreed upon between
Purchaser and the Company (such date and time being called the "Closing
Date"). At the Closing, the Company shall issue and deliver to Purchaser
stock and warrant certificates in definitive form, registered in the name
of Purchaser or its designee, representing the Securities. As payment in
full for the Securities, and against delivery of the certificates therefor
at the Closing, Purchaser shall initiate a wire transfer in immediately
available United States funds in accordance with the Company's instructions
in the amount of the Purchase Price. Each certificate representing the
Securities shall bear the following legend in addition to any other legend
that may be required from time to time under applicable law or pursuant to
any other contractual obligation:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF (A "TRANSFER") EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
AN INVESTOR'S AGREEMENT DATED THE CLOSING DATE. SUCH SECURITIES ARE
ALSO SUBJECT TO A REGISTRATION RIGHTS AGREEMENT DATED THE CLOSING
DATE. ANY TRANSFEREE OF THESE SECURITIES TAKES SUBJECT TO THE TERMS
OF SUCH AGREEMENTS, A COPY OF EACH OF WHICH IS ON FILE WITH THE
COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE
SECURITIES LAWS AND NO TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT
(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR
(B) PURSUANT TO AN EXEMPTION THEREFROM WITH RESPECT TO WHICH THE
COMPANY MAY, UPON REQUEST, REQUIRE A SATISFACTORY OPINION OF COUNSEL
FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF
THE ACT.
Section 1.4 FURTHER ACTION. During the period from the date hereof
to the Closing Date, each of the Company and Purchaser shall use their best
efforts to take all action necessary or appropriate to satisfy the closing
conditions contained in Section 3 hereof (including without limitation
using all reasonable efforts to finalize the Warrant Agreement and the
Registration Rights Agreement in the most expeditious manner practicable)
and to cause its respective representations and warranties contained in
Section 2 to be complete and correct as of the Closing Date, after giving
effect to the transactions contemplated by this Agreement, as if made on
and as of such date.
SECTION 2. REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Purchaser as follows:
(a) Each of the Company and its subsidiaries (collectively,
the "Subsidiaries") has been duly organized and is validly existing as a
corporation, trust or partnership, as the case may be, in good standing
under the laws of the jurisdiction in which it is organized, with full
power and authority to own or lease and occupy its properties and conduct
its business, and is duly qualified to do business, and is in good
standing, in each jurisdiction which requires such qualification, except
where the failure to so qualify would not, individually or in the
aggregate, have or be reasonably likely to result in a material adverse
effect on the business, operations, business prospects, earnings, assets,
liabilities or condition (financial or otherwise) (a "Material Adverse
Effect") of the Company. All of the outstanding shares of capital stock or
other equivalent interests of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and,
except as disclosed in the Company's reports, proxy statements, forms, and
other documents with the SEC filed and publicly available during the twelve
months ended February 13, 1998 (the "Current SEC Documents"), are owned by
the Company, directly, or indirectly through another Subsidiary, free and
clear of any lien, adverse claim, security interest, mortgage, pledge,
equity or other encumbrance. None of the outstanding shares of capital
stock or other equivalent interests of the Subsidiaries was issued in
violation of the preemptive or similar rights of any stockholder or other
holder of interests of such Subsidiary arising by operation of law, under
the charter, by-laws or other organizational document 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")), 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 company, association or other entity, other
than (1) stock of a corporation or equity of an 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 (excluding for this purpose any debt obligation that constitutes
a real estate asset within the meaning of section 856(c)(5)(B) of the Code)
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 (within the meaning of section
856(c)(5) of the Code), 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 partnership or limited liability company is
subject to tax as a partnership, and not an association subject to tax as a
corporation or a publicly traded partnership subject to tax as a
corporation, for United States 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.
(b) The Company and each of the Subsidiaries have all
requisite power and authority, and all necessary material authorizations,
approvals, orders, licenses, certificates and permits (collectively,
"Governmental Licenses"), of and from the appropriate Federal, state,
local or foreign regulatory or governmental agencies, officials, bodies and
tribunals, necessary to own or lease their respective properties and to
conduct their respective businesses as now being conducted, except where
the failure to possess any such Government Licenses would not have a
Material Adverse Effect on the Company or such Subsidiary, as the case may
be; all such Governmental Licenses are in full force and effect, except
where the failure to be in full force and effect would not have a Material
Adverse Effect on the Company or such Subsidiary, as the case may be; and
the Company and each of the Subsidiaries are in compliance with all
applicable laws and Governmental Licenses, except where the failure to
comply would not have a Material Adverse Effect on the Company or such
Subsidiary, as the case may be.
(c) Except as otherwise disclosed in the Current SEC
Documents or as would not have a Material Adverse Effect on the Company or
such Subsidiary, as the case may be, (i) the Company and the Subsidiaries
have good and marketable title to all properties and assets described in
the Current SEC Documents as being owned by them, or reflected in the Base
Balance Sheet (as hereinafter defined), other than properties and assets
conveyed or pledged in customary asset securitization transactions (as to
which no representation is made); (ii) all liens, charges, claims,
restrictions or encumbrances on or affecting the properties and assets of
the Company or any of the Subsidiaries which are required to be disclosed
in the Current SEC Documents are disclosed therein; (iii) each of the
properties of the Company and the 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; (iv) 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; (v) each of such properties complies with all applicable codes
and zoning and subdivision laws and regulations; (vi) the real property
leases and equipment leases, if any, relating to each of such properties
are in full force and effect; and (vii) there is no pending or threatened
condemnation, eminent domain, 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 the
Subsidiaries.
(d) Except as would not have a Material Adverse Effect on
the Company or any of the Subsidiaries, each of the mortgage loans held by
the Company or the Subsidiaries (the "Mortgage Loans") is (i) secured by a
valid lien on the property pledged as security for each such Mortgage Loan,
(ii) insured by a nationally recognized title insurance company for the
amount of each such applicable Mortgage Loan, (iii) evidenced by loan
documents which are valid and enforceable against the borrower under each
such Mortgage Loan, (iv) in good standing, without defaults or, to the
Company's knowledge, offsets or counterclaims which could be validly
asserted by any borrower under any of the Mortgage Loans, (v) is documented
by loan documents substantially in the form of the Company's standard loan
documents, and (vi) except in the case of loans which have been sold,
assigned or conveyed in connection with an asset securitization thereof, is
currently owned and held by the Company and/or the Subsidiaries and has not
been assigned or pledged to any third party.
(e) The Company and the Subsidiaries have title insurance
on all real property described in the Current SEC Documents as being owned
(or held under a ground lease) or financed by any of them in an amount at
least equal to the cost of acquisition of such property or the original
principal amount of the loan provided by any of them, as the case may be,
and 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.
(f) To the extent applicable, the Company and the
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 the
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 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 (as defined herein).
(g) The Company's authorized and outstanding capitalization
(including all securities exercisable for, or convertible or exchangeable
into, Common Stock) is as set forth in Schedule 2.1(g) hereto. The
outstanding shares of Common Stock have been duly and validly authorized
and issued in compliance with all Federal and state securities laws, and
are fully paid and nonassessable; the Common Shares have been duly and
validly authorized and, when issued and delivered pursuant to this
Agreement, will be fully paid and nonassessable; and the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Common Shares.
(h) 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 the Subsidiaries,
which is required to be disclosed in the Current SEC Documents, or which
might reasonably be expected to result in any Material Adverse Change in
the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company or the Subsidiaries, whether or not
arising in the ordinary course of business ("Material Adverse Change"), or
which might reasonably be expected to have a Material Adverse Effect on the
Company or such Subsidiary 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 Current SEC Documents, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Change.
(i) The Company has full corporate power and authority to
enter into and perform its obligations under this Agreement and the Other
Documents and to issue, sell and deliver the Securities; this Agreement and
the Other Documents have been or will, at or prior to the Closing, be duly
authorized, executed and delivered by the Company and, when so executed,
will each constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether a proceeding is
considered at law or in equity).
(j) No consent, approval, authorization or order of any
court or governmental agency, authority or body is required (and has not
been received) for the execution by the Company of this Agreement and the
Other Documents, the performance by the Company or its obligations
hereunder and thereunder or the consummation by the Company of the
transactions contemplated herein and therein.
(k) Neither the Company nor any or the Subsidiaries is in
violation of, in conflict with, in breach of or in default under (and none
of them know of an event which with the giving of notice or the lapse of
time or both would be reasonably likely to constitute a default under) its
charter or by-laws (and none of them know of an event which with the giving
of notice or the lapse of time or both would be reasonably likely to
constitute a violation), and neither the Company nor any Subsidiary is in
default in the performance of any obligation, agreement or condition
contained in any loan, note or other evidence of indebtedness or in any
indenture, mortgage, deed of trust or any other material agreement by which
it or its properties are bound, except for such defaults as would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company or such Subsidiary, as the case may be.
(l) Except as described in the Current SEC Documents, (A)
neither the Company nor the 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 the Subsidiaries has 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 for such violations as would not have a Material Adverse Effect
on the Company or such Subsidiary, as the case may be, 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 the
Subsidiaries relating to any Hazardous Materials or the violation of any
Environmental Laws, which, either individually or in the aggregate, would
have a Material Adverse Effect on the Company or such Subsidiary, as the
case may be.
(m) Neither the issuance and sale of the Securities nor the
consummation of any of the other transactions contemplated herein or in the
Other Documents nor the fulfillment of the terms hereof and thereof will
conflict with, result in a breach or violation of or constitute a default
under any law or the charter or bylaws of the Company or any of the
Subsidiaries or the terms of any indenture or other agreement or instrument
to which the Company or any of the Subsidiaries is a party or is bound or
any judgment, order or decree applicable to the Company or any of the
Subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company or any
of the Subsidiaries. To enable Purchaser to purchase the Securities
without violating Article IV of the Company's Certificate of Incorporation,
the Board of Directors of the Company will have adjusted the ownership
limitations contained therein to the extent necessary to permit Purchaser's
purchase of the Securities (including, without limitation, the exercise
from time to time of the Warrants) and the transactions contemplated hereby
and by the Other Documents at or prior to the Closing.
(n) Each employee benefit or compensation plan, program,
policy, agreement or arrangement of any type sponsored, maintained,
contributed to or required to be contributed by the Company or any ERISA
Affiliate for the benefit of any current or former employee or director of
the Company or any of the Subsidiaries (the "Company Plans") has been
operated and administered in all material respects in accordance with its
terms and all applicable law, including without limitation ERISA (as
defined below) and the Code. There are no actions, suits or claims
pending, other than routine claims for benefits, with respect to the
Company Plans or their operation, administration or maintenance. Neither
the Company nor any ERISA Affiliate has at any time sponsored, maintained,
contributed to or been required to contribute to any "pension plan" (within
the meaning of Section 3(2) of ERISA) subject to Title IV of ERISA,
including without limitation any multiemployer plan, and neither the
Company nor any ERISA Affiliate has at any time incurred or can expect to
incur any liability under Title IV of ERISA. Each Company Plan intended to
qualify under section 401(a) of the Code is so qualified, and the Company
has timely applied for and received a currently effective determination
letter from the Internal Revenue Service with respect to each such Company
Plan. The consummation of the transactions contemplated hereunder will not
result in the payment, vesting, acceleration or enhancement of any benefit
under any Company Plan. Except as required under Sections 601-609 of
ERISA, no Company Plan provides medical benefits to participants following
retirement or other termination of employment or service. For purposes of
this Agreement, "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended; and "ERISA Affiliate" means any entity that, together
with the Company or any subsidiary would be deemed a "single employer" for
purposes of section 4001(b)(1) of ERISA.
(o) Except as disclosed in the Current SEC Documents, other
than the Warrants and grants of options to purchase an aggregate of
740,000, 22,230 and 233,000 shares of Common Stock issued in January 1997,
May 1997 and January 1998, respectively, and restricted stock awards
representing 29,887 shares of Common Stock issued in January 1998, there
are no outstanding warrants or options to purchase any shares of capital
stock of the Company and there are no restrictions upon the voting or
transfer of, or the declaration or payment of any dividend or distribution
on, any shares of capital stock of the Company pursuant to the certificate
of incorporation or by-laws of the Company, any agreement or other
instrument to which the Company is a party or by which the Company is
bound, or any order, law, rule, regulation or determination of any court,
governmental agency or body (including, without limitation, any banking or
insurance regulatory agency or body), or arbitrator having jurisdiction
over the Company.
(p) There are no registration or other rights entitling any
person to registration by the Company under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the issued capital stock of
the Company (other than pursuant to the Registration Rights Agreement), or
to purchase or subscribe for capital stock of the Company (other than
pursuant to understandings to issue Common Stock representing an aggregate
purchase price of up to $70 million in two separate underwritten
transactions to one or more unit investment trusts and the Investor's
Agreement).
(q) The Company has qualified as a "real estate investment
trust" ("REIT") under section 856 of the Code from its inception and it has
operated and intends to continue to operate in a manner so as to qualify as
a REIT. The Company has not taken any action or omitted to take any action
that would reasonably be expected to result in a challenge to its status as
a REIT, and no such challenge is pending or, to the Company's knowledge,
threatened.
(r) Each of FFCA Acquisition Corporation, FFCA
Institutional Advisors, Inc., FFCA Secured Assets Corporation, FFCA
Residual Interest Corporation and FFCA Secured Lending Corporation has been
(at all times during the period each such corporation has been in
existence) and is subject to tax as a corporation for United States federal
income tax purposes and the Company has owned 100% of the stock of each
such corporation at all times during the period each such corporation has
been in existence. Each such entity is a qualified REIT subsidiary, as
described in section 856(i) of the Code.
(s) FFCA Co-Investment Limited Partnership has been (at all
times on and after June 1, 1994) and is subject to tax as a partnership,
and not as an association taxable as a corporation or a publicly traded
partnership subject to tax as a corporation, for United States federal
income tax purposes.
(t) The Company files and has filed all required reports,
proxy statements, forms, and other documents with the SEC since January 1,
1995 (including all information incorporated therein by reference, the "SEC
Documents"). True and complete copies of all such SEC Documents have been
made available to Purchaser. As of their respective dates, (i) the SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Securities Exchange Act of 1934, as amended, as the
case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and (ii) except to the extent
that information contained in any SEC Document has been revised or
superseded by a later filed SEC Document filed and publicly available prior
to the date of this Agreement, none of the SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved and fairly present the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-
end audit adjustments). Except for liabilities and obligations incurred in
the ordinary course of business, consistent with past practices, since the
date of the most recent consolidated balance sheet included in the SEC
Documents filed and publicly available prior to the date of this Agreement
(the "Base Balance Sheet"), neither the Company nor any of the Subsidiaries
has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted
accounting principles to be set forth on a consolidated balance sheet of
the Company and its consolidated Subsidiaries or in the notes thereto.
(u) Except as disclosed in Current SEC Documents, since the
date of the Base Balance Sheet, the Company and the Subsidiaries have
conducted their respective businesses only in the ordinary course of
business in accordance with past practices, and there has not been (i) any
Material Adverse Change in the Company, (ii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of the capital stock of the Company,
(iii) any damage, destruction or loss, whether or not covered by insurance,
that has or reasonably could be expected to have a Material Adverse Effect
on the Company or any Subsidiary, as the case may be, or (iv) any change in
accounting methods, principles or practices by the Company materially
affecting its assets or liabilities or that otherwise has or reasonably
could be expected to have a Material Adverse Effect on the Company or any
Subsidiary, as the case may be and (v) except for regular quarterly
dividends (including a quarterly dividend increase of $.02 declared January
30, 1998) on the Common Stock, 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 maintains a system of internal accounting
controls sufficient to provide reasonable assurances that in all material
respects (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(w) To the Company's knowledge, neither the Company nor any
of the Subsidiaries nor any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary
or received or retained any funds in violation of any law, rule or
regulation.
(x) The Company and each of the Subsidiaries have (i) duly
filed with the appropriate tax authorities all tax returns required to be
filed by them, and such tax returns are true, correct and complete in all
material respects, and (ii) duly paid in full or made provision in
accordance with generally accepted accounting principles for the payment of
all material taxes ending through the date hereof.
(y) No labor disturbance by the employees of the Company or
the Subsidiaries exists or (to the best of the Company's knowledge) is
imminent that would, individually or in the aggregate, have a Material
Adverse Effect. No collective bargaining agreement exists with any of the
Company's employees and, to the best of the Company's knowledge, no such
agreement is imminent.
(z) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will
not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules and
regulations.
(aa) The Company agrees that neither it, nor anyone acting
on its behalf, will offer any of the Securities so as to bring the issuance
and sale of the Securities within the provisions of Section 5 of the
Securities Act, or offer any similar securities for issuance or sale to, or
solicit any offer to acquire any of the same from, or otherwise approach or
negotiate with respect thereto with, anyone if the sale of any of the
Securities or any such similar securities would be integrated as a single
offering for the purposes of the Securities Act, including, without
limitation, Regulation D thereunder.
(ab) The Company has not retained, directly or indirectly,
any broker or finder or incurred any liability or obligation for any
brokerage fees or finder's fees with respect to this Agreement or the
transactions contemplated hereby.
(ac) All the Company's representations and warranties herein
shall survive until ninety (90) days following the delivery to the Company
of its signed, audited financial statements for the year ending December
31, 1998.
Section 2.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to the Company that:
(a) Purchaser has been duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has all
requisite power and authority under such laws to own or lease and operate
its properties and to carry on its business as now conducted.
(b) Purchaser has the power and authority to execute,
deliver and perform this Agreement and the Other Documents. All action on
the part of Purchaser necessary for the authorization, execution and
delivery of this Agreement and the Other Documents and the performance of
all obligations of Purchaser hereunder and thereunder have been taken or
will be taken prior to the Closing. This Agreement and the Other Documents
have been duly authorized, executed and delivered by Purchaser and each
constitutes a valid and legally binding obligation of Purchaser,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity (whether enforcement is sought by
proceedings in equity or at law).
(c) The execution and delivery by Purchaser of this
Agreement and the Other Documents and the performance by Purchaser of its
obligations hereunder and thereunder will not violate any provision of law,
the organizational documents governing Purchaser or any order of any court
or other agency of government, or conflict with, result in a breach of or
constitute (with notice or lapse of time or both) a default under any
indenture, agreement or other instrument by which Purchaser or any of its
properties or assets is bound, or result in the creation or imposition of
any lien, charge, restriction, claim or encumbrance of any nature
whatsoever known to Purchaser upon any of the properties or assets of
Purchaser.
(d) The Securities will be acquired for investment for
Purchaser's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. Purchaser further represents that it does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Securities. Purchaser (i) has
such knowledge and experience in financial and business matters, including
investments of the type represented by the Securities, as to be capable of
evaluating the merits of investment in the Company; (ii) has not been
furnished with or relied upon any oral representation, warranty or
information in connection with the offering of the Securities; and (iii) is
an "Accredited Investor" as such term is defined in Rule 501 of the rules
and regulations promulgated under the Securities Act. Purchaser and its
agents, attorneys and advisors have been provided full and complete access
to all of the books, records, financial statements, accounts, places of
business, and any other information reasonably related to the conduct of
the business of Company, and has been afforded the opportunity to conduct
an independent investigation of all of those matters and has satisfied
itself as to all of the risks of the business of the Company, and has
satisfied itself that it has obtained, or been offered access to all of the
information and descriptions of reasonable risks associated with the
transaction contemplated hereby that a reasonably prudent investor would
wish to obtain.
(e) The Company will not have any liability or obligation
for any brokerage fees or finder's fees with respect to this Agreement or
the transactions contemplated hereby as a result of any action taken by
Purchaser in connection herewith and therewith.
(f) After giving effect to the constructive ownership rules
of section 544 of the Code (as modified by section 856(h) of the Code), no
member of Purchaser (each a "Member") (i) owns more than 9.8% of the Common
Stock or (ii) owns directly or indirectly 25% or more of Purchaser.
(g) After giving effect to the constructive ownership rules
under section 318 of the Code (as modified by section 856(d)(5) of the
Code), Purchaser does not directly or indirectly own the stock of any
person that is a tenant under any lease with the Company and will not
directly or indirectly acquire stock in any such tenant if, upon and as a
direct consequence of such acquisition, the rents to be derived by the
Company under such lease would fail to qualify as rent from real property
pursuant to section 856(d)(2) of the Code.
(h) Purchaser is a newly formed fund that is its own
ultimate parent as that term is defined in the rules and regulations
promulgated under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), does not have and will not have a regularly
prepared balance sheet at the Closing Date, and at the Closing Date will
not have assets or net sales of $10 million or more other than the cash
that will be used as consideration for the acquisition and expenses
incidental to the transactions contemplated hereunder and as a result such
transactions are not subject to the notification and waiting period
requirements of the HSR Act pursuant to 16 C.F.R. Section 801.11(e).
SECTION 3. CLOSING CONDITIONS
Section 3.1 CONDITIONS TO OBLIGATION OF PURCHASER. The obligation
of Purchaser to purchase the Securities shall be subject to satisfaction or
waiver by it of the following conditions on or before the Closing Date:
(a) The representations and warranties of the Company
contained in Section 2.1 hereof that are qualified as to materiality shall
be true and accurate, and those not so qualified shall be true and accurate
in all material respects at and as of the Closing Date as if made on the
date hereof.
(b) The Company shall have performed and complied in all
material respects with all agreements, covenants and conditions contained
herein that are required to be performed or complied with by it on or
before the Closing Date.
(c) The Company shall have received all consents, permits,
approvals and other authorizations that may be required from, and made all
such filings and declarations that may be required with, any person
pursuant to any law, statute, regulation or rule (federal, state, local and
foreign), or pursuant to any agreement, order or decree by which the
Company or any of its assets is bound, in connection with the transactions
contemplated by this Agreement, except for (i) notice requirements which
may be fulfilled subsequent to the Closing Date and (ii) consents, permits,
approvals, authorizations, filings and declarations the failure to obtain
or to undertake which will not adversely affect the Company's ability to
perform its obligations under this Agreement or any agreement executed in
accordance herewith.
(d) Purchaser shall have received a certificate, dated the
Closing Date and signed by the President and the Chief Financial Officer of
the Company, certifying that the conditions in Sections 3.1(a), (b) and (c)
are satisfied on and as of such date.
(e) The Company shall have entered into the Other
Documents, and Purchaser's designee shall have been appointed to the Board
of Directors of the Company pursuant to the Investor's Agreement.
(f) Purchaser and its counsel shall have received copies of
the following documents:
(i) the Certificate of Incorporation,
certified as of a recent date by the Secretary of State of the
State of Delaware, and a certificate of such authority dated as
of a recent date as to the due incorporation and good standing of
the Company and listing all documents of the Company on file with
said authority;
(ii) a certificate of the Secretary or an
Assistant Secretary of the Company dated the Closing Date
certifying: (A) that attached thereto is a true and complete copy
of the Bylaws of the Company as in effect on the date of such
certification; (B) that attached thereto is a true and complete
copy of all resolutions adopted by the Board of Directors
authorizing the execution, delivery and performance of this
Agreement and the Other Documents and the issuance, sale and
delivery of the Securities, and that all such resolutions are in
full force and effect and are all the resolutions adopted in
connection with the transactions contemplated by this Agreement;
(C) that the Certificate of Incorporation of the Company has not
been amended since the date of the last amendment referred to in
the certificate delivered pursuant to clause (i) above; (D) that
the Bylaws have not been amended since the date of the last
amendment referred to in such certificate pursuant to subclause
(ii)(A) above; and (E) that each officer of the Company executing
this Agreement and the Other Documents, the certificates
representing the Securities and any agreement, certificate or
instrument furnished pursuant hereto, was, at the respective
times of such execution and delivery of such documents, duly
elected or appointed, qualified and acting as such officer, and
the signatures of such persons appearing on such documents are
their genuine signatures or true facsimiles thereof; and
(iii) such additional supporting documents
as Purchaser may reasonably request.
(g) Purchaser shall have received an opinion (satisfactory
to Purchaser and its counsel), dated the Closing Date, from Xxxxx Xxxx in
substantially the form of Exhibit B hereto.
(h) The Board of Directors of the Company shall have
adjusted the ownership limitations contained in the Company's certificate
of incorporation to the extent necessary to permit Purchaser's purchase of
the Securities (including, without limitation, the exercise from time to
time of the Warrants) and the transactions contemplated hereby and the
Other Documents.
Section 3.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
Company's obligation to sell the Securities shall be subject to the
satisfaction or waiver by it of the following conditions on or before the
Closing:
(a) The representations and warranties of Purchaser
contained in Section 2.2 of this Agreement that are qualified as to
materiality shall be true and accurate, and those not so qualified shall be
true and accurate in all material respects at and as of the Closing Date as
if made on the date hereof.
(b) Purchaser shall have performed and complied in all
material respects with all agreements and conditions contained herein that
are required to be performed or complied with by it on or before the
Closing Date, including without limitation, payment of the Purchase Price.
(c) Purchaser shall have received all consents, permits,
approvals and other authorizations that may be required from, and made all
such filings and declarations that may be required with, any person
pursuant to any law, statute, regulation or rule (federal, state, local and
foreign), or pursuant to any agreement, order or decree by which Purchaser
or any of its assets is bound, in connection with the transactions
contemplated by this Agreement, except for (i) notice requirements which
may be fulfilled subsequent to the Closing Date and (ii) consents, permits,
approvals, authorizations, filings and declarations the failure to obtain
or to undertake which will not adversely affect Purchaser's ability to
perform its obligations under this Agreement or any agreement executed in
accordance herewith.
(d) The Company shall have received a certificate, dated
the Closing Date and signed by the President of the general partner of
Purchaser, certifying that the conditions in Sections 3.2(a), (b) and (c)
are satisfied on and as of such date.
(e) The Company shall have received an opinion (reasonably
satisfactory to the Company and its counsel), dated the Closing Date, from
outside counsel to Purchaser in substantially the form of Exhibit C hereto.
SECTION 4. MISCELLANEOUS
(a) Each party hereto shall pay its own expenses
(including, without limitation, counsel fees) in connection with the
transactions contemplated hereby, whether or not such transactions shall be
consummated. The Company and the Purchaser shall share all joint filing
fees and related expenses equally.
(b) Except as otherwise provided herein, covenants,
agreements, representations and warranties made in this Agreement, or any
certificate or instrument delivered pursuant to or in connection therewith
shall survive the execution and delivery of this Agreement.
(c) All representations, covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not; provided that Purchaser shall
not assign its rights in this Agreement to any unrelated third party
without first obtaining the prior written consent of the Company, and
provided further that, notwithstanding the above provision, Purchaser may
assign its rights in this Agreement to any 50% or greater controlled
Affiliate of Colony Capital, Inc.
(d) All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in
person, sent by facsimile or mailed by certified or registered mail; return
receipt requested, addressed as follows:
If to Purchaser, to: Colony Investors III, L.P.
c/o Colony Capital, Inc.
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxx
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
If to the Company, to: Franchise Finance Corporation of America
The Perimeter Center
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. X.X. Xxxxxxxxx
with a copy to: Franchise Finance Corporation of America
The Perimeter Center
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
with a copy to: Xxxxx Xxxx
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx , Esq.
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. All notices, requests,
consents and other communications hereunder shall be deemed to have been
duly given or served on the date on which personally delivered or on the
date actually received, with receipt acknowledged.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflict of laws provisions thereof.
(f) This Agreement and the Other Documents constitute the
sole and entire agreement of the parties with respect to the subject matter
hereof and supersedes any and all prior or contemporaneous agreements,
discussions, representations, warranties or other communications. All
Schedules and Exhibits hereto are hereby incorporated herein by reference.
(g) This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(h) As used in this Agreement, knowledge shall mean, with
respect to any person, actual knowledge of such person (without imputing
any knowledge to such person), if an individual, or of any executive
officer of such Person, if not an individual.
(i) This Agreement may not be amended or modified without
the written consent of the Company and Purchaser, nor shall any waiver be
effective against any party unless in a writing executed on behalf of such
party.
(j) If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted
as if such provision were so excluded and shall be enforceable in
accordance with its terms to the fullest extent permitted by law.
(k) The titles and subtitles used in this Agreement are for
convenience only and are not to be considered in construing or interpreting
any term or provisions of this Agreement.
IN WITNESS WHEREOF, the Company and Purchaser have caused this
Agreement to be executed and delivered by the undersigned duly authorized
officers as of the day and year first above written.
FRANCHISE FINANCE CORPORATION OF AMERICA
By: /s/ XXXXXX X. XXXXXXXXX
------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
COLONY INVESTORS III, L.P.
By: Colony Capital III, L.P.
By: ColonyGP III, Inc.
By: /s/ XXXXXX X. XXXXX
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief
Executive Officer
