SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or 240.14a-12
Boddie-Noell Properties, Inc.
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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 by registration 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:
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BODDIE-NOELL PROPERTIES, INC.
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3710 One First Union Center, Charlotte, NC 28202-6032, Telephone 704/333-1367
April 18, 1996
Dear Shareholder:
You are cordially invited to attend the Company's annual meeting on
Thursday, May 23, 1996. The meeting will begin promptly at 11:00 a.m. at 301
South College Street (One First Union Center), Charlotte, North Carolina, in the
27th Floor Conference Room.
The official notice of meeting, proxy statement and form of proxy are
included with this letter. The matters listed in the notice of meeting are
described in detail in the proxy statement.
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 yours,
BODDIE-NOELL PROPERTIES, INC.
/s/ D. Scott Wilkerson
D. Scott Wilkerson
President and Chief Executive Officer
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BODDIE-NOELL PROPERTIES, INC.
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3710 One First Union Center, Charlotte, NC 28202-6032, Telephone 704/333-1367
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held May 23, 1996
The annual meeting of shareholders of Boddie-Noell Properties, Inc.
will be held at 301 South College Street (One First Union Center), Charlotte,
North Carolina, in the 27th Floor Conference Room, on Thursday, May 23, 1996, at
11:00 a.m., for the following purposes:
1. To elect five directors.
2. 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, April 11, 1996, 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, 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,
/s/ Philip S. Payne
Philip S. Payne
Executive Vice President, Treasurer, and
Chief Financial Officer
Date: April 18, 1996
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BODDIE-NOELL PROPERTIES, INC.
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3710 One First Union Center, Charlotte, NC 28202-6032, Telephone 704/333-1367
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
to be held May 23, 1996
April 18, 1996
This 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 the annual meeting of shareholders (the
"Meeting") to be held on Thursday, May 23, 1996. The Meeting will be held at
11:00 a.m. at 301 South College Street (One First Union Center), Charlotte,
North Carolina, in the 27th Floor Conference Room. It is anticipated that the
proxy, proxy statement and notice of meeting will be mailed to shareholders on
April 18, 1996.
This proxy solicitation is made by the Board of Directors of the
Company (the "Board of Directors"). 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. and First Union
National Bank (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 approximately $3,500, exclusive of certain other
fees paid to First Union National Bank in connection with the operation of the
Meeting. All costs of solicitation will be borne by the Company.
Returning your completed proxy will not prevent you from voting in
person at the meeting should you be present and wish to do so. 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 the proposal 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, April 11, 1996, are
entitled to receive notice of, and to vote at, the meeting. At the close of
business on April 11, 1996, 3,016,740 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. 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. No appraisal or dissenters' rights are
available with respect to any matters to be voted upon at the Meeting.
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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 1996 annual meeting of shareholders, or until their successors are
elected and qualified, are B. Mayo Boddie, Nicholas B. Boddie, William H.
Stanley, Richard A. Urquhart, Jr. and Donald R. Pesta, Jr., all of whom have
been nominated for election at the Meeting as directors to hold office until the
1997 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, William H. Stanley, Richard A. Urquhart, Jr. and Donald R.
Pesta, Jr. as directors to hold office until the 1997 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.
Set forth below is a listing and brief biography of each of the five persons
nominated for election to the Board of Directors. With the exception of Mr.
Pesta, all of the directors have served in that capacity since the Company's
formation in 1987. Mr. Pesta was elected by the Board of Directors in January
1996 to complete the term of James B. Powers, who passed away in December 1995.
<TABLE>
<CAPTION>
- ------------------------------- ---------- ------------------------------------
Name Age Position
- ------------------------------- ---------- ------------------------------------
<S> <C> <C>
B. Mayo Boddie 66 Chairman of the Board, Director
Nicholas B. Boddie 68 Vice Chairman, Director
William H. Stanley 70 Director
Richard A. Urquhart, Jr. 77 Director
Donald R. Pesta, Jr. 42 Director
- ------------------------------- ---------- ------------------------------------
</TABLE>
B. Mayo Boddie - Chairman of the Board of Directors. Mr. Boddie was a founder of
the Company and a co-founder of Boddie-Noell Enterprises, Inc. ("BNE") in 1961
and serves as chairman of the board of both companies. Mr. Boddie served as
chief executive officer of the Company from its inception until April 1995. Mr.
Boddie serves as a director of First Union National Bank of North Carolina,
Factory Stores of America, which is a publicly traded REIT, North Carolina
Wesleyan College, and the East Carolina Council of Boy Scouts of America, is a
member of the board of visitors of the Kenan-Flagler Business School (University
of North Carolina at Chapel Hill) and is president of the Rocky Mount Chamber of
Commerce. He attended the University of North Carolina at Chapel Hill.
Nicholas B. Boddie - Vice Chairman and Director. Mr. Boddie was a co-founder of
BNE in 1961 and is currently vice-chairman and a director of that company. He is
a director of First Union National Bank of Rocky Mount, Lake Waccamaw Boys and
Girls Home of North Carolina, East Carolina Council of Boy Scouts and Rocky
Mount Junior Achievement. Mr. Boddie attended the University of North Carolina
at Chapel Hill. He is the brother of B. Mayo Boddie.
William H. Stanley - Director. Mr. Stanley is retired from the position of
chairman of the board of Peoples Bank and Trust Company, Rocky Mount, North
Carolina, which he held from 1975 to 1985 and chairman of the board and chief
executive officer of Peoples Bank Corporation from 1982 to 1985. Mr. Stanley
graduated from Rutgers Graduate School of Banking in 1955.
Richard A. Urquhart, Jr. - Director. Mr. Urquhart is a retired certified public
accountant, and was a partner in the public accounting firm of KPMG Peat
Marwick. Mr. Urquhart is also a former chairman of the board of trustees of Rex
Hospital, Raleigh, North Carolina and is a former director of Golden Corral
Restaurant Real Estate Investment Trust. Mr. Urquhart received a B.S. degree in
commerce from the University of North Carolina at Chapel Hill in 1939.
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Donald R. Pesta, Jr. - Director. Mr. Pesta is a practicing certified public
accountant with extensive experience in real estate related matters. In
addition, he holds a law degree from Ohio Northern University. Mr. Pesta is the
founding partner of the Charlotte, North Carolina, based accounting firm of
Pesta, Finnie & Associates. Prior to forming Pesta, Finnie, he was a tax partner
with the accounting firm of Arthur Andersen LLP where he was coordinator of
Carolinas real estate practice and a member of the firmwide real estate industry
executive team.
Mr. Stanley, Mr. Urquhart, and Mr. Pesta 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. Stanley (Chairman), Urquhart, and Pesta.
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 1995 the audit committee held two
meetings.
The management compensation committee consists of the Company's three
independent directors and Douglas E. Anderson, who is a non-compensated officer
of the Company. 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. During 1995 the management compensation committee held
two meetings.
The Board of Directors met eight times during the year ended December 31, 1995.
Compensation of Directors
The Company pays directors' fees to each director who is not an officer of the
Company or BNE. During the year ended December 31, 1995, Mr. William H. Stanley
and Mr. Richard A. Urquhart, Jr. were each paid an annual retainer of $10,000
plus fees of $5,450 for attendance at seven board meetings, $200 for one board
meeting by telephone, and $600 for attendance at two committee meetings. Mr.
James B. Powers was paid an annual retainer of $10,000 plus fees of $3,850 for
attendance at five board meetings. Mr. B. Mayo Boddie and Mr. Nicholas B. Boddie
did not receive any compensation.
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation of the
Company's chief executive officer and the executive officers whose salaries and
bonuses exceed $100,000 per year on an annual basis (the "Named Executive
Officers") for the three years ended December 31, 1995.
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Summary Compensation Table
<TABLE>
<CAPTION>
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Long-Term
Annual Compensation Compensation
------------------- All Other ------------
Name and Principal Position Year Salary Bonus Compensation Options (#)
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<S> <C> <C> <C> <C> <C>
B. Mayo Boddie, Chairman of the 1995 $0 $0 $0 0
Board of Directors (1) 1994 0 0 0 0
1993 0 0 0 0
D. Scott Wilkerson, President and 1995 $121,800 $25,000 $0 0
Chief Executive Officer (2) 1994 27,693 0 0 50,000
1993 n/a n/a n/a n/a
Philip S. Payne, Executive Vice President, 1995 $121,800 $20,000 $0 0
Treasurer and Chief Financial Officer (3) 1994 27,693 0 0 50,000
1993 n/a n/a n/a n/a
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</TABLE>
(1) Mr. Boddie also served in the capacity of chief executive officer from the
Company's formation until April 1995. (2) Mr. Wilkerson was named president
effective October 1, 1994 , and was named chief executive officer in April 1995.
1994 compensation shown on the table reflects actual payments made during the
period October 1 through December 31, 1994. (3) Mr. Payne was named executive
vice president and chief financial officer effective October 1, 1994, and was
named treasurer in April 1995. 1994 compensation shown on the table reflects
actual payments made during the period October 1 through December 31, 1994.
There were no grants or exercises of stock options during the fiscal year ending
December 31, 1995. The following table sets forth information with respect to
options held by the Named Executive Officers at December 31, 1995.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
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Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Options at Fiscal Year End Options at Fiscal Year End
Name Exercisable/Unexercisable Exercisable/Unexercisable (1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
B. Mayo Boddie 0 0 $0 $0
D. Scott Wilkerson (2) 12,500 37,500 $0 $0
Philip S. Payne (2) 12,500 37,500 $0 $0
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on a closing price of $12.50 per share of Common Stock on December 31,
1995. During the year ended December 31, 1995, the Company made no adjustments
or amendments to the exercise price of stock options granted in 1994 at $13.75
per share. In January 1996, the Board of Directors authorized repricing of these
options to $12.50 per share, the market price as of January 9, 1996. (2) Options
were granted in 1994 and vest at 12,500 shares per year over a four-year period
beginning October 1995 and ending October 1998.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
In October 1994, the Company entered into substantially identical employment
agreements with D. Scott Wilkerson (president) and Philip S. Payne (executive
vice president). These three-year agreements, subject to automatic renewal for
additional three-year periods, provide for initial annual base salaries of
$120,000 and participation in an incentive
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compensation plan to be established by the Company. The agreements provide for
severance payments equal to base salary for the period ending the earlier of
March 1, 1998 or 12 months from the date of termination in the event of
termination without cause, or base salary for the period ending the later of
October 1, 1997 or six months from the date of termination in the event of
change in control of the Company.
Compensation Committee Interlocks and Insider Participation
No member of the compensation committee was or is a paid officer or employee of
the Company.
Board Compensation Committee Report on Executive Compensation
This report is provided by the management compensation committee of the Board of
Directors (the "Committee") 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 a non-compensated officer of the
Company.
Prior to the acquisition of BT Venture Corporation ("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 continues its efforts to develop 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 pay, short-term
incentives and long-term incentives.
Base pay 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 is reviewed by the Committee
annually.
Short-term incentives, generally cash payments, are based on the attainment of
certain targeted performance results. Such targets may include measures such as
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 may include a variety of incentives including 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 stock
on the grant date) were granted to certain executive officers. The options vest
on a schedule of one-fourth of the granted options per year beginning on October
17, 1995. The granted options have a ten-year term. In order to provide a more
equitable base for executive incentive compensation, in early 1996 the Committee
authorized repricing of the options granted in October 1994 to reflect market
value as of January 1996.
1995 Compensation of D. Scott Wilkerson, President and Chief Executive Officer.
D. Scott Wilkerson became president of the Company on October 1, 1994, and was
named chief executive officer in April 1995. Mr. Wilkerson's employment contract
provides for base pay of $120,000 per year with provision for short-term
incentive compensation of up to 50 percent of base pay. Mr. Wilkerson received
1995 short-term incentive compensation of $25,000 for successful achievement of
management's goal of restructuring debt to minimize the Company's exposure to
fluctuations in variable
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interest rates. As long-term incentive compensation, in October 1994 Mr.
Wilkerson was granted options to purchase 50,000 shares of Common Stock. The
options vest on a schedule of one-fourth of the granted options per year
beginning on October 17, 1995. The granted options have a ten-year term.
April 4, 1996 Management Compensation Committee
Richard A. Urquhart, Jr.
William H. Stanley
Donald R. Pesta, 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 Common Stock as of April 4, 1996, (i) by each person who is known
by the Company to own beneficially more than 5 percent of the Company's Common
Stock (none), (ii) by each of the Company's directors, (iii) by each of the
Named Executive Officers and (iv) by all directors and executive officers as a
group.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Shares Beneficially Owned
-------------------------
Directors, Officers and Five Percent Shareholders Number Percent
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
B. Mayo Boddie 89,561 2.9%
Nicholas B. Boddie 84,570 2.8%
Donald R. Pesta, Jr. 0 *
William H. Stanley 3,000 *
Richard A. Urquhart, Jr. 100 *
Philip S. Payne (1) 52,070 1.7%
D. Scott Wilkerson (1) 52,070 1.7%
All directors and executive officers as a group (11 persons) 374,912 12.3%
- ------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1 percent.
(1) Number and percent of shares beneficially owned includes exercisable options
for 12,500 shares. Messrs. Payne and Wilkerson each own 41 shares (representing
in the aggregate a 2.5 percent economic interest) of the Class A (voting) stock
of BNP Management, Inc., a subsidiary of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and B. Mayo Boddie and Nicholas B. Boddie.
B. Mayo Boddie, chairman of the Board of Directors, 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. B. Mayo Boddie and Nicholas
B. Boddie (the "Boddies") and certain family members are the sole owners of BNE.
The Company leases 47 restaurant properties to BNE. See "The Company and BNE"
below.
The Boddies are the sole shareholders and directors of Boddie Investment Company
("BIC"). BIC is the general partner of the various limited partnerships which
own nine apartment properties and three shopping centers managed on a fee basis
by
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the Company prior to transfer during 1995 of these management contracts to the
Company's unconsolidated subsidiary, BNP Management, Inc. See "The Company and
BIC" below.
The Boddies were the sole shareholders and directors of BTVC. On October 1,
1994, the Company acquired 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. The
contract purchase price for BTVC was $23,112,000 (the "Initial Consideration").
In addition, the Boddies are entitled to receive additional shares of Common
Stock valued at up to $1,700,000 (the "Additional Consideration") over a period
of up to 14 quarters commencing with the quarter ended December 31, 1994, in the
event the Company meets certain performance criteria. The Company, at its
election, may make payments of Additional Consideration through the issuance of
shares of Common Stock or in cash. In the event the issuance of shares of Common
Stock to the Boddies as Additional Consideration would cause the Company to
become disqualified as a real estate investment trust ("REIT"), they are
required by the master lease to sell any excess shares.
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 based on a preliminary estimate of the outstanding accounts payable,
accrued expenses, and tenant security deposits as of September 30, 1994. Upon
further 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 and in each quarter of 1995, the Company attained the
financial targets specified for Additional Consideration. During 1995 the
Boddies received Additional Consideration, net of the excess shares previously
paid, of Common Stock valued at $332,981 related to fourth quarter, 1994, and
first and second quarter, 1995. At December 31, 1995, the Boddies are entitled
to Additional Consideration totaling 22,645 shares of Common Stock valued at
$283,334 related to third and fourth quarters of 1995. Assuming the maximum
amount of Additional Consideration is earned and paid in Common Stock, the
Company will issue approximately 100,000 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.
As part of the acquisition, Messrs. Boddie and Boddie have indemnified the
Company, subject to certain limitations, against any claim against the Company
which inures to the Company as a result of its being the successor-in-interest
to BTVC.
B. Mayo Boddie and Nicholas B. Boddie do not receive any compensation from the
Company for their services as chairman, vice chairman or directors 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 ("master lease"). As
amended and restated in December 1995, the master lease has a primary term
expiring in December 2007, grants BNE three five-year renewal options, and
provides for annual rent of the greater of $4,500,000 minimum rent or 9.875
percent of aggregate net sales from restaurant operations on the properties.
For the period ended December 31, 1995, the master lease with BNE resulted in
rental income of $4,649,000, or approximately 34 percent of total revenues. BNE
is responsible for all taxes, utilities, insurance, maintenance and alteration
expenses relating to the operation of the restaurant properties.
BNE had extended to the Company an unsecured revolving line of credit of up to
$2,000,000. Draws totaling $1,100,000 were made and repaid in full during 1994.
At December 31, 1994, there was no obligation outstanding. In conjunction with
modification of the master lease agreement, this line of credit was terminated
in December 1995.
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<PAGE>
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 8.0 percent.
Payments are interest only and paid quarterly. The note is due in full on May 1,
1999. During 1995, the Company recorded interest on this note to BNE in the
amount of $468,000. At December 31, 1995, the effective rate on this note was
7.3 percent.
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 which own nine apartment
properties and three shopping centers managed by the Company during 1995 prior
to transfer of these management contracts to the Company's unconsolidated
subsidiary, BNP Management, Inc. For its management services the Company
received certain property management and administrative fees (generally 5
percent of apartment revenues collected and 3 percent of shopping center
revenues collected) from those limited partnerships. In addition, the Company
received reimbursement for certain expenses. During 1995, the Company received
management fees of $473,000 and expense reimbursement of $72,000 from those
partnerships.
With the acquisition of BTVC in October 1994, 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 8.0 percent.
Payments are interest only and paid quarterly. The note is due in full on May 1,
1999. During 1995, the Company recorded interest on this note to BIC in the
amount of $73,000. At December 31, 1995, the effective interest rate on this
note was 7.3 percent.
11
<PAGE>
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors is currently reviewing competitive proposals for audit
and tax advisory services for the year ended December 31, 1996, and no
independent public accountant has been selected as of this date.
Arthur Andersen LLP has served as independent auditors of the Company since its
commencement of operations. 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 LLP 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.
PROPOSALS OF SHAREHOLDERS
If the 1997 annual meeting is held on a date between April 24, 1997, and August
21, 1997, 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 28202-6032 no later than December 19, 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,
/s/ Philip S. Payne
Philip S. Payne
Executive Vice President, Treasurer, and
Chief Financial Officer
Date: April 18, 1996
12
<PAGE>
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, 1990, 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 percent 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, American Stock Exchange and NASDAQ
National Market System. Stock price performance is not necessarily indicative of
future results.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Data points:
1990 1991 1992 1993 1994 1995
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Company 100 153 173 211 191 210
NAREIT 100 136 155 186 192 221
S&P 500 100 131 141 155 157 215
</TABLE>
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.
