UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 1-9496
BODDIE-NOELL PROPERTIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 56-1574675
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
3710 One First Union Center, Charlotte, NC 28202-6032
(Address of principal executive offices) (Zip Code)
704/333-1367
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of May 5, 1997 (the latest practicable date).
Common Stock, $.01 par value 3,102,983
(Class) (Number of shares)
Index to exhibits at page 14 Total number of pages: 38
1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item No. Page No.
<S> <C> <C>
PART I - Financial Information
1 Financial Statements 3
2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II - Other Information
6 Exhibits and Reports on Form 8-K 12
</TABLE>
2
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PART I - Financial Information
Item 1. Financial Statements.
BODDIE-NOELL PROPERTIES, INC.
- -------------------------------------------------------------------------------
Balance Sheets
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
------------------- ------------------
(Unaudited)
<S> <C> <C>
Assets
Real estate investments at cost:
Apartment properties $ 66,742,758 $ 66,610,048
Restaurant properties 43,205,075 43,205,075
------------------- ------------------
109,947,833 109,815,123
Less accumulated depreciation (12,100,572) (11,461,365)
------------------- ------------------
97,847,261 98,353,758
Cash and cash equivalents 1,036,282 842,604
Rent and other receivables 17,941 12,695
Prepaid expenses and other assets 544,609 392,302
Investment in and advances to Management Company 330,088 261,598
Notes receivable 350,122 -
Intangible related to acquisition of management operations, net 2,781,292 2,744,912
Deferred financing costs, net 772,043 828,113
------------------- ------------------
Total assets $103,679,638 $103,435,982
=================== ==================
Liabilities and Shareholders' Equity
Mortgage and other notes payable $ 70,525,465 $ 70,295,957
Notes payable to affiliates 7,056,300 7,056,300
Accounts payable and accrued expenses 705,960 476,938
Additional consideration due to former BTVC shareholders 288,802 355,570
Escrowed security deposits and deferred revenue 324,683 348,779
------------------- ------------------
Total liabilities 78,901,210 78,533,544
Shareholders' equity:
Common stock, $.01 par value, 10,000,000 shares authorized, 3,102,983 shares
issued and outstanding at March 31, 1997,
3,074,647 shares issued and outstanding at December 31, 1996 31,030 30,746
Additional paid-in capital 34,885,933 34,522,816
Dividends distributed in excess of net income (10,138,535) (9,651,124)
------------------- ------------------
Total shareholders' equity 24,778,428 24,902,438
------------------- ------------------
Total liabilities and shareholders' equity $103,679,638 $103,435,982
=================== ==================
</TABLE>
3
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BODDIE-NOELL PROPERTIES, INC.
- -------------------------------------------------------------------------------
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31
1997 1996
---------------- -----------------
<S> <C> <C>
Revenues
Apartment rental income $ 2,587,737 $ 2,142,742
Restaurant rental income 1,125,000 1,125,000
Equity in income of Management Company 106,590 27,418
Interest and other income 33,288 12,345
---------------- -----------------
3,852,615 3,307,505
Expenses
Depreciation 639,207 555,981
Amortization 144,690 122,289
Apartment operations 833,709 666,047
Administrative 227,083 232,226
Interest 1,537,143 1,351,788
---------------- -----------------
3,381,832 2,928,331
---------------- -----------------
Net income $ 470,783 $ 379,174
================ =================
Per share data:
Net income $0.15 $0.13
================ =================
Dividends declared $0.31 $0.31
================ =================
Weighted average shares outstanding 3,088,283 3,016,740
================ =================
</TABLE>
- -------------------------------------------------------------------------------
Statement of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Dividends
Additional distributed
Common Stock paid-in in excess of
Shares Amount capital net income Total
--------------- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 3,074,647 $30,746 $34,522,816 $ (9,651,124) $24,902,438
Net income - - - 470,783 470,783
Common stock issued, DRIP 12,036 121 154,844 - 154,965
Common stock issued, earnout 16,300 163 208,273 - 208,436
Dividends paid ($0.31) - - - (958,194) (958,194)
--------------- ---------------- ---------------- --------------- ----------------
Balance at March 31, 1997 3,102,983 $31,030 $34,885,933 $(10,138,535) $24,778,428
=============== ================ ================ =============== ================
</TABLE>
4
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BODDIE-NOELL PROPERTIES, INC.
- -------------------------------------------------------------------------------
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31
1997 1996
---------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 470,783 $ 379,174
Adjustments to reconcile net income to
net cash provided by operations:
Equity in income of Management Company (106,590) (27,418)
Depreciation and amortization 783,897 678,270
Changes in operating assets and liabilities:
Rent and other receivables (5,246) 235,149
Prepaid expenses and other assets (150,408) (76,581)
Accounts payable and accrued expenses 229,023 61,972
Security deposits and deferred revenue (25,995) (9,789)
---------------- -----------------
Net cash provided by operating activities 1,195,464 1,240,777
Cash flows from investing activities:
Additions to apartment properties (116,043) (128,997)
Investment in Management Company - (165)
Dividends received from Management Company 38,100 57,023
Investment in notes receivable (350,122) -
Payment of deferred acquisition costs - (169,669)
---------------- -----------------
Net cash used in investing activities (428,065) (241,808)
Cash flows from financing activities:
Proceeds of common stock issued through
dividend reinvestment plan 154,965 -
Payment of dividends (958,194) (935,189)
Proceeds from notes payable 350,122 -
Principal payments on notes payable (120,614) (115,390)
Payment of deferred financing costs - (152,201)
---------------- -----------------
Net cash used in financing activities (573,721) (1,202,780)
---------------- -----------------
Increase (decrease) in cash and cash equivalents 193,678 (203,811)
Cash and cash equivalents at beginning of period 842,604 700,863
---------------- -----------------
Cash and cash equivalents at end of period $ 1,036,282 $ 497,052
================ =================
</TABLE>
5
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BODDIE-NOELL PROPERTIES, INC.
- -------------------------------------------------------------------------------
Notes to Financial Statements - March 31, 1997
(Unaudited)
Note 1. Interim financial statements
The accompanying financial statements of Boddie-Noell Properties, Inc. (the
"Company") have not been audited by independent accountants, except for the
balance sheet at December 31, 1996, which was derived from the financial
statements included in the Company's 1996 Annual Report on Form 10-K. In the
opinion of the Company's management, all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the financial position
and results of operations for the periods presented have been included.
Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this Quarterly Report on Form 10-Q.
These financial statements should be read in conjunction with the Company's 1996
Annual Report on Form 10-K.
The results of the first quarter of 1997 are not necessarily indicative of
future financial results.
Note 2. Note receivable and related financing
Effective February 27, 1997, the Company entered into a participating loan
agreement with The Villages of Chapel Hill Limited Partnership ("The Villages").
Under the terms of this agreement, the Company will loan up to $2,625,000 to The
Villages to fund a substantial rehabilitation of the 264 apartments owned by The
Villages. In addition, the Company has provided a guaranty of $1,500,000 to a
bank on its loan to The Villages. The Company will receive minimum interest on
this loan at the greater of 12.5 percent or 30-day LIBOR plus 6.125 percent,
shared income interest, shared appreciation interest, and certain loan and
annual guaranty fees. The Company plans to fund advances to The Villages through
draws under its existing agreement with the bank for borrowings at 30-day LIBOR
plus 2.25 percent, secured by deeds of trust on three apartment properties.
The Villages is a North Carolina limited partnership which is managed by BNP
Management, Inc. The general partner in Villages is Boddie Investment Company,
whose sole shareholders and directors are Chairman and Vice Chairman of the
Company.
Note 3. Common stock issued
On January 29, 1997, the Company issued 16,300 shares of common stock pursuant
to the earn-out provision of the acquisition agreement for BT Venture
Corporation. On February 14, 1997, the Company issued 12,036 shares of common
stock through its Dividend Reinvestment and Stock Purchase Plan.
Note 4. Subsequent declaration of dividend
On April 15, 1997, the Company declared a cash dividend of $0.31 per share,
which will be paid on May 15, 1997, to shareholders of record on May 1, 1997.
Note 5. Statement No. 128, "Earnings per Share"
In February 1997 the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share," which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of primary and fully diluted earnings per share is not expected to be material.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
The following discussion contains forward-looking statements within the meaning
of the federal securities laws. Although management believes that the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, there are certain factors such as general economic
conditions, local real estate conditions, or weather conditions that might cause
a difference between actual results and those forward-looking statements.
Overview
Boddie-Noell Properties, Inc. is a self-managed, self-advised real estate
investment trust ("REIT"). As of March 31, 1997, the Company owned 47 net-lease
restaurant properties and five apartment properties containing 1,328 apartments.
Through its unconsolidated subsidiary, BNP Management, Inc. (the "Management
Company"), the Company manages an additional seven apartment properties
containing 1,495 apartments and two shopping centers. The Company's headquarters
are in Charlotte, North Carolina, and all of the Company's operations are in the
states of North Carolina and Virginia.
The following discussion should be read in conjunction with the financial
statements and notes thereto included in this Quarterly Report on Form 10-Q and
the Company's audited financial statements and notes thereto included in the
Company's 1996 Annual Report on Form 10-K.
Results of Operations
Revenues. Revenues increased by 16.5 percent for the quarter ended March 31,
1997, compared to the same period in 1996. The increase in revenues for the
first quarter was primarily attributable to a 20.8 percent increase in apartment
rental income, along with a significant increase in equity income from the
Management Company during the quarter.
The $445,000, or 20.8 percent, increase in apartment rental income is primarily
attributable to the inclusion of income from Paces Village Apartments ($377,000
in first quarter of 1997), which was acquired in April 1996, and continued
improvement at apartment properties held throughout the quarter in both 1997 and
1996. Income from these properties increased by 3.2 percent over the same period
in 1996, reflecting a 2.4 percent increase in average monthly revenue received
per occupied apartment and a 0.6 percent increase in average economic occupancy.
For apartments held for the full period in both years, average revenue received
per occupied apartment was $693 per month in 1997 compared to $677 per month in
1996, and average economic occupancy was 94.1 percent in 1997 compared to 93.5
percent in 1996.
Summary amounts related to apartment properties occupancy are as follows:
<TABLE>
<CAPTION>
1997 1996
---------------------------------------------------------------------
Harris Paces Paces
Hill Latitudes Oakbrook Commons Village Overall Overall
<S> <C> <C> <C> <C> <C> <C> <C>
Number of units 184 448 162 336 198 1,328 1,130
Quarter ended March 31--
Average physical occupancy 92.1% 93.5% 93.4% 96.5% 93.2% 94.0% 93.2%
Average economic occupancy 93.1% 92.9% 94.0% 96.3% 93.3% 94.0% 93.5%
Average monthly revenue/unit $712 $650 $780 $697 $680 $691 $677
</TABLE>
The Company owns apartment properties in Charlotte, North Carolina; Greensboro,
North Carolina; and Virginia Beach, Virginia. The Company's apartments are
priced in the moderate to moderately high range for apartments available within
these markets. Despite a substantial amount of new construction, especially in
Charlotte and
7
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Greensboro, these markets have remained relatively strong. This strength is
primarily attributable to demand for apartments created by continued population
and job growth. The Company experienced a nominal reduction in its average
economic occupancy during 1996, but average monthly rent has continued to rise
at a moderate rate, and occupancy has improved during the first quarter of 1997.
(Fourth quarter 1996 amounts were as follows: average monthly revenue per unit,
$689; average economic occupancy, 93.6 percent). While the Company expects some
continued pressure in its markets through 1997, management does not expect this
will have a material adverse effect on the Company's operations or cash flows.
Restaurant rental income was the minimum rent under the lease agreement with
Boddie-Noell Enterprises, Inc. ("Enterprises") in the first quarters of both
1997 and 1996. Under the terms of the lease agreement, restaurant rental income
is the greater of the minimum rent of $4.5 million per year or 9.875 percent of
food sales. For the first quarter of 1997, sales at the Company's restaurant
properties increased by 4.6 percent over sales in the first quarter of 1996.
This is the first positive quarterly comparison for restaurant sales since 1992.
The increase in sales appears to be the result of better weather in the
Company's markets and continued efforts to improve sales by the restaurants'
franchisor and operator.
Equity in income of the Management Company increased significantly in the first
quarter of 1997 compared to 1996, primarily due to the Management Company's
receipt during the quarter of certain one-time refinancing fees from two managed
properties and sales commissions from two managed properties. Effective March
27, 1997, two properties which have been managed by the Management Company were
sold to unrelated third parties. Management anticipates that, following these
property sales, the Management Company's revenues will decrease by approximately
$6,700 per month. Management does not expect the operation of the Management
Company to have a significant effect on the financial position, operating
results, or cash flows of the Company in future periods.
Expenses. First quarter 1997 expenses were generally consistent with
management's expectations. The increase in depreciation compared to first
quarter of 1996 reflects the acquisition of Paces Village Apartments ($10.7
million in apartment property assets) in April 1996 along with improvements at
other apartment properties. The increase in amortization expense is primarily
attributable to quarterly additions to the intangible asset related to the
earn-out provision of the 1994 BT Venture Corporation ("BTVC") acquisition
agreement.
The 25.2 percent increase in apartment operations expense in the first quarter
of 1997 compared to the first quarter of 1996 again reflects the impact of the
Paces Village acquisition in April 1996. Apartment operations expense totaled
32.2 percent of related income in first quarter 1997 compared to 31.1 percent in
first quarter of 1996. The increase in apartment operations expense as a percent
of related income is primarily attributable to increased costs associated with
attracting and retaining residents in a softening apartment market.
Operating expenses relating to restaurant properties are insignificant because
of the restaurant properties' triple net lease arrangement.
The increase in interest expense in the first quarter of 1997 compared to 1996
is primarily attributable to the addition of $10,650,000 of debt related to the
acquisition of Paces Village in the second quarter of 1996. Weighted average
interest rates were 8.0 percent in the first quarter of 1997 compared to 8.1
percent during the same period in 1996.
Liquidity and Capital Resources
Capital resources. At March 31, 1997, the Company's total book capitalization
was $102,360,000, comprised of $24,778,000 of shareholders' equity and
$77,582,000 of debt.
During the first quarter of 1997, the Company issued 16,300 shares of common
stock to the former BTVC shareholders pursuant to an earn-out provision in the
BTVC acquisition agreement. Under the terms of the
8
<PAGE>
acquisition agreement, at March 31, 1997, the former BTVC shareholders were due
additional consideration totaling approximately $289,000, payable at the
Company's option in up to 22,827 shares of common stock or in cash. By
agreement, the Company is prohibited from issuing such shares of common stock if
such issuance would cause the Company to become disqualified as a REIT.
In addition, during the first quarter of 1997, the Company issued 12,036 shares
of common stock under its Dividend Reinvestment and Stock Purchase Plan ("DRIP")
for cash proceeds totaling approximately $155,000.
Effective February 27, 1997, the Company entered into a participating loan
agreement with The Villages of Chapel Hill Limited Partnership ("The Villages").
The Villages is a North Carolina limited partnership which owns The Villages of
Chapel Hill Apartments ("Villages Apartments"), a 264 unit apartment community
located in Carrboro, North Carolina. The general partner of The Villages is
Boddie Investment Company, whose sole shareholders and directors are B. Mayo
Boddie and Nicholas B. Boddie, Chairman and Vice Chairman, respectively, of the
Company. Property management and partnership administration for The Villages are
provided on a fee basis by BNP Management, Inc.
In exchange for interest payments, shared income interest, shared appreciation
interest, certain other fees and reimbursement of certain costs and expenses,
the Company has agreed to loan The Villages up to $2,625,000 to fund a
substantial rehabilitation of Villages Apartments. Under the terms of this loan,
the Company will receive base interest equal to the greater of 12.5 percent or
30-day LIBOR plus 6.125 percent of the outstanding balance of the loan. The
Company will also receive shared income interest equal to 25 percent of the
property's gross monthly rent in excess of $146,333 (an amount equal to the
property's average gross monthly rental receipts for the year 1996) and shared
appreciation interest equal to 25 percent of the increase in value of the
property above $10,000,000 (the liquidation value of the property prior to the
rehabilitation as determined by an independent appraisal). The Company's loan is
secured by a second deed of trust on the property. As part of the transaction
and to facilitate the participation of The Villages' first mortgage lender, the
Company will guarantee $1,500,000 of The Villages' first mortgage loan. In
exchange for the guarantee and so long as the guarantee is outstanding, the
Company will receive an annual loan guarantee fee of 2.5% of the guaranteed
amount.
While the term of the Company's loan is seven years, all but $100,000 of the
principal portion of the loan may be prepaid at any time without penalty. The
Villages has a first mortgage loan from a bank with an outstanding balance of
$7,800,000. Upon completion of the rehabilitation project and the achievement of
certain performance goals, the first mortgage lender has agreed to increase the
first mortgage loan to an amount of up to $10,425,000, provided the increase is
used to repay that portion of the Company's loan which may be prepaid without
penalty.
The balance of the principal and the participation portion of the loan may not
be prepaid for five years and is due in full at seven years. The loan agreement
provides that BNP Management will provide property management for the Villages
Apartments for a minimum of five years or so long as any portion of the loan is
outstanding.
The Company's loan to The Villages and the guarantee of a portion of the first
mortgage loan was approved by the Company's disinterested directors. In granting
their approval, the directors considered a number of factors including a
detailed analysis of, and financial forecast for, The Villages and an
independent appraisal of the Villages Apartments. Following their review, the
disinterested directors determined that the loan was fair and that making the
loan would provide substantial economic benefit to the Company.
At March 31, 1997, the Company had advanced approximately $350,000 under the
loan agreement.
The Company plans to fund advances to The Villages through draws under its April
1996 agreement with SouthTrust Bank for borrowings at 30-day LIBOR plus 2.25
percent, secured by second deeds of trust on three apartment properties.
Cash flows and liquidity. Funds from operations ("FFO") is defined by the
National Association of Real Estate
9
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Investment Trusts ("NAREIT") as "net income (computed in accordance with
generally accepted accounting principles), excluding gains (losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures."
Consistent with NAREIT guidelines, the Company has disregarded all one-time fees
received by the Management Company in the first quarter of 1997 in calculating
FFO.
Management considers FFO to be useful in evaluating potential property
acquisitions and measuring the operating performance of an equity REIT because,
together with net income and cash flows, FFO provides investors with an
additional basis to evaluate the ability of the REIT to incur and service debt
and to fund acquisitions and other capital expenditures. FFO does not represent
net income or cash flows from operations as defined by generally accepted
accounting principles ("GAAP"), and FFO should not be considered as an
alternative to net income as an indicator of the Company's operating performance
or as an alternative to cash flows as a measure of liquidity. FFO does not
measure whether cash flow is sufficient to fund all of the Company's cash needs,
including principal amortization, capital improvements and distributions to
shareholders. FFO does not represent cash flows from operating, investing or
financing activities as defined by GAAP. Further, FFO as disclosed by other
REITs may not be comparable to the Company's calculation of FFO.
A reconciliation of net income to FFO is as follows (all amounts in thousands):
Three months ended
March 31
1997 1996
--------------- --------------
Net income $ 471 $ 379
Depreciation 639 556
Amortization of management intangible 89 73
Less non-recurring equity income items
excluded from FFO (103) -
--------------- --------------
Funds from operations $1,096 $1,008
=============== ==============
Funds available for distribution ("FAD") is defined by the Company as FFO plus
non-cash expense for amortization of loan costs, less payments for scheduled
amortization of debt principal and recurring capital expenditures.
A reconciliation of FFO to FAD, along with summary cash flow information, is as
follows (all amounts in thousands):
<TABLE>
<CAPTION>
Three months ended
March 31
1997 1996
--------------- --------------
<S> <C> <C>
Funds from operations $1,096 $1,008
Amortization of loan costs 56 49
Scheduled debt principal payments (121) (115)
Recurring capital expenditures (87) (49)
Non-recurring equity income items excluded from FFO 103 -
--------------- --------------
Funds available for distribution $1,047 $ 893
=============== ==============
10
<PAGE>
Net cash provided by (used in):
Operating activities $1,195 $1,241
Investing activities (428) (242)
Financing activities (574) (1,203)
Dividends and distributions paid to shareholders $ 958 $ 935
Nonrecurring capital expenditures:
Acquisition improvements and replacements $ 16 $ 80
Other apartment property improvements 13 -
</TABLE>
Funds from operations increased by 8.7 percent in first quarter of 1997 compared
to 1996, primarily attributable to improved operations at apartment properties
and the addition of Paces Village in April 1996. First quarter 1997 net income
was further enhanced by the impact of certain one-time fees included in equity
income.
The Company capitalizes those expenditures relating to acquiring new assets,
materially enhancing the value of an existing asset, or substantially extending
the useful life of an existing asset. All carpet and vinyl replacements are
capitalized. Additions to apartment properties were generally funded from cash
provided by operating activities.
The Company paid dividends of $0.31 per share in the first quarters of both 1997
and 1996.
In February 1997 the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share," which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of primary and fully diluted earnings per share is not expected to be material.
Short- and long-term liquidity requirements. The Company continues to produce
sufficient cash flow to fund its regular dividend. The Company has announced
that it will pay a regular quarterly dividend of $0.31 per share on May 15,
1997, to shareholders of record on May 1, 1997.
The Company continues to produce sufficient cash flow to fund its regular
dividend. The Company generally expects to meet its short-term liquidity
requirements through net cash provided by operations and utilization of credit
facilities. Management believes that net cash provided by operations is, and
will continue to be, adequate to meet both operating requirements and payment of
dividends by the Company in accordance with REIT requirements in both the short
term and the long term. The Company anticipates funding its acquisition
activities, if any, primarily by using short-term credit facilities or secured
long-term debt. The Company expects to meet certain of its long-term liquidity
requirements, such as scheduled debt maturities and repayment of short-term
financing of possible property acquisitions, through long-term secured and
unsecured borrowings and the issuance of debt securities or additional equity
securities of the Company. The Company believes that it has sufficient resources
to meet its short- and long-term liquidity requirements.
Management does not believe that inflation poses a material risk to the Company.
The leases at the Company's apartment properties are short-term in nature,
generally for terms of one year or less. The restaurant properties are leased on
a triple-net basis, which places the risk of rising operating and maintenance
costs on the lessee.
11
<PAGE>
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
Exhibit 10 Loan Agreement as of February 27, 1997, by and between
The Villages of Chapel Hill Limited Partnership and
Boddie-Noell Properties, Inc.
Exhibit 27 Financial data schedule (electronic filing)
b) Reports on Form 8-K:
None
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BODDIE-NOELL PROPERTIES, INC.
(Registrant)
May 14, 1997 /s/ Philip S. Payne
Philip S. Payne
Executive Vice President and
Chief Financial Officer
(Duly authorized officer)
May 14, 1997 /s/ Pamela B. Novak
Pamela B. Novak
Vice President - Controller
(Chief accounting officer)
13
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Page
<S> <C> <C>
10 Loan Agreement as of February 27, 1997, by and between The Villages of Chapel 15
Hill Limited Partnership and Boddie-Noell Properties, Inc.
27 Financial data schedule (electronic filing) -
</TABLE>
14
<PAGE>
EXHIBIT 10
LOAN AGREEMENT AS OF FEBRUARY 27, 1997, BY AND BETWEEN
THE VILLAGES OF CHAPEL HILL LIMITED PARTNERSHIP AND
BODDIE-NOELL PROPERTIES, INC.
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of the 27th day of
February, 1997, by and between THE VILLAGES OF CHAPEL HILL LIMITED PARTNERSHIP,
a North Carolina limited partnership (the "Borrower") and BODDIE-NOELL
PROPERTIES, INC., a Delaware corporation, its successors and assigns (the
"Lender").
R E C I T A L S:
Borrower has requested that the Lender make certain loans to the
Borrower. Lender has agreed to make such loans on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, it is hereby agreed as follows:
ARTICLE I.
DEFINITIONS, ACCOUNTING PRINCIPLES, UCC TERMS.
1.1. As used in this Agreement, the following terms shall have the
following meanings unless the context hereof shall otherwise indicate:
"Affiliate" shall mean any subsidiary of Borrower or any entity of
which Borrower is a subsidiary (collectively a "BNP Entity,") or any entity
which a BNP Entity controls or any entity which controls a BNP Entity. For
purposes hereof, the term "controlled" shall mean that the BNP Entity directly
or acting through entities in which they own a substantial equity interest, has
the power to acquire, dispose, operate and manage the assets of said entity even
though the exercise of such powers may be subject to the approval or consent of
third parties.
"Applicable Environmental Law" shall mean any applicable federal, state
or local laws, rules or regulations pertaining to health or the environment, or
petroleum products, or radon radiation, or oil or hazardous substances,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA") and the Federal
Emergency Planning and Community Right-To-Know Act of 1986, as amended. The
terms "hazardous substance" and "release" shall have the meanings specified in
CERCLA, and the terms "solid waste," disposal," "dispose," and "disposed" shall
have the meanings specified in RCRA, except that if such acts are amended to
broaden the meanings thereof, the broader meaning shall apply herein
prospectively from and after the date of such amendments; notwithstanding the
foregoing, provided, to the extent that the laws of the State of North Carolina
establish a meaning for "hazardous substance" or "release" which is broader than
that specified in CERCLA, as CERCLA may be amended from time to time, or a
meaning for "solid waste," "disposal," and "disposed" which is broader than
specified in RCRA, as RCRA may be amended from time to time, such broader
meanings under said state law shall apply in all matters relating to the laws of
such State.
"Applicable Rate" shall mean the rate of interest borne by the Note in
the absence of an Event of Default.
"Assignment" shall mean the Assignment of Rents and Leases of even date
herewith from Borrower to Lender with respect to rents and leases from the
Property and Improvements.
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"Budget" shall mean the renovations to the Property as generally
described in the Related Loan Agreement.
"Business Day" shall mean a day, other than Saturday or Sunday and
legal holidays, when the Lender is open for business.
"Closing Date" shall mean the date on which all or any part of a Loan
is disbursed by the Lender to or for the benefit of the Borrower.
"Collateral" shall mean, collectively, the Property, Improvements,
Equipment and Rents, and all Proceeds, all whether now owned or hereafter
acquired, and including replacements, additions, accessions, substitutions, and
products, and all other property which is or hereafter may become subject to a
Lien in favor of Lender as security for any of the Loan Obligations.
"Default" shall mean the occurrence or existence of any event which,
but for the giving of notice or expiration of time or both, would constitute an
Event of Default.
"Default Rate" shall mean, as to the rate on any principal or interest
due under the Note, a per annum rate equal to two percentage points (2%) in
excess of the Applicable Rate then accruing pursuant to such Note.
"Equipment" shall mean, to the extent owned by Borrower, all fixtures
and equipment now or hereafter located on, attached to or used or useful in
connection with the Property or Improvements.
"Event of Default" shall mean any "Event of Default" as hereinafter
defined.
"Exhibit" shall mean an Exhibit to this Agreement, unless the context
refers to another document, and each such Exhibit shall be deemed a part of this
Agreement to the same extent as if it were set forth in its entirety wherever
reference is made thereto.
"GAAP" shall mean, as in effect from time to time, generally accepted
accounting principles consistently applied as promulgated by the American
Institute of Certified Public Accountants.
"Guaranty" shall mean that certain Guaranty of Payment from Lender in
favor of or for the benefit of SouthTrust in connection with the SouthTrust
Loan.
"Improvements" shall mean the apartment buildings, clubhouses, swimming
pools, tennis courts and all other buildings, structures and improvements of
every nature whatsoever now or hereafter situated on the Property, including,
but not limited to, all gas and electric fixtures, radiators, heaters, engines
and machinery, boilers, ranges, elevators and motors, plumbing and heating
fixtures, air conditioning equipment, carpeting and other floor coverings, water
heaters, awnings and storm sashes, cleaning apparatus, signs, landscaping, and
parking areas, which are or shall be attached to or located on the Property or
said buildings, structures or improvements, excluding personal property of
lessees of individual apartment units at the Property.
"Indemnity Agreement" shall mean that certain Indemnity Agreement of
even date herewith from the Borrower with respect to the Property and
Improvements.
"Lien" shall mean any voluntary or involuntary mortgage, security deed,
deed of trust, deed to secure debt, lien, pledge, assignment, security interest,
title retention agreement, financing lease, levy, execution, seizure, judgment,
attachment, garnishment, charge, lien or other encumbrance of any kind,
including those contemplated by or permitted in this Agreement and the other
Loan Documents.
"Loan" shall mean the loan in the principal sum of up to $2,625,000 in
aggregate advances (without regard to repayments) to be made by Lender to the
Borrower pursuant to this Agreement.
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"Loan Documents" shall mean, collectively, this Agreement, the Note,
the Assignment, the Mortgage and the Indemnity Agreement, together with any and
all other documents executed by Borrower or others, evidencing, securing, or
otherwise relating to the Loan.
"Loan Obligations" shall mean the aggregate of all principal and
interest owing from time to time under the Note and all expenses, charges and
other amounts from time to time owing under the Note, this Agreement, or the
other Loan Documents and all covenants, agreements and other obligations from
time to time owing to, or for the benefit of, Lender pursuant to the Loan
Documents.
"Loan Term" shall mean the period from the date hereof to the Maturity
Date.
"Maturity Date" shall mean February ___, 2004.
"Mortgage" shall mean that certain Deed of Trust and Security Agreement
of even date herewith from Borrower in favor of or for the benefit of Lender and
encumbering the Collateral which shall in all respects be subject and
subordinate to the terms and conditions of the SouthTrust Mortgage (as herein
defined).
"Note" shall mean the Promissory Note of even date herewith in the
principal amount of the Loan payable by Borrower to the order of Lender.
"Person" shall mean any person, firm, corporation, partnership, limited
liability company, trust or other entity.
"Proceeds" shall mean all proceeds (whether cash or non-cash, moveable
or immoveable, tangible or intangible), including proceeds of insurance and
condemnation, from the sale, exchange, transfer, collection, loss, damage,
disposition, substitution or replacement of any of the Collateral.
"Project Work" shall mean renovations to the Improvements as described
in the Related Loan Agreement.
"Property" shall mean the parcel of real estate in North Carolina more
particularly described in Exhibit A hereto and consisting generally of the
Villages Apartments Phase I through 4 ("Village").
"Related Loan" shall mean the loan in the principal amount of up to
$2,625,000 to be made by SouthTrust Bank of Alabama, National Association
("SouthTrust") to Lender pursuant to the Related Loan Agreement for the purpose
of financing the Project Work.
"Related Loan Agreement" shall mean the Loan Agreement dated April 29,
1996, between Lender and SouthTrust as supplemented and amended by Supplement
and Amendment to Loan Agreement of even date herewith.
"Rents" shall mean all rent and other payments of whatever nature from
time to time payable pursuant to any lease of apartment units at the Property.
"SouthTrust Loan" shall mean the loan in the principal sum of up to
$10,425,000 in aggregate advances (without regard to repayments) to be made by
SouthTrust to the Borrower pursuant to the SouthTrust Loan Agreement.
"SouthTrust Loan Agreement" shall mean the Loan Agreement dated
February _____, 1997, between Borrower and SouthTrust pursuant to which
SouthTrust has agreed to make advances of the SouthTrust Loan, as such Loan
Agreement may hereafter be extended, renewed, modified or amended.
"SouthTrust Mortgage" shall mean that certain first priority Deed of
Trust and Security Agreement dated February _____, 1997 from Borrower in favor
of or for the benefit of SouthTrust and encumbering the Collateral.
1.2. Singular terms shall include the plural forms and vice versa, as
applicable, of the terms defined.
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1.3. Terms contained in this Agreement shall, unless otherwise defined
herein or unless the context otherwise indicates, have the meanings, if any,
assigned to them by Uniform Commercial Code in effect in the state in which
Collateral for the Loan Obligations is located.
1.4. All accounting terms used in this Agreement shall be construed in
accordance with GAAP, except as otherwise defined.
1.5. All references to other documents or instruments shall be deemed
to refer to such documents or instruments as they may hereafter be extended,
renewed, modified, or amended and all replacements and substitutions therefor.
ARTICLE II.
TERMS OF THE LOAN
2.1. The Loan. Borrower has agreed to borrow from Lender, and Lender
has agreed to make the Loan to Borrower, subject to Borrower's compliance with
and observance of the terms, conditions, covenants, and provisions of this
Agreement and the other Loan Documents, and the Borrower has made the covenants,
representations, and warranties herein and therein as a material inducement to
Lender to make the Loan. Any additional loans or advances that Lender may make
and that may be secured by the Mortgage or any Collateral shall be in Lender's
sole discretion. The Lender shall not be obligated to readvance amounts repaid.
2.2. Security for the Loan. The Loan will be evidenced and secured by
the Loan Documents in accordance with the terms of the Loan Documents.
2.3. Interest Rate.
(a) The outstanding principal balance of the Loan will bear
interest as provided in the Note.
(b) All interest on the outstanding principal balance of the
Loan shall be calculated on the basis of a 360-day year by multiplying the
outstanding principal amount by the applicable per annum rate, multiplying the
product thereof by the actual number of days elapsed, and dividing the product
so obtained by 360.
2.4. Repayment of Loan. Each payment of the Loan Obligations shall be
paid directly to the Lender in lawful money of the United States of America at
the following address:
Boddie-Noell Properties, Inc.
3710 One First Union Center
301 South College Street
Charlotte, North Carolina 28202
or such other place as the Lender shall designate in writing to the Borrower.
Each such payment shall be paid in immediately available funds by 2:00 p.m.
Charlotte, North Carolina, time on the date such payment is due, except if such
date is not a Business Day such payment shall then be due on the first Business
Day after such date, but interest shall continue to accrue until the date
payment is received. Any payment received after 2:00 p.m. Charlotte, North
Carolina, time shall be deemed to have been received on the immediately
following Business Day for all purposes, including, without limitation, the
accrual of interest on principal.
2.5. Prepayment.
(a) The principal balance of the Loan may be prepaid only in
accordance with the provisions of the Note.
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(b) If an Event of Default occurs and a Loan is declared to be
immediately due and payable, there shall be added to the principal balance then
due an amount equal to the prepayment premium, if any, which would then be
applicable to any voluntary prepayment.
(c) All prepayments will be applied to installments coming due
hereunder in their inverse order of maturity. Borrower shall not be entitled to
reborrow any amounts so prepaid.
2.6. Late Charges On Overdue Installments; Default Rate; Collection
Costs.
(a) If any scheduled payment of principal or interest, or any
other agreed charge, is not made on or before the fifteenth (15th) day after the
same became due, Borrower agrees to pay to Lender a late charge equal to four
percent (4%) of the amount of the payment or charge which is in default.
(b) Upon the occurrence of any Event of Default, Borrower
agrees to pay interest to Lender at the Default Rate on the aggregate
outstanding Loan Obligations (including accrued interest), which Default Rate
will continue, if the maturity of the outstanding principal indebtedness has
been accelerated, until such outstanding principal indebtedness, with interest,
is paid in full or such acceleration has been rescinded; otherwise such Default
Rate shall continue until such Event of Default is cured or waived in writing by
Holder; and thereafter interest shall again accrue at the Applicable Rate.
(c) Borrower will also pay to Lender, in addition to the
amount due, all reasonable costs of collecting, securing, or attempting to
collect or secure the Notes, including, without limitation, court costs and
reasonable attorneys' fees, including, without limitation, reasonable attorneys'
fees for preparation of litigation and in any appellate and bankruptcy
proceedings.
2.7. Usury Provisions. In no event shall the amount of interest due or
payable hereunder or pursuant to any of the Loan Documents exceed the maximum
rate of interest allowed by applicable law, and in the event any such payment is
inadvertently paid by Borrower or inadvertently received by Lender, then such
excess sum shall be credited as a payment of principal. It is the express intent
hereof that Borrower not pay and Lender not receive, directly or indirectly,
interest in excess of that which may be legally paid by Borrower under
applicable law.
2.8. Miscellaneous. With respect to the amounts due under the Note,
Borrower waives the following to the fullest extent permitted by law:
(a) All rights of exemption of property from levy or sale
under execution or other process for the collection of debts under the
Constitution or laws of the United States or any state thereof; and
(b) Demand, presentment, protest, notice of dishonor, notice
of non-payment, diligence in collection, and all other requirements necessary
to enforce the Notes; and
(c) Any further receipt by Lender or acknowledgment by Lender
of any Collateral now or hereafter deposited with Lender as security for the
Loan Obligations.
2.9. Fee. Borrower will pay to Lender a fee of $26,250.00 (which
includes the reimbursement of the loan fee paid by Lender in connection with the
Related Loan) on or before the first advance of the Loan, which fee is due and
deemed earned as of the date of such initial advance of the Loan.
2.10. Disbursement Procedure. Subject to compliance with all of the
provisions of this Agreement, and subject to the terms of this Agreement, the
Loan shall be disbursed in several advances at such time and in such amounts as
Lender shall determine in accordance with the following procedures:
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Not less than five (5) business days before the date on which
Borrower desires an advance of the Loan, Borrower shall submit to
Lender a requisition in form satisfactory to Lender which shall include
(i) the Budget, (ii) for amounts in the Budget designated for the
Project Work pursuant to a construction contract with a general
contractor, an AIA G702/703 form containing the itemized schedule of
values for such Project Work under the particular contract and an
itemization of the particular costs incurred to date pursuant to each
category of such schedule of values, (iii) a separate itemization of
costs incurred for equipment, construction and nonconstruction expenses
in connection with the Project Work or the Loan (other than those
incurred pursuant to a general construction contract (itemized under
the line items of the Budget, with copies of invoices for all such
amounts)) and (iv) the percentage of completion of each line item on
the Budget and each schedule of values. The accuracy of the costs and
percentage of completion shall be certified to Lender by Borrower, by
Borrower's project architect and, in the case of Project Work by a
general contractor, also by such general contractor. Borrower appoints
BNP Management, Inc. as its agent(s) (if more than one, any one may
sign) to make disbursement requests. Borrower may hereafter by written
notice to Lender appoint one or more other agents or change agents to
make disbursement requests, provided any such notice is not effective
until actually received by Lender.
Lender may require that the completed Project Work to the date
of costs included in any request for an advance of the Loan be reviewed
and approved by a construction inspector selected by Lender as a
condition to funding. Fees and expenses of Lender's inspector shall be
promptly reimbursed by Borrower. Borrower will contact the Lender's
inspector and coordinate delivery of Borrower's requisition with an
inspection by the Lender's inspector in order to allow the Lender's
inspector to review the completed Project Work for which costs are
included in Borrower's requisition. Such inspector will review and
certify to Lender his opinion of the percentage of completion, the
general quality of completed Project Work and compliance with the
proposed scope of the Project Work and the maximum allowable advances,
which shall be determined in accordance with the following paragraphs
of this Section.
The maximum allowable advance of the Loan will be allowable
nonconstruction expenses actually incurred within the amounts set forth
in the Budget, plus the lesser of (i) the actual cost of the completed
Project Work or (ii) the Lender-approved scheduled value of each
completed portion of the Project Work (as set forth in the Budget and
any schedule of values submitted to and approved by Lender, with no
advances for duplication of work for which Loan funds were previously
advanced or work that is unsatisfactory in the opinion of the Lender's
inspector or unavailable for review by the Lender's inspector. The
advance to be made will be the maximum allowable advance less: (1) a
reasonable retainage (not more than ten percent (10%) or less than five
percent (5%) of the total construction costs of the Project Work under
the Loan, as determined by Lender), except for the last advance for the
Project Work and (2) the amounts of the Loan previously advanced by
Lender. The retainage shall be advanced only after satisfactory
completion of all Project Work, the furnishing to Lender of evidence
satisfactory to Lender that such completion is free of all mechanics'
and materialmen's liens, the submission to Lender of evidence that any
appropriate governmental approvals of the Project Work necessary for
permanent occupancy have been obtained and satisfaction of the
conditions of Section 4.19 hereof.
Advances of the Loan shall be made for costs on each line item
shown in the Budget only up to the amount set forth in the Budget for
such line item. A reallocation among line items may be made only with
the prior written consent of Lender. The timing of advances for
development fees, leasing fees and other fees or expenses set forth in
the Budget which are payable to Borrower or any person or entity
affiliated with Borrower shall be in Lender's discretion and generally
shall not be permitted to exceed the percentage completion of Project
Work. No advance will be made for materials stored for future use
except in Lender's sole discretion.
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Notwithstanding the foregoing, Lender shall not be required to
advance more than once each month, and Lender reserves the right to
limit the total amount advanced on the Loan at any time to an amount
which, when deducted from the total amount of the Loan, leaves a
balance to be advanced equal to or greater than the cost of completion
of the Project Work and payment of remaining nonconstruction expenses
of the type set forth in the Budget plus the retainage under any
contract for which the conditions herein for release have not been
satisfied, all as determined by Lender from time to time. Lender shall
be entitled to retain at all times as undisbursed Loan funds an amount
sufficient to pay all construction and nonconstruction costs of the
type set forth in the Budget.
No advances of the Loan shall be made after April 29, 1999,
except in Lender's discretion.
The Loan includes a contingency amount designated in the
Budget and which may be disbursed by Lender at its sole discretion to
complete the Project Work and pay the costs thereof or to pay other
amounts owing by Borrower in connection with the Loan or this
Agreement. Interest will be payable by Borrower to Lender on that
portion of the contingency actually disbursed by Lender. The
contingency will be included in the computation of the undisbursed
portion of the Loan for purposes of determining whether the undisbursed
portion of the Loan will be sufficient to complete the Project Work.
The conditions and limitations of this Section relating to
advances of the Loan may be waived by Lender as to one or more advances
at Lender's sole option without notice, and Lender may make one or more
advances to Borrower upon written or oral disbursement requests not
complying with the requirements of this Section, and such advances will
nevertheless be deemed to be advances to Borrower hereunder, but will
not constitute a waiver by Lender of its right to impose such
limitations and conditions as a prerequisite to any subsequent advance
to Borrower. Waiver as to any one or more advances shall impose no
liability upon Lender to Borrower, or any other person or entity.
Each submission by Borrower to Lender of a requisition for an
advance of the Loan shall constitute Borrower's representation and
warranty to Lender that: (a) all of the Project Work for which an
advance is requested has been completed, and (b) all Project Work costs
which Lender has previously advanced Loan funds have in fact been paid.
Unless otherwise agreed by Lender in its discretion, Lender
will make advances of the Loan by depositing the same into a
construction account with Lender. Borrower agrees that such
construction account shall be used by Borrower only for the purpose of
paying the costs and expenses contemplated by this Agreement. The Loan
funds deposited in such construction account may not be withdrawn by
Borrower, at Lender's option, until all conditions of Section 2.12
hereof have been satisfied. Interest will nevertheless begin to accrue
upon deposit in such account. Borrower assigns to Lender, and grants to
Lender a security interest in and right of setoff against, all funds
from time to time in such construction account. No interest shall be
paid on funds in such account. The making of an advance by Lender shall
not constitute Lender's approval or acceptance of the Project Work
theretofore completed. Lender's or its inspector's inspection and
approval of the Project Work, or the workmanship and materials used
therein, shall impose no liability of any kind on Lender or such
inspector, the sole obligation of Lender as the result of such
inspection and approval being to make the advances if, and to the
extent, required by this Agreement.
2.11. Direct Advances. Regardless of whether Borrower has submitted a
requisition therefor and whether or not an Event of Default exists, Lender may
from time to time advance amounts which become due for costs of insurance, title
insurance, taxes with respect to the Collateral, fees and expenses of Lender's
legal counsel and amounts due Lender for payments of principal, interest and
fees and other amounts due to Lender in connection with the Loan. All such
advances shall be deemed advances to Borrower hereunder and shall be secured by
the Loan Documents to the same extent as if they were made directly to Borrower.
Lender agrees to give Borrower prior written notice of direct advances to
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Persons other than Borrower and a period of five (5) days for Borrower to
instead make such payment itself except in the case of advances of scheduled
payments of principal, interest or fees due to Lender.
2.12. Advances. Lender's obligation to make the Loan or any advance
thereof shall be effective only upon fulfillment of the following conditions:
(a) Receipt and approval by Lender of all items required to be
provided to Lender under the terms of this Agreement.
(b) Payment by Borrower of all fees and expenses then due as
required by this Agreement.
(c) Execution, delivery and, when appropriate, recording or
filing, of this Agreement, the Note, the Mortgage and all other Loan Documents,
all in form and content satisfactory to Lender.
(d) All representations and warranties herein shall be true
and correct in all material respects.
(e) No Event of Default shall then exist.
(f) Prior to any advance of the Loan each of the following
items which must be in form and content satisfactory to Lender:
[To be determined based upon outstanding checklist items as
of closing]
(g) At the time of the final advance of the Loan, each
general contractor's final lien waiver and affidavit of payment of all
subcontractors, laborers and materialmen with respect to the Project Work.
2.13. Reimbursement of Loan Costs. Borrower agrees to reimburse Lender
for all costs incurred directly or indirectly by Lender in connection with the
Related Loan and the SouthTrust Loan, including without limitation, any and all
bank fees, closing costs, personnel time, travel costs, overhead and attorneys'
fees.
2.14 Construction Agent. Borrower acknowledges and agrees that BNP
Management, Inc., in addition to its property management services described
herein, shall serve as Borrower's agent-in-fact for purposes of supervising and
exercising Borrower's rights under the SouthTrust Loan and this Loan. In
consideration of such services, Borrower agrees to pay BNP Management, Inc. on
or before the first advance of the Loan, a fee equal to $26,400.00 and to fully
reimburse BNP Management, Inc. for all costs and expenses incurred directly or
indirectly by BNP Management, Inc. in connection with the supervision and
implementation of the SouthTrust Loan and this Loan, including without
limitation, personnel costs, travel costs, overhead, closing costs, all bank
fees and related expenses and attorneys' fees. Borrower further agrees that so
long as BNP Management, Inc. acts within the scope of its authority under this
Agreement and is not guilty of any willful misconduct or gross negligence,
Borrower shall indemnify and save harmless BNP Management, Inc. from any and all
liabilities, costs, claims, expenses and damages, including reasonable
attorneys' fees, in connection with or related to BNP Management, Inc.'s
supervision and implementation of the SouthTrust Loan and this Loan.
Notwithstanding anything contained herein to the contrary, under no
circumstances shall BNP Management, Inc. be deemed a general contractor for the
Property, but instead, shall be deemed the agent-in-fact for the Borrower.
In addition, Borrower agrees to pay BNP Management, Inc. a loan fee
equal to $52,125.00 on or before the first advance of the Loan, which fee is due
and deemed earned as of the date of such initial advance of the Loan for
services rendered by BNP Management, Inc. in connection with the SouthTrust
Loan.
2.15 Guaranty Fee. In consideration of Lender's Guaranty, Borrower
agrees to pay Lender an annual fee, commencing on February ____, 1997 and being
due and payable on the anniversary of such date, equal to two and one-half
percent (2 1/2%) of the outstanding obligations of Lender under the Guaranty.
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ARTICLE III.
BORROWER'S REPRESENTATIONS AND WARRANTIES.
To induce Lender to enter into this Agreement, and to make the Loan to
the Borrower, the Borrower represents and warrants to Lender as follows:
3.1. Existence, Power and Qualification. Borrower is a limited
partnership duly organized and validly existing under the laws of the State of
North Carolina, has the power to own its properties and to carry on its business
as is now being conducted, and is duly qualified to do business and is in good
standing in every jurisdiction in which the character of the properties owned by
it or in which the transaction of its business makes its qualification
necessary. Borrower's general partner is Boddie Investment Company.
3.2. Power and Authority. Borrower has full power and authority to
borrow hereunder and to incur the obligations provided for herein and in each of
the other Loan Documents, all of which have been authorized by all proper and
necessary action of its partners.
3.3. Due Execution and Enforcement. Each of the Loan Documents
constitutes a valid and legally binding obligation of the Borrower and does not
violate, conflict with, or constitute any default under any law, government
regulation, decree, judgment, the Borrower's certificate of limited partnership
or partnership agreement or any other agreement or instrument binding upon the
Borrower.
3.4. Pending Matters. No action or investigation is pending or to the
best of Borrower's actual knowledge, threatened before or by any state of
federal court or administrative agency which might result in any material
adverse change in the financial condition, operations or prospects of the
Borrower. Borrower, to the best of its actual knowledge, is not in violation of
any agreement, the violation of which might reasonably be expected to have a
materially adverse effect on its business or assets, and Borrower, to the best
of its actual knowledge, is not in violation of any order, judgment, or decree
of any state or federal court, or any statute or governmental regulation to
which it is subject.
3.5. Financial Statements Accurate. All financial statements of
Borrower heretofore provided by the Borrower are true, correct and complete in
all material respects as of their respective dates and fairly present the
financial condition of the Borrower, and there are no liabilities, direct or
indirect, fixed or contingent, as of the respective dates of such statements
which are not reflected therein or in the notes thereto. The financial
statements of the Borrower have been prepared in accordance with GAAP. There has
been no material adverse change in the financial condition, operations, or
prospects of the Borrower since the dates of such statements.
3.6. Payment of Taxes. The Borrower has filed all federal, state, and
local tax returns which are required to be filed and has paid, or made adequate
provision for the payment of, all taxes which have or may become due pursuant to
such returns or to assessments received by Borrower.
3.7. Title to Collateral. The Borrower has good and marketable title to
all of the Collateral, subject to no Lien except those Liens specifically
permitted by this Agreement or the Mortgage.
3.8. Priority of Mortgage. The Mortgage constitutes a second lien upon
and security interest in the real and personal property described therein, prior
to all other Liens other than the SouthTrust Mortgage, including those which may
hereafter accrue, excepting only those Liens specifically permitted by this
Agreement (including the SouthTrust Mortgage) or those "Permitted Encumbrances"
specifically set forth in the Mortgage.
3.9. Location of Chief Executive Offices. The location of Borrower's
principal place of business is as set forth on Exhibit B hereto.
3.10. Disclosure. All information furnished or to be furnished by
Borrower to the Lender in connection with
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the Loan or any of the Loan Documents, is, or will be at the time the same is
furnished, accurate and correct in all material respects and complete insofar as
completeness may be necessary to provide the Lender a true and accurate
knowledge of the subject matter.
3.11. Trade Names. Borrower has not materially changed its name or been
known by any other name within the last five (5) years.
3.12. ERISA. To the best of Borrower's actual knowledge, the Borrower
is in compliance with all applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
3.13. Proceedings Pending. To the best of Borrower's actual knowledge,
there are no proceedings pending or threatened to acquire any power of
condemnation or eminent domain with respect to the Property or any Improvements,
or to enjoin or similarly prevent or restrict the operation of the Property or
Improvements in any manner.
3.14. Compliance With Applicable Laws. To the best of Borrower's actual
knowledge, the Improvements and the Property comply in all material respects
with covenants and restrictions of record other than minor encroachments shown
on surveys of the Property and applicable laws, ordinances, rules and
regulations, including, without limitation, the Americans with Disabilities Act
and regulations thereunder, the Fair Housing Act and regulations thereunder, and
all laws, ordinances, rules and regulations relating to zoning, setback
requirements and building codes.
3.15. Environmental Matters. To the best of Borrower's actual
knowledge, without independent investigation except for the Phase I
environmental reports dated February 13, 1997, by Resolve Environmental
Services, P.A., with respect to the Property, all of which have been furnished
to Lender prior to the date of this Agreement, (a) neither any Improvements, the
Property, nor the Borrower is in violation of or subject to any existing,
pending, or threatened investigation or inquiry by any governmental authority or
any response costs or remedial obligations under any Applicable Environmental
Law, and this representation and warranty would continue to be true and correct
following disclosure to the applicable governmental authorities of all relevant
facts, conditions and circumstances, if any, pertaining to the Improvements, the
Properties, or the Borrower; (b) Borrower has not obtained and is not required
to obtain, any permits, licenses or similar authorizations to construct, occupy,
operate or use any Improvements or Equipment at the Property by reason of any
Applicable Environmental Law; (c) no petroleum products, oil, or hazardous
substances or solid wastes have been disposed of or otherwise released on or are
otherwise located on the Property, except for customary cleaning, purification
and sanitizing materials held and disposed of in compliance with applicable
laws; (d) no PCB-containing or PCB-contaminated transformers or other equipment
are located at the Property; and (e) the use of the Property and Improvements in
the ordinary course of previous operations and as the same are hereafter
intended to be operated will not result in the location on or disposal or other
release of any petroleum products, oil, or hazardous substances or solid wastes
on or to the Property, except for customary cleaning, purification and
sanitizing materials held and disposed of in compliance with applicable laws.
Borrower has entered into the Indemnity Agreement with Lender, and Borrower
agrees to perform its obligations thereunder.
3.16. Solvency. Borrower represents and warrants that it is solvent
within the meaning of 11 U.S.C. ss. 548 and GAAP, and the borrowing of the Loan
will not render the Borrower insolvent within the meaning of 11 U.S.C. ss. 548
and GAAP.
3.17. Roads and Utilities. To the best of Borrower's actual knowledge,
the Property is served by public utilities, including water and sanitary sewage,
all in capacities necessary for the intended use of the Property and
Improvements, and dedicated and publicly maintained roads necessary for the full
use of the Property and Improvements for their intended purposes have been
completed to the boundary of the Property; and the Property and the Improvements
thereat are in existence pursuant to final, unconditional certificates of
occupancy and are operated under current valid business licenses, and there are
no offsite roads, sewage systems, water systems or other improvements which must
be completed for continued occupancy or use of the Improvements.
3.18. Leases. Borrower has provided a true, correct and complete rent
roll for the Property; all lessees shown
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thereon are parties to arms-length (except as expressly set forth in such rent
roll) leases in Borrower's possession and executed on a legal and valid lease
form of the type customarily used on multi-family apartments in the State of
North Carolina; except as disclosed in such rent roll no rent under any such
lease is more than thirty (30) days past due; there are no unexpired free or
reduced rent periods or credits due to any lessee except as disclosed in such
rent rolls; no rentals thereunder have been prepaid further in advance than one
(1) month; and Borrower is in compliance in all material respects with its
obligations as landlord under the leases.
3.19 Project Work. All necessary action has been taken to permit the
Project Work and full use of the Property upon completion of the Project Work
for their intended purpose under applicable covenants and restrictions of record
and all applicable laws, ordinances, and regulations, including, without
limitation, subdivision, zoning and environmental laws. When the Project Work
has been completed, the Property will comply in all material respects with all
covenants and restrictions of record and all applicable laws, ordinances and
regulations, including, without limitation, the Americans with Disabilities Act
and regulations thereunder, the Fair Housing Act and Regulations thereunder and
laws, ordinances and regulations relating to subdivision, zoning, building
codes, set back requirements and environmental matters. All utility and sanitary
sewage services necessary for the construction and use of the Property are
available to the Property. All roads necessary for the full use of the Property
for their intended purposes have been completed to the Property and are public
roads maintained by the applicable governmental agency. There are no proceedings
pending, or, to the best of Borrower's knowledge, threatened, to acquire any
power of condemnation or eminent domain, with respect to the Property, or any
part thereof, or any interest therein, or to enjoin or similarly prevent the
Project Work or use of the Property. The Property is not in violation of or
subject to any existing, pending or threatened investigation or inquiry by any
governmental authority or any remedial obligations under any Applicable
Environmental Law, and there are no facts, conditions or circumstances known to
it which could result in any such investigation or inquiry if such facts,
conditions and circumstances, if any, were fully disclosed to the applicable
governmental authority, and Borrower will promptly notify Lender if Borrower
becomes aware of any such facts, conditions or circumstances or any such
investigation or inquiry. Borrower has not obtained and is not required to
obtain any permits, licenses, or similar authorizations to construct, occupy,
operate or use any buildings, improvements, fixtures or equipment in connection
with the Property or any Project Work by reason of any Applicable Environmental
Law. No oil, toxic or hazardous substances or solid wastes have been disposed of
or released at the Property, and Borrower agrees that it will not in its use of
the Property dispose of or release oil, toxic or hazardous substances or solid
wastes at the Property.
ARTICLE IV.
AFFIRMATIVE COVENANTS OF THE BORROWER.
Borrower agrees with and covenants unto the Lender that until the Loan
Obligations have been paid in full, the Borrower shall:
4.1. Payment of Loan/Performance of Loan Obligations. Duly and
punctually pay or cause to be paid all sums payable under the Note in accordance
with its terms and duly and punctually pay and perform or cause to be paid or
performed all Loan Obligations hereunder and under the other Loan Documents.
4.2. Maintenance of Existence. Maintain its existence, and, in each
jurisdiction in which the character of the property owned by it or in which the
transaction of their respective businesses makes qualification necessary,
maintain qualification and good standing.
4.3. Accrual and Payment of Taxes. During each fiscal year, accrue all
current tax liabilities of all kinds (including, without limitation, federal and
state income taxes, franchise taxes, and payroll taxes, all required withholding
of income taxes of employees, all required old age and unemployment
contributions, and all required payments to employee benefit plans), and pay the
same prior to becoming delinquent.
4.4 Insurance. At all times while Borrower is indebted to Lender,
maintain for the benefit of Borrower and Lender the following insurance:
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(a) Liability insurance in an amount equal to at least
$1,000,000 per occurrence, with a $10,000,000 umbrella policy. All such
liability insurance shall be written on an occurrence basis;
(b) "All-risk" broad form coverage on all Improvements and
Equipment in an amount not less than the replacement cost thereof, and business
income (including rental value) in the amount of twelve (12) months anticipated
gross rents, with endorsements insuring against such potential causes of loss as
shall be reasonably required by Lender, including, but not limited to, loss or
damage from (i) subsidence and windstorm, and (ii) flood, unless evidence
satisfactory to Lender is provided that no part of any of the buildings is
located in an area which is designated as a flood hazard area;
(c) For any period during which work is being conducted at or
with respect to the Property or Improvements, maintain nonreporting builder's
risk insurance on all such work and upon all such Improvements upon which such
work is being conducted sufficient to cover the replacement cost of all such
work and Improvements to the extent not covered by the insurance described in
subsection (b); and
(d) Workers' compensation insurance as required by the laws
of the state in which the Borrower maintains its places of business.
Each of the policies described in 4.4(b) and (c) shall name Lender as
mortgagee and loss payee under a standard non-contributory mortgagee and lender
loss payable clause, and shall provide that Lender shall receive not less than
thirty (30) days written notice prior to cancellation. The proceeds of the
policies described in 4.4(b) and (c) shall be payable to Lender, and shall be
delivered to and held by Lender, and such proceeds (after deducting Lender's
costs and expenses of obtaining such proceeds) shall be applied by Lender, at
Lender's sole option, either (i) to the full or partial payment or prepayment of
the Loan Obligations (without premium), or (ii) to the repair and/or restoration
of the Improvements and Equipment damaged or taken, or (iii) to the Borrower,
all without effecting the lien of the Mortgage for the unpaid amount of the Loan
Obligations.
Borrower appoints Lender as Borrower's attorney-in-fact to cause the
issuance of or an endorsement of any policy to bring Borrower into compliance
herewith and, at Lender's sole option, to make any claim for, receive payment
for, and execute and endorse any documents, checks or other instruments in
payment for loss, theft, or damage covered under any such insurance policy;
however, in no event will Lender be liable for failure to collect any amounts
payable under any insurance policy.
4.5. Financial and Other Information. Provide Lender with the following
financial statements and information on a continuing basis:
(a) Within ninety (90) days after the end of each of its
fiscal years, audited financial statements of the Borrower prepared by a
nationally recognized certified public accounting firm or other independent
certified public accounting firm reasonably acceptable to the Lender, prepared
in accordance with GAAP, and which shall include all liabilities whether fixed
or contingent.
(b) Within forty-five (45) days after the end of each fiscal
quarter, unaudited financial statements of the Borrower for the quarter then
ended, prepared on a basis consistent with and containing the same information
as set forth in the quarterly financial statements heretofore provided by
Borrower to Lender, and certified by a general partner of Borrower to be true
and correct.
(c) Upon specific request for a rent roll by Lender but in no
event more frequently than quarterly, within thirty (30) days after the end of
each calendar quarter, a current rent roll for the Property in form satisfactory
to Lender certified by an authorized officer of Borrower or by a leasing and
management agent satisfactory to Lender.
The Lender reserves the right to require such other financial
information (including tax returns, detailed cash flow information and
contingent liability information) of Borrower and of any Affiliate of the
Borrower, all at such times
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as Lender shall deem reasonably necessary, and Borrower agrees promptly to
provide such information to Lender. All financial statements must be in the form
and detail as the Lender shall from time to time request.
4.6. Books and Records. Permit Persons designated by Lender to inspect
the Property and Improvements and books and records of the Borrower and to
discuss the affairs of the Borrower with the officers of Borrower and employees
of Borrower, as designated by Lender, all at such times as Lender shall
reasonably request.
4.7. Payment of Indebtedness. Duly and punctually pay or cause to be
paid all other Indebtedness now owing or hereafter incurred by the Borrower,
including without limitation the SouthTrust Loan, in accordance with the terms
of such Indebtedness, except such Indebtedness owing to those other than Lender
which is being contested in good faith and with respect to which any execution
against properties of the Borrower has been effectively stayed and for which
reserves adequate for payment have been established.
4.8. Records of Accounts. Maintain all records, including the leases of
individual apartment units and records pertaining to the Rents, either at the
particular Property to which they relate or at the chief executive office of
Borrower as set forth in this Agreement.
4.9. Notice of Loss. Immediately notify the Lender of any event causing
a loss or depreciation in value of the Borrower's assets in excess of $100,000
and the amount of such loss or depreciation, except Borrower shall not be
required to notify Lender of depreciation in real and personal property
resulting from ordinary use thereof.
4.10. Tax Service Fee and Escrows. [Intentionally Deleted.]
4.11. Leases. Enter into leases for apartment units at the Property
only on a form approved by Lender which approval shall not be unreasonably
withheld, and at fair market rents determined by Borrower in the ordinary course
of its business, timely perform all of Borrower's obligations under such leases
and enforce performance of all obligations of the lessees thereunder and take no
action to terminate any leases except as permitted in the Assignments.
4.12. Updated Appraisals. For so long as any of the Loan Obligations
remain outstanding, Lender may cause the Property and Improvements to be
reappraised by an appraiser selected by Lender, and in accordance with Lender's
appraisal guidelines and procedures then in effect, and Borrower agrees to
cooperate in all respects with such appraisals and furnish to the appraisers all
requested information regarding the Property and the Improvements, and Borrower
agrees to pay all costs incurred by Lender in connection with the first such
reappraisal of the Property and, if any Event of Default exists, of all
subsequent reappraisals.
4.13. Comply with Covenants and Laws. Comply and cause the Property and
Improvements to comply in all material respects with all applicable covenants
and restrictions of record and all laws, ordinances, rules and regulations,
including, without limitation, the Americans with Disabilities Act and
regulations thereunder, the Fair Housing Act and Regulations thereunder and
laws, ordinances, rules and regulations relating to zoning, health, building
codes, setback requirements and Applicable Environmental Laws.
4.14. Taxes and Other Charges. Pay all taxes, assessments, charges,
claims for labor, supplies, rent, and other obligations which, if unpaid, might
give rise to a Lien against property of Borrower (including any of the
Collateral), except Liens to the extent permitted by this Agreement except that
Borrower may contest the same as provided in Section 7.12 hereof.
4.15. Use and Occupancy. Require that the Property and the Improvements
thereon be used solely as a multi-family residential complex and related
purposes and maintain the same in good condition and timely make all necessary
repairs thereto.
4.16. Use of Proceeds. Use the proceeds of the Loan solely and
exclusively for the purposes set forth in, and in the amount set forth in, the
Budget (subject to changes thereto hereafter approved by Lender in writing), and
pay such
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fees, closing costs, and other non-construction expenses relating to the Loan,
the Project Work, or the discharge of Borrower's obligations under this
Agreement as Lender has approved or may from time to time approve.
4.17. Reports and Notices. Notify Lender promptly of any material
litigation instituted or threatened against Borrower upon becoming aware of the
same, and any material deficiencies asserted or liens filed by the Internal
Revenue Service against Borrower; and notify Lender promptly of any condemnation
or similar proceedings with respect to the Property or Improvements, any
proceeding seeking to enjoin the intended use of any of the Improvements, and of
all material changes in governmental requirements pertaining to the Property or
Improvements and any other matters which could reasonably be expected to
adversely affect Borrower's ability to perform its obligations under this
Agreement.
4.18. Certificate. Simultaneously with the furnishing of quarterly and
annual financial statements to Lender and at other times upon Lender's
reasonable written request, furnish Lender with a certificate in the form of
Exhibit C attached hereto, properly completed and signed by an authorized
officer of Borrower.
4.19. Project Work. Commence the Project Work within thirty (30) days
of the date hereof, if such Project Work has not already begun; cause the
Project Work to be completed in compliance with, and the Property to thereafter
remain in material compliance with, all applicable covenants and restrictions of
record and all applicable laws, ordinances and regulations, including, without
limitation, the Americans with Disabilities Act and regulations thereunder, the
Fair Housing Act and regulations thereunder and laws, ordinances and regulations
relating to subdivision, zoning, building codes, set back requirements and
environmental matters; not permit any structures or other improvements at the
Property to be constructed so as would encroach upon or overhang any property
line, setback line, easement or right-of-way; cause such Project Work to proceed
continuously; complete the Project Work on or before April 30, 1999, time being
of the essence; and if any building footprint changes or new buildings are
constructed as part of the Project Work, furnish to Lender within thirty (30)
days of Lender's request a current as-built survey, in form satisfactory to
Lender showing the extent of construction of all buildings and improvements at
the Property without violation of set back lines, zoning or subdivision
requirements, covenants or restrictions and showing no encroachments or other
conditions which could adversely affect the value and utility of the Property.
4.20. Payment of Project Work Costs. Pay promptly all persons or
entities supplying work or materials in connection with the Project Work; and
immediately discharge, bond off or make other arrangements acceptable to Lender
with respect to, any mechanics', materialmen's or other lien filed against the
Property or in connection with the Project Work.
4.21. Builder's Risk Insurance and Other Insurance. Maintain in effect
during the period of construction builder's risk coverage with respect to the
Project Work in an amount not less than the cost thereof on a nonreporting form;
maintain liability insurance in an amount acceptable to Lender; maintain
all-risk property insurance with respect to the buildings at the Property and
all business personal property thereat in an amount not less than the
replacement cost thereof under a policy providing for replacement cost valuation
of losses, with no coinsurance; maintain business income insurance (including
loss of rents) equal to twelve (12) months anticipated gross rents and other
anticipated revenues with respect to the Property; notify Lender of any change
in the status of any such insurance within five (5) days of Borrower's receipt
of notice of any such change; and name Lender as mortgagee and loss-payee with
respect to all proceeds of property insurance (including both builder's risk
insurance and the all-risk property insurance and business income insurance)
with respect to the Property pursuant to a mortgagee clause and lender loss
payable clause satisfactory to Lender. All policies must be issued by companies
satisfactory to Lender and on policy forms satisfactory to Lender. The proceeds
of any such insurance upon the Property (including the buildings, business
personal property, and business income) shall be paid to Lender and applied as
provided in the first-priority deeds of trust encumbering the Property or the
loan agreements executed in connection, or, if such documents do not provide for
the manner of application, then Borrower shall be entitled to use such proceeds
for the repair or restoration of the improvements and personal property damaged
or to the payment of the Loan Obligations, at Borrower's option. Borrower
appoints Lender as Borrower's attorney-in-fact to cause the issuance of or an
endorsement of any policy to bring Borrower into compliance with this Section
and to make any claim for, receive payment for, and execute and endorse any
documents, checks or other instruments in payment for loss, theft, or damage
under any such insurance policy.
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4.22. Deficiencies. Deposit with Lender within ten (10) days of
Lender's demand therefor the amount of money equal to the difference between the
undisbursed Loan funds (exclusive of interest reserve, if any) and the amount
which Lender determines is necessary to fully complete the Project Work free of
all liens, including direct and indirect costs and work performed but for which
payment has not been made, and Lender shall be under no obligation to make any
further advances until any amount so demanded is so deposited.
4.23. Reports and Notices With Respect to Project Work. Furnish
promptly to Lender such information as Lender may require concerning Project
Work costs, progress of Project Work, marketing, and such other factors as
Lender may require; notify Lender promptly of any litigation instituted or
threatened against Borrower with respect to the Project Work, any condemnation
or similar proceedings with respect to the Property, any proceeding seeking to
enjoin the Project Work or the intended use of the Property, any changes in
governmental requirements pertaining to the Project Work or the Property,
utility availability or anticipated costs of completion of the Project Work, and
any other matters which could reasonably be expected to adversely affect
Borrower's ability to perform its obligations with respect to the Project Work
under this Agreement.
4.24. Changes to Project Work. Authorize or permit no changes to the
scope of the proposed Project Work without the prior written consent of Lender
and all governmental bodies having jurisdiction to the extent such approval is
required by law or regulation.
4.25. List of Contractors, Subcontractors, and Materialmen. Upon
Lender's written request, notify Lender promptly of the names and addresses of
all contractors, subcontractors and materialmen who are employed in connection
with the Project Work.
4.26. Ownership of Personalty. Furnish to Lender, if Lender so
requests, the contracts, bills of sale, receipted vouchers, and agreements, or
any of them, under which Borrower claims title to the materials, articles,
fixtures and other personal property used or to be used in the Project Work.
4.27. Additional Advances from SouthTrust Loan. Any and all additional
advances under the SouthTrust Loan (in addition to the initial advance of
$7,800,000.00) shall be used first to pay all sums payable to Lender under the
Note. Provided any amount remains outstanding under the Note, Borrower agrees
that Lender may place reasonable restrictions on the use and disposition of the
cash flow from the Property and the additional advances received by Borrower
pursuant to the SouthTrust Loan to the extent necessary to ensure the payment of
all of Borrower's obligations under the Note.
ARTICLE V.
NEGATIVE COVENANTS OF THE BORROWER.
Until the Loan Obligations have been paid in full, Borrower shall not:
5.1. No Liens; Exceptions. Create, incur, assume or suffer to exist any
Lien upon or with respect to any of the Collateral, whether now owned or
hereafter acquired, other than the following permitted Liens:
(a) Liens at any time existing in favor of the Lender;
(b) Inchoate Liens arising by operation of law for the
purchase of labor, services, materials, equipment or supplies, provided payment
shall not be delinquent and which Lien is fully subordinate to the Mortgage;
(c) Liens for current year's taxes, assessments or
governmental charges or levies provided payment thereof shall not be delinquent;
and
(d) "Permitted Encumbrances" upon the Property, as defined in
the Mortgage.
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5.2. Merger, Consolidation, Etc. Enter into any merger, consolidation
or similar transaction, or sell, assign, lease or otherwise dispose of (whether
in one transaction or in a series of transactions), all or substantially all of
its assets (whether now or hereafter acquired), without the prior written
consent of the Lender, which may be granted or refused by Lender in Lender's
sole discretion.
5.3. Disposition of a Material Portion of Its Assets. Sell, lease,
transfer or otherwise dispose of any material portion of its assets, unless any
such disposition is of property other than the Collateral and is in the ordinary
course of business for a full and fair consideration, which in no event shall
include a transfer for full or partial satisfaction of a preexisting debt.
5.4. Dividends, Distributions and Redemptions. Except as hereinafter
provided or as otherwise consented to by Lender in writing, declare or pay any
distributions to its partners or purchase, redeem, retire, or otherwise acquire
for value, any partnership interests of Borrower now or hereafter outstanding,
return any capital to its partners as such, or make any distribution of assets
to its partners; provided Borrower may, subject to the provisions of Section
4.27, pay cash dividends or distributions so long as no Default or Event of
Default exists or would occur as a result of such dividend or distribution.
5.5. Change in Business; Management; Control. Conduct or enter into any
business other than acting as owner and landlord pursuant to the leasing of
apartment units within the Improvements at the Property, make any other material
change in the nature of its business as it is being conducted as of the date
hereof or permit any change in management without the prior written consent of
the Lender, which may be granted or refused by Lender in Lender's sole
discretion.
5.6. Changes in Accounting. Change its methods of accounting, unless
such change is permitted by GAAP, and provided such change does not have the
effect of curing or preventing what would otherwise be an Event of Default or
Default had such change not taken place.
5.7. ERISA Funding and Termination. Permit (a) the funding requirements
of ERISA with respect to any employee plan to be less than the minimum required
by ERISA at any time, or (b) any employee plan to be subject to involuntary
termination proceedings at any time.
5.8. Transactions with Affiliates. Enter into any transaction with any
Person affiliated with the Borrower without the prior written consent of the
Lender, which may be granted or refused by Lender in Lender's sole discretion,
other than in the ordinary course of its business and on fair and reasonable
terms no less favorable to the Borrower in any material respect than those they
would obtain in a comparable arms-length transaction with a Person not an
affiliate.
5.9. Place of Business. Change its principal place of business without
first giving Lender at least thirty (30) days prior written notice thereof and
promptly providing Lender such information and preparing and filing such
additional UCC financing statements as Lender may request in connection
therewith.
5.10. Managers and Leasing Agents. Permit to exist any management or
leasing agreement with respect to the Improvements at the Property unless the
same is first submitted to and approved by Lender in Lender's sole and absolute
discretion and each manager or leasing agent enters into a subordination
agreement acceptable to Lender subordinating its agreement and any fees or
commissions to the Mortgage, Assignment and Loan Obligations. Lender hereby
consents to BNP Management, Inc. serving as the management company for the
Property.
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES.
6.1. The occurrence of any one or more of the following shall
constitute an "Event of Default" hereunder:
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(a) The failure by Borrower to pay any installment of
principal or interest under the Note, as and when the same comes due, which
failure is not cured within five (5) Business Days following written notice by
Lender to Borrower (except that the requirement of notice and the applicable
cure period shall be deemed eliminated after two such notices of failure have
been given in any single calendar year); or
(b) The failure by Borrower to pay any payment due to Lender
under the Loan Documents other than as provided in (a) above, as and when the
same comes due, which failure is not cured within twenty (20) days following
written notice by Lender to Borrower (except that the requirement of notice and
the applicable cure period shall be deemed eliminated after two such notices of
failure have been given in any single calendar year); or
(c) The failure of Borrower properly and timely to perform or
observe any covenant or condition set forth in this Agreement (other than those
specified in (a) and (b) of this Section) or any other Loan Document, which
failure is not cured within any applicable cure period as set forth herein or,
if no cure period is specified therefor, is not cured within thirty (30) days of
Lender's written notice to Borrower of such Default except that if such Default
is capable of being cured but is not cured within such period and Borrower has
notified Lender on or before the expiration of such initial 30-day period that
it is diligently pursuing a cure, then so long as Borrower is diligently
pursuing a cure, Borrower shall have an additional sixty (60) days within which
to effect a cure; or
(d) The occurrence of any Event of Default (other than those
specified in (a), (b) or (c) of this Section) under any other Loan Document; or
(e) The filing by the Borrower of a voluntary petition in
bankruptcy or the adjudication of Borrower as a bankrupt or insolvent, or the
filing by Borrower of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief for itself under any present or future federal, state or other
statute, law or regulation relating to bankruptcy, insolvency or other relief
for debtors, or if Borrower should seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator for itself or of all or any
substantial part its property or of any or all of the rents, revenues, issues,
earnings, profits or income thereof, or the making of any general assignment for
the benefit of creditors or the admission in writing by Borrower of its
inability to pay its debts generally as they become due; or
(f) The entry by a court of competent jurisdiction of an
order, judgment, or decree approving a petition filed against the Borrower,
which such petition seeks any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency, or other relief for debtors, which order, judgment or
decree remains unvacated and unstayed for an aggregate of sixty (60) days
(whether or not consecutive) from the date of entry thereof, or the appointment
of any trustee, receiver or liquidator of Borrower or of all or any substantial
part of its properties or of any or all of the rents, revenues, issues,
earnings, profits or income thereof which appointment shall remain unvacated and
unstayed for an aggregate of sixty (60) days (whether or not consecutive); or
(g) Any certificate, statement, representation, warranty or
audit heretofore or hereafter furnished by or on behalf of the Borrower pursuant
to or in connection with this Agreement or otherwise (including, without
limitation, representations and warranties contained herein or in any Loan
Documents) or as an inducement to Lender to extend any credit to or to enter
into this or any other agreement with Borrower in connection with the Loan or
other loan or other obligation owing to Lender, now existing or hereafter
created, proves to have been false in any material respect at the time when the
facts therein set forth were stated or certified, or proves to have omitted any
substantial contingent or unliquidated liability or claim against Borrower, or
on the date of execution of this Agreement there shall have been any materially
adverse change in any of the facts previously disclosed by any such certificate,
statement, representation, warranty or audit, which change shall not have been
disclosed to Lender in writing at or prior to the time of such execution; or
(h) A final judgment shall be rendered by a court of law or
equity against Borrower and the same shall remain undischarged for a period of
thirty (30) days, unless such judgment is either (i) fully covered by
collectible
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insurance and such insurer has within such period acknowledged such coverage in
writing, or (ii) although not fully covered by insurance, enforcement of such
judgment has been effectively stayed, such judgment is being contested or
appealed by appropriate proceedings and Borrower, as the case may be, has
established reserves adequate for payment in the event Borrower, as the case may
be, is ultimately unsuccessful in such contest or appeal and evidence thereof is
provided to Lender; or
(i) The occurrence of any materially adverse change in the
financial condition or prospects of Borrower, or the existence of any other
condition which, in Lender's reasonable determination, constitutes an impairment
of Borrower's ability to perform its obligations under its Loan Documents;
(j) Any "Event of Default" pursuant to, and as defined in,
the SouthTrust Loan Agreement; or
(k) Any act or failure to act by Borrower which allows
SouthTrust to exercise its rights under the Guaranty against Lender.
Notwithstanding anything in this Section, all requirements of notice
shall be deemed eliminated if Lender is prevented from giving such notice by
bankruptcy or other applicable law. The cure period, if any, shall then run from
the occurrence of the event or condition of Default rather than from the date of
notice.
6.2. Remedies. Upon the occurrence of any Default or Event of Default,
regardless of any requirement that notice be given or a period of time elapse,
Lender shall be under no obligation to make further advances of the Loan (if not
fully advanced). Upon the occurrence of any Event of Default and subject to the
rights of SouthTrust under the SouthTrust Mortgage, Lender shall have the
absolute right to refuse to disburse any additional Loan funds hereunder and at
its option and election and in its sole discretion to exercise alternatively or
cumulatively any or all of the following remedies:
(a) Cancel Lender's obligations pursuant to this Agreement by
written notice to Borrower. Upon the occurrence of an Event of Default described
in Sections 6.1(e) or (f) hereof, Lender's obligations pursuant to this
Agreement shall be terminated immediately and automatically and upon the
occurrence of a Default described in Section 6.1(f), Lender's obligations
pursuant to this Agreement shall be suspended pending removal of such condition
prior to the end of the sixty (60) day period stated therein (being the time
such condition becomes an Event of Default).
(b) Take immediate possession of the Borrower's interest in
the Collateral as well as all other property to which title is held by Borrower
as is necessary to operate and rent the Property and Improvements; exercise all
rights in and to the Collateral; and do anything in its sole judgment to fulfill
the obligations of Borrower under this Agreement. Without restricting the
generality of the foregoing and for the purposes aforesaid, Borrower hereby
appoints and constitutes Lender its lawful attorney-in-fact with full power of
substitution to preserve and protect the Collateral and take any action that
Borrower itself would be entitled to take with respect to the Collateral, it
being understood and agreed that this power of attorney shall be a power coupled
with an interest and cannot be revoked. All expenses incurred by Lender under
this subsection shall constitute a part of the Loan Obligations, shall bear
interest from the date incurred at the Default Rate and shall, together with
such interest, be deemed secured by the Mortgage and all Collateral.
(c) Declare the entire unpaid principal of the Loan to be, and
the same shall thereupon become, immediately due and payable, without
presentment, protest or further demand or notice of any kind, all of which are
hereby expressly waived.
(d) Proceed to protect and enforce its rights by action at law
(including, without limitation, bringing suit to reduce any claim to judgment),
suit in equity and other appropriate proceedings including, without limitation,
for specific performance of any covenant or condition contained in this
Agreement.
(e) Exercise any and all rights and remedies afforded by the
laws of the United States, the state in which any Property or other Collateral
is located or any other appropriate jurisdiction as may be available for the
32
<PAGE>
collection of debts and enforcement of covenants and conditions such as those
contained in this Agreement and the Loan Documents.
(f) Exercise the rights and remedies of setoff and/or banker's
lien against the interest of the Borrower in and to every account (including
escrows established pursuant to the Mortgage) and other property of the Borrower
which is in the possession of the Lender or any person who then owns a
participating interest in a Loan, to the extent of the full amount of the Loan
Obligations.
(g) Exercise its rights and remedies pursuant to any other
Loan Documents.
Notwithstanding anything contained herein to the contrary, upon the
occurrence of an Event of Default as described in Section 6.1(k) (a "Guaranty
Default"), any amounts advanced by Lender under the Guaranty shall be
immediately due and payable by Borrower to Lender and shall bear interest at a
rate equal to the greater of: (a) fifteen percent (15%), or (b) the maximum
interest rate permitted under applicable law. In addition, upon a Guaranty
Default, Lender shall have the right, in its sole and absolute discretion, to
force Borrower to sell, transfer or convey the Property to the extent necessary
to avoid any further liability under the Guaranty and to pursue all other
remedies against Borrower as provided in the Loan Documents or otherwise
available at law or in equity.
ARTICLE VII.
MISCELLANEOUS.
7.1. Waiver. No remedy conferred upon, or reserved to, the Lender in
this Agreement or any of the other Loan Documents is intended to be exclusive of
any other remedy or remedies, and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing in law or in equity. Exercise or omission to exercise any right of the
Lender shall not affect any subsequent right of Lender to exercise the same. No
course of dealing between Borrower and Lender or any delay on the Lender's part
in exercising any rights shall operate as a waiver of any of the Lender's
rights. No waiver of any Default or Event of Default under this Agreement or any
of the other Loan Documents shall extend to or shall affect any subsequent or
other then existing Default or Event of Default or shall impair any rights,
remedies or powers of Lender.
7.2. Costs and Expenses. Borrower will bear all taxes, fees and
expenses (including reasonable fees and expenses of counsel for Lender based on
standard hourly rates of Lender's counsel) in connection with the Loan, the
preparation of this Agreement and the other Loan Documents (including any
amendments hereafter made), and the recording of any of the Loan Documents. If,
at any time, a Default or Event of Default occurs or Lender becomes a party to
any suit or proceeding in order to protect its interests or priority in any
Collateral for any of the Loan Obligations or its rights under this Agreement or
any of the Loan Documents, or if Lender is made a party to any suit or
proceeding by virtue of a Loan, this Agreement or any Collateral for any Loan
Obligations and as a result of any of the foregoing, the Lender employs counsel
to advise or provide other representation with respect to this Agreement, or to
collect the balance of the Loan Obligations, or to take any action in or with
respect to any suit or proceeding relating to this Agreement, any of the other
Loan Documents, any Collateral for any of the Loan Obligations, the Borrower, or
to protect, collect, or liquidate any of the Collateral for the Loan
Obligations, or attempt to enforce any security interest or lien granted to the
Lender by any of the Loan Documents, then in any such events, all of the
reasonable attorney's fees arising from such services, including fees on appeal
and in any bankruptcy proceedings, and any expenses, costs and charges relating
thereto shall constitute additional obligations of Borrower to the Lender
payable on demand of the Lender. Without limiting the foregoing, Borrower has
undertaken the obligation for payment of, and shall pay, all recording and
filing fees, revenue or documentary stamps or taxes, intangibles taxes, transfer
taxes, recording taxes and other taxes, expenses and charges payable in
connection with this Agreement, any of the Loan Documents, the Loan Obligations,
or the filing of any financing statements or other instruments required to
effectuate the purposes of this Agreement, and should Borrower fail to do so,
Borrower agrees to reimburse Lender for the amounts paid by Lender, together
with penalties or interest, if any, incurred by Lender as a result of
underpayment or nonpayment. This Section shall survive repayment of the
remaining Loan Obligations.
33
<PAGE>
7.3. Performance of Lender. At its option, upon Borrower's failure to
do so, after providing Borrower with written notice (unless Lender is prevented
from giving such notice by bankruptcy or other applicable law) and ten (10) days
to cure such failure (unless Lender in its reasonable opinion deems prompt
action necessary to protect the Collateral or Lender's interest therein), the
Lender may make any payment, do any act or give any notice on the Borrower's
behalf that the Borrower or others are required to do to remain in compliance
with this Agreement or any of the other Loan Documents, and Borrower agrees to
reimburse the Lender, on demand, for any payment made or expense incurred by
Lender pursuant to the foregoing authorization, including, without limitation,
reasonable attorneys' fees, and until so repaid any sums advanced by Lender
shall bear interest at the Default Rate from the date advanced until repaid, and
such expenses together with interest shall be deemed secured by the Collateral.
7.4. Headings. The headings of the Sections of this Agreement are for
convenience of reference only, are not to be considered a part hereof, and shall
not limit or otherwise affect any of the terms hereof.
7.5. Survival of Covenants. All covenants, agreements, representations
and warranties made herein and in certificates or reports delivered pursuant
hereto shall be deemed to have been material and relied on by Lender,
notwithstanding any investigation made by or on behalf of Lender, and shall
survive the execution and delivery to Lender of the Note and this Agreement.
7.6. Notices, etc. Any notice or other communication required or
permitted to be given by this Agreement or the other Loan Documents or by
applicable law shall be in writing and shall be deemed received (a) on the date
delivered, if sent by hand delivery (to the person or department if one is
specified below), (b) three (3) days following the date deposited in U.S. mail,
certified or registered, with return receipt requested, or (c) one (1) day
following the date deposited with Federal Express or other national overnight
carrier, and in each case addressed as follows:
If to Borrower:
The Villages of Chapel Hill Limited Partnership
c/o BNP Management, Inc.
3710 One First Union Center
301 South College Street
Charlotte, North Carolina 28202
Attention: Mr. D. Scott Wilkerson, President
If to Lender:
Boddie-Noell Properties, Inc.
3710 One First Union Center
301 South College Street
Charlotte, North Carolina
Attention: Mr. D. Scott Wilkerson
with a copy to:
Kennedy Covington Lobdell & Hickman, L.L.P.
100 North Tryon Street, Suite 4200
Charlotte, North Carolina 28202
Attention: E. Allen Prichard
Either party may change its address to another single address by notice given as
herein provided, except any change of address notice must be actually received
in order to be effective.
7.7. Benefits. All of the terms and provisions of this Agreement shall
bind and inure to the benefit of the parties
34
<PAGE>
hereto and their respective successors and assigns. No Person other than
Borrower or Lender shall be entitled to rely upon this Agreement or be entitled
to the benefits of this Agreement.
7.8. Participation. Borrower acknowledges that Lender may, at its
option, sell participation interests in, or assign all of its interest in, the
Loan. Borrower agrees with each present and future participant or owner of a
Loan that if an Event of Default should occur, each present and future
participant or owner shall have all of the rights and remedies of Lender with
respect to any deposit due from any participant to the Borrower. The execution
by a participant of a participation agreement with Lender, and the execution by
the Borrower of this Agreement, regardless of the order of execution, shall
evidence an agreement between Borrower and said participant in accordance with
the terms of this Section. Borrower consents to the Lender's disclosure and
distribution, subject to obligations of confidentiality in SEC and AMEX rules,
of financial and other information that has been provided by Borrower to Lender
pursuant to this Agreement to participants and prospective participants.
7.9. Supersedes Prior Agreements; Counterparts. This Agreement and the
Loan Documents referred to herein supersede and incorporate all representations,
promises, and statements, oral or written, made by Lender in connection with the
Loan. This Agreement may not be varied, altered, or amended except by a written
instrument executed by an authorized officer of the Lender. This Agreement may
be executed in any number of counterparts, each of which, when executed and
delivered, shall be an original, but such counterparts shall together constitute
one and the same instrument.
7.10. Use of Proceeds for Restoration. Notwithstanding any contrary
provision of this Agreement or any other Loan Document, Lender agrees that
Lender shall make the net proceeds of insurance or condemnation (after payment
of Lender's costs and expenses) available to Borrower for Borrower's repair,
restoration and replacement of the Improvements and Equipment damaged or taken
on the following terms and subject to Borrower's satisfaction of the following
conditions:
(a) At the time of such loss or damage and at all times
thereafter while Lender is holding any portion of such proceeds, there shall
exist no Default or Event of Default under this Agreement (provided if a Default
exists as of the date of or subsequent to Borrower's written election to Lender
informing Lender that Borrower intends to use proceeds to restore the
Improvements, Equipment, Lender shall not apply the net proceeds to Loan
Obligations so long as a cure period exists);
(b) The Improvements and Equipment for which loss or damage
has resulted shall be capable of being restored or replaced to its use
immediately preceding such loss or damage and with a value not less than the
value prior to such loss or damage and restoration or replacement shall be
capable of being completed prior to the maturity of each and every Loan secured
by such Property for which loss, damage or taking has occurred;
(c) Within forty-five (45) days from the date of such loss or
damage Borrower shall have given Lender a written notice electing to have the
proceeds applied for such purpose;
(d) Within sixty (60) days following the date of notice under
the preceding subparagraph (c) and prior to any proceeds being disbursed to
Borrower, Borrower shall have provided to Lender all of the following to the
extent requested by Lender:
(1) complete plans and specifications for restoration,
repair and replacement of the Improvements and equipment damaged to
the condition, utility and value required by (b) above,
(2) if loss or damage exceeds $50,000, fixed-price or
guaranteed maximum cost bonded construction contracts for completion
of the repair and restoration work in accordance with such plans and
specifications,
35
<PAGE>
(3) builder's risk insurance for the full cost of
construction with Lender named under a standard mortgagee loss-payable
clause,
(4) such additional funds as in Lender's reasonable
opinion are necessary to complete the repair, restoration and
replacement, and
(5) copies of all permits and licenses necessary to
complete the work in accordance with the plans and specifications;
(e) Lender may, at Borrower's reasonable expense, retain an
independent inspector to review and approve plans and specifications and
completed construction and to approve all requests for disbursement, which
approvals shall be conditions precedent to release of proceeds as work
progresses;
(f) No portion of such proceeds shall be made available by
Lender for architectural reviews or for any soft costs related to construction
or other purposes which are not directly attributable to the cost of repairing,
restoring or replacing the Improvements and Equipment for which a loss or damage
has occurred unless the amount of such insurance is sufficient to cover such
reviews and soft costs;
(g) Borrower shall commence such work within one hundred
twenty (120) days of such loss or damage and shall diligently pursue such work
to completion;
(h) Each disbursement by Lender of such proceeds and deposits
shall be funded subject to conditions and in accordance with disbursement
procedures which a commercial construction lender would typically establish in
the exercise of sound banking practices and shall be made only upon receipt of
disbursement requests on an AIA G702/703 form (or similar form approved by
Lender) signed and certified by the Borrower and its architect and general
contractor, if any, with appropriate invoices and lien waivers as required by
Lender;
(i) Lender shall have a lien and security interest in all
building materials and completed repair and restoration work and in all fixtures
and equipment (to the extent owned by Borrower) acquired with such proceeds with
the same priority as in the Improvements or Equipment for which the loss or
damage has occurred, and Borrower shall execute and deliver such mortgages,
deeds of trust, security agreements, financing statements and other instruments
as Lender shall request to create, evidence, or perfect such lien and security
interest; and
(j) In the event and to the extent such proceeds are not
required or used for the repair, restoration and replacement of the Improvements
or Equipment for which a loss or damage has occurred, or in the event Borrower
fails to timely make such election or having made such election fails to timely
comply with the terms and conditions set forth herein, Lender shall be entitled
without notice to or consent from Borrower to apply such proceeds, or the
balance thereof, at Lender's option either (i) to the full or partial payment or
prepayment of the Loan Obligations in the manner aforesaid, or (ii) to the
repair, restoration and/or replacement of all or any part of such Improvements
and Equipment for which a loss or damage has occurred, or Lender may release the
balance of such proceeds to the Borrower, all without affecting the lien of the
Mortgage for the unpaid balance of the Loan Obligations.
7.11. Project Work. Borrower hereby assigns to Lender all Borrower's
right, title, and interest in all plans, specifications and contracts now or
hereafter made by Borrower relating to the Project Work or the construction or
equipping of all or any part of the Property in connection with the Project
Work, and all bonds and other guarantees of performance in favor of Borrower
with respect to any such contracts. Borrower agrees that upon any Event of
Default under the Loan Agreement, Lender shall have the absolute right to make
such use of the foregoing property so assigned as Lender shall desire, and, as
to any such property which is also the subject of a security agreement or
financing statement in favor of Lender, that Lender will not be limited to
remedies available under the applicable Uniform Commercial Code, but may at its
option avail itself of the rights granted herein in addition to or in
substitution for its Uniform Commercial Code remedies.
36
<PAGE>
7.12. Right to Contest. Notwithstanding any provisions of this
Agreement or the Mortgage to the contrary, Borrower shall have the right to
contest in good faith any item described in Section 4.14 of this Agreement or
Section 1.04 of the Mortgage provided Lender receives prompt notice from
Borrower of such contest, Borrower diligently pursues such contest, and the
Lender's interest in the Collateral is not in Lender's opinion materially
endangered by such contest and Lender, at its option, receives and holds any
reserves equal to the amount that would be required for payment (including
interest and penalties) in the event Borrower is unsuccessful in such contest.
7.13. Controlling Law. THE VALIDITY, INTERPRETATION, ENFORCEMENT AND
EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NORTH CAROLINA.
7.14. Exculpation. The liability of Borrower or any general partner
thereof for all sums due and payable pursuant to the Note shall be limited as
set forth therein, which provisions are incorporated herein by this reference.
37
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
BORROWER:
THE VILLAGES OF CHAPEL HILL LIMITED
PARTNERSHIP, a North Carolina limited partnership
By: Boddie Investment Company,
ATTEST: General Partner
/s/ Philip S. Payne BY: /s/ Douglas E. Anderson
Asst. Secretary Its Vice President
[CORPORATE SEAL]
LENDER:
BODDIE-NOELL PROPERTIES, INC.,
a Delaware corporation
ATTEST: BY: /s/ D. Scott Wilkerson
Its ________ President
/s/ Philip S. Payne
Asst. Secretary
[CORPORATE SEAL]
38
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BODDIE-NOELL
PROPERTIES, INC. FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED MARCH
31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,036,282
<SECURITIES> 0
<RECEIVABLES> 17,941
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,598,832
<PP&E> 109,947,833
<DEPRECIATION> (12,100,572)
<TOTAL-ASSETS> 103,679,638
<CURRENT-LIABILITIES> 1,319,445
<BONDS> 77,581,765
<COMMON> 31,030
0
0
<OTHER-SE> 24,747,398
<TOTAL-LIABILITY-AND-EQUITY> 103,679,638
<SALES> 0
<TOTAL-REVENUES> 3,852,615
<CGS> 0
<TOTAL-COSTS> 1,472,916
<OTHER-EXPENSES> 371,773
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,537,143
<INCOME-PRETAX> 470,783
<INCOME-TAX> 0
<INCOME-CONTINUING> 470,783
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 470,783
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
