<PAGE>
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the Appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or 14a-12
BODDIE-NOELL PROPERTIES, INC.
(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), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed 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:
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>
BODDIE-NOELL PROPERTIES, INC.
May 29, 1995
Fellow Shareholders:
You are cordially invited to attend the annual meeting of shareholders of
Boddie-Noell Properties, Inc. (the "Company"), to be held at the Omni Hotel, 222
East Third Street in Charlotte, North Carolina, on Thursday, June 29, 1995 at
10:00 a.m. The business to be conducted at the meeting is set forth in the
formal notice that follows.
MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY STRONGLY RECOMMEND
THAT YOU VOTE FOR EACH OF THE PROPOSALS TO BE VOTED UPON AT THE ANNUAL MEETING
AS SET FORTH IN THE FORMAL NOTICE AND PROXY STATEMENT THAT FOLLOWS.
The Company relies on all shareholders to promptly execute and return their
proxies in order to avoid costly proxy solicitation. Accordingly, please
complete, date and sign the enclosed proxy and return it promptly in the
enclosed envelope (which requires no postage if mailed in the United States). If
you attend the annual meeting, as we hope you do, you may withdraw your proxy at
the meeting and vote your shares in person from the floor. YOUR VOTE IS
IMPORTANT.
Sincerely,
BODDIE-NOELL PROPERTIES, INC.
D. Scott Wilkerson
PRESIDENT AND CHIEF EXECUTIVE OFFICER
3710 One First Union Center (Bullet) Charlotte, North Carolina
28202 (Bullet) (704) 333-1367
<PAGE>
PRELIMINARY PROXY
BODDIE-NOELL PROPERTIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 29, 1995
TO THE SHAREHOLDERS OF BODDIE-NOELL PROPERTIES, INC.
NOTICE is hereby given that an Annual Meeting (the "Meeting") of
shareholders of Boddie-Noell Properties, Inc. (the "Company"), whose principal
executive offices are located at 3710 One First Union Center, Charlotte, North
Carolina 28202, will be held on June 29, 1995, at 10:00 a.m. at the Omni Hotel,
222 East Third Street, Charlotte, North Carolina 28202 for the following
purposes:
1. To elect five directors.
2. To amend the Certificate of Incorporation to authorize the issuance of
10 million shares of preferred stock (the "Preferred Stock"), issuable
in series the characteristics of which would be set by the Board of
Directors.
3. To amend the Certificate of Incorporation to increase the number of
shares of common stock that the Company has authority to issue from 10
million to 100 million shares.
4. To amend the bylaws to eliminate the restrictions on the issuance of
Preferred Stock.
5. To approve issuances of 20% or more of the Company's outstanding common
stock (or securities convertible into 20% or more of the common stock)
to a single person or group in connection with acquisitions.
6. To amend the bylaws to eliminate the restrictions on making loans to
other persons.
7. To transact such other business that may properly come before the
Meeting or any adjournments thereof.
Pursuant to the Delaware General Corporation Law and provisions of the
Company's bylaws, May 15, 1995 has been fixed as the record date for
determination of the shareholders entitled to notice of and to vote at the
Meeting, and accordingly, only such persons as are holders of record of common
stock at the close of business on such date will be entitled to notice of and to
vote at such meeting and any adjournments thereof.
You are invited to attend this Meeting. In the event you are unable to
attend, please sign, date and return the accompanying proxy promptly so that
your shares may be represented and voted at the Meeting. If you desire to vote
at the Meeting in person, you may revoke your proxy at that time. In the
meantime, the prompt return of your proxy, properly dated and signed, will
ensure the presence of a quorum at the Meeting. A return envelope is enclosed
for your convenience.
By order of the Board of Directors.
PHILIP S. PAYNE
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Date: May 29, 1995
YOUR PROXY IS IMPORTANT, PLEASE VOTE PROMPTLY.
<PAGE>
PRELIMINARY PROXY
BODDIE-NOELL PROPERTIES, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 29, 1995
The following proxy statement is furnished to the shareholders of
Boddie-Noell Properties, Inc. (the "Company") in connection with the
solicitation by the Board of Directors of proxies for use at an annual meeting
of shareholders (the "Meeting") of the Company for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. The Meeting will be held
Thursday, June 29, 1995 at 10:00 a.m. eastern daylight savings time at the Omni
Hotel, 222 East Third Street, Charlotte, North Carolina. The Company's principal
executive offices are located at 3710 One First Union Center, Charlotte, North
Carolina, 28202. The Company's telephone number is (704) 333-1367. It is
anticipated that the proxy, Proxy Statement and Notice of Annual Meeting of
Shareholders will be mailed to shareholders on May 29, 1995.
All costs of solicitation will be borne by the Company. In addition to the
use of mails, proxies may be solicited by personal interview, telephone or
telegraph, by directors or officers of the Company and certain independent
solicitation agents as discussed below.
The Company has retained Corporate Communications, Inc., Depository Trust
Company, Independent Election Corporation of America, and First Union National
Bank (collectively, the "Consultants") to assist in the process of identifying
and contacting shareholders for the purpose of soliciting proxies. The entire
expense of engaging the services of the Consultants to assist in proxy
solicitation is projected to be $3,500, exclusive of certain other fees paid to
First Union National Bank in connection with the operation of the Meeting.
Proxies may be revoked at any time before exercise thereof by filing a
notice of such revocation or a later dated proxy with the Secretary of the
Company or by voting in person at the Meeting. Consequently, execution of the
proxy will not in any way affect a shareholder's right to attend the Meeting,
revoke his or her proxy, and vote in person.
Shares represented by proxies in the form enclosed, if such proxies are
properly executed and returned and not revoked, will be voted as specified.
Where no specification is made on a properly executed and returned proxy, the
shares will be voted FOR each of the proposals to be voted upon at the Meeting
as set forth in the formal notice attached and as described in this Proxy
Statement.
Holders of record of shares of common stock (the "Common Stock") of the
Company as of the close of business on the record date, May 15, 1995, are
entitled to receive notice of, and to vote at, the Meeting. At the close of
business on May 15, 1995, 2,990,990 shares of Common Stock were issued and
outstanding. A shareholder of record on the record date is entitled to one vote
for each share then held. The holders, present in person or by proxy, of a
majority of the total number of outstanding shares of the Common Stock entitled
to vote at the Meeting will constitute a quorum.
Shares represented by proxies that reflect abstention or "broker non-votes"
(i.e. shares held by a broker or nominee that are represented at the Meeting,
but with respect to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. Directors will be
elected by a favorable vote of a plurality of the voting shares of Common Stock
present and entitled to vote, in person or by proxy, at the Meeting.
Accordingly, abstentions or broker non-votes as to the election of directors
will not affect the election of the candidates receiving the most votes. The
affirmative vote of a majority of the shares of Common Stock outstanding is
required to approve the amendment to the Company's Certificate of Incorporation;
therefore, abstentions and broker non-votes will have the same effect as votes
against such proposals. Other proposals to come before the Meeting require the
approval of a majority of the shares of Common Stock present and entitled to
vote on such proposals. Abstentions as to such proposals will have the same
effect as votes against such proposals. Broker non-votes, however, will be
treated as unvoted for purposes of determining approval of such proposals and
will not be counted as votes for or against such proposals.
1
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE INFORMATION
APPEARING ELSEWHERE IN THIS PROXY STATEMENT.
As evidenced by the Company's acquisition of BT Venture Corporation
("BTVC") in October of 1994, the Company is committed to a strategy of
increasing its property portfolio and changing its emphasis from restaurant to
apartment properties. As part of this strategy, the Company continues to seek
acquisitions of apartment properties on attractive terms. The Company's ability
to acquire additional properties, however, has been hindered by its inability to
access sufficient sources of acquisition financing and its high level of debt.
To improve the Company's ability to obtain sufficient capital to meet its
strategic growth plan and lower its debt to equity ratio, the Company's Board of
Directors recommends that the shareholders adopt certain changes to the
Company's Certificate of Incorporation and bylaws. These changes are primarily
designed to allow the Company to raise additional equity capital through the
issuance of Preferred Stock, including Preferred Stock convertible into Common
Stock. The Board of Directors believes that this flexibility is necessary for
the Company to compete for equity investors with other real estate investment
trusts that already possess such authority.
In a companion proposal, the Company is requesting that the shareholders
waive an American Stock Exchange requirement that shareholders approve the
issuance of securities in connection with acquisitions resulting in a person or
group becoming the beneficial owner of 20% or more of the Common Stock or
securities convertible into 20% or more of the Common Stock. Given the Company's
current small capitalization level, it is likely that many proposed issuances of
new equity would require shareholder approval. The Board of Directors believes
that this pre-approval requirement hinders the Company's ability to attract
investors due to the uncertainty of the Company being able to obtain shareholder
approval and the delay associated with obtaining such approval.
The Board of Directors also recommends the elimination of a bylaw provision
restricting the making of loans to other parties. The Company is seeking
elimination of this provision in connection with the restructuring of its
third-party management business. The Company currently provides management
services for properties owned by third-parties. Income earned by the Company
from these third-party management services may adversely affect the
characterization of the Company as a REIT if the revenue derived from such
third-party services exceeds 5% of the Company's gross revenues. Although the
Company's third-party revenues to date have not exceeded the permissible level,
the Board of Directors has decided to restructure the Company's third-party
management services to alleviate the risk that the Company's third-party
revenues may do so in the future. Such restructuring will involve the transfer
of its third-party management business to a newly formed taxable subsidiary (the
"Management Company") of which 95% of the economic interest will be owned by the
Company. To enable the Company to maintain its status as a REIT, the Company
will own 100% of the non-voting common stock and 1% of the voting stock of the
Management Company. The remaining ownership interests of the Management Company
(representing 5% of the economic interest) will be owned by officers of the
Management Company, who will also initially be officers of the Company. The
restructuring of the Company's third-party management business through the
creation of the Management Company is not subject to approval by the Company's
shareholders. The Company anticipates that it may be required to loan funds to
the Management Company from time to time for working capital needs and,
accordingly, desires to remove the bylaw provision prohibiting the making of
such loans.
Although the Board believes that approval of the various proposals is in
the best interests of the Company, shareholders should carefully consider the
risks associated with the adoption of all or any one of these proposals. Such
risks include, among others:
(Bullet) possible dilution of shareholders' ownership interest in the
Company;
(Bullet) risk that cash available for distribution to shareholders
would be reduced by the amount used to (i) pay dividends on
Preferred Stock or (ii) redeem outstanding securities;
(Bullet) possible loss of REIT status and reduction in shareholders'
voting power caused by a concentration of ownership of Common
Stock;
(Bullet) risk that holders of Preferred Stock would have special
voting rights that would effectively reduce the control of
the common shareholders over the Company;
(Bullet) risk that certain corporate actions would require the consent
of the holders of Preferred Stock, possibly restricting the
Company from taking actions in the best interest of the
common shareholders;
(Bullet) possible issuance of Common Stock at less than its fair
market value causing a reduction in the value of Common
Stock; and
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<PAGE>
(Bullet) risk that loans to the Management Company would not be repaid
because of the unsecured nature of such debt and the
Company's lack of voting control over the Management Company.
PROPOSAL ONE:
ELECTION OF DIRECTORS
Pursuant to the Certificate of Incorporation and Article III of the
Company's bylaws, the Board of Directors consists of five directors, whose terms
of office expire annually. At each annual meeting the shareholders shall elect
directors to hold office until the next annual meeting. Those directors whose
terms expire at the 1995 annual meeting of shareholders, or until their
successors are elected and qualified, are B. Mayo Boddie, Nicholas B. Boddie,
James B. Powers, William H. Stanley and Richard A. Urquhart, Jr., all of whom
have been nominated for election at the Meeting as directors to hold office
until the 1996 Annual Meeting of Shareholders and until their successors are
elected and qualified.
The Board of Directors of the Company recommends a vote FOR B. Mayo Boddie,
Nicholas B. Boddie, James B. Powers, William H. Stanley and Robert A. Urquhart,
Jr. as directors to hold office until the 1996 Annual Meeting of Shareholders
and until their successors are elected and qualified. Should any of these
persons become unable to accept nomination or election, which management has no
reason to expect, it is the intention of the persons appointed as proxy agents
in the enclosed proxy to vote for the substitute in each case.
The names of the five persons nominated for election to the Board of
Directors, their principal occupations or employment, and certain other
information with respect to each of them are set forth below. All of the
individuals named below have been directors of the Company since its formation
in 1987.
Mr. B. Mayo Boddie (age 65) is Chairman of the Board of Directors of the
Company and was formerly its Chief Executive Officer. Mr. Boddie was a
co-founder of Boddie-Noell Enterprises ("BNE") in 1961 and is currently Chairman
of the Board and Chief Executive Officer of BNE. Mr. Boddie serves as a director
of First Union National Bank of North Carolina and Factory Stores of America, a
real estate investment trust. B. Mayo Boddie is the brother of Nicholas B.
Boddie.
Mr. Nicholas B. Boddie (age 67) is Vice Chairman of the Board of Directors
of the Company. Mr. Boddie was a co-founder of BNE in 1961 and is currently Vice
Chairman and a director of BNE. Nicholas B. Boddie is the brother of B. Mayo
Boddie.
Mr. James B. Powers (age 70) was Chairman of the Board of Directors and
Chief Executive Officer of The Planters Corporation and The Planters National
Bank and Trust Company in Rocky Mount, North Carolina from 1984 to 1989. Prior
to his election as Chief Executive Officer in 1984, he served as President for
10 years. Planters National Bank and Peoples Bank merged in 1990 to form Centura
Bank and Trust Company.
Mr. William H. Stanley (age 70) was Chairman of the Board of Directors of
Peoples Bank and Trust Company in Rocky Mount, North Carolina from 1975 to 1985
and Chairman of the Board and Chief Executive Officer of Peoples Bancorporation
from 1982 to 1985. Mr. Stanley is also a director of Rocky Mount Mills.
Mr. Richard A. Urquhart, Jr. (age 76), a retired certified public
accountant, was a partner in the public accounting firm of KMPG Peat Marwick
from 1965 to 1979. From 1965 to 1988, Mr. Urquhart was a trustee of Rex
Hospital, Raleigh, North Carolina and was the Chairman of the Board of Trustees
at the time of his retirement. From 1984 to 1992, Mr. Urquhart was a director of
Golden Corral Realty Corporation, a real estate investment trust.
Mr. Powers, Mr. Stanley and Mr. Urquhart are, and are standing for
re-election as, independent directors of the Company. Under the Company's
Certificate of Incorporation, a majority of the directors must be independent.
COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS
The Audit Committee consists of Messrs. Powers, Stanley and Urquhart. The
committee recommends to the Board of Directors the engagement of the independent
public accountants of the Company and reviews with the independent public
accountants the scope and results of the Company's audits and the Company's
internal accounting controls. During 1994, the Audit Committee held one meeting.
Mr. Stanley serves as Chairman of the Audit Committee.
The Board of Directors has established a Compensation Committee to
administer the Company's executive compensation plan. The Compensation Committee
consists of the Company's three independent directors and Douglas E. Anderson,
who is a non-compensated officer of the Company. The Compensation Committee did
not meet in 1994.
3
<PAGE>
The Board of Directors met nine times during the year ended December 31,
1994.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1994, Mr. James B. Powers, Mr. William
H. Stanley and Mr. Richard A. Urquhart, Jr. were paid $7,500 each for serving on
the Board of Directors, plus a fee of $750 for each of nine Board meetings
attended in person during the period. Mr. B. Mayo Boddie and Mr. Nicholas B.
Boddie did not receive any compensation.
On April 18, 1995, the Board of Directors unanimously approved an increase
in the fees payable to Independent Directors. Under the new fee schedule, each
Independent Director will receive $10,000 for serving on the Board of Directors
during 1995, as well as $800 per meeting attended. Independent Directors will
also be paid $500 for each committee meeting attended unless it is held on the
same day as a regular board meeting in which case the compensation will be $100.
B. Mayo Boddie and Nicholas B. Boddie will receive no compensation.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company as of December 31, 1994:
<TABLE>
<CAPTION>
NAME AGE POSITION OFFICER SINCE
<S> <C> <C> <C>
D. Scott Wilkerson......................... 37 President, Chief Executive Officer October 1994
Philip S. Payne............................ 43 Executive Vice President, Chief Financial Officer October 1994
Douglas E. Anderson........................ 47 Vice President, Secretary 1987
W. Craig Worthy............................ 42 Vice President, Treasurer 1987
Lisa K. McCourt............................ 31 Vice President, Property Management Services October 1994
Pamela B. Novak............................ 41 Vice President, Controller October 1994
</TABLE>
Set forth below is a summary of the business experience of the executive
officers of the Company:
D. SCOTT WILKERSON -- PRESIDENT AND CHIEF EXECUTIVE OFFICER. From 1980 to
1986, Mr. Wilkerson was with Arthur Andersen LLP, Charlotte, North Carolina,
serving as Tax Manager from 1985 to 1986. His specialization was in the
representation of real estate syndicators, developers and management companies.
He was president of BTVC from January 1994 until its merger into the Company in
October 1994. Mr. Wilkerson joined BTVC in 1987 and served in various officer
level positions, including vice president of administration and finance and vice
president for acquisitions and development before becoming president. Mr.
Wilkerson received a B.S. degree in accounting from the University of North
Carolina at Charlotte in 1980. He is a C.P.A. and licensed real estate broker.
He has been active in various professional, civic and charitable activities.
PHILIP S. PAYNE -- EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER.
Mr. Payne joined BTVC in 1990 as vice president of capital market activities and
became executive vice president and chief financial officer in January 1993.
From 1987 to 1990 he was a principal in Payne Knowles Investment Group, a
financial planning firm. From 1983 to 1987 he was a registered representative
with Legg Mason Wood Walker. From 1978 to 1983, Mr. Payne practiced law. He
received his B.S. and J.D. degrees from the College of William and Mary in 1973
and 1978, respectively.
DOUGLAS E. ANDERSON -- VICE PRESIDENT AND SECRETARY. Mr. Anderson has
served as vice president and secretary of the Company since its inception in
1987. He has been with BNE since 1977 and is currently a director, executive
vice president and secretary of BNE, primarily responsible for supervising
financial and other administrative activities. Mr. Anderson is also president of
BNE Land and Development Company, the real estate development division of BNE.
He serves as a director of Wachovia Bank of Rocky Mount, North Carolina, the
Educational Foundation of the University of North Carolina and is a former
director of Golden Corral Realty Corporation, a real estate investment trust. He
received a B.S. degree in accounting from the University of North Carolina at
Chapel Hill in 1970.
W. CRAIG WORTHY -- VICE PRESIDENT AND TREASURER. Mr. Worthy has served as
vice president and treasurer of the Company since its inception in 1987. He is a
certified public accountant and has been employed by BNE since 1979. Mr. Worthy
is currently senior vice president and chief financial officer of BNE. He serves
as a director of First Union Bank of Rocky Mount, North Carolina. He received a
B.A. degree from the University of Virginia in 1974 and a Master of Accountancy
and of Business Administration from the University of South Carolina in 1977.
4
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LISA K. MCCOURT -- VICE PRESIDENT, PROPERTY MANAGEMENT SERVICES. Ms.
McCourt became vice president of property management of BTVC in 1993. She joined
BTVC in 1989 as a community manager and was promoted to regional property
manager and oversaw all apartment and shopping center operations in the
Raleigh-Durham-Chapel Hill area of North Carolina and Virginia Beach, Virginia.
Prior to joining the Company, she worked for eight years in property management
with fee-managed properties for Boyd & Hassell Property Management Company.
PAMELA B. NOVAK -- VICE PRESIDENT AND CONTROLLER. A certified public
accountant, Ms. Novak joined BTVC in 1993 as controller. From 1984 to 1993, she
was employed by Ernst & Young as an audit manager. She received a B.S. in
accounting from the University of North Carolina at Charlotte in 1984.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid to Messrs. B. Mayo Boddie and D. Scott Wilkerson (the "Named Executive
Officers") for the three years ended December 31, 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION ALL OTHER COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#)
<S> <C> <C> <C> <C> <C>
B. Mayo Boddie, Chief Executive Officer (1) 1994 -- -- -- --
1993 -- -- -- --
1992 -- -- -- --
D. Scott Wilkerson, President (2) 1994 $27,692(3) -- -- 50,000(4)
</TABLE>
(1) Mr. Boddie received no compensation from the Company. See "Certain
Relationships and Transactions -- The Company and BTVC" for a description of
the consideration received by Mr. Boddie from the Company as a result of the
merger of BTVC into the Company.
(2) Mr. Wilkerson was named Chief Executive Officer of the Company in April
1995.
(3) Mr. Wilkerson's base salary on an annualized basis is $120,000.
(4) These options will vest in four equal annual installments commencing October
1995.
The following tables set forth certain information with respect to options
granted in 1994 to the Named Executive Officers:
OPTIONS GRANTS IN FISCAL YEAR 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
PERCENT OF TOTAL RATES OF STOCK PRICE
OPTIONS GRANTED EXERCISE APPRECIATION FOR OPTION
OPTIONS TO EMPLOYEE PRICE EXPIRATION TERM (2)
NAME GRANTED (1) IN FISCAL YEAR PER SHARE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
B. Mayo Boddie (3) -- -- -- -- -- --
D. Scott Wilkerson 50,000 31.3% $ 13.75 October 2004 $432,365 $1,095,698
</TABLE>
(1) These options will vest in four equal annual installments commencing October
1995.
(2) Realizable values have been reduced by the $13.75 per share option exercise
price that the optionee will be required to pay to the Company in order to
exercise the options.
(3) Mr. Boddie received no compensation from the Company. See "Certain
Relationships and Transactions -- The Company and BTVC" for a description of
the consideration received by Mr. Boddie from the Company as a result of the
merger of BTVC into the Company.
5
<PAGE>
FISCAL-YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT FISCAL YEAR-END (#) OPTIONS AT FISCAL YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
<S> <C> <C>
B. Mayo Boddie -- / -- $ -- / --
D. Scott Wilkerson -- /50,000 $ -- / --
</TABLE>
(1) Based on a closing price of $12.50 per share of Common Stock on December 31,
1994.
EMPLOYMENT CONTRACTS
Mr. Wilkerson entered into a three-year employment contract with the
Company in 1994. This contract provides for annual compensation of $120,000. The
contract includes provisions restricting competition with the Company during
employment and, except in certain circumstances, for a limited period of time
after termination of employment. Under the employment contact, Mr. Wilkerson is
entitled to his base salary for the longer of six months or the remaining period
of his contract in the event of a change of control of the Company. If the
Company terminates Mr. Wilkerson without cause, his severance payment would
equal his base salary for six to twelve months depending on the number of months
remaining under his employment contract.
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee is or was a paid officer
or employee of the Company. One member, Douglas E. Anderson, is Vice President
and Secretary of the Company but receives no compensation.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Management Compensation Committee of the Board of Directors (the
"Committee") is responsible for ensuring that a proper system of short and
long-term compensation is in place to provide performance-oriented incentives to
management. The following report is provided to assist shareholders in
understanding the Committee's objectives and procedures in establishing the
compensation of the Company's executive officers:
The Committee is responsible for establishing and administering the
Company's executive compensation plan. It is made up of the Company's three
outside directors and Douglas E. Anderson, who is non-compensated officer of the
Company.
Prior to the acquisition of BTVC, the Company had no paid officers or
employees. Upon the acquisition of BTVC, the executive officers of BTVC became
the executive officers of the Company with the terms and conditions of their
employment remaining substantially the same as those that were in place with
BTVC.
The Committee is currently developing a comprehensive compensation plan for
its executive officers. The Committee believes that compensation of the
Company's executive officers should link rewards to business results and
shareholder returns; encourage creation of shareholder value and achievement of
strategic objectives; maintain an appropriate balance between base salary and
short and long-term incentive opportunity; attract and retain, on a long-term
basis, high caliber personnel; and provide total compensation opportunity that
is competitive with other REITs, taking into account relative company size and
performance as well as individual responsibilities and performance. It is
expected that this plan will consist of three key elements: base salary,
short-term incentives and long-term incentives.
BASE SALARY. Base salary for the Company's executive officers is expected
to be in line with that paid by other REITs, taking into account the size of the
Company and individual responsibilities and performance, and will be reviewed
annually.
SHORT-TERM INCENTIVES. Short-term incentives, generally cash payments, will
be based on the attainment of certain targeted performance results. Such targets
may be based on total shareholder return, reported and operating earnings, funds
from operations and cash flow. Actual individual awards will depend on
assessments of individual and Company success in meeting the specified targets.
LONG-TERM INCENTIVES. Long-term incentives may include a variety of
incentives, such as stock options, stock appreciation rights and direct grants
of the Company's stock. The Company, with the approval of its shareholders,
adopted a Stock Option and Incentive Plan on August 4, 1994. The Company has
reserved 280,000 shares of Common Stock for issuance under the plan. On October
17, 1994, options to purchase 160,000 shares at $13.75 per share (the fair
market value of the
6
<PAGE>
stock on the grant date) were granted to certain executive officers. The options
vest in equal annual installments beginning October 1995. The granted options
have a ten-year term.
COMPENSATION OF D. SCOTT WILKERSON. D. Scott Wilkerson became President of
the Company on October 1, 1994 and Chief Executive Officer on April 18, 1995.
Mr. Wilkerson's employment contract provides for a base salary of $120,000 per
year with provision for short-term incentive compensation of up to 50 percent of
base salary. For the period October 1, 1994, to December 31, 1994, Mr. Wilkerson
received compensation of $27,692. This was comprised entirely of base salary. No
short-term incentive compensation was provided. As long-term incentive
compensation, Mr. Wilkerson was granted options to purchase 50,000 shares of the
Company's stock at $13.75 per share (the fair market value of the stock on the
grant date). The options vest in four equal annual installments beginning
October 1995 and have a ten-year term.
March 24, 1995
MANAGEMENT COMPENSATION COMMITTEE
James B. Powers
William H. Stanley
Richard A. Urquhart, Jr.
Douglas E. Anderson
THE FOREGOING REPORT SHOULD NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS
INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH
ACTS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of May 15, 1995 for (i) each person
who is known by the Company to own beneficially more than five percent of the
Company's Common Stock, (ii) the president and each director of the Company and
(iii) by all directors and executive officers as a group. The address of each
individual is c/o 3710 One First Union Center, Charlotte, North Carolina 28202.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
NAME OF BENEFICIAL OWNER NUMBER PERCENT
<S> <C> <C>
B. Mayo Boddie 78,820 2.6%
Nicholas B. Boddie 78,820 2.6
James B. Powers 3,500 *
William H. Stanley 3,000 *
Richard A. Urquhart, Jr. 100 *
D. Scott Wilkerson 39,570 1.3
All directors and executive officers as a group (11 persons) 415,663(1) 13.8
</TABLE>
* Represents less than 1% of the outstanding Common Stock.
(1) Includes 89,250 shares owned by Boddie-Noell Enterprises, Inc. Savings and
Employee Retirement Plan. Mr. Douglas E. Anderson and Mr. W. Craig Worthy,
both of whom are executive officers of the Company and Boddie-Noell
Enterprises, maintain shared voting control and investment powers with
respect to these shares. The address of Boddie-Noell Enterprises, Inc.
Savings and Employee Retirement Plan is 1021 Noell Lane, Rocky Mount, North
Carolina 27802.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
B. MAYO BODDIE AND NICHOLAS B. BODDIE
B. Mayo Boddie, Chairman of the Board of Directors of the Company, is
Chairman of the Board of Directors and Chief Executive Officer of BNE. Nicholas
B. Boddie is Vice Chairman and director of both the Company and BNE. The Boddies
and certain family members are the sole owners of BNE. The Company leases 47
Hardee's restaurant properties to BNE. See "The Company and BNE" below.
B. Mayo Boddie and Nicholas B. Boddie (the "Boddies") were Chairman and
Vice Chairman, respectively, directors and sole shareholders of BNE Advisory
Group, Inc., an affiliate of BNE. From the inception of the Company until
October 1, 1994, BNE Advisory Group was the advisor to the Company. See "The
Company and BNE Advisory Group" below.
The Boddies were the sole shareholders and directors of BTVC. From June
1993 until October 1, 1994, BTVC was the management agent for the Company's
apartment properties. On October 1, 1994, the Company acquired BTVC. See "The
Company and BTVC" below.
The Boddies are the sole shareholders and directors of Boddie Investment
Company ("BIC"). BIC is the general partner of the various limited partnerships
that own nine of the apartment properties and three shopping centers managed on
a fee basis by the Company. See "The Company and BIC" below.
The Company did not pay the Boddies for their services during the period of
1994 that they were executive officers of the Company.
THE COMPANY AND BNE
In 1987, the Company purchased 47 existing Hardee's restaurant properties
from BNE Realty Partners, Limited Partnership, an affiliate of BNE, for an
aggregate purchase price of $43,243,000, or an average purchase price of
$920,000 per property. The restaurants are operated by BNE under franchise
agreements with Hardee's Food Systems, Inc. Concurrent with the acquisition of
the properties, the properties were leased to BNE under a triple net lease (the
"Master Lease"). The Master Lease has a primary term of 15 years, grants BNE
three five-year renewal options and provides for rent equal to 9.875 percent of
net restaurant sales, subject to a minimum annual rent of eight percent of the
purchase price.
For the period ended December 31, 1994, the Master Lease with BNE resulted
in rental income of $5,047,000. Because the Master Lease is a triple net lease,
BNE is responsible for all taxes, utilities, insurance, maintenance and
alteration expenses relating to the operation of the restaurant properties.
BNE has extended to the Company an unsecured revolving line of credit of
$2,000,000. The line of credit bears interest at a floating rate per annum equal
to the prime rate of First Union National Bank of North Carolina. During 1994,
draws of $1,100,000 were made and repaid. Interest paid under this line in 1994
was $18,000. At December 31, 1994, there were no outstanding balances under this
facility.
With the acquisition of BTVC in October 1994 the Company assumed a note
payable to BNE in the amount of $6,100,000. The note bears interest at a
floating rate equal to the 30-day LIBOR rate plus 150 basis points capped at
eight percent. Payments are interest only and paid quarterly. The note is due in
full on May 1, 1999. During 1994, the Company recorded interest on this note to
BNE in the amount of $105,500. The effective rate on the note was 7.5% at
December 31, 1994.
THE COMPANY AND BNE ADVISORY GROUP
From the inception of the Company until October 1, 1994, BNE Advisory
Group, an affiliate of BNE, served as the advisor to the Company. BNE Advisory
Group provided administrative services to the Company and managed the day-to-day
operations of the Company. In addition, BNE Advisory Group provided executive
and administrative personnel and office space for such personnel to the Company.
As compensation for such services, the Company agreed to pay BNE Advisory Group
an annual fee equal to 4.65 percent of the Company's net cash available from
operations.
During the first three quarters of 1994, the Company paid BNE Advisory
Services fees in the amount of $153,000. With the acquisition of BTVC on October
1, 1994, the Company terminated its advisory contract with BNE Advisory
Services.
8
<PAGE>
THE COMPANY AND BIC
With the acquisition of BTVC, the Company assumed fee management of ten
apartment properties and three shopping centers on October 1, 1994. BIC is the
general partner of the various limited partnerships that own nine of the
apartment properties and the three shopping centers managed by the Company. For
its management services the Company receives certain property management and
administrative fees (generally five percent of apartment revenues collected and
three percent of shopping center revenues collected) from those limited
partnerships. In addition, the Company receives reimbursement for certain
expenses. For the period October 1, 1994 to December 31, 1994, the Company
received management fees of $276,000 and expense reimbursement of $39,000.
With the acquisition of BTVC, the Company assumed a note payable to BIC in
the amount of $956,000. The note bears interest at a floating rate equal to the
30-day LIBOR rate plus 150 basis points, capped at eight percent. Payments are
interest only and paid quarterly. The note is due in full on May 1, 1999. During
1994, the Company recorded interest on this note to BIC in the amount of
$16,900. The effective rate on the note was 7.5% at December 31, 1994.
THE COMPANY AND BTVC
Prior to the acquisition of BTVC on October 1, 1994, the Company contracted
with BTVC to provide management services for its two apartment properties, Paces
Commons and Oakbrook. Under the management agreement, BTVC was responsible for
the leasing, maintenance, rent collection, property accounting and day-to-day
operations of these properties. As compensation for these services, the Company
agreed to pay a management fee equal to five percent of the rental and other
revenue collected and to reimburse BTVC for certain expenses. For the first
three quarters of 1994, the Company paid BTVC property management fees of
$112,000 and expense reimbursements of $23,000. With the acquisition of BTVC on
October 1, 1994, the Company began to manage its own properties.
BTVC was an integrated real estate management, development and acquisition
Company that owned one apartment property and managed an additional 12 apartment
communities, including two owned by the Company, and three shopping centers. As
result of the acquisition, the Company succeeded to BTVC's third-party
management business. The acquisition of BTVC was made pursuant to a Proxy
Statement, which was filed with the Securities and Exchange Commission on June
15, 1994. The acquisition was approved by the Company's shareholders at its
Annual Meeting on August 4, 1994, and was also approved by the Company's debt
holders.
B. Mayo Boddie and Nicholas B. Boddie were the sole shareholders of BTVC.
As a result of the acquisition, the Boddies received substantial consideration
comprised of cash, shares of Common Stock and relief from certain debt and
contractual and contingent obligations. In addition, they are entitled to
receive additional shares of Common Stock in the event the Company meets certain
performance standards.
The contract purchase price for BTVC was $23,112,000 (the "Initial
Consideration"). The Initial Consideration was paid by the Company as follows:
(i) $91,000 in cash; (ii) assumption of $21,251,000 in indebtedness and other
liabilities (including the current liability for outstanding accounts payable,
accrued expenses, and tenant security deposits as of September 30, 1994); and
(iii) 134,610 shares of Common Stock valued at $1,899,000 (value based on a
price of $14.1125 per share, which was the average closing price for the 20
trading days ending on the third business day prior to the closing of the
acquisition).
The acquisition agreement, provides for additional consideration of up to
$1,700,000 if the Company meets or exceeds certain performance standards in the
future (the "Additional Consideration"). The Additional Consideration will be
payable in shares of Common Stock or cash, at the option of the Company, on a
quarterly basis over a period of up to 14 quarters commencing with the quarter
ended December 31, 1994. The Additional Consideration is contingent upon the
Company generating funds from operations, as adjusted for additional non-cash
items such as acquisition expenses and loan cost charge-offs ("Adjusted FFO"),
which equals or exceeds certain agreed upon levels. Quarterly targets for
Adjusted FFO range from $1,134,000 to $1,264,000 with a total cumulative target
of $16,507,000 over the 14-quarter period.
The performance targets are cumulative. If the Company fails to meet a
target in any particular quarter, the Additional Consideration will be deemed to
be earned in a subsequent quarter if the cumulative Adjusted FFO meets or
exceeds the cumulative Adjusted FFO specified in the schedule. To the extent the
issuance of shares of Common Stock to Messrs. Boddie and Boddie as Additional
Consideration would cause the Company to become disqualified as a REIT, they
will be paid cash in lieu of the shares that would result in the
disqualification.
On October 1, 1994, the Company issued a total of 140,990 shares to Messrs.
Boddie and Boddie as part of the Initial Consideration. This number of shares
was issued on a preliminary estimate of the outstanding accounts payable,
accrued
9
<PAGE>
expenses, and tenant security deposits as of September 30, 1994. Upon a
post-closing review, it was determined that 6,380 shares had been issued in
excess of the amount required by the acquisition agreement ("excess shares").
During the fourth quarter of 1994, the Company attained the financial targets
specified for Additional Consideration. At December 31, 1994, Messrs. Boddie and
Boddie were entitled to Additional Consideration, net of the excess shares
previously paid, of $49,647 ($141,667 less the value of excess shares previously
issued), which were paid in the form 3,712 shares of Common Stock during the
first quarter of 1995.
Assuming the maximum amount of Additional Consideration is earned and paid,
the Company will issue approximately 121,000 additional shares. This would
result in total consideration for the acquisition of BTVC, including the
assumption of debt and liabilities, of approximately $24,941,000.
PROPOSAL TWO:
AUTHORIZATION OF PREFERRED STOCK
THE PROPOSED AMENDMENT
The Board of Directors by unanimous vote has adopted a resolution approving
and recommending that the shareholders adopt an amendment to Article IV of the
Company's Certificate of Incorporation to authorize the issuance of 10 million
shares of preferred stock, issuable in series the characteristics of which would
be set by the Board of Directors, without further shareholder action.
Article IV of the Company's Certificate of Incorporation currently is as
follows: "The total number of shares of stock which the Corporation shall have
authority to issue is Ten Million (10,000,000) shares of common stock, and the
par value of each of such shares is One Penny ($0.01), amounting in the
aggregate to One Hundred Thousand Dollars ($100,000.00)." The proposed amendment
would, if approved along with Proposal Three set forth below at "Increase in
Number of Authorized Shares of Common Stock," replace the present Article IV in
its entirety with the following:
Article IV
(a) Shares and Par Value. The total number of shares of stock of
all classes that the Corporation has authority to issue is 110,000,000
shares of capital stock (par value $.01 per share), amounting in
aggregate par value to $1,100,000, of which 10,000,000 shares are
classified as Preferred Stock (par value $.01 per share) and
100,000,000 shares are classified as Common Stock (par value $.01 per
share).
(b) Preferred Stock. Subject to the limitations prescribed by law
and the provisions of this Article IV, the Board of Directors may
classify and reclassify any unissued shares of Preferred Stock by
setting or changing in any one or more respects, from time to time
before issuance of such shares, the preferences, conversion or other
rights, voting powers, restrictions (including restrictions on
transfers of shares), limitations as to dividends, qualifications or
terms or conditions of redemption of such shares of Preferred Stock.
The power of the Board of Directors to classify and reclassify any of
the shares of Preferred Stock shall include, without limitation,
authority to determine, fix, or alter one or more of the following:
(i) The distinctive designation of such class or series and
the number of shares to constitute such class or series; provided
that, unless otherwise prohibited by the terms of such class or
series or any other class or series, the number of shares of any
class or series may be decreased by the Board of Directors in
connection with any classification or reclassification of unissued
shares and the number of shares of such class or series may be
increased by the Board of Directors in connection with any such
classification or reclassification, and any shares of any class or
series which have been redeemed, purchased, otherwise acquired or
converted into shares of Common Stock or any other class or series
shall become part of the authorized capital stock and be subject to
classification and reclassification as provided in this
sub-paragraph.
(ii) Whether or not, and if so, the rates, amounts and times
at which, and the conditions under which, dividends shall be
payable on shares of such class or series, whether any such
dividends shall rank senior or junior to or on a parity with the
dividends payable on any other class or series of stock, and the
status of any such dividends as cumulative, cumulative to a limited
extent or non-cumulative and as participating or non-participating.
(iii) Whether or not shares of such class or series shall
have voting rights, in addition to any voting rights provided by
law and, if so, the terms of such voting rights.
10
<PAGE>
(iv) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and
conditions thereof, including provision for adjustment of the
conversion or exchange rate in such events or at such times as the
Board of Directions shall determine.
(v) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they
shall be redeemable and the amount per share payable in case of
redemption, which amount may vary under different conditions and at
different redemption dates; and whether or not there shall be any
sinking fund or purchase account in respect thereof and, if so, the
terms thereof.
(vi) The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding up of the
affairs of, or upon any distribution of the assets of, the
Corporation, which rights may vary depending upon whether such
liquidation, dissolution or winding up is voluntary or involuntary
and, if voluntary, may vary at different dates, and whether such
rights shall rank senior or junior to or on a parity with such
rights of any other class or series of stock.
(vii) Whether or not there shall be any limitations
applicable, while shares of such class or series are outstanding,
upon the payment of dividends or making of distributions on, or the
acquisition of, or the use of moneys for purchase or redemption of,
any stock of the Corporation, or upon any other action of the
Corporation, including action under this sub-paragraph, and, if so,
the terms and conditions thereof.
(viii) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of
such class or series, not inconsistent with law and the Certificate
of Incorporation.
If the increase in the total number of shares of Common Stock the Company
is authorized to issue is not approved as described in Proposal Three below,
paragraph (a) of the above amendment to the Certificate of Incorporation would
read as follows:
(a) Shares and Par Value. The total number of shares of stock of
all classes that the Corporation has authority to issue is 20,000,000
shares of capital stock (par value $.01 per share), amounting in
aggregate par value to $200,000, of which 10,000,000 shares are
classified as Preferred Stock (par value $.01 per share) and
10,000,000 shares are classified as Common Stock (par value $.01 per
share).
GENERAL
Approval of the proposed amendment to the Company's Certificate of
Incorporation would authorize the Company to issue 10 million shares of
preferred stock, par value $.01 per share (the "Preferred Stock"). If the
amendment is approved by the shareholders, Preferred Stock could be issued,
without the vote of holders of Common Stock, for any corporate purpose and for
whatever consideration the Board of Directors deemed appropriate. The powers,
preferences and rights and qualifications, limitations and restrictions of the
Preferred Stock would be determined by resolution of the Board of Directors. The
Board of Directors would be authorized to issue Preferred Stock in series and
vary the powers, preferences and rights, and the qualifications, limitations and
restrictions thereof as between series.
The terms of the Preferred Stock cannot be stated or estimated at this
time. At present the Board has not proposed to fix the characteristics of any
series of Preferred Stock in anticipation of issuing shares of a series nor has
it approved specific financing or acquisition plans involving the issuance of
Preferred Stock. The Company has engaged Craigie Incorporated to privately place
an issuance of Preferred Stock, but no agreement has been reached with any
prospective purchaser regarding the terms thereof. The Company has identified
potential acquisitions in the event Preferred Stock is issued; however, the
Company has no agreement with the owners of such potential acquisition targets.
The Company intends to issue the Preferred Stock in private offerings and does
not intend to seek additional shareholder approval prior to its issuance.
REASONS FOR AUTHORIZING THE ISSUANCE OF PREFERRED STOCK
BACKGROUND. The Company remains committed to a strategy of changing its
emphasis from restaurant to apartment properties. The Company has, with the
approval of its shareholders, begun to make this change with the purchase of
four apartment properties and the apartment management, acquisition and
development business of BT Venture Corporation. To continue its transformation,
the Company will seek to acquire additional apartment properties.
11
<PAGE>
Although the Company currently has sufficient cash flow to fund its
day-to-day operations and dividend payments, it does not have sufficient capital
to acquire additional apartment properties. To address this need for capital the
Company has considered a number of options, including the issuance of additional
common stock, the assumption of additional debt, the creation of an UPREIT and
the issuance of preferred stock. Following extensive discussion with its
investment, legal and accounting advisors, the Company has determined that at
this time the most viable option for raising capital is the issuance of
preferred stock.
DISADVANTAGES OF COMMON STOCK ISSUANCE. The price at which the Company
could issue Common Stock is limited by the then-current trading price of the
Common Stock. At current trading prices, the Board believes that the dilutive
effect on the Company's current shareholders of an offering of Common Stock may
be excessive. The price at which the Company could issue Preferred Stock,
however, is less tied to the market price of the Common Stock. As a result, the
Company may be able to issue Preferred Stock on such terms that the dilutive
effect on the Company's shareholders would be smaller than an in an offering of
Common Stock. In addition, the yield or dividend rate on Preferred Stock may be
lower than the yield the Company currently pays on its outstanding Common Stock.
DISADVANTAGES OF ADDITIONAL DEBT. The Board of Directors believes that the
assumption of additional debt at this time is not the best means to finance
property acquisitions. As of March 31, 1995, the Company had total debt,
including both long-term fixed-rate mortgage notes and short-term variable rate
notes, of $66,794,000. This represents 62.5% of total capitalization (the sum of
total debt and market capitalization). This ratio is high compared to other real
estate investment trusts, and the Company is committed to reducing its ratio of
total debt to total capitalization.
CONSIDERATION OF UPREIT REORGANIZATION. The Board of Directors has also
considered the creation of an umbrella partnership (an "UPREIT") as a way to
fund acquisitions. The formation of an UPREIT would involve the transfer by the
Company of substantially all its assets to a partnership (the "Operating
Partnership") in which it would be the sole general partner and a majority
limited partner. In order to acquire additional properties, the Company could
cause the Operating Partnership to issue limited partner interests as a major
component of the overall consideration. The Operating Partnership would be
structured to provide that distributions of cash from the partnership's
operations would be allocated between the Company and the other limited partners
based upon their respective equity ownership. If the Company were to reorganize
as an UPREIT, the limited partner interests would probably be convertible into
shares of Common Stock or cash after one year from their issuance.
In order to form an UPREIT, there must be another partner in addition to
the Company; therefore, the Company would not adopt this structure prior to
reaching agreement with one or more potential limited partners. It is expected
that such limited partners would contribute an interest in properties to the
Operating Partnership in exchange for their limited partner interests. The exact
percentage of such limited partners' interest and the Company's would depend on
the respective values of the assets to be contributed by each party to the
Operating Partnership.
Although the Board of Directors believes that the formation of an UPREIT
may be an attractive means of accomplishing its goal of growth through apartment
property acquisitions, the Board is not seeking shareholder approval of such a
reorganization at this time. The Company has not yet determined whether it
should seek shareholder approval with respect to a conversion into an UPREIT
before or after reaching agreement with prospective limited partners on the
property to be contributed, its valuation and other terms. If an UPREIT
reorganization is later pursued by the Company, the Company would probably still
need to raise funds to (i) retire debt on newly acquired properties and (ii)
offer cash along with limited partner interests in the Operating Partnership as
part of the consideration for a property acquisition.
AN UPREIT REORGANIZATION IS NOT A MATTER TO BE VOTED UPON AT THE MEETING.
IF THE BOARD DETERMINES TO RECOMMEND SUCH AN OPTION TO THE SHAREHOLDERS, AN
EXTENSIVE DISCUSSION OF THE PROPOSAL WOULD BE PRESENTED TO THE SHAREHOLDERS. THE
REORGANIZATION AS AN UPREIT COULD NOT BE UNDERTAKEN WITHOUT THE PRIOR APPROVAL
OF A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK.
CONCLUSION. Considering the costs and limitations of other forms of
financing, the Board of Directors recommends that the shareholders authorize the
issuance of Preferred Stock. Approval of this proposal would enable the Company
to issue Preferred Stock on terms set by the Board. With such flexibility, the
Company may be able to raise funds for acquisitions or other capital needs (such
as repayment of existing indebtedness) on terms that would make a Preferred
Stock issuance more attractive than an issuance of Common Stock or debt
securities.
12
<PAGE>
RISKS ASSOCIATED WITH THE ISSUANCE OF PREFERRED STOCK
REDUCED DISTRIBUTIONS TO COMMON SHAREHOLDERS. Upon the issuance of
Preferred Stock, dividends paid to common shareholders could not be paid until
Preferred Stock dividends were paid. The amount of cash available for
distribution to common shareholders would be reduced by the amount of the
dividends payable on the Preferred Stock. The coupon or dividend rate on the
Preferred Stock would be set by the Board of Directors prior to the issuance of
such shares. Adverse changes in the financial condition of the Company or high
interest rates prevailing in the economy at the time of the issuance of
Preferred Stock could result in high coupon or dividend rates on the Preferred
Stock. The terms of the Preferred Stock could also provide for an increase in
the coupon or dividend rate upon the occurrence of certain events.
In addition, series of Preferred Stock may be issued with redemption or
call features. If such Preferred Stock is called or redeemed for cash, the cash
available for distribution to the common shareholders would be correspondingly
reduced.
Upon dissolution of the Company, preferred stockholders would receive
priority in their claims to the residual assets of the Company, which, depending
upon the terms of the Preferred Stock as set by the Board of Directors, may
exceed the par value or issued value of such stock and would reduce the amount
otherwise available for distribution to the common shareholders.
POSSIBLE DILUTION OF COMMON SHAREHOLDERS' INTEREST. Upon the issuance of
Preferred Stock, the ownership interest of the common shareholders in the
Company will be diluted. The Board of Directors may issue Preferred Stock
convertible into shares of Common Stock. Upon such conversion, the individual
ownership interest of each holder of Common Stock prior to such conversion could
decrease. The extent of any decrease would depend upon the conversion ratio
established by the Board of Directors at the time of the issuance of the
Preferred Stock.
POSSIBLE RESTRICTIONS ON OPERATIONS. In connection with the issuance of
Preferred Stock, the Company may be required to enter into an agreement with the
purchasers that may contain covenants preventing the Company from issuing
securities or borrowing funds without the consent of the preferred shareholders.
Such restrictions could prevent the Company from pursuing investment
opportunities that would benefit the Company as a whole.
POSSIBLE RESTRICTIONS ON FUTURE REORGANIZATIONS. The terms of a preferred
stock purchase agreement may require the express consent of the holders of the
Preferred Stock prior to a merger or consolidation of the Company with any other
company. An agreement may also contain similar provisions restricting other
reorganizations of the Company. Such restrictions may prevent the Company from
taking advantage of business opportunities that may be in the best interests of
the Company as a whole and the common shareholders. Management does not intend,
however, to enter into any preferred stock purchase agreement that would
restrict its ability to form an UPREIT at a later date.
VOTING RIGHTS OF PREFERRED SHAREHOLDERS. A series of Preferred Stock may be
given voting rights. Such voting rights may vest at the time of the issuance of
the Preferred Stock or upon the occurrence of certain specified events (such as
the nonpayment of preferred dividends for a period of time). Furthermore, the
voting rights may allow preferred shareholders to cast more than one vote per
share or to elect, as a class, a specified number of directors. Such voting
rights could impair the common shareholders' control over the Company.
LIMIT ON CHANGES IN CONTROL. Although the Board of Directors does not
intend to utilize it for such purposes, Preferred Stock could be issued with
terms and conditions that would have the effect of discouraging a change of
control of the Company. Such limitations on changes in control may limit the
opportunity for stockholders to receive a premium for their Common Stock over
prevailing market prices. As a qualified real estate investment trust, however,
the Company is subject to provisions of the Internal Revenue Code (the "Code")
that limit concentration of ownership of its shares, and the Board believes that
these provisions and provisions of the Certificate of Incorporation of the
Company, which authorize the Company to redeem and stop transfer of shares to
preserve its qualification, make any attempt to change control unlikely.
PROPOSAL THREE:
INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
THE PROPOSED AMENDMENT
The Board of Directors by unanimous vote has adopted a resolution approving
and recommending that the shareholders adopt an amendment to Article IV of the
Company's Certificate of Incorporation to increase the total number of shares of
Common Stock the Company is authorized to issue from 10 million to 100 million.
The proposed amendment would replace the present Article IV in its entirety
with the following:
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<PAGE>
Article IV
The total number of shares of stock that the Corporation has
authority to issue is 100,000,000 shares of common stock, and the par
value of each of such shares is $.01, amounting in the aggregate to
$1,000,000.
If the shareholders also approve the proposed authorization of the issuance
of Preferred Stock set forth at Proposal Two, Article IV of the Certificate of
Incorporation would be amended as described above at "Authorization of Preferred
Stock -- The Proposed Amendment."
ADVANTAGES OF INCREASING NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors recommends an increase in the number of shares of
Common Stock authorized for issuance from 10 to 100 million to improve its
ability to raise funds on attractive terms to finance growth. Currently,
approximately 6.5 million shares of Common Stock are available for issuance for
such purposes as equity financings and acquisitions. If the Company issues
Preferred Stock that is convertible into shares of Common Stock, the amount of
shares of Common Stock available for acquisitions may be insufficient.
The Board of Directors is seeking the approval of the shareholders at this
time rather than waiting to seek such approval until it is necessary to finance
a pending acquisition because such a delay would entail the additional expense
of holding a special shareholders' meeting and may also jeopardize the Company's
ability to complete the financing and acquisition. The delay caused by holding a
special shareholders' meeting can be expected to be three months or more. During
such time, the prospective property seller may find a better offer. Moreover,
offers that are contingent on shareholder authorization frequently do not
compare well with offers from competing companies that can purchase the target
property without getting shareholder approval.
POSSIBLE DILUTION OF SHAREHOLDERS' INTEREST
Approval of the proposed amendment increases the risk that the Company will
issue additional shares of Common Stock or other securities convertible into
shares of Common Stock. Such issuances would dilute the ownership interest of
current shareholders in the Company. For a discussion of the risks of issuing
Preferred Stock convertible into Common Stock, see "Authorization of Preferred
Stock -- Risks Associated with the Issuance of Preferred Stock."
PROPOSAL FOUR:
AMENDMENT OF BYLAWS TO ELIMINATE THE
RESTRICTIONS ON THE ISSUANCE OF PREFERRED STOCK
THE PROPOSED AMENDMENT
The Board of Directors by unanimous vote has adopted a resolution approving
and recommending that the shareholders adopt an amendment to the bylaws to
eliminate the restrictions on the issuance of Preferred Stock. Section 3.12
presently includes the following provisions:
It shall be the duty of the Board of Directors to ensure that the
purchase, sale, retention and disposal of the Corporation's assets,
and the investment policies of the Corporation and the limitations
thereon or amendment thereto are at all times:
(a) consistent with such policies, limitations and
restrictions as are contained in this Section 3.12, or recited
in the Registration Statement on Form S-11 (the "Registration
Statement") filed with the Securities and Exchange Commission in
connection with this Corporation's initial offering of common
stock (the "Initial Offering"); . . .
The Corporation shall not: . . .
(d) issue equity securities which are redeemable at the
option of the holders thereof; . . .
(f) issue options or warrants to purchase shares of the
Company at an exercise price less than the fair market value of
such shares or which are for more than 10% of the outstanding
shares . . .
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<PAGE>
The Corporation does not intend . . . to repurchase or
otherwise reacquire shares of the Corporation except as may be
necessary to maintain qualification as a real estate investment
trust, [or] to issue senior securities. . . .
The proposed amendment would delete clauses (a), (d) and (f) above from
Section 3.12 and would also eliminate the above restrictions on the acquisition
by the Company of its own securities and on the issuance of senior securities.
REASONS FOR THE PROPOSED AMENDMENT
The Board of Directors recommends that the shareholders vote FOR the
proposed amendment to enable the Company to issue Preferred Stock. Elimination
of the restriction in Section 3.12 on the issuance of senior securities is a
prerequisite to the issuance of Preferred Stock. In addition, clause (d) of
Section 3.12 and the provision stating that the corporation does not intend "to
repurchase or otherwise reacquire shares of the Corporation except as may be
necessary to maintain qualification as a real estate investment trust" should be
deleted from the bylaws because the Board does not believe that the Company
would be able to place an issuance of Preferred Stock unless the holders of such
stock were able to redeem their shares for shares of Common Stock under certain
conditions. Such redemption rights are a common feature of preferred stock, and
the ability to include a redemption feature in an issuance of Preferred Stock is
necessary for the Company to place Preferred Stock on attractive terms.
The Board also recommends that Section 3.12 of the bylaws should be amended
to delete clause (f) thereof. This clause prohibits the issuance of options or
warrants to purchase stock of the Company at an exercise price less than the
fair market value of such shares or which are for more than 10% of the
outstanding shares. Preferred stock is frequently issued as part of a package of
securities that includes options or warrants to purchase shares of common stock.
The institutional investors that the Company is targeting to purchase its
Preferred Stock may well demand a similar package of options or warrants with
the Preferred Stock as a condition of their investment. Depending upon the size
of the Preferred Stock offering, such options or warrants could be for shares of
Common Stock constituting 10% or more of the outstanding shares of Common Stock.
The Company does not presently contemplate that such options or warrants
would be exercisable for less than the fair market value of the Common Stock.
Nevertheless, the flexibility to so set the exercise price is in the best
interest of the Company because it improves the Company's ability to create an
attractive package of securities that could raise the funds necessary to
accomplish its goal of growth through apartment property acquisitions. To have
such flexibility, clause (f) of Section 3.12 must be deleted.
Clause (a) of Section 3.12, which would also be deleted from the bylaws if
this proposal is approved, incorporates by reference to the Company's initial
Registration Statement on Form S-11 (the "Registration Statement") a list of
certain prohibited investments and activities. These prohibited investments and
activities are also set forth elsewhere in Section 3.12 itself and include the
prohibition at clause (d) regarding the issuance of redeemable equity securities
and the prohibition at clause (f) regarding the issuance of certain options or
warrants. The deletion of clause (a), therefore, is necessary to prevent the
incorporation by reference to the Registration Statement of the prohibitions on
the issuance of (i) redeemable equity securities or (ii) certain options or
warrants.
For a description of the advantages of having the ability to issue
Preferred Stock, see "Authorization of Preferred Stock -- Reasons for
Authorizing Issuance of Preferred Stock."
RISKS OF APPROVING PROPOSED AMENDMENT
Approving the proposed amendment to Section 3.12 of the Company's bylaws
would expose the Company's shareholders to the risks associated with the
issuance of Preferred Stock. For a discussion of such risks, see "Authorization
of Preferred Stock -- Risks Associated with the Issuance of Preferred Stock."
The elimination of clause (f) of Section 3.12 creates the risk that the
Company would issue options or warrants to purchase Common Stock at an exercise
price below the fair market value of the stock. If the holder of such a security
exercised the option or warrant to purchase Common Stock at an exercise price
below its then-current fair market value, the shareholders could suffer a
reduction in the value of their Common Stock as well as the usual dilution in
ownership interest associated with the issuance of capital stock.
15
<PAGE>
PROPOSAL FIVE:
APPROVAL OF LARGE PURCHASES OF COMPANY SECURITIES
GENERAL
Under the rules of the American Stock Exchange, shareholder approval is
required before the Company can list shares issued in connection with an
acquisition resulting in a person or group becoming a beneficial holder of 20%
or more of the outstanding shares of Common Stock. Because the Preferred Stock
may be convertible into shares of Common Stock, a large issuance of Preferred
Stock in connection with an acquisition could require shareholder approval. The
American Stock Exchange has informed the Company that such shareholder approval
requirement can be eliminated upon the approval of the Company's shareholders.
THE PROPOSAL
The Board of Directors recommends that the shareholders vote FOR the
proposal authorizing issuances of 20% or more of the Common Stock outstanding
(or securities convertible into 20% or more of the Common Stock) to a single
person or group in connection with acquisitions.
REASONS FOR ADVANCE APPROVAL OF LARGE PURCHASES OF COMPANY SECURITIES
The Board of Directors believes that approval of this proposal will help
the Company to grow through apartment property acquisitions. The Company is
currently seeking to place a large issuance of Preferred Stock in order to fund
acquisitions. The Company may also seek to privately place a large issuance of
Preferred or Common Stock in the future. If a large purchaser is found and such
purchaser conditions the sale on the Company's acquisition of certain
properties, the American Stock Exchange's shareholder voting requirement would
cause the Company to postpone its acquisition plans pending shareholder
approval. Institutional investors may be discouraged from purchasing Preferred
or Common Stock if such purchase and the related acquisition of properties would
be delayed. In fact, as Craigie Incorporated has attempted to find buyers of
Preferred Stock in anticipation of shareholder approval, institutional investors
have indicated that they would not consider a purchase until after shareholder
approval is obtained. By voting to eliminate this shareholder approval
requirement, the Board believes that large institutional investors may be more
interested in a private stock offering by the Company.
Avoidance of the costs of special shareholder meetings is another advantage
to voting for this proposal. Such a special shareholders' meeting would involve
significant expenses, including the costs of preparing a proxy statement
(including legal and accounting fees), printing and mailing the proxy statement,
and soliciting shareholder approval.
RISKS OF APPROVING THIS PROPOSAL
POSSIBLE LOSS OF REIT STATUS. Approval of the proposal at issue increases
the likelihood that the Company will sell a large amount of securities in
connection with an acquisition to a single purchaser. Such a purchase could
jeopardize the Company's status as a real estate investment trust. To maintain
its status as a REIT, not more than 50% in value of the outstanding stock of the
Company may be owned, directly or indirectly, through the application of certain
attribution rules, by five or fewer persons (as defined in the Code to include
certain entities). The issuance of 20% or more of the Common Stock or securities
convertible into shares of Common Stock would increase the likelihood that the
Company would fail the "five or fewer" requirement.
If the Company fails to qualify for taxation as a REIT in any taxable year
and certain relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to shareholders in any year in which the
Company fails to qualify will not be deductible by the Company nor will they be
required to be made. In such event, to the extent of current or accumulated
earnings and profits, all distributions to shareholders will be dividends,
taxable as ordinary income, except that, subject to certain limitations of the
Code, corporate distributees may be eligible for the dividends-received
deduction. Unless the Company is entitled to relief under specific statutory
provisions, the Company also will be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
Notwithstanding shareholder approval of the proposal at issue, the
Company's Certificate of Incorporation would continue to prohibit the issuance
of capital stock causing a person or group to own directly or indirectly more
than 9.8% of the outstanding shares of capital stock unless such person or group
has provided the Board of Directors with evidence and assurances acceptable to
the Board of Directors that the qualification of the Company as a real estate
investment trust under
16
<PAGE>
the Code would not be jeopardized. Such charter provision should mitigate the
risk that approval of this proposal would otherwise have on the Company's REIT
status.
CONCENTRATION OF OWNERSHIP OF COMMON STOCK. The Company is more likely to
issue a large amount of securities to a single security holder in connection
with an acquisition if this Proposal Five is approved. With no one person or
group (other than management) currently owning more than five percent of the
Common Stock, the issuance of securities convertible into 20% or more of the
Common Stock to a single person or group could give such person or group
significant influence in directing the affairs of the Company. Such person or
group may have interests that conflict with those of the other shareholders.
DILUTION OF SHAREHOLDERS' INTEREST. In addition to the dilutive effect on
the shareholders' voting power, the issuance of 20% or more of the Common Stock
(or securities convertible into 20% or more of the Common Stock) would also have
a dilutive effect on the shareholders' economic interest in the Company.
PROPOSAL SIX:
AMENDMENT OF BYLAWS TO ELIMINATE
RESTRICTION ON LENDING
THE PROPOSED AMENDMENT
Section 3.12 of the bylaws includes the following provision: "The Company
does not intend . . . to make loans to other persons." The Board of Directors by
unanimous vote has adopted resolutions approving and recommending that the
shareholders adopt an amendment to the bylaws that would delete the phrase "to
make loans to other persons" from the list of activities in which the Company
does not intend to engage.
REASONS FOR THE PROPOSED AMENDMENT
The Board of Directors recommends the proposed amendment so that the
Company will be authorized to make loans to the Management Company in order to
meet the Management Company's working capital needs. As discussed at the
"Summary," the Company intends to transfer its third-party management business
to the Management Company, which will be a taxable subsidiary of the Company.
The purpose of this restructuring is to alleviate the risk that the Company's
third-party revenues do not exceed the level permitted to maintain REIT status.
To comply with the REIT qualification requirements, the Company will own 100% of
the non-voting common stock and 1% of the voting stock of the Management Company
(representing 95% of the economic interest). The remaining ownership interest in
the Management Company (representing 5% of the economic interest) will be owned
by officers of the Management Company, who will also initially be officers of
the Company. The shares held by these officers will be subject to a provision in
the Management Company's bylaws that will be designed to ensure that such stock
will always be held by an officer or director of the Management Company. THE
RESTRUCTURING OF THE COMPANY'S THIRD-PARTY MANAGEMENT BUSINESS THROUGH THE
CREATION OF THE MANAGEMENT COMPANY IS NOT SUBJECT TO APPROVAL BY THE COMPANY'S
SHAREHOLDERS NOR IS IT CONDITIONED UPON THE APPROVAL BY THE SHAREHOLDERS OF THIS
BYLAW AMENDMENT.
RISKS OF PROPOSED AMENDMENT
A loan to the Management Company creates the risk that the Company will not
be repaid. The Company cannot ensure repayment because it will not have control
of the Management Company and its loans to the Management Company are expected
to be unsecured.
Furthermore, although the Company has no intention of making loans other
than to the Management Company, the proposed amendment would eliminate the only
restriction in the Company's governing documents on the making of loans to other
persons. Should the Company make such loans other than to the Management Company
or other majority-owned subsidiaries, the Company would be exposed to the risks
associated with lending to non-affiliates, including the risk that such funds
may not be repaid in full.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has appointed the accounting firm of Arthur Andersen & Co. to serve
as independent auditors of the Company for the fiscal year ending December 31,
1995. Arthur Andersen & Co. has served as independent auditors of the Company
since its commencement of operations and
17
<PAGE>
is considered by management of the Company to be well qualified. The Company has
been advised by that firm that neither it nor any member thereof has any
financial interest, direct or indirect, in the Company or any of its
subsidiaries in any capacity.
Representatives of Arthur Andersen & Co. will be present at the Meeting,
will have the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
STOCK PRICE PERFORMANCE GRAPH
The following stock price performance graph compares the Company's
performance to the S&P 500 and the index of equity real estate investment trusts
prepared by the National Association of Real Estate Investment Trusts ("NAREIT")
for the last five years. The stock price performance graph assumes an initial
investment on December 31, 1989 of $100 in the Company and the two indexes and
further assumes the reinvestment of all dividends. Equity real estate investment
trusts are defined as those which derive more than 75% of their income from
equity investments in real estate assets. The NAREIT equity index includes all
tax qualified real estate investment trusts listed on the New York Stock
Exchange, the American Stock Exchange and Nasdaq National Market System. Stock
price performance is not necessarily indicative of future results.
[STOCK PRICE PERFORMANCE GRAPH APPEARS HERE, A DESCRIPTION OF WHICH IS SET
FORTH AS AN APPENDIX HERETO]
THE STOCK PRICE PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE
BE DEEMED FILED UNDER SUCH ACTS.
PROPOSALS OF SHAREHOLDERS
If the 1996 Annual Meeting is held on a date between May 30, 1996 and
September 27, 1996, then any proposal by a shareholder for a matter to be
presented at that meeting must be received for inclusion in the proxy statement
and form of proxy at the Company's executive offices at 3710 One First Union
Center, Charlotte, North Carolina, 28202 no later than January 26, 1996, in a
form consistent with the regulations of the Securities and Exchange Commission
governing the inclusion of such proposals in proxy statements and forms of
proxy.
GENERAL
The Board of Directors knows of no other matter to be acted upon at the
Meeting. However, if any other matter is lawfully brought before the Meeting,
the shares covered by such proxy will be voted thereon in accordance with the
best judgment of the persons acting under such proxy unless a contrary intent is
specified by the shareholder.
Your vote is important. If you cannot attend the Meeting, please take time
to complete the enclosed proxy card and return it in the envelope provided.
By order of the Board of Directors,
PHILIP S. PAYNE,
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Date: May 29, 1995
18
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APPENDIX
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
P R O X Y
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 29, 1995
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Shareholders Meeting of Boddie-Noell Properties, Inc. (the "Company") to be held
on June 29, 1995, and the Proxy Statement in connection therewith; (b) appoints
D. Scott Wilkerson and Philip S. Payne, as Proxies (the "Proxies"), or either of
them, each with the power to appoint a substitute, and (c) authorizes the
Proxies to represent and vote, as designated below, all the shares of Common
Stock of the Company, held of record by the undersigned on May 15, 1995, at such
Annual Meeting and at any adjournment(s) thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THESE PROPOSALS:
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY to vote
(except as indicated to the contrary for all nominees
below)
</TABLE>
NOMINEES: B. Mayo Boddie, Nicholas B. Boddie, James B. Powers, William H.
Stanley and Richard A. Urquhart, Jr.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
2. TO AMEND THE CERTIFICATE OF INCORPORATION to authorize the issuance of 10
million shares of preferred stock, issuable in series the characteristics
of which would be set by the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO AMEND THE CERTIFICATE OF INCORPORATION to increase the number of
shares of Common Stock that the Company has authority to issue from 10
million to 100 million shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. TO AMEND THE BYLAWS TO ELIMINATE THE RESTRICTIONS ON THE ISSUANCE OF
PREFERRED STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on reverse side)
<PAGE>
(continued from other side)
5. TO APPROVE ISSUANCES OF 20% OR MORE OF
OUTSTANDING COMMON STOCK (or securities
convertible into 20% or more of Common
Stock) to a single person or group in
connection with acquisitions.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. TO AMEND THE BYLAWS TO ELIMINATE THE
RESTRICTIONS on making loans to other
persons.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. OTHER BUSINESS: In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the meeting or any
adjournments thereof.
[ ] FOR [ ] WITHHOLD AUTHORITY
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" EACH OF THE PROPOSALS TO BE VOTED UPON AND IN THE DISCRETION OF THE
PROXIES ON ANY OTHER BUSINESS WHICH PROPERLY COMES BEFORE THE MEETING.
Dated , 1995
Signature
Please sign exactly as your name
appears hereon. When signing on
behalf of a corporation,
partnership, estate, trust or in
any other representative capacity,
please sign your name and title.
For joint accounts, each joint
owner must sign.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS IMPORTANT WHETHER YOU
OWN FEW OR MANY SHARES. DELAY IN RETURNING YOUR PROXY MAY SUBJECT THE COMPANY TO
ADDITIONAL EXPENSE.
*******************************************************************************
The Performance Graph appears where indicated. The plot points
are listed below.
1989 1990 1991 1992 1993 1994
The Company 100 100 153 173 211 191
NAREIT 100 85 115 132 157 163
S&P 500 100 97 126 136 150 152
