SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only(as permitted by
Rule 14-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or 240.14a-12
Boddie-Noell Properties, Inc.
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11(Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction: 5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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BODDIE-NOELL PROPERTIES, INC.
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3850 One First Union Center, Charlotte, NC 28202-6032, Telephone 704/944-0100
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held May 15, 1998
The annual meeting of shareholders of Boddie-Noell Properties, Inc. (the
"Company") will be held at the Westin Hotel, 222 East Third Street, Charlotte,
North Carolina, on Friday, May 15, 1998, at 2:00 p.m., for the following
purposes:
1. To elect seven directors;
2. To consider and vote upon a proposal to increase the number of shares
issuable under the Company's 1994 Stock Option and Incentive Plan from
280,000 to 570,000; and
3. To transact such other business that may properly come before the
meeting or any adjournments thereof.
March 25, 1998, is the record date for the determination of shareholders
entitled to notice of and to vote at the meeting.
The proposed business cannot be conducted at the annual meeting unless the
holders of a majority of the shares of the Company outstanding on the record
date are present in person or by proxy. Therefore, PLEASE MARK, DATE, SIGN AND
RETURN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS. THE
PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING.
By Order of the Board of Directors,
PHILIP S. PAYNE
Executive Vice President, Treasurer, and
Chief Financial Officer
April 13, 1998
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IMPORTANT
Shareholders can help the Company avoid the necessity and expense of
sending follow-up letters to ensure a quorum by promptly returning the enclosed
proxy. Please mark, date, sign and return the enclosed proxy in order that the
necessary quorum may be represented at the meeting. The enclosed envelope
requires no postage if mailed in the United States.
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BODDIE-NOELL PROPERTIES, INC.
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3850 One First Union Center, Charlotte, NC 28202-6032, Telephone 704/944-0100
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
to be held May 15, 1998
April 13, 1998
The Board of Directors of Boddie-Noell Properties, Inc. solicits the
enclosed proxy for use at the annual meeting of shareholders to be held on
Friday, May 15, 1998. We expect to mail the proxy, proxy statement and notice of
meeting to shareholders on April 13, 1998.
We may also solicit proxies by personal interview or telephone. In
addition to directors or officers of the Company, certain independent
solicitation agents may solicit proxies. We have retained Corporate
Communications, Inc. and First Union National Bank to assist in identifying and
contacting shareholders for the purpose of soliciting proxies. We expect the
cost of these services to be approximately $4,000, exclusive of certain other
fees we pay to First Union National Bank related to the meeting. Boddie-Noell
Properties, Inc. will bear the costs of this solicitation.
Holders of record of shares of Boddie-Noell Properties, Inc. common stock
as of the close of business on March 25, 1998, the record date, are entitled to
receive notice of and to vote at the meeting. A shareholder of record on the
record date is entitled to one vote for each share held. The holders of a
majority of the outstanding shares of common stock entitled to vote at the
meeting will constitute a quorum. At the close of business on March 25, 1998,
there were 5,882,374 shares of common stock issued and outstanding.
You may revoke your proxy at any time before it is exercised, either by
filing with the Company a written notice of your revocation, by delivering a
duly executed proxy bearing a later date, or by voting in person at the meeting.
If you attend the meeting, you may withdraw your proxy at the meeting and vote
your shares in person. Executing your proxy will not, in any way, affect your
right to attend the meeting, revoke your proxy, and vote in person.
Every proxy returned in time to be voted at the meeting will be voted. If
a specification is made with respect to any proposal, the proxy will be voted
accordingly. If no specification is made, the proxy will be voted in favor of
the proposal.
Shares represented by proxies that reflect abstention or "broker
non-votes" will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. Proxies reflect broker
non-votes if a broker or nominee holds the shares, but has not received
instructions, and is not authorized to vote without instructions.
With respect to Proposal One, the election of Directors, the seven
nominees receiving the highest number of votes will be deemed to be elected.
Abstentions or broker non-votes on Proposal One will not affect the election of
the candidates receiving the most votes.
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Proposal Two, the approval of an amendment to the Company's 1994 Stock
Option and Incentive Plan, requires the approval of a majority of the shares of
common stock cast on the proposal. Abstentions and broker non-votes on Proposal
Two will be treated as unvoted, and will not be counted as votes for or against
such proposals.
No appraisal or dissenters' rights are available with respect to any
matters to be voted upon at the meeting.
PROPOSALS OF SHAREHOLDERS
Notice is hereby given that any shareholder proposals for inclusion in
proxy solicitation material for the next annual meeting must be received at the
Boddie-Noell Properties, Inc. executive offices no later than December 15, 1998.
Any such proposals must comply with requirements of Rule 14a-8 promulgated under
the Securities Exchange Act of 1934.
GENERAL
The Board of Directors knows of no other matter to be acted upon at the
meeting. However, if any other matter is lawfully brought before the meeting,
the shares covered by such proxy will be voted thereon in accordance with the
best judgment of the persons acting under such proxy, unless a contrary intent
is specified by the shareholder.
Your vote is important. If you cannot attend the meeting, please take time
to complete the enclosed proxy card and return it in the envelope provided.
By Order of the Board of Directors,
PHILIP S. PAYNE
Executive Vice President, Treasurer, and
Chief Financial Officer
April 13, 1998
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PROPOSAL ONE:
ELECTION OF DIRECTORS
Our Board of Directors consists of seven directors. Each director's term
of office expires annually. At each annual meeting the shareholders elect
directors to hold office until the next annual meeting or until their successors
are elected and qualified.
The term of office for each director listed below expires at the 1998
annual meeting of shareholders, or until his successor is elected and qualified.
All of these directors have been nominated for election at the Meeting as
directors to hold office until the 1999 annual meeting of shareholders or until
their successors are elected and qualified.
We have set forth below a listing and brief biography of each of the seven
persons nominated for election to the Board of Directors:
<TABLE>
<CAPTION>
Name Age Position Director Since
- --------------------------- --------- ------------------------------------------------- -------------------
<S> <C> <C> <C>
B. Mayo Boddie 67 Director, Chairman of the Board April 1987
D. Scott Wilkerson 40 Director, President and December 1997
Chief Executive Officer
Philip S. Payne 46 Director, Executive Vice President, December 1997
Treasurer and Chief Financial Officer
William H. Stanley 72 Director April 1987
Donald R. Pesta, Jr. 44 Director January 1996
Paul G. Chrysson 43 Director December 1997
W. Michael Gilley 42 Director December 1997
</TABLE>
B. Mayo Boddie--Chairman of the Board of Directors. Mr. Boddie was one of
our founders and a co-founder of Boddie-Noell Enterprises ("Enterprises") in
1961. He serves as Chairman of the Board of Directors of both companies. Mr.
Boddie served as chief executive officer of the Company from its inception until
April 1995. Mr. Boddie serves as a director of First Union National Bank of
North Carolina.
D. Scott Wilkerson--Director, President and Chief Executive Officer. Mr.
Wilkerson joined BT Venture Corporation in 1987 and served in various officer
level positions, including Vice President of Administration and Finance and Vice
President for Acquisitions and Development before becoming President in January
1994. Our Board of Directors named him Chief Executive Officer in April 1995,
and a Director in December 1997. From 1980 to 1986, Mr. Wilkerson was with
Arthur Andersen LLP, in Charlotte, North Carolina, serving as tax manager from
1985 to 1986. His specialization was in the representation of real estate
syndicators, developers and management companies. Mr. Wilkerson received a B.S.
degree in accounting from the University of North Carolina at Charlotte in 1980.
He is a licensed certified public accountant and licensed real estate broker. He
is a member of the Board of Directors of the Apartment Association of North
Carolina and the Charlotte Apartment Association. He is active in various
professional, civic and charitable activities.
Philip S. Payne--Director, Executive Vice President, Treasurer and Chief
Financial Officer. Mr. Payne joined BT Venture Corporation in 1990 as Vice
President of Capital Market Activities
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and became Executive Vice President and Chief Financial Officer of BT Venture
Corporation in January 1994. He was named Treasurer in April 1995 and a Director
in December 1997. From 1987 to 1990 he was a principal in Payne Knowles
Investment Group, a financial planning firm. From 1983 to 1987 he was a
registered representative with Legg Mason Wood Walker. From 1978 to 1983, Mr.
Payne practiced law, and he currently maintains his license to practice law in
Virginia. He received a B.S. degree from the College of William and Mary in 1973
and a J.D. degree in 1978 from the same institution. Mr. Payne is a member of
the Editorial Board of The REIT Report, a publication of the National
Association of Real Estate Investment Trusts.
William H. Stanley--Director. Mr. Stanley is retired from the positions of
Chairman of the Board of Directors and Chief Executive Officer of Peoples Bank
and Trust Company. Mr. Stanley serves as a director of Ellett Bros., Inc.
Donald R. Pesta, Jr.--Director. Mr. Pesta is a certified public accountant
and the founding partner of the accounting firm of Pesta, Finnie & Associates, a
firm specializing in real estate and partnership taxation. He is a former
partner of Arthur Andersen LLP.
Paul G. Chrysson--Director. Mr. Chrysson is President of C.B. Development
Company, Inc., a developer of single family and multi-family residential
properties. Mr. Chrysson serves as a director of Amos Cottage Children's
Hospital and Greenbriar Corporation. He is also on the Board of Advisors of
Wachovia Bank (Forsyth County). He is a former director of Triad Bank and United
Carolina Bank (North Carolina). He has also served on the boards of various
charitable organizations. He has been a licensed real estate broker since 1974
and a licensed contractor since 1978.
W. Michael Gilley--Director. Mr. Gilley is President of Bartram Investment
Properties, Inc., a private real estate investment company. From January 1995 to
January 1997, he was Executive Vice President of Greenbriar Corporation. He also
served on their Board of Directors from September 1994 to September 1996. He has
been a licensed real estate broker since 1984.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends a vote FOR B. Mayo
Boddie, D. Scott Wilkerson, Philip S. Payne, William H. Stanley, Donald R.
Pesta, Jr., Paul G. Chrysson, and W. Michael Gilley as directors to hold office
until the 1999 annual meeting of shareholders or until their successors are
elected and qualified.
COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS
The Board of Directors met eight times during the year ended December 31,
1997, including five meetings held by telephone. The Board of Directors has two
committees--the Audit Committee and the Management Compensation Committee.
The Audit Committee consists of Messrs. Stanley (Chairman), Pesta, and
Gilley. The committee recommends to the Board of Directors the engagement of the
independent public accountants of the Company and reviews with the independent
public accountants the scope and results of the Company's audits and the
Company's internal accounting controls. During 1997, the Audit Committee held
one meeting.
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The Management Compensation Committee consists of Messrs. Stanley
(Chairman), Pesta, and Chrysson and Douglas E. Anderson, who is a
non-compensated officer of the Company. The committee is responsible for
ensuring that a proper system of short- and long-term compensation is in place
to provide performance-oriented incentives to management. During 1997, the
Management Compensation Committee held three meetings.
COMPENSATION OF DIRECTORS
Effective December 1, 1997, and concurrent with the closing of Phase I of
the Chrysson acquisition, two of our previous board members--Nicholas B. Boddie
and Richard A. Urquhart, Jr.--resigned as directors. As required by that
acquisition agreement, Paul G. Chrysson and W. Michael Gilley were appointed to
replace Messrs. Boddie and Urquhart. Effective December 22, 1997, the board of
directors was expanded from five to seven members, and D. Scott Wilkerson and
Philip S. Payne (our two most senior executive officers) were appointed to the
board.
During 1997, we paid directors' fees to each director who is not an
officer of the Company or Enterprises. During the year ended December 31, 1997,
Mr. Donald R. Pesta, Jr., Mr. William H. Stanley and Mr. Richard A. Urquhart,
Jr. were each paid annual retainers of $10,000 plus fees totaling $3,000 each
for participation in board meetings and $300 each for participation in committee
meetings. Mr. B. Mayo Boddie, Mr. Nicholas B. Boddie, Mr. Paul G. Chrysson, Mr.
W. Michael Gilley, Mr. D. Scott Wilkerson, and Mr. Philip S. Payne did not
receive any compensation as directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Anderson, who is a member of the Management Compensation Committee,
serves without compensation as a vice president and secretary of the Company. No
other member of the Management Compensation Committee was or is an officer or
employee of the Company.
EXECUTIVE COMPENSATION
The following tables provide information regarding the annual and
long-term compensation of our chief executive officer and the other most highly
paid executive officers whose total salary and bonus exceeded $100,000 in 1997.
We refer to them as the "named executive officers."
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<TABLE>
<CAPTION>
Summary Compensation Table
- ------------------ -------------------------- ----------- ----------------------------- --------------------
Long-Term
Annual Compensation Compensation
Securities
Underlying
Name and Principal Position Year Salary Bonus Options (#)
- --------------------------------------------- ----------- --------------- ------------- --------------------
<S> <C> <C> <C> <C>
D. Scott Wilkerson, President and 1997 $139,920 $30,000 50,000
Chief Executive Officer (1) 1996 127,200 0 50,000 (2)
1995 121,800 25,000 0
Philip S. Payne, Executive Vice President, 1997 $139,920 $30,000 50,000
Treasurer and Chief Financial Officer (3) 1996 127,200 0 50,000 (2)
1995 121,800 20,000 0
Pamela B. Novak, Vice President, 1997 $ 90,000 $10,000 10,000
Controller and Chief Accounting Officer 1996 80,000 0 10,000 (2)
1995 72,500 0 0
<FN>
(1) Mr. Wilkerson was named President effective October 1, 1994, and was named
Chief Executive Officer in April 1995.
(2) The named executive officers did not receive any options in 1996; however,
in January 1996 the Board of Directors authorized repricing of the exercise
price of stock options originally granted in 1994 at $13.75 per share to $12.50
per share, the market price as of January 9, 1996.
(3) Mr. Payne was named Executive Vice President and Chief Financial Officer
effective October 1, 1994, and was named Treasurer in April 1995.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Options Granted in 1997
- ------------------------- ------------ --------------- ----------- -------------- --------------------------
Potential Realizable
Percent of Value at Assumed Annual
Total Options Exercise Rates of Stock Price
Granted in Price per Appreciation for Option
Options Expiration Term (1)
Name Granted 1997 Share Date 5% 10%
- ------------------------- ------------ --------------- ----------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
D. Scott Wilkerson 50,000 45.5% $12.25 4/30/2007 $385,198 $976,167
Philip S. Payne 50,000 45.5% 12.25 4/30/2007 385,198 976,167
Pamela B. Novak 10,000 9.1% 12.25 4/30/2007 77,040 195,233
<FN>
(1) We reduced realizable values by the $12.25 per share exercise price that the optionee will be required to pay the
Company in order to exercise the options.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
1997 Year-End Option Values
- ------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Options at Fiscal Year End Options at Fiscal Year End
Name Exercisable/Unexercisable Exercisable/Unexercisable (1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
D. Scott Wilkerson 37,500 62,500 $51,563 $98,438
Philip S. Payne 37,500 62,500 51,563 98,438
Pamela B. Novak 7,500 12,500 10,313 19,688
<FN>
(1) Based on the closing price of $13 7/8 per share of common stock on December 31, 1997.
</FN>
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In July 1997, we entered into substantially identical employment
agreements with D. Scott Wilkerson (President) and Philip S. Payne (Executive
Vice President and Chief Financial Officer). The term of the agreements is four
years, subject to automatic annual renewal for additional one-year periods
extending the term to a maximum of ten years. The agreements provide for annual
base salaries of $139,920, annual discretionary bonuses as determined by the
Board of Directors, and participation in an incentive compensation plan we
intend to establish, along with specified death and disability benefits. The
agreements provide for severance payments equal to base salary for the remaining
term of the contract (excluding any unexercised renewal periods) in the event of
termination without cause. Alternatively, in the event of a change in control of
the Company, the agreements provide for payments of three times base salary,
discretionary bonus and annual bonus, along with a lump sum cash payment of the
benefit the executive would otherwise have received had all stock options and
other stock based compensation been fully vested, been exercised and become due
and payable.
Also in July 1997, we entered into an employment agreement with Pamela B.
Novak (Vice President, Controller and Chief Accounting Officer). The two-year
agreement is substantially identical to the agreements signed by Messrs.
Wilkerson and Payne, except that this agreement provides for a base salary of
$90,000 and limits severance payments to no more than the greater of the then
remaining term of the agreement or one year's total compensation.
MANAGEMENT COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Management Compensation Committee is providing this report to assist
shareholders in understanding our objectives in establishing the compensation of
our executive officers. The Management Compensation Committee is responsible for
establishing and administering the Company's executive compensation plan.
The Management Compensation Committee believes that the executive
officers' compensation should:
-Link rewards to business results and shareholder returns;
-Encourage creation of shareholder value and achievement of strategic
objectives;
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-Maintain an appropriate balance between base salary and short- and
long-term incentive opportunity;
-Attract and retain, on a long-term basis, high-caliber personnel; and
-Provide total compensation opportunity that is competitive with other
REITs, taking into account relative company size and performance, as
well as individual responsibilities and performances.
There are three key components to the executive compensation program: base
pay, short-term incentives and long-term incentives.
Base pay for the executive officers is designed to be competitive with
that paid by other REITs, considering the size of the Company and individual
responsibilities and performance. We review base pay for the executive officers
annually.
We base short-term incentives, generally cash payments, on the attainment
of certain targeted performance results. These targets include measures such as
total shareholder return, operating earnings, funds from operations and cash
flow. Individual awards depend on our assessments of individual performance and
the Company's success in meeting the specified targets.
Long-term incentives may include a variety of incentives, including stock
options, stock appreciation rights, phantom stock and direct grants of the
Company's stock. The Company has reserved 280,000 shares of common stock for
issuance under the Stock Option and Incentive Plan that was adopted in 1994. As
of December 31, 1997, options for 250,000 shares of common stock are
outstanding, including options for 110,000 shares that were granted in 1997.
1997 Compensation of the CEO
D. Scott Wilkerson became president of the Company on October 1, 1994, and
was named chief executive officer in April 1995. Mr. Wilkerson's employment
contract, effective July 1997, provides for an initial base salary of $139,920,
annual discretionary bonuses, and participation in an incentive compensation
plan we intend to establish. The Management Compensation Committee determined
Mr. Wilkerson's 1997 base salary of $139,920 in the same manner as described
above for other executive officers. During 1997, options for 50,000 shares were
granted to Mr. Wilkerson. The grant of options to Mr. Wilkerson during 1997 was
made following a subjective review of the compensation packages provided to the
executive officers of other real estate investment trusts and the Company's
progress in attaining its long-term goal of becoming an active, growing
apartment company.
April 13, 1998 Management Compensation Committee
William H. Stanley, Chairman
Donald R. Pesta, Jr.
Paul G. Chrysson
Douglas E. Anderson
The foregoing report should not be deemed to be incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides certain information regarding beneficial
ownership of common stock as of April 1, 1998, by each of the named executive
officers, and by all directors and officers as a group. We do not know of any
single person or group who is the beneficial owner of more than 5% of the
Company's common stock.
Shares Beneficially Owned
Directors and Officers Number Percent
- ------------------------------------------ ------------------- -------------
B. Mayo Boddie 88,930 1.5%
D. Scott Wilkerson (1) 77,070 1.3%
Philip S. Payne (1) 77,070 1.3%
William H. Stanley 3,000 *
Donald R. Pesta, Jr. 500 *
Paul G. Chrysson (2) - *
W. Michael Gilley (3) 33,400 *
Pamela B. Novak (4) 8,763 *
Douglas E. Anderson 40,371 *
All directors and executive officers
as a group (9 persons) (5) 329,104 5.5%
* Less than 1 percent.
(1) Number and percent of shares beneficially owned includes exercisable
options for 37,500 shares. Messrs. Wilkerson and Payne each own 41 shares
(representing in the aggregate a 2.5 percent economic interest) of the
Class A (voting) stock of BNP Management, Inc., a subsidiary of the
Company.
(2) Number and percent of shares beneficially owned excludes 173,360 Operating
Partnership units owned by Mr. Chrysson, which are redeemable for cash or,
at the Company's option, shares of common stock in December 1998. Also
excludes 17,600 units that will be issued in December 1998, and 17,600
units that will be issued in December 1999, all of which will be issued
subject to a one-year lock-up period.
(3) Number and percent of shares beneficially owned excludes 156,466 Operating
Partnership units owned by Mr. Gilley, which are redeemable for cash or,
at the Company's option, shares of common stock in December 1998. Also
excludes 20,000 units that will be issued in December 1998, and 20,000
units that will be issued in December 1999, all of which will be issued
subject to a one-year lock-up period.
(4) Number and percent of shares beneficially owned includes exercisable
options for 7,500 shares.
(5) Number and percent of shares beneficially owned includes exercisable
options for 82,500 shares held by directors and officers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BODDIE-NOELL PROPERTIES, INC. AND B. MAYO BODDIE AND NICHOLAS B. BODDIE
B. Mayo Boddie, Chairman of our Board of Directors, is Chairman of the
Board of Directors and Chief Executive Officer of Enterprises. Nicholas B.
Boddie is his brother and was Vice Chairman and a director of the Company prior
to his resignation in December 1997. He is
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also the Vice Chairman and a director of Enterprises. The Boddies and certain of
their family members are the sole owners of Enterprises. We lease 47 restaurant
properties to Enterprises. See "Boddie-Noell Properties, Inc. and Boddie-Noell
Enterprises, Inc." below.
The Boddies are the sole shareholders and directors of Boddie Investment
Company. See "Boddie-Noell Properties, Inc. and Boddie Investment Company"
below.
The Boddies were the sole shareholders and directors of BT Venture
Corporation. In October 1994, we acquired BT Venture Corporation. The contract
purchase price for BT Venture Corporation was $23.2 million. In addition, the
Boddies were entitled to receive additional consideration valued at up to $1.7
million, based on whether we met certain performance criteria. During 1997, we
issued 16,299 shares of common stock to the Boddies for payment of additional
consideration. In January 1998, we issued 43,438 shares of common stock to the
Boddies for final payment of additional consideration related to the BT Venture
Corporation acquisition. As part of the acquisition, the Boddies have
indemnified the Company, subject to certain limitations, against any claim
against us that we assume as a result of our being the successor-in-interest to
BT Venture Corporation.
B. Mayo Boddie and Nicholas B. Boddie have not received any compensation
for their services as Chairman and Vice Chairman, respectively, or as Directors
of the Company.
BODDIE-NOELL PROPERTIES, INC. AND BODDIE-NOELL ENTERPRISES, INC.
In 1987 we purchased 47 existing restaurant properties from BNE Realty
Partners, Limited Partnership, an affiliate of Enterprises, for an aggregate
purchase price of $43.2 million. Concurrent with our acquisition of the
properties, we leased them on a triple net basis to Enterprises under a master
lease. The master lease, as amended in December 1995, has a primary term
expiring in December 2007, but grants Enterprises three five-year renewal
options. Under the amended lease, Enterprises pays annual rent equal to the
greater of $4.5 million or 9.875% of food sales from the restaurants.
Enterprises operates the 47 restaurants under franchise agreements with Hardee's
Food Systems, Inc.
For the year ended December 31, 1997, the master lease with Enterprises
resulted in rental income of $4.5 million, or approximately 27.7% of our total
revenues. Enterprises is responsible for all taxes, utilities, insurance,
maintenance, and alteration expenses relating to the operation of the restaurant
properties.
In connection with the acquisition of BT Venture Corporation in 1994, we
assumed a note payable to Enterprises in the amount of $6.1 million. The note
bears interest at a variable rate equal to the 30-day LIBOR rate plus 1.5%,
capped at 8.0%. Payments are interest only and paid quarterly. The note is due
in full in May 1999. Interest on this note was $441,000 in 1997. At December 31,
1997, the effective interest rate on this note was 7.25%.
BODDIE-NOELL PROPERTIES, INC. AND BODDIE INVESTMENT COMPANY
BNP Management, Inc., our unconsolidated subsidiary, provides fee
management of seven limited partnerships and the apartment communities and
shopping centers owned by those partnerships. Boddie Investment Company is the
general partner of these limited partnerships. BNP Management had revenues of
$1.1 million from these limited partnerships in 1997.
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<PAGE>
In connection with the acquisition of BT Venture Corporation in 1994, we
assumed a note payable to Boddie Investment Company in the amount of $956,000.
The note bears interest at a variable rate equal to the 30-day LIBOR rate plus
1.5%, capped at 8.0%. Payments are interest only and paid quarterly. The note is
due in full in May 1999. Interest on this note was $69,000 in 1997. At December
31, 1997, the effective interest rate on this note was 7.25%.
In February 1997, we entered into a participating loan agreement with The
Villages of Chapel Hill Limited Partnership, a limited partnership whose general
partner is Boddie Investment Company. Under the terms of the agreement, we have
committed to loan The Villages up to $2.6 million to fund a substantial
rehabilitation of the apartment community. We also guaranteed a $1.5 million
bank loan. As of April 1, 1998, we have advanced The Villages approximately $2.3
million. During 1997, we earned $164,000 in interest and fees related to this
participating loan agreement.
BODDIE-NOELL PROPERTIES, INC. AND THE CHRYSSON PARTIES
In September 1997, we signed an agreement with Paul and James Chrysson and
certain of their affiliates, all of whom together we refer to as the Chrysson
Parties, to acquire a portfolio of seven apartment communities containing 1,356
units located in North Carolina. Under this acquisition agreement, in December
1997, we acquired the first four apartment communities, containing 880 units. We
refer to the acquisition of these Chrysson properties as the Chrysson
acquisition, and refer to the acquisition of the first four communities as Phase
I of the Chrysson acquisition. The aggregate contract purchase price of the
Phase I communities was $59.9 million, including the issuance of 1,150,032
partnership units of Boddie-Noell Properties Limited Partnership and relief from
$45.0 million in debt related to the communities. As part of the acquisition
agreement, the Chrysson Parties appointed two members to our Board of
Directors--Paul G. Chrysson and W. Michael Gilley.
Under the terms of the Chrysson acquisition agreement, we will issue up to
1.7 million partnership units of Boddie-Noell Properties Limited Partnership. We
issued 950,032 units in December 1997. We will issue 100,000 units in December
1998 and 100,000 units in December 1999. We will issue the remaining units upon
the acquisition of each of the remaining three apartment communities that are
currently under construction. Additionally, under the terms of the acquisition
agreement, we will have a right of first refusal to purchase any project
developed in the future by the development entity owned by the Chrysson Parties.
As a further condition of the acquisition agreement, the Chrysson Parties have
agreed to refrain from developing any apartment communities within a three-mile
radius of any apartment community we own now or in the future.
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APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the
Audit Committee, has appointed the accounting firm of Ernst & Young LLP to serve
as our independent auditors for the fiscal year ending December 31, 1998. Ernst
& Young has served as our independent auditors since October 1996 and is
considered by management to be well qualified. Ernst & Young has advised us that
neither it nor any member thereof has any financial interest, direct or
indirect, in the Company or any of its subsidiaries in any capacity.
Representatives of Ernst & Young LLP will be present at the Meeting, will have
the opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
Effective October 15, 1996, we dismissed our prior certifying accountants,
Arthur Andersen LLP ("Andersen") and retained Ernst & Young LLP as our new
certifying accountants.
The independent accountants' reports on the Company's financial statements
for 1997 and 1996 did not contain an adverse opinion or disclaimer of opinion,
and neither report was qualified or modified as to uncertainty, audit scope or
accounting principles.
The Audit Committee of the Company's Board of Directors approved our
decision to change accountants.
During 1994, 1995 and 1996, we did not have any disagreements with
Andersen on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, that, if not resolved to
the satisfaction of Andersen, would have caused Andersen to make reference to
the subject matter of disagreement in connection with their reports.
None of the "reportable events" described in Item 304(a)(1)(v) of
Regulation S-K occurred with respect to the Company during 1994, 1995 or 1996.
Effective October 15, 1996, the Company engaged Ernst & Young LLP as its
principal accountant. During 1994, 1995, and the interim period preceding
October 15, 1996, we had not consulted Ernst & Young LLP regarding any matters
or events as set forth in Item 304(a)(2) of Regulation S-K.
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STOCK PRICE PERFORMANCE GRAPH
The following stock price performance graph compares the Company's
performance to the S&P 500 and the index of equity REITs prepared by the
National Association of Real Estate Investment Trusts ("NAREIT") for the last
five years. The stock price performance graph assumes an initial investment on
December 31, 1992, of $100 in the Company and the two indexes, and further
assumes the reinvestment of all dividends.
Equity REITs are defined as those that derive more than 75% of their
income from equity investments in real estate assets. The NAREIT equity index
includes all tax qualified real estate investment trusts listed on the New York
Stock Exchange, American Stock Exchange and NASDAQ National Market System. Stock
price performance is not necessarily indicative of future results.
[OBJECT OMITTED]
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
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PROPOSAL TWO:
AMENDMENT TO THE COMPANY'S
1994 STOCK OPTION AND INCENTIVE PLAN
On February 17, 1998, our Board of Directors adopted an amendment to the
Company's 1994 Stock Option and Incentive Plan. We have provided below a summary
of the most important features of the Plan. A Committee comprised of the
independent directors of the Compensation Committee of the Board of Directors
administers the Plan.
The only amendment, upon which we are asking you to vote, is to increase
the number of shares of our common stock available under the Plan. Currently, we
can issue up to 280,000 shares, of which up to 75,000 shares may be Restricted
Stock. We want to increase the number of shares available under the Plan by
290,000, including an increase of up to 77,000 shares of Restricted Stock. After
this amendment, the Plan would authorize us to issue up to 570,000 shares of
common stock, of which up to 152,000 shares can be Restricted Stock. A
Restricted Stock Award is an award entitling the recipient to acquire shares of
common stock that are subject to restrictions imposed by the Committee.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends a vote FOR the amendment
to the Stock Option and Incentive Plan. The Board of Directors will vote proxies
that they solicit in favor of the amendment unless you specify a contrary choice
in your proxy. The affirmative vote of a majority of the votes cast on the
proposal will be required to approve the amendment.
FEATURES OF THE PLAN
The purpose of the Plan is to attract and retain the best available
employees and to encourage them to perform at the highest possible level. We
believe that our ability to provide incentives under the Plan will enhance the
value of our Company and benefit you, the stockholders. We also believe the Plan
motivates employees to contribute to our future growth and profitability and
rewards them in a manner that aligns their interests with your interests as
stockholders.
We can issue up to five different types of awards under the Plan:
-Stock options that qualify as incentive stock options under Section 422
of the Internal Revenue Code. We refer to these options as Incentive Stock
Options;
-Stock options that do not qualify as Incentive Stock Options. We refer
to these options as Non-qualified Stock Options;
-Restricted Stock Awards (described above);
-Phantom Stock Awards, which we describe below; and
-Stock Appreciation Rights, which we refer to as SARs and describe in more
detail below.
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STOCK OPTIONS
Incentive Stock Options vs. Non-Qualified Stock Options
We can grant two types of stock options under the Plan: Incentive Stock
Options and Non-qualified Stock Options. Incentive Stock Options must meet
certain tests under and qualify for certain treatment under the Internal Revenue
Code. (See "Federal Income Tax Consequences" below for more details.)
Exercise Price
If we grant an Incentive Stock Option, the exercise price must be at least
equal to the fair market value of a share of common stock on the grant date. If
we grant an Incentive Stock Option to someone who, because of certain ownership
attribution rules in the Internal Revenue Code, is deemed to own at least 10% of
our voting stock, the exercise price must be at least equal to 110% of the fair
market value of a share of common stock on the grant date.
If we grant a Non-qualified Stock Option, the Committee can set the
exercise price. The only limitation is if the grant of a Non-qualified Stock
Option is in lieu of a cash bonus. In that case, the exercise price cannot be
less than 50% of the fair market value of a share of common stock on the grant
date.
Option Term
The Committee can fix the term of each stock option it grants. But
Incentive Stock Options must expire no more than 10 years after the grant date.
If we grant an Incentive Stock Option to someone who, because of certain
ownership attribution rules in the Internal Revenue Code, is deemed to own at
least 10% of our voting stock, the option must expire no more than five years
after the grant date.
Vesting
The Committee determines the vesting schedule for each stock option it
grants. Generally, the stock options under the Plan vest in equal annual amounts
over three or four years.
Method of Exercise
An option holder may exercise his options by delivering an exercise notice
that states how many options the holder is exercising. The holder must pay the
option price in full at the time he exercises the options in one of the
following manners:
-in cash or by certified check;
-by a broker-dealer to whom the holder has submitted an exercise notice;
-by delivering shares of the Company's common stock already owned and
possessed by the holder; or
-by any other method the Committee allows.
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Transferability
No option holder may transfer an option to another person except by will
or by the laws of intestacy. Only the grantee of an option may exercise that
option during the grantee's lifetime.
Termination
If an optionee's employment terminates because he dies, retires, or
becomes totally disabled, the vested portion of the optionee's options will be
exercisable for a period ranging from three to six months after the employment
termination, depending on the nature of the termination. If we terminate an
optionee's employment for cause, all of the optionee's unexercised options will
immediately terminate.
STOCK APPRECIATION RIGHTS
Stock Appreciation Rights, or SARs, are awards enabling employees to
receive cash, stock or a combination of the two in an amount equal to the
increase in the fair market value of the shares from the grant date to the
exercise date. The Committee may grant and determine the terms of SARs, which
may be related or unrelated to options. The Committee may also determine the
method of payment for exercised SARs -- cash, common stock valued at its fair
market value on the exercise date, or a combination of the two.
RESTRICTED STOCK AWARDS
As noted earlier, a Restricted Stock Award is an award entitling the
recipient to acquire shares of common stock that are subject to restrictions
imposed by the Committee. The Committee will determine the price, if any, at
which an employee may acquire the Restricted Stock. The Committee will also
determine the service requirements and performance goals to which awards of
Restricted Stock will be subject and will determine whether the Restricted Stock
Award allows the Company to pay, waive, defer, or reinvest dividends on the
Restricted Stock.
An employee receiving a grant of Restricted Stock must decide whether to
accept the grant within 60 days of the grant. If he accepts the grant, within
that 60-day period, he must sign a written instrument describing the terms and
conditions of the grant and must pay any purchase price for the Restricted
Stock.
The holder of Restricted Stock may not sell, assign, transfer, pledge or
otherwise encumber or dispose of the Restricted Stock. If a holder's employment
terminates, for whatever reason, we will have the right to repurchase at the
original purchase price, if any, any unvested shares of Restricted Stock.
UNRESTRICTED STOCK AWARDS
The Committee may grant unrestricted stock to an employee. The Committee
may set terms and a purchase price for the grant.
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PHANTOM STOCK AWARDS
Under the Plan, the Committee may also grant Phantom Stock Awards and
establish the terms of those awards. A Phantom Stock Award is an award of a
right to receive a payment equal to the fair market value on the exercise date
of a stated number of shares of common stock. The Committee may determine
whether the Company will pay for exercised Phantom Stock Awards in cash, common
stock valued at its fair market value on the exercise date, or a combination of
the two.
CHANGE IN CONTROL FEATURES
Awards under the Plan become immediately vested if there is a change of
control of the Company. If the Committee expressly stated that an award would
not vest upon a change of control, however, then that express provision would
stay in force. A change of control includes:
-the Company adopting a plan of merger or consolidation where the
Company's stockholders as a group would receive less than 50% of the
voting capital stock of the surviving or resulting corporation;
-a change in the make-up of the Company's Board of Directors where
those directors who, as of May 1, 1994 (the "Incumbent Directors")
ceased to constitute at least a majority of the Board. But, if
someone becomes a director after May 1, 1994, and his election or
nomination for election was approved by a vote of at least a majority
of the Incumbent Directors, then he is considered an Incumbent
Director for purposes of this test; or
-the acquisition of more than 40% of the Company's voting capital
stock by any person within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934 without our Board's approval.
PLAN AMENDMENT
The Board of Directors may amend or discontinue the Plan at any time. The
Committee may amend or cancel any outstanding Award, or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price. Any amended exercise or purchase price must meet the
requirements of the Plan as if the date of the amended award was the date of the
initial grant. If the Internal Revenue Code requires shareholder approval of an
amendment to maintain favorable tax treatment, then we must obtain the necessary
shareholder approval to amend the Plan.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options
An employee who receives Incentive Stock Options generally recognizes no
income on either the grant or exercise of the option. But the alternative
minimum tax may apply in certain circumstances. If the Plan participant sells
his acquired stock at least two years after the grant date and at least one year
after the exercise date, he would realize capital gain. The capital gain would
equal the difference between the amount he pays for the stock (the option price
or the exercise price) and the sale proceeds. If the participant's gain is taxed
as a capital gain, we would not be allowed a deduction. If the participant
disposes of his stock before the end of those
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holding periods, however, we would be allowed a deduction equal to the income
the participant recognizes. If the disposition were a taxable sale or exchange,
the participant would recognize ordinary income equal to the difference between
the option price and the fair market value of the stock on the exercise date.
Non-qualified Stock Options and SARs
Plan participants receiving Non-qualified Stock Options and SARs having no
ascertainable fair market value on the grant date will recognize no income for
Federal income tax purposes until they exercise or otherwise dispose of the
option or SAR.
If the participant exercises a Non-qualified Stock Option, the participant
will realize compensation income equal to the fair market value of the stock at
the time it is transferred to him less the exercise price. If a participant
exercises an SAR, he will realize compensation income equal to the amount of
cash or the fair market value of the stock he receives. If the participant later
sells the stock, any further gain would be capital gain.
If we satisfy our tax withholding obligations arising from the exercise of
the options or SARs, we would receive a business expense deduction for the
amount that the participant must include in gross income as compensation
relating to the exercise of the option or SAR.
Restricted Stock Awards
Recipients of restricted stock awards have two options regarding how the
awards are taxed. In general, the recipient recognizes no income on the grant
date. The employee will, however, realize ordinary income when the restricted
stock vests. The income will equal the fair market value of the restricted stock
on the vesting date less any consideration the employee pays for the stock.
The employee may alternatively choose to make an election under Section
83(b) of the Internal Revenue Code. If the employee makes that election, the
employee will recognize income on the grant date. The income will equal the
value of such shares at the time of award.
Assuming we comply with applicable withholding requirements, we will be
allowed a business expense deduction for the amount of any taxable income the
employee recognizes at the time he recognizes that income.
As of April 2, 1998, the closing value of our common stock as reported on
the American Stock Exchange was $15 1/8.
A summary of options granted under the Stock Option and Incentive Plan to
current directors, executive officers, nominees, or their associates follows:
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Number of
Options Granted
-----------------
Named executive officers--
D. Scott Wilkerson, President and Chief Executive Officer 100,000
Philip S. Payne, Executive Vice President, Treasurer and
Chief Financial Officer 100,000
Pamela B. Novak, Vice President, Controller and
Chief Accounting Officer 20,000
All current executive officers 220,000
All current directors who are not executive officers -
Nominees for election as a director--
B. Mayo Boddie -
D. Scott Wilkerson 100,000
Philip S. Payne 100,000
William H. Stanley -
Donald R. Pesta, Jr. -
Paul G. Chrysson -
W. Michael Gilley -
Associates of directors, executive officers or nominees for
election as a director--
W. Craig Worthy 30,000
Other persons who received 5% of such options -
All employees as a group 220,000
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P R O X Y BODDIE-NOELL PROPERTIES, INC.
Proxy is Solicited on Behalf of the Board of
Directors for the Annual Meeting of
Shareholders to be Held on May 15, 1998
The undersigned hereby:
-acknowledges receipt of the Notice of Annual Meeting of Shareholders of
Boddie-Noell Properties, Inc. to be held on May 15, 1998, and the Proxy
Statement in connection therewith;
-appoints D. Scott Wilkerson and Philip S. Payne (the "Proxies"), or either
of them, each with the power to appoint a substitute; and
-authorizes the Proxies to represent and vote, as designated below, all the
shares of common stock of Boddie-Noell Properties, Inc. held of record by
the undersigned on March 25, 1998, at such Annual Meeting and at any
adjournment(s) thereof.
The Board of Directors recommends a vote FOR each of these proposals:
1. ELECTION OF DIRECTORS
( )FOR all nominees ( ) WITHHOLD AUTHORITY to vote
(except as indicated to the contrary below) for all nominees
NOMINEES: B. Mayo Boddie, D. Scott Wilkerson, Philip S. Payne,
William H. Stanley, Donald R. Pesta, Jr., Paul G. Chrysson,
W. Michael Gilley
Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
2. AMENDMENT TO 1994 STOCK OPTION AND INCENTIVE PLAN
( )FOR ( )AGAINST ( ) ABSTAIN
3. OTHER BUSINESS: In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the meeting or any
adjournments.
( )FOR ( ) WITHHOLD AUTHORITY
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WLL BE VOTED
"FOR" EACH OF THE PROPOSALS TO BE VOTED UPON AND IN THE DISCRETION OF THE
PROXIES ON ANY OTHER BUSINESS THAT PROPERLY COMES BEFORE THE MEETING.
Dated _________________, 1998
Please sign exactly as your name
appears hereon. When signing on
behalf of a corporation, partnership,
estate, trust or in any other
representative capacity, please sign
your name and title. For joint
accounts, each joint owner must sign.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS IMPORTANT WHETHER YOU
OWN FEW OR MANY SHARES. DELAY IN RETURNING YOUR PROXY MAY SUBJECT THE COMPANY TO
ADDITIONAL EXPENSE.
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