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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11(Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
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3710 One First Union Center, Charlotte, NC 28202-6032, Telephone 704/333-1367
April 30, 1997
Dear Shareholder:
You are cordially invited to attend the Company's annual meeting on
Thursday, June 5, 1997. The meeting will begin promptly at 2:00 p.m. at the
Westin Hotel, 222 East Third Street, Charlotte, North Carolina.
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
<PAGE>
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 June 5, 1997
The annual meeting of shareholders of Boddie-Noell Properties, Inc.
will be held at the Westin Hotel, 222 East Third Street, Charlotte, North
Carolina, on Thursday, June 5, 1997, at 2:00 p.m., for the following purposes:
1. To elect five directors;
2. To consider and vote upon a proposal to reincorporate the Company
in Maryland; and
3. 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, 1997, 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 any 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,
PHILIP S. PAYNE
Executive Vice President, Treasurer, and
Chief Financial Officer
Date: April 30, 1997
<PAGE>
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 June 5, 1997
April 30, 1997
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, June 5, 1997. The Meeting will be held at
2:00 p.m. at the Westin Hotel, 222 East Third Street, Charlotte, North Carolina.
It is anticipated that the proxy, proxy statement and notice of meeting will be
mailed to shareholders on April 30, 1997.
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 by 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 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 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, April 11, 1997, are
entitled to receive notice of, and to vote at, the Meeting. At the close of
business on April 11, 1997, 3,102,983 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.
1
<PAGE>
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.
2
<PAGE>
PROPOSAL ONE:
ELECTION OF DIRECTORS
Pursuant to the amended Certificate of Incorporation (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 elect directors to hold office until the next
annual meeting or until their successors are elected and qualified. Those
directors whose terms expire at the 1997 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 1998 annual meeting of shareholders or 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 1998 annual meeting of
shareholders or 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.
<TABLE>
<CAPTION>
- -------------------------------- ------------- --------------------------------
Name Age Position
- -------------------------------- ------------- --------------------------------
<S> <C> <C>
B. Mayo Boddie 67 Chairman of the Board, Director
Nicholas B. Boddie 69 Vice Chairman, Director
Donald R. Pesta, Jr. 43 Director
William H. Stanley 71 Director
Richard A. Urquhart, Jr. 78 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. ("Enterprises")
in 1961 and serves as chairman of the board of directors 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 and FAC Realty Trust, Inc., a publicly traded real estate
investment trust ("REIT").
Nicholas B. Boddie - Vice Chairman and Director. Mr. Boddie was a co-founder of
Enterprises in 1961 and is currently vice-chairman and a director of that
company. 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 directors and chief executive officer of Peoples Bank
and Trust Company. Mr. Stanley serves as a director of Ellett Bros., Inc.,
Chapin, South Carolina.
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
Realty Corp., a publicly traded REIT.
Donald R. Pesta, Jr. - Director. Mr. Pesta is a practicing certified public
accountant with extensive experience in real estate related matters. Mr. Pesta
is the founding partner of the Charlotte, North Carolina, based accounting firm
of Pesta, Finnie & Associates.
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.
3
<PAGE>
Committees of the Board of Directors; Meetings
The Board of Directors met ten times during the year ended December 31, 1996,
including four meetings held by telephone.
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 1996, 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 1996, the management compensation committee
held one meeting.
Compensation of Directors
The Company pays directors' fees to each director who is not an officer of the
Company or Enterprises. During the year ended December 31, 1996, Mr. Donald R.
Pesta, Jr., Mr. William H. Stanley and Mr. Richard A. Urquhart, Jr. were each
paid annual retainers of $10,000 plus fees totaling $5,600 each for
participation in board meetings and $300 each for participation in committee
meetings. In addition, Mr. Pesta was paid a retainer of $10,000 upon his
election in January 1996. Mr. B. Mayo Boddie and Mr. Nicholas B. Boddie did not
receive any compensation.
Compensation Committee Interlocks and Insider Participation
Mr. Anderson, who is a member of the management compensation committee, serves
without compensation as a vice president and secretary of the Company. No other
member of the management compensation committee was or is an officer or employee
of the Company.
EXECUTIVE COMPENSATION
The following tables provide information regarding the annual and long-term
compensation of the Company's chief executive officer and the other most highly
paid executive officer whose total salary and bonus exceeded $100,000 in 1996
(the "Named Executive Officers").
<TABLE>
Summary Compensation Table
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation All Other Compensation
------------------------------ -----------------
Name and Principal Position Year Salary Bonus Compensation Options (#)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
D. Scott Wilkerson, President and 1996 $127,200 $ 0 $0 50,000 (2)
Chief Executive Officer (1) 1995 121,800 25,000 0 0
1994 27,693 0 0 50,000
Philip S. Payne, Executive Vice President, 1996 $127,200 $ 0 $0 50,000 (2)
Treasurer and Chief Financial Officer (3) 1995 121,800 20,000 0 0
1994 27,693 0 0 50,000
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<FN>
(1) 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.
(2) No options were received by the Named Executive Officers in 1996; however,
in January 1996 the Board of Directors authorized repricing of the exercise
price of stock options originally granted in 1994 at $13.75 per share to $12.50
per share, the market price as of January 9, 1996.
4
<PAGE>
(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.
</FN>
</TABLE>
<TABLE>
Options Repriced in 1996
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
Percent of Total at Assumed Annual Rates of
Options Repriced Exercise Stock Price Appreciation for
Options in Price per Expiration Option Term (1)
------------------------------
Name Repriced Fiscal Year Share Date 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
D. Scott Wilkerson 50,000 33.3% $12.50 10/17/04 $332,825 $814,018
Philip S. Payne 50,000 33.3% $12.50 10/17/04 $332,825 $814,018
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Realizable values have been reduced by the $12.50 per share exercise price
that the optionee will be required to pay to the Company in order to exercise
the options.
</FN>
</TABLE>
<TABLE>
1996 Year-End Option Values
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
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>
D. Scott Wilkerson (2) 25,000 25,000 $0 $0
Philip S. Payne (2) 25,000 25,000 $0 $0
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Based on a closing price of $12.50 per share of Common Stock on December 31,
1996.
(2) Options were originally granted in 1994, subsequently repriced at $12.50 per
share in January 1996, and vest at 12,500 shares per year over a four-year
period beginning October 1995 and ending October 1998.
</FN>
</TABLE>
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 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.
Management 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. The Committee consists of the Company's three
outside directors and Douglas E. Anderson, who is a non-compensated officer of
the Company.
5
<PAGE>
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. There are three key components to the
Company's executive compensation program: base pay, short-term incentives and
long-term incentives.
Base pay for the Company's executive officers is designed to be competitive 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 include measures such as
total shareholder return, operating earnings, funds from operations and cash
flow. Actual individual awards will depend on assessments of individual
performance and Company success in meeting the specified targets.
Long-term incentives may include a variety of incentives including stock
options, stock appreciation rights, phantom stock 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.
The following table provides information regarding this repricing of options for
all executive officers.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Number of
Securities Market Price Exercise Length of Original
Underlying of Stock at Price at New Option Term
Options Time of Time of Exercise Remaining at Date
Name Date Repriced Repricing Repricing Price of Repricing
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
D. Scott Wilkerson, President 1/09/96 50,000 $12.50 $13.75 $12.50 8.75 years
and CEO
Philip S. Payne, Executive Vice 1/09/96 50,000 $12.50 $13.75 $12.50 8.75 years
President, Treasurer and CFO
Lisa K. McCourt, Vice President - 1/09/96 10,000 $12.50 $13.75 $12.50 8.75 years
Property Mgmt.
Pamela B. Novak, Vice President - 1/09/96 10,000 $12.50 $13.75 $12.50 8.75 years
Controller
W. Craig Worthy, Vice President 1/09/96 30,000 $12.50 $13.75 $12.50 8.75 years
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
1996 Compensation of the CEO: 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 salary of $120,000 per year
with provision for short-term incentive compensation of up to 50 percent of base
pay. The base salary for Mr. Wilkerson of $127,200 in 1996 was determined by the
Committee in the same manner as described above for other executive officers.
During 1996, options for 50,000 shares granted to Mr. Wilkerson in October 1994
were repriced as shown above.
April 4, 1997 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, 1997, (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 90,156 2.8%
Nicholas B. Boddie 84,570 2.7%
Donald R. Pesta, Jr. 0 *
William H. Stanley 3,000 *
Richard A. Urquhart, Jr. 100 *
Philip S. Payne (1) 64,570 2.0%
D. Scott Wilkerson (1) 64,570 2.0%
All directors and executive officers as a group (10 persons) (2) 408,745
12.9%
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
* Less than 1 percent.
(1) Number and percent of shares beneficially owned includes exercisable options
for 25,000 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.
(2) Number and percent of shares beneficially owned includes exercisable options
for 70,000 shares.
</FN>
</TABLE>
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 Boddie-Noell Enterprises, Inc.
("Enterprises"). Nicholas B. Boddie is Vice Chairman and a director of both the
Company and Enterprises. B. Mayo Boddie and Nicholas B. Boddie (the "Boddies")
and certain family members are the sole owners of Enterprises. The Company
leases 47 restaurant properties to Enterprises. See "The Company and
Enterprises" below.
7
<PAGE>
The Boddies are the sole shareholders and directors of Boddie Investment Company
("BIC"). See "The Company and BIC" below.
The Boddies were the sole shareholders and directors of BT Venture Corporation
("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 $23,241,000
(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 REIT, the
Boddies are required by the master lease to sell any excess shares.
In October 1994 the Company issued a total of 140,990 shares to Messrs. Boddie
and Boddie as part of the Initial Consideration. During 1995 and 1996, the
Company issued a total of 64,450 shares of Common Stock to the Boddies for
payment of Additional Consideration. Under the terms of the acquisition
agreement, the Boddies were due Additional Consideration totaling 27,950 shares
of Common Stock valued at $356,000 as of December 31, 1996. Assuming the maximum
amount of Additional Consideration is earned and paid in Common Stock, the
Company would issue approximately 62,000 additional shares (including shares
earned, but not issued, at December 31, 1996).
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 and Vice Chairman, respectively, or as
Directors of the Company.
The Company and Enterprises
In 1987 the Company purchased 47 existing Hardee's restaurant properties from
BNE Realty Partners, Limited Partnership, an affiliate of Enterprises, for an
aggregate purchase price of $43,243,000, or an average purchase price of
$920,000 per property. The restaurants are operated by Enterprises under
franchise agreements with Hardee's Food Systems, Inc. Concurrent with the
acquisition of the properties, the properties were leased to Enterprises 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 Enterprises
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, 1996, the master lease with Enterprises
resulted in rental income of $4,500,000, or approximately 31 percent of total
revenues. Enterprises is responsible for all taxes, utilities, insurance,
maintenance, and alteration expenses relating to the operation of the restaurant
properties.
In connection with the acquisition of BTVC in October 1994, the Company assumed
a note payable to Enterprises 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 1996, the Company recorded interest on
this note to Enterprises in the amount of $432,000. At December 31, 1996, the
effective interest rate on this note was 7.1 percent.
The Company and BIC
With the acquisition of BTVC in October 1994, the Company assumed fee management
of ten apartment properties and three shopping centers. BIC is the general
partner of the various limited partnerships that own apartment properties and
shopping centers managed by the Company during 1995 prior to transfer of these
management contracts to the Company's unconsolidated subsidiary, BNP Management,
Inc.
In connection 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
8
<PAGE>
percent. Payments are interest only and paid quarterly. The note is due in full
on May 1, 1999. During 1996, the Company recorded interest on this note to BIC
in the amount of $68,000. At December 31, 1996, the effective interest rate on
this note was 7.1 percent.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has appointed the accounting firm of Ernst & Young LLP to serve as
independent auditors of the Company for the fiscal year ending December 31,
1997. Ernst & Young has served as independent auditors of the Company since
October 1996 and 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 Ernst & Young 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.
Effective October 15, 1996, the Company dismissed its prior certifying
accountants, Arthur Andersen LLP ("Andersen") and retained as its new certifying
accountants, Ernst & Young LLP.
Andersen's reports on the Company's financial statements during the two most
recent fiscal years contained no adverse opinion or disclaimer of opinion, nor
were qualified or modified as to uncertainty, audit scope or accounting
principles.
The decision to change accountants was approved by the Audit Committee of the
Company's Board of Directors.
During the two most recent fiscal years and all subsequent interim periods
preceding October 15, 1996, there were no disagreements between the Company and
Andersen on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of Andersen, would have caused Andersen to make
reference to the subject matter of disagreement in connection with Andersen's
reports.
None of the "reportable events" described in Item 304(a)(1)(v) of Regulation S-K
occurred with respect to the Company within the two most recent fiscal years and
any subsequent interim periods preceding October 15, 1996.
Effective October 15, 1996, the Company engaged Ernst & Young LLP as its
principal accountant. During the two most recent fiscal years and all subsequent
interim periods preceding October 15, 1996, the Company had not consulted Ernst
& Young LLP regarding any matters or events as set forth in Item 304(a)(2) of
Regulation S-K.
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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 REITs 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,
1991, of $100 in the Company and the two indexes, and further assumes the
reinvestment of all dividends.
Equity REITs 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.
[THE STOCK PERFORMANCE GRAPH APPEARS HERE IN THE PRINTED DOCUMENT]
Data points:
1991 1992 1993 1994 1995 1996
---------------------------------------------------------------
The Company 100 113 138 125 138 151
NAREIT 100 115 137 141 163 221
S&P 500 100 108 118 120 165 203
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.
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PROPOSAL TWO:
REINCORPORATION OF THE COMPANY IN MARYLAND
AND RELATED CHANGES TO THE RIGHTS OF SHAREHOLDERS
General
The Board of Directors has unanimously approved a proposal (the
"Reincorporation") to change the Company's state of incorporation from Delaware
to Maryland. The Company believes that after the Reincorporation it will be
organized and will operate in such a manner as to continue to qualify for
taxation as a REIT under Sections 856 through 860 of the Internal Revenue Code
of 1986, as amended (the "Code"), for its taxable year ending December 31, 1997,
and the Company intends to operate in such a manner in the future. The Board of
Directors believes the Reincorporation is in the best interests of the Company
and its shareholders.
The primary purpose of the proposed change in domicile is to avoid having to
continue to pay Delaware's annual franchise tax. For the year ended December 31,
1996, the Company paid to the State of Delaware a franchise tax totaling
$50,040. The Company anticipates having to pay the same amount in franchise
taxes for future years if it continues as a Delaware corporation. As a Maryland
corporation, the Company would not be subject to such annual taxes other than
the personal property tax filing fee of $100, provided that Maryland does not
alter its current laws.
In addition to avoiding the imposition of Delaware's annual franchise tax on the
Company, a number of changes will be effected as a result of the
Reincorporation. Such changes are described below under the headings "Certain
Consequences of the Merger" and "Comparison of Rights of Shareholders of the
Company and Shareholders of the Maryland Company."
The Board of Directors estimates the aggregate costs to the Company of
Reincorporation to be approximately $50,000.
In the event this proposal is not adopted, the Company will continue to operate
as a Delaware corporation and remain subject to Delaware's annual franchise tax.
Merger of Boddie-Noell Properties, Inc. into Newly Formed Maryland Subsidiary
The proposed Reincorporation would be accomplished by merging the Company into a
newly formed Maryland subsidiary, which is named Boddie-Noell Properties of
Maryland, Inc. (the "Maryland Company"), pursuant to an Agreement and Plan of
Merger (the "Merger Agreement"), substantially in the form attached as Exhibit A
to this Proxy Statement. The Maryland Company was incorporated in Maryland on
April 18, 1997, specifically for purposes of the Reincorporation and has
conducted no business and has no material assets or liabilities. After
consummation of the Reincorporation, the Maryland Company will change its name
to Boddie-Noell Properties, Inc. The Maryland Company's principal executive
offices are located at 3710 One First Union Center, Charlotte, North Carolina
28202. The Reincorporation would not result in any change in the Company's
business, assets or liabilities and would not result in any relocation of
management or other employees.
Where the context so requires, the term "Company" shall mean the Maryland
Company following the Reincorporation and the term "Board of Directors" shall
mean the Board of Directors of the Maryland Company following the
Reincorporation.
Certain Consequences of the Merger
Effective Time. The merger will take effect on the later of the times (the
"Effective Time") on which a Certificate of Ownership and Merger is filed with
the Secretary of State of Delaware and Articles of Merger are filed with the
State Department of Assessments and Taxation of Maryland, which filings are
anticipated to be made as soon as practicable after the Reincorporation proposal
is approved by the shareholders of the Company. At the Effective Time, the
separate corporate existence of the Company will cease and shareholders of the
Company will become shareholders of the Maryland Company.
Management After the Merger. Immediately after the merger, the Board of
Directors of the Maryland Company (the "Maryland Board of Directors") will be
composed of the current members of the Board of Directors of the Company. The
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current members of the Board of Directors will continue to serve as directors of
the Maryland Company for the same terms for which they would otherwise have
served as directors of the Company.
Shareholder Rights. Certain differences in shareholder rights exist under
Delaware General Corporation Law ("Delaware law") and Maryland General
Corporation Law ("Maryland law"). See "Comparison of Rights of Shareholders of
the Company and Shareholders of the Maryland Company" for a more complete
discussion of the consequential effects of the differences between the rights of
shareholders under Delaware and Maryland law.
Conversion of Common Stock. As a result of the Reincorporation, each
outstanding share of Common Stock of the Company will automatically be converted
into one share of Common Stock of the Maryland Company (the "Maryland Common
Stock"). Other than changes due to the differences between Delaware and
Maryland law and certain differences between the charters of the Company and
the Maryland Company (see "Comparison of Rights of Shareholders of the Company
and Shareholders of the Maryland Company"), there will be no changes in the
rights, preferences and privileges of holders of the Common Stock as a result
of the Reincorporation. The Maryland Common Stock will be listed on the
American Stock Exchange, Inc. ("AMEX") under the same symbol as the Company's
Common Stock.
Number of Shares of Stock Authorized and Outstanding. The number of
outstanding shares of Maryland Common Stock immediately following the
Reincorporation will equal the number of shares of Common Stock of the Company
outstanding immediately prior to the Effective Time. Unlike the Company's
charter, which authorizes the Company to issue only 10 million shares of common
stock, the charter of the Maryland Company authorizes the issuance of 100
million shares of common stock and 10 million shares of preferred stock. See
"Comparison of Rights of Shareholders of the Company and Shareholders of the
Maryland Company" for a more complete discussion of the differences between the
rights of shareholders under Delaware and Maryland law.
Franchise Tax. As a result of the Reincorporation, the Maryland Company will
not be subject to Delaware's annual franchise tax. For the year ended December
31, 1996, the Company and its subsidiaries paid to the State of Delaware annual
franchise tax totaling $50,040. The Company anticipates having to pay the same
amount in franchise tax for future years if it continues as a Delaware
corporation. As a Maryland corporation, the Maryland Company would not be
subject to such annual taxes other than the personal property tax filing fee of
$100, provided that Maryland does not alter its current laws.
Possible Adoption of UPREIT Structure. Unlike Delaware law, which requires
shareholder approval for any transfer of assets not in the ordinary course of
business, Maryland law permits a corporation to transfer any or all of its
assets to a subsidiary without shareholder approval if all of the equity
interests of the subsidiary are owned, directly or indirectly, by the
corporation. Among the transactions that, as a result of this difference in the
law, would require shareholder approval under Delaware law but not under
Maryland law is the adoption of an UPREIT structure.
An UPREIT is a real estate investment trust that controls and holds
substantially all of its properties through an umbrella limited partnership (an
"Operating Partnership"). The limited partnership interests ("Units") in an
Operating Partnership can be issued to acquire property in transactions that
would not trigger immediate tax obligations for certain sellers. Such Units are
generally redeemable for cash or shares of common stock of the REIT. UPREITs are
structured so that distributions of cash from the Operating Partnership are
allocated between the REIT and the other limited partners based upon their
respective Unit ownership.
As discussed in the Company's 1995 proxy statement and other public documents
filed with the SEC, the Company has considered adopting an UPREIT structure
since 1994. Converting to an UPREIT could enable the Company to acquire
properties at lower prices because of the tax advantages to certain sellers of
receiving Units as consideration.
Assuming approval of the Reincorporation, the Maryland Company might convert to
an UPREIT without shareholder approval if it would enable the Maryland Company
to complete a property acquisition believed to be in its best interest.
Risks of UPREIT Conversion. If the Company converts to an UPREIT and causes
the Operating Partnership to issue Units to acquire additional properties, the
sellers of such properties are likely to require the Company to agree to
maintain a certain level of debt on such properties and refrain from selling
such properties for a period of time in order that they may defer tax
liabilities. The Company expects that it would cause the Operating Partnership
to agree to certain resale
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restrictions and debt maintenance requirements. Adoption of the UPREIT
structure, therefore, could inhibit the Company from selling properties or
retiring debt that would otherwise be in the best interest of the Company.
Upon the admission of additional limited partners to the Operating Partnership,
the Company (as general partner) would owe a fiduciary obligation to the limited
partners. In most cases, the interests of the limited partners would coincide
with the interests of the Company and its shareholders because (i) the Company
would own a majority of the limited partner interests in the Operating
Partnership and (ii) the limited partners' Units would be convertible into
shares of the Company. Nevertheless, the interests of the limited partners might
conflict with those of the shareholders. For example, the sale of certain
properties could cause adverse tax consequences to particular limited partners.
The fiduciary obligations of the Company to the limited partners could prevent
the Company from taking actions in the best interest of its shareholders. In
addition, as a general partner of the Operating Partnership, the Company could
be found liable for the breach of the fiduciary duties owed to a limited
partner.
Upon the issuance of Units of the Operating Partnership, the interest of the
Company (and therefore the shareholders) in assets of the partnership would be
diluted. To the extent limited partners redeem such Units for (at the option of
the Company) stock or cash, the Company's interest in the partnership would
increase commensurately; however, the dilutive effect on current shareholders of
the issuance of Units would remain if such Units were redeemed (as would be
expected) for shares of Common Stock of the Company.
Company Plans. The Company's 1994 Stock Option and Incentive Plan and Dividend
Reinvestment and Stock Purchase Plan (collectively the "Plans") will be
continued by the Maryland Company following the Reincorporation. Approval of the
proposed Reincorporation will constitute approval of the adoption and assumption
of the Plans by the Maryland Company.
Outstanding Options. In addition to the assumption by the Maryland Company of
all options outstanding under the Plans, any and all other outstanding options
and other rights to acquire shares of Common Stock of the Company will be
converted into options or rights to acquire shares of the Maryland Company.
Federal Income Tax Consequences. The Reincorporation is intended to be tax
free under the Code. Accordingly, no gain or loss will be recognized by the
holders of shares of the Company's Common Stock as a result of the
Reincorporation, and no gain or loss will be recognized by the Company or the
Maryland Company. Each former holder of shares of the Company's Common Stock
will have the same tax basis in the Maryland Common Stock received by such
holder pursuant to the Reincorporation as such holder has in the shares of the
Company's Common Stock held by such holder at the Effective Time. Each
shareholder's holding period with respect to the Maryland Common Stock will
include the period during which such holder held the shares of the Company's
Common Stock, provided the latter were held by such holder as a capital asset at
the Effective Time. The Company has not obtained a ruling from the Internal
Revenue Service with respect to the consequences of the Reincorporation.
The foregoing is only a summary of certain federal income tax consequences.
Shareholders should consult their own tax advisors regarding the federal tax
consequences of the Reincorporation as well as any consequences under the laws
of any other jurisdiction.
Accounting Treatment of the Merger
Upon consummation of the merger, all assets and liabilities of the Company will
be transferred to the Maryland Company at historical cost in a manner similar to
that in pooling of interests accounting.
Appraisal Rights
Delaware law provides that shareholders of a corporation do not have appraisal
rights when a corporation whose shares are listed on a national securities
exchange merges with a foreign corporation. Consequently, because the Common
Stock is listed on AMEX, appraisal rights are not available to shareholders of
the Company with respect to the Reincorporation.
Approval Required for Reincorporation
Under Delaware law, the affirmative vote of a majority of the outstanding shares
of each class of the Company's capital
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stock entitled to vote on the proposal is required for approval of the
Reincorporation. The Reincorporation may be abandoned or the Merger Agreement
may be amended (with certain exceptions), either before or after shareholder
approval has been obtained, if in the opinion of the Board of Directors
circumstances arise that make such action advisable.
No federal or state regulatory requirements must be complied with or approval
must be obtained in connection with the proposed transaction.
Comparison of Rights of Shareholders of the Company and Shareholders of the
Maryland Company
The Company is organized as a corporation under the laws of the State of
Delaware and the Maryland Company is organized as a corporation under the laws
of the State of Maryland. As a Delaware corporation, the Company is subject to
Delaware law. The Company also is governed by its Amended Certificate of
Incorporation (the "Delaware Certificate") and Bylaws (the "Delaware Bylaws"),
which have been adopted pursuant to Delaware law. As a Maryland corporation, the
Maryland Company is governed by Maryland law and by its Articles of
Incorporation (the "Maryland Articles") and Bylaws (the "Maryland Bylaws"). A
number of differences between Delaware law and Maryland law and among these
various documents are summarized below.
The discussion of the comparative rights of the shareholders of the Company and
the shareholders of the Maryland Company as set forth below does not purport to
be complete and is subject to and qualified in its entirety by reference to
Delaware law and Maryland law and also to the Maryland Articles, Maryland
Bylaws, Delaware Certificate and Delaware Bylaws. The Maryland Articles and
Bylaws will be substantially in the forms attached as Exhibits B and C,
respectively, to this Proxy Statement and the Delaware Certificate and Delaware
Bylaws may be obtained from the Company, without charge, by contacting Philip S.
Payne, Executive Vice President, Boddie-Noell Properties, Inc., 3710 One First
Union Center, Charlotte, North Carolina 28202.
Limitation of Liability. Pursuant to Delaware law and the Delaware
Certificate, the liability of directors of the Company to the Company or to any
shareholder of the Company for money damages for breach of fiduciary duty has
been eliminated, except for (i) breach of the directors' duty of loyalty to the
Company or its shareholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) unlawful
dividends or redemptions or purchases of stock, or (iv) any transaction from
which the directors derived an improper personal benefit. In general, the
liability of officers may not be eliminated or limited under Delaware law.
Pursuant to Maryland law and the Maryland Articles, the liability of directors
and officers of the Maryland Company to the Maryland Company or to any
shareholder of the Maryland Company for money damages has been eliminated except
for (i) actual receipt of an improper personal benefit in money, property or
service and (ii) active and deliberate dishonesty established by a final
judgment as being material to the cause of action.
As a result of the Reincorporation, directors and officers of the Company may
not be liable under Maryland law for certain actions for which they would have
otherwise been liable under Delaware law; therefore, the likelihood of payments
by the Company pursuant to its indemnification obligations (which are described
below) may be reduced.
There is no pending or, to the Company's knowledge, threatened litigation to
which any of its directors or officers is a party in which the rights of the
Company or its shareholders would be affected if the Company already were
subject to the provisions of Maryland law rather than Delaware law.
Indemnification of Directors and Officers. The Delaware Certificate requires
the Company, to the fullest extent permitted by Delaware law, to indemnify its
officers and directors and to advance expenses incurred by such officers and
directors in relation to any action, suit or proceeding. The Delaware
Certificate, as permitted by Delaware law, requires the Company to indemnify
every person who is or was a party or is or was threatened to be made a party to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer or
employee of the Company or, while a director, officer or employee of the
Company, is or was serving at the request of the Company as a director, officer,
employee, agent or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
counsel fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding,
to the fullest extent permitted by applicable law.
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The Maryland Articles authorize the Maryland Company to indemnify its present
and former directors and officers, and any former director and officer who
served a predecessor of the Maryland Company in such capacity, and to pay or
reimburse expenses in advance of the final disposition of a proceeding to the
fullest extent permitted from time to time by the laws of Maryland. Maryland law
permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that (a) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and was
committed in bad faith or was the result of active and deliberate dishonesty,
(b) the director or officer actually received an improper personal benefit in
money, property or services, or (c) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe that the act or omission was
unlawful. In addition, Maryland law requires the Company, as conditions to
advancing expenses, to obtain (i) a written affirmation by the director or
officer of his or her good faith belief that he or she has met the standard of
conduct necessary for indemnification by the Company as authorized by the bylaws
and (ii) a written statement by or on his or her behalf to repay the amount paid
or reimbursed by the Company if it shall ultimately be determined that the
standard of conduct was not met. Under Maryland law, rights to indemnification
and expenses are non-exclusive, in that they need not be limited to those
expressly provided by statute. As a result, under Maryland law and the Maryland
Articles, the Maryland Company is permitted to indemnify its directors,
officers, employees and other agents, within the limits established by law and
public policy, pursuant to an express contract, bylaw provision, shareholder
vote or otherwise, any or all of which could provide indemnification rights
broader than those currently available under the Delaware Certificate or
Delaware law.
Unlike the Delaware Certificate, which specifically sets forth most of the
conditions and requirements of indemnification for the Delaware Company without
referring to Delaware law, the Maryland Articles define most of the conditions
and requirements of indemnification for the Maryland Company by referring to
applicable Maryland law; therefore, the Maryland Company's indemnification
obligations may be modified by future changes in law without shareholder action.
To protect the Maryland Company's officers and directors, the Maryland Articles
provide that amendment or repeal of the indemnification provision of the
Maryland Articles would be effective on a prospective basis only and neither
repeal nor modification of such provision would adversely affect rights to
indemnification in effect at the time of any act or omission that is the subject
of a proceeding against an indemnified person. The indemnification provisions of
the Maryland Articles are intended to apply to proceedings arising from acts or
omissions occurring before or after their respective adoption or execution.
There is presently no pending or already completed litigation nor, to the best
knowledge of the Company, is there any threatened litigation to which the
expanded nature of the coverage under the indemnity provision of the Maryland
Articles would apply.
Under Delaware law, the termination of any proceeding by conviction or upon a
plea of nolocontendere or its equivalent, shall not, of itself, create a
presumption that such person is prohibited from being indemnified. Under
Maryland law, such a termination creates a rebuttable presumption that such
person is not entitled to indemnification. In addition, Delaware law requires
court approval before there may be any indemnification where the person seeking
indemnification has been found liable to the corporation. However,
indemnification is prohibited under Maryland law if the person seeking
indemnification has been found liable to the corporation in a proceeding brought
by or in the right of the corporation. In addition, Maryland law provides that a
person adjudged liable on the basis that personal benefit was improperly
received may not be indemnified by the corporation. Thus, under these
circumstances, Maryland law provides indemnification rights that are narrower
than under Delaware law.
Delaware law, Maryland law and the Bylaws of both the Company and the Maryland
Company may permit indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") or the Exchange Act. The Board of
Directors has been advised that, in the opinion of the Securities and Exchange
Commission, indemnification for liabilities arising under the Securities Act or
the Exchange Act is contrary to public policy and is therefore unenforceable,
absent a decision to the contrary by a court of appropriate jurisdiction.
Actions by Written Consent of Shareholders. Under both Delaware law and
Maryland law, shareholders may act by written consent in lieu of a shareholder
meeting. Delaware law provides that, unless otherwise provided in the
certificate of incorporation of a Delaware corporation, any action that may be
taken at a shareholder meeting may be taken without a meeting, without prior
notice and without a vote, upon the written consent of the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a shareholder meeting at which all
shares entitled to vote were present and voted. Maryland law provides that any
action that may be taken at a
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shareholder meeting may be taken without a meeting only if (i) a unanimous
written consent setting forth the matter is signed by each shareholder entitled
to vote on the matter and (ii) a written waiver of any right to dissent is
signed by each shareholder entitled to notice of the meeting but not entitled to
vote at it.
Because Maryland law requires the unanimous written consent of all shareholders
entitled to vote for actions by written consent, it will be very unlikely that
shareholders of the Maryland Company will be able to take action by written
consent. This provision of Maryland law may deter hostile takeovers, as a holder
or group of holders controlling a majority in interest of the Maryland Company's
stock will not be able to amend the Maryland Bylaws or remove directors pursuant
to a shareholders' written consent unless they call a special meeting of the
shareholders. However, the Company does not believe that this provision will
have any material effect on the operation of the Company because the rules of
AMEX limit listed companies in using written consents in lieu of shareholder
meetings.
Inspection of Books and Records. Under Delaware law, any shareholder of the
Company may examine the list of shareholders and any shareholder making a
written demand may inspect any other corporate books and records for any purpose
reasonably related to the shareholder's interest as a shareholder. Maryland law
provides an absolute right of shareholder inspection for any purpose to
individuals who have been shareholders for more than six months and,
individually or as a group, own at least five percent or more of a Maryland
corporation's outstanding voting shares. In addition, any shareholder of a
Maryland corporation has the right to request the corporation to provide a sworn
statement showing all stock and securities issued and all consideration received
by the corporation within the preceding 12 months. Thus, shareholders of less
than five percent of the Company's Common Stock will not be able to make written
demand to inspect the books and records of the Company if the Reincorporation is
approved.
Amendment to Bylaws. Under Delaware law, the shareholders may never be
divested of the power to adopt, amend or repeal the bylaws. Such power may also
be conferred upon the board of directors. Under Maryland law, the exclusive
power to adopt, amend or repeal the bylaws may be conferred upon the
shareholders, vested exclusively with the board of directors, or shared by both
groups.
Under both the Delaware Bylaws and the Maryland Bylaws, the bylaws may be
altered, amended or repealed, or new bylaws may be adopted by the respective
shareholders or by the respective boards of directors.
Dividends and Other Distributions. Under Delaware law, dividends may be paid
out of the surplus of the corporation or, if there is no surplus, out of net
profits for the year in which the dividend is declared and/or the preceding
fiscal year. Maryland law allows the payment of dividends and redemption of
stock unless (i) the corporation would not be able to pay indebtedness that
became due in the ordinary course of business or (ii) the corporation's total
assets would be less than the sum of the corporation's liabilities plus, unless
the charter provides otherwise, the amount that would be needed upon dissolution
to satisfy the preferential rights of those shareholders whose preferential
rights upon dissolution are superior to those receiving the distribution. The
Company has historically paid quarterly cash dividends since its initial public
offering in April 1987 and plans to continue to do so. The Company does not
believe that the differences between Delaware and Maryland law regarding
dividends or distributions will materially affect its dividends or distributions
in the future.
Law Regulating Business Combinations. Delaware law requires that a merger,
consolidation, share exchange, or, in certain circumstances, an asset transfer
or issuance or reclassification of equity securities (a "business combination")
between a corporation and any person who owns 15% or more of the outstanding
voting stock of the corporation may not occur for three years following the date
such person became such an interested shareholder unless (i) approved by the
board of directors and holders of at least two-thirds of the outstanding voting
stock (other than shares controlled by the interested shareholder), (ii) the
board of directors approved the acquisition of voting stock pursuant to which
such person became an interested shareholder, or (iii) an exemption is
available.
Under Maryland law, business combinations between a Maryland corporation and any
person who, at any time within the two-year period prior to the date in
question, was the beneficial owner of ten percent or more of the voting power of
the then-outstanding voting stock of the corporation (an "Interested Maryland
Shareholder") are prohibited for five years after the most recent date on which
the Interested Maryland Shareholder became an Interested Maryland Shareholder.
Thereafter, unless an exemption is available, Maryland law provides that any
such business combination must be recommended by the board of directors of such
corporation and approved by the affirmative vote of at least (a) 80% of the
votes entitled to be cast by holders of outstanding voting shares of the
corporation and (b) 66% of the votes entitled to be
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cast by holders of outstanding voting shares of the corporation other than
shares held by the Interested Maryland Shareholder with whom the business
combination is to be effected.
The business combination statute could have the effect of discouraging offers to
acquire the Maryland Company and of increasing the difficulty of consummating
any such offers.
Control Share Acquisitions. Maryland law provides that "control shares" of a
Maryland corporation acquired in a "control share acquisition" have no voting
rights except to the extent approved by a vote of two-third of the votes
entitled to be cast on the matter, excluding shares of stock owned by the
acquiror or by officers or directors who are employees of the corporation.
"Control shares" are voting shares of stock which, if aggregated with all other
shares of stock previously acquired by such person, would entitle the acquiror
to exercise voting power in electing directors within one of the following
ranges of voting power: (i) one-fifth or more but less than one-third, (ii)
one-third or more but less than a majority, or (iii) a majority or more of all
voting power. Control shares do not include shares the acquiring person is then
entitled to vote as a result of having previously obtained shareholder approval.
A "control share acquisition" means the acquisition of control shares, subject
to certain exceptions.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of directors to call a special meeting of shareholders to
be held within 50 days of demand to consider the voting rights of the shares. If
no request for a meeting is made, the corporation may itself present the
question at any shareholders' meeting. If voting rights are not approved at the
meeting or if the acquiring person does not deliver an acquiring person
statement as required by the statute, then, subject to certain conditions and
limitations, the corporation may redeem any or all of the control shares (except
those for which voting rights have previously been approved) for fair value
determined, without regard to voting rights, as of the date of the last control
share acquisition or of any meeting of shareholders at which the voting rights
of such are considered and not approved. If voting rights for control shares are
approved at a shareholders' meeting and the acquiror becomes entitled to vote a
majority of the shares entitled to vote, all other shareholders may exercise
appraisal rights. The fair value of the shares as determined for purposes of
such appraisal rights may not be less than the highest price per share paid in
the control share acquisition, and certain limitations and restrictions
otherwise applicable to the exercise of dissenters' rights do not apply in the
context of a control share acquisition.
The control share acquisition statute does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the charter or bylaws of
the corporation.
The control share acquisition statute could have the effect of discouraging
offers to acquire the Maryland Company and of increasing the difficulty of
consummating any such offers.
Delaware law has no provision comparable to the Maryland control share
acquisition statute.
Restrictions on Ownership and Transfer of Common Stock. For the Company to
qualify as a REIT under the Code, no more than 50% in value of its outstanding
shares of Common Stock may be owned, actually or constructively, by five or
fewer individuals (as defined in the Code to include certain entitles) during
the last half of a taxable year (other than the first year). In addition, if the
Company, or an owner of 10% or more of the Company, actually or constructively
owns 10% or more of a tenant of the Company (or a tenant of any partnership in
which the Company is a partner), the rent received by the Company (either
directly or through any such partnership) from such tenant will not be
qualifying income for purposes of the REIT gross income test of the Code. Common
Stock must also be beneficially owned by 100 or more persons during at least 335
days of a taxable year of 12 months or during a proportionate part of a shorter
taxable year. Because the Company expects to qualify as a REIT, the Delaware
Certificate and the Maryland Articles contain restrictions on the ownership and
transfer of Common Stock intended to assist the Company in complying with these
requirements.
The ownership limit provision in the Maryland Articles provides that, subject to
certain specified exceptions, no person or entity may own, or be deemed to own
by virtue of the applicable constructive ownership provisions of the Code, more
than 9.8% (by number or value, whichever is more restrictive) of the outstanding
shares of Common Stock (the "Ownership Limit"). The constructive ownership rules
are complex, and may cause shares of Common Stock owned actually or
constructively by a group of related individuals and/or entities to be
constructively owned by one individual or entity. As a result, the acquisition
of less than 9.8% of the shares of the Common Stock (or the acquisition of an
interest in an entity that
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owns, actually or constructively, Common Stock) by an individual or entity,
could, nevertheless cause that individual or entity, or another individual or
entity, to own constructively in excess of 9.8% of the outstanding Common Stock
and thus subject such shares to the ownership limit provision in the Maryland
Articles. The Board of Directors may, but will not be required to, waive the
Ownership Limit with respect to a particular shareholder if it determines that
such ownership will not jeopardize the Company's status as a REIT. As a
condition of such waiver, the Board of Directors may require opinions of counsel
satisfactory to it and/or undertakings or representations from the applicant
with respect to preserving the REIT status of the Company. The above provisions
in the Maryland Articles are very similar to the ownership limit provisions set
forth in the Delaware Certificate.
Pursuant to the Maryland Articles, if any shareholder purports to transfer
shares to a person and either the transfer would result in the Maryland Company
failing to qualify as a REIT or the shareholder knows that such transfer would
cause the transferee to hold more than the Ownership Limit, the purported
transfer shall be null and void, and the shareholder will be deemed not to have
transferred the shares. In addition, if any person holds shares in excess of the
Ownership Limit, such person will be deemed to hold the shares that cause the
Ownership Limit to be exceeded in trust for the Maryland Company, and will not
receive distributions with respect to such shares and will not be entitled to
vote such shares. The Maryland Company may either direct the person to sell the
shares in excess of the Ownership Limit or redeem such shares for the lesser of
the amount paid for the shares and the average closing price for the 10 trading
days immediately preceding the redemption or to sell such shares at the
direction of the Maryland Company, in which case the Maryland Company will be
reimbursed for its expenses in connection with the sale and will receive any
amount of such proceeds that exceeds the amount such person paid for the shares,
and such person will be entitled to receive only the balance of the proceeds.
The remedy provided in the Maryland Articles arising from a violation of the
Ownership Limit is substantially similar to such remedy provided in the Delaware
Certificate, except that the price to be paid upon redemption of the excess
shares by the Delaware Company is equal to the closing price of such shares on
AMEX on the last business day prior to the redemption date.
Also, under the Maryland Articles, if any purported transfer of Common Stock
would cause the Maryland Company to be beneficially owned by fewer than 100
persons, or would cause the Maryland Company to be "closely held" within the
meaning of Section 856(h) of the Code, such purported transfer will be null and
void in its entirety and the intended transferee will acquire no rights to the
stock. The Delaware Certificate does not contain such restrictions.
All certificates representing shares of Common Stock will bear a legend
referring to the restrictions set forth in the Maryland Articles which are
described above. The Delaware Certificate requires no such legend.
Under both the Delaware Certificate and the Maryland Articles, every owner of a
specified percentage (or more) of the outstanding shares of Common Stock must
file a completed questionnaire with the Company containing information regarding
their ownership of such shares, as set forth in the Treasury Regulations. In
addition, each shareholder shall upon demand be required to disclose to the
Company in writing such information as the Company may request in order to
determine the effect, if any, of such shareholder's actual and constructive
ownership of Common Stock on the Company's status as a REIT and to ensure
compliance with the Ownership Limit.
The foregoing ownership limitations may have the effect of precluding
acquisition of control of the Company without the consent of the Board of
Directors.
Transfer of Assets to Another Entity. See "Certain Consequences of the
Merger--Possible Adoption of UPREIT Structure" and "--Risks of UPREIT
Conversion."
Investment Policies and Restrictions. The Delaware Bylaws contain a provision
preventing the Company from investing more than 10% of the Company's total
assets in unimproved real property or mortgage loans on unimproved real
property. The Maryland Bylaws contain no such restriction. The Board of
Directors believes that such a restriction could unduly restrict the flexibility
of the Maryland Company to engage in activities that would be in the best
interest of the shareholders. The Board of Directors has no plan to make
significant acquisitions of unimproved property.
Number of Authorized Shares of Capital Stock. The Delaware Certificate
authorizes the issuance of 10 million shares of Common Stock. The Maryland
Articles authorize the Maryland Company to issue 100 million shares of Common
Stock and 10 million shares of preferred stock. On June 29, 1995, the
shareholders authorized the Board of Directors to amend the
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Delaware Certificate to increase the total number of shares of Common Stock the
Company is authorized to issue from 10 million to 100 million and to authorize
the issuance of 10 million shares of preferred stock. However, in order to avoid
additional franchise taxes, the Board of Directors elected not to effect such
amendment to the Delaware Certificate at that time. Since the Maryland Company
is not subject to any franchise tax, the Reincorporation will enable the Company
to have the level of authorized capital stock that was approved by its
shareholders without incurring an increase in taxes.
Approval of the Reincorporation increases the risk that the Company may 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.
Issuance of Preferred Stock. Unlike the Delaware Certificate, the Maryland
Articles authorize the issuance of 10 million shares of preferred stock. The
provisions of the Maryland Articles authorizing the issuance of preferred stock
are identical to those that the Company's shareholders approved in 1995 but were
never filed with the State Department of Assessments and Taxation because of the
increased franchise tax obligations in Delaware described above. As a result of
the Reincorporation, 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.
Upon the issuance of preferred stock, dividends paid to common shareholders
would 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, a 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 Maryland Company, preferred shareholders would receive
priority in their claims to the residual assets of the Maryland 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.
Upon the issuance of preferred stock, the ownership interest of the common
shareholders in the Maryland Company would be diluted. Under the Maryland
Articles, the Board of Directors could 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 would 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.
In connection with the issuance of preferred stock, the Maryland Company could
be required to enter into an agreement with the purchasers that contains
covenants preventing the Maryland Company from issuing securities or borrowing
funds without the consent of the preferred shareholders. Such restrictions could
prevent the Maryland Company from pursuing investment opportunities that would
benefit the Maryland Company as a whole.
The terms of a preferred stock purchase agreement could require the express
consent of the holders of the preferred stock prior to a merger or consolidation
of the Maryland Company with any other company. An agreement could also contain
similar provisions restricting other reorganizations of the Maryland Company.
Such restrictions could prevent the Maryland Company from taking advantage of
business opportunities that would be in the best interests of the Maryland
Company as a whole and the common shareholders.
A series of preferred stock could be given voting rights. Such voting rights
could 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
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period of time). Furthermore, the voting rights could 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 Maryland Company.
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 Maryland Company. Such
limitations on changes in control may limit the opportunity for shareholders to
receive a premium for their Common Stock over prevailing market prices. As a
qualified REIT, however, the Company is subject to provisions of the Code that
limit concentration of ownership of its shares, and the Board of Directors
believes that these provisions and certain provisions of the Maryland Articles,
which authorize the Company to redeem and stop transfer of shares to preserve
its qualification, make any attempt to change control unlikely.
Validity of the Maryland Common Stock
The validity of the Maryland Common Stock will be passed upon for the Maryland
Company by Smith Helms Mulliss & Moore, L.L.P., 2800 Two Hannover Square,
Raleigh, North Carolina 27601.
Recommendation of the Board of Directors
The Board believes that the Reincorporation proposal is in the best interests of
the Company and its shareholders and therefore recommends shareholders vote FOR
approval of the proposal. The affirmative vote of a majority of the outstanding
shares of each class of the Company's capital stock entitled to vote at the
Meeting is required to approve the Reincorporation proposal.
A vote FOR the Reincorporation proposal will constitute approval of (i) the
change in the Company's state of incorporation through a merger of the Company
into the Maryland Company, (ii) the Maryland Articles, (iii) the Maryland
Bylaws, and (iv) all other aspects of the Reincorporation proposal.
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PROPOSALS OF SHAREHOLDERS
If the 1998 annual meeting is held on a date between May 6, 1998, and September
3, 1998, 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 31, 1997, 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, Treasurer, and
Chief Financial Officer
Date: April 30, 1997
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
_________________, 1997, is by and between Boddie-Noell Properties, Inc., a
Delaware corporation (the "Company"), and Boddie-Noell Properties of Maryland,
Inc., a Maryland corporation (the "Maryland Company").
RECITALS
WHEREAS, the Board of Directors of the Company and the Board of
Directors of the Maryland Company each have determined that it is in the best
interests of their respective shareholders to effect the merger provided for
herein upon the terms and subject to the conditions set forth therein; and
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto adopt the plan of reorganization encompassed by this agreement
and agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), the Company shall
be merged with and into the Maryland Company and the separate corporate
existence of the Company shall thereupon cease (the "Merger"). To the extent the
Merger constitutes a transaction for federal income tax purposes, the parties
intend that the Merger qualify as a reorganization described in Section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended. The Maryland
Company shall be the surviving entity in the Merger (sometimes hereinafter
referred to as the "Surviving Entity") and shall continue to be governed by the
laws of the State of Maryland, and the separate existence of the Maryland
Company with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger. The Merger shall have the effects specified
in the Delaware General Corporation Law (the "DGCL") and the Maryland General
Corporation Law (the "MGCL").
1.2 Closing. The closing of the Merger (the "Closing") shall
take place (i) at the offices of Smith Helms Mulliss & Moore, L.L.P., 2800 Two
Hannover Square, Raleigh, North Carolina 27601 at 10:00 a.m. local time on the
first business day on which the last to be fulfilled or waived of the conditions
set forth in Section 6.1 hereof shall be fulfilled or (ii) at such other place
and time and/or on such other date as the Company and the Maryland Company may
agree.
1.3 Effective Time. Following the Closing, and provided that
this Agreement has not been terminated or abandoned pursuant to Article VII
hereof, the Company and the Maryland Company will, at such time as they deem
advisable, cause a Certificate of Ownership and Merger (the "Certificate of
Ownership and Merger") to be executed, acknowledged and filed with the Secretary
of State of Delaware as provided in Section 253 of the DGCL and Articles of
Merger (the "Articles of Merger") to be filed with the State Department of
Assessments and Taxation of Maryland (the "SDAT") as provided in Section 3-105
of the MGCL. The Merger shall become effective at the later of the filing of the
Certificate of Ownership and Merger with the Secretary of State of Delaware and
the acceptance for record of the Articles of Merger by the SDAT (the "Effective
Time").
ARTICLE II
ARTICLES OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
2.1 Articles of Incorporation. Except as set forth in Section
8.8, the Articles of Incorporation of the Maryland Company in effect at the
Effective Time shall be the Articles of Incorporation of the Surviving Entity,
until duly amended in accordance with the terms thereof and the MGCL.
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2.2 The Bylaws. The Bylaws of the Maryland Company in effect
at the Effective Time shall be the Bylaws of the Surviving Entity, until duly
amended in accordance with the terms thereof and the MGCL.
ARTICLE III
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION
3.1 Directors and Officers. The directors and officers of the
Company at the Effective Time shall, from and after the Effective Time, be the
directors and officers, respectively, of the Surviving Entity until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving Entity's
Articles of Incorporation and Bylaws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any capital
stock of the Company:
(a) Each share of the common stock, par value $0.01 per share
(the "Company Shares") of the Company issued and outstanding immediately prior
to the Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share (the "Maryland
Company Shares") of the Maryland Company. Each certificate (each, a
"Certificate") representing any such Company Shares shall thereafter represent
the right to receive Maryland Company Shares. All Company Shares shall no longer
be outstanding and shall be canceled and retired and shall cease to exist.
(b) Each Company Share issued and held in the Company's
treasury at the Effective Time, shall by virtue of the Merger and without any
action on the part of the holder thereof, cease to be outstanding, shall be
canceled and retired without payment of any consideration therefor and shall
cease to exist.
(c) At the Effective Time, each Maryland Company Share issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the Maryland Company or the holder
of such shares, be canceled and retired without payment of any consideration
therefor.
(d) Each option or other right to purchase or otherwise
acquire Company Shares pursuant to stock option or other stock-based plans of
the Company granted and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
of such option or right, be converted into and become a right to purchase or
otherwise acquire the same number of Maryland Company Shares at the same price
per share and upon the same terms and subject to the same conditions as
applicable to such options or other rights immediately prior to the Effective
Time.
4.2 Exchange of Certificates for Company Shares.
(a) Exchange Agent. As of the Effective Time, the Company
shall deposit with an exchange agent (the "Exchange Agent"), for the benefit of
the holders of Company Shares, for exchange in accordance with this Article IV,
certificates representing the Maryland Company Shares (such certificates,
together with the amount of any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") to be issued pursuant to
Section 4.1 in exchange for outstanding Company Shares.
(b) Exchange Procedures. Promptly after the Effective Time,
the Surviving Entity shall cause the Exchange Agent to mail to each holder of
record of a Certificate or Certificates (i) a letter of transmittal which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to
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the Exchange Agent and shall be in such form and have such other provisions as
the Surviving Entity may specify and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing Maryland
Company Shares. Upon surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of Maryland Company Shares and (y) a check
representing unpaid dividends and distributions, if any, which such holder has
the right to receive in respect of shares represented by the Certificate
surrendered pursuant to the provisions of this Article IV, and the Certificate
so surrendered shall forthwith be canceled. No interest will be paid or accrue
on unpaid dividends and distributions, if any, payable to holders of
Certificates. In the event of a transfer of ownership of Company Shares which is
not registered in the transfer records of the Company, a certificate
representing the proper number of Maryland Company Shares may be issued to such
a transferee if the Certificate representing such Company Shares is presented to
the Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid. If any certificate for Maryland Company Shares is to be issued in a name
other than that in which the Certificate surrendered in exchange therefore is
registered, it shall be a condition of such exchange that the person requesting
this exchange shall pay any transfer or other taxes required by reason of the
issuance of Certificates for such Maryland Company Shares in a name other than
that of the registered holder of the Certificate surrendered, or shall establish
to the satisfaction of the Surviving Entity that such tax has been paid or is
not applicable.
(c) Transfers. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Company Shares which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Entity for transfer,
they shall be canceled and exchanged for the Maryland Company Shares deliverable
in respect thereof pursuant to this Agreement in accordance with the procedures
set forth in this Article IV.
(d) Termination of Exchange Fund. Any portion of the
Exchange Fund (including the proceeds of any investments thereof and any
Maryland Company Shares that remain unclaimed by the shareholders of the Company
for six months after the Effective Time) shall be paid to the Surviving Entity.
Any shareholders of the Company who have not theretofore complied with this
Article IV shall thereafter look only to the Surviving Entity for payment of
their Maryland Company Shares and unpaid dividends on Maryland Company Shares
deliverable in respect of each Company Share such shareholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of the Surviving Entity, the
Exchange Agent or any other person shall be liable to any former holder of
Company Shares for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(e) No Liability. In the event any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Entity, the posting by such person of a bond in such
amount as the Surviving Entity may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate, a certificate
representing Maryland Company Shares and cash in lieu of fractional shares
deliverable in respect thereof pursuant to this Agreement.
ARTICLE V
COVENANTS
5.1 Stock Exchange Listing. The Maryland Company shall use its
best efforts to cause the Maryland Company Shares to be issued in the Merger to
be approved for listing on the American Stock Exchange, Inc. (AMEX), subject to
official notice of issuance, prior to the Closing Date.
5.2 Indemnification; Directors' and Officers' Insurance. From
and after the Effective Time, the Surviving Entity agrees that it will
indemnify, and pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to, (i) any individual who is a present or former
director or officer of the Company or (ii) any individual who, while a director
of the Company and at the request of the Company, serves or has served another
corporation, partnership, joint venture, trust, employee benefit plan or any
other enterprise as a director, officer, partner or trustee of such corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
arising out of or pertaining to
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matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent permitted by law.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of the Maryland Company and the Company to consummate
the Merger are subject to the fulfillment of each of the following conditions:
(a) Shareholder Approval. This Agreement shall have
been duly approved by the holders of a majority of the Company Shares, in
accordance with applicable law and the Amended Certificate of Incorporation and
Bylaws of the Company.
(b) AMEX Listing. The Maryland Company Shares issuable to
the Company shareholders pursuant to this Agreement shall have been authorized
for listing on AMEX upon official notice of issuance.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of the Company Shares, by the
mutual consent of the Board of Directors of the Company and the Board of
Directors of the Maryland Company.
7.2 Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article VII, no party hereto (or any of its directors or officers) shall have
any liability or further obligation to any other party to this Agreement.
ARTICLE VIII
MISCELLANEOUS AND GENERAL
8.1 Modification or Amendment. Subject to the applicable
provisions of the DGCL and the MGCL, at any time prior to the Effective Time,
the parties hereto may modify or amend this Agreement, by written agreement
executed and delivered by duly authorized officers of the respective parties.
8.2 Waiver of Conditions. The conditions to each of the
parties' obligations to consummate the Merger are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
8.3 Counterparts. For the convenience of the parties hereto,
this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
8.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the States of Delaware and Maryland.
8.5 No Third-Party Beneficiaries. Except as provided in
Section 5.2, this Agreement is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
8.6 Headings. The Article, Section and paragraph headings
herein are for convenience of reference only, do not constitute a part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
8.7 Service of Process. The Maryland Company may be served
with process in the State of Maryland in any
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proceeding for the enforcement of any obligation of the Company, as well as for
enforcement of any obligations of the Maryland Company arising from the Merger,
and it does hereby irrevocably appoint the Secretary of State of the State of
Maryland as its agent to accept service of process in any such suit or other
proceedings. The address to which a copy of such process shall be mailed by the
Secretary of State to the Maryland Company is 3710 One First Union Center,
Charlotte, North Carolina 28202.
8.8 Amendment of Articles. At the Effective Time, the
Articles of Incorporation of the Maryland Company will be amended in order to
(i) change the name of the Maryland Company to Boddie-Noell Properties, Inc.
and (ii) delete in its entirety Section 5.5 thereof.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
BODDIE-NOELL PROPERTIES, INC.
ATTEST: By:_______________________________________
(Name)
(Title)
BODDIE-NOELL PROPERTIES OF MARYLAND, INC.
ATTEST: By:______________________________________
(Name)
(Title)
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EXHIBIT B
(Set forth below are the Maryland Company's Articles of Incorporation
as of the Effective Time of the Reincorporation)
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
BODDIE-NOELL PROPERTIES, INC.
ARTICLE I
INCORPORATOR
THE UNDERSIGNED, Jeffrey D. Miller, whose mailing address is
2800 Two Hannover Square, Raleigh, North Carolina 27601, being at least eighteen
years of age, acting as incorporator, does hereby form a corporation under the
General Laws of the State of Maryland.
ARTICLE II
NAME
The name of the corporation (the "Corporation") is
Boddie-Noell Properties, Inc.
ARTICLE III
PRINCIPAL OFFICE, REGISTERED OFFICE AND AGENT
The address of the Corporation's principal office is 3710 One
First Union Center, Charlotte, North Carolina 28202. The address of the
Corporation's principal office and registered office in the State of Maryland is
32 South Street, Baltimore, Maryland 21202. The name of its registered agent at
that office is The Corporation Trust, Incorporated.
ARTICLE IV
PURPOSES
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Maryland
Corporations and Associations Article as now or hereafter in force.
ARTICLE V
CAPITAL STOCK
5.1. Shares and Par Value. The total number of shares of stock
of all classes which 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).
5.2. Common Stock. The following is a description of the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption of the Common Stock of the Corporation (See also Article Sixth
hereof):
(a) Except as otherwise provided in these Articles of
Incorporation, each share of Common Stock shall have one vote, and, except as
otherwise provided in respect of any class or series of Preferred Stock
hereafter classified
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or reclassified, the exclusive voting power for all purposes shall be vested in
the holders of the Common Stock.
(b) Subject to the provisions of law and any preferences of
any class or series of Preferred Stock hereafter classified or reclassified,
dividends, including dividends payable in shares of another class of the
Corporation's stock, may be paid on the Common Stock of the Corporation at such
time and in such amounts as the Board of Directors may deem advisable out of
assets of the Corporation legally available therefor.
(c) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of the Common
Stock then outstanding shall be entitled, after payment or provision for payment
of the debts and other liabilities of the Corporation and the amount to which
the holders of any class or series of Preferred Stock hereafter classified or
reclassified shall be entitled, to share ratably in the remaining net assets of
the Corporation.
5.3. Preferred Stock. 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. Subject to the foregoing, the power of the Board of Directors to classify
and reclassify any of the shares of Preferred Stock shall include, without
limitation, subject to the provisions of these Articles of Incorporation,
authority to determine, fix, or alter one or more of the following:
(a) 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 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.
(b) 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.
(c) 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.
(d) 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 Directors shall determine.
(e) 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.
(f) 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.
(g) 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
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under this sub-paragraph, and, if so, the terms and conditions thereof.
(h) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of such class or
series, not inconsistent with law and these Articles of Incorporation.
5.4. Preemptive Rights. No holder of shares of capital stock of
the Corporation shall, as such holder, have any preemptive or other right to
purchase or subscribe for any shares of Common Stock or any class of capital
stock of the Corporation that the Corporation may issue or sell.
ARTICLE VI
REIT PROVISIONS
6.1. Definitions. The following terms shall have the following
meanings:
(a) "Acquire" shall mean the acquisition of Beneficial
Ownership of shares of capital stock of the Corporation by any means including,
without limitation, acquisition pursuant to the exercise of any option, warrant,
pledge or other security interest or similar right to acquire shares, but shall
not include the acquisition of any such rights unless, as a result, the acquiror
would be considered a Beneficial Owner, as defined below.
(b) "Beneficial Ownership" shall mean ownership of capital
stock of the Corporation by a Person who would be treated as an owner of such
shares of capital stock either directly or indirectly under Section 542(a)(2) of
the Code, taking into account, for this purpose, constructive ownership
determined under Section 544 of the Code, as modified by Section 856(h)(1)(B) of
the Code (except where expressly provided otherwise). The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have correlative
meanings.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Merger" shall mean the merger of Boddie-Noell Properties,
Inc., a Delaware corporation, into the Corporation.
(e) "Ownership Limit" shall mean 9.8% of the outstanding
capital stock of the Corporation.
(f) "Person" shall mean an individual, corporation,
partnership, estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended; but does not include an underwriter that participates in a public
offering of the Common Stock for a period of 90 days following the purchase by
such underwriter of the Common Stock.
(g) "REIT" shall mean a Real Estate Investment Trust under
Section 856 of the Code.
(h) "Redemption Price" shall mean the lower of (i) the price
paid by the transferee from whom shares are being redeemed and (ii) the average
of the last reported sales prices on the American Stock Exchange of the class of
capital stock to be redeemed on the ten trading days immediately preceding the
date fixed for redemption by the Board of Directors, or if such capital stock is
not then traded on the American Stock Exchange, the average of the last reported
sales prices of such capital stock on the ten trading days immediately preceding
the relevant date as reported on any exchange or quotation system over which
such capital stock may be traded, or if such capital stock is not then traded
over any exchange or quotation system, then the price determined in good faith
by the Board of Directors of the Corporation as the fair market value of shares
of such capital stock on the relevant date.
(i) "Restriction Termination Date" shall mean the first day
after the date of the Merger on which the Board of Directors and the
shareholders of the Corporation determine pursuant to Section 6.10 of these
Articles of Incorporation that it is no longer in the best interests of the
Corporation to attempt to, or continue to, qualify as a REIT.
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(j) "Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of capital stock or the right to vote or
receive dividends on capital stock (including (i) the granting of any option or
entering into any agreement for the sale, transfer or other disposition of
capital stock or the right to vote or receive dividends on capital stock or (ii)
the sale, transfer, assignment or other disposition or grant of any securities
or rights convertible into or exchangeable for capital stock, or the right to
vote or receive dividends on capital stock), whether voluntary or involuntary,
whether of record or beneficially and whether by operation of law or otherwise.
6.2. Restrictions.
(a) Except as provided in Section 6.8, during the period
commencing on the date of the Merger and prior to the Restriction Termination
Date: (i) no Person shall Acquire any shares of capital stock if, as a result of
such acquisition, such Person shall Beneficially Own shares of capital stock in
excess of the Ownership Limit; (ii) no Person shall Acquire any shares of
capital stock if, as a result of such acquisition, the capital stock would be
directly or indirectly owned by less than 100 Persons (determined without
reference to the rules of attribution under Section 544 of the Code); and (iii)
no Person shall Acquire any shares if, as a result of such acquisition, the
Corporation would be "closely held" within the meaning of Section 856(h) of the
Code.
(b) Any Transfer that would result in a violation of the
restrictions in Section 6.2(a) shall be void ab initio as to the Transfer of
such shares of capital stock that would cause the violation of the applicable
restriction in Section 6.2(a), and the intended transferee shall acquire no
rights in such shares of capital stock.
6.3. Remedies for Breach.
(a) If the Board of Directors or a committee thereof shall at
any time determine in good faith that a Transfer has taken place that falls
within the scope of Section 6.2(b) or that a Person intends to Acquire
Beneficial Ownership of any shares of the Corporation that will result in
violation of Section 6.2(a) or Section 6.2(b) (whether or not such violation is
intended), the Board of Directors or a committee thereof shall take such action
as it or they deem advisable to refuse to give effect to or to prevent such
Transfer, including, but not limited to, refusing to give effect to such
Transfer on the books of the Corporation or instituting proceedings to enjoin
such Transfer.
(b) Without limitation to Section 6.2(b) and 6.3(a), any
purported transferee of shares acquired in violation of Section 6.2 shall, if it
shall be deemed to have received any shares, be deemed to have acted as agent on
behalf of the Corporation in acquiring such of the shares as result in a
violation of Section 6.2 and shall be deemed to hold such shares in trust on
behalf and for the benefit of the Corporation. The transferee shall have no
right to receive dividends or other distributions with respect to such shares,
and shall have no right to vote such shares. Such transferee shall have no
claim, cause of action, or any other recourse whatsoever against a transferor of
shares acquired in violation of Section 6.2. The transferee's sole right with
respect to such shares shall be to receive at the Corporation's sole and
absolute discretion, either (i) consideration for such shares upon the resale of
the shares as directed by the Corporation pursuant to Section 6.3(c) or (ii) the
Redemption Price pursuant to Section 6.3(c).
(c) The Board of Directors shall, within six months after
receiving notice of a Transfer that violates Section 6.2(a), either (in its sole
and absolute discretion) (i) direct the transferee of such shares to sell all
shares held in trust for the Corporation pursuant to Section 6.3(b) for cash in
such manner as the Board of Directors directs or (ii) to the extent permissible
under Maryland law, redeem such shares for the Redemption Price within such
six-month period on such date as the Board of Directors may determine. If the
Board of Directors directs the transferee to sell the shares, the transferee
shall receive such proceeds as trustee for the Corporation and pay the
Corporation out of the proceeds of such sale all expenses incurred by the
Corporation in connection with such sale plus any remaining amount of such
proceeds that exceeds the amount paid by the transferee for the shares, and the
transferee shall be entitled to retain only any proceeds in excess of such
amounts required to be paid to the Corporation.
6.4. Notice of Restricted Transfer. Any Person who acquires of
attempts or intends to acquire shares in violation of Section 6.2 shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted or
intended Transfer on the Corporation's status as a REIT.
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6.5. Owners Required to Provide Information. From the date of
the Merger and prior to the Restriction Termination Date:
(a) every shareholder of record of more than 5% (or such lower
percentage as required by the Code or regulations promulgated thereunder) of the
outstanding capital stock of the Corporation shall, within 30 days after
December 31 of each year, give written notice to the Corporation stating the
name and address of such record shareholder, the number of shares Beneficially
Owned by it, and a description of how such shares are held; provided that a
shareholder of record who holds outstanding capital stock of the Corporation as
nominee for another person, which other person is required to include in gross
income the dividends received on such capital stock (an "Actual Owner"), shall
give written notice to the Corporation stating the name and address of such
Actual Owner and the number of shares of such Actual Owner with respect to which
the shareholder of record is nominee.
(b) every Actual Owner of more than 5% (or such lower
percentage as required by the Code or regulations promulgated thereunder) of the
outstanding capital stock of the Corporation who is not a shareholder of record
of the Corporation, shall within 30 days after December 31 of each year, give
written notice to the Corporation stating the name and address of such Actual
Owner, the number of shares Beneficially Owned, and a description of how such
shares are held.
(c) each Person who is a Beneficial Owner of capital stock and
each Person (including a shareholder of record) who is holding capital stock for
a Beneficial Owner shall provide to the Corporation such information as the
Corporation may request, in good faith, in order to determine the Corporation's
status as a REIT.
6.6. Remedies Not Limited. Subject to Section 6.12 of this
Article VI, nothing contained in this Article VI shall limit the authority of
the Board of Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its shareholders in
preserving the Corporation's status as a REIT.
6.7. Ambiguity. In the case of an ambiguity in the application
of any of the provisions of this Article VI, including any definition contained
in Section 6.1, the Board of Directors shall have the power to determine the
application of the provisions of this Article VI with respect to any situation
based on the facts known to it.
6.8. Exception. The Board of Directors may, upon receipt of
either a certified copy of a ruling from the Internal Revenue Service or an
opinion of counsel satisfactory to the Board of Directors, but shall in no case
be required to, exempt a Person (the "Exempted Holder") from the Ownership Limit
if the ruling or opinion concludes that no Person who is an individual as
defined in Section 542(a)(2) of the Code will, as the result of the ownership of
shares by the Exempted Holder, be considered to have Beneficial Ownership of an
amount of capital stock that will violate the Ownership Limit.
6.9. Legend. Each certificate for capital stock of the
Corporation shall bear a legend referring to the restrictions set forth in this
Article VI.
6.10. Termination of REIT Status. The Corporation shall take no
action to terminate the Corporation's status as a REIT or to amend the
provisions of this Article VI until such time as (i) the Board of Directors
adopts a resolution recommending that the Corporation terminate its status as a
REIT or amend this Article VI, as the case may be, (ii) the Board of Directors
presents the resolution at an annual or special meeting of the shareholders and
(iii) such resolution is approved by holders of two-thirds of the issued and
outstanding shares of the capital stock entitled to vote thereon voting together
as a single class.
6.11. Severability. If any provision of this Article VI or any
application of any such provision is determined to be invalid by any Federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected and other applications of such provision shall
be affected only to the extent necessary to comply with the determination of
such court.
6.12. AMEX Settlement. Nothing in this Article VI shall preclude
settlement of any transaction entered into through the facilities of the
American Stock Exchange.
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ARTICLE VII
BOARD OF DIRECTORS
7.1. Function. The business and affairs of the Corporation
shall be managed by, or under the direction of, its Board of Directors. The
Board of Directors shall consist at all times of a majority of Independent
Directors, provided that upon a failure to comply with this requirement because
of the resignation, removal or death of an Independent Director, such
requirement shall not be applicable for a period of 60 days or such longer
period as may reasonably be needed to fill the vacancy with an Independent
Director. An "Independent Director" shall be a director who is not (i) an
employee or officer of the Corporation or a subsidiary or division thereof,
(ii) a spouse, parent or child of, or a relative living in the same household
as, a principal executive officer of the Corporation, or (iii) an individual
member of an organization acting as an advisor, consultant, legal counsel or
acting in a similar capacity that receives compensation on a continuing basis
from the Corporation in addition to director's fees.
7.2. Number. The number of directors that will constitute the
entire Board of Directors shall be fixed by, or in the manner provided in, the
Bylaws but shall in no event be less than three nor more than fifteen. The
current number of directors is five, and the names of the directors who will
serve until the next annual meeting and until their successors are elected and
qualify are: B. Mayo Boddie, Nicholas B. Boddie, Donald R. Pesta, Jr., William
H. Stanley and Richard A. Urquhart, Jr.
7.3. Vacancies. The shareholders may elect a successor to fill
a vacancy on the Board of Directors that results from the removal of a director.
Newly created directorships resulting from any increase in the number of
directors may be filled by a majority of the Board of Directors, or as otherwise
provided in the Bylaws, and any vacancies on the Board of Directors resulting
from any cause other than an increase in the number of directors may be filled
by the affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum of the Board of Directors, or by a sole remaining
director, or as otherwise provided in the Bylaws.
7.4. Removal. Any director may be removed from office only for
cause and only by the affirmative vote of the holders of two-thirds of the
shares of capital stock of the Corporation outstanding and entitled to vote in
the election of directors voting together as a group. For purposes of this
Section 7.4, "cause" shall mean the wilful and continuous failure of a director
to substantially perform such director's duties for the Corporation (other than
any such failure resulting from temporary incapacity due to physical or mental
illness) or the wilful engaging by a director in gross misconduct materially and
demonstrably injurious to the Corporation.
7.5. Powers. The enumeration and definition of particular
powers of the Board of Directors included in the foregoing shall in no way be
limited or restricted by reference to or inference from the terms of any other
clause of this or any other Article of these Articles of Incorporation, or
construed as or deemed by inference or otherwise in any manner to exclude or
limit the powers conferred upon the Board of Directors under the Maryland
Corporations and Associations Article as now or hereafter in force.
ARTICLE VIII
LIABILITY
The liability of the directors and officers of the Corporation
to the Corporation and its shareholders for money damages is hereby limited to
the fullest extent permitted by Section 5-349 of the Courts and Judicial
Proceedings Article of the Annotated Code of Maryland (or its successor) as such
provisions may be amended from time to time. No amendment of these Articles of
Incorporation or repeal of any of its provisions shall limit or eliminate the
benefits provided to directors and officers under this provision with respect to
any act or omission that occurred prior to such amendment or repeal.
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ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify directors, officers, agents
and employees as follows: (a) the Corporation shall indemnify its directors and
officers, whether serving the Corporation, any predecessor of the Corporation,
or at the Corporation's request any other entity, to the full extent required or
permitted by the Maryland Corporations and Associations Article now or hereafter
in force, including the advance of expenses under the procedures and to the full
extent permitted by law and (b) the Corporation shall indemnify other employees
and agents, whether serving the Corporation, any predecessor of the Corporation,
or at the Corporation's request any other entity, to such extent as shall be
authorized by the Board of Directors or the Corporation's Bylaws and be
permitted by law. The foregoing rights of indemnification shall not be exclusive
of any other rights to which those seeking indemnification may be entitled and
shall continue as to a person who has ceased to be a director, officer, agent or
employee and shall inure to the benefit of the heirs, executors and
administrators of such a person. The Board of Directors may take such action as
is necessary to carry out these indemnification provisions and is expressly
empowered to adopt, approve and amend from time to time such Bylaws, resolutions
or contracts implementing such provisions or such further indemnification
arrangements as may be permitted by law. No amendment of these Articles of
Incorporation of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal.
ARTICLE X
VOTING REQUIREMENTS
Notwithstanding any provision of the General Laws of the State
of Maryland requiring action to be taken or authorized by the affirmative vote
of the holders of a designated proportion greater than a majority of the shares
of capital stock of the Corporation outstanding and entitled to vote thereupon,
such action shall, except as otherwise provided in these Articles of
Incorporation, be valid and effective if taken or authorized by the affirmative
vote of the holders of a majority of the total number of shares of capital stock
of the Corporation outstanding and entitled to vote thereupon voting together as
a single class.
ARTICLE XI
AMENDMENT
The Corporation reserves the right to amend, alter or repeal
any provision contained in these Articles of Incorporation in any manner
permitted by Maryland law, including any amendment changing the terms or
contract rights, as expressly set forth in its Charter, of any of its
outstanding stock by classification, reclassification or otherwise, upon the
vote of the holders of a majority of the shares of capital stock of the
Corporation outstanding and entitled to vote thereon voting together as a single
class; provided that any amendment to Article VI, Section 7.4 of Article VII or
to this Article XI must be adopted by the vote of the holders of two-thirds of
the shares of capital stock of the Corporation outstanding and entitled to vote
thereon voting together as a single class. All rights conferred upon
shareholders herein are subject to this reservation.
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EXHIBIT C
(Set forth below are the Maryland Company's Bylaws
as of the Effective Time of the Reincorporation)
STATE OF MARYLAND
AMENDED AND RESTATED BYLAWS
OF
BODDIE-NOELL PROPERTIES, INC.
ARTICLE I
OFFICES
1.01 Registered Office. The Corporation shall maintain a
registered office in the State of Maryland as required by law.
1.02 Other Offices. The Corporation may also have offices at
such other places both within and without the State of Maryland as the Board of
Directors may from time to time determine or the business of the Corporation may
require, including, without limitation, the principal office at 3710 One First
Union Center, Charlotte, North Carolina 28202.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.01 Location. Meetings of shareholders for any purpose may be
held at such time and place, within or without the State of Maryland, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
2.02 Annual Meeting. Annual meetings of shareholders shall be
held on a date and a time as may be determined from time to time by the Board of
Directors, at which the shareholders shall elect by plurality vote a Board of
Directors, and transact such other business as may properly be brought before
the meeting in accordance with Section 2.04 herein.
2.03 Director Nominations. Only persons who are nominated in
accordance with the procedures set forth in this Section 2.03 shall be eligible
for election as directors. Prior to each annual meeting of shareholders (or
special meeting of shareholders held for the election of directors), the Board
of Directors shall nominate a slate of persons to stand for election to the
Board of Directors at the annual meeting. The notice to the shareholders of the
meeting shall set forth the names and backgrounds of the persons nominated by
the Board of Directors. Nominations of persons for election to the Board of
Directors of the Corporation may also be made at a meeting of shareholders or by
any shareholder of the Corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Section 2.03. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely notice in
writing to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not later than (i) with respect to an election to be
held at an annual meeting of shareholders, 90 days prior to the anniversary date
of the immediately preceding annual meeting, and (ii) with respect to an
election to be held at a special meeting of shareholders for the election of
directors, the close of business on the tenth day following the date on which
notice of such meeting is first given to shareholders. Such shareholder's notice
shall set forth (a) as to each person whom the shareholder proposes to nominate
for election or reelection as a director, (i) the name, age, business address
and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in
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the proxy statement as a nominee and to serving as a director if elected); and
(b) as to the shareholder giving the notice, (i) the name and address, as they
appear on the Corporation's books, of such shareholder and (ii) the class and
number of shares of the Corporation which are beneficially owned by such
shareholder. At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation that information required to be set forth in a shareholder's
notice of nomination which pertains to the nominee. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by the
Bylaws, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded.
2.04 Notice and Business to be Conducted. Written notice of the
annual meeting shall be given to each shareholder entitled to vote thereat at
least 10 but not more than 60 days before the date of the meeting.
At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
the meeting by a shareholder. For business to be properly brought before an
annual meeting by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not later than 90 days prior to
the anniversary date of the immediately preceding annual meeting. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the shareholder proposing such
business, (c) the class and number of shares of the Corporation that are
beneficially owned by the shareholder, and (d) any material interest of the
shareholder in such business. Notwithstanding anything in the Bylaws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section. The Chairman of the
annual meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting in accordance with the
provisions of this Section, and if he should so determine, he shall so declare
to the meeting and any such business not properly brought before the meeting
shall not be transacted.
2.05 Stock Ledger. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least 10 days before every
election of directors, a complete list of the shareholders entitled to vote at
said election, arranged in alphabetical order, showing the address of and the
number of shares registered in the name of each shareholder. Such list shall be
open to the examination of any shareholder, during ordinary business hours, for
a period of at least ten days prior to the election, either at a place within
the city, town or village where the election is to be held and which place shall
be specified in the notice of the meeting, or, if not specified, at the place
where said meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and subject to
the inspection of any shareholder who may be present.
2.06 Special Meetings. At any time in the interval between
annual meetings, special meetings of the shareholders, unless otherwise provided
by law or by the Articles of Incorporation, may be called by the Chief Executive
Officer and shall be called by the Chief Executive Officer upon the request in
writing of a majority of the Board of Directors or a majority of the Independent
Directors (as defined in Section 3.01 hereof), or upon the written request of
the holders of shares representing at least 25% of the shares of capital stock
of the Corporation which would be entitled to vote thereat.
2.07 Notice of Special Meeting. A request for a special meeting
pursuant to Section 2.06 hereof shall state the purpose of the meeting and the
matters proposed to be acted on at it. In the event shareholders have requested
a special meeting, the Secretary shall: (a) inform the shareholders who make the
request of the reasonably estimated cost of preparing and mailing a notice of
the meeting; and (b) on payment of these costs to the corporation, notify each
shareholder entitled to notice of the meeting. Notice of the special meeting
shall be given to each shareholder in the same manner as set forth in Section
2.04 hereof.
2.08 Business at Special Meeting. Business transacted at any
special meeting of shareholders shall be limited to the purposes stated in the
notice. Unless requested by shareholders entitled to cast a majority of all the
votes entitled to be cast at the meeting, a special meeting need not be called
to consider any matter which is substantially the same as a
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matter voted on at any special meeting of the shareholders held during the
preceding 12 months.
2.09 Quorum. The holders of a majority of the total capital
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
statute or by the Articles of Incorporation. If, however, such quorum shall not
be present or represented at any meeting of the shareholders, the shareholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting as
originally notified.
2.10 Vote. When a quorum is present at any meeting, the vote
of the holders of a majority of the shares of capital stock entitled to be voted
on a question brought before such meeting whose holders are present in person or
represented by proxy shall decide such question unless the question is one upon
which, by express provision of statute or of the Articles of Incorporation, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
2.11 Proxies. At all meetings of shareholders, a shareholder may
vote in person or vote by proxy that is executed in writing by the shareholder
or that is executed by his duly authorized attorney-in-fact. Such proxy shall be
filed with the Secretary of the Corporation or other persons authorized to
tabulate votes before or at the time of the meeting. No proxy shall be valid
after 11 months from the date of its execution unless otherwise provided in the
proxy.
ARTICLE III
DIRECTORS
3.01 Number, Election and Term. The number of directors of the
Corporation that shall constitute the whole Board of Directors shall be fixed
from time to time by resolution by the Board of Directors but shall not be less
than five; provided, however, that the tenure of office of a director shall not
be affected by any decrease or increase in the number of directors so made by
the Board of Directors. At all times that the Corporation intends to be
qualified as a real estate investment trust under the Internal Revenue Code of
1986, as amended, or any successor statute, a majority of the Board of Directors
shall be Independent Directors (as hereinafter defined). For purposes of these
Bylaws, "Independent Director" shall mean a director of the Corporation who is
not an Affiliated Person (as hereinafter defined) of the Corporation. For
purposes of these Bylaws, an "Affiliated Person" of the Corporation means (a)
any person directly or indirectly owning, controlling, or holding with power to
vote, 5 per centum or more of the outstanding voting securities of the
Corporation; (b) any person 5 per centum or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with power to
vote, by the Corporation; (c) any person directly or indirectly controlling,
controlled by, or under common control with, the Corporation; or (d) any
officer, partner, or employee of the Corporation. The directors shall be elected
at the annual meeting of the shareholders, except as provided in Section 3.03 of
this Article III, and the directors so elected shall hold office until the next
annual meeting or until their successors are elected and qualify.
3.02 Powers. The business and affairs of the Corporation shall be
managed in accordance with the Articles of Incorporation and these Bylaws under
the direction of its Board of Directors and where applicable, the Independent
Directors, which may exercise all of the powers of the Corporation, except such
as are by law or by the Corporation's Articles of Incorporation or by these
Bylaws conferred upon or reserved to the shareholders.
3.03 Vacancies. Any vacancy occurring in the Board of Directors
for any cause may be filled by a majority of the remaining members of the Board
of Directors, although such majority is less than a quorum; provided, however,
that if the Corporation has sought to qualify as a real estate investment trust
and in accordance with Section 3.01 a majority of the Board of Directors are
required to be Independent Directors, then Independent Directors shall nominate
replacements for vacancies among the Independent Directors. If the shareholders
of any class or series are entitled separately to elect one or more directors, a
majority of the remaining directors elected by that class or series or the sole
remaining director elected by that class or series may fill any vacancy among
the number of directors elected by that class or series. A director elected by
the Board of Directors to fill a vacancy shall be elected to hold office until
the next annual meeting of shareholders or until his successor is elected and
qualified.
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3.04 Resignations. Any director or member of a committee may
resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, or if no time is specified, at the time
of the receipt by the Chairman of the Board of Directors, the Chief Executive
Officer or the Secretary. The acceptance of a resignation shall not be necessary
to make it effective.
3.05 Committees of the Board of Directors. The Board of Directors
may appoint from among its members one or more committees composed of three or
more directors. A majority of the members of any committee so appointed shall be
Independent Directors (as defined in Section 3.01). The Board of Directors may
delegate to any committee any of the powers of the Board of Directors except the
power to declare dividends or distributions on stock, recommend to the
shareholders any action which requires shareholder approval, amend the Bylaws,
approve any merger or share exchange or issue stock. However, if the Board of
Directors has given general authorization for the issuance of stock, a committee
of the Board of Directors, in accordance with a general formula or method
specified by the Board of Directors by resolution or by adoption of a stock
option plan, may fix the terms of stock subject to classification or
reclassification and the terms on which any stock may be issued.
Notice of committee meetings shall be given in the same manner as
notice for special meetings of the Board of Directors.
One-third, but not less than two, of the members of any committee shall
be present in person or by telephone at any meeting of such committee in order
to constitute a quorum for the transaction of business at such meeting, and the
act of a majority of those present shall be the act of such committee. The Board
of Directors may designate a Chairman of any committee and such Chairman or any
two members of any committee may fix the time and place of its meetings unless
the Board of Directors shall otherwise provide. In the absence or
disqualification of any member of any such committee, the members thereof
present at any meeting and not disqualified from voting, whether or not they
constitute a quorum, may unanimously appoint another director to act at the
meeting in the place of such absent or disqualified members; provided, however,
that in the event of the absence or disqualification of an Independent Director,
such appointee shall be an Independent Director.
Each committee shall keep minutes of its proceedings and shall report
the same to the Board of Directors when required, and any action taken by the
committees shall be subject to revision and alteration by the Board of
Directors, provided that no rights of third persons shall be affected by any
such revision or alteration.
Subject to the provisions hereof, the Board of Directors shall have the
power at any time to change the membership of any committee, to fill all
vacancies, to designate alternate members to replace any absent or disqualified
member, or to dissolve any committee.
3.06 Meetings of the Board of Directors. Meetings of the Board
of Directors, regular or special, may be held at any place in or out of the
State of Maryland as the Board of Directors may from time to time determine or
as shall be specified in the notice of such meeting.
The first meeting of each newly elected Board of Directors shall be
held as soon as practicable after the annual meeting of the shareholders at
which the directors were elected. The meeting may be held at such time and place
as shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, except that no notice shall be necessary if
such meeting is held immediately after the adjournment and at the site of the
annual meeting of the shareholders.
Regular meetings of the Board of Directors may be held with or without
notice at such time and place as shall from time to time be determined by the
Board of Directors.
Special meetings of the Board of Directors may be called at any time by
two or more directors or by the Chairman of the Board of Directors or the Chief
Executive Officer.
Notice of the place and time of every special meeting of the Board of
Directors shall be delivered to each director either personally or by telephone,
facsimile, telegram or telegraph, or by leaving the same at his residence or
usual place of
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business at least forty-eight hours before the time at which such meeting is to
be held, or by first-class mail, at least three days before the day on which
such meeting is to be held. If mailed, such notice shall be deemed to be given
when deposited in the United States mail addressed to the director at his
post-office address as it appears on the records of the Corporation, with
postage thereon prepaid.
3.07 Quorum and Voting. At all meetings of the Board of
Directors, a majority of the entire Board of Directors shall constitute a quorum
for the transaction of business and the action of a majority of the directors
present at any meeting at which a quorum is present shall be the action of the
Board of Directors unless the concurrence of a greater proportion, or the
concurrence of a majority of the Independent Directors is required for such
action by law, the Corporation's Articles of Incorporation or these Bylaws. If a
quorum shall not be present at any meeting of directors, the directors present
may, by a majority vote, adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present.
Notwithstanding the first paragraph of this Section 3.07, any action
pertaining to a transaction involving the Corporation in which any director or
officer of the Corporation or any affiliate of any of the foregoing persons has
an interest shall specifically be approved with respect to any isolated
transactions or generally be approved with respect to any series of similar
transactions, by a majority of the members of the Board of Directors, including
a majority of the Independent Directors who are not parties to and have no
financial interest in such transaction and so are not affiliates of such
interested party, even if such directors constitute less than a quorum.
In approving any contract, joint venture or other transaction or series
of transactions between the Corporation and any director or officer of the
Corporation or any affiliate of such persons, a majority of the directors
including a majority of the Independent Directors must determine that:
(a) the contract, joint venture or other transaction as
contemplated is fair and reasonable to the Corporation and its
shareholders and on terms and conditions no less favorable to the
Corporation than those available from unaffiliated third parties;
(b) if an acquisition of property other than mortgage loans is
involved, the total consideration (determined at the time the
acquisition is approved by the Independent Directors) for the property
being acquired is not in excess of the (i) appraised value of such
property as stated in an appraisal by a qualified independent appraiser
with experience in appraising assets of the type being acquired or (ii)
fair value of such property as stated in an opinion by a qualified
independent consultant, selected, approved or ratified by the
Independent Directors prior to any such acquisition, and if the price
is in excess of the cost of the asset to such seller thereof, the
Independent Directors shall determine that substantial justification
for such excess exists and that such excess is not unreasonable; and
(c) if the transaction involves the making of loans or the
borrowing of money, the transaction is fair, competitive, and
commercially reasonable and no less favorable to the Corporation than
loans between unaffiliated lenders and borrowers under the same
circumstances.
3.08 Organization. The Chairman of the Board of Directors shall
preside at each meeting of the Board of Directors, or in the absence or
inability of the Chairman of the Board of Directors to preside at a meeting,
another director chosen by a majority of the directors present shall act as
Chairman of the meeting and preside thereat. The Secretary (or, in his absence
or inability to act, any person appointed by the Chairman of the meeting) shall
act as Secretary of the meeting and keep the minutes thereof.
3.09 Meeting by Conference Telephone. Unless otherwise
restricted by the Articles of Incorporation, members of the Board of Directors
may participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means
constitutes presence in person at a meeting.
3.10 Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if a written consent to such action is signed by
all members of the Board of Directors or of such committee, as the case may be,
and such written consent is filed with the
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minutes of proceedings of the Board of Directors or committee.
3.11 Compensation of Directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of committees of the Board of Directors may be allowed like
compensation for attending committee meetings.
3.12 Investment Policies and Restrictions. 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 in
compliance with the restrictions applicable to real estate investment trusts
pursuant to the Internal Revenue Code of 1986, as amended.
The Corporation shall not:
(a) invest in mortgage loans unless an appraisal is obtained
concerning the underlying property;
(b) invest in commodity or commodity future contracts other
than interest rate futures used solely for hedging purposes;
(c) issue debt securities unless the historical debt service
coverage of the most recently completed fiscal year, as adjusted for
known changes, is sufficient to service the higher level of debt
(without regard to any applicable balloon principal payments);
(d) invest in real estate contracts for sale, unless such real
estate contracts are recordable in the chain of title; or
(e) act in any way that would disqualify the Corporation as a
real estate investment trust under the provisions of the Code.
The Corporation does not intend to invest in the securities of other
issuers for the purposes of exercising control (other than with respect to
wholly owned subsidiaries), to engage in the trading of or to underwrite
securities for other issuers, to engage in the purchase and sale (or turnover)
of investments other than as described in the Registration Statement or to offer
securities in exchange for property unless deemed prudent by a majority of the
directors.
The Independent Directors shall review the investment policies of the
Corporation at least annually to determine that the policies then being followed
by the Corporation are in the best interests of its shareholders. Each such
determination and the basis therefore shall be set forth in the minutes of the
Board of Directors.
The directors shall review the borrowings of the Corporation quarterly
for reasonableness in relation to the Corporation's net assets. The Corporation
shall not incur indebtedness if, after giving effect to the incurrence thereof,
aggregate indebtedness, secured and unsecured, would exceed three hundred
percent (300%) of the Corporation's net assets, on a consolidated basis, unless
approved by a majority of the directors, including a majority of the Independent
Directors, and disclosed to the shareholders in the next quarterly report of the
Corporation, along with justification for such excess. For this purpose, the
term "Net Assets" means the total assets (less intangibles) of the Corporation
at cost, before deducting depreciation or other non-cash reserves, less total
liabilities, as calculated at the end of each quarter on a basis consistently
applied.
The foregoing prohibitions and restrictions set forth in this Section
3.12 shall not be changed without the approval of the shareholders of the
Corporation.
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ARTICLE IV
NOTICES
4.01 Writing. Notices to directors and shareholders when in
writing or by telegram as required by provisions of statutes, or by the Articles
of Incorporation, or by these Bylaws, shall be delivered personally or mailed to
the directors or shareholders at their addresses appearing on the books of the
Corporation.
4.02 Waiver. Whenever any notice is required to be given under
provisions of the statutes or of the Articles of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
5.01 Principal Officers. The principal officers of the
Corporation shall be a Chief Executive Officer, a President, one or more Vice
Presidents, a Treasurer and a Secretary. The Corporation may also have such
other principal officers, including one or more Controllers, as the Board of
Directors may in its discretion appoint. One person may hold the offices and
perform the duties of any two or more of said offices, except that no one person
shall hold the offices and perform the duties of President and Secretary.
5.02 Election, Term of Office and Remuneration. The principal
officers of the Corporation shall be elected annually by the Board of Directors
at the annual meeting thereof. Each such officer shall hold office until his
successor is elected and qualified or until his earlier death, resignation or
removal. The remuneration of all officers of the Corporation shall be fixed by
the Board of Directors. Any vacancy in any office shall be filled in such manner
as the Board of Directors shall determine.
5.03 Subordinate Officers. In addition to the principal officers
enumerated in Section 5.01 of this Article V, the Corporation may have one or
more Assistant Treasurers, Assistant Secretaries and Assistant Controllers and
such other subordinate officers, agents and employees as the Board of Directors
may deem necessary, each of whom shall hold office for such period as the Board
of Directors may from time to time determine. The Board of Directors may
delegate to any principal officer the power to appoint and to remove any such
subordinate officer, agents or employees.
5.04 Removal. Except as otherwise permitted with respect to
subordinate officers, any officer may be removed, with or without cause, at any
time, by resolution adopted by the Board of Directors.
5.05 Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors (or to a principal officer if the Board
of Directors has delegated to such principal officer the power to appoint and to
remove such officer). The resignation of any officer shall take effect upon
receipt of notice thereof or at such later time as shall be specified in such
notice; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
5.06 Powers and Duties. The officers of the Corporation shall
have such powers and perform such duties incident to each of their respective
offices and such other duties as may from time to time be conferred upon or
assigned to them by the Board of Directors.
ARTICLE VI
CERTIFICATE OF STOCK
6.01 Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate, signed by, or in the name of the
Corporation by, the Chairman or Vice Chairman of the Board of Directors or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation. Any or all of the signatures
on the certificate may be a
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facsimile. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, any such certificate or certificates
shall cease to be such officer or officers of the Corporation, whether because
of death, resignation or otherwise, before such certificate or certificates have
been delivered by the Corporation, such certificate or certificates may
nevertheless be adopted by the Corporation and be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the Corporation. If the Corporation shall be
authorized to issue more than one class of stock, or more than one series of any
call, the designations, preference and relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarization on the face or the back of the
certificate which the Corporation shall issue to represent such class of stock;
provided, however, that in lieu of the foregoing requirements, there may be set
forth on the face or back of the certificate which the Corporation shall issue
to represent such class or series of stock, a statement that the Corporation
will furnish without charge to each shareholder who so requests, the
designations, preferences and relative, participating, option or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
6.02 Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of the fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost or destroyed.
6.03 Transfer of Stock. Subject to restrictions provided in the
Articles of Incorporation, shares of stock of the Corporation shall be
transferable on the books of the Corporation only by the holder of record
thereof, in person or by duly authorized attorney, upon surrender and
cancellation of a certificate or certificates for a like number of shares, with
an assignment or power of transfer endorsed thereon or delivered therewith, duly
executed, and with such proof of the authenticity of the signature and of
authority to transfer, and of payment of transfer taxes, as the Corporation or
its agents may require.
6.04 Setting of Record Date on Transfer Books. The Board of
Directors shall fix in advance a date, not exceeding 60 days preceding the date
of any meeting of shareholders, or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection with
obtaining the consent of shareholders for any purpose, as a record date for the
determination of the shareholders entitled to notice of, and to vote at, any
such meeting, and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent, and in such case such shareholders and only such shareholders as
shall be shareholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
6.05 Registered Shareholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Maryland.
ARTICLE VII
GENERAL PROVISIONS
7.01 Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Articles of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law.
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Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Articles of Incorporation.
7.02 Reserves. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall think conducive to the interest of
the Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
7.03 Annual Report. The officers of the Corporation shall
prepare or cause to be prepared annually a full and correct report of the
affairs of the Corporation, including financial statements for the preceding
fiscal year, which shall be prepared in accordance with generally accepted
accounting principles, audited and certified by independent certified public
accountants and distributed to shareholders within one hundred twenty (120) days
after the close of the Corporation's fiscal year and a reasonable period of time
(at least 10 days) prior to the annual meeting of shareholders. Such report
shall also be submitted at the annual meeting. The annual report shall also
include full disclosure of all material terms, factors and circumstances
surrounding any transactions between the Corporation and any director, or any
affiliates of such director. The Independent Directors will comment on the
fairness of such transactions in the annual report.
The Corporation shall also publish in the annual report the ratio of
the cost of raising capital during the year to the capital raised.
7.04 Quarterly Report. The officers of the Corporation shall also
prepare or cause to be prepared quarterly for each of the first three quarters
of each fiscal year, a full and correct report of the affairs of the
Corporation, including a balance sheet and financial statement of operations for
the preceding fiscal quarter, which need not be certified by independent
certified public accountants and shall be distributed to shareholders within
forty-five (45) days after the close of the Corporation's preceding fiscal
quarter.
7.05 Books of Account and Records. The Corporation shall
maintain at its office in the City of Charlotte and State of North Carolina
correct and complete books and records of account of all the business and
transactions of the Corporation, such books and records to include, without
limitation, current names and addresses of all shareholders as well as
shareholder records. Upon the request of, and reasonable notice given by, any
shareholder, there shall be made available for inspection such books and records
in accordance with the provisions of Maryland law during regular business hours
of the Corporation.
7.06 Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
7.07 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
7.08 Seal. The Board of Directors shall provide a suitable seal,
bearing the name of the Corporation, which shall be in the charge of the
Secretary. The Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof. If the Corporation is required to place its
corporate seal to a document, it is sufficient to meet the requirement of any
law, rule or regulation relating to a corporate seal to place the word "Seal"
adjacent to the signature of the person authorized to sign the document on
behalf of the Corporation.
ARTICLE VIII
AMENDMENTS
8.01 Amendments. These Bylaws may be altered or repealed or new
bylaws may be made by the shareholders entitled to vote thereon at any annual or
special meeting thereof or by the Board of Directors.
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P R O X Y BODDIE-NOELL PROPERTIES, INC.
Proxy is Solicited on Behalf of the Board of
Directors for the Annual Meeting of
Shareholders to be Held on June 5, 1997
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Boddie-Noell Properties, Inc. (the "Company") to be
held on June 5, 1997, and the Proxy Statement in connection therewith; (b)
appoints D. Scott Wilkerson and Philip S. Payne (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 April 11, 1997, 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
( )FOR all nominees ( ) WITHHOLD AUTHORITY to vote
(except as indicated to the contrary below) for all nominees
NOMINEES: B. Mayo Boddie, Nicholas B. Boddie, Donald R. Pesta, Jr., William
H. Stanley, and Richard A. Urquhart, Jr.
Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
2. REINCORPORATION OF THE COMPANY IN MARYLAND
( )FOR ( )AGAINST ( ) ABSTAIN
3. 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.
( )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 WLL
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 _________________, 1997
____________________________________________
____________________________________________
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.
