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 ss. 240.14a-11(c) or ss. 240.14a-12
FRANCHISE FINANCE CORPORATION OF AMERICA
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(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:
[X] 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>
[GRAPHIC OMITTED]
FRANCHISE FINANCE
CORPORATION OF AMERICA
----------
NOTICE OF
1996
ANNUAL MEETING
AND
PROXY STATEMENT
----------
ANNUAL MEETING
TO BE HELD
MAY 8, 1996
<PAGE>
[GRAPHIC OMITTED]
FRANCHISE FINANCE
CORPORATION OF AMERICA
17207 NORTH PERIMETER DRIVE
SCOTTSDALE, ARIZONA 85255-5402
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 1996 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 8, 1996 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,
March 29, 1996 Morton Fleischer, President, Chief Executive
Officer and Chairman of the Board
<PAGE>
[GRAPHIC OMITTED]
FRANCHISE FINANCE
CORPORATION OF AMERICA
17207 NORTH PERIMETER DRIVE
SCOTTSDALE, ARIZONA 85255-5402
-----------------------------------------
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1996
-----------------------------------------
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 8, 1996 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 ten directors to the Board of Directors.
2. To consider and vote upon a proposal to amend and restate the
Company's Restated Certificate of Incorporation which would, among
other things, authorize the issuance of 50,000,000 shares of
preferred stock.
3. To ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1996.
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, 1996
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
Christopher H. Volk
Christopher H. Volk, Secretary
Scottsdale, Arizona
Dated: March 29, 1996
<PAGE>
FRANCHISE FINANCE CORPORATION OF AMERICA
17207 North Perimeter Drive
Scottsdale, Arizona 85255
-----------------------------------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be held May 8, 1996
-----------------------------------------------------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors (the "Board") of Franchise
Finance Corporation of America, a Delaware corporation (the "Company") for use
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 8, 1996 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 29, 1996.
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; 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, 1996 (the "Record Date") will be entitled to receive notice of and to vote
at the Meeting. On the Record Date there were 40,350,849 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.
1
<PAGE>
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.
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 amendment to and restatement of the Company's Restated
Certificate of Incorporation.
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 Transfer Agents, 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 1997 Annual Meeting of Shareholders
or until his 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 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
Directors
The following table sets forth certain information with respect to the
directors of the Company (all of whom are nominees for re-election):
2
<PAGE>
Principal Occupation or Employment
During the Past Five Years; Other Director of the
Name and Age Directorships Company Since
- ------------ ------------- -------------
Morton H. Fleischer Director, Chairman of the Board, President June 22, 1993
(59) and Chief Executive Officer of the
Company. Mr. Fleischer previously served
as the President, Chief Executive Officer
and director of Franchise Finance
Corporation of America I, a Delaware
corporation ("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 eleven public limited partnerships
that were consolidated to form the
Company. In addition, he 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 ("SLT")
(commercial land development).
Robert W. Halliday Director and Chairman Emeritus of the June 22, 1993
(76) Board of the Company. Mr. Halliday
previously served as the Chairman of the
Board of the Company since its
organization and of FFCA I since its
formation in 1980. He is a limited partner
of the general partner of PIP 86, GHI and
SLT, and 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. Mr. March 14, 1995
(64) Barnes has been a partner in the law firm
of Musick, Peeler & Garrett since June
1992. He was a partner in the law firm of
Katten, Muchin Zavis & Weitzman from March
1991 to January 1992, and a partner in the
law firm of Wyman Bautzer Kuchel & Silbert
from January 1989 to March 1991. He is a
member of the Business Law Section of the
American Bar Association, in addition to
other committees. Mr. Barnes was appointed
as the Commissioner of Corporations for
the State of California in 1975 and is a
member of the California Senate Commission
on Corporate Governance, Shareholder
Rights and Securities Transactions. He is
currently a director and secretary of
American Shared Hospital Services.
William C. Foxley President of Foxley Cattle Company. From August 1, 1994
(61) 1983 to 1993, Mr. Foxley served as a
consultant to a group of investment
limited partnerships managed by Bridge
Capital of Teaneck, New Jersey. He is
currently Chairman of the Board of the
Museum of Western Art in Denver and a
director of the Buffalo Bill Historical
Center in Cody, Wyoming.
3
<PAGE>
Principal Occupation or Employment
During the Past Five Years; Other Director of the
Name and Age Directorships Company Since
- ------------ ------------- -------------
Donald C. Hannah Chairman and Chief Executive Officer of August 1, 1994
(63) U.S. Properties, Inc. Mr. Hannah is a
member of the Chief Executives
Organization and the World Presidents'
Organization, and is a director of the
Precision Standard Corporation (NASDAQ),
the Samoth Capital Corporation and the
Marine Resources Foundation.
Dennis E. Mitchem An independent management consultant January 29, 1996
(64) specializing in the areas of privatization
and financial services. From March 1994 to
December 1995, Mr. Mitchem worked in
Moscow serving as a consultant to the
Russian Privatization Center in the
establishment of its local Privatization
Centers. From July 1992 to February 1994,
he was Managing Director of CAJV, a joint
venture between Arthur Andersen LLP and
Castillo Company, Inc., and managed the
Denver, Colorado, financial processing
center of the Resolution Trust
Corporation. From 1954 to June 1993, he
was employed by Arthur Andersen LLP, where
he became a partner in 1967 and retired as
a senior partner in June 1993.
Louis P. Neeb Chairman of the Board and Chief Executive August 1, 1994
(56) Officer of Casa Ole Restaurants, Inc.
since October 1995. Mr. Neeb also serves
as President of Neeb Enterprises, Inc., a
restaurant consulting firm. He was
President and Chief Executive Officer of
Spaghetti Warehouse, Inc., from 1991 to
January 1994 and President of Geest Foods
USA from September 1989 to June 1991,
prior to which he served as President and
Chief Executive Officer of Taco Villa,
Inc. 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 ShowBiz Pizza Time, Inc. and Silver
Diner Development Inc. and was previously
a director of On the Border Cafes, Inc.
Kenneth B. Roath Chairman and Chief Executive Officer of August 1, 1994
(60) Health Care Property Investors, Inc., a
real estate investment trust organized in
1985 to invest, on a net lease basis, in
health care properties. Mr. Roath is the
past Chairman of the National Association
of Real Estate Investment Trusts, Inc.
("NAREIT"), and is currently a member of
the Executive Committee and the Board of
Governors of NAREIT.
4
<PAGE>
Principal Occupation or Employment
During the Past Five Years; Other Director of the
Name and Age Directorships Company Since
- ------------ ------------- -------------
Wendell J. Smith President of W.J.S. & Associates, which August 1, 1994
(63) was established by Mr. Smith in 1984 as a
consultant to pension funds and pension
fund real estate advisors. Mr. Smith also
serves as a director of Shurgard Storage
Centers (NYSE), a real estate investment
trust organized to invest in self-storage
facilities, and Real Estate Investment
Trust of California, a company which
invests in apartments and commercial
properties. He retired in 1991 from the
State of California Public Employees
Retirement System ("CALPERS"), after 27
years of employment during which time he
had responsibility for all real estate
equities and mortgage acquisitions for
CALPERS. Mr. Smith previously served on
the Western and National Advisory Boards
of the Federal National Mortgage
Association and the Advisory Board of the
Center for Real Estate Research at the
University of California.
Casey J. Sylla Senior Vice President and Chief Investment August 1, 1994
(52) Officer of Allstate Insurance Company.
From 1992 until July 1995, Mr. Sylla was
an executive officer and vice president
and head of the Securities Department of
The Northwestern Mutual Life Insurance
Company. From 1989 to 1991, he 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.
Board Meetings
The Board held seven (7) meetings during the fiscal year ended December
31, 1995. The Board also took action three (3) 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 1995; and (ii)
the total number of meetings held by all committees of the Board on which he
served during 1995.
Committees of the Board
Audit Committee. The current members of the Audit Committee are Messrs.
Kenneth B. Roath, Chairman, Wendell J. Smith and Willie R. Barnes. 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 three (3) meetings in 1995.
Executive Committee. The current members of the Executive Committee are
Messrs. Morton H. Fleischer, Chairman, Robert W. Halliday and Donald C. Hannah.
The 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 Executive
Committee held no meetings in 1995 and took action three (3) times by unanimous
written consent.
5
<PAGE>
Compensation Committee. The current members of the Compensation
Committee are Messrs. Casey J. Sylla, Chairman, Louis P. Neeb and William C.
Foxley. The Compensation Committee, 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
administers the Company's 1995 Stock Option and Incentive Plan. The Compensation
Committee held five (5) meetings in 1995.
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
1995, the Independent Directors received 20% of such annual fee in non-qualified
stock options to purchase Shares based upon the Black-Scholes option pricing
model. The Independent Directors agreed to use at least one-half of their
remaining annual fees received from the Company for open market purchases of
common stock of the Company. Messrs. Barnes, Foxley, Hannah, Neeb, Roath, Smith
and Sylla each received options to purchase 2,927 Shares at $19.75 per Share,
the fair market value of the Shares on May 15, 1995, the date of grant. These
options are exercisable when granted.
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.
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.
Executive Officer
Name/Age Present Executive Office of the Company
- -------- ------------------------ Since
-----
Morton H. Fleischer Chairman of the Board, President and Chief June 22, 1993
(59) Executive Officer of the Company. More
detailed information regarding Mr.
Fleischer's business experience is set
forth under "Directors."
John R. Barravecchia Executive Vice President, Chief Financial June 1, 1994
(40) Officer, Treasurer and Assistant
Secretary. Mr. Barravecchia previously
served as Senior Vice President, Chief
Financial Officer and Treasurer of the
Company from June 1, 1994 until July 28,
1995, and as Senior Vice President of FFCA
I from October 1989 until June 1, 1994. He
was Vice President and Chief Financial
Officer of FFCA I from December 1986 until
October 1989, and served as a director of
FFCA I from March 1993 until June 1, 1994.
Prior to joining FFCA I, Mr. Barravecchia
was associated with the international
public accounting firm of Arthur Andersen
LLP.
6
<PAGE>
Executive Officer
Name/Age Present Executive Office of the Company
- -------- ------------------------ Since
-----
Christopher H. Volk Executive Vice President, Chief Operating June 1, 1994
(39) Officer, Secretary and Assistant
Treasurer. Mr. Volk previously served as
Senior Vice President-Underwriting and
Research of the Company from June 1, 1994
until July 28, 1995, and as Vice
President- Research of FFCA I from October
1989 until June 1, 1994. He served as
director of FFCA I from March 1993 until
June 1, 1994. Prior to joining FFCA I in
1986, Mr. Volk was employed with the
National Bank of Georgia, where his last
position was Assistant Vice President and
Senior Credit Officer in Correspondent
Banking. Mr. Volk is a member of NAREIT
and currently serves as co-chair of its
Public Relations Committee.
Robin L. Roach Senior Vice President-Corporate Finance. June 1, 1994
(43) Mr. Roach previously served as Senior Vice
President-Portfolio Management and
Operations of the Company from June 1,
1994 until November 3, 1995, and as
Executive Vice President of FFCA I 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 Senior Vice President and General Counsel. June 1, 1994
(43) Mr. Ruben previously served as an attorney
and counsel of FFCA I from March 1991
until June 1, 1994. Prior to joining FFCA
I, Mr. Ruben was a partner with the
national law firm of Kutak Rock.
Stephen G. Schmitz Senior Vice President-Corporate Finance. May 31, 1995
(41) Mr. Schmitz previously served in various
positions as an officer of FFCA I from
1986 to June 1, 1994. Prior to joining the
Company, Mr. Schmitz was a commercial
lender with Mellon Bank in Pittsburgh,
where his last position was Vice-President
and Section Manager.
Catherine F. Long Vice President-Finance, Principal June 1, 1994
(39) Accounting Officer, Assistant Secretary
and Assistant Treasurer. Ms. Long
previously served as Vice
President-Finance of FFCA I 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.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation awarded to, earned by,
or paid to (i) the Company's Chief Executive Officer ("CEO") during 1995 and the
pro rata partial payments received by the CEO during 1994 (from June 1, 1994 to
December 31, 1994) following the Consolidation on June 1, 1994, and (ii) the
Company's other four most highly compensated executive officers whose total
annual compensation exceeded $100,000 during 1995 (the "Named Executive
Officers") and the pro rata partial payments received by the Named Executive
Officers during 1994 following the Consolidation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM AWARDS
--------------------------------------- ----------------
Other Annual Securities Underlying All Other
Name and Principal Positions Year Salary($) Bonus($)(1) Compensation($) Options(#) Compensation(2)
---------------------------- ---- --------- ----------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Morton H. Fleischer 1995 $400,000 $250,000 -0- -0- -0-
Director, Chairman of the 1994 $400,000(3) $116,667 -0- -0- -0-
Board, President and Chief
Executive Officer
Christopher H. Volk 1995 $180,122 $125,000 -0- 138,000 $ 9,000
Executive Vice President, Chief 1994 $165,000(4) $ 48,125 -0- -0- $ 2,045
Operating Officer, Secretary and
Assistant Treasurer
John R. Barravecchia 1995 $180,122 $100,000 -0- 138,000 $ 9,000
Executive Vice President, Chief 1994 $165,000(4) $ 48,125 -0- -0- $ 2,080
Financial Officer, Treasurer and
Assistant Secretary
Stephen G. Schmitz 1995 $151,917 $100,000 -0- 138,000 $ 7,825
Senior Vice President, 1994 $100,000(5) $ 23,333 -0- -0- $ 1,500
Corporate Finance
Robert W. Halliday 1995 $200,000 $ 50,000 -0- -0- -0-
Former Chairman of the Board 1994 $200,000(6) $ 58,333 -0- -0- -0-
- ---------------
</TABLE>
(1) Bonus includes the amount of cash bonus earned and accrued (a) during the
period from June 1, 1994 to December 31, 1994 and paid in January 1995 and
(b) during the period from January 1, 1995 to December 31, 1995 and paid in
January 1996.
(2) Amounts included in All Other Compensation represent matching Company
contribution amounts received under the Company's 401(k) Plan.
(3) Received approximately $233,333 representing pro rata portion of annual
salary paid by the Company from June 1, 1994 to December 31, 1994.
(4) Received approximately $96,250 representing pro rata portion of annual
salary paid by the Company from June 1, 1994 to December 31, 1994.
(5) Received approximately $58,333 representing pro rata portion of annual
salary paid by the Company from June 1, 1994 to December 31, 1994.
(6) Received approximately $116,667 representing pro rata portion of annual
salary paid by the Company from June 1, 1994 to December 31, 1994.
8
<PAGE>
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 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, and 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. Participants can elect to contribute up to 15% 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.
Directors, executive officers, other key employees and other key persons
associated with the Company are eligible to receive options under this 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 key persons
associated with the Company to participate in the ownership of the Company.
Initially, the Company reserved 3,018,804 Shares, which equals 7-1/2% of the
Shares outstanding as of March 15, 1995, 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 real estate investment trust ("REIT")
for federal income tax purposes.
The Plan is designed to attract and retain directors, executive
officers, key employees and other key 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.
9
<PAGE>
The Plan is administered by the Compensation Committee, consisting
entirely of Independent Directors. 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.
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 20% 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 are designed to comply
with the provisions of the Code and are 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 Shares 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.
10
<PAGE>
Employment and Change-in-Control Arrangements
The Company has no employment or change-in-control agreements with any
executive officer of the Company.
Option Grants Table
The following table provides information relating to the grant of stock
options to the Company's CEO and the Named Executive Officers during the fiscal
year ended December 31, 1995 under the Company's 1995 Stock Option and Incentive
Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Grant Date
Individual Grants Value(1)
------------------------------------------------------ --------
Number of
Securities Percent of
Underlying Total Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration Grant Date
Name (#)(2) Fiscal Year ($/Sh)(3) Date Present Value ($)
---- ------ ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Morton H. Fleischer - - - - -
Robert W. Halliday - - - - -
John R. Barravecchia 138,000 11.4% $ 19.50 5/10/05 $ 282,900
Christopher H. Volk 138,000 11.4% $ 19.50 5/10/05 $ 282,900
Stephen G. Schmitz 138,000 11.4% $ 19.50 5/10/05 $ 282,900
</TABLE>
- ----------
(1) These values were calculated as of the grant date using the Black-Scholes
option pricing model. The values shown are theoretical and do not
necessarily reflect the actual values the recipients may eventually realize.
The following assumptions were made for purposes of calculating Grant Date
Present Value: expected option term of seven years, expected stock price
volatility of 21.36% (calculated weekly over the preceding period since the
stock began trading), expected dividend yield of 8% and risk-free rate of
return of 6.52% (equal to the yield on a seven-year Treasury bond on May 10,
1995). Any actual value to the officer will depend on the extent to which
the market value of the Company's stock at a future date exceeds the
exercise price.
(2) These options vest in three equal installments on the first, second and
third anniversaries of the date of grant.
(3) All options were granted at the fair market value of the Shares based upon
an average close price for the previous 10 consecutive trading days.
11
<PAGE>
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table provides information related to the exercise of
stock options during the year ended December 31, 1995 by the CEO and each of the
Named Executive Officers and the 1995 fiscal year-end value of unexercised
options. No options were exercised in 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End (#) at FY-End
--------------------- --------------------
Name Shares Acquired Value Realized Exercisable/ Exercisable/
on Exercise (#) ($) Unexercisable Unexercisable ($)(1)
- ------------------ --------------- --- ------------- --------------------
<S> <C> <C> <C> <C>
Morton H. Fleischer - - - -
Robert W. Halliday - - - -
John R. Barravecchia 0 $0 0/138,000 $0/$431,250
Christopher H. Volk 0 $0 0/138,000 $0/$431,250
Stephen G. Schmitz 0 $0 0/138,000 $0/$431,250
</TABLE>
- ----------
(1) Market value of underlying Shares on date of fiscal year-end minus the
exercise price. The closing price of the Company's Shares on December 29,
1995 was $22-5/8.
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, 1995, the Company's officers, directors and 10% Shareholders have
complied with the Section 16(a) filing requirements, except that on one occasion
each of Messrs. Foxley, Hannah, Roath, Smith and Sylla was inadvertently late in
reporting on Form 4 the acquisition of fewer than 20 shares of common stock
through a reinvestment of dividends.
Compensation Committee Interlocks
and Insider Participation
In fiscal 1995, 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.
12
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON FISCAL 1995 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 1995 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.
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 process used by the
Compensation Committee in determining executive officer compensation levels for
all of these components takes into account both qualitative and quantitative
factors. Among the factors considered by the Compensation Committee are the
recommendations of the CEO with respect to the compensation of the Company's
other key executive officers. However, the Compensation Committee makes the
final compensation decisions concerning such officers.
In making compensation decisions, the Compensation Committee considers
compensation practices and financial performance of the Peer Group (as defined
below). This information provides guidance to the Compensation Committee, but
the Compensation Committee does not target total executive compensation or any
component thereof to any particular point within, or outside, the range of Peer
Group results. However, the Compensation Committee believes that compensation at
or near the 50th percentile of the Peer Group for base salaries and at or near
the 75th percentile for total cash compensation and long-term incentive awards
is generally appropriate for the Compensation Committee to use as a framework
for compensation decisions. The specified percentiles are considered on both an
absolute basis and a size-adjusted basis (i.e., reflecting compensation levels
that are commensurate with the Company's size relative to the sizes of the Peer
Group companies). Specific compensation for individual officers will vary from
these levels as the result of other factors considered by the Compensation
Committee unrelated to compensation practices of the Peer Group.
The Peer Group is comprised of companies that are among those entities
who participate in the compensation survey conducted by the National Association
of Real Estate Investment Trusts ("NAREIT"), the Equity REIT Survey, and also
included the largest publicly traded REITs ("Peer Group"). The Compensation
Committee selects various groupings of these 178 companies as it deems
appropriate for different compensation and financial performance comparisons.
All 178 of these companies are included in the performance peer group (and, the
companies covered by the Standard & Poor's ("S&P") 500 Index) used for the
shareholder return performance graph set forth below.
In making compensation decisions, the Compensation Committee also from
time to time receives assessments and advice regarding the compensation
practices of the Company and others from independent compensation consultants.
13
<PAGE>
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 Peer Group entities. Subject to an executive officer's individual
performance, the Compensation Committee sets salaries at or about the median as
reflected by such information.
In evaluating the CEO's salary for 1995, the Compensation Committee
considered quantitative factors such as the Company's increased investments
resulting in the Company attaining increased market share in both the ownership
of real estate and the financing of chain restaurant properties, and increased
returns to shareholders. In addition, the Compensation Committee considered
qualitative factors such as Mr. Fleischer's development of long-term financing
strategies for the Company.
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 exceeds the target level.
For 1995, FFO was 101% 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.
The CEO receives an annual bonus of 50% of annual salary if the FFO
target level is met while certain executive officers, including the chief
financial officer and the chief operating officer, each receive half of their
target bonus (or 25% of annual salary) if the FFO target is met. The remaining
portion of each of the executive officers' bonuses is based upon other factors
including individual performance and length of time with the Company. Thus, the
total annual bonus for an executive officer, other than the CEO, may exceed 50%
of annual salary. Bonuses up to 63 percent of January 1 through December 31,
1995 salary were earned by each executive officer, including the CEO, under the
plan.
14
<PAGE>
Stock Options
The long-term incentive component of the CEO's and the executive
officers' compensation is stock options. The Company believes that providing
executive officers with opportunities to acquire significant equity positions
in the Company and thus, the opportunity to share in its growth and prosperity,
through the grant of stock options will enable the Company to attract and retain
qualified and experienced executive officers. Stock options represent a valuable
portion of the compensation program for the Company's executive officers. The
exercise price of stock options has thus been tied to the fair market value of
the Company's Shares on the date of the grant, and will only have value if the
value of the Company's Shares increases. Grants of stock options to executive
officers are made by the Compensation Committee upon the recommendation of
senior management and are based upon the level of each executive officer's
position with the Company, an evaluation of the executive officer's past and
expected future performance, the number of outstanding and previously granted
options, and discussions with the executive officer.
Compensation Committee:
Casey J. Sylla, Chairman
William C. Foxley
Louis P. Neeb
15
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The graph and table below compare the cumulative total shareholder
returns (assuming reinvestment of dividends before consideration of income
taxes) of the Company's Shares, the S&P 500 Index and the NAREIT Equity Index.
The graph assumes $100 invested on June 30, 1994 in the Company's Shares and
each of the indices. The stock price performance shown on the graph below are
not necessarily indicative of future price performance.
[PERFORMANCE GRAPH]
NAREIT Equity
Date Company Index S&P 500 Index Index
---- ------------- ------------- -----
6/30/94 100.00 100.00 100.00
9/30/94 83.09 104.89 97.96
12/31/94 86.17 104.87 97.97
3/31/95 96.09 115.08 97.81
6/30/95 109.25 126.07 103.56
9/30/95 111.55 136.09 108.44
12/31/95 119.75 144.29 112.93
NAREIT
Measurement Period S&P Equity
(Fiscal Year Covered) FFCA 500 Index Index
--------------------- ---- --------- -----
Measurement Pt 6/30/94 $ 100.00 $ 100.00 $ 100.00
12/31/94 86.17 104.87 97.97
12/31/95 119.75 144.29 112.93
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 this Proxy Statement, in whole or in part, the
previous report of the Compensation Committee and the Performance Graph and
Table shall not be incorporated by reference into any such filings.
16
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO AND RESTATEMENT OF THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION
The Board has adopted, subject to shareholder approval, the Second
Amended and Restated Certificate of Incorporation of the Company (the "Restated
Certificate"). If the proposal to adopt the Restated Certificate is approved by
the shareholders at the Meeting, the Restated Certificate will become effective
at the time the Company files the Restated Certificate with the office of the
Delaware Secretary of State. It is anticipated that such action will occur on or
about May 8, 1996.
The substance and effect of certain provisions of the Restated
Certificate are described below and the complete text of the proposed Restated
Certificate is set forth in Appendix "A" to this Proxy Statement. The following
discussion is qualified in its entirety by reference to the text of the proposed
Restated Certificate.
The Restated Certificate increases the authorized capital stock of the
Company by authorizing the issuance of 50,000,000 shares of preferred stock
having a par value of $.01 per share ("Preferred Stock"). The Restated
Certificate also grants authority to the Board to authorize the issuance of one
or more series of Preferred Stock, and with respect to each such series to fix
by resolution or resolutions providing for the issuance of such series the
number of shares of such series, the voting powers, designations, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, including without
limitation the dividend rights, dividend rate, terms of redemption (including
sinking fund provisions), redemption price or prices, conversion rights,
transfer and ownership restrictions and liquidation preferences, that are
permitted by the General Corporation Law of Delaware in respect of any class or
classes of stock or any series of any class of stock of the Company, without
further action or vote by the Company's stockholders.
Notwithstanding the foregoing, any shares of Preferred Stock issued by
the Company must comply with the requirements of the NYSE (even if such
Preferred Stock is not listed on the NYSE) including the requirement that such
shares of Preferred Stock, voting as a class, have the right to elect a minimum
of two directors upon default of the equivalent of six quarterly dividends,
regardless of whether defaulted dividends occurred in consecutive periods. Such
right to elect directors should remain in effect until cumulative dividends have
been paid in full or until non-cumulative dividends have been paid regularly for
at least a year. In addition, the NYSE recommends that the quorum fixed for
holders of Preferred Stock entitled to vote on such election of directors be low
enough that the right to elect directors can be exercised as soon as it accrues,
but in no event should the quorum exceed the percentage required for a quorum of
the Shares required for the election of directors.
The Restated Certificate also contains provisions relating to ownership
limits and transfer restrictions with respect to the Shares as well as the
Preferred Stock. Such limitations and restrictions, among other things, are
necessary for the Company to maintain its status as a REIT.
The Company's Certificate of Incorporation authorizes the issuance of
200,000,000 Shares and does not currently authorize the issuance of Preferred
Stock. The Board believes that it would be in the Company's best interests to
have the flexibility to issue different classes of stock in pursuit of its
capital raising transactions, as well as for general corporate purposes. The
issuance of Preferred Stock could adversely affect the voting rights of the
holders of, or the market price of, the Shares. In addition to the voting rights
required by the NYSE, the holders of Preferred Stock also would have the right
to vote separately as a class on any proposal involving fundamental changes in
the rights of holders of Preferred Stock pursuant to the General Corporation Law
of Delaware. The Company has no present plans to issue any shares of Preferred
Stock.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2.
17
<PAGE>
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, 1996. The shareholders of the Company are being
asked to ratify this selection at the Meeting. 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, 1996. Whether the proposal is approved or defeated, the Board may reconsider
its selection.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 3.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information as of February 14, 1996
regarding beneficial ownership of Shares by (i) each director of the Company,
(ii) the CEO and each of the Named Executive Officers, and (iii) all directors
and executive officers of the Company as a group.
Shares of Common
Stock Beneficially Percent
Name of Beneficial Owner Owned(1)(2) of Class
- ------------------------ ----------- --------
Morton H. Fleischer............................... 1,208,469(3) 3.0%
Robert W. Halliday............................... 400,372 *
Willie R. Barnes.................................. 3,459 *
William C. Foxley................................. 5,316 *
Donald C. Hannah.................................. 10,482 *
Dennis E. Mitchem................................. 127 *
Louis P. Neeb..................................... 13,243 *
Kenneth B. Roath.................................. 5,316 *
Wendell J. Smith.................................. 5,004 *
Casey J. Sylla.................................... 5,909 *
John R. Barravecchia.............................. 25,000 *
Christopher H. Volk............................... 26,700 *
Stephen G. Schmitz................................ 2,000 *
Directors and executive officers as a group ...... 1,736,474 4.3%
(16 persons)
- ----------
*Less than one percent
(1) Share amount and percentage figures are rounded to the nearest whole
number. All Shares not outstanding but which may be acquired by such
stockholder within 60 days 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 stockholder, but not by any other
stockholder. The Shares beneficially owned by Messrs. Barnes, Foxley,
Hannah, Neeb, Roath, Smith and Sylla include 2,927 Shares representing
stock options currently exercisable by each individual.
(2) Does not include Shares awarded to employees as the matching portion of
the Company's 401(k) plan.
(3) Includes an aggregate of 10,000 Shares held by Donna H. Fleischer, the
wife of Mr. Fleischer.
18
<PAGE>
To the best of the Company's knowledge, no shareholder beneficially
owned more than 5% of the Company's common stock as of February 14, 1996.
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 Limited Partnership; FFCA
Participating Management Company Limited Partnership; Perimeter Center
Management Company; Franchise Finance Corporation of America II; and Franchise
Finance Corporation of America III (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
1995 fiscal year, the above Companies paid approximately $760,000 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. ("D.F. King") to solicit proxies from
shareholders by mail, in person and by telephone. The Company will pay D.F. 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 1995 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,
1995, including financial statements and financial statement schedules, as filed
with the Securities and Exchange Commission. Requests should be addressed to
John R. Barravecchia, the Chief Financial Officer of the Company, 17207 North
Perimeter Drive, Scottsdale, Arizona 85255.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any shareholder who intends to submit a proposal at the 1997 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 November 29, 1996. Such proposals should
19
<PAGE>
be sent to Christopher H. Volk, Executive Vice President and Secretary of the
Company, at 17207 North Perimeter Drive, Scottsdale, Arizona 85255.
OTHER MATTERS
The Board is not aware of any matters to come before the Meeting, other
than those specified in the Notice of Annual Meeting. However, if any other
matter requiring a vote of the shareholders should arise at the Meeting, it is
the intention of the persons named in the accompanying Proxy to vote such Proxy
in accordance with their best judgment.
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 URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE. BY RETURNING YOUR PROXY CARD 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
Christopher H. Volk
Christopher H. Volk, Secretary
Scottsdale, Arizona
March 29, 1996
20
<PAGE>
APPENDIX A
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FRANCHISE FINANCE CORPORATION OF AMERICA
Franchise Finance Corporation of America, a Delaware corporation (the
"Corporation"), does hereby certify that (i) the name of the Corporation is
Franchise Finance Corporation of America, (ii) the Certificate of Incorporation
of the Corporation was originally filed with the Secretary of State of the State
of Delaware on June 22, 1993, and (iii) pursuant to and in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware, the text of the Certificate of Incorporation of the Corporation is
hereby restated, integrated and further amended to read in its entirety as
follows:
ARTICLE I
The name of the Corporation is Franchise Finance Corporation of
America.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, in the County of New Castle, City of Wilmington, Delaware 19801.
The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
A. The total number of shares of all classes of capital stock that the
Corporation shall have authority to issue is 250,000,000 shares, consisting of
200,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock") and 50,000,000 shares of preferred stock having a par value of $.01 per
share (the "Preferred Stock"). Authority is hereby expressly granted to the
Board of Directors of the Corporation to authorize the issuance of one or more
series of Preferred Stock, and with respect to each such series to fix by
resolution or resolutions providing for the issuance of such series the number
of shares of such series, the voting powers, designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, including without
limitation the dividend rights, dividend rate, terms of redemption (including
sinking fund provisions), redemption price or prices, conversion rights,
transfer and ownership restrictions and liquidation preferences, that are
permitted by the General Corporation Law of Delaware in respect of any class or
classes of stock or any series of any class of stock of the Corporation, without
further action or vote by the Corporation's stockholders.
B. Rights and Restrictions of Common Stock and Preferred Stock.
1. Restrictions on Transfer to Preserve Tax Benefit.
(a) Definitions. For the purposes of this Article IV,
the following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Common
Stock or Preferred Stock by a Person who would be treated as
an owner of such shares of Common Stock or Preferred Stock
either directly or constructively through the application of
Section 544 of the Code, as modified
A-1
<PAGE>
by Section 856(h)(1)(B) of the Code. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall
have the correlative meanings.
"Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
"Common Stock" shall mean the $.01 par value common
stock issued by the Corporation.
"Constructive Ownership" shall mean ownership of
Common Stock or Preferred Stock by a Person who would be
treated as an owner of such shares of Common Stock or
Preferred Stock either directly or constructively through the
application of Section 318 of the Code, as modified by Section
856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have
the correlative meanings.
"Initial Public Offering" means the issuance of
shares of Common Stock pursuant to the Corporation's first
effective registration statement for such Common Stock filed
under the Securities Act of 1933, as amended.
"Market Price" shall mean, (i) with respect to the
Common Stock, the last reported sales price reported on the
New York Stock Exchange on the trading day immediately
preceding the relevant date, or if the Common Stock is not
then traded on the New York Stock Exchange, the last reported
sales price of the Common Stock on the trading day immediately
preceding the relevant date as reported on any exchange or
quotation system over which the Common Stock may be traded, or
if the Common Stock is not then traded over any exchange or
quotation system, then the market price of the Common Stock on
the relevant date as determined in good faith by the Board of
Directors of the Corporation; and (ii) with respect to the
Preferred Stock, the market price of the Preferred Stock on
the relevant date as determined in good faith by the Board of
Directors of the Corporation.
"Ownership Limit" shall initially mean 9.8% (in value
or in number of shares, whichever is more restrictive) of the
outstanding Common Stock and/or Preferred Stock, applied
separately to the Common Stock and Preferred Stock, provided
that the Ownership Limit shall apply to each series of
Preferred Stock as set forth in the resolutions providing for
the issuance of such series of Preferred Stock of the
Corporation, and after any adjustment as set forth in
subparagraph B(1)(j) of this Article IV, shall mean such
greater percentage of the outstanding Common Stock or
Preferred Stock as so adjusted, provided that the Board of
Directors may, in its discretion, adjust the Ownership Limit
of any Person provided that after such adjustment, the
Ownership Limit of all other persons shall be adjusted such
that in no event may any five Persons Beneficially Own more
than 49% of the Common Stock and/or the Preferred Stock.
"Person" shall mean an individual, corporation,
partnership, estate, trust (including a trust qualified under
Section 401(a) or 501(c)(17) of the Code), a portion of a
trust permanently set aside for or to be used exclusively for
the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section
509(a) of the Code, joint stock company or other entity; but
does not include an underwriter which participates in a public
offering of the Common Stock or Preferred Stock for a period
of 25 days following the purchase by such underwriter of the
Common Stock or the Preferred Stock, as the case may be.
"Preferred Stock" shall mean the $.01 par value
preferred stock issued by the Corporation in such series and
with such voting powers, and such designations, preferences
and relative, participating, optional or other special rights,
and qualifications, or restrictions thereof, as shall be
stated in the resolutions providing for the issue of such
stock adopted by the board of directors.
"Redemption Price" shall mean the price at which the
Corporation shall be entitled to redeem shares of Common Stock
or Preferred Stock which shall equal the lesser of (i) the
price per share to be paid in the transaction which if
effective would cause the Ownership Limit of the transferee to
be violated or in the case of a gift, the Market Price of the
shares of Common Stock
A-2
<PAGE>
or Preferred Stock, as the case may be, as of the date of the
gift; or (ii) the Market Price of the shares of Common Stock
or Preferred Stock on the date the Corporation calls such
shares for redemption.
"REIT" shall mean a Real Estate Investment Trust
under Section 856 of the Code.
"Restriction Termination Date" shall mean the first
day after the date of the Initial Public Offering on which the
Board of Directors of the Corporation determines that it is no
longer in the best interests of the Corporation to attempt to,
or continue to, qualify as a REIT, and only after the
stockholders of the Corporation have approved the
discontinuation of the Corporation to qualify as a REIT by a
majority vote of outstanding Common Stock and of each
outstanding series of Preferred Stock with the power to vote
thereon.
"Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Common Stock or
Preferred Stock (including (i) the granting of any option or
entering into any agreement for the sale, transfer or other
disposition of such Common Stock or Preferred Stock or (ii)
the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for
Common Stock or Preferred Stock), whether voluntary or
involuntary, whether of record or beneficially and whether by
operation of law or otherwise.
(b) Restriction on Transfers. Subject to the
provisions of subparagraph B(1)(i) of this Article IV:
(i) from the date of the Initial Public
Offering and prior to the Restriction Termination
Date, no Person shall Beneficially Own shares of
Common Stock or Preferred Stock in excess of the
Ownership Limit, and no Person shall Constructively
Own shares of Common Stock or Preferred Stock in
excess of 9.8% of the outstanding Common Stock and/or
the Preferred Stock;
(ii) from the date of the Initial Public
Offering and prior to the Restriction Termination
Date, any Transfer that, if effective, would result
in any Person Beneficially Owning Common Stock or
Preferred Stock in excess of the Ownership Limit
shall be void ab initio as to the Transfer of such
shares of Common Stock or Preferred Stock, as the
case may be, which would be otherwise Beneficially
Owned by such Person in excess of the Ownership
Limit; and the intended transferee shall acquire no
rights in such shares of Common Stock or Preferred
Stock;
(iii) from the date of the Initial Public
Offering and prior to the Restriction Termination
Date, any Transfer that, if effective, would result
in any Person Constructively Owning Common Stock or
Preferred Stock in excess of 9.8% of the outstanding
Common Stock or Preferred Stock shall be void ab
initio as to the Transfer of such shares of Common
Stock or Preferred Stock which would be otherwise
Constructively Owned by such Person in excess of such
amount; and the intended transferee shall acquire no
rights in such shares of Common Stock or Preferred
Stock; and
(iv) from the date of the Initial Public
Offering and prior to the Restriction Termination
Date, any Transfer that, if effective, would result
in the Common Stock or Preferred Stock being
Beneficially Owned by less than 100 Persons
(determined without reference to any rules of
attribution) shall be void ab initio as to the
Transfer of such shares of Common Stock or Preferred
Stock which would be otherwise beneficially owned by
the transferee; and the intended transferee shall
acquire no rights in such shares of Common Stock or
Preferred Stock.
(c) Remedies For Breach. If the Board of Directors or
its designees shall at any time determine in good faith that a
Transfer has taken place in violation of subparagraph B(1)(b)
A-3
<PAGE>
of this Article IV or that a Person intends to acquire or has
attempted to acquire beneficial ownership (determined without
reference to any rules of attribution), Beneficial Ownership
or Constructive Ownership of any shares of Common Stock or
Preferred Stock of the Corporation in violation of
subparagraph B(1)(b) of this Article IV, the Board of
Directors or its designees shall take such action as it deems
advisable to refuse to give effect or to prevent such
Transfer, including, but not limited to, refusing to give
effect to such Transfer on the books of the Corporation,
instituting proceedings to enjoin such Transfer or redeeming
the shares of Common Stock or Preferred Stock purported to be
transferred for an amount equal to their Redemption Price.
(d) Notice of Restricted Transfer. Any Person who
acquires or attempts to acquire Common Stock or Preferred
Stock in violation of subparagraph B(1)(b) of this Article IV,
shall immediately give written notice to the Corporation of
such event and shall provide to the Corporation such other
information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted
Transfer on the Corporation's status as a REIT.
(e) Owners Required To Provide Information. From the
date of the Initial Public Offering and prior to the
Restriction Termination Date,
(i) every Beneficial Owner of more than 5%
(or such other percentage, between 1/2 of 1% and 5%,
as provided in the Code) of the outstanding Common
Stock or the outstanding Preferred Stock of the
Corporation shall, within 30 days after January 1 of
each year, give written notice to the Corporation
stating the name and address of such Beneficial
Owner, the number of shares of Common Stock or
Preferred Stock Beneficially Owned, and description
of how such shares are held. Each such Beneficial
Owner shall provide to the Corporation such
additional information as the Corporation may request
in order to determine the effect, if any, of such
Beneficial Ownership on the Corporation's status as a
REIT.
(ii) each Person who is a Beneficial Owner
or Constructive Owner of Common Stock or Preferred
Stock and each Person (including the shareholder of
record) who is holding Common Stock or Preferred
Stock for a Beneficial Owner or Constructive Owner
shall provide to the Corporation such information
that the Corporation may request, in good faith, in
order to determine the Corporation's status as a
REIT.
(f) Remedies Not Limited. Subject to the provisions
of paragraph (l) of this Subsection B(1), nothing contained in
this Article IV shall limit the authority of the Board of
Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its
stockholders by preservation of the Corporation's status as a
REIT.
(g) Ambiguity. In the case of an ambiguity in the
application of any of the provisions of subparagraph B(1) of
this Article IV, including any definition contained in
subparagraph B(1)(a), the Board of Directors shall have the
power to determine the application of the provisions of this
subparagraph B(1) with respect to any situation based on the
facts known to it.
(h) Modification of Ownership Limit. Subject to the
limitations provided in subparagraph B(1)(i), the Board of
Directors may from time to time adjust the Ownership Limit
with regard to any Person.
(i) Limitations on Modifications.
(i) If the Ownership Limit of any Person
shall be increased, the Ownership Limit of all other
Persons shall be adjusted such that no five Persons
Beneficially Own in excess of 49% of the Common Stock
and/or the Preferred Stock.
A-4
<PAGE>
(ii) Prior to the modification of any
Ownership Limit pursuant to subparagraph B(1)(h) or
B(1)(j) of this Article IV, the Board of Directors of
the Corporation may require such opinions of counsel,
affidavits, undertaking or agreements as it may deem
necessary or advisable in order to determine or
ensure the Corporation's status as a REIT.
(j) Exceptions.
(i) The Board of Directors, with a ruling
from the Internal Revenue Service or an opinion of
counsel, may exempt a Person from the Ownership
Limits if such Person is not an individual for
purposes of Section 542(a)(2) of the Code as modified
by Section 856(h) of the Code, and the Board of
Directors obtains such representations and
undertakings from such Person as are reasonably
necessary to ascertain that no individual's
Beneficial Ownership of such Common Stock or
Preferred Stock will violate the Ownership Limit and
agrees that any violation or attempted violation will
result in the redemption of such Common Stock or
Preferred Stock, as the case may be, in accordance
with this Article IV.
(ii) The Board of Directors, with a ruling
from the Internal Revenue Service or an opinion of
counsel, may exempt a Person from the limitation on a
Person Constructively Owning shares of Common Stock
or Preferred Stock in excess of 9.8% of the
outstanding Common Stock or Preferred Stock, as the
case may be, if such Person does not and represents
that it will not own, directly or constructively (by
virtue of the application of Section 318 of the Code,
as modified by Section 856(d)(5) of the Code), more
than a 9.8% interest (as set forth in Section
856(d)(2)(B)), in a tenant of the Corporation and the
Corporation obtains such representations and
undertakings from such Person as are reasonably
necessary to ascertain this fact and agrees that any
violation or attempted violation will result in the
exemption of such shares of Common Stock or Preferred
Stock in excess of 9.8% of the outstanding Common
Stock or Preferred Stock, as the case may be, in
accordance with this Article IV.
(k) Termination of REIT Status. The Corporation shall
maintain its status as a REIT until such time as the Board of
Directors of the Corporation determines that it is no longer
in the best interests of the Corporation to attempt to, or
continue to, qualify as a REIT, and after the stockholders of
the Corporation have approved the discontinuation of the
Corporation to qualify as a REIT by a majority vote of
outstanding Common Stock and a majority vote of all
outstanding series of Preferred Stock with the power to vote
thereon.
(l) New York Stock Exchange Transactions. Nothing in
this subsection B(1) shall preclude the settlement of any
transaction entered into through the facilities of the New
York Stock Exchange.
2. (a) Legend. Each certificate for Common Stock shall bear
the following legend:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR THE
PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A
REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED. NO PERSON MAY BENEFICIALLY OWN SHARES OF
(i) COMMON STOCK IN EXCESS OF 9.8% (OR SUCH OTHER PERCENTAGE
AS MAY BE DETERMINED BY THE BOARD OF DIRECTORS OF THE
CORPORATION) OF THE OUTSTANDING COMMON STOCK OF THE
CORPORATION, OR (ii) PREFERRED STOCK IN EXCESS OF 9.8% (OR
SUCH OTHER PERCENTAGE AS MAY BE DETERMINED BY THE BOARD OF
DIRECTORS OF THE CORPORATION) OF THE OUTSTANDING PREFERRED
STOCK OF THE CORPORATION AND NO PERSON MAY CONSTRUCTIVELY
A-5
<PAGE>
OWN SHARES OF COMMON STOCK AND/OR PREFERRED STOCK IN EXCESS OF
THE ABOVE LIMITATIONS. ANY PERSON WHO ATTEMPTS TO BENEFICIALLY
OWN OR CONSTRUCTIVELY OWN SHARES OF COMMON STOCK AND/OR
PREFERRED STOCK IN EXCESS OF THE ABOVE LIMITATIONS MUST
IMMEDIATELY NOTIFY THE CORPORATION. ANY TRANSFER WHICH IF
EFFECTIVE WOULD CAUSE ANY PERSON TO BENEFICIALLY OWN MORE THAN
9.8% OF THE OUTSTANDING COMMON STOCK AND/OR PREFERRED STOCK OF
THE CORPORATION (OR SUCH OTHER LIMITS AS THE BOARD OF
DIRECTORS OF THE CORPORATION SHALL DETERMINE) SHALL BE VOID AB
INITIO. AMONG OTHER THINGS, IF THE BOARD OF DIRECTORS
DETERMINES THAT A PURPORTED TRANSFER, IF EFFECTIVE, WOULD
VIOLATE THE FOREGOING RESTRICTIONS, THE PURPORTED TRANSFEREE
OF SUCH SHARES SHALL BE DEEMED TO HAVE GRANTED AN OPTION TO
THE CORPORATION TO ACQUIRE SUCH SHARES AT A PRICE EQUAL TO THE
LESSER OF: (i) THE PRICE TO BE PAID IN THE TRANSACTION WHICH,
IF EFFECTIVE, WOULD VIOLATE THE FOREGOING LIMITATIONS; OR (ii)
THE FAIR MARKET VALUE OF SUCH SHARES AS OF THE DATE OF
EXERCISE OF SUCH OPTION. ALL TERMS IN THIS LEGEND HAVE THE
MEANINGS DEFINED IN THE CORPORATION'S CERTIFICATE OF
INCORPORATION, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON
TRANSFER, WILL BE SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO
SO REQUESTS. IF THE RESTRICTIONS ON TRANSFER ARE VIOLATED, THE
SHARES OF COMMON STOCK REPRESENTED HEREBY MAY BE AUTOMATICALLY
REDEEMED."
(b) Each certificate for Preferred Stock shall bear
substantially the following legend:
"THE CORPORATION SHALL FURNISH WITHOUT CHARGE TO EACH
STOCKHOLDER WHO SO REQUESTS A STATEMENT OF THE POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE
CORPORATION OR SERIES THEREOF AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
SUCH REQUESTS SHALL BE MADE TO THE CORPORATION'S SECRETARY AT
THE PRINCIPAL OFFICE OF THE CORPORATION.
THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE
PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A
REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED. EXCEPT AS OTHERWISE PROVIDED BY THE
CORPORATION'S CERTIFICATE OF INCORPORATION, NO PERSON MAY
BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF (i) COMMON
STOCK IN EXCESS OF 9.8% (IN VALUE OR IN NUMBER OF SHARES,
WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING COMMON STOCK
OF THE CORPORATION OR (ii) PREFERRED STOCK IN EXCESS OF 9.8%
(IN VALUE OR IN NUMBER OF SHARES, WHICHEVER IS MORE
RESTRICTIVE) OF THE OUTSTANDING PREFERRED STOCK OF THE
CORPORATION, WITH CERTAIN FURTHER RESTRICTIONS AND EXCEPTIONS
SET FORTH IN OR PURSUANT TO THE CORPORATION'S CERTIFICATE OF
INCORPORATION. ANY PERSON WHO ATTEMPTS TO BENEFICIALLY OWN OR
CONSTRUCTIVELY OWN COMMON STOCK AND/OR PREFERRED STOCK IN
EXCESS OF THE ABOVE LIMITATIONS MUST NOTIFY THE CORPORATION IN
WRITING AT LEAST 15 DAYS PRIOR TO SUCH PROPOSED OR ATTEMPTED
TRANSFER OR OWNERSHIP. TRANSFERS IN VIOLATION OF THE
RESTRICTIONS DESCRIBED ABOVE AND TRANSFERS IN VIOLATION OF
CERTAIN OTHER PROVISIONS OF THE CERTIFICATE OF INCORPORATION
SHALL BE VOID AB INITIO. AMONG OTHER THINGS, IF THE BOARD OF
DIRECTORS DETERMINES THAT A PURPORTED TRANSFER, IF
A-6
<PAGE>
EFFECTIVE, WOULD VIOLATE THE FOREGOING RESTRICTIONS, THE
PURPORTED TRANSFEREE OF SUCH SHARES SHALL BE DEEMED TO HAVE
GRANTED AN OPTION TO THE CORPORATION TO ACQUIRE SUCH SHARES AT
A PRICE EQUAL TO THE LESSER OF: (i) THE PRICE TO BE PAID IN
THE TRANSACTION WHICH, IF EFFECTIVE, WOULD VIOLATE THE
FOREGOING LIMITATIONS; OR (ii) THE FAIR MARKET VALUE OF SUCH
SHARES AS OF THE DATE OF EXERCISE OF SUCH OPTION. ALL
CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN
THE CORPORATION'S CERTIFICATE OF INCORPORATION."
3. Severability. If any provision of this Article IV or any
application of any such provision is determined to be invalid by any
federal or state court having jurisdiction over the issues, the
validity of the remaining provisions shall not be affected and other
applications of such provisions shall be affected only to the extent
necessary to comply with the determination of such court.
ARTICLE V
The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors. The Board of Directors of the
Corporation shall consist of one or more members as determined by the Bylaws of
the Corporation.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, alter, amend
or repeal the Bylaws of the Corporation.
ARTICLE VI
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
ARTICLE VII
No amendment may be made to this Restated Certificate of Incorporation
unless approved by the vote of the holders of a majority of the voting
securities of the Corporation; except that no amendment which would change any
rights with respect to any outstanding class of securities of the Corporation,
by reducing the amount payable thereon upon liquidation of the Corporation, or
by diminishing or eliminating any voting rights pertaining thereto, may be made
unless approved by the vote of the holders of 66-2/3% of the outstanding
securities of such class.
IN WITNESS WHEREOF, the undersigned has executed and acknowledged this
Second Amended and Restated Certificate of Incorporation as of this 8th day of
May, 1996.
FRANCHISE FINANCE CORPORATION OF AMERICA
By
-------------------------------------
Morton H. Fleischer, President
ATTEST:
- ------------------------------
Christopher H. Volk, Secretary
A-7
<PAGE>
PROXY/VOTING INSTRUCTION CARD
FRANCHISE FINANCE CORPORATION OF AMERICA
c/o Gemisys Transfer Agents, P.O. Box 3287, Englewood, CO 80155-9758
ANNUAL MEETING DATE: May 8, 1996
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, 1996, 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 8, 1996 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 [x] in ink. Sign, date and return this Proxy promptly, using
the enclosed envelope.
1. Election of Directors:
[ ] FOR ALL NOMINEES LISTED BELOW
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
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 H. Fleischer, Robert W. Halliday, Willie R. Barnes, William C. Foxley,
Donald C. Hannah, Dennis E. Mitchem, Louis P. Neeb, Kenneth B. Roath, Wendell J.
Smith and Casey J. Sylla
2. Proposal to amend and restate the Company's Restated Certificate of
Incorporation to, among other things, authorize the issuance of
50,000,000 shares of preferred stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1996.
[ ] FOR [ ] AGAINST [ ] 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 29, 1996 and the Proxy Statement furnished
therewith.
<PAGE>
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 , 1996
---------------------------------------
--------------------------------------------------
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
[ ] ANNUAL MEETING. Please check here to indicate that you plan to attend
the Annual Meeting of Shareholders on May 8, 1996.
