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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only(as permitted by Rule
14-6(e)(2)
[ ] 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:
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BODDIE-NOELL PROPERTIES, INC.
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3710 One First Union Center, Charlotte, NC 28202-6032, Telephone 704/333-1367
April 21, 1997
Dear Shareholder:
You are cordially invited to attend the Company's annual meeting on
Wednesday, May 21, 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
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BODDIE-NOELL PROPERTIES, INC.
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3710 One First Union Center, Charlotte, NC 28202-6032, Telephone 704/333-1367
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held May 21, 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
Wednesday, May 21, 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;
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 that time. In the
meantime, the prompt return of your proxy, dated and signed, will ensure the
presence of a quorum at the meeting. A return envelope is enclosed for your
convenience.
By Order of the Board of Directors,
/s/ Philip S. Payne
Philip S. Payne
Executive Vice President, Treasurer, and
Chief Financial Officer
Date: April 21, 1997
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BODDIE-NOELL PROPERTIES, INC.
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3710 One First Union Center, Charlotte, NC 28202-6032, Telephone 704/333-1367
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
to be held May 21, 1997
April 21, 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 Wednesday, May 21, 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 21, 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 certain independent solicitation agents as discussed
below. The Company has retained Corporate Communications, Inc. and First Union
National Bank (the "Consultants") to assist in the process of identifying and
contacting shareholders for the purpose of soliciting proxies. The entire
expense of engaging the services of the Consultants to assist in proxy
solicitation is projected to be approximately $3,500, exclusive of certain other
fees paid to First Union National Bank in connection with the operation of the
Meeting. All costs of solicitation will be borne by the Company.
Returning your completed proxy will not prevent you from voting in person
at the meeting should you be present and wish to do so. Proxies may be revoked
at any time before exercise thereof by filing a notice of such revocation or a
later dated proxy with the secretary of the Company or by voting in person at
the meeting. Consequently, execution of the proxy will not in any way affect a
shareholder's right to attend the meeting, revoke his or her proxy, and vote in
person.
Shares represented by proxies in the form enclosed, if such proxies are
properly executed and returned and not revoked, will be voted as specified.
Where no specification is made on a properly executed and returned proxy, the
shares will be voted FOR the 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.
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Other proposals to come before the Meeting require the approval of a
majority of the shares of Common Stock present and entitled to vote on such
proposals. Abstentions as to such proposals will have the same effect as votes
against such proposals. Broker non-votes, however, will be treated as unvoted
for purposes of determining approval of such proposals and will not be counted
as votes for or against such proposals.
No appraisal or dissenters' rights are available with respect to any
matters to be voted upon at the Meeting.
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PROPOSAL ONE:
ELECTION OF DIRECTORS
Pursuant to the Certificate of Incorporation and Article III of the Company's
bylaws, the Board of Directors consists of five directors, whose terms of office
expire annually. At each annual meeting the shareholders shall elect directors
to hold office until the next annual meeting. Those directors whose terms expire
at the 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 and until their successors are elected and
qualified.
The Board of Directors of the Company recommends a vote FOR B. Mayo Boddie,
Nicholas B. Boddie, William H. Stanley, Richard A. Urquhart, Jr. and Donald R.
Pesta, Jr. as directors to hold office until the 1998 annual meeting of
shareholders and until their successors are elected and qualified. Should any of
these persons become unable to accept nomination or election, which management
has no reason to expect, it is the intention of the persons appointed as proxy
agents in the enclosed proxy to vote for the substitute in each case.
Set forth below is a listing and brief biography of each of the five persons
nominated for election to the Board of Directors. With the exception of Mr.
Pesta, all of the directors have served in that capacity since the Company's
formation in 1987. Mr. Pesta was elected by the Board of Directors in January
1996.
<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
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</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 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, which is a publicly traded 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 and chief executive officer of Peoples Bank and Trust
Company. Mr. Stanley serves as a director of Rocky Mount Mills, Rocky Mount,
North Carolina, and 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.
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.
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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 for participation in
board meetings and $300 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 compensation committee, serves without
compensation as a vice president and secretary of the Company. No other member
of the 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>
<CAPTION>
Summary Compensation Table
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Long-Term
Annual Compensation All Other Compensation
------------------------------ -----------------
Name and Principal Position Year Salary Bonus Compensation Options (#)
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<S> <C> <C> <C> <C> <C>
D. Scott Wilkerson, President and 1996 $127,200 $ 0 $0 50,000 (3)
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 (3)
Treasurer and Chief Financial Officer (2) 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) 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.
(3) 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.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
Options Repriced in 1996
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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 (2)
------------------------------
Name Repriced (1) Fiscal Year Share Date 5% 10%
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<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
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<FN>
(1) No options were received by the Named Executive Officers in 1996; however,
the options originally granted to them in 1994 were repriced in January 1996.
(2) 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>
<CAPTION>
1996 Year-End Option Values
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Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Options at Fiscal Year End Options at Fiscal Year End
Name Exercisable/Unexercisable Exercisable/Unexercisable (1)
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
D. Scott Wilkerson (2) 25,000 25,000 $0 $0
Philip S. Payne (2) 25,000 25,000 $0 $0
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<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.
Board Compensation Committee Report on Executive Compensation
This report is provided by the management compensation committee of the Board of
Directors (the "Committee") to assist shareholders in understanding the
Committee's objectives and procedures in establishing the compensation of the
Company's executive officers.
The Committee is responsible for establishing and administering the Company's
executive compensation plan. It is made up of the Company's three outside
directors and Douglas E. Anderson, who is a non-compensated officer of the
Company.
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
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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 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 and 1/09/96 50,000 $12.50 $13.75 $12.50 8.75 years
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>
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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
compensation 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.
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>
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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) 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.
</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 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.
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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 BTVC. On October 1,
1994, the Company acquired BTVC. As a result of the acquisition, the Boddies
received substantial consideration comprised of cash, shares of Common Stock and
relief from certain debt and contractual and contingent obligations. The
contract purchase price for BTVC was $23,112,000 (the "Initial Consideration").
In addition, the Boddies are entitled to receive additional shares of Common
Stock valued at up to $1,700,000 (the "Additional Consideration") over a period
of up to 14 quarters commencing with the quarter ended December 31, 1994, in the
event the Company meets certain performance criteria. The Company, at its
election, may make payments of Additional Consideration through the issuance of
shares of Common Stock or in cash. In the event the issuance of shares of Common
Stock to the Boddies as Additional Consideration would cause the Company to
become disqualified as a real estate investment trust ("REIT"), they are
required by the master lease to sell any excess shares.
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, Vice Chairman or 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.
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, the Company assumed fee management of ten
apartment properties and three shopping centers in October 1994. BIC is the
general partner of the various limited partnerships which own nine apartment
properties and three shopping centers managed by the Company during 1995 prior
to transfer of these management contracts to the Company's unconsolidated
subsidiary, BNP Management, Inc.
11
<PAGE>
With the acquisition of BTVC in October 1994, the Company assumed a note payable
to BIC in the amount of $956,000. The note bears interest at a floating rate
equal to the 30-day LIBOR rate plus 150 basis points capped at 8.0 percent.
Payments are interest only and paid quarterly. The note is due in full on May 1,
1999. During 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 the date hereof, 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 period to the date hereof.
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 the date hereof, the Company has not consulted Ernst &
Young LLP regarding any matters or events as set forth in Item 304. (a)(2) of
Regulation S-K.
12
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following stock price performance graph compares the Company's performance
to the S&P 500 and the index of equity real estate investment trusts prepared by
the National Association of Real Estate Investment Trusts ("NAREIT") for the
last five years. The stock price performance graph assumes an initial investment
on December 31, 1991, of $100 in the Company and the two indexes and further
assumes the reinvestment of all dividends.
Equity real estate investment trusts are defined as those which derive more than
75 percent of their income from equity investments in real estate assets. The
NAREIT equity index includes all tax qualified real estate investment trusts
listed on the New York Stock Exchange, American Stock Exchange and NASDAQ
National Market System. Stock price performance is not necessarily indicative of
future results.
[STOCK PERFORMANCE GRAPH APPEARS HERE IN PRINTED DOCUMENT]
<TABLE>
<CAPTION>
Data points:
1991 1992 1993 1994 1995 1996
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Company 100 113 138 125 138 151
NAREIT 100 115 137 141 163 221
S&P 500 100 108 118 120 165 203
</TABLE>
The stock price performance graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
13
<PAGE>
PROPOSAL TWO:
REINCORPORATION OF THE COMPANY IN MARYLAND
AND RELATED CHANGES TO THE RIGHTS OF STOCKHOLDERS
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 real estate investment trust ("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 stockholders.
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 or other
similar taxes greater 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 Stockholders of the
Company and Stockholders 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 which is attached as
Exhibit A to this Proxy Statement. The Maryland Company was incorporated in
Maryland on April __, 1997 specifically for purposes of the Reincorporation and
has conducted no business and has no material assets or liabilities. After
completion of the merger, 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 Maryland Board of Directors 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 stockholders of the Company. At the Effective Time, the
separate corporate existence of the Company will cease and stockholders of the
Company will become stockholders of the Maryland Company.
14
<PAGE>
Management After the Merger. Immediately after the merger, members of 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
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.
Stockholder Rights. Certain differences in stockholder rights exist under
Delaware General Corporation Law (the "DGCL") and Maryland General Corporation
Law (the "MGCL"). For example, special meetings of stockholders require written
request by a greater percentage of stockholders owning the capital stock of the
Company issued and outstanding and entitled to vote under the MGCL as compared
with the DGCL. See "Comparison of Rights of Stockholders of the Company and
Stockholders of the Maryland Company" for a more complete discussion of the
consequential effects of the differences between the rights of stockholders
under the DGCL and the MGCL.
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 Delaware Certificate and the Maryland Articles
(each as defined below) (see "Comparison of Rights of Stockholders of the
Company and Stockholders 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 Delaware Certificate, which
authorizes the Company to issue only 10,000,000 shares of common stock, the
Maryland Articles authorize the Maryland Company to issue 100,000,000 shares of
common stock and 10,000,000 shares of preferred stock. See "Comparison of Rights
of Stockholders of the Company and Stockholders of the Maryland Company" for a
more complete discussion of the consequential effects of the differences between
the rights of stockholders under the DGCL and the MGCL.
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 or other similar taxes greater 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
stockholder 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 if all of the equity interests of the subsidiary are
owned, directly or indirectly, by the corporation without stockholder approval.
Among the transactions that, as a result of this difference in the law, would
require stockholder 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 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 stockholder approval if it would enable the Maryland Company
to complete a property acquisition believed to be in its best interest.
15
<PAGE>
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 stockholder's holding period
with respect to the Maryland Common Stock will include the period during which
such holder held the shares of 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.
Stockholders 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 book value because the conversion of
the Company's Common Stock into Maryland Common Stock will be accounted for as a
pooling of interests.
Appraisal Rights
Delaware law provides that stockholders of a Delaware corporation do not have
appraisal rights when a Delaware 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 stockholders 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 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 stockholder 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 Stockholders of the Company and Stockholders 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
the DGCL, a general corporation statute dealing with a wide variety of matters,
including election, tenure, duties and liabilities of directors and officers;
dividends and other distributions; meetings of stockholders; and extraordinary
actions, such as amendments to the certificate of incorporation, mergers, sales
of all or substantially all of the assets and dissolution. 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 the DGCL. As a Maryland corporation, the Maryland Company
16
<PAGE>
is governed by the MGCL, a general corporation statute covering the same matters
as is covered by the DGCL, and by its Articles of Incorporation (the "Maryland
Articles") and Bylaws (the "Maryland Bylaws"). A number of differences between
the DGCL and MGCL and among these various documents are summarized below.
The discussion of the comparative rights of the stockholders of the Company and
the stockholders 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 the
DGCL and the MGCL and also to the Maryland Articles, Maryland Bylaws, Delaware
Certificate and Delaware Bylaws. The Maryland Articles and Bylaws will be
substantially in the forms of 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, Treasurer and Chief Financial Officer, Boddie-Noell Properties, Inc.,
3710 One First Union Center, Charlotte, North Carolina 28202.
Limitation of Liability. Pursuant to the DGCL and the Delaware Certificate, the
liability of directors of the Company to the Company or to any stockholder of
the Company for money damages for breach of fiduciary duty has been eliminated,
except (i) for breach of the directors' duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
dividends or redemptions or purchases of stock or (iv) for 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 the MGCL and the Maryland Articles, the liability of directors and
officers of the Maryland Company to the Maryland Company or to any stockholder
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, directors and officers of the
Maryland Company may not be liable for certain actions for which they would have
otherwise been liable.
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 stockholders 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 the DGCL, 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 the DGCL, 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 full extent permitted by
applicable law.
17
<PAGE>
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
maximum extent permitted from time to time by the laws of Maryland. The MGCL
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, the MGCL 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 the MGCL, 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 the MGCL 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, stockholder vote or otherwise, any or all of
which could provide indemnification rights broader than those currently
available under the Delaware Certificate or the DGCL.
Because the indemnification provisions of the Maryland Articles are tied to
applicable Maryland law, they may be modified by future changes in such law
without further stockholder action. 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 provisions would adversely affect rights to indemnification in effect at
the time of any act or omission which 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 agreements would apply.
Under the DGCL, 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, the DGCL 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, the MGCL 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.
The DGCL, the MGCL 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 Stockholders. Under both the DGCL and the MGCL,
stockholders may act by written consent in lieu of a stockholder meeting. The
DGCL provides that, unless otherwise provided in the certificate of
incorporation of a Delaware corporation, any action that may be taken at a
stockholder 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 stockholder meeting at which all shares
entitled to vote were present and voted. The MGCL provides that any action that
may be taken at a stockholder meeting may be taken without a meeting only if (i)
a unanimous written consent setting forth the matter is signed by each
stockholder entitled to vote on the matter and (ii) a written waiver of any
right to dissent is signed by each stockholder entitled to notice of the meeting
but not entitled to vote at it.
18
<PAGE>
Because the MGCL requires the unanimous written consent of all stockholders
entitled to vote for actions by written consent, it will be very unlikely that
stockholders of the Maryland Company will be able to take action by written
consent under the MGCL. This provision of the MGCL 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 stockholders' written consent unless they call a special
meeting of the stockholders. 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
meetings.
Inspection of Books and Records. Under the DGCL, any stockholder of the Company
may examine the list of stockholders and any stockholder making a written demand
may inspect any other corporate books and records for any purpose reasonably
related to the stockholder's interest as a stockholder. The MGCL provides an
absolute right of stockholder inspection for any purpose to individuals who have
been stockholders for more than six months and, individually or as a group, own
at least five percent (5%) or more of a Maryland corporation's outstanding
voting shares. In addition, any stockholder 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, stockholders of less than 5% 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 the DGCL, the stockholders 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 the MGCL, the exclusive power to adopt, amend
or repeal the bylaws may be conferred upon the stockholders, 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
stockholders or by the respective boards of directors.
Dividends and Other Distributions. Under the DGCL, 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.
The MGCL 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 stockholders 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. The DGCL requires that certain
transactions between a corporation and an interested stockholder may not occur
for three years following the date such person became an interested stockholder
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
stockholder), (ii) the board of directors approved the acquisition of voting
stock pursuant to which such person became an interested stockholder or (iii) an
exemption is available.
Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange, or, in certain circumstances, an asset transfer
or issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns ten percent or more of the
voting power of the corporation's shares or an affiliate of the corporation 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
Stockholder") are prohibited for five years after the most recent date on which
the Interested Maryland Stockholder becomes an Interested Maryland Stockholder.
Thereafter, unless an exemption is available, the MGCL 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 cast by holders of
outstanding voting shares of the corporation other than shares held by the
Interested Maryland Stockholder with whom the business combination is to be
effected.
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<PAGE>
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. The MGCL 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 stockholder 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 stockholders 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 stockholders' 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 stockholders at which the voting rights
of such are considered and not approved. If voting rights for control shares are
approved at a stockholders' meeting and the acquiror becomes entitled to vote a
majority of the shares entitled to vote, all other stockholders 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.
The DGCL has no provision comparable to the Maryland control share acquisition
statute.
Dissolution of the Company and the Maryland Company. Under the DGCL, a
corporation may be dissolved if (i) the board of directors of the corporation,
by resolution adopted by a majority of the whole board of directors at any
meeting called for that purpose, deems such dissolution advisable and (ii) a
majority of the outstanding stock of the corporation votes for the proposed
dissolution at a stockholders meeting called for the purpose of acting upon such
resolution. Dissolution of a corporation may also be authorized without action
by the board of directors if all stockholders entitled to vote thereon shall
consent thereto in writing.
The MGCL permits the dissolution of the Maryland Company if (i) the board of
directors adopts by a majority vote of the entire board a resolution advising
dissolution and (ii) the dissolution is approved by the stockholders by the
affirmative vote of not less than two-thirds of all votes entitled to be cast on
the matter.
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
20
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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 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 stockholder
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.
The remedy provided in the Maryland Articles arising from a violation of the
Ownership Limit is different from the remedy provided in the Delaware
Certificate arising from a violation of the comparable provisions in the
Delaware Certificate. Pursuant to the Maryland Articles, if any stockholder
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 stockholder 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 stockholder 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 person will be required to sell such
shares to the Maryland Company 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.
Under the Delaware Certificate, any transfers of Common Stock in violation of
stock ownership limits set forth in such certificate are void. The ownership
limit provisions in the Delaware Certificate may not apply to limit certain
transactions which could result in a constructive transfer or ownership of
Common Stock without an actual transfer of such stock. Because the Maryland
Articles are intended to restrict both actual and constructive transfers and
ownership of Common Stock, the Maryland Articles should enhance the Company's
ability to comply with the stock ownership limits imposed on REITs.
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.
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.
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 stockholder 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 stockholder's actual and constructive
ownership of Common Stock on the Company's status as a REIT and to ensure
compliance with the Ownership Limit.
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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."
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 would unduly restrict the flexibility
of the Maryland Company to engage in activities that could be in the best
interest of the stockholders. 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
stockholders authorized the Board of Directors to amend the 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. Since the Maryland Company is not subject to any
franchise tax, the Reincorporation will enable the Company to have the capital
stock authorization size that was approved by its stockholders 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
stockholders 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 stockholders approved in 1995 but were
never filed 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 stockholders
could not be paid until preferred stock dividends were paid. The amount of cash
available for distribution to common shareholders would be reduced by the amount
of the dividends payable on the preferred stock. The coupon or dividend rate on
the preferred stock would be set by the Board of Directors prior to the issuance
of such shares. Adverse changes in the financial condition of the Company or
high interest rates prevailing in the economy at the time of the issuance of
preferred stock could result in high coupon or dividend rates on the preferred
stock. The terms of the preferred stock could also provide for an increase in
the coupon or dividend rate upon the occurrence of certain events.
In addition, series of preferred stock may be issued with redemption or call
features. If such preferred stock is called or redeemed for cash, the cash
available for distribution to the common shareholders would be correspondingly
reduced.
Upon dissolution of the Maryland Company, preferred stockholders 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
stockholders in the Maryland Company will be diluted. The Board of Directors may
issue preferred stock convertible into shares of Common Stock. Upon such
conversion, the individual ownership interest of each holder of Common Stock
prior to such conversion could decrease. The extent of any decrease would depend
upon the conversion ratio established by the Board of Directors at the time of
the issuance of the preferred stock.
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In connection with the issuance of preferred stock, the Maryland Company may be
required to enter into an agreement with the purchasers that may contain
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 may 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 may also contain
similar provisions restricting other reorganizations of the Maryland Company.
Such restrictions may prevent the Maryland Company from taking advantage of
business opportunities that may be in the best interests of the Maryland Company
as a whole and the common stockholders.
A series of preferred stock may be given voting rights. Such voting rights may
vest at the time of the issuance of the preferred stock or upon the occurrence
of certain specified events (such as the nonpayment of preferred dividends for a
period of time). Furthermore, the voting rights may allow preferred shareholders
to cast more than one vote per share or to elect as a class, a specified number
of directors. Such voting rights could impair the common stockholders' 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 stockholders 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 provisions of 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 stockholders and therefore recommends stockholders 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. The persons named
as proxies in the accompanying form of proxy intend to vote in favor of
Reincorporation.
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 April 21, 1998, and August
19, 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 20, 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,
/s/ Philip S. Payne
Philip S. Payne
Executive Vice President, Treasurer, and
Chief Financial Officer
Date: April 21, 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 stockholders 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. 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 or 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 stockholders of the Company for six months
after the Effective Time) shall be paid to the Surviving Entity. Any
stockholders 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 stockholder 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,
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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 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) Stockholder 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
stockholders 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.
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8.7 Service of Process. The Maryland Company may be served with process in
the State of Maryland in any 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 Change of Name. The Maryland Company will change its name to
Boddie-Noell Properties, Inc.
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
Section 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).
Section 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):
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(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 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.
Section 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 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 Directions 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
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purchase or redemption of, any stock of the Corporation, or upon any other
action of the Corporation, including action under this sub-paragraph, and, if
so, the terms and conditions thereof.
(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.
Section 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
Section 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 the correlative meanings.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Merger" means 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.
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(i) "Restriction Termination Date" shall mean the first day after the
date of the Merger on which the Board of Directors and the stockholders 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.
(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.
Section 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.
Section 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.
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Section 6.4. Notice of Restricted Transfer. Any Person who acquires or
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.
Section 6.5. Owners Required to Provide Information. From the date of the
Merger and prior to the Restriction Termination Date:
(a) every stockholder 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 stockholder, the number of shares Beneficially
Owned by it, and a description of how such shares are held; provided that a
stockholder 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 stockholder 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 stockholder 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 stockholder 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.
Section 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 stockholders in preserving the
Corporation's status as a REIT.
Section 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.
Section 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.
Section 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.
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Section 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 stockholders 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.
Section 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.
Section 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.
ARTICLE VII
Board of Directors
Section 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.
Section 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.
Section 7.3. Vacancies. The stockholders 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.
Section 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 willful 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 willful engaging by a director in gross misconduct materially
and demonstrably injurious to the Corporation.
Section 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
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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 stockholders 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.
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 X must be adopted by
the vote of the holders of two-thirds of the shares of capital stock of the
Corporation outstanding and
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entitled to vote thereon voting together as a single class. All rights conferred
upon stockholders 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
Section 1.01 Registered Office. The Corporation shall maintain a registered
office in the State of Maryland as required by law.
Section 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 STOCKHOLDERS
Section 2.01 Location. Meetings of stockholders 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.
Section 2.02 Annual Meeting. Annual meetings of stockholders shall be held
on a date and a time as may be determined from time to time by the Board, at
which the stockholders 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.
Section 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 stockholders (or
special meeting of stockholders 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 stockholders 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 stockholders or by
any stockholder 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 stockholder'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 stockholders, 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 stockholders 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 stockholders. Such stockholder's notice
shall set forth (a) as to each person whom the stockholder 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 the proxy statement as a nominee and to serving as a director if
elected); and (b) as to the stockholder giving the notice, (i)
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the name and address, as they appear on the Corporation's books, of such
stockholder and (ii) the class and number of shares of the Corporation which are
beneficially owned by such stockholder. 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 stockholder'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.
Section 2.04 Notice and Business to be Conducted. Written notice of the
annual meeting shall be given to each stockholder 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 stockholders, 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 stockholder. For business to be properly brought before an annual
meeting by a stockholder, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, a stockholder'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 stockholder's notice to the
Secretary shall set forth as to each matter the stockholder 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 stockholder proposing such business, (c) the class
and number of shares of the Corporation that are beneficially owned by the
stockholder and (d) any material interest of the stockholder 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.
Section 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 stockholders 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 stockholder. Such list shall be
open to the examination of any stockholder, 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 stockholder who may be present.
Section 2.06 Special Meetings. At any time in the interval between annual
meetings, special meetings of the stockholders, 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.
Section 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 stockholders have requested
a special meeting, the Secretary shall: (a) inform the stockholders 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
stockholder entitled to notice of the meeting. Notice of the special meeting
shall be given to each stockholder in the same manner as set forth in Section
2.04 hereof.
Section 2.08 Business at Special Meeting. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice. Unless requested by stockholders 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 matter voted on at
any special meeting of the stockholders held during the preceding 12 months.
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Section 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
stockholders 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 stockholders, the stockholders
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.
Section 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.
Section 2.11 Proxies. At all meetings of stockholders, a stockholder may
vote in person or vote by proxy that is executed in writing by the stockholder
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
Section 3.01 Number, Election and Term. The number of directors of the
Corporation that shall constitute the whole Board 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. 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
stockholders, 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.
Section 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 stockholders.
Section 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 stockholders
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 stockholders or until his successor is elected and
qualifies.
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Section 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, the Chief Executive Officer or the
Secretary. The acceptance of a resignation shall not be necessary to make it
effective.
Section 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
stockholders any action which requires stockholder 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, 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 telephonic communication 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 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.
Section 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 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 stockholders 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 stockholders.
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 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 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
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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.
Section 3.07 Quorum and Voting. At all meetings of the Board, 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 stockholders 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.
Section 3.08 Organization. The Chairman of the Board shall preside at each
meeting of the Board of Directors, or in the absence or inability of the
Chairman of the Board 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.
Section 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.
Section 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 or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or committee.
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Section 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 may be allowed like compensation
for attending committee meetings.
Section 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 stockholders. 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 stockholders 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 stockholders of the
Corporation.
ARTICLE IV
NOTICES
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Section 4.01 Writing. Notices to directors and stockholders 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 stockholders at their addresses appearing on the books of the
Corporation.
Section 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
Section 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 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.
Section 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.
Section 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.
Section 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.
Section 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.
Section 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.
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ARTICLE VI
CERTIFICATE OF STOCK
Section 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 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 stockholder 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.
Section 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.
Section 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.
Section 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 stockholders, 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 stockholders for any purpose, as a record date for the
determination of the stockholders 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 stockholders and only such stockholders as
shall be stockholders 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.
Section 6.05 Registered Stockholders. 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
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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
Section 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. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the Articles of Incorporation.
Section 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.
Section 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 stockholders 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 stockholders. 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.
Section 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 stockholders within
forty-five (45) days after the close of the Corporation's preceding fiscal
quarter.
Section 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 stockholders as well as stockholder records. Upon the
request of, and reasonable notice given by, any Stockholder, there shall be made
available for inspection such books and records in accordance with the
provisions of Delaware law during regular business hours of the Corporation.
Section 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.
Section 7.07 Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 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.
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ARTICLE VIII
AMENDMENTS
Section 8.01 Amendments. These Bylaws may be altered or repealed or new
bylaws may be made by the stockholders 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 May 21, 1997
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Shareholders Meeting of Boddie-Noell Properties, Inc. (the "Company") to be held
on May 21, 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.
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