Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
FRANCHISE FINANCE CORPORATION OF AMERICA
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-1l(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 1995 Annual Meeting of Shareholders of Franchise Finance Corporation of
America to be held at The Scottsdale Princess Resort, 7575 East Princess Drive,
Scottsdale, Arizona on May 10, 1995 at 10:00 a.m. local time.
The Notice of Annual Meeting of Shareholders and the Proxy Statement
that follow describe the business to be conducted at the meeting. We will also
report on matters of current interest to our shareholders.
Whether you own a few or many shares of stock, it is important that
your shares be represented. If you cannot personally attend the meeting, we
encourage you to make certain you are represented at the meeting by signing and
dating the accompanying proxy card and promptly returning it in the enclosed
envelope. Returning your proxy card will not prevent you from voting in person,
but will assure that your vote will be counted if you are unable to attend the
meeting.
Sincerely,
/s/ MORTON FLEISCHER
---------------------------------
Morton Fleischer, President and
March 31, 1995 Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Franchise Finance Corporation of America (the "Company") will be
held on Wednesday, May 10, 1995 at 10:00 a.m. local time, at The Scottsdale
Princess Resort, 7575 East Princess Drive, Scottsdale, Arizona for the following
purposes:
1. To elect nine directors to the Board of Directors.
2. To consider and vote upon a proposal to approve the Company's 1995
Stock Option and Incentive Plan.
3. To ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1995.
4. To transact such other business as may properly come before the
Meeting and at any postponements or adjournments thereof.
Only shareholders of record at the close of business on March 15, 1995
are entitled to notice of and to vote at the Meeting or at any postponements or
adjournments thereof.
You are cordially invited and urged to attend the Meeting. All
shareholders, whether or not they expect to attend the Meeting in person, are
requested to complete, date and sign the enclosed form of Proxy and return it
promptly in the postage paid, return-addressed envelope provided for that
purpose. By returning your Proxy promptly you can help the Company avoid the
expense of follow-up mailings to ensure a quorum so that the Meeting can be
held. Shareholders who attend the Meeting may revoke a prior proxy and vote in
person as set forth in the Proxy Statement.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
PROPOSED ITEMS. YOUR VOTE IS IMPORTANT.
By Order of the Board of Directors
/s/ CHRISTOPHER H. VOLK
------------------------------------
Christopher H. Volk, Secretary
Scottsdale, Arizona
Dated: March 31, 1995
<PAGE>
FRANCHISE FINANCE CORPORATION OF AMERICA
SCOTTSDALE PERIMETER CENTER
17207 NORTH PERIMETER DRIVE
SCOTTSDALE, ARIZONA 85255
-----------------------------------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 1995
-----------------------------------------------------------------------
GENERAL INFORMATION
Franchise Finance Corporation of America (the "Company") was organized
in June 1993 to facilitate the consolidation by merger (the "Consolidation") of
Franchise Finance Corporation of America I, a Delaware corporation ("FFCA I")
and eleven public real estate limited partnerships (the "Partnerships") with and
into the Company. The Consolidation was completed on June 1, 1994 and the
Company's shares commenced trading on the New York Stock Exchange (the "NYSE")
on June 29, 1994. The Company invests in franchised restaurant real estate and
will elect at the time it files its first tax return to be taxed as a real
estate investment trust ("REIT") under the Internal Revenue Code of 1986, as
amended.
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of the Company of proxies to be voted at
the Annual Meeting of Shareholders of the Company to be held at The Scottsdale
Princess Resort, 7575 East Princess Drive, Scottsdale, Arizona, on May 10, 1995
at 10:00 a.m. local time, and at any and all postponements or adjournments
thereof (collectively referred to herein as the "Meeting"). This Proxy
Statement, the accompanying form of proxy (the "Proxy") and the Notice of Annual
Meeting will be first mailed or given to the Company's shareholders on or about
March 31, 1995.
Because many of the Company's shareholders may be unable to attend the
Meeting in person, the Board solicits proxies by mail to give each shareholder
an opportunity to vote on all matters presented at the Meeting. Shareholders are
urged to: (i) read this Proxy Statement carefully; (ii) specify their choice in
each matter by marking the appropriate box on the enclosed Proxy card; and (iii)
sign, date and return the Proxy by mail in the postage-paid, return addressed
envelope provided for that purpose.
All shares of the Company's common stock, $.01 par value per share (the
"Shares"), represented by properly executed and valid Proxies received in time
for the Meeting will be voted at the Meeting in accordance with the instructions
marked thereon or otherwise as provided therein, unless such Proxies have
previously been revoked. Unless instructions to the contrary are marked, or if
no instructions are specified, Shares represented by the Proxies will be voted
for the proposals set forth on the Proxy, and in the discretion of the persons
named as proxies on such other matters as may properly come before the Meeting.
Any Proxy may be revoked at any time prior to the exercise thereof by submitting
another Proxy bearing a later date or by giving written notice of revocation to
the Company at the Company's address indicated above or by voting in person at
the Meeting. Any notice of revocation sent to the Company must include the
shareholder's name and must be received prior to the Meeting to be effective.
VOTING
Only persons holding Shares of record at the close of business on March
15, 1995 (the "Record Date") will be entitled to receive notice of and to vote
at the Meeting. On the Record Date there were 40,250,719 Shares outstanding,
each of which will be entitled to one vote on each matter properly submitted for
vote to the Company's shareholders at the Meeting. The presence, in person or by
proxy, of holders of a majority of Shares entitled to vote at the Meeting
constitutes a quorum for the transaction of business at the Meeting.
The election of each director nominee requires the affirmative vote of
a plurality of the Shares cast in the election of directors. An affirmative vote
of a majority of the votes cast at the Meeting is required for approval of all
other items being submitted to the shareholders for their consideration.
Those Shares present, in person or by proxy, including Shares as to
which authority to vote on any proposal is withheld, Shares abstaining as to any
proposal, and broker non-votes (where a broker submits a proxy but does not have
authority to vote a customer's Shares on one or more matters) on any proposal,
will be considered present at the Meeting for purposes of establishing a quorum.
Each will be tabulated separately.
Under the rules of the NYSE, brokers who hold shares in street name for
customers have the authority to vote on certain items when they have not
received instructions from beneficial owners. Brokers that do not receive
instructions are entitled to vote on all proposals contained in this Proxy
except such brokers cannot vote on the proposal to approve the Company's 1995
Stock Option and Incentive Plan.
Abstentions are counted in tabulations of the votes cast on proposals
presented to shareholders, whereas broker non-votes are not counted for purposes
of determining whether a proposal has been approved.
Votes cast by proxy will be tabulated by an automated system
administered by Gemisys Corporation, the Company's transfer agent. Votes cast by
proxy or in person at the Meeting will be counted by the independent persons
appointed by the Company to act as election inspectors for the Meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
It is intended that the Shares represented by properly executed Proxies
will be voted to elect the director nominees, unless authority so to vote is
withheld. Each nominee is currently a member of the Board and all of the
nominees have indicated a willingness to serve as a director if re-elected. If
elected, each nominee will serve until the 1996 Annual Meeting of Shareholders
or until their earlier removal or resignation. The Board has no reason to
believe that any of the director nominees will be unable to serve as directors
or become unavailable for any reason. If, at the time of the meeting, any of the
director nominees shall become unavailable for any reason, the persons entitled
to vote the Proxy will vote, as such persons shall determine in his or her
discretion, for such substituted nominee or nominees, if any, nominated by the
Board.
There are no arrangements or understandings between or among any of the
officers or directors and any other person pursuant to which any officer or
director was selected as such. There are no family relationships among any
directors and executive officers of the Company.
The affirmative vote of a plurality of the Shares present or
represented to vote at the Meeting is necessary to elect each director nominee.
Shareholders of the Company will have an opportunity on their Proxy to vote in
favor of one or more director nominees while withholding their authority to vote
for one or more director nominees.
THE BOARD RECOMMENDS THAT SHAREHOLDERS GRANT AUTHORITY FOR THE ELECTION
OF THE NOMINEES TO THE BOARD OF DIRECTORS
<TABLE>
DIRECTORS
The following table sets forth certain information with respect to the
directors of the Company (all of whom are nominees for re-election):
<CAPTION>
Principal Occupation or Employment During the Past Director of the
Name and Age Five Years; Other Directorships Company Since
-------------- -------------------------------------------------- ----------------
<S> <C> <C>
Morton Fleischer Director, President and Chief Executive Officer of June 22, 1993
(58) the Company. Former President, Chief Executive
Officer and director of FFCA I (a predecessor
corporation of the Company) since its formation in
1980. Mr. Fleischer has acted as an individual
general partner (or general partner of the general
partner) of the public limited partnerships
involved in the Consolidation. In addition, Mr.
Fleischer is a general partner (or general partner
of the general partner) in the following public
limited partnerships whose investments are set
forth in parentheticals: Participating Income
Properties 1986, L.P. ("PIP 86") (travel plazas);
Participating Income Properties II, L.P. (travel
plazas); Participating Income Properties III
Limited Partnership (travel plazas); Guaranteed
Hotel Investors 1985, L.P. ("GHI") (hotels); and
Scottsdale Land Trust Limited Partnership
("Scottsdale Trust") (commercial land
development).
Robert W. Halliday Chairman of the Board of the Company. Previously June 22, 1993
(75) the Chairman of the Board of FFCA I (a predecessor
corporation of the Company) since its formation in
1980. Mr. Halliday is a limited partner of the
general partner for PIP 86, GHI and Scottsdale
Trust. Mr. Halliday has served as a director of
several publicly held American and Canadian
companies, including Great Pacific Corporation,
Mitchell Energy & Development Corporation, Boise
Cascade Corporation and Jim Pattison Enterprises.
Willie R. Barnes Corporate and securities law attorney. Partner in March 14, 1995
(63) the law firm of Musick, Peeler & Garrett since
June 1992. Sole practitioner from February 1992
until June 1992. Partner in the law firm of
Katten, Muchin Zavis & Weitzman from March 1991 to
January 1992. Partner in the law firm of Wyman
Kuchel Kuchel & Silbert from January 1989 to March
1991. Member of the Section of Business Law of the
American Bar Association and the Advisory
Board-Institute for Corporate Counsel, in addition
to other committees. Mr. Barnes was appointed as
the Commissioner of Corporations for the State of
California in 1975 and was appointed to the
California Senate Commission on Corporate
Governance, Shareholder Rights and Securities
Transactions. Director and Secretary, American
Shared Hospital Services.
William C. Foxley President of Foxley Cattle Company. From 1983 to August 1, 1994
(60) 1993, Mr. Foxley served as a consultant to a group
of investment limited partnerships managed by
Bridge Capital of Teaneck, New Jersey. Chairman of
the Board of the Museum of Western Art in Denver
and a director of the Buffalo Bill Historical
Center in Cody, Wyoming.
Donald C. Hannah Chairman and Chief Executive Officer of U.S. August 1, 1994
(62) Properties, Inc. Member of the Chief Executives
Organization and the World Presidents'
Organization. Director of the Precision Standard
Corporation (NASDAQ), the Samoth Capital
Corporation and the Marine Resources Foundation.
Louis P. Neeb President of Neeb Enterprises, Inc., a restaurant August 1, 1994
(55) consulting firm. Mr. Neeb was President and Chief
Executive Officer of Spaghetti Warehouse, Inc.,
from 1991 to January 1993 and President of Geest
Foods, PLC from September 1989 to June 1991, prior
to which he served as President and Chief
Executive Officer of Taco Villa. Mr. Neeb spent
ten years with the Pillsbury Company in various
positions which included: Executive Vice
President, Pillsbury; Chairman of the Board,
Burger King; and President, Steak 'N Ale
Restaurants. Mr. Neeb is also a director of
Showbizz Pizza Time, Inc. and was previously a
director of On the Border Cafes, Inc.
Kenneth B. Roath Chairman and Chief Executive Officer of Health August 1, 1994
(59) Care Property Investors, Inc. Chairman, member of
the Executive Committee and a member of the Board
of Governors of the National Association of Real
Estate Investment Trusts.
Wendell J. Smith Employed by the State of California Public August 1, 1994
(62) Employees Retirement System ("CALPERS"), starting
in November 1964 until his retirement in December
1991. Mr. Smith is President of W.J.S. &
Associates, which he established in 1984, as a
consultant to pension funds and pension fund real
estate advisors. He previously served for two
years on the Western Advisory Board of the Federal
National Mortgage Association ("FNMA") and for two
years on the National Advisory Board of FNMA. Mr.
Smith also serves as a director of Shurgard
Storage Centers (NASDAQ).
Casey J. Sylla Senior Vice President and has been an officer and August 1, 1994
(51) head of the Securities Department of The
Northwestern Mutual Life Insurance Company
("Northwestern") since 1992. From 1989 to 1991,
Mr. Sylla was President of FFCA Fiduciary Capital
Corporation ("FCC"), which was the managing
general partner of FFCA Fiduciary Capital
Management Company ("FCM"), which was the managing
general partner of and investment advisor to
Fiduciary Capital Partners, L.P. ("FCP") and
Fiduciary Capital Pension Partners, L.P. ("FCPP").
Mr. Fleischer was formerly a majority shareholder
of FCC and an individual general partner of FCM.
During the period from 1989 to 1991, Mr. Sylla
also served as Chief Investment Officer of FCP and
FCPP and Co-Chairman of the Advisory Board of FCM.
Mr. Sylla also serves as a director of NML
Corporation (a wholly-owned subsidiary of
Northwestern) and Baird Financial Corporation (the
holding company for Robert W. Baird Company, a
registered broker dealer).
</TABLE>
BOARD MEETINGS
The Board held eight meetings during the fiscal year ended December 31,
1994. Four of these meetings were held before June 28, 1994 (the date on which
the Company became a public company) when the Board consisted of only two
directors-Messrs. Fleischer and Halliday. The Board comprised of Messrs.
Fleischer and Halliday also took action fifteen times by unanimous written
consent. During a director's tenure, no director attended fewer than 75% of the
aggregate of (i) the total number of meetings of the Board during 1994; and (ii)
the total number of meetings held by all committees of the Board on which he
served during 1994.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE. Following the completion of the Consolidation, the
Board established an Audit Committee which must consist of at least two
independent directors. The current members of the Audit Committee are Kenneth B.
Roath, Chairman, and Wendell J. Smith. Robert L. Virgil also served on the Audit
Committee but resigned as a director of the Company effective December 5, 1994.
Mr. Virgil resigned as a result of conflicting time demands between his other
responsibilities and his duties as a director of the Company. The Audit
Committee makes recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the plans and
results of the audit engagement, approves professional services provided by the
independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of the Company's internal accounting controls. The Audit Committee
held one meeting in 1994.
EXECUTIVE COMMITTEE. The Company's Executive Committee has the authority
to acquire, dispose of and finance investments for the Company and execute
contracts and agreements, including those related to the borrowing of money by
the Company, and generally exercise all other powers of the Board except as
prohibited by law. The current members of the Executive Committee are Messrs.
Morton Fleischer, Chairman, Robert W. Halliday and Donald C. Hannah. The
Executive Committee held no meetings in 1994.
COMPENSATION COMMITTEE. Following completion of the Consolidation, the
Board established a Compensation Committee which, among other things, advises
the Board on all matters pertaining to compensation programs and policies,
establishes guidelines for employee incentive and benefit programs, makes
specific recommendations to the Board relating to salaries of officers and all
incentive awards and will administer the Company's 1995 Stock Option and
Incentive Plan. The current members of the Compensation Committee are Messrs.
Casey J. Sylla, Chairman, Louis P. Neeb and William C. Foxley. The Compensation
Committee held three meetings in 1994 and took action by unanimous written
consent on one occasion.
The Board does not presently have a separate nominating committee, the
function of which is handled by the Board as a whole.
COMPENSATION OF DIRECTORS
The Company pays an annual fee of $30,000 to its Independent Directors
(i.e., directors who are not employees of the Company or its affiliates). In
1994, the Independent Directors agreed to use at least one-half of all fees
received from the Company for open market purchases of common stock of the
Company. Directors who are employees of the Company are not paid director's
fees. The Company also reimburses directors for travel expenses incurred in
connection with their activities on behalf of the Company. In addition, each
director receives $500 for each committee meeting the director attends, with the
chairman of the respective committee receiving $1,000 for each committee
meeting.
<TABLE>
EXECUTIVE OFFICERS
Set forth below is certain information regarding the executive officers
of the Company, including age, principal occupation during the last five years
and the date each became an executive officer of the Company.
<CAPTION>
Executive Officer
Name/Age Present Executive Office of the Company Since
-------- ------------------------ --------------------
<S> <C> <C>
Morton Fleischer Director, President and Chief Executive Officer of June 22, 1993
(58) the Company. More detailed information regarding
Mr. Fleischer's business experience is set forth
under "DIRECTORS."
Robert W. Halliday Chairman of the Board of the Company. More June 22, 1993
(75) detailed information regarding Mr. Halliday's
business experience is set forth under
"DIRECTORS."
John R. Barravecchia Senior Vice President, Chief Financial Officer and June 1, 1994
(39) Treasurer. Senior Vice President of FFCA I (a
predecessor corporation of the Company) from
October 1989 until June 1, 1994. Vice President
and Chief Financial Officer of FFCA I from
December 1986 until October 1989. Served as a
director of FFCA I from March 1993 until June 1,
1994.
Thomas K. Crawford Senior Vice President-Real Estate Marketing. June 1, 1994
(40) Senior Vice President-Real Estate Marketing of
FFCA I (a predecessor corporation of the Company)
from October 1989 until June 1, 1994. Served as a
director of FFCA I from March 1993 until June 1,
1994. Director of Phone Banks Systems, Inc.
Robin L. Roach Senior Vice President-Portfolio Management and June 1, 1994
(42) Operations. Executive Vice President of FFCA I (a
predecessor corporation of the Company) from
December 1986 until June 1, 1994. On March 13,
1992, Mr. Roach filed a petition for relief under
the federal bankruptcy laws; an order of discharge
was subsequently entered.
Dennis L. Ruben (41) Senior Vice President and General Counsel. June 1, 1994
Attorney and counsel of FFCA I (a predecessor
corporation of the Company) since 1991. Prior to
joining FFCA I, Mr. Ruben was an associate, and
then partner, with the national law firm of Kutak
Rock from 1980 until March 1991.
Christopher H. Volk Senior Vice President-Underwriting and Research, June 1, 1994
(38) and Secretary. Vice President-Research of FFCA I
(a predecessor corporation of the Company) from
October 1989 until June 1, 1994. Served as
director of FFCA I from March 1993 until June 1,
1994.
Catherine F. Long Vice President-Finance and Principal Accounting June 1, 1994
(38) Officer, Assistant Secretary and Assistant
Treasurer. Vice President-Finance of FFCA I (a
predecessor corporation of the Company) from June
1990 until June 1, 1994. From December 1978 to May
1990, Ms. Long was associated with the
international public accounting firm of Arthur
Andersen LLP.
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
ON FISCAL 1994 EXECUTIVE COMPENSATION
The Compensation Committee of the Board is responsible for establishing
compensation policy and administering the compensation programs of the Company's
officers. The Compensation Committee is comprised of three independent outside
directors. The Compensation Committee meets at least once a year to review
executive compensation policies, design of compensation programs and individual
salaries and awards for the executive officers.
Pursuant to the rules regarding disclosure of Company polices
concerning executive compensation, this report is submitted by Messrs. Sylla,
Foxley and Neeb in their capacity as members of the Compensation Committee and
addresses the Company's compensation policies for 1994 as they affected Mr.
Fleischer, the chief executive officer ("CEO"), and the Company's other
executive officers, including the named executive officers.
OVERVIEW OF EXECUTIVE COMPENSATION POLICY
The Company's compensation philosophy for executive officers is
incentive oriented. The incentive portion of the Company's executive
compensation program is designed to be closely linked to corporate performance
and returns to shareholders. Accordingly, the Company has developed an overall
compensation strategy and specific compensation plans that tie a significant
portion of executive compensation to the Company's success in meeting specified
performance goals and to appreciation in the Company's stock price.
The key elements of the Company's executive compensation program
consist of salary, annual bonus and stock options. The Compensation Committee's
policies with respect to each of these elements, including the basis for the
compensation awarded to the CEO, are discussed below. The Compensation Committee
does not believe that Internal Revenue Code Section 162(m), which denies a
deduction for compensation payments in excess of one million dollars to the CEO
or a named executive officer, is likely to be applicable to the Company in the
near future, but will reconsider the implications of Section 162(m) if and when
it appears that the section may become applicable.
SALARIES
Salaries for executive officers are determined by evaluating
subjectively the responsibilities of the position held and the experience and
performance of the individual and comparing base salaries for comparable
positions at comparable entities. The comparable entities used for this purpose
include those entities who participate in the compensation survey conducted by
the National Association of Real Estate Investment Trusts, and also included the
largest publicly traded REITs. Subject to an executive officer's individual
performance, the Compensation Committee sets salaries at or about the median as
reflected by such information. The CEO's base salary for 1994 was based upon a
compensation consultant's recommendation during 1993 and was designed to be at
or about the median when compared to the salaries paid other CEOs of large
publicly traded REITs.
ANNUAL BONUS
All Company employees, including the Company's executive officers and
CEO, are eligible for an annual cash bonus. The purpose of the incentive bonus
is to supplement the pay of executive officers (and other key management
personnel) so that overall total cash compensation (salary and bonus) is
competitive and properly rewards them for their efforts in achieving certain
funds from operations ("FFO") targets. FFO generally includes net income, plus
certain non-cash items, primarily depreciation and amortization. The Company's
objective is for the CEO and executive officers to be paid a mix of total cash
compensation of approximately two-thirds salary and one-third annual bonus, if
the target performance (as described below) under the plan is achieved.
During the beginning of each year the Board sets minimum and target FFO
levels. A bonus pool is funded to the extent FFO exceeds the minimum level. The
minimum level is 95% of target performance and is designed to assure a threshold
return to Company shareholders before a bonus pool is funded. The pool is 10
percent of the amount in excess of the minimum level and if the target FFO level
is attained, the pool will be sufficient to pay the executive officers, as well
as other key management personnel, their target bonuses. Each executive officer,
including the CEO, has a target bonus of 50 percent of salary. There is no cap
on the size of the pool and thus bonuses in excess of the target bonus may be
earned if FFO exceed the target level.
For 1994, FFO was 102% of target level, but the Board, at the
Compensation Committee's recommendation, elected to limit the size of the bonus
pool to that which would be funded at the FFO target level. The Board reserves
the right to make whatever changes it deems necessary in the size of the pool
and to make such other changes it deems necessary to preserve the purpose and
objectives of the incentive bonus arrangement. Accordingly, bonuses up to 50
percent of June 1 through December 31, 1994 salary (which corresponds to the
period they were employed by the Company) were earned by each executive officer,
including the CEO, under the plan.
STOCK OPTIONS
The long-term incentive component of the CEO's and the executive
officers' compensation is intended to be stock options. Because the 1995 Stock
Option and Incentive Plan has not yet been approved by shareholders, no awards
have been made. The Company's shareholders will vote on whether or not to
approve the 1995 Stock Option and Incentive Plan at the Meeting.
Compensation Committee:
Casey J. Sylla, Chairman
William C. Foxley
Louis P. Neeb
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
In fiscal 1994, the members of the Compensation Committee were Casey J.
Sylla, Louis P. Neeb and William C. Foxley. No member of the Compensation
Committee was previously an officer or an employee of the Company or any of its
subsidiaries.
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the 1994 annual base salaries of the
Company's Chief Executive Officer and its other highly compensated executive
officers whose total annual compensation exceeds $100,000 during such year, of
which the Company made pro rata partial payments during 1994 (from June 1, 1994
to December 31, 1994) following the Consolidation on June 1, 1994.
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
Awards Payouts
-------------------- -------
Secur-
ities All
Other Restricted Underlying Other
Bonus Annual Stock Options/ LTIP Compen-
Name and Principal Positions Year Salary($) ($)(4) Compensation($) Awards($) SAR's(#) Payouts($) sation(3)
---------------------------- ---- --------- -------- -------------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Morton Fleischer ................. 1994 $400,000(1) 116,667 -0- -0- -0- -0- -0-
Director, President and
Chief Executive Officer
Robert W. Halliday ............... 1994 $200,000(2) 58,333 -0- -0- -0- -0- -0-
Chairman of the Board of
Directors
Thomas K. Crawford ............... 1994 $165,000(3) 48,125 -0- -0- -0- -0- 2,468
Senior Vice
President-Real Estate
Marketing
Christopher H. Volk .............. 1994 $165,000(3) 48,125 -0- -0- -0- -0- 2,045
Senior Vice President-
Research and
Underwriting, and
Secretary
John R. Barravecchia ............. 1994 $165,000(3) 48,125 -0- -0- -0- -0- 2,080
Senior Vice President,
Chief Financial Officer
and Treasurer
----------
-
(1) Received approximately $233,333 representing pro rata portion of annual
salary from June 1, 1994 to December 31, 1994.
(2) Received approximately $116,667 representing pro rata portion of annual
salary from June 1, 1994 to December 31, 1994.
(3) Received approximately $96,250 representing pro rata portion of annual
salary from June 1, 1994 to December 31, 1994.
(4) Bonus includes the amount of cash bonus earned and accrued during the period
from June 1, 1994 to December 31, 1994 and paid in January 1995.
(5) Amounts included in All Other Compensation represent matching Company
contribution amounts received under the FFCA 401(k) Plan.
</TABLE>
The foregoing compensation tables do not include certain fringe benefits
made available on a nondiscriminatory basis to all Company employees such as
group health insurance, dental insurance, long-term disability insurance,
vacation and sick leave. In addition, the Company makes available certain
non-monetary benefits to its executive officers with a view to acquiring and
retaining qualified personnel and facilitating job performance. The Company
considers such benefits to be ordinary and incidental business costs and
expenses. The aggregate value of such benefits in the case of each executive
officer and of the group listed in the above table, which cannot be precisely
ascertained but which is less than the lesser of (a) ten percent of the cash
compensation paid to each such executive officer or to the group, respectively,
or (b) $50,000, or $50,000 times the number of individuals in the group, as the
case may be, is not included in such table.
COMPENSATION PURSUANT TO PLANS
401(K) PLAN. The Company has adopted a defined contribution savings
plan (the "401(k) Plan") to provide retirement income to employees of the
Company, including the executive officers referred to in the Summary
Compensation Table. The 401(k) Plan is intended to be qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code") and
incorporates features permitted under Section 401(k) of the Code.
The 401(k) Plan covers all employees who have completed six months of
service and are over 21 years of age. Participants can elect to contribute up to
15% (18% for the 1994 plan year) of annual compensation on a pre-tax basis. The
Company provides a 100% matching contribution, in the Company's common stock, up
to 6% of annual compensation.
All participant contributions are fully vested as soon as they are
made. Company contributions are subject to a vesting schedule and are 100%
vested after six years of service. In determining the years of service, the
Company includes the time a participant was an employee of FFCA I, a predecessor
corporation of the Company. Participant contributions are invested as directed
by each participant in investment funds available under the 401(k) Plan. Full
retirement benefits are payable to each participant in a single cash payment or
an actuarial equivalent form of annuity on the first day of the month following
the participant's retirement or after his or her 65th birthday. In general, if
employment ceases before the employee reaches age 65, the vested benefits under
the 401(k) Plan are paid in full at termination of employment or a later date
elected by the participant. The 401(k) Plan provides death benefits to a
participant's beneficiary if the participant dies before his or her retirement
benefits commence or if a survivor form of annuity is in effect.
STOCK OPTION PLANS. The Company has one stock option plan, the 1995
Stock Option and Incentive Plan, under which options may currently be granted
(see "PROPOSAL 2" below for additional information). Directors and executive
officers are eligible to receive options under this plan; however, no options to
purchase shares of common stock were granted to the Company's directors or
executive officers during 1994.
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has no employment or change in control agreements with any
executive officer of the Company.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who own more
than ten percent (10%) of a registered class of the Company's equity securities
("10% Shareholders") to file with the Securities and Exchange Commission (the
"Commission") and the NYSE reports of ownership and changes in ownership of
equity securities of the Company and to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge (based solely upon a review of the copies of
such Section 16(a) reports furnished to the Company and written representations
that no other reports were required), for the Company's fiscal year ended
December 31, 1994, the Section 16(a) filing requirements applicable to the
Company's officers, directors and 10% Shareholders were complied with, with one
exception. The exception concerned the late filing, by four days, of Mr.
Halliday's Form 4 for August of 1994, which Form 4 disclosed a purchase of the
Company's common stock.
<TABLE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The graph and table below compare the cumulative total shareholder
return on the Company's common stock for the last fiscal year with the
NAREIT-Equity and S&P 500 Indices.
(The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T)
COMPARISON OF SIX MONTH TOTAL RETURNS
FRANCHISE FINANCE CORPORATION OF AMERICA,
S&P 500 INDEX AND NAREIT-EQUITY INDEX
<CAPTION>
Measurement Period S&P NAREIT Equity
(Fiscal Year Covered) FFCA 500 Index Index
--------------------- --------- -----
<S> <C> <C> <C>
Measurement Pt 6/30/94 $100 $100 $100
7/31/94 93.55 103.15 99.51
8/31/94 92.52 107.03 99.81
9/30/94 83.09 104.89 97.95
10/31/94 87.80 107.06 94.55
11/30/94 82.83 102.85 91.30
12/31/94 86.22 104.87 97.97
</TABLE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE
FILINGS BY REFERENCE, INCLUDING THE PROXY STATEMENT, IN WHOLE OR IN PART, THE
PREVIOUS REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE GRAPH SHALL
NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
PROPOSAL NO. 2
APPROVAL OF STOCK OPTION AND INCENTIVE PLAN
The Board, upon the recommendation of the Compensation Committee,
adopted the Company's Stock Option and Incentive Plan (the "Plan") effective as
of March 15, 1995, subject to the approval of the Plan by the shareholders at
the Meeting. To date, the Compensation Committee has not granted any options
under the Plan nor has it determined the number of options that will be granted
if the shareholders approve the Plan. A copy of this Plan is included as
Appendix A to this Proxy Statement, and the following summary of material
provisions of the Plan is qualified in its entirety by reference to the full
text of the Plan.
The Compensation Committee and the Board believe that stock-based
compensation programs are a key element in achieving the Company's continued
financial and operational success. The Company has established the Plan to
enable directors, executive officers, other key employees and other persons
associated with the Company to participate in the ownership of the Company.
Initially, the Company intends to reserve 3,018,804 Shares, which equals 7-1/2%
of the Shares outstanding as of the Record Date, for grant under the Plan, and
this amount may not be increased without the approval of the shareholders. The
maximum number of Shares with respect to which awards may be granted to any one
individual during any calendar year is 200,000. In addition, Shares may not be
acquired pursuant to the Plan if the acquisition violates the ownership limit or
causes the Company to fail to qualify as a REIT for federal income tax purposes.
The Plan is designed to attract and retain directors, executive
officers, key employees and other persons associated with the Company and to
provide incentives to such persons to maximize the Company's cash flow available
for distribution. The Plan provides for the award to executive officers
(including officers who are also directors) and other key employees of the
Company of a broad variety of stock-based compensation alternatives such as
non-qualified stock options, incentive stock options (unless the context
indicates to the contrary, the term "option" shall refer to both incentive and
non-qualified stock options), restricted stock and performance awards.
The Plan will be administered by the Compensation Committee, consisting
of not less than two members appointed by the Board, each of whom, to the extent
necessary to comply with Rule 16b-3 of the Securities Exchange Act of 1934, as
amended, and Section 162(m) of the Code and the regulations promulgated
thereunder only, is a "disinterested person" within the meaning of Rule 16b-3
and an "outside director" within the meaning of Section 162(m). The Committee
shall construe and interpret the Plan and, subject to the express provisions of
the Plan, is authorized to select from among the eligible employees of the
Company the individuals to whom options, restricted stock purchase rights and
performance awards are to be granted and to determine the number of Shares to be
subject thereto and the terms and conditions thereof. The Compensation Committee
is also authorized to adopt, amend and rescind rules relating to the
administration of the Plan.
AWARDS UNDER THE PLAN
TERMS AND CONDITIONS OF OPTIONS; PAYMENT. Incentive stock options
granted under the Plan are exercisable for a period of not more than ten (10)
years from the date of the grant. Any non-qualified options granted under the
Plan are exercisable at such times, in such amounts and during such periods as
the Compensation Committee determines at the date of the grant. If the optionee
exercises the option, payment may be made either in cash, certified check or
other immediately available funds, with previously issued Shares (valued as of
the date of the option exercise), a combination of cash, certified check or
other immediately available funds and Shares or any other consideration
permitted under applicable law. The Compensation Committee may allow a delay in
payment up to thirty days from the date the option is exercised; however, the
company will not issue stock certificates until it has received full payment for
the Shares.
OPTION PRICE. The purchase price of each Share issued pursuant to the
exercise of an incentive stock option granted under the Plan may not be less
than 100% of the fair market value per Share on the date of the grant. The
purchase price of each Share issued pursuant to the exercise of a non-qualified
stock option granted under the Plan shall be determined by the Compensation
Committee.
TRANSFERABILITY. Options granted under the Plan may not be transferred
by the optionee except by will, the laws of descent and distribution or pursuant
to qualified domestic relation orders, and any option granted under the Plan
shall be exercisable, during the lifetime of the holder, only by such holder.
ADJUSTMENTS; MERGERS AND CONSOLIDATIONS. The Plan provides that in the
event of any change in the outstanding Shares through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, split-up,
split-off, spin-off, combination of Shares, exchange of Shares, or other like
change in capital structure of the Company, an adjustment will be made to each
outstanding option or performance awards granted under the Plan such that each
such option shall thereafter be exercisable for such securities, cash and/or
other property as would have been received in respect of the Shares subject to
such option had the option been exercised in full immediately prior to such
change.
VESTING. The period during which the right to exercise an option in
whole or in part vests shall be set by the Compensation Committee. Generally, no
portion of an option which is unexercisable at termination of employment shall
thereafter become exercisable. While an option is generally only exercisable by
the optionee while he or she is an employee, the Compensation Committee may
allow exercise subsequent to an optionee's termination of employment, subject to
certain additional limitations.
ACCELERATION OF VESTING PROVISIONS. The Plan authorizes the
Compensation Committee to accelerate the vesting of an outstanding option upon
written notice to the optionholder. An acceleration of the vesting period in
accordance with such authority would not affect the expiration date of the
option.
REDUCTION OF VESTING PERIOD. The Plan provides that outstanding options
or performance awards will become immediately exercisable in the event of a
change of control of the Company. For purposes of the Plan unless otherwise
defined in any applicable agreement, a change in control would generally be
deemed to have occurred when (a) any person becomes the beneficial owner of 80%
or more of the total number of Shares then outstanding; (b) the Board or
shareholders approve the sale of all or substantially all of the assets of the
Company or any merger, consolidation, issuance of securities, the result of
which would be the occurrence of an event described in clause (a) above; or (c)
as a result of, or in connection with, any cash tender offer, exchange offer,
merger or other business combination, sale of assets or contested election, or
any combination of the foregoing.
CANCELLATION AND REGRANT OF OPTIONS. The Plan allows the Compensation
Committee to modify, extend or renew outstanding options granted under the Plan,
or accept the surrender of options outstanding under the Plan (to the extent not
theretofore exercised), and authorize the granting of a like number of new
options under the Plan in substitution for the original options, regardless of
whether the vesting schedules or exercise prices are the same or different from
the original options being surrendered. The grant of new options would be
subject to the terms and conditions of and within the limitations of the Plan,
and any modification that would alter or impair any rights or obligations of the
optionholder under an option would be prohibited in the absence of such holder's
consent.
AMENDMENTS. The Board may from time to time, insofar as permitted by
law, revise or amend the Plan in any way, except that no amendments may be made
without the approval of the shareholders if such amendments (i) increase the
maximum number of Shares which may be issued under the Plan (except as otherwise
provided therein), (ii) change the manner of determining the exercise price,
(iii) extend the maximum period during which options may be granted or
exercised, (iv) materially modify the eligibility requirements for participation
in the Plan, or (v) materially increase the benefits accruing to participants
under the Plan.
NON-QUALIFIED STOCK OPTIONS. The Compensation Committee may grant
non-qualified stock options to employee directors, officers, employees and other
persons associated with the Company and such options may provide for the right
to purchase Shares at a specified price which may be less than fair market value
on the date of grant (but not less than par value), and usually will become
exercisable in installments after the grant date. Non- qualified stock options
may be granted to employee directors, officers and employees and other persons
associated with the Company for any reasonable term.
In addition, non-employee directors of the Company will automatically
receive certain non-qualified stock options in an amount equal to 10% of the
dollar amount of the directors' annual retainer fee. The exercise price of the
options will equal the fair market value of the Company's common stock on the
date of grant. The amount of options received will be determined through the
application of the Black-Scholes option pricing model.
INCENTIVE STOCK OPTIONS. Incentive stock options will be designed to
comply with the provisions of the Code and will be subject to restrictions
contained in the Code, including a requirement that exercise prices are equal to
at least 100% of fair market value of the Shares on the grant date and a
ten-year restriction on the option term, but may be subsequently modified to
disqualify them from treatment as incentive stock options. To the extent the
aggregate fair market value of stock with respect to which incentive stock
options are exercisable for the first time by the optionee during any calendar
year under the Plan exceeds $100,000, such options shall be treated as
non-qualified options to the extent required by the Code.
RESTRICTED STOCK. Restricted stock may be sold to participants at
various prices (but not below par value) and made subject to such restrictions
as may be determined by the Compensation Committee. Typically, restricted stock
may be repurchased by the Company at the original purchase price if the
conditions or restrictions are not met. In general, restricted stock may not be
sold, or otherwise transferred or hypothecated, until the restrictions are
removed or expire. Purchasers of restricted stock, unlike recipients of options,
will have voting rights and will receive dividends prior to the time when the
restrictions lapse.
PERFORMANCE AWARDS. The value of performance awards may be limited to
the market value, book value or other measure of the Company's common stock or
other specific performance criteria deemed appropriate by the Compensation
Committee. In making such determinations, the Compensation Committee considers,
among other factors it deems relevant, the contributions, responsibilities and
other compensation of the key employee, or person associated with the Company,
at issue. The manner of exercise, payment of consideration and term of the
performance awards are generally the same as those applying to stock options
granted under the Plan.
FEDERAL INCOME TAX CONSEQUENCES
Under current federal income tax laws, neither the grant nor the
exercise of an option that qualifies for treatment as an incentive stock option
will result in the recognition of income by the optionee. To qualify for the
foregoing treatment, the optionee must hold shares acquired through the exercise
of an incentive stock option for at least two years from the date of the grant
of the option and at least one year from the date of its exercise. If an
optionee satisfies the holding period requirements, the sale of the shares
acquired through the exercise of the incentive stock option will result in
long-term capital gain (or loss) to the optionee. If an optionee does not
satisfy the holding period requirements, the optionee will recognize, at the
time of the disposition of the shares, ordinary income equal to the amount by
which the lesser of (i) the fair market value of the shares on the date of the
exercise and (ii) the fair market value of the shares on the date of disposition
exceeds the exercise price of the incentive stock option. Any gain realized in
excess of such ordinary income will be either long-term or short-term capital
gain depending on the optionee's holding period for the shares.
As a general matter, no deduction is permitted to the optionor as a
result of the grant or exercise of an incentive option. However, in the event an
optionee recognizes ordinary income for federal tax purposes in connection with
the disposition of shares acquired through exercise of an incentive stock option
under the circumstances discussed above, the Company will generally be entitled
to a deduction for federal income tax purposes equal to the amount of ordinary
income recognized by the optionee.
A grantee of a non-qualified stock option will not recognize taxable
income and the Company will not receive a deduction upon the grant of such
option. Upon an optionee's exercise of a non-qualified stock option: (i) the
optionee will recognize ordinary income in an amount equal to the difference
between the fair market value on the exercise date and the exercise price of the
shares; and (ii) if certain conditions are satisfied, the Company will be
entitled to a tax deduction in an amount equal to the amount of income realized
by the optionee. Following exercise, the optionee will realize gain or loss at
disposition in an amount equal to the difference between the disposition price
and the basis of the shares.
The federal tax law is subject to changes in the Code and the
regulations promulgated by the Internal Revenue Service, and in court and
administrative interpretation.
The Board believes that the Plan is valuable in its efforts to attract
and retain key personnel. Approval of the Plan requires the affirmative vote of
a majority of votes entitled to be cast at the Meeting.
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board, upon the recommendation of the Audit Committee, has selected
Arthur Andersen LLP to serve as independent auditors of the Company for the
fiscal year ending December 31, 1995. Arthur Andersen LLP has served as the
Company's independent auditors since the Company's inception. Representatives of
Arthur Andersen LLP will be present at the Meeting and will have the opportunity
to make a statement if they desire to do so and will be available to respond to
appropriate questions from shareholders.
Although it is not required to do so, the Board is submitting its
selection of the Company's independent auditors for ratification by the
shareholders at the Meeting in order to ascertain the views of shareholders
regarding such selection. A majority of the votes cast at the Meeting, if a
quorum is present, will be sufficient to ratify the selection of Arthur Andersen
LLP as the Company's independent auditors for the fiscal year ending December
31, 1995. Whether the proposal is approved or defeated, the Board may reconsider
its selection.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION OF
THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1995.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
To the best of the Company's knowledge, no shareholder beneficially
owned more than 5% of the Company's common stock as of March 15, 1995.
The following table sets forth information as of the Record Date
regarding beneficial ownership of shares of Common Stock by (i) each director of
the Company, (ii) each executive officer of the Company, and (iii) all directors
and executive officers as a group.
Shares of
Common Stock
Name of Beneficially Percent
Beneficial Owner Owned(1) of Class*
---------------- ------------ ---------
M. H. Fleischer .............................. 1,208,469(2) 3.0%
Robert W. Halliday .......................... 405,202(3) 1.0%
Willie R. Barnes ............................. -0- *
William C. Foxley ............................ 1,247 *
Donald C. Hannah ............................. 6,947 *
Kenneth B. Roath ............................. 1,247 *
Louis P. Neeb ................................ 1,233 *
Wendell J. Smith ............................. 1,050 *
Casey J. Sylla ............................... 1,753 *
John R. Barravecchia ......................... 25,247 *
Thomas K. Crawford ........................... 25,256 *
Christopher H. Volk .......................... 26,945 *
--------- ---
Directors and executive officers ............. 1,735,884 4.3%
as a group (15 persons) ========= ===
---------------
*Less than one percent
(1) Share amount and percentage figures are rounded to the nearest whole number.
All Shares of common stock not outstanding but which may be acquired by such
shareholder within 60 days of the Record Date by the exercise of any stock
option or any other right, are deemed to be outstanding for the purposes of
calculating beneficial ownership and computing the percentage of the class
beneficially owned by such shareholder, but not by any other shareholder.
Except as otherwise noted, each shareholder has sole voting and sole
dispositive power with respect to such shareholder's Shares.
(2) Includes an aggregate of 10,000 Shares held by Donna H. Fleischer, the wife
of Mr. Fleischer.
(3) Includes an aggregate of 50,000 Shares held in a charitable trust in which
Mr. Halliday is a trustee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Law Firm. Musik, Peeler & Garret, the law firm in which Willie R.
Barnes, a director of the Company is a partner, has previously provided legal
services to FFCA I and the Company. The legal fees paid to Musik, Peeler &
Garret by the Company are comparable to fees charged by similar law firms for
the same type of services rendered.
Administrative Services Agreement. The Company has entered into an
administrative services agreement (the "Administrative Agreement") with the
following entities. FFCA Management Company, L.P.; FFCA Participating Management
Company Limited Partnership; Perimeter Center Management Company; Franchise
Finance Corporation of America II; Franchise Finance Corporation of America III;
and FFCA Institutional Advisors, Inc., a wholly owned subsidiary of the Company
(collectively the "Companies"). The Companies are affiliates of the Company
primarily due to Mr. Fleischer's individual ownership interest or interest as an
individual general partner of such entities. Mr. Fleischer and other executive
officers and directors of the Company also serve as executive officers and
directors in certain of the Companies.
The Administrative Agreement appoints the Company as administrator of
the Companies. As administrator, the Company supervises all aspects of the
operations of the Companies. The Company charges for all personnel expenses
directly attributable to the individual company and allocates overhead to the
Companies pursuant to a predetermined formula, as determined in the Company's
reasonable discretion. The Company also adds a profit percentage not to exceed
20% of the sum of the total expenses charged to each individual entity. In the
1994 fiscal year, the above Companies paid $599,000 to the Company pursuant to
the Administrative Agreement.
SOLICITATION OF PROXIES
This solicitation is being made by mail on behalf of the Board, but may
also be made without additional remuneration by officers or employees of the
Company by telephone, telegraph, facsimile transmission or personal interview.
The expense of the preparation, printing and mailing of this Proxy Statement and
the enclosed form of Proxy and Notice of Annual Meeting, and any additional
material relating to the Meeting which may be furnished to shareholders by the
Board subsequent to the furnishing of this Proxy Statement, has been or will be
borne by the Company. The Company will reimburse banks and brokers who hold
Shares in their name or custody, or in the name of nominees for others, for
their out-of-pocket expenses incurred in forwarding copies of the proxy
materials to those persons for whom they hold such Shares. To obtain the
necessary representation of shareholders at the Meeting, supplementary
solicitations may be made by mail, telephone or interview by officers of the
Company or selected securities dealers. It is anticipated that the cost of such
supplementary solicitations, if any, will not be material. In addition, the
Company has retained D.F. King & Co., Inc. ("King") to solicit proxies from
shareholders by mail, in person and by telephone. The Company will pay King a
fee of $8,000 for its services, plus reimbursement of reasonable out-of-pocket
expenses incurred in connection with the proxy solicitation.
ANNUAL REPORT
The Annual Report of the Company for the 1994 fiscal year has been
mailed to shareholders along with this Proxy Statement. THE COMPANY WILL, UPON
WRITTEN REQUEST AND WITHOUT CHARGE, PROVIDE TO ANY PERSON SOLICITED HEREUNDER A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1994, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. Requests should be
addressed to John R. Barravecchia, the Chief Financial Officer of the Company,
at Scottsdale Perimeter Center, 17207 North Perimeter Drive, Scottsdale, Arizona
85255.
OTHER MATTERS
The Company is not aware of any business to be presented for
consideration at the Meeting, other than that specified in the Notice of Annual
Meeting. If any other matters are properly presented at the Meeting, it is the
intention of the persons named in the enclosed Proxy to vote in accordance with
their best judgment.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any shareholder who intends to submit a proposal at the 1996 Annual
Meeting of Shareholders and who wishes to have the proposal considered for
inclusion in the proxy statement and form of proxy for that meeting must, in
addition to complying with the applicable laws and regulations governing
submission of such proposals, deliver the proposal to the Company for
consideration no later than December 1, 1995. Such proposals should be sent to
Christopher H. Volk, Senior Vice President and Secretary of the Company, at
Scottsdale Perimeter Center, 17207 North Perimeter Drive, Scottsdale, Arizona
85255.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial
owners of the Shares for which proxies are being solicited from you, and, if so,
the number of copies of this Proxy Statement and other soliciting materials you
wish to receive in order to supply copies to the beneficial owners of the
Shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS,
WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON, ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE. BY RETURNING YOUR PROXY PROMPTLY YOU CAN
HELP THE COMPANY AVOID THE EXPENSE OF FOLLOW-UP MAILINGS TO ENSURE A QUORUM SO
THAT THE MEETING CAN BE HELD. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE A
PRIOR PROXY AND VOTE THEIR PROXY IN PERSON AS SET FORTH IN THIS PROXY STATEMENT.
By Order of the Board of Directors
/s/ CHRISTOPHER H. VOLK
-----------------------------------
Christopher H. Volk, Secretary
Scottsdale, Arizona
March 31, 1995
<PAGE>
APPENDIX A
1995 STOCK OPTION AND INCENTIVE PLAN OF
FRANCHISE FINANCE CORPORATION OF AMERICA
Franchise Finance Corporation of America, a Delaware corporation (the
"Company"), has adopted this 1995 Stock Option and Incentive Plan of Franchise
Finance Corporation of America (the "Plan"), effective March 15, 1995, for the
benefit of its eligible Employees.
The purposes of this Plan are as follows:
(a) To provide an additional incentive for key Employees and
other persons associated with the Company to further the growth,
development and financial success of the Company by personally
benefiting through the ownership of Company stock and/or rights which
recognize such growth, development and financial success.
(b) To enable the Company to obtain and retain the services of
key Employees and other persons associated with the Company considered
essential to the long-range success of the Company by offering them an
opportunity to own stock in the Company and/or rights which will
reflect the growth, development and financial success of the Company.
ARTICLE I
DEFINITIONS
Section 1.01. GENERAL. Wherever the following terms are used in this
Plan they shall have the meaning specified below, unless the context clearly
indicates otherwise.
"Beneficiary" shall mean the person or persons properly designated by
the Optionee or Grantee, including his spouse or heirs at law, to exercise such
Optionee's or Grantee's rights under this Plan in the event of the Optionee's or
Grantee's death, or if the optionee or Grantee has not designated such person or
persons, or such person or persons shall all have pre-deceased the Optionee or
Grantee, the executor or administrator of the Optionee's or Grantee's estate.
Designation, revocation and redesignation of Beneficiaries must be made in
writing in accordance with rules established by the Committee and shall be
effective upon delivery to the Committee.
"Board" shall mean the Board of Directors of the Company.
"Bylaws" shall mean the Amended and Restated Bylaws of the Company, as
amended from time to time.
"Certificate of Incorporation" shall mean the Company's Certificate of
Incorporation on file with the Delaware Secretary of State.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation Committee of the Board,
appointed as provided in Section 9.01 and the Bylaws of the Company.
"Common Stock" shall mean the common stock of the Company, par value
$.01 per share, as presently constituted and any equity security of the Company
issued or authorized to be issued in the future, but excluding any warrants,
options or other rights to purchase Common Stock, and provided that debt
securities of the Company convertible into Common Stock shall be deemed equity
securities of the Company.
"Company" shall mean Franchise Finance Corporation of America, a
Delaware corporation.
"Company Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. "Company Subsidiary" shall also mean any
partnership in which the Company and/or any Company Subsidiary owns more than 50
percent of the capital or profits interests.
"Director" shall mean a member of the Board.
"Employee" shall mean any officer, director or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Company, or of
any Company Subsidiary and, to the extent permitted by applicable law, any
persons associated with the Company.
"Expiration Date" shall mean the last day of the term of the Option as
established in Section 4.03.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" of a share of Common Stock as of a given date shall
be the average of the daily market price for the ten (10) consecutive trading
days immediately preceding the valuation date. The market price for each such
trading day shall be: (i) if the shares of Common Stock are listed or admitted
to trading on any securities exchange or the NASDAQ-National Market System, the
closing price, regular way, on such day, or if no such sale takes place on such
day, the average of the closing bid and asked prices on such day, (ii) if the
shares of Common Stock are not listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System, the last reported sale price on
such day or, if no sale takes place on such day, the average of the closing bid
and asked prices on such day, as reported by a reliable quotation source
designated by the Company, or (iii) if the shares of Common Stock are not listed
or admitted to trading on any securities exchange or the NASDAQ- National Market
System and no such last reported sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked prices on such
day, as reported by a reliable quotation source designated by the Company, or if
there shall be no bid and asked prices on such day, the average of the high bid
and low asked prices, as so reported, on the most recent day (not more than 10
days prior to the date in question) for which prices have been so reported;
provided that if there are no bid and asked prices reported during the 10 days
prior to the date in question, the Fair Market Value of the shares of Common
Stock shall be determined by the Company acting in good faith on the basis of
such quotations and other information as it considers, in its reasonable
judgment, appropriate.
"Grantee" shall mean an Employee or other person associated with the
Company granted a Performance Award under this Plan.
"Incentive Stock Option" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Stock Option by the Committee.
"Non-Employee Director" shall mean each person who is then a member of
the Board and who is not then an Employee of the Company or any of its
subsidiaries.
"Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is designated as a Non-Qualified Stock Option
by the Committee.
"Option" shall mean a stock option granted pursuant to this Plan. An
option granted under this Plan shall, as determined by the Committee, be either
a Non-Qualified Stock Option or an Incentive Stock Option.
"Optionee" shall mean an Employee or person associated with the Company
and who is granted an Option under this Plan.
"Ownership Limit" shall mean not more than 9.8% (in value or in number
of shares, whichever is more restrictive) of the outstanding Common Stock.
"Participant" shall mean a person who has received any type of award
under this Plan.
"Performance Award" shall mean a cash bonus, stock bonus or other
performance or incentive award that is paid in cash, stock or a combination of
both.
"Plan" shall mean this 1995 Stock Option and Incentive Plan of
Franchise Finance Corporation of America.
"Restricted Stock" shall mean Common Stock awarded pursuant to Article
VII of this Plan.
"Restricted Stockholder" shall mean an Employee to whom Restricted
Stock has been awarded under this Plan.
"Retainer Fee" shall mean a director's annual fee for serving as a
director of the Company and does not include compensation for attending
committee meetings or travel or other reimbursable expenses.
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act,
as such Rule may be amended in the future.
"Termination of Employment" shall mean the time when the
employee-employer relationship between the Optionee, Grantee or Restricted
Stockholder and the Company or a Company Subsidiary is terminated for any
reason, including, but not by way of limitation, a termination by resignation,
discharge, death, permanent and total disability or retirement; but excluding
(i) terminations where there is a simultaneous reemployment or continuing
employment of an Optionee, Grantee or Restricted Stockholder by the Company or a
Company Subsidiary and (ii) at the discretion of the Committee, terminations
which result in a temporary severance of the employee-employer relationship that
do not exceed one year. The Committee, in its absolute discretion, shall
determine the effect of all other matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, with respect to Incentive Stock Options, a
leave of absence shall constitute a Termination of Employment if, and to the
extent that, such leave of absence interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section. Notwithstanding any other provision of this Plan,
the Company or any Company Subsidiary has an absolute and unrestricted right to
terminate an Employee's employment at any time for any reason whatsoever, with
or without cause, except to the extent expressly provided otherwise in writing.
Section 1.02. GENDER AND NUMBER. Wherever the masculine gender is used
it shall include the feminine and neuter, and wherever a singular pronoun is
used it shall include the plural, unless the context clearly indicates
otherwise.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.01. SHARES SUBJECT TO PLAN. The shares subject to Options,
Restricted Stock Awards or Performance Awards shall initially be shares of the
Company's Common Stock, par value $.01 per share, as presently constituted, and
the aggregate number of such shares which may be issued upon exercise of such
options or rights or upon any such awards shall not exceed 3,018,804 shares,
which equals 7 1/2% of the Common Stock outstanding on March 15, 1995. The
shares of Common Stock issuable upon exercise or grant of an Option or
Performance Award, or as Restricted Stock, may be either previously authorized
but unissued shares or issued shares which have been repurchased by the Company.
If any equity securities of the Company, other than Common Stock, are issued or
authorized to be issued, the Committee shall determine, on a fair and equitable
basis, the appropriate number of shares of the Company's present common stock to
be deemed issued or issuable with respect to such other equity securities for
purposes of this Section 2.01.
Section 2.02. UNEXERCISED OPTIONS AND OTHER RIGHTS. If any Option, or
other right to acquire shares of Common Stock under any Performance Award,
expires or is cancelled without having been fully exercised, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration or cancellation shall be
counted against the maximum number of shares that may be awarded to an
individual Participant under the Plan under Section 2.04 hereof. Any shares of
Restricted Stock repurchased by the Company pursuant to Section 7.05 may again
be utilized hereunder.
Section 2.03. EFFECT OF CERTAIN EXERCISES. If a Performance Award based
on the increased market value of a specified number of shares of Common Stock is
paid, the number of shares of Common Stock to which such exercise or payment
relates under such Performance Award shall be charged against the maximum number
of shares of Common Stock that may be issued under this Plan. If any shares of
Common Stock issuable pursuant to any Option or other right to acquire shares of
Common Stock provided for under this Plan are surrendered to the Company as
payment for the exercise price of said Option or other right to acquire shares
of Common Stock, the number of shares of Common Stock issuable but so
surrendered shall be charged against the maximum number of shares of Common
Stock that may be issued under this Plan. In the event the Company withholds
shares of Common Stock for tax withholding purposes pursuant to Section 10.06
hereof, the number of shares that would have been issuable but that are withheld
pursuant to the provisions of Section 10.06 shall be charged against the maximum
number of shares of Common Stock that may be issued under this Plan.
Section 2.04. INDIVIDUAL LIMITATION. Notwithstanding any provision
herein to the contrary, the maximum number of shares of Common Stock which may
be issued through a combination of any Option, Performance Award or Restricted
Stock to any individual Participant for any plan year may not exceed 200,000
shares.
ARTICLE III
GRANTING OF OPTIONS
Section 3.01. ELIGIBILITY. Subject to the Ownership Limit, any Employee
or person associated with the Company and selected by the Committee pursuant to
Section 3.04(a)(i) shall be eligible to be granted an Option.
Section 3.02. DISQUALIFICATION FOR STOCK OWNERSHIP. No person may be
granted an Incentive Stock Option under this Plan if such person, at the time
the Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any then existing Company Subsidiary unless such Incentive Stock
Option conforms to the applicable provisions of Section 422 of the Code.
Section 3.03. QUALIFICATION OF INCENTIVE STOCK OPTIONS. No Incentive
Stock Option shall be granted unless such Option, when granted, qualifies as an
"incentive stock option" under Section 422 of the Code.
Section 3.04. GRANTING OF OPTIONS.
(a) The Committee shall from time to time, in its absolute discretion:
(i) Determine which Employees or persons associated with the
Company are key Employees and select from among the key Employees or
such persons (including Employees or persons to whom Options or
Performance Awards have previously been granted and/or shares of
Restricted Stock have previously been issued) such of them as in its
opinion should be granted Options;
(ii) Determine the number of shares to be subject to such Options
granted to the selected key Employees or such persons;
(iii) Determine whether such Options are to be Incentive Stock
Options or Non- Qualified Stock Options; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan.
(b) Upon the selection of a key Employee or persons associated with
the Company to be granted an Option, the Committee shall instruct the
Secretary of the Company to issue the Option and may impose such conditions
on the grant of the Option as it deems appropriate. Without limiting the
generality of the preceding sentence, the Committee may, in its discretion
and on such terms as it deems appropriate, require as a condition on the
grant of an Option to an Employee that the Employee surrender for
cancellation some or all of the unexercised Options or Performance Awards
or other rights which have been previously granted to him under this Plan.
An Option, the grant of which is conditioned upon such surrender, may have
an option price lower (or higher) than the exercise price of such
surrendered Option or Performance Award, may cover the same (or a lesser or
greater) number of shares as such surrendered right, may contain such other
terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered right.
Such cancellation and regrant options shall be counted against the maximum
number of shares that may be awarded to an individual Participant under the
Plan pursuant to Section 2.04 hereof.
(c) Any Incentive Stock Option granted under this Plan may be modified
by the Committee to disqualify such option from treatment as an "incentive
stock option" under Section 422 of the Code.
Section 3.05. NON-EMPLOYEE DIRECTORS. Notwithstanding anything in this
Plan to the contrary, Non- Employee Directors may be granted Options only
pursuant to the provisions contained in this Section 3.05.
(a) On the third business day following the Company's Annual Meeting
of Shareholders (the "Grant Date"), a Non-Employee Director shall
automatically, without further action by the Board or the Committee, be
granted certain Non-Qualified Stock Options in an amount equal to 10% of
the dollar amount of the Retainer Fee (the "Option Percentage").
(i) If on the Grant Date the Company is in possession of
material, undisclosed information that would prevent it from issuing
securities, then the grant of the Options will be suspended until the
third day after the public dissemination of the information (or the
first trading day thereafter). Only the legal counsel to the Company
may suspend the Grant Date; the amount, pricing and other terms of the
grant will remain as set forth in this Section 3.05, with the exercise
price of the Option determined in accordance with the formula on the
date the Option is finally granted.
(b) The number of shares underlying the Non-Qualified Stock Options
granted to any eligible Non-Employee Director shall be equal to the whole
number (with any fractional interest rounded up to the next highest whole
number) determined by dividing the Option Percentage by the number
resulting from the application of the Black-Scholes option pricing model to
an Option for one share of Common Stock as determined on the Grant Date,
whichever is applicable.
In applying the Black-Scholes option pricing model the following
variables shall apply:
(i) the risk free rate of return shall be the long-term Treasury
bill rate in effect on the Grant Date;
(ii) the assumed dividend rate shall be that in effect on the
Grant Date;
(iii) the volatility shall be determined on the basis of the
Common Stock's volatility over the four calendar quarters preceding
the Grant Date; and
(iv) any other variables as may be established by the Committee.
(c) Only Non-Qualified Stock Options may be granted under the Plan.
The price per share of the Common Stock subject to each Option granted
under the Plan shall not be less than 100% of the Fair Market Value of the
Common stock on the Grant Date.
(d) In addition to the provisions contained in Section 10.02 of this
Plan, neither the Board nor the Committee may amend, more than once every
six months, the provisions of the Plan regarding (i) the selection of the
Non-Employee Directors to whom Options are to be granted, (ii) the timing
of such grants, (iii) the number of shares subject to any Option, (iv) the
exercise price of any Option, (v) the periods during which any Option may
be exercised, and (vi) the term of any Option, other than to comport with
changes in the Code, as amended, the Employee Retirement Income Security
Act, as amended, or the rules and regulations thereunder. In addition,
neither the Board nor the Committee may amend the Option Percentage without
the advice of legal counsel to the Company.
ARTICLE IV
TERMS OF OPTIONS
Section 4.01. OPTION AGREEMENT. Each Option shall be evidenced by a
written stock option agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan. Stock
option agreements evidencing Incentive Stock Options shall contain such terms
and conditions as may be necessary to meet the applicable provisions of Section
422 of the Code.
Section 4.02. OPTION PRICE. The price per share of the shares subject
to each Option shall be set by the Committee; provided, however, that such price
shall be no less than the par value of a share of Common Stock and in the case
of Incentive Stock Options such price shall not be less than 100% of the Fair
Market Value of a share of Common Stock as of the date the Option is granted;
provided further, that in the case of Incentive Stock Options such price shall
be no less than 110% of the Fair Market Value of a share of Common Stock as of
the date the Option is granted if such Option is granted to a person who owns
ten percent (10%) or more of the issued and outstanding Common Stock of the
Company as of such date.
Section 4.03. OPTION TERM. The term of an Option shall be set by the
Committee in its discretion; provided, however, that no such term shall exceed a
reasonable time period, and provided further that, in the case of Incentive
Stock Options, the term shall not be more than ten (10) years from the date the
Incentive Stock Option is granted. The last day of the term of the Option shall
be the Option's Expiration Date.
Section 4.04. OPTION VESTING.
(a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee,
and the Committee may determine that an Option may not be exercised in
whole or in part for a specified period after it is granted; provided,
however, that no Option shall be exercisable by any Optionee who is
then subject to Section 16 of the Exchange Act within the period ending
six months after the date the Option is granted. At any time after
grant of an Option, the Committee may, in its sole discretion and
subject to whatever terms and conditions it selects, accelerate the
period during which an Option vests.
(b) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable;
provided, however, that provision may be made that such Option shall
become exercisable, with the consent of the Committee, in the event of
a Termination of Employment because of the Optionee's normal retirement
or permanent and total disability (each as determined by the Committee
in accordance with Company policies), death or early retirement.
(c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the
meaning of Section 422 of the Code, but without regard to Section
422(d) of the Code) are exercisable for the first time by an Optionee
during any calendar year (under the Plan and all other incentive stock
option plans of the Company or any Company Subsidiary) exceeds
$100,000, such Options shall be treated as Non-Qualified Options to the
extent required by Section 422 of the Code. The rule set forth in the
preceding sentence shall be applied by taking Options into account in
the order in which they were granted. For purposes of this Section
4.04(c), the Fair Market Value of stock shall be determined as of the
time the Option, with respect to such stock, is granted.
Section 4.05. EXERCISE OF OPTION AFTER TERMINATION OF EMPLOYMENT. For
those Participants who are Employees, an Option is exercisable by an Optionee
only while he is an Employee. The preceding notwithstanding, the Committee may
determine that an Option may be exercised subsequent to an Optionee's
Termination of Employment, subject to the following limitations:
(a) If the Optionee dies while an Option is exercisable under
the terms of this Plan, the Optionee's Beneficiary may exercise such
rights, to the extent the Optionee could have done so immediately
preceding his death. Any such Option must be exercised within twelve
(12) months after the Optionee's death, and the Committee may in its
discretion extend the Expiration Date of such Option to accommodate
such exercise; provided, however, that the term of an Incentive Stock
Option may not be extended beyond ten (10) years from the date of
grant.
(b) If the Optionee's employment is terminated due to his
permanent and total disability, as defined in Section 22(e)(3) of the
Code, the Optionee may exercise his Option, to the extent exercisable
as of his Termination of Employment, within twelve (12) months after
termination, but no later than the Option's Expiration Date.
(c) If the Optionee's employment is terminated for any reason
other than those set forth in subsection (a) or (b) above, the Optionee
may exercise his Option, to the extent exercisable as of his
Termination of Employment, within three (3) months after Termination of
Employment, but not later than the Option's Expiration Date.
Section 4.06. CONSIDERATION. In consideration of the granting of a
Non-Qualified Stock Option, the Optionee shall agree, in a written stock option
agreement, to remain in the employ of, or associated with, the Company or a
Company Subsidiary for a period of time to be determined by the Committee after
the Non-Qualified Stock Option is granted or upon such other terms and
conditions as deemed appropriate by the Committee. In consideration of the
granting of an Incentive Stock Option, the Optionee shall agree, in a written
stock option agreement, to remain in the employ of the Company or a Company
Subsidiary for a period of time to be determined by the Committee after the
Incentive Stock Option is granted, upon those terms and conditions as deemed
appropriate by the Committee. If no period of time for employment by the Company
is set in such written stock option agreement, no time of employment shall be
required. Nothing in this Plan or in any stock option agreement hereunder shall
confer upon any Optionee any right to continue in the employ of the Company or
any Company Subsidiary.
ARTICLE V
EXERCISE OF OPTIONS
Section 5.01. PARTIAL EXERCISE. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
Section 5.02. MANNER OF EXERCISE. All or a portion of an exercisable
Option shall be deemed exercised upon:
(a) Delivery of all of the following to the Secretary of the
Company or his office:
(i) A written notice complying with the applicable
rules established by the Committee or the Company stating that
the Option, or a portion thereof, is exercised. The notice
shall be signed by the Optionee or other person then entitled
to exercise the Option or such portion;
(ii) Such representations and documents as the
Committee, in its absolute discretion, deems necessary or
advisable to effect compliance with all applicable provisions
of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee
may, in its absolute discretion, also take whatever additional
actions it deems appropriate to effect such compliance,
including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and
registrars; and
(iii) In the event that the Option shall be exercised
pursuant to Section 4.05(a) by any person or persons other
than the Optionee, appropriate proof of the right of such
person or persons to exercise the Option; and
(b) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is
exercised. However, at the discretion of the Committee, the terms of
the Option may (i) allow a delay in payment up to thirty (30) days from
the date the Option, or portion thereof, is exercised; (ii) allow
payment, in whole or in part, through the delivery of shares of Common
Stock owned by the Optionees; (iii) allow payment, in whole or in part,
through the surrender of shares of Common Stock then issuable upon
exercise of the Option; or (iv) allow payment, in whole or in part,
through the delivery of property of any kind which constitutes good and
valuable consideration.
Section 5.03. TRANSFER OF SHARES TO AN EMPLOYEE. As soon as practicable
after receipt by the Company, pursuant to Section 5.02(b), of full cash payment
for the shares with respect to which an Option, or portion thereof, is exercised
by an Optionee, with respect to each such exercise, the Company shall transfer
to the Optionee the number of shares equal to the quotient of:
(a) The amount of the payment made by the Optionee to the
Company pursuant to Section 5.02(b), and
(b) The price per share of the shares subject to the Option as
determined pursuant to Section 4.02.
Section 5.04. CERTAIN TIMING REQUIREMENTS. At the discretion of the
Committee, shares of Common Stock issuable to the Optionee upon exercise of the
Option may be used to satisfy the Option exercise price or the tax withholding
consequences of such exercise only (i) during such periods in which trading of
the Company Common Stock is permitted for Employees of the Company under Company
policy as in effect from time to time or (ii) pursuant to an irrevocable written
election by the Optionee to use shares of Common Stock issuable to the Optionee
upon exercise of the Option to pay all or part of the Option price or the
withholding taxes made at least six months prior to the payment of such Option
price or withholding taxes.
Section 5.05. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The Company
shall not be required to issue or to deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body which the Committee shall, in its absolute
discretion, deem necessary or advisable;
(c) Obtaining any approval or other clearance from any state
or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time
for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
Section 5.06. RIGHTS AS STOCKHOLDERS. The holders of Options shall not
be, nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.
Section 5.07. TRANSFER RESTRICTIONS. Shares acquired through the
exercise of an Option shall be subject to the restrictions on transfer set forth
in the Certificate of Incorporation. The Committee, in its absolute discretion,
may impose such additional restrictions on the transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Stock Option Agreement and may
be referred to on the certificates evidencing such shares. The Committee will
require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting such Option to such Employee or (ii) one
year after the transfer of such shares to such Employee. The Committee may
direct that the certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.
Section 5.08. RESTRICTIONS ON EXERCISE OF OPTION. An Option is not
exercisable if the exercise of such Option would likely result in any of the
following:
(a) The Optionee's ownership of Common Stock being in
violation of the Company's Certificate of Incorporation or Ownership
Limit; or
(b) Income to the Company that could impair the Company's
status as a real estate investment trust, within the meaning of
Sections 856 through 860 of the Code.
ARTICLE VI
AWARD OF RESTRICTED STOCK
Section 6.01. ELIGIBILITY. Subject to the Ownership Limit, Restricted
Stock may be awarded to any Employee or person associated with the Company whom
the Committee, pursuant to Section 3.04(a)(i), determines is a key Employee or
person associated with the Company.
Section 6.02. AWARD OF RESTRICTED STOCK.
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Select from among the key Employees (including
Employees to whom Options or Performance Awards have
previously been granted and/or shares of Restricted Stock have
previously been issued) or persons associated with the Company
such of them as in its opinion should be awarded Restricted
Stock; and
(ii) Determine the purchase price and other terms
and conditions applicable to such Restricted Stock, consistent
with this Plan.
(b) The Committee shall establish the purchase price and form
of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the Common Stock to be
purchased. In all cases, legal consideration shall be required for each
issuance of Restricted Stock.
(c) Upon the selection of a key Employee or persons associated
with the Company to be awarded Restricted Stock, the Committee shall
instruct the Secretary of the Company to issue such Restricted Stock
and may impose such conditions on the issuance of such Restricted Stock
as it deems appropriate.
ARTICLE VII
TERMS OF RESTRICTED STOCK
Section 7.01. RESTRICTED STOCK AGREEMENT. Restricted Stock shall be
issued only pursuant to a written Restricted Stock agreement, which shall be
executed by the selected key Employee or persons associated with the Company and
an authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.
Section 7.02. CONSIDERATION TO THE COMPANY. As consideration for the
issuance of Restricted Stock, in addition to payment of the purchase price, the
selected key Employee or persons associated with the Company shall agree, in the
written Restricted Stock agreement, to remain in the employ of, or associated
with, the Company or a Company Subsidiary for a period of time after the
Restricted Stock is issued to be determined by the Committee. Nothing in this
Plan or in any Restricted Stock agreement hereunder shall confer on any
Restricted Stockholder any right to continue in the employ of the Company or any
Company Subsidiary.
Section 7.03. RIGHTS AS STOCKHOLDERS. Upon delivery of the shares of
Restricted Stock to the escrow holder pursuant to Section 7.06, the Restricted
Stockholder shall have all the rights of a stockholder with respect to said
shares, subject to the restrictions in his Restricted Stock agreement, including
the right to vote the shares and to receive all dividends and other
distributions paid or made with respect to the shares; provided, however, that
in the discretion of the Committee, any extraordinary distributions with respect
to the Common Stock shall be subject to the restrictions set forth in Section
7.04.
Section 7.04. RESTRICTIONS. All shares of Restricted Stock issued under
this Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall, in the terms of each individual
Restricted Stock agreement, be subject to such restrictions as the Committee
shall provide, which restrictions may include, without limitation, restrictions
based on duration of employment with the Company, Company performance and
individual performance; provided, however, that by a resolution adopted after
the Restricted Stock is issued, the Committee may, on such terms and conditions
as it may determine to be appropriate, remove any or all of the restrictions
imposed by the terms of the Restricted Stock agreement. Restricted Stock may not
be sold or encumbered until all restrictions are terminated or expire.
Section 7.05. REPURCHASE OF RESTRICTED STOCK. The Committee shall
provide in the terms of each individual Restricted Stock agreement that the
Company shall have the right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the Restricted Stock
agreement immediately upon a Termination of Employment or otherwise for any
reason at a cash price per share equal to the price paid by the Restricted
Stockholder for such Restricted Stock; provided, however, that provision may be
made that no such right of repurchase shall exist in the event of a Termination
of Employment because of the Restricted Stockholder's retirement at or after age
fifty-five (55), death or permanent and total disability.
Section 7.06. ESCROW. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock agreement with respect to the shares evidenced by
such certificate expire or shall have been removed.
Section 7.07. LEGEND. In order to enforce the restrictions imposed upon
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under Restricted Stock agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.
ARTICLE VIII
PERFORMANCE AWARDS
Section 8.01. ELIGIBILITY. Subject to the Ownership Limit, one or more
Performance Awards may be granted to any key Employee or person associated with
the Company.
Section 8.02. PERFORMANCE AWARDS.
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Select from among key Employees or persons
associated with the Company (including Employees to whom
Options or Performance Awards have previously been granted
and/or shares of Restricted Stock have previously been issued)
such of them as in its opinion should be granted a Performance
Award; and
(ii) Determine the purchase price and other terms and
conditions applicable to such Performance Award, consistent
with this Plan.
(b) The value of such Performance Awards may be linked to the
market value, book value or other measure of the value of Common Stock
or other specific performance criteria determined appropriate by the
Committee, in each case on a specified date or dates or over any period
or periods determined by the Committee, or may be based upon the
appreciation in the market value, book value or other measure of the
value of a specified number of shares of Common Stock over a fixed
period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors
as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the key
Employee or person associated with the Company whose Performance Award
is at issue.
Section 8.03. PERFORMANCE AWARD AGREEMENT. Each Performance Award shall
be evidenced by a written agreement, which shall be executed by the Grantee and
an authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.
Section 8.04. TERM. The term of a Performance Award shall be set by the
Committee in its discretion.
Section 8.05. EXERCISE UPON TERMINATION OF EMPLOYMENT. A Performance
Award is exercisable only while the Grantee is an Employee or associated with
the Company; provided that the Committee may determine that the Performance
Award may be exercised subsequent to Termination of Employment to the extent
permitted under Section 4.05 with respect to Options.
Section 8.06. PAYMENT ON EXERCISE. Payment of the amount determined
under Section 8.02 above shall be in cash, in Common Stock or a combination of
both, as determined by the Committee. To the extent such payment is effected in
Common Stock, it shall be made subject to satisfaction of all provisions of
Section 5.05 with respect to Options and shall be no less than the par value of
a share of Common Stock.
Section 8.07. CONSIDERATION. In consideration of the granting of a
Performance Award, the Grantee shall agree, in a written agreement, to remain in
the employ of, or associated with, the Company or a Company Subsidiary after
such Performance Award is granted for a period of time as determined by the
Committee. Nothing in this Plan or in any agreement hereunder shall confer on
any Grantee any right to continue in the employ of, or associate with, the
Company or any Company Subsidiary.
ARTICLE IX
ADMINISTRATION
Section 9.01. COMPENSATION COMMITTEE. The Compensation Committee shall
consist of two or more Directors who are "outside directors" as defined under
Section 162(m) of the Code and the regulations promulgated thereunder, appointed
by and holding office at the pleasure of the Board, each of whom is not then an
officer of the Company and each of whom is a "disinterested person" as defined
by Rule 16b-3. Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be filled
by the Board.
Section 9.02. DUTIES AND POWERS OF COMMITTEE. It shall be the duty of
the Committee to conduct the general administration of this Plan in accordance
with its provisions. The Committee shall have the power to interpret this Plan,
the Options, the Performance Awards and the Restricted Stock, and the agreements
pursuant to which the Options, Performance Awards and Restricted Stock are
granted or awarded, and to adopt such rules for the administration,
interpretation and application of this Plan as are consistent therewith and to
interpret, amend or revoke any such rules. Any such grant or award under this
Plan need not be the same with respect to each Optionee, Grantee or Restricted
Stockholder. Any such interpretations and rules with respect to Incentive Stock
Options shall be consistent with the provisions of Section 422 of the Code. In
its absolute discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under this Plan except
with respect to matters which under Rule 16b-3 are required to be determined in
the sole discretion of the Committee. The Committee shall have the power to
amend the Plan, upon advice from counsel to the Company, if required to preserve
the Company's status as a real estate investment trust under the provisions of
the Code.
Section 9.03. MAJORITY RULE. The Committee shall act by a majority of
its members in attendance at a meeting, or to the extent permitted by law and
the Bylaws, by telephonic meeting, at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.
Section 9.04. COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH
ACTIONS. Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all Options, Grantees, Restricted Stockholders, the
Company and all other interested persons. No members of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan, any Option, any Performance Award or any
Restricted Stock, and all members of the Committee shall be fully protected by
the Company in respect of any such action, determination or interpretation.
Section 9.05. NO LIABILITY. No member of the Board or the Committee, or
Director, officer or employee of the Company or any Company Subsidiary shall be
liable, responsible or accountable in damages or otherwise for any determination
made or other action taken or any failure to act by such person so long as such
person is not determined to be guilty by a final adjudication of willful
misconduct with respect to such determination, action or failure to act.
Section 9.06. INDEMNIFICATION. To the fullest extent permitted by law,
each of the members of the Board and the Committee and each of the Directors,
officers and employees of the Company and any Company Subsidiary shall be held
harmless and be indemnified by the Company for any liability, loss (including
amounts paid in settlement), damages or expenses (including reasonable
attorneys' fees) suffered by virtue of any determinations, acts or failures to
act, or alleged acts or failures to act, in connection with the administration
of this Plan so long as such person is not determined by a final adjudication to
be guilty of willful misconduct with respect to such determination, action or
failure to act.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. NOT TRANSFERABLE. Options, Performance Awards and
Restricted Stock under this Plan may not be sold, pledged, assigned or
transferred in any manner other than by will or the laws of descent and
distribution; provided, however, that an Optionee or Grantee may designate a
Beneficiary to exercise his Option or other rights under this Plan after his
death. No Option, Performance Award or Restricted Stock or interest or right
therein shall be liable for the debts, contracts or engagements of the Optionee,
Grantee or Restricted Stockholder or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that nothing in this Section 10.01 shall prevent transfers by will or
by the applicable laws of descent and distribution. An Option shall be exercised
during the Optionee's lifetime only by the Optionee or his guardian or legal
representative. A Performance Award under this Plan shall be exercised during
the Grantee's lifetime only by the Grantee or his guardian or legal
representative.
Section 10.02. AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN.
Subject to the conditions contained in Section 3.05(d) herein, this Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Board. However, without approval of the
Company's stockholders given within twelve months before or after the action by
the Board or the Committee, no action of the Committee or Board may, except as
provided in Section 10.03, increase the limits imposed in Section 2.01 on the
maximum number of shares which may be issued under this Plan, and no action of
the Committee or Board may be taken that would otherwise require stockholder
approval as a matter of applicable law, regulation or rule. No amendment,
suspension or termination of this Plan shall, without the consent of the holder
of an Option, Performance Award or Restricted Stock, alter or impair any rights
or obligations under any Option, Performance Award or Restricted Stock
theretofore granted or awarded. No Option, Performance Award or Restricted Stock
may be granted or awarded during any period of suspension nor after termination
of this Plan, and in no event may any Incentive Stock Option be granted under
this Plan after the first to occur of the following events:
(a) The expiration of five years from the date the Plan is
adopted by the Board; or
(b) The expiration of five years from the date the Plan is
approved by the Company's stockholders under Section 10.05.
Section 10.03. CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY. In the
event that the outstanding shares of Common Stock are hereafter changed into or
exchanged for cash or a different number or kind of shares or other securities
of the Company, or of another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock splitup, stock dividend
or combination of shares, appropriate adjustments shall be made by the Committee
in the number and kind of shares for the purchase of which Options or with
respect to which the exercise of Performance Awards may be granted, including
adjustments of the limitation in Section 2.01 on the maximum number and kind of
shares which may be issued.
In the event of such a change or exchange, other than for shares or
securities of another corporation or by reason of reorganization, the Committee
shall also make an appropriate and equitable adjustment in the number and kind
of shares as to which all outstanding Options or Performance Awards, or portions
thereof then unexercised, shall be exercisable. Such adjustment shall be made
with the intent that after the change or exchange of shares, each Optionee's and
each Grantee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in an outstanding Option or
Performance Award may include a necessary or appropriate corresponding
adjustment in the Option or Performance Award exercise price, but shall be made
without change in the total price applicable to the Option or Performance Award,
or the unexercised portion thereof (except for any change in the aggregate price
resulting from rounding off of share quantities or prices).
Where an adjustment of the type described above is made to an Incentive
Stock Option under this Section, the adjustment will be made in a manner which
will not be considered a "modification" under the provisions of subsection
424(h)(3) of the Code.
In the event of a "spin-off" or other substantial distribution of
assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Company's Common Stock, the Committee may in its discretion
make an appropriate and equitable adjustment to the Option or Performance Award
exercise price to reflect such diminution.
Section 10.04. MERGER OF THE COMPANY. In the event of the merger or
consolidation of the Company with or into another corporation, the exchange of
all or substantially all of the assets of the Company for the securities of
another corporation, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company:
(a) The terms of an Option or Performance Award shall provide
that all granted or awarded Options or Performance Awards will
immediately vest in the Optionee or Grantee, and for a specified period
of time prior to such event, such Option or Performance Award shall be
exercisable as to all shares covered thereby, notwithstanding anything
to the contrary in (i) Section 4.04 or (ii) the provisions of such
Option or Performance Award.
(b) At the discretion of the Committee, the restrictions
imposed under a Restricted Stock agreement upon some or all shares of
Restricted Stock may be terminated and/or some or all of such shares
may cease to be subject to repurchase under Section 7.05 after such
event.
Section 10.05. APPROVAL OF PLAN BY STOCKHOLDERS. This Plan will be
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board's initial adoption of this Plan. Options or
Performance Awards may be granted and Restricted Stock may be awarded prior to
such stockholder approval, provided that such Options or Performance Awards
shall not be exercisable and such Restricted Stock shall not vest prior to the
time when this Plan is approved by the stockholders, and provided further that
if such approval has not been obtained at the end of said twelve-month period,
all Options and Performance Awards previously granted and all Restricted Stock
previously awarded under this Plan shall thereupon be cancelled and become null
and void. The Company shall take such actions with respect to the Plan as may be
necessary to satisfy the requirements of Rule 16b-3.
Section 10.06. TAX WITHHOLDING. The Company shall be entitled to
require payment or deduction from other compensation payable to each Optionee,
Grantee or Restricted Stockholder of any sums required by federal, state or
local tax law to be withheld with respect to any Option, Performance Award or
Restricted Stock. The Committee may in its discretion allow such Optionee,
Grantee or Restricted Stockholder to elect to have the Company withhold shares
of Common Stock (or allow the return of shares of Common Stock) having a Fair
Market Value equal to the sums required to be withheld. If the Optionee, Grantee
or Restricted Stockholder elects to advance such sums directly, written notice
of that election shall be delivered on or prior to such exercise and, whether
pursuant to such election or pursuant to a requirement imposed by the Company
payment in cash or by check of such sums for taxes shall be delivered within two
days after the date of exercise. If, as allowed by the Committee, the Optionee,
Grantee or Restricted Stockholder elects to have the Company withhold Shares of
Common Stock (or allow the return of shares of Common Stock) having a Fair
Market Value equal to the sums required to be withheld, the value of the shares
of Common Stock to be withheld (or returned as the case may be) will be equal to
the Fair Market Value of such shares as of the date that the amount of tax to be
withheld is to be determined (the "Tax Date"). Elections by such persons to have
shares of Common Stock withheld for this purpose will be subject to the
following restrictions: (a) the election must be made on or prior to the Tax
Date, (b) the election must be irrevocable, (c) the election shall be subject to
the disapproval of the Committee, and (d) if the person is an officer of the
Company within the meaning of Section 16 of the Exchange Act, the election shall
be subject to such additional restrictions as the Committee may impose in an
effort to secure the benefits of any regulations thereunder. The Committee shall
not be obligated to issue shares and/or distribute cash to any person upon
exercise of any right until such payment has been received or shares have been
so withheld, unless withholding (or offset against a cash payment) as of or
prior to the date of such exercise is sufficient to cover all such sums due or
which may be due with respect to such exercise.
Section 10.07. LOANS. The Committee may, in its discretion, extend one
or more loans to key Employees in connection with the exercise or receipt of
outstanding Options or Performance Awards granted under this Plan, or the
issuance of Restricted Stock awarded under this Plan. The terms and conditions
of any such loan shall be set by the Committee.
Section 10.08. LIMITATIONS APPLICABLE TO SECTION 16 PERSONS.
(a) Notwithstanding any other provision of this Plan, any
Option or Performance Award granted or Restricted Stock awarded to a
key Employee who is then subject to Section 16 of the Exchange Act is
subject to the following additional limitations:
(i) the Option, Performance Award or Restricted
Stock agreement may provide for the issuance of shares of
Common Stock as a stock bonus for no consideration other than
services rendered; and
(ii) in the event of an Option, Performance Award or
Restricted Stock agreement under which shares of Common Stock
are or in the future may be issued for any type of
consideration other than services rendered, the amount of such
consideration shall be equal to the minimum amount (such as
the par value of such shares) required to be received by the
Company to comply with applicable state law.
(b) Notwithstanding any other provision of this Plan, this
Plan, and any Option or Performance Award granted, or Restricted Stock
awarded, to a key Employee who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth
in any applicable exemptive rule under Section 16 of the Exchange Act
(including any amendment to Rule 16b-3 of the Exchange Act) that are
requirements for the application of such exemptive rule. Any such
additional limitation shall be set forth in an annex to this Plan, such
annex to be incorporated herein by this reference and made part of this
Plan.
(c) With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
Moreover, in the event the Plan does not include a provision required
by Rule 16b-3 to be stated therein, such provision (other than one
relating to eligibility requirements, or the price and amount of
awards) shall be deemed automatically to be incorporated by reference
into the Plan insofar as participants subject to Section 16 are
concerned.
Section 10.09. PLAN DESIGNATION AND STATUS. Notwithstanding the
designation of this document as a Plan for convenience of reference and to
standardize certain provisions applicable to all types of Options, Performance
Awards and Restricted Stock issuances authorized, each of the Option,
Performance Award and Restricted Stock shall be deemed to be a separate "plan"
for purposes of Section 16 of the Exchange Act and any applicable state
securities laws.
Section 10.10. RELEASE OF RESTRICTIONS. Any or all of the foregoing
limitations in Sections 10.08(a) and 10.09 on Options or Performance Awards
granted to key Employees and Restricted Stock awarded to key Employees shall be
suspended if, to the extent, as to such persons, and for so long as the
Securities and Exchange Commission by regulation or official staff
interpretation or a no-action letter issued to the Company determines that such
limitation is not necessary to secure the benefits otherwise available with
respect to a "plan" or particular award, as the case maybe, under any applicable
exemptive rule under Section 16 of the Exchange Act.
Section 10.11. EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Company Subsidiary. Nothing in this Plan shall
be construed to limit the right of the Company (a) to establish any other forms
of incentives or compensation for employees of the Company or any Company
Subsidiary or (b) to grant or assume options or other rights otherwise than
under this Plan in connection with any proper corporate or partnership purpose
including but not by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, partnership,
firm or association or the performance of services for the benefit of the
Company.
Section 10.12. EFFECT OF CHANGE OF SUBSIDIARY STATUS. For purposes of
this Plan and any Options or Performance Awards granted, or Restricted Stock
awarded hereunder, if an entity ceases to be a Company Subsidiary the employment
of all Optionees, Grantees or Restricted Stockholders who are employed by such
entity shall be deemed to have terminated, except any such Optionees, Grantees
or Restricted Stockholders who continue to be employees of another entity within
the Company.
Section 10.13. COMPLIANCE WITH LAWS. This Plan, the granting and
vesting of Options, Performance Awards or Restricted Stock under this Plan and
the issuance and delivery of shares of Common Stock and the payment of money
under this Plan or under Options or Performance Awards granted or Restricted
Stock awarded hereunder are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions, and
the person acquiring such securities shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, Options,
Performance Awards and Restricted Stock granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such laws, rules and
regulations.
Section 10.14. TITLES. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this Plan.
Section 10.15. GOVERNING LAW. This Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of Delaware without regard to conflicts of laws thereof.
Section 10.16. SEVERABILITY. If any portion of this Plan is declared by
a court of competent jurisdiction to be invalid or unenforceable after all
appeals have either been exhausted or the time for any appeals to be taken has
expired, the remainder of the terms, provisions, covenants and restrictions of
this Plan shall remain in full force and effect and in no way be affected,
impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers duly authorized on this 15th day of March, 1995.
FRANCHISE FINANCE CORPORATION OF AMERICA,
a Delaware corporation
By /s/ MORTON FLEISCHER
-----------------------------------------
Morton Fleischer, President and
Chief Executive Officer
<PAGE>
APPENDIX B
PROXY/VOTING INSTRUCTION CARD
FRANCHISE FINANCE CORPORATION OF AMERICA
C/O GEMISYS CORPORATION, P.O. BOX 3287, ENGLEWOOD, CO 80155-9758
ANNUAL MEETING DATE: MAY 10, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned shareholder of Franchise Finance Corporation of America (the
"Company"), a Delaware corporation, hereby constitutes and appoints Christopher
H. Volk and John R. Barravecchia, and each of them, proxies, with full power of
substitution, for and on behalf of the undersigned to vote, as designated below,
according to the number of shares of the Company's $.01 par value common stock
held of record by the undersigned on March 15, 1995, and as fully as the
undersigned would be entitled to vote if personally present, at the Annual
Meeting of Shareholders to be held at The Scottsdale Princess Resort, 7575 E.
Princess Drive, Scottsdale, Arizona on May 10, 1995 at 10:00 a.m. local time,
and at any postponements or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED. IF PROPERLY EXECUTED AND NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED IN FAVOR OF THE ELECTION OF ALL LISTED NOMINEES TO THE BOARD OF
DIRECTORS AND FOR EACH OF THE OTHER ITEMS SET FORTH ON THE PROXY.
Please mark boxes in ink, and sign, date and return this Proxy promptly, using
the enclosed envelope.
1. Election of Directors:
o FOR ALL NOMINEES LISTED BELOW o WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote all nominees listed
below
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below)
-------------------------------------------------------------------------------
Morton Fleischer, Robert W. Halliday, Willie R. Barnes, William C. Foxley,
Donald C. Hannah, Louis P. Neeb, Kenneth B. Roath, Wendell J. Smith and
Casey J. Sylla
2. Proposal to approve the Company's 1995 Stock Option and Incentive Plan.
o FOR o AGAINST o ABSTAIN
3. Proposal to ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1995.
o FOR o AGAINST o ABSTAIN
4. In the discretion of such proxy holders, upon such other business as
may properly come before the Meeting or any and all postponements or
adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, dated March 31, 1995 and the Proxy Statement
furnished therewith.
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. Executors, administrators, trustees and
other fiduciaries, and persons signing on behalf of corporations or
partnerships, should so indicate when signing.
Dated _________________________________________ , 1995
----------------------------------------------------
Authorized Signature
----------------------------------------------------
Title
----------------------------------------------------
Authorized Signature
----------------------------------------------------
Title
To save the Company additional vote solicitation expenses, please sign,
date and return this Proxy promptly, using the enclosed envelope.
NON-VOTING INSTRUCTIONS
o ANNUAL MEETING. Please check here to indicate that you plan to attend
the Annual Meeting of Shareholders on May 10, 1995.
