As filed with the Securities and Exchange Commission on June 26, 1997
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FRANCHISE FINANCE CORPORATION OF AMERICA
----------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 86-0736091
- ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17207 North Perimeter Drive
Scottsdale, Arizona 85255
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
FRANCHISE FINANCE CORPORATION OF AMERICA
1997 EMPLOYEE STOCK PURCHASE PLAN
----------------------------------------
(Full title of the plan)
Morton H. Fleischer
President and Chief Executive Officer
17207 North Perimeter Drive
Scottsdale, Arizona 85255 (602) 585-4500
- --------------------------------------- ---------------------------------
(Name and address of agent for service) (Telephone number, including area
code, of agent for service)
Copies to:
Paul E. Belitz, Esq.
Kutak Rock
Suite 2900
717 17th Street
Denver, Colorado 80202-3329
(303) 297-2400
Calculation of Registration Fee
<TABLE>
<CAPTION>
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Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Share(1) Offering Price(1) Fee
- ------------------ ------------ ---------------- ----------------- -------------
<S> <C> <C> <C> <C>
Common Stock, 50,000 $25.5625 $1,278,125 $387.31
$.01 par value
- --------------
(1) Estimated solely for the purpose of calculating the registration fee pursuant to the Rule
457(h). The average of the high and low prices of the Registrant's Common Stock as reported on the
New York Stock Exchange on June 20, 1997.
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</TABLE>
This Registration Statement shall become effective upon filing in accordance
with Rule 462 under the Securities Act of 1933.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents, previously filed with the Securities and
Exchange Commission by Franchise Finance Corporation of America (the
"Registrant") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated herein by reference:
(i) the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(ii) the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997;
(iii) the Registrant's Current report on Form 8-K dated June 9, 1997;
and
(iv) the description of the Registrant's common stock contained in the
Registrant's Registration Statement on Form 8-A filed with the
Securities and Exchange Commission on June 28, 1994.
Each document filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment
that indicates that all securities offered herein have been sold or that
deregisters all such securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the respective date of filing such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not Applicable
Item 5. Interests of Named Experts and Counsel.
Not Applicable
<PAGE>
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides generally
and in pertinent part that a Delaware corporation may indemnify its directors
and officers against expenses, judgements, fines and settlements actually and
reasonably incurred by them in connection with any civil suit or action, except
actions by or in the right of the corporation, or any administrative or
investigative proceeding if, in connection with the matters in issue, they acted
in good faith and in a manner they reasonably believed to be in, or not opposed
to, the best interests of the corporation, and in connection with any criminal
suit or proceeding, if in connection with the matters in issue, they had no
reasonable cause to believe their conduct was unlawful. Section 145 further
provides that in connection with the defense or settlement of any action by or
in the right of the corporation, a Delaware corporation may indemnify its
directors and officers against expenses actually and reasonably believed to be
in, or not opposed to, the best interests of the corporation. Section 145
permits a Delaware corporation to grant its directors and officers additional
rights of indemnification through bylaw provisions and otherwise and to purchase
indemnity insurance on behalf of its directors and officers.
Article III, Section 13 of the Amended and Restated Bylaws of the
Registrant requires the Registrant to indemnify every person who was or is a
party or is or was threatened to be made a party to any action, suit, or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director or officer of the Registrant or, while
a director or officer of the Registrant, is or was serving at the request of the
Registrant as a director, officer, employee, agent or trustee of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including counsel fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, to the full extent permitted by applicable
law.
The Registrant's Restated Certificate of Incorporation also provides in
Article Six that directors shall not be liable to the Registrant 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 Delaware General Corporation Law.
Item 7. Exemption from Registration Claimed.
Not Applicable
Item 8. Exhibits.
See the Exhibit Index immediately preceding the exhibits attached
hereto and incorporated herein by this reference.
2
<PAGE>
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the registration statement is on Form S-3, Form S-8, or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report
3
<PAGE>
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Scottsdale, State of Arizona, on June 24, 1997.
FRANCHISE FINANCE CORPORATION OF
AMERICA
By /s/ Morton H. Fleischer
-------------------------------------------
Morton H. Fleischer, Chairman of the
Board, President, Chief Executive Officer
and Director
S-1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Morton H. Fleischer, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement on Form S-8 and file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto such attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, to all intents and purposes and as full as they might or
could do in person, hereby ratifying and confirming all that such
attorney-in-fact and agent, or his substitute may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Morton H. Fleischer Chairman of the Board, June 24, 1997
- ---------------------------------------- President, Chief Executive
Morton H. Fleischer Officer and Director
/s/ John R. Barravecchia Executive Vice President, June 24, 1997
- ---------------------------------------- Chief Financial Officer,
John R. Barravecchia Treasurer and Assistant
Secretary
/s/ Catherine F. Long Senior Vice President, June 24, 1997
- ---------------------------------------- Finance, Principal Accounting
Catherine F. Long Officer, Assistant Secretary
and Assistant Treasurer
/s/ Willie R. Barnes Director June 24, 1997
- ----------------------------------------
Willie R. Barnes
</TABLE>
S-2
<PAGE>
<TABLE>
<S> <C> <C>
/s/ William C. Foxley Director June 24, 1997
- ----------------------------------------
William C. Foxley
/s/ Robert W. Halliday Chairman Emeritus June 24, 1997
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Robert W. Halliday
Director
- ----------------------------------------
Donald C. Hannah
Director
- ----------------------------------------
Dennis E. Mitchem
/s/ Louis P. Neeb Director June 24, 1997
- ----------------------------------------
Louis P. Neeb
/s/ Kenneth B. Roath Director June 24, 1997
- ----------------------------------------
Kenneth B. Roath
/s/ Wendell J. Smith Director June 24, 1997
- ----------------------------------------
Wendell J. Smith
/s/ Casey J. Sylla Director June 24, 1997
- ----------------------------------------
Casey J. Sylla
</TABLE>
S-3
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.01 (1) Specimen of Common Stock Certificate
5.01 * Opinion of Kutak Rock Regarding Legality
10.01 * 1997 Employee Stock Purchase Plan
23.01 * Consent of Arthur Andersen LLP
23.02 Consent of Kutak Rock (included in Exhibit 5)
24.01 Power of Attorney (included on page S-2 of the Registration
Statement)
- ----------------
(1) Filed with the Securities and Exchange Commission as part of the Exhibits
to the Registration Statement on Form S-4 and amendments thereto,
registration number 33-65302, and incorporated herein by reference to such
Registration Statement.
* Filed herewith.
June 26, 1997
Board of Directors
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Gentlemen:
We have acted as counsel to Franchise Finance Corporation of America
(the "Company") in connection with the filing of the registration statement on
Form S-8 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the "Act"). The Registration Statement relates to the 50,000 shares of
the Company's common stock, $.01 par value per share (the "Common Stock"),
issuable pursuant to the Company's 1997 Employee Stock Purchase Plan (the
"Plan"). In rendering the opinion expressed below, we have reviewed such
matters, documents and law as we have deemed necessary for purposes of this
opinion. Based on and subject to the foregoing, it is our opinion that the
shares of Common Stock, when issued in accordance with the Plan, will be legally
issued, fully and paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ KUTAK ROCK
KUTAK ROCK
FRANCHISE FINANCE CORPORATION OF AMERICA
1997 EMPLOYEE STOCK PURCHASE PLAN
Franchise Finance Corporation of America, a Delaware corporation,
hereby adopts this Franchise Finance Corporation of America 1997 Employee Stock
Purchase Plan (the "Plan"') as of the Effective Date. The purposes of this Plan
are as follows:
(1) To assist employees of the Company and its Participating
Subsidiaries in acquiring a stock ownership interest in the Company
pursuant to a plan which is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986,
as amended.
(2) To help employees provide for their future security and to
encourage them to remain in the employment of the Company and its
Participating Subsidiaries.
1. Definitions.
Whenever any of the following terms is used in the Plan with the first
letter or letters capitalized, it shall have the following meaning unless the
context clearly indicates to the contrary (such definitions to be equally
applicable to both the singular and plural forms of the terms defined):
(a) "Code" means the Internal Revenue Code of 1986, as
amended.
(b) "Committee" means the committee appointed to administer
the Plan pursuant to paragraph 10.
(c) "Company" means Franchise Finance Corporation of America,
a Delaware corporation.
(d) "Dates of Exercise" means the dates as of which an Option
is exercised and the Stock subject to that Option is purchased. With
respect to any Option, the Dates of Exercise are the last day of March,
June, October and December on which Stock is traded on the New York
Stock Exchange during the Option Period in which that Option was
granted.
(e) "Date of Grant" means the date as of which an Option is
granted, as set forth in paragraph 3(a).
(f) "Eligible Compensation" means total cash compensation
received from the Company or a Participating Subsidiary as regular
compensation during an Option Period. By way of illustration, and not
by way of limitation, Eligible Compensation includes regular
compensation such as salary, wages, overtime, shift differentials,
bonuses,
1
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commissions, and incentive compensation, but excludes relocation
expense reimbursements, foreign service premiums, tuition or other
reimbursements, income realized as a result of participation in any
stock option, stock purchase, or similar plan of the Company or any
Participating Subsidiary.
(g) "Effective Date" means June 30, 1997.
(h) "Eligible Employee" means any employee of the Company or a
Participating Subsidiary who meets the following criteria:
(1) the employee does not, immediately after the
Option is granted, own (within the meaning of Section
423(b)(3) and 424(d) of the Code) stock possessing five
percent or more of the total combined voting power or value of
all classes of stock of the Company or of a Subsidiary;
(2) the employee has completed six months of
employment for the Company or a Subsidiary; and
(3) the employee's customary employment is 20 hours
or more a week.
(i) "Option" means an option granted under the Plan to an
Eligible Employee to purchase shares of Stock.
(j) "Option Period" means with respect to any Option the
period beginning upon the Date of Grant and ending on the March 31,
June 30, September 30 or December 31 immediately following the Date of
Grant, whichever is earlier, or ending on such other date as the
Committee shall determine. No Option Period may exceed 27 months from
the Date of Grant.
(k) "Option Price" with respect to any Option has the meaning
set forth in paragraph 4(b).
(l) "Participant" means an Eligible Employee who has complied
with the provisions of paragraph 3(b).
(m) "Participating Subsidiary" means any present or future
Subsidiary that the Committee designates to be eligible to participate
in the Plan, and that elects to participate in the Plan.
(n) "Periodic Deposit Account" means the account established
and maintained by the Company to which shall be credited pursuant to
Section 3(c) amounts received from Participants for the purchase of
Stock under the Plan.
(o) "Plan" means this Franchise Finance Corporation of America
1997 Employee Stock Purchase Plan.
2
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(p) "Plan Year" means the calendar year.
(q) "Stock" means shares of common stock, par value $.01 per
share, of the Company.
(r) "Stock Purchase Account" means the account established and
maintained by the Company to which shall be credited pursuant to
Section 4(c) Stock purchased upon exercise of an Option under the Plan.
(s) "Subsidiary" means any corporation, other than the
Company, in an unbroken chain of corporations beginning with the
Company, if at the time of the granting of the Option, each of the
corporations, other than the last corporation, in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
2. Stock Subject to Plan.
Subject to the provisions of paragraph 8 (relating to adjustment upon
changes in the Stock), the Stock which may be sold pursuant to Options granted
under the Plan shall not exceed in the aggregate Fifty Thousand (50,000) shares,
and may be newly issued shares or treasury shares or shares bought in the
market, or otherwise, for purposes of the Plan.
3. Grant of Options.
(a) General Statement. The Company may grant Options under the
Plan to all Eligible Employees on January 1, April 1, July 1 and/or
October 1 of each Plan Year or on such other date as the Committee
shall designate. The term of each Option shall end on the last day of
the Option Period with respect to which the Option is granted. With
respect to each Offering Period, each Eligible Employee shall be
granted an Option, on the Date of Grant, for as many full and
fractional shares of Stock as the Eligible Employee may purchase with
up to 10% of the Compensation he or she receives during the Option
Period (or during any portion of the Option Period as the Eligible
Employee may elect to participate).
(b) Election to Participate. Each Eligible Employee who elects
to participate in the Plan shall communicate to the Company, in
accordance with procedures established by the Committee, an election to
participate in the Plan whereby the Eligible Employee designates a
stated whole percentage equaling at least 1%, but no more than 10%, of
his or her Eligible Compensation during the Option Period to be
deposited periodically in his or her Periodic Deposit Account under
subparagraph (c). The cumulative amount deposited in the Periodic
Deposit Account during a Plan Year with respect to any Eligible
Employee may not exceed the limitation stated in subparagraph (d). A
Participant's election to participate in the Plan shall continue in
effect during the current and subsequent Option Periods until changed
pursuant to subparagraph 3(c).
3
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(c) Periodic Deposit Accounts. The Company shall maintain a
Periodic Deposit Account for each Participant and shall credit to that
account in U.S. dollars all amounts received under the Plan from the
Participant. No interest will be paid to any Participant or credited to
his or her Periodic Deposit Account under the Plan with respect to such
funds. All amounts credited to a Participant's Periodic Deposit Account
shall be used to purchase Stock under subparagraph 4(c) and no portion
of a Participant's Periodic Deposit Account shall be refunded to him or
her.
Credits to an Eligible Employee's Periodic Deposit Account
shall be made by payroll deduction or by other alternate payment
arrangements, in accordance with rules and procedures established by
the Committee. An Eligible Employee may increase, decrease or eliminate
the periodic credits to his or her Periodic Deposit Account for future
periods by filing a new election amount at any time during an Option
Period. The change shall become effective in accordance with the
Committee's rules and procedures as soon as practicable after the
Company receives the election, but the change will not affect the
amounts deposited with respect to Eligible Compensation sooner than the
Eligible Compensation payable with respect to the next pay period after
the Company receives the authorization.
(d) $25,000 Limitation. No Eligible Employee shall be
permitted to purchase Stock under the Plan or under any other employee
stock purchase plan of the Company or of any Subsidiary which is
intended to qualify under Section 423 of the Code, at a rate which
exceeds $25,000 in fair market value of Stock (determined at the time
the Option is granted) for each calendar year in which any such Option
granted to such Participant is outstanding at any time.
4. Exercise of Options.
(a) General Statement. On each Date of Exercise, the entire
Periodic Deposit Account of each Participant shall be used to purchase
at the Option Price whole and/or fractional shares of Stock subject to
the Option. Each Participant automatically and without any act on his
or her part will be deemed to have exercised his or her Option on each
such Date of Exercise to the extent that the amounts then credited to
the Participant's Periodic Deposit Account under the Plan are used to
purchase Stock.
(b) Option Price Defined. The Option Price per share of Stock
to be paid by each Participant on each exercise of his or her Option
shall be an amount in U.S. dollars equal to the lower of 85% of the
fair market value of a share of Stock as of the Date of Grant or the
applicable Date of Exercise. The fair market value of a share of Stock
as of an applicable Date of Grant or Date of Exercise shall be the
average of the high and low price of a share of Stock on the New York
Stock Exchange on such date.
(c) Stock Purchase Accounts; Stock Certificates. The Company
shall maintain a Stock Purchase Account for each Participant to reflect
the Stock purchased under the Plan by the Participant. Upon exercise of
an Option by a Participant pursuant
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to subparagraph 4(a), the Company shall credit to the Participant's
Stock Purchase Account the whole and/or fractional shares of Stock
purchased at that time.
Except as provided in paragraph 5, certificates with respect to
Stock credited to a Participant's Stock Purchase Account shall be
issued only on request by the Participant for a distribution of whole
shares or when necessary to comply with the transaction requirements
outside the United States. Upon issuance of such a Stock certificate to
a Participant, the Participant's Stock Purchase Account shall be
adjusted to reflect the number of shares of Stock distributed to the
Participant.
5. Rights on Retirement, Death, Termination of Employment.
If a Participant retires, dies, or otherwise terminates employment, or
if the corporation that employs a participant ceases to be a Participating
Subsidiary, then to the extent practicable, no further amounts shall be credited
to the Participant's Periodic Deposit Account from any pay due and owing with
respect to the Participant after such retirement, death, or other termination of
employment. All amounts credited to such a Participant's Periodic Deposit
Account shall be returned to the Participant or used on the next Date of
Exercise in that Option Period to purchase Stock under paragraph 4, based upon
the election by the Participant or his or her personal representative. Such a
Participant's Stock Purchase Account shall be terminated, and Stock certificates
with respect to whole shares of Stock and cash with respect to fractional shares
of Stock shall be distributed as soon as practicable after such Date of
Exercise.
Notwithstanding anything in this Plan to the contrary and except to the
extent permitted under Section 423(a) of the Code, a Participant's Option shall
not be exercisable more than three months after the Participant retires or
otherwise ceases to be employed by the Company or a Participating Subsidiary,
including as a result of the corporation ceasing to be a Participating
Subsidiary.
6. Restriction Upon Assignment of Options; Restriction upon Disposition of
Stock.
(a) An Option granted under the Plan shall not be transferable
otherwise than by will or the laws of descent and distribution, and is
exercisable during the Participant's lifetime only by the Participant.
The Company will not recognize and shall be under no duty to recognize
any assignment or purported assignment by a Participant, other than by
will or the laws of descent and distribution, of the Participant's
interest in the Plan or of his or her Option or of any rights under his
or her Option.
(b) Common Stock purchased under the Plan cannot be sold,
transferred, or otherwise disposed of before the first anniversary of
purchase, except to the extent that the Committee finds disposition to
be necessary in light of a hardship affecting the Participant. A
Participant that disposes of such shares within the one-year
restriction period shall be required to pay the Company the full amount
of any discount received on the shares; provided, however, that the
Committee may waive this requirement, in its sole discretion, if such
disposition was necessary in light of a hardship affecting the
Participant.
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7. No Rights of Stockholder Until Exercise of Option.
A Participant shall not be deemed to be a stockholder of the Company,
nor have any rights or privileges of a stockholder, with respect to the number
of shares of Stock subject to an Option. A Participant shall have the rights and
privileges of a stockholder of the Company when, but not until, the
Participant's Option is exercised pursuant to paragraph 4(a) and the Stock
purchased by the Participant at that time has been credited to the Participant's
Stock Purchase Account.
8. Changes in the Stock; Adjustments of an Option.
If, while any Options are outstanding, the outstanding shares of Stock
have increased, decreased, changed into, or been exchanged for a different
number or kind of shares or securities of the Company, or there has been any
other change in the capitalization of the Company, through reorganization,
merger, recapitalization, reclassification, stock split, reverse stock split,
spinoff or similar transaction, appropriate and proportionate adjustments may be
made by the Committee in the number and/or kind of shares which are subject to
purchase under outstanding Options and to the Option Exercise Price or prices
applicable to such outstanding Options, including, if the Committee deems
appropriate, the substitution of similar options to purchase shares of another
company (with such other company's consent). In addition, in any such event, the
number and/or kind of shares which may be offered in the Options shall also be
proportionately adjusted. No adjustments to outstanding Options shall be made
for dividends paid in the form of stock.
9. Use of Funds; Repurchase of Stock.
All funds received or held by the Company under the Plan will be
included in the general funds of the Company free of any trust or other
restriction and may be used for any corporate purpose. The Company shall not be
required to repurchase from any Eligible Employee shares of Stock which such
Eligible Employee acquires under the Plan.
10. Administration by Committee.
(a) Appointment of Committee. The board of directors of the
Company, or its delegate, shall appoint a Committee, which shall be
composed of one or more members, to administer the Plan on behalf of
the Company. Each member of the Committee shall serve for a term
commencing on the date specified by the board of directors of the
Company, or its delegate, and continuing until he or she dies or
resigns or is removed from office by such board of directors, or its
delegate.
(b) Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of the Plan in
accordance with its provisions. The Committee shall have the power to:
(1) determine when the initial and subsequent Option
Periods will commence;
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(2) interpret the Plan and the Options;
(3) adopt such rules for the administration,
interpretation, and application of the Plan as are consistent
with the Plan and Section 423 of the Code; and
(4) interpret, amend, or revoke any such rules.
In its absolute discretion, the Board of Directors of the Company may
at any time and from time to time exercise any and all rights and duties of the
Committee under the Plan. The Committee may delegate any of its responsibilities
under the Plan by designating in writing other persons who carry out any or all
of such responsibilities.
(c) Majority Rule. The Committee shall act by a majority of
its members in office. The Committee may act either by vote at a
meeting or by a memorandum or other written instrument signed by a
majority of the Committee.
(d) Compensation; Professional Assistance; Good Faith Actions.
Each member of the Committee who is an employee of the Company or a
Subsidiary shall receive no additional compensation for his or her
services under the Plan. Each Committee member who is not an employee
of the Company or a Subsidiary shall receive such compensation for his
or her services under the Plan as may be determined by the Board of
Directors of the Company, or its delegate. All expenses and liabilities
incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee
may employ attorneys, consultants, accountants, appraisers, brokers, or
other persons. The Committee, the Company, and its officers and
directors shall be entitled to rely upon the advice, opinions, or
valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith
shall be final and binding upon all Participants, the Company and all
other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or the Options, and all members
of the Committee shall be fully protected by the Company in respect to
any such action, determination or interpretation.
11. No Rights as an Employee.
Nothing in the Plan nor any Option shall be construed to give any
person (including any Eligible Employee or Participant) the right to remain in
the employ of the Company or a Subsidiary or to affect the right of the Company
and Subsidiaries to terminate the employment of any person (including any
Eligible Employee or Participant) at any time with or without cause, to the
extent otherwise permitted under law.
7
<PAGE>
12. Term of Plan.
No Option may be granted during any period of suspension of the Plan or
after termination of the Plan, and in no event may any Option be granted under
the Plan after five years from the commencement of the initial Option Period.
13. Amendment of the Plan.
The Board of Directors of the Company, or its delegate, may amend,
suspend, or terminate the Plan at any time; provided that approval by the vote
of the holders of more than 50% of the outstanding shares of the Stock entitled
to vote shall be required to amend the Plan to reduce the Exercise Price or
increase the number of shares of Stock reserved for the Options under the Plan.
14. Effect Upon Other Plans.
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary, except to the
extent required by law. Nothing in this Plan shall be construed to limit the
right of the Company or any Subsidiary (a) to establish any other forms of
incentives or compensation for employees of the Company or any Subsidiary or (b)
to grant or assume options otherwise than under this Plan in connection with any
proper corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
15. Notices.
Any notice to be given under the terms of the Plan to the Company shall
be addressed to the Company in care of the Committee and any notice to be given
to the Eligible Employee shall be addressed to the Eligible Employee at his or
her last address as reflected in the Company's records. By a notice given
pursuant to this paragraph, either party may hereafter designate a different
address for notices to be given to it or the Eligible Employee. Any notice which
is required to be given to the Eligible Employee shall, if the Eligible Employee
is then deceased, be given to the Eligible Employee's personal representative if
such representative has previously informed the Company of his or her status and
address by written notice under this paragraph. Any notice shall have been
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office,
branch post office, or other depository regularly maintained by the United
States Postal Services.
16. Titles.
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of the Plan.
8
INDEPENDENT AUDITORS' CONSENT
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 23, 1997
included in Franchise Finance Corporation of America's Form 10-K for the year
ended December 31, 1996 and to all references to our firm included in this
Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Phoenix, Arizona
June 24, 1997
