As filed with the Securities and Exchange Commission on May 23, 2006
Registration No. 333-__________
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-3
______________________
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
FRANKLIN STREET PROPERTIES CORP.
(Exact Name of Registrant as Specified in Its Charter)
______________________
Maryland
(State or Other Jurisdiction of Incorporation or Organization)
04-3578653
(I.R.S. Employer Identification Number)
______________________
401 Edgewater Place, Suite 200
Wakefield, MA 01880
(781) 557-1300
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
______________________
George J. Carter
President and Chief Executive Officer
Franklin Street Properties Corp.
401 Edgewater Place, Suite 200
Wakefield, MA 01880
(781) 557-1300
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
______________________
Copies to:
Kenneth A. Hoxsie, Esq.
James R. Burke, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telephone: (617) 526-6000
Telecopy: (617) 526-5000
Approximate date of commencement of proposed sale to public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|__________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|__________
If this Form is a registration statement pursuant to General Instruction I.D.
or a post-effective amendment thereto that shall become effective upon filing
with the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. |X|
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities
pursuant to Rule 413(b) under the Securities Act, check the following box. |_|
______________________
CALCULATION OF REGISTRATION FEE
=============================================================================================
Proposed
Proposed Maximum
Maximum Aggregate Amount Of
Title Of Each Class Of Amount to be Offering Price Offering Registration
Securities To Be Registered Registered Per Unit Price Fee
- ---------------------------------------------------------------------------------------------
Common stock, $0.0001 par
value per share ........ (1) (1) (1) (2)
=============================================================================================
(1) Omitted pursuant to Form S-3 General Instruction II.E. Such indeterminate
number or amount of common stock is being registered as may from time to
time be offered at indeterminate prices.
(2) The registrant is deferring payment of the amount of the registration fee
in reliance on Rule 456(b) and Rule 457(r) under the Securities Act of
1933.
FRANKLIN STREET PROPERTIES CORP.
Common Stock
______________________
The shares of common stock, $0.0001 par value per share, of Franklin
Street Properties Corp., or FSP Corp., covered by this prospectus may be offered
and sold from time to time by FSP Corp. or certain selling stockholders of FSP
Corp.
This prospectus describes some of the general terms that may apply to
sales of our common stock. We will describe the specific terms of any sale of
our common stock, including the offering price of the shares, the names of any
selling stockholders and the amounts of any shares of our common stock being
offered or sold hereunder, in a supplement to this prospectus. This prospectus
may not be used to offer or sell any shares of our common stock unless
accompanied by a prospectus supplement.
Our common stock is listed on the American Stock Exchange (AMEX) and
trades under the symbol "FSP."
We may, and any selling stockholder may, offer and sell shares of our
common stock independently or together to or through one or more underwriters,
dealers and agents, or directly to purchasers, on a continuous or delayed basis.
If any underwriters, dealers or agents are involved in the sale of any shares of
our common stock, the applicable prospectus supplement will set forth any
commissions or discounts. Unless otherwise set forth in a prospectus supplement,
we will not receive any proceeds from the sale of shares of our common stock by
any selling stockholders.
The last sale price of our common stock on the AMEX on May 22, 2006 was
$21.00 per share.
Investing in these securities involves risks. See "Risk Factors" on page 2
of this prospectus, in the documents incorporated by reference herein and in any
prospectus supplement.
______________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
______________________
Prospectus dated May 23, 2006.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS..........................................................1
ABOUT FRANKLIN STREET PROPERTIES CORP..........................................1
RISK FACTORS...................................................................2
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION.............................2
AVAILABLE INFORMATION..........................................................2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE..............................3
DESCRIPTION OF CAPITAL STOCK...................................................3
USE OF PROCEEDS................................................................4
SELLING STOCKHOLDERS...........................................................4
PLAN OF DISTRIBUTION...........................................................5
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.......................7
LEGAL MATTERS.................................................................18
EXPERTS.......................................................................19
ABOUT THIS PROSPECTUS
This prospectus is part of a "shelf" registration statement that we have
filed with the Securities and Exchange Commission, or SEC. Under this shelf
registration statement, we or certain selling stockholders may, from time to
time, sell our common stock in one or more offerings.
This prospectus describes the general manner in which our common stock may
be offered by this prospectus. We will provide a prospectus supplement that will
contain specific information about the terms of an offering. If there is any
inconsistency between the information in this prospectus and the accompanying
prospectus supplement, you should rely on the information in the prospectus
supplement. We may also add, update or change in the prospectus supplement any
of the information contained in this prospectus. This prospectus, together with
applicable prospectus supplements, includes all material information relating to
this offering.
This prospectus does not contain all the information set forth in the
registration statement and the exhibits and schedules to the registration
statement, because some parts have been omitted in accordance with the rules and
regulations of the SEC. For further information with respect to us and our
common stock being registered hereby, you should refer to the registration
statement and the exhibits and schedules filed as part of the registration
statement. Statements contained in this prospectus regarding the contents of any
agreement, contract or other document referred to are not necessarily complete;
reference is made in each instance to the copy of the contract or document filed
as an exhibit to the registration statement. Each statement is qualified by
reference to the exhibit.
ABOUT FRANKLIN STREET PROPERTIES CORP.
Franklin Street Properties Corp., or FSP Corp., is a Maryland corporation
that operates in a manner intended to qualify as a real estate investment trust
for federal income tax purposes. We believe we have qualified as a real estate
investment trust, or REIT, for United States federal income tax purposes since
January 2002. We have been a reporting company under the Securities Exchange Act
of 1934 since 2001, and our common stock began trading on the American Stock
Exchange, or AMEX, on June 2, 2005. We operate in two business segments and have
two principal sources of revenue:
o Real estate operations, including real estate leasing, interim
acquisition financing and development and asset/property management,
which generate rental income, loan origination fees, and development
and management fees, respectively.
o Investment banking/investment services, which generate brokerage
commissions and other fees related to the organization of
single-purpose entities that own real estate, which we refer to as
sponsored REITs.
Our principal executive offices are located at 401 Edgewater Place, Suite
200, Wakefield, Massachusetts 01880. The telephone number of our principal
executive office is (781) 557-1300. Our website address is
www.franklinstreetproperties.com.
For additional information about FSP Corp. and our business, see
"Available Information", below.
We use the terms "FSP Corp.", the "company", "we", "us" and "our" in this
prospectus to refer to the business of Franklin Street Properties Corp. and its
subsidiaries unless otherwise noted.
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RISK FACTORS
An investment in our common stock involves significant risks. You should
carefully consider the risk factors contained in any prospectus supplement and
in our filings with the Securities and Exchange Commission, as well as all of
the information contained in this prospectus, any prospectus supplement and the
documents incorporated by reference in this prospectus, before you decide to
invest in our common stock. The risks and uncertainties we have described are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect our operations.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus, any prospectus supplement, and the documents incorporated
by reference in this prospectus contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. You can identify these forward-looking
statements by our use of the words "believes", "anticipates", "plans",
"expects", "may", "will", "intends", "estimates" and similar expressions,
whether in the negative or affirmative. Although we believe that these
forward-looking statements reasonably reflect our plans, intentions and
expectations, we cannot guarantee that we actually will achieve these plans,
intentions or expectations. Our actual results could differ materially from the
plans, intentions and expectations disclosed in the forward-looking statements
we make. Investors are cautioned that our forward-looking statements involve
risks and uncertainty, including without limitation changes in economic
conditions in the markets in which we own properties, changes in the demand by
investors for investment in sponsored REITs, risks of a lessening of demand for
the types of real estate owned by us, changes in government regulations, and
expenditures that cannot be anticipated such as utility rate and usage
increases, unanticipated repairs, additional staffing, insurance increases and
real estate tax valuation reassessments. We cannot guarantee that we actually
will achieve the plans, intentions or expectations disclosed in our
forward-looking statements and, accordingly, you should not place undue reliance
on our forward-looking statements. There are a number of important factors that
could cause actual results or events to differ materially from the
forward-looking statements that we make, including the factors included in the
documents we incorporate by reference in this prospectus. You should read these
factors and the other cautionary statements made in the documents we incorporate
by reference as being applicable to all related forward-looking statements
wherever they appear in this prospectus, any prospectus supplement and any
document incorporated by reference. We caution you that we do not undertake any
obligation to update forward-looking statements we make.
AVAILABLE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
reports with the SEC. You may inspect a copy of the registration statement and
all other reports that we file with the SEC without charge at the SEC's
principal office in Washington, D.C. Copies of all or any part of the
registration statement may be obtained after payment of fees prescribed by the
SEC from the SEC's Public Reference Room at the SEC's principal office, 100 F
Street, N.E., Washington, D.C. 20549.
You may obtain information regarding the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC at www.sec.gov. In
addition, you may obtain copies of our SEC filings on our website at
www.franklinstreetproperties.com.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We are incorporating by reference certain documents we file with the SEC,
which means that we can disclose important information to you by referring you
to those documents. The information in the documents incorporated by reference
is considered to be part of this prospectus. Information in documents that we
file with the SEC after the date of this prospectus will automatically update
and supersede information in this prospectus. We incorporate by reference the
documents listed below and any future filings we may make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior
to the termination of the sale of all the shares covered by this prospectus.
o Our Annual Report on Form 10-K for the fiscal year ended December
31, 2005, filed with the SEC on February 24, 2006;
o Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2006, filed with the SEC on May 8, 2006;
o Our Current Report on Form 8-K, dated February 3, 2006 and filed
with the SEC on February 8, 2006;
o Our Current Report on Form 8-K, dated March 15, 2006 and filed with
the SEC on March 16, 2006;
o Our Current Report on Form 8-K, dated April 30, 2006 and filed with
the SEC on May 4, 2006;
o Our Current Report on Form 8-K, dated May 12, 2006 and filed with
the SEC on May 15, 2006;
o Our Current Report on Form 8-K, dated May 22, 2006 and filed with
the SEC on May 22, 2006;
o The description of our common stock contained in our Form 8-A, filed
with the SEC on April 5, 2005; and
o All of our filings pursuant to the Securities Exchange Act of 1934
on or after the date of the initial filing of the registration
statement of which this prospectus is a part and prior to the
termination of this offering.
A statement contained in a document incorporated by reference in this
prospectus shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus, any
prospectus supplement or in any other subsequently filed document which is also
incorporated in this prospectus modifies or replaces such statement. Any
statements so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
You may request, orally or in writing, a free copy of any of the documents
incorporated by reference in this prospectus by writing or telephoning us at the
following address:
Franklin Street Properties Corp.
401 Edgewater Place, Suite 200
Wakefield, MA 01880
(781) 557-1300
Attention: Investor Relations
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 180,000,000 shares of common
stock, par value $0.0001 per share, and 20,000,000 shares of preferred stock,
par value $0.0001 per share.
Each outstanding share of our common stock entitles the holder thereof to
one vote on all matters submitted to a vote of stockholders. There is no
cumulative voting in the election of directors. Holders of shares of our common
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stock have no conversion, sinking fund or preemptive rights to subscribe for any
securities of the Registrant. Shares of our common stock have equal dividend,
distribution, liquidation and other rights and have no preference or exchange
rights.
Currently, no shares of our preferred stock are issued or outstanding. Our
Board of Directors may authorize from time to time, without further action by
our stockholders, the issuance of shares of preferred stock in one or more
separately designated classes. The Board may set the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms and conditions of redemption of the
shares of each class of our preferred stock.
In order for us to maintain our qualification as a REIT, among other
things, not more than 50% in value of our outstanding shares of common stock may
be owned, directly or indirectly, by five or fewer individuals. Our Articles of
Incorporation provide that holders of our common stock and preferred stock,
collectively, cannot beneficially or constructively own more than 9.8% of the
number of shares or value of our outstanding equity securities and that no
stockholder will be able to transfer or acquire shares that would result in our
outstanding equity shares being beneficially owned by fewer than 100 persons.
Our Articles of Incorporation also provide that on an annual basis we will use
our best efforts to redeem any shares of our common stock from holders who
desire to sell them. The purchase price paid by us will be 90% of the fair
market value of the shares purchased, as determined by our Board of Directors in
its sole and absolute discretion after consultation with an adviser selected by
our Board. We have no obligation to redeem shares of our common stock during any
period that our common stock is listed for trading on a national securities
exchange.
The above is a summary and does not purport to be complete and is
qualified by our Articles of Incorporation, which were filed as an exhibit to
our Form 8-A, filed with the SEC on April 5, 2005, and our Bylaws, which were
filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on May
15, 2006.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement or
other offering material, we anticipate that we will use the net proceeds from
the sale of our common stock by us for general corporate purposes. Unless
otherwise set forth in a prospectus supplement, to the extent any shares of our
common stock registered under this registration statement are for the account of
selling stockholders, we will not receive any of the proceeds of the sale of
such shares by such stockholders.
SELLING STOCKHOLDERS
We may register shares of our common stock covered by this prospectus for
re-offers and resales by any selling stockholders to be named in a prospectus
supplement. Because we are a well-known seasoned issuer, as defined in Rule 405
of the Securities Act of 1933, we may add secondary sales of shares of our
common stock by any selling stockholders by filing a prospectus supplement with
the SEC. We may register these shares to permit selling stockholders to resell
their shares when they deem appropriate. A selling stockholder may resell all, a
portion or none of its shares at any time and from time to time. Selling
stockholders may also sell, transfer or otherwise dispose of some or all of
their shares of our common stock in transactions exempt from the registration
requirements of the Securities Act. We do not know when or in what amounts the
selling stockholders may offer shares for sale under this prospectus and any
prospectus supplement. We may pay all expenses incurred with respect to the
registration of the shares of our common stock owned by the selling
stockholders, other than underwriting fees, discounts or commissions, which will
be borne by the selling stockholders. A prospectus supplement for any selling
stockholders will name the selling stockholder, the amount of shares to be
registered and sold and any other terms of the shares of our common stock being
sold by such selling stockholder.
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PLAN OF DISTRIBUTION
We may sell shares of our common stock, and any selling stockholder may
sell shares of our common stock, in any one or more of the following ways from
time to time: (1) through agents; (2) to or through underwriters; (3) through
brokers or dealers; (4) directly by us or any selling stockholders to
purchasers, including through a specific bidding, auction or other process; (5)
by an over-the-counter distribution in accordance with the rules of the Nasdaq
National Market; or (6) through a combination of any of these methods of sale.
To the extent required, this prospectus may be amended or supplemented from time
to time to describe a specific plan of distribution. The applicable prospectus
supplement will contain the terms of the transaction, name or names of any
underwriters, dealers, agents and the respective amounts of our common stock
underwritten or purchased by them, the initial public offering price of our
common stock, and the applicable agent's commission, dealer's purchase price or
underwriter's discount. Any selling stockholders, dealers and agents
participating in the distribution of our common stock may be deemed to be
underwriters, and compensation received by them on resale of our common stock
may be deemed to be underwriting discounts and commissions. Additionally,
because selling stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933, selling stockholders may
be subject to the prospectus delivery requirements of the Securities Act.
Any initial offering price, dealer purchase price, discount or commission
may be changed from time to time.
Shares of our common stock may be distributed from time to time in one or
more transactions, at negotiated prices, at a fixed or fixed prices (that may be
subject to change), at market prices prevailing at the time of sale, at various
prices determined at the time of sale or at prices related to prevailing market
prices.
Offers to purchase shares of our common stock may be solicited directly by
us or any selling stockholder or by agents designated by us from time to time.
Any such agent may be deemed to be an underwriter, as that term is defined in
the Securities Act, of the shares of our common stock so offered and sold.
If underwriters are utilized in the sale of any shares of our common stock
in respect of which this prospectus is being delivered, such shares of our
common stock will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices determined by
the underwriters at the time of sale. Shares of our common stock may be offered
to the public either through underwriting syndicates represented by managing
underwriters or directly by one or more underwriters. If any underwriter or
underwriters are utilized in the sale of shares of our common stock, unless
otherwise indicated in the applicable prospectus supplement, the obligations of
the underwriters are subject to certain conditions precedent and that the
underwriters will be obligated to purchase all such shares of our common stock
if any are purchased.
If a dealer is utilized in the sale of shares of our common stock in
respect of which this prospectus is delivered, we will sell such shares of our
common stock, and any selling stockholder will sell shares of our common stock,
to the dealer, as principal. The dealer may then resell such shares of our
common stock to the public at varying prices to be determined by such dealer at
the time of resale. Transactions through brokers or dealers may include block
trades in which brokers or dealers will attempt to sell shares as agent but may
position and resell as principal to facilitate the transaction or in crosses, in
which the same broker or dealer acts as agent on both sides of the trade. Any
such dealer may be deemed to be an underwriter, as such term is defined in the
Securities Act, of the shares of our common stock so offered and sold. In
addition, any selling stockholder may sell shares of our common stock in
ordinary brokerage transactions or in transactions in which a broker solicits
purchases.
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Offers to purchase shares of our common stock may be solicited directly by
us or any selling stockholder and the sale thereof may be made by us or any
selling stockholder directly to institutional investors or others, who may be
deemed to be underwriters within the meaning of the Securities Act with respect
to any resale thereof.
Any selling stockholders may also resell all or a portion of their shares
of our common stock in transactions exempt from the registration requirements of
the Securities Act in reliance upon Rule 144 under the Securities Act provided
they meet the criteria and conform to the requirements of that rule, Section
4(1) of the Securities Act or other applicable exemptions, regardless of whether
the shares of our common stock are covered by the registration statement of
which this prospectus forms a part.
If so indicated in the applicable prospectus supplement, we or any selling
stockholder may authorize agents and underwriters to solicit offers by certain
institutions to purchase shares of our common stock from us or any selling
stockholder at the public offering price set forth in the applicable prospectus
supplement pursuant to delayed delivery contracts providing for payment and
delivery on the date or dates stated in the applicable prospectus supplement.
Such delayed delivery contracts will be subject only to those conditions set
forth in the applicable prospectus supplement.
Agents, underwriters and dealers may be entitled under relevant agreements
with us or any selling stockholder to indemnification by us against certain
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, underwriters and dealers may be
required to make in respect thereof. The terms and conditions of any
indemnification or contribution will be described in the applicable prospectus
supplement. We may pay all expenses incurred with respect to the registration of
the shares of our common stock owned by any selling stockholders, other than
underwriting fees, discounts or commissions, which will be borne by the selling
stockholders.
We or any selling stockholder may enter into derivative, sale or forward
sale transactions with third parties, or sell securities not covered by this
prospectus to third parties in privately negotiated transactions. If the
applicable prospectus supplement indicates, in connection with those
transactions, that third parties may sell shares of our common stock covered by
this prospectus and the applicable prospectus supplement, including in short
sale transactions and by issuing securities not covered by this prospectus but
convertible into or exchangeable for or represents beneficial interests in such
shares of our common stock, or the return of which is derived in whole or in
part from the value of such shares of our common stock. If so, the third party
may use securities received under those sale, forward sale or derivative
arrangements or shares of our common stock pledged by us or any selling
stockholder or borrowed from us, any selling stockholder or others to settle
those sales or to close out any related open borrowings of stock, and may use
shares of our common stock received from us or any selling stockholder in
settlement of those transactions to close out any related open borrowings of
stock. The third party in such sale transactions will be an underwriter and will
be identified in the applicable prospectus supplement (or a post-effective
amendment).
Additionally, any selling stockholder may engage in hedging transactions
with broker-dealers in connection with distributions of shares or otherwise. In
those transactions, broker-dealers may engage in short sales of shares in the
course of hedging the positions they assume with such selling stockholder. Any
selling stockholder also may sell shares short and redeliver shares to close out
such short positions. Any selling stockholder may also enter into option or
other transactions with broker-dealers which require the delivery of shares to
the broker-dealer. The broker-dealer may then resell or otherwise transfer such
shares pursuant to this prospectus. Any selling stockholder also may loan or
pledge shares, and the borrower or pledgee may sell or otherwise transfer the
shares so loaned or pledged pursuant to this prospectus. Such borrower or
pledgee also may transfer those shares to investors in our common stock or the
selling stockholder's shares of our common stock or in connection with the
offering of other shares of our common stock not covered by this prospectus.
Underwriters, broker-dealers or agents may receive compensation in the
form of commissions, discounts or concessions from us or any selling
stockholder. Underwriters, broker-dealers or agents may also receive
6
compensation from the purchasers of shares for whom they act as agents or to
whom they sell as principals, or both. Compensation as to a particular
underwriter, broker-dealer or agent might be in excess of customary commissions
and will be in amounts to be negotiated in connection with transactions
involving shares. In effecting sales, broker-dealers engaged by us or any
selling stockholder may arrange for other broker-dealers to participate in the
resales.
Agents, underwriters and dealers may engage in transactions with, or
perform services for us or any selling stockholder and our respective
subsidiaries in the ordinary course of business.
Any underwriter may engage in overallotment, stabilizing transactions,
short covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934. Overallotment involves sales in
excess of the offering size, which create a short position. Stabilizing
transactions permit bids to purchase the underlying shares of our common stock
so long as the stabilizing bids do not exceed a specified maximum. Short
covering transactions involve purchases of the shares of our common stock in the
open market after the distribution is completed to cover short positions.
Penalty bids permit the underwriters to reclaim a selling concession from a
dealer when the shares of our common stock originally sold by the dealer are
purchased in a covering transaction to cover short positions. Those activities
may cause the price of the shares of our common stock to be higher than it would
otherwise be. If commenced, the underwriters may discontinue any of the
activities at any time. An underwriter may carry out these transactions on the
American Stock Exchange, in the over-the-counter market or otherwise.
The place and time of delivery for shares of our common stock will be set
forth in the accompanying prospectus supplement for such shares of our common
stock.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material United States federal
income tax considerations associated with the ownership and disposition of our
common stock. The following summary is not exhaustive of all possible tax
considerations. Moreover, the summary contained herein does not address all
aspects of taxation that may be relevant to particular stockholders in light of
their personal tax circumstances, or to certain types of stockholders subject to
special treatment under federal income tax laws, including insurance companies,
tax-exempt organizations (except to the extent discussed below under the heading
"Taxation of Tax-Exempt Stockholders"), financial institutions, broker-dealers,
and foreign corporations and persons who are not citizens or residents of the
United States (except to the extent discussed below under the heading "Taxation
of Non-U.S. Stockholders").
We have elected to be taxed as a real estate investment trust under the
Internal Revenue Code of 1986, as amended, which we refer to as the tax code.
Generally, a company that meets the eligibility requirements for treatment as a
real estate investment trust and that elects to be so treated is not subject to
federal income tax on the income it distributes to its stockholders. We believe
that we are organized and have operated in a manner so as to meet these
eligibility requirements; however, there can be no assurance that we have
qualified or will remain qualified as a REIT. Our counsel, Wilmer Cutler
Pickering Hale and Dorr LLP, has rendered its opinion, based upon various
assumptions specified therein and upon our representations, that we have been
organized and operated in conformity with the requirements for qualification as
a real estate investment trust for each taxable year beginning with our taxable
year ending December 31, 2002 and that our current organization and method of
operation will enable us to continue to meet the requirements for qualification
and taxation as a real estate investment trust. Qualification as a REIT,
however, depends upon our ability to meet, through actual annual (or in some
cases quarterly) operating results, requirements (discussed in greater detail
below) relating to, among other things, the sources of our income, the nature of
our assets, the level of our distributions and the diversity of our share
ownership. Wilmer Cutler Pickering Hale and Dorr LLP has not reviewed and will
not review these results on an independent or ongoing basis. Given the complex
nature of the REIT qualification requirements, the ongoing importance of factual
determinations and the possibility of future changes in our circumstances, there
can be no assurance that our actual operating results will satisfy the
requirements for taxation as a REIT under the tax code for any particular
taxable year.
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The statements in this summary are, and the opinion of Wilmer Cutler
Pickering Hale and Dorr LLP is, based on the provisions of the tax code,
applicable United States Treasury regulations promulgated thereunder, and
judicial and administrative decisions and rulings all as in effect on the date
rendered. Neither the statements below nor the opinion is binding on the
Internal Revenue Service or the courts, and there can be no assurance that the
Internal Revenue Service or the courts will not take a contrary view. No ruling
from the Internal Revenue Service has been or will be sought. Future
legislative, judicial or administrative changes or interpretations could alter
or modify the statements and conclusions set forth herein, possibly adversely.
EACH STOCKHOLDER IS URGED TO CONSULT HIS, HER, OR ITS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO THE STOCKHOLDER OF THE OWNERSHIP AND
DISPOSITION OF STOCK IN AN ENTITY ELECTING TO BE TAXED AS A REAL ESTATE
INVESTMENT TRUST, INCLUDING FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES, AS WELL AS POTENTIAL CHANGES IN THE APPLICABLE TAX LAWS.
Tax Consequences of REIT Election
Introduction. We have elected under Section 856 of the tax code to be
taxed as a real estate investment trust. Subject to the risks described above,
we intend to continue to be taxed as a REIT.
Taxation of FSP Corp.
General. If we continue to qualify as a real estate investment trust, we
generally will not be subject to federal corporate income taxes on our net
income to the extent that the income is currently distributed to our
stockholders. The benefit of this tax treatment is that it substantially
eliminates the "double taxation" resulting from the taxation at both the
corporate and stockholder levels that generally results from owning stock in a
corporation. Accordingly, our income generally will be subject to taxation
solely at the stockholder level upon a distribution by us. We will, however, be
required to pay certain federal income taxes, including in the following
circumstances:
o We will be subject to federal income tax at regular corporate rates
on taxable income, including net capital gain, that we do not
distribute to stockholders during, or within a specified time period
after, the calendar year in which such income is earned.
o We will be subject to the "alternative minimum tax" with respect to
our undistributed alternative minimum taxable income.
o We will be subject to a 100% tax on net income from certain sales or
other dispositions of property that we hold primarily for sale to
customers in the ordinary course of business, also known as
"prohibited transactions".
o If we fail to satisfy the 75% gross income test or the 95% gross
income test, both described below, but nevertheless qualify as a
real estate investment trust, we will be subject to a 100% tax on an
amount equal to (i) the gross income attributable to the greater of
the amount by which we fail the 75% or 95% gross income test
multiplied by (ii) a fraction intended to reflect our profitability.
o If we fail to satisfy the securities asset test, described below,
and such failure exceeds a de minimis threshold, then we must
dispose of the non-qualifying securities and we will be subject to a
tax equal to the greater of $50,000 and the highest corporate tax
rate multiplied by the income generated by the non-qualifying
securities for the period beginning with the first date of the
failure and ending on the date that we disposed of the securities.
o If we fail to distribute during the calendar year at least the sum
of (i) 85% of our real estate investment trust ordinary income for
such year, (ii) 95% of our real estate investment trust capital gain
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net income for such year, and (iii) any undistributed taxable income
from prior periods, we will pay a 4% excise tax on the excess of
such required distribution over the amount actually distributed to
our stockholders.
o We may elect to retain and pay income tax on some or all of our
long-term capital gain, as described below.
o We may be subject to a 100% excise tax on transactions with any of
our taxable REIT subsidiaries that are not conducted on an
arm's-length basis.
o If we fail to satisfy one or more of the other requirements for real
estate investment trust qualification for reasonable cause and not
due to willful neglect, then in order to avoid disqualification as a
real estate investment trust, we would be required to pay a penalty
of $50,000 for each such failure.
Requirements for Qualification as a Real Estate Investment Trust
Introduction. In order to qualify as a real estate investment trust for
federal income tax purposes a REIT must elect (or have elected, and have not
revoked its election) to be treated as a REIT and must satisfy certain statutory
tests relating to, among other things, (i) the sources of its income, (ii) the
nature of its assets, (iii) the amount of its distributions, and (iv) the
ownership of its stock. We have elected to be treated as a REIT and have
endeavored, and we will continue to endeavor, to satisfy the tests for REIT
qualification.
A real estate investment trust may own a "qualified REIT subsidiary." A
qualified REIT subsidiary is a corporation, all of the capital stock of which is
owned by a real estate investment trust, and for which subsidiary no election
has been made to treat it as a "taxable REIT subsidiary" (as discussed below). A
corporation that is a qualified REIT subsidiary is not treated as a corporation
separate from its parent real estate investment trust for federal income tax
purposes. All assets, liabilities, and items of income, deduction, and credit of
a qualified REIT subsidiary are treated as the assets, liabilities, and items of
income, deduction and credit of the parent real estate investment trust. Thus,
in applying the requirements described herein, any qualified REIT subsidiary of
ours will be ignored, and all assets, liabilities and items of income, deduction
and credit of such subsidiary will be treated as our assets, liabilities, and
items of income deduction and credit.
In the event that we become a partner in a partnership, we will be deemed
to own a proportionate share (based upon our share of the capital of the
partnership) of the assets of the partnership and will be deemed to be entitled
to the income of the partnership attributable to such share. In addition, the
assets and income of the partnership so attributed to us will retain their same
character as in the hands of the partnership for purposes of determining whether
we satisfy the income and asset tests described below.
A real estate investment trust may own up to 100% of the stock of one or
more taxable REIT subsidiaries. A taxable REIT subsidiary may earn income that
would not be qualifying income, as described below, if earned directly by the
parent real estate investment trust. Both the subsidiary and the parent real
estate investment trust must jointly elect to treat the subsidiary as a taxable
REIT subsidiary. Overall, not more than 20% of the value of a REIT's assets may
consist of securities of one or more taxable REIT subsidiaries. A taxable REIT
subsidiary will pay tax at regular corporate rates on any income that it earns.
There is a 100% excise tax imposed on certain transactions involving a taxable
REIT subsidiary and its parent real estate investment trust that are not
conducted on an arm's-length basis. An election has been made to treat FSP
Investments LLC, a wholly owned subsidiary of ours, as a taxable REIT
subsidiary. FSP Investments LLC pays corporate income tax on its taxable income
and its after-tax net income will be available for distribution to us, generally
as a dividend.
Income Tests - General. We must satisfy annually two tests regarding the
sources of our gross income in order to maintain our real estate investment
trust status. First, at least 75% of our gross income, excluding gross income
from certain "dealer" sales, for each taxable year generally must consist of
defined types of income that we derive, directly or indirectly, from investments
relating to real property or mortgages on real property or temporary investment
income, also known as the "75% gross income test". Qualifying income for
purposes of the 75% gross income test generally includes:
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o "rents from real property" (as described below);
o interest from debt secured by mortgages on real property or on
interests in real property;
o dividends or other distributions on, and gain from the sale
of, shares in other real estate investment trusts;
o gain from the sale or other disposition of real property or
mortgages on real property;
o amounts (other than amounts the determination of which depends
in whole or in part on the income or profits of any person)
received as consideration for entering into agreements to make
loans secured by mortgages on real property or on interests in
real property or agreements to purchase or lease real
property; and
o certain investment income attributable to temporary investment
of capital that we raise.
Second, at least 95% of our gross income, excluding gross income from
certain "dealer" sales, for each taxable year generally must consist of income
that is qualifying income for purposes of the 75% gross income test, as well as
dividends, other types of interest, and gain from the sale or disposition of
stock or securities, also known as the "95% gross income test."
Income Tests - Rents from Real Property. Rent that we receive from real
property that we own and lease to tenants will qualify as "rents from real
property" if the following conditions are satisfied:
o First, the rent must not be based, in whole or in part, on the
income or profits of any person. An amount will not fail to
qualify as rent from real property solely by reason of its
being based on a fixed percentage (or percentages) of sales or
receipts.
o Second, neither we nor any direct or indirect owner of 10% or
more of our stock may own, actually or constructively, 10% (by
vote or value) or more of the tenant from which we collect the
rent.
o Third, all of the rent received under a lease will not qualify
as rents from real property unless the rent attributable to
the personal property leased in connection with the real
property constitutes no more than 15% of the total rent
received under the lease.
o Finally, we generally must not operate or manage our real
property or furnish or render services to our tenants, other
than through an "independent contractor" who is adequately
compensated and from whom we do not derive revenue. We may
provide services directly, however, if the services are
"usually or customarily rendered" in connection with the
rental of space for occupancy only and are not otherwise
considered rendered "primarily for the occupant's
convenience." In addition, we may render, other than through
an independent contractor, a de minimis amount of
"non-customary" services to the tenants of a property as long
as our income from such services does not exceed 1% of our
gross income from the property.
Although no assurances can be given that either of the gross income tests
will be satisfied in any given year, we anticipate that our operations will
allow us to meet both the 75% gross income test and the 95% gross income test.
Such belief is premised in large part on our expectation that substantially all
of the amounts that we receive with respect to our properties will qualify as
"rents from real property." Stockholders should be aware, however, that there
are a variety of circumstances, as described above, in which rent received from
a tenant will not be treated as rents from real property.
Income Tests - Failure to Satisfy Gross Income Tests. If we fail to
satisfy either or both of the 75% or 95% gross income tests for taxable years
beginning before October 22, 2004, we could nevertheless qualify as a real
estate investment trust for that year if we are eligible for relief under
certain provisions of the federal income tax laws. Those relief provisions
generally will be available if:
o Our failure to meet the gross income test was due to reasonable
cause and not due to willful neglect;
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o We attach a schedule of the sources of our income to our federal
income tax return; and
o Any incorrect information on the schedule is not due to fraud with
intent to evade tax.
Pursuant to the American Jobs Creation Act of 2004, or the 2004 Tax Act,
if we fail to satisfy either or both of the 75% or 95% gross income tests for
any taxable year beginning after October 22, 2004, the relief provisions
generally will be available if:
o Following our identification of the failure to meet the gross income
test for any taxable year, a description of each item of our gross
income included in the 75% and 95% gross income tests is set forth
in a schedule for such taxable year filed in accordance with
regulations to be prescribed by the Treasury Secretary; and
o Our failure to meet the gross income test was due to reasonable
cause and not due to willful neglect.
It is not possible to state whether we would be entitled to the benefit of
the above relief provisions in a particular circumstance that might arise in the
future. Furthermore, as discussed above under "Taxation of FSP Corp. - General,"
even if the relief provisions apply, we would incur a 100% tax on the gross
income attributable to the greater of the amounts by which we fail the 75% and
95% gross income tests, multiplied by a fraction that reflects our
profitability.
Asset Tests. We also must satisfy the following four tests relating to the
nature of our assets at the close of each quarter of our taxable year.
o First, at least 75% of the value of our total assets must consist of
cash or cash items (including receivables), government securities,
"real estate assets," or qualifying temporary investments, also
known as the "75% asset test";
o Second, no more than 25% of the value of our total assets may be
represented by securities other than those that are qualifying
assets for purposes of the 75% asset test or of certain entities
that qualify as taxable REIT subsidiaries, also known as the "25%
asset test";
o Third, of the investments included in the 25% asset test, the value
of any one issuer's securities that we own may not exceed 5% of the
value of our total assets, and we may not own 10% or more of the
total combined voting power or 10% or more of the total value of the
securities of any issuer, unless we and such issuer make an election
to treat the issuer as a taxable REIT subsidiary or the issuer is a
"disregarded entity" for federal income tax purposes or is itself a
REIT (the "securities asset test"); and
o Fourth, while we may own up to 100% of the stock of a corporation
that elects to be treated as a taxable REIT subsidiary for federal
income tax purposes, the total value of our stock ownership in one
or more taxable REIT subsidiaries may not exceed 20% of the value of
our gross assets.
We intend to operate so that we will not acquire any assets that would
cause us to violate any of the asset tests. If, however, we should fail to
satisfy any of the asset tests at the end of a calendar quarter, we would not
lose our real estate investment trust status if (1) we satisfied the asset tests
at the end of the close of the preceding calendar quarter, and (2) the
discrepancy between the value of our assets and the asset test requirements
arose from changes in the market values of our assets and was not wholly or
partly caused by the acquisition of one or more nonqualifying assets. If we did
not satisfy the condition described in clause (2) of the preceding sentence, we
could still avoid disqualification as a real estate investment trust by
eliminating any discrepancy within 30 days after the close of the calendar
quarter in which the discrepancy arose.
Pursuant to the 2004 Tax Act, for taxable years beginning after October
22, 2004, we may also be able to avoid disqualification as a real estate
investment trust as a result of a failure of the securities asset test if:
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o Such failure is due to the ownership of assets the total value of
which does not exceed the lesser of $10 million and 1% of the total
value of our assets at the end of the quarter, which is referred to
as the de minimis threshold, and we dispose of the assets in order
to satisfy the securities asset test within six months after the
last day of the quarter in which we identified the failure or such
other time period prescribed by the Treasury Secretary and in the
manner prescribed by the Treasury Secretary; or
o In the case of a failure that involves the ownership of assets the
total value of which exceeds the de minimis threshold, (1) we
prepare a schedule that sets forth each asset that causes us to fail
the securities asset test and file such schedule in accordance with
regulations to be prescribed by the Treasury Secretary, (2) the
failure to satisfy the securities asset test is due to reasonable
cause and is not due to willful neglect, and (3) we pay a tax equal
to the greater of $50,000 or the highest corporate tax rate
multiplied by the net income generated by the non-qualifying asset
for the period beginning on the first date of the failure and ending
on the date that we disposed of the asset.
Distribution Requirements. Each taxable year, we must distribute dividends
to our stockholders in an amount at least equal to:
o 90% of our "real estate investment trust taxable income," computed
without regard to the dividends paid deduction and our net capital
gain or loss; and
o Certain items of noncash income.
We must make such distributions in the taxable year to which they relate,
or in the following taxable year if we declare the distribution before we timely
file our federal income tax return for such year and pay the distribution on or
before the first regular distribution date after such declaration. Further, if
we fail to meet the 90% distribution requirement as a result of an adjustment to
our tax returns by the Internal Revenue Service, we may, if the deficiency is
not due to fraud with intent to evade tax or a willful failure to file a timely
tax return, and if certain other conditions are met, retroactively cure the
failure by paying a deficiency dividend (plus interest) to our stockholders.
We will be subject to federal income tax on our taxable income, including
net capital gain that we do not distribute to our stockholders. Furthermore, if
we fail to distribute during a calendar year, or, in the case of distributions
with declaration and record dates falling within the last three months of the
calendar year, by the end of the January following such calendar year, at least
the sum of:
o 85% of our real estate investment trust ordinary income for such
year;
o 95% of our real estate investment trust capital gain income for such
year; and
o Any of our undistributed taxable income from prior periods,
we will be subject to a 4% nondeductible excise tax on the excess of such
required distribution over the amount actually distributed. If we elect to
retain and pay income tax on the net capital gain that we receive in a taxable
year, we will be deemed to have distributed any such amount for the purposes of
the 4% excise tax described in the preceding sentence.
We intend to make distributions to holders of our common stock in a manner
that will allow us to satisfy the distribution requirements described above. It
is possible that, from time to time, our pre-distribution taxable income may
exceed our cash flow and that we may have difficulty satisfying the distribution
requirements. We intend to monitor closely the relationship between our
pre-distribution taxable income and our cash flow and intend to borrow funds or
liquidate assets in order to overcome any cash flow shortfalls if necessary to
satisfy the distribution requirements imposed by the tax code. It is possible,
although unlikely, that we may decide to terminate our real estate investment
trust status as a result of any such cash shortfall. Such a termination would
have adverse tax consequences to our stockholders. See "Taxation of FSP Corp. -
General."
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Recordkeeping Requirements. We must maintain records of information
specified in applicable Treasury Regulations in order to maintain our
qualification as a real estate investment trust. In addition, in order to avoid
monetary penalties, we must request on an annual basis certain information from
our stockholders designed to disclose the actual ownership of our outstanding
stock. We intend to comply with these recordkeeping requirements.
Ownership Requirements. For us to qualify as a real estate investment
trust, shares of our stock must be held by a minimum of 100 persons for at least
335 days in each taxable year. Further, at no time during the second half of any
taxable year may more than 50% of our shares be owned, actually or
constructively, by five or fewer "individuals" (which term is defined for this
purpose to include certain tax-exempt entities including pension trusts). Our
common stock will be held by 100 or more persons. We intend to continue to
comply with these ownership requirements. Also, our charter contains ownership
and transfer restrictions designed to prevent violation of these requirements.
Failure to Qualify. If we fail to satisfy all of the above requirements
for any taxable year beginning before October 22, 2004 and no relief provisions
in effect for such years applied, then we would fail to qualify as a real estate
investment trust. If we failed to satisfy all of the above requirements for any
taxable year beginning after October 22, 2004 and no relief provisions in effect
for such years applied, then we could nevertheless qualify as a real estate
investment trust if:
o Such failures are due to reasonable cause and not due to willful
neglect, and
o We pay (in the manner prescribed by the Treasury Secretary in
regulations) a penalty of $50,000 for each such failure.
It is not possible to state whether we would be entitled to the benefit of
the relief provisions in a particular circumstance. If such relief is not
available, we would fail to qualify as a real estate investment trust.
If we do fail to qualify as a real estate investment trust in any taxable
year, we would be subject to federal income tax, including any applicable
alternative minimum tax, on our taxable income at regular corporate rates. In
calculating our taxable income in a year in which we did not qualify as a real
estate investment trust, we would not be able to deduct amounts paid out to our
stockholders. We would not be required to distribute any amounts to our
stockholders in such taxable year. In such event, to the extent of our current
and accumulated earnings and profits, all distributions to stockholders would be
characterized as dividends and would be taxable as ordinary income.
Non-corporate stockholders, however, could qualify for a lower maximum tax rate
on such dividends in most circumstances. Moreover, subject to certain
limitations under the tax code, corporate stockholders might be eligible for the
dividends received deduction. Unless we qualified for relief under specific
statutory provisions, we would be disqualified from taxation as a real estate
investment trust for the four taxable years following the year in which we
ceased to qualify as a real estate investment trust. We cannot predict whether
we would qualify for such statutory relief in a particular circumstance that
might arise in the future.
Taxation of Taxable U.S. Stockholders
As used herein, the term "taxable U.S. stockholder" means a stockholder
that, for United States federal income tax purposes, is:
o A citizen or resident of the United States;
o A corporation, partnership, or other entity created or organized in
or under the laws of the United States or any state or political
subdivision thereof;
o An estate the income of which is includible in gross income for
United States federal income tax purposes regardless of such
estate's connection with the conduct of a trade or business within
the United States; or
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o Any trust with respect to which (1) a United States court is able to
exercise primary supervision over the administration of such trust,
and (2) one or more United States persons have the authority to
control all substantial decisions of the trust.
For any taxable year in which we qualify as a real estate investment
trust, amounts distributed to taxable U.S. stockholders will be taxed as
follows.
Distributions Generally. Distributions made to our taxable U.S.
stockholders out of current or accumulated earnings and profits (and not
designated as a capital gain dividend) will be taken into account by such
stockholder as ordinary income and will not, in the case of a corporate taxable
U.S. stockholder, be eligible for the dividends received deduction. In addition,
such dividends will not qualify for the lower maximum tax rate applicable to
dividends received by non-corporate taxpayers except to the extent that they
were attributable to income previously taxed to us. To the extent that we make a
distribution with respect to our common stock that is in excess of our current
or accumulated earnings and profits, the distribution will be treated by a
taxable U.S. stockholder first as a tax-free return of capital, reducing the
taxable U.S. stockholder's tax basis in our common stock, and any portion of the
distribution in excess of the stockholder's tax basis in our common stock will
then be treated as gain from the sale of such stock. Dividends that we declare
in October, November, or December of any year payable to a taxable U.S.
stockholder of record on a specified date in any such month shall be treated as
both paid by us and received by stockholders on December 31 of such year,
provided that the dividend is actually paid by us during January of the
following calendar year. Taxable U.S. stockholders may not include on their
federal income tax returns any of our tax losses.
Capital Gain Dividends. Dividends to taxable U.S. stockholders that
properly are designated by us as capital gain dividends will be treated by such
stockholders as long-term capital gain, to the extent that such dividends do not
exceed our actual net capital gain, without regard to the period for which the
taxable U.S. stockholders have held our common stock. Taxable U.S. stockholders
that are corporations may be required, however, to treat up to 20% of particular
capital gain dividends as ordinary income. Capital gain dividends, like regular
dividends from a real estate investment trust, are not eligible for the
dividends received deduction for corporations.
For taxable U.S. stockholders who are taxable at the rates applicable to
individuals, we will classify portions of any capital gain dividend as either
(1) a "regular" capital gain dividend taxable to the taxable U.S. stockholder at
a maximum rate of 15% (subject to applicable sunset provisions) or (2) an
"unrecaptured Section 1250 gain" dividend taxable to the taxable U.S.
stockholder at a maximum rate of 25%.
Retained Capital Gains. We may elect to retain, rather than distribute,
our net long-term capital gain received during the tax year. If we so elect, we
will be required to pay tax on the retained amounts. To the extent designated in
a notice to the taxable U.S. stockholders, the taxable U.S. stockholders will be
required to include their proportionate shares of the undistributed net
long-term capital gain so designated in their income for the tax year, but will
be permitted a credit or refund, as the case may be, for their respective shares
of any tax paid on such gains by us. In addition, each taxable U.S. stockholder
will be entitled to increase the tax basis in his or her shares of our common
stock by an amount equal to the amount of net long-term capital gain the taxable
U.S. stockholder was required to include in income, reduced by the amount of any
tax paid by us for which the taxable U.S. stockholder was entitled to receive a
credit or refund.
Passive Activity Loss and Investment Interest Limitations. Distributions,
including deemed distributions of undistributed net long-term capital gain, from
us and gain from the disposition of our common stock will not be treated as
passive activity income, and therefore taxable U.S. stockholders will not be
able to apply any passive activity losses against such income. Distributions
from us, to the extent they do not constitute a return of capital, generally
will be treated as investment income for purposes of the investment income
limitation on deductibility of investment interest. However, dividends
attributable to income that was subject to tax at our level as well as net
capital gain from the disposition of our common stock or capital gain dividends,
including deemed distributions of undistributed net long-term capital gains,
generally will be excluded from investment income.
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Sale of FSP Common Stock. Upon the sale of our common stock, a taxable
U.S. stockholder generally will recognize gain or loss equal to the difference
between the amount realized on such sale and the holder's tax basis in the stock
sold. To the extent that our common stock is held as a capital asset by the
taxable U.S. stockholder, the gain or loss will be a long-term capital gain or
loss if the stock has been held for more than a year, and will be a short-term
capital gain or loss if the stock has been held for a shorter period. In
general, however, any loss upon a sale of our common stock by a taxable U.S.
stockholder who has held such stock for six months or less (after applying
certain holding period rules) will be treated as a long-term capital loss to the
extent that distributions from us were required to be treated as long-term
capital gain by that holder.
Taxation of Tax-Exempt Stockholders
Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts, collectively known as "exempt
organizations", generally are exempt from federal income taxation. Exempt
organizations are subject to tax, however, on their unrelated business taxable
income, or "UBTI." UBTI is defined as the gross income derived by an exempt
organization from an unrelated trade or business, less the deductions directly
connected with that trade or business, subject to certain exceptions. While many
investments in real estate generate UBTI, the Internal Revenue Service has
issued a ruling that dividend distributions from a real estate investment trust
to an exempt employee pension trust do not constitute UBTI, provided that the
shares of the real estate investment trust are not otherwise used in an
unrelated trade or business of the exempt employee pension trust. Based on that
ruling, amounts distributed to exempt organizations generally should not
constitute UBTI. However, if an exempt organization finances its acquisition of
our common stock with debt, a portion of its income from us will constitute UBTI
pursuant to the "debt-financed property" rules.
In addition, in certain circumstances, a pension trust that owns more than
10% of our stock will be required to treat a percentage of the dividends paid by
us as UBTI based upon the percentage of our income that would constitute UBTI to
the stockholder if received directly by it. This rule applies to a pension trust
holding more than 10% (by value) of our common stock only if (1) the percentage
of income from us that is UBTI (determined as if we were a pension trust) is at
least 5% and (2) we are treated as a "pension-held REIT." We do not expect to
receive significant amounts of income that would be considered UBTI if received
directly by a pension trust and do not expect to qualify as a "pension-held
REIT."
Taxation of Non-U.S. Stockholders
General. The rules governing United States federal income taxation of
nonresident alien individuals, foreign corporations, foreign partnerships,
foreign trusts and certain other foreign stockholders, collectively known as
"non-U.S. stockholders", are complex and no attempt is made herein to provide
more than a general summary of such rules. This discussion does not consider the
tax rules applicable to all non-U.S. stockholders and, in particular, does not
consider the special rules applicable to U.S. branches of foreign banks or
insurance companies or certain intermediaries. NON-U.S. STOCKHOLDERS SHOULD
CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE THE IMPACT OF FEDERAL, STATE,
LOCAL AND FOREIGN TAX LAWS WITH REGARD TO THE OWNERSHIP AND DISPOSITION OF OUR
COMMON STOCK, INCLUDING ANY REPORTING AND WITHHOLDING REQUIREMENTS.
Ordinary Dividends - General. Distributions to non-U.S. stockholders that
are not attributable to gain from sales or exchanges by us of United States real
property interests and are not designated by us as capital gain dividends (or
deemed distributions of retained capital gains) will be treated as ordinary
dividends to the extent that they are made out of our current or accumulated
earnings and profits. Any portion of a distribution in excess of our current and
accumulated earnings and profits will not be taxable to a non-U.S. stockholder
to the extent that such distribution does not exceed the adjusted basis of the
15
stockholder in our common stock, but rather will reduce the adjusted basis of
such stock. To the extent that the portion of the distribution in excess of
current and accumulated earnings and profits exceeds the adjusted basis of a
non-U.S. stockholder for our common stock, such excess generally will be treated
as gain from the sale or disposition of the stock and will be taxed as described
below.
Ordinary Dividends - Withholding. Dividends paid to non-U.S. stockholders
may be subject to U.S. withholding tax. If an income tax treaty does not apply
and the non-U.S. stockholder's investment in our common stock is not effectively
connected with a trade or business conducted by the non-U.S. stockholder in the
United States (or if a tax treaty does apply and the investment in our common
stock is not attributable to a United States permanent establishment maintained
by the non-U.S. stockholder), ordinary dividends (i.e., distributions out of
current and accumulated earnings and profits) will be subject to a U.S.
withholding tax at a 30% rate, or, if an income tax treaty applies, at a lower
treaty rate. Because we generally cannot determine at the time that a
distribution is made whether or not such a distribution will be in excess of
earnings and profits, we intend to withhold on the gross amount of each
distribution at the 30% rate (or lower treaty rate) (other than distributions
subject to the 35% FIRPTA withholding rules described below). To receive a
reduced treaty rate, a non-U.S. stockholder must furnish us or our paying agent
with a duly completed Form W-8BEN (or authorized substitute form) certifying
such holder's qualification for the reduced rate. Generally, a non-U.S.
stockholder will be entitled to a refund from the Internal Revenue Service to
the extent the amount withheld by us from a distribution exceeds the amount of
United States tax owed by such stockholder.
In the case of a non-U.S. stockholder that is a partnership or a trust,
the withholding rules for a distribution to such a partnership or trust will be
dependent on numerous factors, including (1) the classification of the type of
partnership or trust, (2) the status of the partner or beneficiary, and (3) the
activities of the partnership or trust. Non-U.S. stockholders that are
partnerships or trusts are urged to consult their tax advisors regarding the
withholding rules applicable to them based on their particular circumstances.
If an income tax treaty does not apply, ordinary dividends that are
effectively connected with the conduct of a trade or business within the U.S. by
a non-U.S. stockholder (and, if a tax treaty applies, ordinary dividends that
are attributable to a United States permanent establishment maintained by the
non-U.S. stockholder) are exempt from U.S. withholding tax. In order to claim
such exemption, a non-U.S. stockholder must provide us or our paying agent with
a duly completed Form 4224 or Form W-8ECI (or authorized substitute form)
certifying such holder's exemption. However, ordinary dividends exempt from U.S.
withholding tax because they are effectively connected or are attributable to a
United States permanent establishment maintained by the non-U.S. stockholder
generally are subject to U.S. federal income tax on a net income basis at
regular graduated rates. In the case of non-U.S. stockholders that are
corporations, any effectively connected ordinary dividends or ordinary dividends
attributable to a United States permanent establishment maintained by the
non-U.S. stockholder may, in certain circumstances, be subject to branch profits
tax at a 30% rate, or at such lower rate as may be provided in an applicable
income tax treaty.
Capital Gain Dividends - General. For any year in which we qualify as a
real estate investment trust, distributions that are attributable to gain from
sales or exchanges by us of United States real property interests will be taxed
to a non-U.S. stockholder under the provisions of the Foreign Investment in Real
Property Tax Act of 1980, also known as "FIRPTA". Under FIRPTA, except as
described below, distributions attributable to gain from sales of United States
real property are taxed to a non-U.S. stockholder as if such gain were
effectively connected with a United States trade or business. Non-U.S.
stockholders thus would be taxed at the regular capital gain rates applicable to
taxable U.S. stockholders (subject to the applicable alternative minimum tax and
a special alternative minimum tax in the case of nonresident alien individuals).
Distributions subject to FIRPTA also may be subject to a 30% branch profits tax
in the hands of a corporate non-U.S. stockholder not otherwise entitled to
treaty relief or exemption.
Pursuant to the 2004 Tax Act, for taxable years beginning after October
22, 2004, a distribution attributable to gain from sales of United States real
property is not treated as effectively connected with a United States trade or
16
business provided that (1) the distribution is received with respect to stock
that is publicly traded on an established securities market in the United States
and (2) the non-U.S. stockholder does not own more than five percent of the
stock at any time during the taxable year in which the distribution is received.
If these requirements are satisfied, the distribution is treated in the manner
described above for ordinary dividends rather than being treated as a capital
gain dividend, and the distribution is not subject to the branch profits tax.
Capital Gain Dividends - Withholding. Under FIRPTA, we are required to
withhold 35% (or a lower rate set forth in the regulations) of any distribution
to a non-U.S. stockholder that is designated as a capital gain dividend or which
could be designated as a capital gain dividend. Moreover, if we designate
previously made distributions as capital gain dividends, subsequent
distributions (up to the amount of the prior distributions so designated) will
be treated as capital gain dividends for purposes of FIRPTA withholding. If a
distribution is treated as an ordinary dividend rather than a capital gain
dividend pursuant to the terms of the 2004 Tax Act, the FIRPTA withholding rules
would not apply, however the withholding rules applicable to ordinary dividends,
described above, would apply.
Sale of Our Common Stock. A non-U.S stockholder generally will not be
subject to United States federal income tax under FIRPTA with respect to gain
recognized upon a sale of our common stock, provided that we are a
"domestically-controlled REIT." A domestically-controlled REIT generally is
defined as a real estate investment trust in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by non-U.S. persons. Although currently it is anticipated that we
will be a domestically-controlled REIT, and, therefore, that the sale of our
common stock will not be subject to taxation under FIRPTA, there can be no
assurance that we will, at all relevant times, be a domestically-controlled
REIT. If the gain on the sale of our common stock were subject to taxation under
FIRPTA, a non-U.S. stockholder would be subject to the same treatment as taxable
U.S. stockholders with respect to such gain (subject to the applicable
alternative minimum tax and a special alternative minimum tax in the case of
nonresident alien individuals). In addition, a purchaser of our common stock
from a non-U.S. stockholder subject to taxation under FIRPTA generally would be
required to deduct and withhold a tax equal to 10% of the amount realized by a
non-U.S. stockholder on the disposition. Any amount withheld would be creditable
against the non-U.S. stockholder's FIRPTA tax liability.
Even if gain recognized by a non-U.S. stockholder upon the sale of our
common stock is not subject to FIRPTA, such gain generally will subject such
stockholder to U.S. tax if:
o An income tax treaty does not apply and the gain is effectively
connected with a trade or business conducted by the non-U.S.
stockholder in the United States (or, if an income tax treaty
applies and the gain is attributable to a United States permanent
establishment maintained by the non-U.S. stockholder), in which
case, unless an applicable treaty provides otherwise, a non-U.S.
stockholder will be taxed on his or her net gain from the sale at
regular graduated U.S. federal income tax rates. In the case of a
non-U.S. stockholder that is a corporation, such stockholder may be
subject to a branch profits tax at a 30% rate, unless an applicable
income tax treaty provides for a lower rate and the stockholder
demonstrates its qualification for such rate; or
o The non-U.S. stockholder is a nonresident alien individual who holds
our common stock as a capital asset and was present in the United
States for 183 days or more during the taxable year (as determined
under the tax code) and certain other conditions apply, in which
case the non-U.S. stockholder will be subject to a 30% tax on
capital gains.
Estate Tax Considerations. The value of our common stock owned, or treated
as owned, by a non-U.S. stockholder who is a nonresident alien individual at the
time of his or her death will be included in the individual's gross estate for
United States federal estate tax purposes, unless otherwise provided in an
applicable estate tax treaty.
17
Information Reporting and Backup Withholding
We are required to report to our stockholders and to the Internal Revenue
Service the amount of distributions paid during each tax year, and the amount of
tax withheld, if any. These requirements apply even if withholding was not
required with respect to payments made to a stockholder. In the case of non-U.S.
stockholders, the information reported may also be made available to the tax
authorities of the non-U.S. stockholder's country of residence, if an applicable
income tax treaty so provides.
Backup withholding generally may be imposed on certain payments to a
stockholder unless the stockholder (1) furnishes certain information, or (2) is
otherwise exempt from backup withholding.
A stockholder who does not provide us with his or her correct taxpayer
identification number also may be subject to penalties imposed by the Internal
Revenue Service. In addition, we may be required to withhold a portion of
capital gain distributions to any stockholders who fail to certify their
non-foreign status to us.
Stockholders should consult their own tax advisors regarding their
qualification for an exemption from backup withholding and the procedure for
obtaining an exemption. Backup withholding is not an additional tax. Rather, the
amount of any backup withholding with respect to a distribution to a stockholder
will be allowed as a credit against such holder's United States federal income
tax liability and may entitle the stockholder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
In general, backup withholding and information reporting will not apply to
a payment of the proceeds of the sale of our common stock by a non-U.S.
stockholder by or through a foreign office of a foreign broker effected outside
of the United States; provided, however, that foreign brokers having certain
connections with the United States may be obligated to comply with the backup
withholding and information reporting rules. Information reporting (but not
backup withholding) will apply, however, to a payment of the proceeds of a sale
of our common stock by foreign offices of certain brokers, including foreign
offices of a broker that:
o is a United States person;
o derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States; or
o is a "controlled foreign corporation" for United States tax
purposes.
Information reporting will not apply in the above cases if the broker has
documentary evidence in its records that the holder is a non-U.S. stockholder
and certain conditions are met, or the non-U.S. stockholder otherwise
establishes an exemption.
Payment to or through a United States office of a broker of the proceeds
of a sale of our common stock is subject to both backup withholding and
information reporting unless the stockholder certifies in the manner required
that he or she is a non-U.S. stockholder and satisfies certain other
qualifications under penalties of perjury or otherwise establishes an exemption.
State and Local Tax
The discussion herein concerns only the United States federal income tax
treatment likely to be accorded to us and our stockholders. No consideration has
been given to the state and local tax treatment of such parties. The state and
local tax treatment may not conform to the federal treatment described above. As
a result, a stockholder should consult his or her own tax advisor regarding the
specific state and local tax consequences of the ownership and disposition of
our common stock.
LEGAL MATTERS
The validity of the shares of common stock covered by this prospectus will
be passed upon for us by Wilmer Cutler Pickering Hale and Dorr LLP, Boston,
Massachusetts. Certain attorneys at Wilmer Cutler Pickering Hale and Dorr LLP
own an aggregate of approximately 725,162 shares of our common stock as of the
date of this prospectus.
18
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has
audited our consolidated financial statements and schedule and management's
assessment of the effectiveness of our internal control over financial reporting
as of December 31, 2005, as set forth in their reports, which are incorporated
by reference in this prospectus and elsewhere in the registration statement. Our
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
The financial statements of FSP Willow Bend Office Center Corp., FSP
Innsbrook Corp., FSP 380 Interlocken Corp., FSP Blue Lagoon Drive Corp. and FSP
Eldridge Green Corp. for the years ended December 31, 2005, incorporated by
reference into this prospectus have been audited by Braver PC, as stated in
their report incorporated by reference into this prospectus, and are included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
19
No dealer, salesperson or other person is authorized to give any information or
to represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is an offer to sell
only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
________________________
FRANKLIN STREET PROPERTIES CORP.
Common Stock
May 23, 2006
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses expected to be incurred by FSP
Corp. in connection with the registration and distribution of the common stock
registered hereby, all of which expenses, except for the Securities and Exchange
Commission registration fee, are estimated. The selling stockholders will not be
responsible for any such expenses.
Amount
----------
Securities and Exchange Commission registration fee ....... $ *
Legal fees and expenses ................................... 29,000
Accounting fees and expenses .............................. 10,000
Miscellaneous expenses..................................... 5,000
===========
Total ........................................... $ 44,000
*Deferred in accordance with Rules 456(b) and 457(r) of the Securities Act of
1933.
Item 15. Indemnification of Directors and Officers.
Our Articles of Incorporation require us to indemnify our directors,
officers, employees, agents and other persons acting on behalf of or at our
request to the fullest extent permitted from time to time by Maryland law. The
General Corporation Law of the State of Maryland permits a corporation to
indemnify its directors, officers and certain other parties against judgments,
penalties, fines, settlements and reasonable expenses, including attorneys'
fees, actually incurred by them in connection with any proceeding to which they
may be made a party by reason of their services to or at the request of the
corporation, unless it is established that (i) the act or omission of the
indemnified party was material to the matter giving rise to the proceeding and
was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) the indemnified party actually received an improper personal
benefit, or (iii) in the case of any criminal proceeding, the indemnified party
had reasonable cause to believe that the act or omission was unlawful.
Indemnification may be made against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by the director or officer in connection
with the proceeding; provided, however, that if the proceeding is one by or in
the right of the corporation, indemnification may not be made with respect to
any proceeding in which the director or officer has been adjudged to be liable
to the corporation. We will indemnify our directors, officers and certain other
parties who have been successful, on the merits or otherwise, in the defense of
any proceeding to which they were made a party by reason of their service to us
or at our request against reasonable expenses incurred in connection with the
proceeding or any claim, issue or matter in a proceeding in which the party was
successful. In addition, a director or officer may not be indemnified with
respect to any proceeding charging improper personal benefit to the director or
officer in which the director or officer was adjudged to be liable on the basis
that personal benefit was improperly received.
Our Articles of Incorporation contain a provision eliminating the personal
liability of a director or officer to us or our stockholders for monetary
damages to the fullest extent permitted by Maryland law. The General Corporation
Law of the State of Maryland permits the liability of directors and officers to
a corporation or its stockholders for money damages to be limited, except (i) to
the extent that a judgment or other final adjudication is entered adverse to the
director or officer in a proceeding based on a finding that the director's or
officer's action, or failure to act, was the result of active and deliberative
dishonesty and was material to the cause of action adjudicated in the proceeding
or (ii) to the extent it is proved that the director or officer actually
received an improper benefit or profit in money, property or services. This
provision of the General Corporation Law of the State of Maryland does not limit
our ability or our stockholders' ability to obtain other relief, such as an
injunction or rescission.
II-1
Item 16. Exhibits.
The following exhibits are filed with this registration statement.
Exhibit
Number Description
- ------ -----------
4.1 Articles of Incorporation of Franklin Street Properties Corp.
(incorporated herein by reference to the Registrant's Form 8-A,
filed with the SEC on April 5, 2005 (File No. 001-32470)).
4.2 Restated Bylaws of Franklin Street Properties Corp. (incorporated
herein by reference to the Registrant's Current Report on Form 8-K,
filed with the SEC on May 15, 2006 (File No. 001-32470)).
4.3 Form of common stock certificate (incorporated herein by reference
to the Registrant's Registration Statement on Form S-4, filed with
the SEC on September 2, 2004 (File No. 333-118748)).
5.1 Opinion of Wilmer Cutler Pickering Hale and Dorr LLP.
8.1 Opinion of Wilmer Cutler Pickering Hale and Dorr LLP regarding tax
matters.
23.1 Consent of Wilmer Cutler Pickering Hale and Dorr LLP (included in
the opinion filed as Exhibit 5.1).
23.2 Consent of Wilmer Cutler Pickering Hale and Dorr LLP (included in
the opinion filed as Exhibit 8.1).
23.3 Consent of Ernst & Young LLP.
23.4 Consent of Braver PC.
24.1 Powers of Attorney (included on page II-5).
ITEM 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or decrease in the volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
II-2
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this
section do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement, or is contained in a form of prospectus
filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(A) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date;
(5) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
II-3
(iii) The portion of any other free writing prospectus relating to
the offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made
by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the town of Wakefield, Commonwealth of Massachusetts, on the
23rd, day of May, 2006.
FRANKLIN STREET PROPERTIES CORP.
By: /s/ George J. Carter
----------------------------------------
George J. Carter
President and Chief Executive Officer
POWER OF ATTORNEY
Each of the undersigned officers and directors of Franklin Street
Properties Corp. hereby severally constitutes and appoints George J. Carter and
Barbara J. Fournier, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full powers of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments to this registration statement
to which this Power of Attorney is attached, including post-effective
amendments, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
or she might or could do in person, and hereby ratifies and confirms all said
attorneys-in-fact and agents, or either of them, or his or her substitute or
substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ George J. Carter President, Chief Executive May 23, 2006
- --------------------------- Officer and Director
George J. Carter (Principal Executive Officer)
/s/ Barbara J. Fournier Vice President, Chief Operating May 23, 2006
- --------------------------- Officer, Secretary, Treasurer and
Barbara J. Fournier Director
/s/ John Demeritt Senior Vice President and Chief May 23, 2006
- --------------------------- Financial Officer (Principal
John Demeritt Financial Officer and Principal
Accounting Officer)
/s/ John Burke Director May 23, 2006
- ---------------------------
John Burke
/s/ Dennis J. McGillicuddy Director May 23, 2006
- ---------------------------
Dennis J. McGillicuddy
/s/ Georgia Murray Director May 23, 2006
- ---------------------------
Georgia Murray
/s/ Janet P. Notopoulos Director May 23, 2006
- ---------------------------
Janet P. Notopoulos
II-5
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
4.1 Articles of Incorporation of Franklin Street Properties Corp.
(incorporated herein by reference to the Registrant's Form 8-A,
filed with the SEC on April 5, 2005 (File No. 001-32470)).
4.2 Restated Bylaws of Franklin Street Properties Corp. (incorporated
herein by reference to the Registrant's Current Report on Form 8-K,
filed with the SEC on May 15, 2006 (File No. 001-32470)).
4.3 Form of common stock certificate (incorporated herein by reference
to the Registrant's Registration Statement on Form S-4, filed with
the SEC on September 2, 2004 (File No. 333-118748)).
5.1* Opinion of Wilmer Cutler Pickering Hale and Dorr LLP.
8.1* Opinion of Wilmer Cutler Pickering Hale and Dorr LLP regarding tax
matters.
23.1* Consent of Wilmer Cutler Pickering Hale and Dorr LLP (included in
the opinion filed as Exhibit 5.1).
23.2* Consent of Wilmer Cutler Pickering Hale and Dorr LLP (included in
the opinion filed as Exhibit 8.1).
23.3* Consent of Ernst & Young LLP.
23.4* Consent of Braver PC.
24.1* Powers of Attorney (included on page II-5).
- ----------------------
* Filed herewith.