SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ]Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CNL American Properties Fund, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ]Fee paid previously with preliminary materials.
[ ]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, of
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
400 East South Street
Orlando, FL 32801
March ___, 1999
To our Stockholders:
You are cordially invited to attend the annual meeting of stockholders
of CNL American Properties Fund, Inc., (the "Company") on May 13, 1999 at 10:30
a.m. at the CNL Management Center at 450 E. South Street, Suite 101, Orlando,
Florida. The directors and officers of the Company look forward to greeting you
personally. Enclosed for your review are the proxy, the proxy statement, notice
of meeting for the annual meeting of stockholders and annual report.
The Company experienced a year of tremendous growth in 1998. A
favorable market environment combined with our conservative investment
philosophy contributed to the successful results. During 1998, the Company
received over $385 million in capital through its public offerings of shares of
common stock and acquired or invested in 165 properties. The number of
restaurant chains in the Company's portfolio increased from 29 to 39 and the
Company added three new states increasing its presence to 38 states. We believe
the Company is well-positioned to participate in the expected continued growth
in the restaurant real estate market. Following the successful completion of its
first follow on offering of common stock in March 1998, the Company commenced an
offering of up to $345,000,000 (34,500,000 shares) of its common stock which was
completed in the first quarter of 1999. The remaining net proceeds of this
offering will be invested in additional triple-net leased properties and
mortgage loans during the first quarter of 1999.
As we have previously reported, in 1998, a special committee comprised
of the Company's independent directors (the "Special Committee") recommended,
and the full Board of Directors unanimously approved, a plan calling for the
Company to pursue:
o significantly increasing the Company's size by acquiring affiliate
portfolios of properties similar to those held by the Company;
o becoming internally advised and acquiring internal real estate development
capabilities by acquiring the Company's advisor;
o expanding the Company's mortgage lending capabilities by acquiring an
affiliate that will allow the Company to offer a full range of financing
options to its restaurant operators; and
o listing the Company's common stock on a national stock exchange.
In addition, the Special Committee recommended that the Company
evaluate a public offering of its common stock.
The Special Committee and its financial advisors have made significant
progress towards accomplishing these objectives and we expect to provide you
further information in the near future.
In an effort to prepare for the Company's anticipated future growth,
the Board of Directors is asking for your approval of two important proposals
contained in this year's annual proxy in addition to the election of the Board
of Directors:
<PAGE>
o approval of a one-for-two reverse stock split (the "Reverse Stock Split") of
the Company's common stock; and
o approval of the 1999 Stock Incentive Plan (the "Plan").
The intent of the Reverse Stock Split is to reduce the number of shares
of the Company's common stock outstanding and to increase the future
marketability and liquidity of the Company's common stock in connection with
the Company's anticipated application for listing with the New York Stock
Exchange (the "NYSE"). The Board believes that the Reverse Stock Split will
allow the Company to list its shares of common stock at a price per share that
is more comparable to other listed REITs. Additionally, the Board of Directors
believes that the current per share price of the Company's common stock may
limit the effective future marketability of the Company's common stock because
of the reluctance of many brokerage firms and institutional investors to
recommend lower-priced stocks to their clients or to hold them in their own
portfolios. The Board believes that the decrease in the number of shares of the
Company's common stock outstanding as a consequence of the proposed Reverse
Stock Split and the resulting anticipated increased price level will enhance
its listing with the NYSE and encourage greater interest in the Company's
common stock by the financial community and the investing public and possibly
promote greater liquidity for the holders of the Company's common stock.
With the prospect of becoming internally advised, the Board also
believes that equity-based compensation is an important element of overall
compensation for the Company. Such compensation advances the interest of the
Company by encouraging, and providing for, the acquisition of equity interests
in the Company by participants, thereby aligning participants' interests with
stockholders and providing participants with a substantial motivation to
enhance stockholder value. The proposed stock incentive plan will achieve this
result by allowing designated officers, directors and key employees of the
Company to receive various forms of stock awards under the Plan.
As we prepare for the exciting year ahead, the Board of Directors
unanimously recommends that you vote to approve the three proposals included in
this year's annual proxy statement. Your vote counts. Please complete and
return the attached ballot today.
Thank you for your attention to this matter.
Sincerely,
/s/James M. Seneff, Jr. /s/Robert A. Bourne
- ------------------------------ ---------------------------
James M. Seneff, Jr. Robert A. Bourne
Chairman of the Board and Vice Chairman of the Board
Chief Executive Officer and Treasurer
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
400 East South Street
Orlando, Florida 32801
Notice of Annual Meeting of Stockholders
To Be Held May 13, 1999
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of CNL
AMERICAN PROPERTIES FUND, INC. (the "Company") will be held at 10:30 a.m. local
time, on May 13, 1999, at the CNL Management Center at 450 E. South Street,
Suite 101, Orlando, Florida, for the following purposes:
1. To elect five directors.
2. To approve a one-for-two reverse stock split of the Company's
common stock, par value $0.01 per share, whereby each
outstanding share of common stock will be divided by two.
3. To consider and vote upon the Company's 1999 stock incentive
plan.
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on February 26, 1999,
will be entitled to notice of and to vote at the annual meeting or at any
adjournment thereof.
Stockholders are cordially invited to attend the meeting in person.
WHETHER OR NOT YOU NOW PLAN TO ATTEND THE MEETING, YOU ARE ASKED TO
COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY CARD FOR WHICH A
POSTAGE PAID RETURN ENVELOPE IS PROVIDED. IT IS IMPORTANT THAT YOUR SHARES BE
VOTED. IF YOU DECIDE TO ATTEND THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE
YOUR SHARES IN PERSON.
By Order of the Board of Directors,
/s/ Lynn E. Rose
--------------------------
Lynn E. Rose
Secretary
March ____, 1999
Orlando, Florida
<PAGE>
CNL AMERICAN PROPERTIES FUND, INC.
400 East South Street
Orlando, Florida 32801
PROXY STATEMENT
This Proxy Statement is furnished by the Board of Directors (the "Board")
of CNL American Properties Fund, Inc. (the "Company") in connection with the
solicitation by the Company management of proxies to be voted at the annual
meeting of stockholders to be held on May 13, 1999, and at any adjournment
thereof, for the purposes set forth in the accompanying notice of such meeting.
All stockholders of record at the close of business on February 26, 1999, will
be entitled to vote.
Any proxy, if received in time, properly signed and not revoked, will be
voted at such meeting in accordance with the directions of the stockholder. If
no directions are specified, the proxy will be voted FOR each Proposal set forth
in this Proxy Statement. Any stockholder giving a proxy has the power to revoke
it at any time before it is exercised. A proxy may be revoked (1) by delivery of
a written statement to the Secretary of the Company stating that the proxy is
revoked, (2) by presentation at the annual meeting of a subsequent proxy
executed by the person executing the prior proxy, or (3) by attendance at the
annual meeting and voting in person.
Votes cast in person or by proxy at the annual meeting will be tabulated
and a determination will be made as to whether or not a quorum is present. The
Company will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence or absence of a quorum, but as unvoted
for purposes of determining the approval of any matter submitted to the
stockholders. If a broker submits a proxy indicating that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to such matter.
Solicitation of proxies will be primarily by mail. However, directors and
officers of the Company also may solicit proxies by telephone or telegram or in
person. All of the expenses of preparing, assembling, printing and mailing the
materials used in the solicitation of proxies will be paid by the Company.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting materials, at the expense of the Company,
to the beneficial owners of shares held of record by such persons. The Company
also has retained D. F. King & Co. to aid in the solicitation of the proxy at an
estimated fee of $______. It is anticipated that this Proxy Statement and the
enclosed proxy first will be mailed to stockholders on or about March ____,
1999.
As of February 26, 1999, 74,696,927 shares of common stock of the Company
were outstanding. Each share of common stock entitles the holder thereof to one
vote on each of the matters to be voted upon at the annual meeting. As of the
record date, officers and directors of the Company had the power to vote
approximately 0.03% of the outstanding shares of common stock.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PROPOSAL I: Election of Directors.............................................................. 3
Executive Compensation............................................................. 9
Performance Graph.................................................................. 10
PROPOSAL II: Approval of Reverse Stock Split.................................................... 11
PROPOSAL III: Approval of 1999 Stock Incentive Plan.............................................. 15
SECURITY OWNERSHIP............................................................................................ 21
CERTAIN TRANSACTIONS.......................................................................................... 23
INDEPENDENT AUDITORS.......................................................................................... 25
OTHER MATTERS................................................................................................. 25
PROPOSALS FOR NEXT ANNUAL MEETING............................................................................. 25
ANNUAL REPORT................................................................................................. 26
EXHIBIT A - ARTICLES OF AMENDMENT TO THE AMENDED AND
RESTATED ARTICLES OF INCORPORATION OF CNL AMERICAN
PROPERTIES FUND, INC................................................................................. 27
EXHIBIT B - CNL AMERICAN PROPERTIES FUND, INC. 1999 STOCK
INCENTIVE PLAN....................................................................................... 29
</TABLE>
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<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
Nominees
The persons named below have been nominated by the Board for election as
directors to serve until the next annual meeting of stockholders or until their
successors shall have been elected and qualified. Messrs. Bourne and Seneff have
been directors since May 1994. Messrs. Hostetter, Huseman and Kruse have been
directors since March 1995. The table sets forth each nominee's name, age,
principal occupation or employment during at least the last five years and
directorships in other public corporations.
The Company's officers and directors have advised the Company that they
intend to vote their shares of common stock for the election of each of the
nominees. Proxies will be voted FOR the election of the following nominees
unless authority is withheld.
Name and Age Background
Robert A. Bourne, 51 Mr. Bourne has served as
Vice Chairman and Treasurer of the
Company since February 1999, has served
as a director since May 1994, and
previously served as President from May
1994 through February 1999. Mr. Bourne
has served as director of the Company's
advisor, CNL Fund Advisors, Inc. ("Fund
Advisors"), an affiliate of the Company
since its inception in 1994. Mr. Bourne
served as President of Fund Advisors
from the date of its inception through
October 1997, has served as Treasurer
since September 1997 and has served as
Vice Chairman of the Board of Directors
since October 1997. Fund Advisors is
responsible for the day-to-day operation
of the Company and performs certain
other administrative services for the
Company and for certain other entities
with which Mr. Bourne is affiliated. See
"Certain Transactions." Mr. Bourne also
serves as President and Treasurer of CNL
Group, Inc. In addition, Mr. Bourne is
President, a director and a registered
principal of CNL Securities Corp.,
President and a director of CNL
Investment Company, Vice Chairman of the
Board of Directors of Commercial Net
Lease Realty, Inc., President of CNL
Realty Corp. and Chief Investment
Officer, Vice Chairman of the Board of
Directors, Treasurer and a director of
CNL Institutional Advisors, Inc., a
registered investment advisor. Mr.
Bourne previously served as Secretary
and Treasurer of Commercial Net Lease
Realty, Inc. through December 31, 1997.
Mr. Bourne also served as President of
CNL Institutional Advisors, Inc. from
the date of its inception through June
30, 1997. Mr. Bourne also served as
director, Treasurer and Vice Chairman of
CNL Realty Advisors, Inc. until December
31, 1997, at which time CNL Realty
Advisors, Inc. merged with Commercial
Net Lease Realty, Inc. In addition, Mr.
Bourne serves as President and a
director of CNL Hospitality Properties,
Inc., CNL Hospitality Advisors, Inc.,
CNL Health Care Properties, Inc. and CNL
Health Care Advisors, Inc. All such
entities are affiliates of CNL Group,
Inc., a privately held, diversified real
estate company of which Fund Advisors is
a wholly-owned subsidiary. Since joining
CNL Securities Corp. in 1979, Mr. Bourne
has been active in the acquisition,
development, and management of
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<PAGE>
real
estate projects throughout the United
States. Mr. Bourne formerly was a
certified public accountant with Coopers
& Lybrand L.L.P. and a partner in the
firm of Bourne & Rose, P.A.
G. Richard Hostetter, Esq., 59 Mr. Hostetter has served as a director
of the Company since March 1995. Mr.
Hostetter previously served as a
director of CNL Hospitality Properties,
Inc. from its inception through February
1999. Mr. Hostetter was associated with
the law firm of Miller and Martin from
1966 through 1989, the last ten years of
such association as a senior partner. As
a lawyer, he served for more than 20
years as counsel for various corporate
real estate groups, fast-food companies
and public companies, including The
Krystal Company, resulting in his
extensive participation in transactions
involving the sale, lease, and
sale/leaseback of approximately 250
restaurant units. He is licensed to
practice law in Tennessee and Georgia.
From 1989 through 1998, Mr. Hostetter
served as President and General Counsel
of Mills, Ragland & Hostetter, Inc., the
corporate general partner of MRH, L.P.,
a holding company involved in corporate
acquisitions, in which he was also a
general and limited partner. Since
January 1, 1999, Mr. Hostetter serves as
President and General Counsel of MRH,
Inc., which manages two of the
businesses formerly owned by MRH, L.P.
Richard C. Huseman, 60 Dr. Huseman has served as
a director of the Company since March
1995. Mr. Huseman previously served as a
director of CNL Hospitality Properties,
Inc. from its inception through February
1999. Dr. Huseman is presently a
professor in the College of Business
Administration, and from 1990 through
1995, served as the Dean of the College
of Business Administration of the
University of Central Florida. He has
served as a consultant in the area of
managerial strategies to a number of
Fortune 500 corporations, including IBM,
AT&T, and 3M, as well as to several
branches of the U.S. government,
including the U.S. Department of Health
and Human Services, the U.S. Department
of Justice, and the Internal Revenue
Service.
J. Joseph Kruse, 66 Mr. Kruse has served as
a director of the Company since March
1995. Mr. Kruse previously served as a
director of CNL Hospitality Properties,
Inc. from its inception through February
1999. From 1993 to the present, Mr.
Kruse has been President and Chief
Executive Officer of Kruse & Co., Inc.,
a merchant banking company engaged in
real estate. Formerly, Mr. Kruse was a
Senior Vice President with Textron, Inc.
for twenty years, and then served as
Senior Vice President at G. William
Miller & Co., a firm founded by the
former Chairman of the Federal Reserve
Board and the Secretary of the Treasury
of the United States. Mr. Kruse was
responsible for evaluations of
commercial real estate and retail
shopping mall projects and continues to
serve of counsel to the firm.
James M. Seneff, Jr., 52 Mr. Seneff has served
as Chief Executive Officer and a
director since May 1994 and Chairman of
the Board of the Company since December
1994, as well as Chief Executive
Officer, Chairman of the Board and a
director of Fund Advisors since its
inception in 1994. Mr. Seneff has served
as Chief Executive Officer, Chairman of
the Board of Directors, director, and a
principal stockholder of CNL Group, Inc.
since its formation in 1980. In
addition, Mr. Seneff is
Chief Executive Officer, a director and
a registered principal of CNL Securities
Corp.,
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<PAGE>
Chief Executive Officer and
Chairman of the Board of CNL Investment
Company, Chief Executive Officer and
Chairman of the Board of Commercial Net
Lease Realty, Inc., Chief Executive
Officer and Chairman of the Board of CNL
Realty Corp. and Chief Executive Officer
and a director of CNL Institutional
Advisors, Inc., a registered investment
advisor. Mr. Seneff also served as Chief
Executive Officer and Chairman of the
Board of CNL Realty Advisors, Inc. until
December 31, 1997, at which time CNL
Realty Advisors, Inc. merged with
Commercial Net Lease Realty, Inc. In
addition, Mr. Seneff serves as Chief
Executive Officer, Chairman of the Board
and a director of CNL Hospitality
Properties, Inc., CNL Hospitality
Advisors, Inc., CNL Health Care
Properties, Inc. and CNL Health Care
Advisors, Inc. Mr. Seneff also serves as
a director of First Union National Bank
of Florida, N. A. Mr. Seneff previously
served on the Florida State Commission
on Ethics. Mr. Seneff also served on the
Florida Investment Advisory Council,
which oversees the $60 billion Florida
State retirement plan, from 1986 to
1994, and was Chairman of the Council
from 1991 to 1992. Since 1971, Mr.
Seneff has been active in the
acquisition, development and management
of real estate projects throughout the
United States.
In the event that any nominee(s) should be unable to accept the office of
director, which is not anticipated, it is intended that the persons named in the
proxy will vote FOR the election of such other person in the place of such
nominee(s) for the office of director as the Board of Directors may recommend.
The affirmative vote of a majority of the shares of common stock present in
person or represented by proxy and entitled to vote is required for the election
of directors.
A majority of the Company's directors are required to be independent, as
that term is defined in the Company's Amended and Restated Articles of
Incorporation. Messrs. Hostetter, Kruse and Huseman are independent directors.
Compensation of Directors
During the year ended December 31, 1998, each independent director earned
$6,000 for serving on the Board of Directors. Each independent director also
received $750 per Board meeting and audit committee meeting attended ($375 for
each telephonic meeting in which the director participated), and received $1,000
per special committee meeting and compensation committee meeting ($500 for each
telephonic meeting in which the director participated). The Company has not, and
in the future will not, pay any compensation to the directors of the Company who
also serve as officers and directors of Fund Advisors.
The Board of Directors met nine times during the year ended December 31,
1998, and the average attendance by directors at Board meetings was
approximately 96 percent. Each current member attended at least 85 percent of
the total meetings of the Board and of any committee on which he served.
Committees of the Board of Directors
The Company has a standing Audit Committee, the members of which are
selected by the Board of Directors each year. The current members of the Audit
Committee, who have served since 1995, are Messrs. Hostetter, Kruse and Huseman.
The Audit Committee makes recommendations to the Board of Directors as to the
independent accountants of the Company and reviews with such accounting firm the
scope of the audit and the results of the audit upon its completion. The Audit
Committee met twice during the year ended December 31, 1998.
-5-
<PAGE>
During 1998, the Board of Directors established a Special Committee of the
Board of Directors to consider the implementation of strategic alternatives. The
Special Committee consisted of Messrs. Hostetter, Kruse and Huseman, each being
an independent member of the Company's Board of Directors having no financial
interest in the implementation of certain strategic alternatives designed to
increase stockholder value. The Special Committee met 12 times during the year
ended December 31, 1998.
During 1998, the Board of Directors also established a Compensation
Committee consisting of Messrs. Hostetter, Kruse and Huseman. The Compensation
Committee advises the Board of Directors on all matters pertaining to future
compensation programs and policies and establishes guidelines for future
employee incentive and benefits programs. The Compensation Committee met four
times during the year ended December 31, 1998.
The Company currently does not have a nominating committee.
Executive Officers
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Position
<S> <C>
James M. Seneff, Jr. Chief Executive Officer and Chairman of the Board
Robert A. Bourne Vice Chairman and Treasurer
Curtis B. McWilliams President
John T. Walker Chief Operating Officer and Executive Vice President
Jeanne A. Wall Executive Vice President
Steven D. Shackelford Chief Financial Officer
Lynn E. Rose Secretary
</TABLE>
Mr. McWilliams, age 43, has served as President of the Company since
February 1999 and previously served as Executive Vice President of the Company
from February 1998 through February 1999. Mr. McWilliams joined Fund Advisors in
April 1997 and currently serves as President of Fund Advisors. In addition, Mr.
McWilliams serves as Executive Vice President of CNL Group, Inc., as President
of CNL Institutional Advisors, Inc. and as President of the Restaurant and
Financial Services Groups within CNL Group, Inc. From January 1991 to August
1996, Mr. McWilliams was a managing director in the Corporate Banking Group of
Merrill Lynch's Investment Banking Division. During this time, he was a senior
relationship manager with Merrill Lynch and as such was responsible for a number
of the firm's relationships with companies such as AT&T, AT&T Capital, AMR
Corporation, J.C. Penney and the Robert M. Bass Group. From February 1990 to
February 1993, he served as co-head of one of the Industrial Banking Groups
within Merrill Lynch's investment banking division and had administrative
responsibility for 25 bankers overseeing 150 client relationships, including the
firm's Transportation Group. In addition, from September 1996 to March 1997, Mr.
McWilliams served as Chairman of Private Advisory Services, Merrill Lynch's high
net worth brokerage business.
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<PAGE>
Mr. Walker, age 40, has served as Executive Vice President of the Company
since January 1996 and Chief Operating Officer of the Company since March 1995,
and previously served as Senior Vice President since December 1994. In addition,
Mr. Walker has served as Executive Vice President of Fund Advisors since January
1996 and Chief Operating Officer of Fund Advisors since April 1995, and
previously served as Senior Vice President of Fund Advisors since November 1994.
In addition, Mr. Walker previously served as Executive Vice President of CNL
Hospitality Properties, Inc. and CNL Hospitality Advisors, Inc. From May 1992 to
May 1994, Mr. Walker, a certified public accountant, was Executive Vice
President for Finance and Administration and Chief Financial Officer of Z Music,
Inc., a cable television network (subsequently acquired by Gaylord
Entertainment), where he was responsible for overall financial and
administrative management and planning. From January 1990 through April 1992,
Mr. Walker was Chief Financial Officer of the First Baptist Church in Orlando,
Florida. From April 1984 through December 1989, he was a partner in the
accounting firm of Chastang, Ferrell & Walker, P.A., where he was the partner in
charge of audit and consulting services, and from 1981 to 1984, Mr.
Walker was a Senior Consultant/Audit Senior at Price Waterhouse.
Ms. Wall, age 40, has served as Executive Vice President of the Company
since December 1994 and as Executive Vice President of Fund Advisors since
November 1994, and previously served as Vice President of Fund Advisors since
March 1994. Ms. Wall has served as Chief Operating Officer of CNL Investment
Company and of CNL Securities Corp. since November 1994 and has served as
Executive Vice President of CNL Investment Company since January 1991. Ms. Wall
joined CNL Securities Corp. in 1984. In 1985, Ms. Wall became Vice President of
CNL Securities Corp. In 1987, she became Senior Vice President and in July 1997
she became Executive Vice President of CNL Securities Corp. In this capacity,
Ms. Wall serves as national marketing and sales director and oversees the
national marketing plan for the CNL investment programs. In addition, Ms. Wall
oversees product development, partnership administration and investor services
for programs offered through participating brokers and corporate communications
for CNL Group, Inc. and its affiliates. Ms. Wall also has served as Senior Vice
President of CNL Institutional Advisors, Inc., a registered investment advisor,
from 1990 to 1993, as Vice President of CNL Realty Advisors, Inc. since its
inception in 1991 until December 31, 1997, at which time CNL Realty Advisors,
Inc. merged with Commercial Net Lease Realty, Inc., and served as Vice President
of Commercial Net Lease Realty, Inc. from 1992 through December 31, 1997. In
addition, Ms. Wall serves as Executive Vice President of CNL Hospitality
Properties, Inc., CNL Hospitality Advisors, Inc., CNL Health Care Properties,
Inc. and CNL Health Care Advisors, Inc. Ms. Wall currently serves as a trustee
on the Board of the Investment Program Association and on the Direct
Participation Program committee for the National Association of Securities
Dealers.
Mr. Shackelford, age 35, has served as Chief Financial Officer of the
Company since January 1997 and as Chief Financial Officer of Fund Advisors since
September 1996. From March 1995 to July 1996, Mr. Shackelford was a senior
manager in the national office of Price Waterhouse where he was responsible for
advising foreign clients seeking to raise capital and a public listing in the
United States. From August 1992 to March 1995, he served as a manager in the
Price Waterhouse, Paris, France office serving several multinational clients.
Mr. Shackelford was an audit staff and audit senior from 1986 to 1992 in the
Orlando, Florida office of Price Waterhouse. Mr Shackelford is a certified
public accountant.
Ms. Rose, age 50, has served as Secretary of the Company since December
1994, served as Treasurer from December 1994 through February 1999, has served
as a director and Secretary of Fund Advisors since March 1994, and as Treasurer
of Fund Advisors from the date of its inception through June 30, 1997. Ms. Rose,
a certified public accountant, has served as Secretary of CNL Group, Inc. since
1987, as Chief Financial Officer of CNL Group, Inc. since December 1993, and
served as Controller of CNL Group, Inc. from 1987 until December 1993. In
addition, Ms. Rose has served as Chief Financial Officer and Secretary of CNL
Securities Corp. since July 1994. She has served as Chief Operating Officer,
Vice President and
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<PAGE>
Secretary of CNL Corporate Services, Inc. since November
1994. Ms. Rose also has served as Chief Financial Officer and Secretary of CNL
Institutional Advisors, Inc. since its inception in 1990, as Treasurer of CNL
Realty Advisors, Inc. from 1991 to February 1996, and as Secretary and a
director of CNL Realty Advisors, Inc. since its inception in 1991 until December
31, 1997, at which time CNL Realty Advisors, Inc. merged with Commercial Net
Lease Realty, Inc. In addition, Ms. Rose served as Secretary and Treasurer of
Commercial Net Lease Realty, Inc. from 1992 to February 1996. Ms. Rose also
serves as Secretary and Treasurer of CNL Hospitality Properties, Inc. and CNL
Health Care Properties, Inc. and as Secretary, Treasurer and a director of CNL
Hospitality Advisors, Inc. and CNL Health Care Advisors, Inc. Ms. Rose also
currently serves as Secretary for approximately 50 additional corporations. Ms.
Rose oversees the legal compliance, accounting, tenant compliance, and reporting
for over 250 corporations, partnerships and joint ventures. Prior to joining
CNL, Ms. Rose was a partner with Robert A. Bourne in the accounting firm of
Bourne & Rose, P.A., Certified Public Accountants.
The backgrounds of Messrs. Seneff and Bourne are described at "ELECTION OF
DIRECTORS."
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<PAGE>
EXECUTIVE COMPENSATION
Annual Compensation
No annual or long-term compensation was paid by the Company to the Chief
Executive Officer for services rendered in all capacities to the Company during
the fiscal years ended December 31, 1996, 1997 and 1998. In addition, no
executive officer of the Company received an annual salary or bonus from the
Company during the fiscal year ended December 31, 1998. The Company's executive
officers also are employees and executive officers of Fund Advisors and receive
compensation from CNL Group, Inc. in part for services in such capacities. See
"Certain Transactions" for a description of the fees payable and expenses
reimbursed to Fund Advisors.
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<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's common stock, based on the offering price of the
Company's common stock based on its prior three offerings and assuming the
reinvestment of distributions ("APF"), with the S&P 500 Index ("S&P 500") and
with the income rate of return from The National Council of Real Estate
Investment Fiduciaries ("NCREIF") from the month the Company commenced
operations through December 31, 1998. The graph assumes the investment of $100
on June 30, 1995, the date on which the Company commenced operations.
<TABLE>
<CAPTION>
Quarterly Total Return Indexes
Date S&P 500 NCREIF APF
---- ------- ------ ---
<S> <C>
06/30/95 100.00 100.00 100.00
09/30/95 104.19 102.23 101.15
12/31/95 110.40 104.55 102.84
03/31/96 116.32 106.90 104.63
06/30/96 121.55 109.37 106.46
09/30/96 125.30 111.78 108.36
12/31/96 135.75 114.24 110.29
03/31/97 139.39 116.73 112.27
06/30/97 163.72 119.40 114.34
09/30/97 175.99 122.06 116.49
12/31/97 181.05 124.84 118.71
03/31/98 206.30 127.67 120.97
06/30/98 213.12 130.53 123.28
09/30/98 191.92 133.41 125.63
12/31/98 232.79 136.33 128.02
</TABLE>
The S&P 500 index contains both a capital and income component to its total
return. For companies included in the S&P 500 index, their total return is
measured by dividing the sum of (a) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and (b) the difference
between the registrant's share price at the end and the beginning of the
measurement period; by the share price at the beginning of the measurement
period. There is currently no public trading market for the Company's common
stock, therefore, the per share price is fixed at $10 and its return is composed
of only the cumulative amount of distributions for the measurement period,
assuming reinvestment of distributions. The NCREIF income index measures net
operating income as a percentage of average daily investment. In order to show a
more accurate comparison to the Company return, the component of the NCREIF
total return attributable to increases in share price has not been included in
the cumulative return. A copy of the NCREIF index is available from the Company
upon written request.
-10-
<PAGE>
PROPOSAL II
APPROVAL OF REVERSE STOCK SPLIT
The Board has unanimously approved, and recommends to the holders of
the Company's common stock that they approve, a one for two reverse stock split
of the Company's common stock, par value $.01 per share (the "Reverse Stock
Split"). If approved by the stockholders, the Reverse Stock Split may be
effected, as described below.
The intent of the Reverse Stock Split is to reduce the number of shares
of the Company's common stock authorized and outstanding and to increase the
marketability and liquidity of the Company's common stock in connection with the
Company's anticipated application for listing with the New York Stock Exchange
(the "NYSE"). If the Reverse Stock Split is approved by the holders of the
Company's common stock at the Annual Meeting, the Reverse Stock Split will be
effected unless there is a subsequent determination by the Board that the
Reverse Stock Split is not in the best interests of the Company and its
stockholders. Although the Board believes as of the date of this Proxy Statement
that the Reverse Stock Split is advisable, the Reverse Stock Split may be
abandoned by the Board at any time before, during or after the Annual Meeting
and prior to filing the proposed Articles of Amendment to the Company's Amended
and Restated Articles of Incorporation (the "Articles of Incorporation"), as set
forth in Exhibit A to this Proxy Statement.
The discussion of the Reverse Stock Split set forth below is qualified
in its entirety by reference to Exhibit A, which is incorporated herein by
reference.
Purposes of the Reverse Stock Split
The principal purpose of the Reverse Stock Split is to reduce the
number of shares of the Company's common stock outstanding. The Board believes
that the Reverse Stock Split would allow the Company to list its shares of
common stock on a national exchange at a price per share that is more comparable
to other listed REITs.
The Board of Directors believes that a decrease in the number of
authorized and outstanding shares of the Company's common stock, without any
material alteration of the proportionate economic interest in the Company held
by individual shareholders, may increase the trading price of the outstanding
shares when listed on the NYSE, to a price more appropriate for an
exchange-listed security, although no assurance can be given that the market
price of the Company's common stock will rise in proportion to the reduction in
the number of outstanding shares resulting from the Reverse Stock Split.
Additionally, the Board of Directors believes that the current $10.00
per share price of the Company's common stock may, upon listing on the NYSE,
limit the effective marketability of the Company's common stock at the time of
listing because of the reluctance of many brokerage firms and institutional
investors to recommend lower-priced stocks to their clients or to hold them in
their own portfolios. Certain policies and practices of the securities industry
may tend to discourage individual brokers within those firms from dealing in
lower-priced stocks.
The Board believes that the decrease in the number of shares of the
Company's common stock outstanding as a consequence of the proposed Reverse
Stock Split and the resulting anticipated increased price level will enhance its
listing with the NYSE and encourage greater interest in the Company's common
stock by the financial community and the investing public and possibly promote
greater liquidity for the holders of the Company's common stock. It is possible,
however, that liquidity could be affected adversely by the reduced number of
shares of common stock outstanding after the Reverse Stock Split. Although any
increase in the market price after listing of the Company's common stock
resulting
-11-
<PAGE>
from the Reverse Stock Split may be proportionately less than the
decrease in the number of shares of common stock outstanding, the proposed
Reverse Stock Split could result in a market price for the shares that would be
high enough to overcome the reluctance, policies and practices of brokerage
houses and investors referred to above.
There can be no assurances, however, that the foregoing effects will
occur or that the market price of the Company's common stock immediately after
implementation of the proposed Reverse Stock Split and listing will be
maintained for any period of time, or that such market price will approximate
two times the market price before the proposed Reverse Stock Split.
Effect of the Reverse Stock Split
If the Reverse Stock Split is approved by the holders of the Company's
common stock at the Annual Meeting, and unless there is a subsequent
determination by the Board of Directors that the Reverse Stock Split is not in
the best interests of the Company and its stockholders, an amendment to Section
7.1 of Article VII of the Articles of Incorporation, in the form set forth in
Exhibit A hereto, would be filed with the Maryland Department of Assessments and
Taxation on any date (the "Reverse Split Date") selected by the Board on or
prior to the Company's next annual meeting of stockholders. The Reverse Stock
Split would become effective on the date of such filing. Without any further
action on the part of the Company or the holders of the Company's common stock,
the shares of the Company's common stock held by stockholders of record as of
the Reverse Split Date would be converted on the Reverse Split Date into the
right to receive an amount of whole shares of Company's common stock equal to
the number of their shares divided by two. The number of authorized shares of
Company's common stock would be reduced from 125,000,000 to 62,500,000.
No fractional shares would be issued, and no such fractional share
interest would entitle the holder thereof either to vote or to any rights of a
stockholder of the Company. In lieu of any such fractional shares, each holder
of such fractional shares would be entitled to a cash payment in an amount equal
to the fraction of a whole share of common stock multiplied by (i) if the stock
is listed on the NYSE, another national exchange or on the NASDAQ Stock Market,
the last closing price of the common stock, or (ii) $20.00 per share if the
stock is not listed on the NYSE, another national exchange or on the NASDAQ
Stock Market.
Approval of the Reverse Stock Split would not affect any continuing
stockholder's percentage ownership interest in the Company or proportional
voting power, except for minor differences resulting from the payment in cash of
fractional shares. The shares of Company's common stock which would be issued
upon approval of the Reverse Stock Split would be fully paid and nonassessable.
The voting rights and other privileges of the continuing holders of Company's
common stock would not be affected substantially by adoption of the Reverse
Stock Split or subsequent implementation thereof.
The par value of the Company's common stock would remain at $0.01 per
share following the Reverse Stock Split, and the number of shares of Company's
common stock outstanding would be reduced. As a consequence, the aggregate par
value of the outstanding Company's common stock would be reduced, while the
aggregate capital in excess of par value attributable to the outstanding
Company's common stock for statutory and accounting purposes would be
correspondingly increased. Under Maryland law, the Board would have the
authority, subject to certain limitations, to transfer some or all of such
capital in excess of par value from capital to surplus, which could be
distributed to stockholders as dividends or used by the Company to repurchase
outstanding stock. The Company has no plans to reduce capital at this time.
-12-
<PAGE>
As of the Record Date, the number of issued and outstanding shares of
Company's common stock was 74,696,927. As a result of the Reverse Stock Split,
the aggregate number of shares of Company's common stock that would be issued
and outstanding would be approximately 37,348,464, and 25,151,536 shares would
be authorized and unissued (22,926,536 shares, including the reservation of an
additional 2,225,000 shares of Company's common stock for issuance upon exercise
of outstanding stock options under the Company's 1999 Stock Incentive Plan).
The adoption of the 1999 Stock Incentive Plan is being submitted to
stockholders pursuant to this Proxy Statement. If the 1999 Stock Incentive Plan
is approved and the Reverse Stock Split is similarly approved, the total number
of shares reserved for grants and all options granted under the plan would be
reduced proportionately.
The following table illustrates the principal effects of the proposed
Reverse Stock Split, as of the Record Date:
Number of Shares of Common Stock
---------------------------------------------------------
Prior to reverse stock After reverse stock
split split
---------------------------- -------------------------
Authorized 125,000,000 62,500,000
Outstanding (74,696,927) (37,348,464)
Reserved for issuance in
connection with future
grants under the 1999 Stock
Incentive Plan (4,500,000) (2,225,000)
------------ ---------------
Available for future issuance
by action of the Board (after
giving effect to the reservations
above) 45,803,073 22,926,536
============ ===============
Federal Income Tax Consequences
The Company believes that the federal income tax consequences of the
Reverse Stock Split will be as follows:
i. No income gain or loss will be recognized by stockholders on the
surrender of their existing shares of common stock in exchange for the
issuance of the new number of shares of common stock.
ii. The tax basis of the common stock issued in the Reverse Stock Split will
equal the tax basis of the common stock exchanged therefor.
iii. The holding period of the common stock issued in the Reverse Stock Split
will include the holding period of the original common stock if such
shares were held as capital assets.
iv. The conversion of the old common stock into the common stock issued in
the Reverse Stock Split will produce no taxable income or gain or loss to
the Company.
The foregoing summary represents the Company's opinion only and is
based on the existing provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and existing administrative interpretations thereof, any
of which may be revised retroactively. The Company's opinion is not binding upon
the Internal Revenue Service or the courts, and there can be no assurance that
the Internal Revenue Service or the courts would accept the positions expressed
above.
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<PAGE>
The state and local tax consequences of the Reverse Stock Split may
vary significantly as to each stockholder, depending upon the state in which
such stockholder resides. Stockholders are urged to consult their own tax
advisors with respect to the federal, state, and local tax consequences of the
Reverse Stock Split.
No Right of Appraisal
Under the Maryland General Corporation Law, dissenting stockholders are
not entitled to appraisal rights with respect to the Company's proposed
amendment to the Articles of Incorporation to effect the Reverse Stock Split,
and the Company will not provide stockholders with any such right.
Approval of the Reverse Stock Split and the amendment to the Articles
of Incorporation requires the affirmative vote of a majority of the outstanding
Company's common stock outstanding and entitled to vote at the Annual Meeting.
The Board unanimously recommends that the stockholders vote "for" the
Reverse Stock Split.
-14-
<PAGE>
PROPOSAL III
APPROVAL OF 1999 STOCK INCENTIVE PLAN
The Board has unanimously approved, and proposes that the stockholders
of the Company approve, the 1999 Stock Incentive Plan (the "Plan"). The Plan
will become effective on ___________, subject to the approval of the
stockholders of the Company. Following is a summary description of the 1999
Plan, which is qualified in its entirety to the full text of the Plan, attached
hereto as Exhibit B and incorporated herein by reference.
The Board believes that equity-based compensation is an important
element of overall compensation for the Company. Such compensation advances the
interest of the Company by encouraging, and providing for, the acquisition of
equity interests in the Company by participants, thereby aligning participants'
interests with stockholders and providing participants with a substantial
motivation to enhance stockholder value.
Description of the Plan
The Plan would authorize the issuance of up to 4,500,000 shares of
Company's common stock upon the exercise of stock options (both incentive and
nonqualified), stock appreciation rights and the award of restricted stock
("Stock Award") provided, that the aggregate number of shares of Common Stock
that may be issued pursuant to Options, SARs and Stock Awards granted under the
Plan shall increase automatically to 9,000,000 shares and 12,000,000 shares
respectively, when the Corporation has issued and outstanding 150,000,000 shares
and 200,000,000 shares, respectively, of common stock. The Plan will become
effective on _______, 1999 subject to stockholder approval, and terminates on
_________, 2009. The Plan will be administered by the Compensation Committee of
the Board or by any other committee duly appointed by the Board (as applicable,
the "Committee"), in either case comprised of not fewer than two non-employee
directors, or if no Committee is appointed, by the Board.
Key employees, officers, directors and persons performing consulting or
advisory services for the Company or its affiliates, as defined in the Plan, who
are designated by the Committee, are eligible to receive awards under the Plan.
Awards may be made in the form of stock options, stock awards or stock
appreciation rights ("SARs"). Stock options granted under the Plan may be either
incentive stock options or non-qualified stock options. Incentive stock options
may be granted only to employees of the Company or any of its affiliates.
Participants may also be granted stock awards, which are shares of Company's
common stock granted subject to the satisfaction of certain specified
conditions. Participants may also be granted a SAR that entitles the holder to
receive the difference between the fair market value of the shares on the date
of grant and the date of exercise of the shares of Company's common stock
subject to the award. SARs may be granted in relation to a particular option
awarded under the Plan and exercisable only upon surrender to the Company,
unexercised, of that portion of the option to which the SAR relates.
As of ________, 1999, approximately __ employees, ______ directors,
executive officers and affiliates were eligible to receive awards under the
Plan.
Options. Options granted under the Plan are exercisable only to the
extent vested on the date of exercise, and no options may be exercised more than
ten years from the date the option is granted (five years in the case of an
incentive stock option granted to a person who owns more than 10% of the total
combined voting power of all classes of the Company's stock (a "Ten Percent
Shareholder")). The
-15-
<PAGE>
exercise price per share of each option granted under the
Plan may not be less than 100% (110% in the case of a Ten Percent Shareholder)
of the fair market value of the Company's common stock on the date of grant.
Fair market value is the last sale price of the Company's common stock as
reported on the over-the-counter market or, if the Company's common stock is
listed on the New York Stock Exchange (or another national exchange or the
NASDAQ Stock Market), the closing price of the Company's common stock as listed
on the New York Stock Exchange (or another national exchange or the NASDAQ Stock
Market) on that date or, if there are no sales of shares reported on that date,
the last sale price or the closing price as reported on the over-the-counter
market or listed on the New York Stock Exchange (or another national exchange or
the NASDAQ Stock Market), respectively, on the next preceding date on which
sales of Company's common stock were reported or, if the Company's common stock
is not listed on the NYSE (or another national exchange or the NASDAQ Stock
Market) or traded on the over-the-counter market, the price per share determined
by the Company's Board of Directors on the basis of the quarterly valuation of
the Company's assets. To the extent that the aggregate fair market value
(determined on the option grant date) of the shares of Company's common stock
with respect to which incentive stock options are exercisable exceeds $100,000,
such options are deemed not to be incentive stock options.
An option may be exercised, in full or in part, provided that the
option is vested. Options may be exercised by written notice delivered to the
Company accompanied by payment of the option exercise price payable (i) in cash,
(ii) with Company's common stock owned by the participant, (iii) by delivery to
the Company of (x) irrevocable instructions to deliver directly to a broker the
stock certificates representing the shares for which the option is being
exercised and (y) irrevocable instructions to such broker to sell the stock and
to promptly deliver to the Company the portion of the proceeds equal to the
option exercise price and any amount necessary to satisfy the Company's
obligation for withholding taxes, or (iv) any combination thereof. The Company's
common stock used to pay the option exercise price or any portion thereof will
be valued at the fair market value of such Company's common stock on the date of
exercise and must have been held for at least six months.
The Committee or the Board, as the case may be, has the authority to
determine the circumstances under which options vest upon termination of the
employment or service of the participant for any reason. Unless otherwise
provided by the Committee, vesting of an option generally ceases on the date
that an option holder terminates employment or service for any reason with the
Company or an affiliate. Options granted under the Plan terminate on the date
three months after the date on which the participant terminates employment, or
the expiration under the terms of the option agreement, whichever period is
shorter except in the case of death, disability or retirement. In the event a
participant terminates employment by reason of death or disability, or the
participant's death occurs after termination of employment or service but before
the option has expired, the option held by such participant may be exercised, to
the extent exercisable, for a period of one year from the date of death or
disability or until the expiration of the stated term of such option, whichever
period is shorter. In the event of termination "for cause," any unexercised
option held by such participant shall be forfeited immediately upon the giving
of notice of such termination of employment or service for cause to the
participant.
Options are not transferable by a participant during the participant's
lifetime and may not be assigned, exchanged, pledged, transferred or otherwise
encumbered or disposed of except by will or by the applicable laws of descent
and distribution. Under the Plan, an option that is not an incentive stock
option may be transferred to immediate family members of the option holder or to
a trust or partnership for such family members; provided, however, that the
option holder receives no consideration for such transfer. In the event of such
transfer, the option and any corresponding SAR that relates to such option must
be transferred to the same person or persons or entity or entities.
-16-
<PAGE>
Stock Awards. Stock awards by the Committee will be subject to such
restrictions as the Committee may impose thereon (the "Restrictions"), including
but not limited to continuous employment or service with the Company or any of
its affiliates for a specified term or the attainment of specific corporate,
divisional or individual performance standards or goals. If the Committee, on
the date of the stock award, prescribes that a stock award shall become
nonforfeitable and transferable only upon the attainment of certain performance
objectives, the shares subject to such stock award shall become nonforfeitable
and transferable only to the extent that the Committee certified that such
objectives have been achieved. The Committee may endorse a legend on the
certificates representing the stock award in order to prevent a violation of the
requirements of the Securities Act of 1933, as amended, or to implement the
Restrictions with respect to such stock award. The Committee may also require
that the participant deliver to the Company a written statement in which the
participant represents and warrants that the shares in the stock award are being
acquired for the participant's own account and not with a view to the resale or
distribution thereof.
Stock awards are nontransferable except by the laws of descent and
distribution. No right or interest of a participant in a stock award shall be
liable for, or subject to, any lien, obligation or liability of such
participant. Notwithstanding the restriction on transferability, the Committee
may provide that a stock award may be transferred to members of the
participant's immediate family, provided that the participant does not receive
consideration for the transfer. The transferee of a stock award shall be bound
by the same terms and conditions that governed the stock award during the period
that it was held by the participant.
Upon the issuance of a stock award to a participant, the stock
certificate representing the stock award will be issued and transferred to and
in the name of the participant, whereupon the participant will be entitled to
all rights of a stockholder of the Company with respect to such stock award,
including the rights to vote such shares and to receive dividends. The Company
will hold such stock certificate in custody, together with stock powers executed
by the participant in favor of the Company, until the restricted period expires
and the restrictions imposed on the stock award are satisfied.
SARs. The Committee has authority to designate each individual to whom
SARs are to be granted and to specify the number of shares covered by such
grants. No participant may be granted corresponding SARs that are related to
incentive stock options which are first exercisable in any calendar year for
stock having an aggregate fair market value that exceeds $100,000. Corresponding
SARs may be granted either at the time of the grant of such option or at any
subsequent time prior to the expiration of such option; provided, however, that
corresponding SARs shall not be offered or granted in connection with a prior
option without the consent of the participant holding such option.
The maximum period in which a SAR may be exercised will be determined
by the Committee, except that no corresponding SAR that is related to an
incentive stock option shall be exercisable after the expiration of ten years
from the date such related option was granted. In the case of a SAR that is
related to an incentive stock option granted to a participant who is or is
deemed to be a Ten Percent Shareholder, such corresponding SAR shall not be
exercisable after the expiration of five years from the date such related option
was granted. The terms of any corresponding SAR that is related to an incentive
stock option may provide that it is exercisable for a period less than such
maximum period.
Subject to the provisions of the Plan and the applicable SAR agreement,
a SAR may be exercised in whole at any time or in part from time to time at such
times and in compliance with such requirements as the Committee shall determine;
provided, however, that a corresponding SAR that is related to an incentive
stock option may be exercised only to the extent that the related option is
exercisable and only when the fair market value exceeds the option exercise
price of the related option. A SAR granted under
-17-
<PAGE>
the Plan may be exercised with
respect to any number of whole shares less than the full number for which the
SAR could be exercised. A partial exercise of a SAR shall not affect the right
to exercise the SAR from time to time in accordance with the Plan and the
related agreement with respect to the remaining shares of Company's common stock
subject to the SAR. The exercise of a corresponding SAR shall result in the
termination of the related option to the extent of the number of shares of
Company's common stock with respect to which the SAR is exercised.
At the Committee's discretion, the amount payable as a result of the
exercise of a SAR may be settled in cash, shares of Company's common stock, or a
combination of cash and Company's common stock.
SARs granted under the Plan are not transferable except by will or by
the laws of descent and distribution. During the lifetime of the participant to
whom the SAR is granted, the SAR may be exercised only by the participant. The
Committee may grant SARs that may be transferred to immediate family members to
the extent and on such terms as may be permitted by Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In the event
of any such transfer, a corresponding SAR and the related option must be
transferred to the same person or persons or entity or entities. The holder of a
transferred SAR will be bound by the same terms and conditions that governed the
SAR during the period that it was held by the participant.
Changes in Capital Structure. Subject to any required stockholder
action, the number of shares of Company's common stock subject to each
outstanding award and the exercise price per each such share of Company's common
stock subject to an option or SAR will be proportionately adjusted for any
increase or decrease in the number of issued shares of Company's common stock
resulting from a subdivision or consolidation of shares of Company's common
stock or other capital readjustment or the payment of a stock dividend (but only
on the Company's common stock) or any other increase or decrease in the number
of shares of common stock effected without receipt of consideration by the
Company.
Thus, if the Reverse Stock Split submitted by the Company's
stockholders pursuant to this Proxy Statement is approved, the initial number of
shares authorized for issuance pursuant to the Plan would be reduced from
4,500,000 shares to 2,250,000 shares, subject to the increases described in
section 5.1 of the Plan. If the Company is the surviving company in a merger or
consolidation and unexercised options remain outstanding under the Plan, after
the effective date of the merger, each holder of an outstanding option or SAR
shall be entitled, upon exercise of that option, to receive, in lieu of
Company's common stock, the number and class or classes of shares of stock or
other securities or property to which the holder would have been entitled if,
immediately prior to the merger, the holder had been the holder of record of a
number of shares of Company's common stock equal to the number of shares of
Company's common stock as to which that option may be exercised.
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation (other
than circumstances involving a mere change in the identity, form or place of
organization of the Company), or if the Company is liquidated or dissolved, or
sells or otherwise disposes of substantially all of its assets to another entity
while unexercised options remain outstanding under the Plan, unless provisions
are made in connection with the transaction for the continuance of the Plan
and/or the assumption or substitution of options or SARs with new options or
stock appreciation rights covering the stock of the successor corporation, or
the parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and exercise prices, then all outstanding options, SARs and
Stock Awards shall be vested as of the effective date of such merger,
consolidation, liquidation, dissolution, or sale.
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<PAGE>
The Board generally may amend the Plan from time to time, except that,
without the approval of the stockholders of the Company, no revision or
amendment may change the aggregate number of shares of Company's common stock
that may be issued under the Plan. The terms and conditions applicable to any
award may thereafter be amended or modified by mutual agreement between the
Company and the participant or such other persons as may then have an interest
therein.
Federal Income Tax Consequences. Incentive stock options are subject to
special federal income tax treatment. No federal income tax is imposed on the
option holder upon the grant of the exercise of an incentive stock option if
certain "holding period" requirements specified in the Code are fulfilled. If
the option holder does not dispose of shares acquired pursuant to the exercise
within a specified holding period and if the option holder meets the
above-mentioned employment requirements, the Company would not be entitled to
any deduction for federal income tax purposes in connection with the grant or
exercise of the option for the disposition of the shares so acquired.
Upon disposition of the common stock received upon exercise of an
incentive stock option after the fulfillment of the holding period requirements
by an option holder who meets the certain employment requirements specified in
the Code, any appreciation of the shares above the exercise price should
constitute capital gain. If an option holder disposes of shares acquired
pursuant to the exercise of an incentive stock option prior to the end of the
holding period or if an option holder does not meet the above-mentioned
employment requirements, the option holder will be treated as having received,
at the time of disposition, ordinary income. In such event, the Company may
claim a deduction at the same time and in the same amount as the option holder
recognizes ordinary income.
As a general rule, no federal income tax is imposed on the option
holder upon the grant of a non-qualified stock option such as those available
under the Incentive Plan, and the Company is not entitled to a tax deduction by
reason of such a grant. Generally, upon the exercise of a non-qualified stock
option, the option holder will be treated as receiving ordinary income in the
year of exercise in an amount equal to the excess of the fair market value of
the shares on the date of exercise over the exercise price paid for such shares.
Upon the exercise of a non-qualified stock option, the Company may claim a
deduction at the same time and in the same amount as ordinary income is
recognized by the option holder. Upon a subsequent disposition of the shares
received upon exercise of a non-qualified stock option, any appreciation after
the date of exercise should qualify as capital gain.
No tax is imposed on an option holder pursuant to a grant of a SAR.
Upon exercise of a SAR, the option holder will recognize ordinary income equal
to the amount of cash received (or, if payment is made in common stock, the fair
market value on the date of exercise of the common stock received), and the
Company will be entitled to a corresponding deduction. SARs issued in tandem
with incentive stock options under the Plan are intended to satisfy the
requirements of applicable federal income tax regulations so as not to
disqualify the related incentive stock options form treatment as incentive stock
options under section 422 of the Code.
A grantee who has been granted a stock award under the Plan consisting
of common stock that is subject to restrictions will not recognize income for
federal income tax purposes at the time of grant, and the Company will not be
entitled to a deduction at that time, if the restrictions simultaneously prevent
the stock's transfer and constitute a substantial risk of forfeiture for federal
income tax purposes. When the restrictions lapse, the grantee will recognize
ordinary income in an amount equal to the excess of the fair market value of the
shares at such time over the amount (if any) paid for the shares, and the
Company
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<PAGE>
will be entitled to a corresponding deduction. If dividends are paid in cash to
the grantee during the period that the restrictions apply, the dividends will
constitute ordinary income to the grantee for federal income tax purposes at the
time they are paid, and the Company will be entitled to a corresponding
deduction.
The comments set forth in the above paragraphs are only a summary of
certain of the federal tax consequence relating to the Plan. No consideration
has been given to the effects of state, local, or other tax laws (including
other federal tax laws) on the Plan or grantees thereunder. As a general matter,
the company will be subject to federal income tax reporting requirements with
respect to all grantees who are employees of the Company.
In view of the complexity of the tax aspects of transactions involving
the grant and exercise of options, SARs and stock awards, and the receipt and
disposition of shares of common stock in connection with these and other awards
under the Plan, and because the impact of taxes will vary depending on
individual circumstances each grantee receiving an award under the Plan should
consult his or her own tax advisor to determine the tax consequences in his or
her particular circumstances.
Federal, state or local law may require the withholding of taxes
applicable to income resulting from an award. A participant shall be required to
make appropriate arrangements with the Company, as the case may be, for
satisfaction of any federal, state or local taxes the Company is required to
withhold. The Committee or Board administering the Plan may, in its discretion
and subject to such rules as it may adopt, permit the participant to pay all or
a portion of the federal, state or local withholding taxes arising in connection
with an award by electing to have the Company withhold shares of Company's
common stock having a fair market value on the date specified in the rules
adopted by the Committee or Board of Directors administering the Plan equal to
the amount to be withheld.
Approval of the Plan requires the affirmative vote of a majority of the
outstanding Company's common stock present and entitled to vote at the Annual
Meeting.
The Board unanimously recommends that the stockholders vote "for" the
adoption of the Plan.
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SECURITY OWNERSHIP
The following table sets forth, as of February 26, 1999, the number and
percentage of outstanding shares beneficially owned by all persons known by the
Company to own beneficially more than five percent of the Company's common
stock, by each director and nominee, and by all officers and directors as a
group, based upon information furnished to the Company by such stockholders,
officers and directors.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Shares
Robert A. Bourne 20,000 (1) -
400 East South Street
Orlando, Florida 32801
G. Richard Hostetter, Esq. (IRA) 5,478.82 (2) (3)
SunTrust Bank of Chattanooga, N.A.
P.O. Box 1638
Mail Code M0321
Chattanooga, TN 37401
Richard C. Huseman 0 -
3300 University Boulevard, Suite 251
Winter Park, FL 32792
J. Joseph Kruse 0 -
494 Woonasquatucket Avenue, Unit 114
North Providence, RI 02911
James M. Seneff, Jr. 20,000 (1) (3)
400 East South Street
Orlando, Florida 32801
All directors and executive 25,478.82 (1) (2) (3)
officers as a group (ten persons)
(1) Represents shares held by Fund Advisors, of which Mr. Seneff is Chief
Executive Officer, Chairman of the Board of Directors, director, and a
principal stockholder.
(2) Represents shares held by SunTrust Bank of Chattanooga, on behalf of Mr.
Hostetter in an IRA.
(3) Less than one percent.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities (collectively, the "Reporting Persons"), to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission (the "SEC"). Reporting Persons are required
by SEC regulation to furnish the Company with copies of all Forms 3, 4 and 5
that they file.
Based solely upon a review of Section 16(a) reports furnished to the
Company for fiscal year 1998, written representations that no other reports were
required and other information known to the Company, the Company believes that
the Reporting Persons have complied with all filing requirements for fiscal year
1998.
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CERTAIN TRANSACTIONS
All of the executive officers of the Company are executive officers of Fund
Advisors, a wholly owned subsidiary of CNL Group, Inc., of which Messrs. Seneff
and Bourne are affiliates. In addition, Messrs. Seneff and Bourne, Ms. Rose and
Ms. Wall are executive officers of CNL Securities Corp., the managing dealer of
the Company's prior offerings of shares of common stock, and a wholly owned
subsidiary of CNL Group, Inc. Messrs. Seneff and Bourne are directors of the
Company, Fund Advisors and CNL Securities Corp., and Ms. Rose is a director of
Fund Advisors. Administration of the day-to-day operations of the Company is
provided by Fund Advisors, pursuant to the terms of an advisory agreement (the
"Advisory Agreement"). Fund Advisors also serves as the Company's consultant in
connection with policy decisions to be made by the Company's Board of Directors,
manages the Company's properties and renders such other services as the Board of
Directors deems appropriate. Fund Advisors also bears the expense of providing
the executive personnel and office space to the Company. Fund Advisors is at all
times subject to the supervision of the Board of Directors of the Company and
has only such functions and authority as the Company may delegate to it as the
Company's agent.
CNL Securities Corp. received selling commissions amounting to 7.5% of the
total amount raised from the sale of shares of common stock for services in
connection with the offering of shares, a substantial portion of which has been
or will be paid as commissions to other broker-dealers. For the year ended
December 31, 1998, the Company had incurred $28,914,297 of such fees, of which
approximately $26,033,446 was paid by CNL Securities Corp. as commissions to
other broker-dealers.
In addition, CNL Securities Corp. received a marketing support and due
diligence expense reimbursement fee equal to 0.5% of the total amount raised
from the sale of shares, a substantial portion of which was reallowed to other
broker-dealers. For the year ended December 31, 1998, the Company had incurred
$1,927,620 of such fees, the majority of which were reallowed to other
broker-dealers and from which all bona fide due diligence expenses were paid.
CNL Securities Corp. is also entitled to receive, in connection with each
of the Company's offerings of common stock to date, a soliciting dealer
servicing fee payable annually by the Company beginning on December 31 of the
year following the year in which the offering terminates in the amount of 0.20%
of the stockholders' investment in the Company. CNL Securities Corp. in turn may
re-allow all or a portion of such fee to soliciting dealers whose clients
purchased shares in such offering and who held shares on such date. As of
December 31, 1998, the Company had incurred $300,206 of such fees relating to
the initial offering which terminated in February 1997.
During 1998, Fund Advisors received acquisition fees for services in
identifying the properties and structuring the terms of the acquisition and
leases of the properties and structuring the terms of the mortgage loans equal
to 4.5% of the total amount raised from the sale of shares. For the year ended
December 31, 1998, the Company had incurred $17,317,297 of such fees.
For negotiating secured equipment leases and supervising the secured
equipment lease program, Fund Advisors will be entitled to receive from the
Company a one-time secured equipment lease servicing fee of two percent of the
purchase price of the equipment that is the subject of a secured equipment
lease. For the year ended December 31, 1998, the Company incurred $54,998 in
such fees.
The Company and Fund Advisors have entered into an Advisory Agreement
pursuant to which Fund Advisors will receive a monthly asset management fee of
one-twelfth of 0.60% of the Company's real estate asset value (generally, the
total amount invested in the properties as of the end of the preceding month,
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exclusive of acquisition fees and acquisition expenses), plus one-twelfth of
0.60% of the Company's total principal amount of the mortgage loans as of the
end of the preceding month. The management fee, which will not exceed fees which
are competitive for similar services in the same geographic area, may or may not
be taken, in whole or in part as to any year, in the sole discretion of Fund
Advisors. All or any portion of the management fee not taken as to any fiscal
year shall be deferred without interest and may be taken in such other fiscal
year as Fund Advisors shall determine. For the year ended December 31, 1998, the
Company had incurred $1,911,128 of such fees, $60,124 of which has been
capitalized as part of the cost of the buildings for properties under
construction.
The term of the Advisory Agreement expires April 19, 1999, subject to
successive one-year renewals upon mutual consent of the parties. The Advisory
Agreement may be terminated for cause by either party thereto, or by the mutual
consent of the parties (by a majority of the independent directors of the
Company or a majority of the Board of Fund Advisors, as the case may be), upon
60 days written notice.
Fund Advisors and its affiliates provide accounting and administrative
services to the Company (including accounting and administrative services in
connection with the offering of shares) on a day-to-day basis. For the year
ended December 31, 1998, the Company incurred a total of $4,292,517 for these
services, $3,103,046 of such costs representing stock issuance costs and
$1,189,471 representing general operating and administrative expenses, including
costs related to preparing and distributing reports required by the SEC.
During the year ended December 31, 1998, the Company acquired five
properties for an aggregate purchase price of approximately $8,770,000 from
affiliates of the Company. The affiliates had purchased and temporarily held
title to these properties in order to facilitate the acquisition of the
properties by the Company. Each property was acquired at a cost no greater than
the lesser of the cost of the property to the affiliate (including carrying
costs) or the property's appraised value.
In connection with the acquisition of six properties during the year ended
December 31, 1998, the Company incurred $229,153 in development/construction
management fees to affiliates of Fund Advisors that were constructed by such
affiliates. Such fees were included in the purchase price of the properties and
are therefore included in the basis on which the Company charges rent on the
properties.
In connection with the acquisition of properties that are being or have
been renovated, subject to approval by the Company's Board of Directors, the
Company may incur advisory fees payable to affiliates of the Company. Such fees
are included in the purchase price of the properties and are therefore included
in the basis on which the Company charges rent on the properties. During the
year ended December 31, 1998, the Company incurred $67,389 of such fees relating
to three properties.
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INDEPENDENT AUDITORS
Upon recommendation of and approval by the Board, including the independent
directors, PricewaterhouseCoopers LLP has been selected to act as independent
certified public accountants for the Company during the current fiscal year.
A representative of PricewaterhouseCoopers LLP will be present at the
annual meeting and will be provided with the opportunity to make a statement if
desired. Such representative will also be available to respond to appropriate
questions.
OTHER MATTERS
The Board does not know of any matters to be presented at the annual
meeting other than those stated above. If any other business should come before
the annual meeting, the person(s) named in the enclosed proxy will vote thereon
as he or they determine to be in the best interests of the Company.
PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder proposal to be considered for inclusion in the Company's
proxy statement and form of proxy for the annual meeting of stockholders to be
held in 2000 must be received at the Company's office at 400 East South Street,
Orlando, Florida 32801, no later than November 1999.
Under the bylaws of the Company, a stockholder must comply with certain
procedures to nominate directors or to propose other matters to be considered at
an annual meeting of stockholders. These procedures provide that the
stockholders desiring to make nominations for directors or to bring a proper
subject before a meeting must do so by notice timely delivered to the secretary
of the Company. To be timely, the secretary must receive the notice at the
Company's principal executive offices not less than 60 days nor more than 90
days before the anniversary of the preceding year's annual meeting of
stockholders. In the case of the Company's annual meeting of stockholders in
2000, the secretary of the Company must receive notice of any such proposal no
earlier than February 13, 2000 and no later than March 14, 2000 (other than
proposals intended to be included in the proxy statement and form of proxy
which, as noted above, must be received by November __, 1999. Generally, such
notice must set forth: (i) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, all information relating to
such person that is required to be disclosed in solicitations or proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected);(ii) as to any other business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and of the beneficial
owner, if any, on whose behalf the proposal is made; (iii) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made, the name and address of such stockholder, as
they appear on the Company's books, and of such beneficial owner and the class
and number of shares of the Company which are owned beneficially and of record
by such stockholder and such beneficial owner. The Chairman of the annual
meeting shall have the power to declare that any proposal not meeting these and
any other applicable requirements imposed by the bylaws shall be disregarded. A
copy of the bylaws may be obtained without charge on written request addressed
to CNL American Properties Fund, Attn. Corporate Secretary, 400 E. South Street,
Orlando, Florida 32801.
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ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1998, accompanies this Proxy Statement.
By Order of the Board of Directors,
/s/Lynn E. Rose
----------------------------
Lynn E. Rose
Secretary
March ____, 1999
Orlando, Florida
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EXHIBIT A
ARTICLES OF AMENDMENT
TO
THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
CNL AMERICAN PROPERTIES FUND, INC.
CNL AMERICAN PROPERTIES FUND, INC., a Maryland corporation having its
principal office at 32 South Street, Baltimore, Maryland 21202 (hereinafter, the
"Company"), does hereby certify to the Department of Assessments and Taxation of
the State of Maryland, that:
FIRST: The name of the Company is CNL American Properties Fund, Inc.
SECOND: Section 7.1 of Article VII of the Amended and Restated Articles
of Incorporation of the Company is hereby deleted in its entirety and amended to
read as follows:
"SECTION 7.1 Authorized Shares. The capital stock of the Company shall
be divided into Equity Shares. The total number of Equity Shares which the
Company is authorized to issue is one hundred forty three million five hundred
thousand (143,500,000) shares, consisting of sixty two million five hundred
thousand (62,500,000) Common Shares (as defined and described in Section
7.2(ii)), three million (3,000,000) Preferred Shares (as defined in Section 7.3
hereof) and seventy eight million (78,000,000) Excess Shares (as defined in
Section 7.7 hereof). All shares shall be fully paid and nonassessable when
issued. Shares may be issued for such consideration as the Directors determine
or, if issued as a result of a share dividend or share split, without any
consideration."
THIRD: The amendment to the Amended and Restated Articles of
Incorporation of the charter of the Company as hereinabove set forth has been
duly advised by the board of directors and approved by the stockholders of the
Company.
FOURTH: Upon the filing with the Department of Assessments and Taxation
of the State of Maryland of these Articles of Amendment to the Amended and
Restated Articles of Incorporation of the Company, whereby Section 7.1 of
Article VII, is amended to read as set forth herein (the "Filing"), each two
shares of Common Shares issued and outstanding and held of record by each
stockholder of the Company immediately prior to the Filing shall, automatically
and without the need for any further action on the part of any stockholder, be
combined into one (1) validly issued, fully paid and nonassessable share of
Common Shares, par value $.01 per share. No scrip or fractional shares will be
issued by reason of this amendment, but in lieu thereof the Company will pay to
any such holder of a fractional share an amount of cash for such fractional
share based on a per share value of $20.00.
FIFTH: (a) The total number of shares of all classes of stock of the
Company heretofore authorized, and the number and par value of the shares of
each class, were as follows:
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The total number of Equity Shares which the Company
was authorized to issue was two hundred six million (206,000,000) shares,
consisting of one hundred twenty five million (125,000,000) Common Shares, three
million (3,000,000) Preferred Shares and seventy-eight million (78,000,000)
Excess Shares. The par value of the Common Shares and Excess Shares was $.01 per
share and the aggregate par value of all of the authorized shares of all classes
of capital stock having a par value was $2,030,000.00. Preferred Shares had not
been assigned a par value.
(b) The total number of shares of all classes of
stock of the Company as increased, and the number and par value of the shares of
each class, are as follows:
The total number of Equity Shares which the Company
is authorized to issue is one hundred forty three
million five hundred thousand (143,500,000) shares, consisting of sixty two
million five hundred thousand (62,500,000) Common Shares, three million
(3,000,000) Preferred Shares and seventy eight million (78,000,000) Excess
Shares. The par value of the Common Shares and Excess Shares remains $.01 per
share and the aggregate par value of all of the authorized shares of all classes
of capital stock having a par value is $1,405,000.00. Preferred Shares have not
been assigned a par value.
SIXTH: These Articles of Amendment do not change the information
required by subsection (b)(2)(i) of Section 2-607 of the General Corporation Law
of Maryland.
IN WITNESS WHEREOF, these Articles of Amendment are hereby executed by
Robert A. Bourne, the President of the Company, who hereby acknowledges that the
Articles of Amendment are the act of the Company, and who does hereby state
under the penalties of perjury that the matters and facts set forth herein with
respect to authorization and approval of such Articles are true in all material
respects to the best of his knowledge, information and belief.
CNL American Properties Fund, Inc.
By: /s/ Robert A. Bourne
-----------------------------------------
Name: Robert A. Bourne
Title: President
Date: ________________, 1999
ATTEST
By: /s/ Lynn E. Rose
-------------------------
Lynn E. Rose
Secretary
Date: _________, 1999
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Exhibit B
CNL AMERICAN PROPERTIES FUND, INC.
1999 STOCK INCENTIVE PLAN
ARTICLE I
PURPOSES
The Plan is intended to assist CNL American Properties Fund, Inc. (the
"Company") and its Affiliates in recruiting and retaining individuals with
ability and initiative by enabling such persons to participate in the future
success of the Company and its Affiliates and to associate their interests with
those of the Company and its stockholders. The Plan is intended to permit the
grant of both Options qualifying under Section 422 of the Internal Revenue Code
of 1986, as amended ("Incentive Stock Options") and Options not so qualifying,
and the grant of stock appreciation rights ("SARs") and Stock Awards. No Option
that is intended to be an Incentive Stock Option shall be invalid for failure to
qualify as an Incentive Stock Option. The proceeds received by the Company from
the sale of Common Stock pursuant to this Plan shall be used for general
corporate purposes. All capitalized terms used herein are defined below in
Article II.
ARTICLE II
DEFINITIONS
2.1. Affiliate means (i) any entity that directly or indirectly, is
controlled by, or controls or is under common control with the Company, and (ii)
any entity in which the Company has a significant equity interest, in either
case as determined by the Committee.
2.2. Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Stock Award, Option or SAR granted to such Participant.
2.3. Board means the Board of Directors of the Company.
2.4. Change of Control means:
(a) a "person" or "group" (which terms shall have the meaning
they have when used in Section 13(d) of the Exchange Act) (other than the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, any corporation owned directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of voting securities of the Company) becomes (other than solely by
reason of a repurchase of voting securities by the Company), the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of fifty percent (50%) or more of the combined voting power of the
Company's then total outstanding voting securities;
(b) the Company consolidates with or merges with or into
another corporation or partnership or conveys, transfers or leases, in any
transaction or series of transactions, all or substantially all of its assets to
any corporation or partnership, or any corporation or partnership consolidates
with or merges with or into the Company, in any event pursuant to a transaction
in which the outstanding voting stock of the Company is reclassified or
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changed
into or exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding voting securities of the Company are
changed into or exchanged for voting securities of the surviving corporation and
(ii) the persons who were the beneficial owners of the Company's voting
securities immediately prior to such transaction beneficially own immediately
after such transaction 50% or more of the total outstanding voting power of the
surviving corporation, or the Company is liquidated or dissolved or adopts a
plan of liquidation or dissolution.
2.5. Code means the Internal Revenue Code of 1986, and any amendments
thereto.
2.6. Committee means either (i) the Board or (ii) a committee of the
Board designated by the Board to administer the Plan and composed of not less
than two directors, each of whom is expected, but not required, to be a
"Non-Employee Director" (within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934, as amended) and an "outside director" (within the meaning
of Code section 162(m)) to the extent Rule 16b-3 of the Exchange Act and Code
section 162(m), respectively, are at such time applicable to the Company and the
Plan. If at any time such a committee has not been so designated, the Board
shall constitute the Committee.
2.7. Common Stock means the common stock, $0.01 par value, of the
Company.
2.8. Company means CNL American Properties Fund, Inc., a Maryland
corporation.
2.9. Consultant means any person performing consulting or advisory
services for the Company or any Affiliate, with or without compensation, to whom
the Committee chooses to grant a Stock Award, Option, or SAR in accordance with
the Plan.
2.10. Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
2.11. Director means a member of the Company's Board of Directors.
2.12. Disability shall have the meaning provided for in Section
22(e)(3) of the Code or any successor statute thereto. 2.13. Exchange
Act means the Securities Exchange Act of 1934, as amended. 2.14. Fair
Market Value means, on any given date, the current fair market value of
the shares of Common Stock as
determined pursuant to subsection (a) or (b) below.
(a) While the Company is a Public Company, Fair Market Value
shall be determined as follows: (i) if the Common Stock is traded on the Nasdaq
SmallCap or National Market or listed on a national securities exchange, the
closing price of the Common Stock on the determination date on the exchange on
which the Common Stock is principally traded, or, if there are no sales on such
date, then on the next preceding date on which there were sales of Common Stock,
(ii) if the Common Stock is not traded on the Nasdaq SmallCap or National Market
or listed on a national securities exchange, the closing price last reported by
the National Association of Securities Dealers, Inc. for the over-the-counter
market on the determination date, or, if no sales are reported on such date,
then on the next preceding date on which there where such quotations or (iii)
if the Common Stock is not traded in the over-the-counter market, the price
determined by the Company's Board of Directors on the basis of the quarterly
valuation of the Company's assets.
(b) Notwithstanding subsections (a) and (b) of this Section, in
all cases, Fair Market Value shall not be less than the par value of the Common
Stock.
(c) For purposes of this Section, the term "Public Company"
means the Company, subsequent to the effective date of the Plan, has sold
securities pursuant to an effective registration statement filed pursuant to the
Securities Act and is subject to the reporting and information requirements
under the Exchange Act, and the term "Non-Public Company" means the Company has
not sold securities pursuant to an effective registration statement filed
pursuant to the Securities Act and is not subject to the reporting and
information requirements under the Exchange Act.
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2.15. Initial Value means, with respect to an SAR, the Fair Market
Value of one share of Common Stock on the date of grant.
2.16. Incentive Stock Option means an Option qualifying for special
tax treatment under Section 422 of the Code.
2.17. Nonqualified Stock Option means an option which is not an
Incentive Stock Option.
2.18. Option means a stock option that is either a Nonqualified Stock
Option or Incentive Stock Option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth in an
Agreement.
2.19. Optionee means the employee, Director or Consultant to whom an
Option is granted.
2.20. Parent Corporation means a corporation which is with respect
to the Company a parent corporation as defined in Section 424 of the Code.
2.21. Participant means an employee of the Company or an Affiliate, a
Director or a Consultant who satisfies the requirements of Article IV and is
selected by the Committee to receive a Stock Award, Option, SAR or a combination
thereof.
2.22. Plan means this 1999 Stock Incentive Plan.
2.23. SAR means a stock appreciation right that in accordance with the
terms of an Agreement entitles the holder to receive, with respect to each share
of Common Stock encompassed by the exercise of such SAR, the amount determined
by the Committee and specified in an Agreement. In the absence of such a
determination, the holder shall be entitled to receive, with respect to such
share of Common Stock encompassed by the exercise of such SAR, the excess of its
Fair Market Value on the date of exercise over the Initial Value. References to
"SARs" include both Corresponding SARs and SARs granted independently of
Options, unless the context requires otherwise.
2.24 Securities Act means the Securities Act of 1933, as amended. 2.24.
Stock Award means Common Stock awarded to a Participant under Article
VIII.
2.25. Stockholder means the holder of Common Stock issued under the
Plan as a result of exercise of an Option or SAR or grant of a Stock Award.
2.26. Subsidiary Corporation means a corporation which is with respect
to the Company a subsidiary corporation as defined in Section 424 of the Code.
2.27. Termination of Employment means unless provided otherwise by the
Committee, an employee has ceased to be employed by the Company or an Affiliate,
a director has ceased to be a member of the Board of Directors of the Company or
an Affiliate, or a Consultant has ceased to have a consulting relationship with
the Company or an Affiliate.
2.28. Ten Percent Shareholder means any individual owning more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, a Parent Corporation or a Subsidiary Corporation. An individual shall
be considered to own any voting stock owned (directly or indirectly) by or for
his brothers, sisters, spouse, ancestors or lineal descendants and shall be
considered to own proportionately any voting stock owned (directly or
indirectly) by or for a company, partnership, estate or trust of which such
individual is a shareholder, partner or beneficiary, all as required by Section
424(d) of the Code.
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ARTICLE III
ADMINISTRATION
The Committee shall have authority to grant Stock Awards, Options and
SARs upon such terms (not inconsistent with the provisions of this Plan) as the
Committee may consider appropriate. Such terms may include conditions (in
addition to those contained in this Plan) on the exercisability of all or any
part of an Option or SAR or on the transferability or forfeitability of a Stock
Award. Notwithstanding any such conditions, the Committee may, in its
discretion, accelerate the time at which any Option or SAR may be exercised, or
the time at which a Stock Award may become transferable or nonforfeitable or the
time at which it may be settled. The Committee shall have complete authority to
interpret all provisions of this Plan; to prescribe the form of Agreements; to
adopt, amend, and rescind rules and regulations pertaining to the administration
of the Plan; and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific power
to the Committee shall not be construed as limiting any power or authority of
the Committee; provided that the Committee may not exercise any right or power
reserved to the Board. Any decision made, or action taken, by the Board or the
Committee or in connection with the administration of this Plan shall be final
and conclusive on all persons having an interest in the Plan. No member of the
Board or the Committee shall be liable for any act done in good faith with
respect to this Plan or any Agreement, Option, SAR or Stock Award. All expenses
of administering this Plan shall be borne by the Company. If no Committee is
appointed by the Board, the Board shall constitute the Committee.
The Committee, in its discretion, may delegate to one or more officers
of the Company, all or part of the Committee's authority and duties with respect
to grants and awards to individuals who are not subject to the reporting and
other provisions of Section 16 of the Exchange Act. The Committee may revoke or
amend the terms of a delegation at any time but such action shall not invalidate
any prior actions of the Committee's delegates that were consistent with the
terms of the Plan. Furthermore, the mere fact that a Committee member shall fail
to qualify as a "non-employee Director" or "outside director" within the meaning
of Rule 16b-3 under the Exchange Act and Section 162(m) of the Code,
respectively, shall not invalidate any award made by the Committee which award
is otherwise validly made under the Plan.
ARTICLE IV
ELIGIBILITY
Any employee of the Company or an Affiliate (including a company that
becomes an Affiliate after the adoption of this Plan), a Director or a
Consultant to the Company or an Affiliate (including a company that becomes an
Affiliate after the adoption of this Plan) is eligible to participate in this
Plan if the Committee, in its sole discretion, determines that such person has
contributed significantly or can be expected to contribute significantly to the
profits or growth of the Company or an Affiliate. Only employees of the Company,
a Subsidiary Corporation or a Parent Corporation are eligible to receive
Incentive Stock Options.
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ARTICLE V
STOCK SUBJECT TO PLAN
5.1. Maximum Shares for Delivery. The maximum number of shares of
Common Stock that may be delivered to Participants under the Plan pursuant to
Stock Awards and exercise of options or SARs shall be four million five hundred
thousand (4,500,000) shares, plus any Common Stock that is represented by awards
granted under the Plan of the Company, which are forfeited, expired or canceled
without the delivery of Common Stock or which result in the forfeiture of Common
Stock back to the Company provided, that subject to the provisions of Article IX
of the Plan, the aggregate number of shares of Common Stock that may be issued
pursuant to Options, SARs and Stock Awards granted under the Plan shall increase
automatically to nine million (9,000,000) shares and twelve million (12,000,000)
shares respectively, when the Corporation has issued and outstanding one hundred
and fifty million (150,000,000) shares and two hundred million (200,000,000)
shares, respectively, of Common Stock.
5.2. The shares of Common Stock issued may be shares of authorized but
unissued Common Stock or shares of previously issued Common Stock that have been
reacquired by the Company. The maximum aggregate number of shares that may be
issued under this Plan shall be subject to adjustment as provided in Article IX.
5.3. Individual Limit. The maximum number of shares of Common Stock
with respect to which Options, SARs, and Stock Awards may be granted to any one
Participant during any one calendar year shall not exceed 10% of the total
number of shares reserved under this plan.
5.4. Reallocation of Shares. If an Option is terminated, in whole or in
part, for any reason other than its exercise or the exercise of a Corresponding
SAR that is settled with Common Stock, the number of shares of Common Stock
allocated to the Option or portion thereof may be reallocated to other Options,
SARs and Stock Awards to be granted under this Plan. If an SAR is terminated, in
whole or in part, for any reason other than its exercise or the exercise of a
related Option, the number of shares of Common Stock allocated to the SAR or
portion thereof may be reallocated to other Options, SARs and Stock Awards to be
granted under this Plan.
ARTICLE VI
OPTIONS
6.1 Award. In accordance with the provisions of Article IV, the
Committee will designate each individual to whom an Option is to be granted and
will specify the number of shares of Common Stock covered by such awards. The
Option Agreement shall specify whether the Option is an Incentive Stock Option
or Nonqualified Stock Option, the vesting schedule applicable to such Option and
any other terms of such Option. An individual must be an employee of the
Company, a Subsidiary Corporation or a Parent Corporation to be eligible to be
granted an Incentive Stock Option.
6.2 Option Price. The exercise price per share for Common Stock subject
to an Option shall be determined by the Board on the date of grant; provided,
however, that the exercise price per share shall not be less than one hundred
percent 100% of the Fair Market Value of a share of Common Stock on the date the
Option is granted and the exercise price per share of Common Stock for an Option
that is an Incentive Stock Option shall not be less than one hundred percent
(100%) of the Fair Market Value on the date the Option is granted.
Notwithstanding the preceding sentence, the exercise price per share of Common
Stock subject to an Option that is an Incentive Stock Option granted to an
individual who is or is deemed to be a Ten Percent Shareholder on the date such
option is granted, shall not be less than one hundred ten percent (110%) of the
Fair Market Value on the date the Option is granted.
6.3 Maximum Option Period. Unless provided otherwise in this Agreement,
the maximum period in which an Option may be exercised shall be ten years,
except that no Option that is an Incentive Stock Option shall be exercisable
after the expiration of ten years from the date such Option was granted. In the
case of an Incentive Stock Option that is granted to a Participant who is or is
deemed to be a Ten Percent Shareholder on the date of
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grant, such Option shall
not be exercisable after the expiration of five years from the date of grant.
The terms of any Option that is an Incentive Stock Option may provide that it is
exercisable for a period less than such maximum period.
6.4 Maximum Value of Options which are Incentive Stock Options. To the
extent that the aggregate Fair Market Value of the Common Stock with respect to
which Incentive Stock Options granted to any person are exercisable for the
first time during any calendar year (under all stock option plans of the
Company, a subsidiary Corporation or Parent Corporation) exceeds $100,000, the
Options are not Incentive Stock Options. For purposes of this section, the Fair
Market Value of the Common Stock will be determined as of the time the Incentive
Stock Option with respect to the Common Stock is granted. This paragraph will be
applied by taking Incentive Stock Options into account in the order in which
they are granted.
6.5 Nontransferability. Except as provided in Section 6.6, each Option
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any such transfer, the Option and
any Corresponding SAR that relates to such Option must be transferred to the
same person or persons or entity or entities. Except to the extent an Option is
transferred in accordance with Section 6.6, during the lifetime of the
Participant to whom the Option is granted, the Option may be exercised only by
the Participant. No right or interest of a Participant in any Option shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.
6.6 Transferable Options. Section 6.5 to the contrary notwithstanding,
if the Agreement so provides, an Option that is not an Incentive Stock Option
may be transferred by a Participant to the Participant's children,
grandchildren, spouse, one or more trusts for the benefit of such family members
or a partnership in which such family members are the only partners; provided,
however, that Participant may not receive any consideration for the transfer.
The holder of an Option transferred pursuant to this section shall be bound by
the same terms and conditions that governed the Option during the period that it
was held by the Participant. In the event of any such transfer, the Option and
any Corresponding SAR that relates to such Option must be transferred to the
same person or persons or entity or entities.
6.7 Vesting and Termination of Employment. Except as provided in an
Option Agreement, the following rules shall apply:
(a) Options will vest as provided in the Option Agreement. An
Option will be fully vested upon the occurrence of
a Change of Control prior to the Participant's Termination of Employment. An
Option will be exercisable only to the extent that it is vested on the date of
exercise. Vesting of an Option will cease on the date of the Optionee's
Termination of Employment and the Option will be exercisable only to the extent
the Option is vested on the date of Termination of Employment.
(b) If the Optionee's Termination of Employment is for reason
of death or Disability, the right to exercise the Option (to the extent vested)
will expire on the earlier of (i) one (1) year after the date of the Optionee's
Termination of Employment, or (ii) the expiration date under the terms of the
Agreement. Until the expiration date, the Optionee's heirs, legatees or legal
representative may exercise the Option, except to the extent the Option was
previously transferred pursuant to Section 6.6.
(c) If the Optionee's Termination of Employment is by reason of
the Optionee's retirement from service of the Company and its Affiliates on or
after the attainment of age sixty-two (62), the right to exercise the Option
(to the extent that it is vested) will expire on the earlier of (i) three (3)
years after the date of the Optionee's Termination of Employment, or (ii) the
expiration date under the terms of the Agreement.
(d) If the Optionee's Termination of Employment is for any
reason other than death, Disability or retirement, the right to exercise the
Option (to the extent that it is vested) will expire on the earlier of (i) three
(3) months after the date of the Optionee's Termination of Employment, or (ii)
the expiration date under the terms of the Agreement. However, if the Option
would then expire during the Pooling Period and the Common Stock received upon
the exercise of the Option would be subject to the Pooling Period transfer
restrictions, then the right to exercise the Option will expire ten (10)
calendar days after the end of the Pooling Period. "Pooling Period" means the
period in which property is subject to restrictions on transfer in compliance
with the "Pooling of Interests Accounting" rules set forth in the Securities and
Exchange Commission Accounting Series Releases 130 and 135. If Termination of
Employment is for a reason other than the Optionee's death, disability or
retirement and the Option
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holder dies after his or her Termination of Employment
but before the right to exercise the Option has expired, the right to exercise
the Option shall expire on the earlier of (i) one (1) year after the date of the
Optionee's Termination of Employment, or (ii) the date the Option expires under
the terms of the Agreement, and, until expiration, the Optionee's heirs,
legatees or legal representative may exercise the Option, except to the extent
the Option was previously transferred pursuant to Section 6.6.
6.8 Forfeiture for Cause. Notwithstanding any provision of the Plan to
the contrary, unless provided otherwise in an Option Agreement, all unexercised
Options granted to an Optionee whose Termination of Employment is for "cause"
shall terminate and be forfeited by the Optionee. A termination of Employment
shall be for cause if it is by reason of (i) conduct related to the Optionee's
service to the Company or an Affiliate for which either criminal or civil
penalties against the Optionee may be sought, (ii) material violation of Company
policies, or (iii) disclosing or misusing any confidential information or
material concerning the Company or Affiliate. An Optionee may be released from
the forfeiture provisions of this section if the Committee (or its duly
appointed agent) determines in its sole discretion that such action is in the
best interests of the Company.
6.9 Exercise. The Option holder must provide written notice to the
Secretary of the Company of the exercise of Options and the number of Options
exercised. Subject to the provisions of this Plan and the applicable Agreement,
an Option may be exercised to the extent vested in whole at any time or in part
from time to time at such times and in compliance with such requirements as the
Committee shall determine. An Option granted under this Plan may be exercised
with respect to any number of whole shares less than the full number for which
the Option could be exercised. An Option may not be exercised with respect to
fractional shares of Common Stock. A partial exercise of an Option shall not
affect the right to exercise the Option from time to time in accordance with
this Plan and the applicable Agreement with respect to the remaining shares
subject to the Option. The exercise of an Option shall result in the termination
of any Corresponding SAR to the extent of the number of shares with respect to
which the Option is exercised.
6.10 Payment. Unless otherwise provided by the Agreement, payment of
the Option price shall be made in cash or a cash equivalent acceptable to the
Committee. Unless otherwise provided by the Agreement, payment of all or part of
the Option price may also be made by surrendering shares of Common Stock to the
Company that have been held for at least six (6) months prior to the date of
exercise. If Common Stock is used to pay all or part of the Option price, the
sum of the cash or cash equivalent and the Fair Market Value (determined as of
the day preceding the date of exercise) of the shares surrendered must not be
less than the Option price of the shares for which the Option is being
exercised. In accordance with such procedures as the Committee may determine,
the Committee may approve payment of the exercise price by a broker-dealer or by
the Option holder with cash advanced by the broker-dealer if the exercise notice
is accompanied by the Option holder's written irrevocable instructions to
deliver the Common Stock acquired upon exercise of the Option to the
broker-dealer. Wherever in this Plan or any Agreement a Participant is permitted
to pay the exercise price of an Option or SAR or taxes relating to the exercise
of an Option or SAR by delivering Common Stock, the Participant may, subject to
procedures satisfactory to the Committee, satisfy such delivery requirement by
presenting proof of beneficial ownership of such Common Stock, in which case the
Company shall treat the Option or SAR as exercised without further payment and
shall withhold such number of Common Stock from the Common Stock acquired by the
exercise of the Option or SAR.
6.11 Stockholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to his or her Option until the date
of exercise of such Option.
6.12 Stock Certificate Legends. The Company may require that
certificates evidencing shares of Common Stock purchased upon the exercise of
Incentive Stock Option issued under the Plan be endorsed with a legend in
substantially the following form:
The shares evidenced by this certificate may not be sold or
transferred prior to ________, 19__, in the absence of a
written statement from the Company to the effect that the
Company is aware of the facts of such sale or transfer.
The blank contained in this legend shall be filled in with the date that is the
later of (i) one year and one day after the date of the exercise of such
Incentive Stock Option or (ii) two years and one day after the grant of such
Incentive Stock Option. Upon delivery to the Company, at its principal executive
office, of a written statement to
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the effect that such shares have been sold or
transferred prior to such date, the Company does hereby agree to promptly
deliver to the transfer agent for such shares a written statement to the effect
that the Company is aware of the fact of such sale or transfer.
6.13 Disposition of Stock. A Participant shall notify the Company of
any sale or other disposition of Common Stock acquired pursuant to an Incentive
Stock Option if such sale or disposition occurs (i) within two years of the
grant of an Option or (ii) within one year of the issuance of the Common Stock
to the Participant. Such notice shall be in writing and directed to the
Secretary of the Company.
ARTICLE VII
SAR
7.1. Award. In accordance with the provisions of Article IV, the Board
will designate each individual to whom SARs are to be granted and will specify
the number of shares covered by such awards. In addition no Participant may be
granted Corresponding SARs (under all Incentive Stock Option plans of the
Company and its Affiliates) that are related to Incentive Stock Options which
are first exercisable in any calendar year for stock having an aggregate Fair
Market Value (determined as of the date the related Option is granted) that
exceeds $100,000.
7.2. Maximum SAR Period. The maximum period in which an SAR may be
exercised shall be determined by the Board on the date of grant, except that no
Corresponding SAR that is related to an Incentive Stock Option shall be
exercisable after the expiration of ten years from the date such related Option
was granted. In the case of a Corresponding SAR that is related to an Incentive
Stock Option granted to a Participant who is or is deemed to be a Ten Percent
Shareholder, such Corresponding SAR shall not be exercisable after the
expiration of five years from the date such related Option was granted. The
terms of any Corresponding SAR that is related to an Incentive Stock Option may
provide that it is exercisable for a period less than such maximum period.
7.3. Nontransferability. Except as provided in Section 7.4, each SAR
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any such transfer, a Corresponding
SAR and the related Option must be transferred to the same person or persons or
entity or entities. During the lifetime of the Participant to whom the SAR is
granted, the SAR may be exercised only by the Participant. No right or interest
of a Participant in any SAR shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
7.4. Transferable SARs. Section 7.3 to the contrary notwithstanding, if
the Agreement so provides, a SAR may be transferred by a Participant to the
children, grandchildren, spouse, one or more trusts for the benefit of such
family members or a partnership in which such family members are the only
partners; provided, however, that a Participant may not receive any
consideration for the transfer. In the event of any such transfer, a
Corresponding SAR and the related Option must be transferred to the same person
or persons or entity or entities. The holder of an SAR transferred pursuant to
this section shall be bound by the same terms and conditions that governed the
SAR during the period that it was held by the Participant.
7.5. Exercise. Subject to the provisions of this Plan and the
applicable Agreement, an SAR may be exercised in whole at any time or in part
from time to time at such times and in compliance with such requirements as the
Committee shall determine; provided, however, that a Corresponding SAR that is
related to an Incentive Stock Option may be exercised only to the extent that
the related Option is exercisable and only when the Fair Market Value exceeds
the option price of the related Option. An SAR granted under this Plan may be
exercised with respect to any number of whole shares less than the full number
for which the SAR could be exercised. A partial exercise of an SAR shall not
affect the right to exercise the SAR from time to time in accordance with this
Plan and the applicable Agreement with respect to the remaining shares subject
to the SAR. The exercise of a Corresponding SAR shall result in the termination
of the related Option to the extent of the number of shares with respect to
which the SAR is exercised.
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7.6. Employee Status. If the terms of any SAR provide that it may be
exercised only during employment or within a specified period of time after
Termination of Employment, the Committee may decide to what extent leaves of
absence for governmental or military service, illness, temporary disability or
other reasons shall not be deemed interruptions of continuous employment.
7.7. Settlement. At the Committee's discretion, the amount payable as a
result of the exercise of an SAR may be settled in cash, Common Stock, or a
combination of cash and Common Stock. No fractional shares will be deliverable
upon the exercise of an SAR but a cash payment will be made in lieu thereof.
7.8. Shareholder Rights. No Participant shall, as a result of receiving
an SAR award, have any rights as a stockholder of the Company or any Affiliate
until the date that the SAR is exercised and then only to the extent that the
SAR is settled by the issuance of Common Stock.
ARTICLE VIII
STOCK AWARDS
8.1. Award. In accordance with the provisions of Article IV, the Board
will designate each individual to whom a Stock Award is to be made and will
specify the number of shares of Common Stock covered by such awards.
8.2. Vesting. The Board, on the date of the award, may prescribe that a
Participant's rights in the Stock Award shall be forfeitable or otherwise
restricted for a period of time or subject to such conditions as may be set
forth in the Agreement.
8.3. Performance Objectives. In accordance with Section 8.2, the Board
may prescribe that Stock Awards will become vested or transferable or both based
on objectives such as, but not limited to, the Company's, an Affiliate's or an
operating unit's return on equity, earnings per share, total earnings, earnings
growth, return on capital, return on assets, or Fair Market Value. If the Board,
on the date of award, prescribes that a Stock Award shall become nonforfeitable
and transferable only upon the attainment of performance objectives, the shares
subject to such Stock Award shall become nonforfeitable and transferable only to
the extent that the Committee certifies that such objectives have been achieved.
8.4. Stock Legends and Related Matters.
(a) The Committee, on behalf of the Company, may endorse such
legend or legends upon the certificates representing the shares of Common Stock,
and may issue such "stop transfer" instructions as it determines to be necessary
or appropriate to (i) prevent a violation of, or to perfect an exemption from,
the registration requirements of the Securities Act, or (ii) implement the
provisions of any agreement between the Company or an Affiliate and the
Participant with respect to such shares.
(b) The Committee may require that a Participant, as a condition
to receipt of a particular award, execute and deliver to the Company a written
statement, in form satisfactory to the Committee, in which the Participant
represents and warrants that the shares are being acquired for such person's own
account, for investment only and not with a view to the resale or distribution
thereof. The Participant shall, at the request of the Committee, be required to
represent and warrant in writing that, to the extent permitted by the terms of
the award, any subsequent resale or distribution of Shares by the Participant
shall be made only pursuant to either (i) a Registration Statement on an
appropriate form under the Securities Act, which Registration Statement has
become effective and is current with regard to the shares being sold, or (ii) a
specific exemption from the registration requirements of the Securities Act, but
in claiming such exemption the Participant shall, prior to any offer of sale or
sale of such shares, obtain a prior favorable written opinion of counsel, in
form and substance satisfactory to counsel for the Company, as to the
application of such exemption thereto.
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The Committee may delay any award, issuance or delivery of shares of Common
Stock if it determines that listing, registration or qualification of the shares
or the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
shares under the Plan, until such listing, registration, qualification, consent
or approval shall have been effected or obtained, or otherwise provided for,
free of any conditions not acceptable to the Committee.
8.5. Employee Status. In the event that the terms of any Stock Award
provide that shares may become transferable and nonforfeitable thereunder only
after completion of a specified period of employment, the Committee may decide
in each case to what extent leaves of absence for governmental or military
service, illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment.
8.6. Nontransferability. Except as provided in Section 8.7, Stock
Awards granted under this Plan shall be nontransferable except by will or by the
laws of descent and distribution. No right or interest of a Participant in a
Stock Award shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.
8.7. Transferable Stock Awards. Section 8.6 to the contrary
notwithstanding if the Award so provides, a Stock Award may be transferred by a
Participant to the children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family members are
the only partners; provided, however, that Participant may not receive any
consideration for the transfer. The holder of a Stock Award transferred pursuant
to this section shall be bound by the same terms and conditions that governed
the Incentive Award during the period that it was held by the Participant.
8.8. Stockholder Rights. Prior to their forfeiture (in accordance with
the applicable Agreement) and while the shares of Common Stock granted pursuant
to the Stock Award may be forfeited or are nontransferable, a Participant will
have all rights of a stockholder with respect to a Stock Award, including the
right to receive dividends and vote the shares; provided, however, that during
such period (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to
a Stock Award, (ii) the Company shall retain custody of the certificates
evidencing shares of Common Stock granted pursuant to a Stock Award, and (iii)
the Participant will deliver to the Company a stock power, endorsed in blank,
with respect to each Stock Award. The limitations set forth in the preceding
sentence shall not apply after the shares of Common Stock granted under the
Stock Award are transferable and are no longer forfeitable.
ARTICLE IX
CHANGE IN CAPITAL STRUCTURE
The existence of outstanding Options shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issuance of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Common Stock outstanding, without
receiving compensation therefore in money, services or property, then (i) the
number, class, and per share price of shares of Common Stock subject to
outstanding Options, SARs and Stock Awards hereunder shall be appropriately
adjusted in such a manner as to entitle an Optionee to receive upon exercise of
an Option or an SAR or the receipt of a Stock Award, for the same aggregate cash
consideration, the same total number and
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class of shares as he would have
received had the Optionee exercised his or her Option or SAR or received his or
her Stock Award in full immediately prior to the event requiring the adjustment;
and (ii) the number and class of shares then reserved for issuance under the
Plan shall be adjusted by substituting for the total number and class of shares
of Common Stock then reserved that number and class of shares of Common Stock
that would have been received by the owner of an equal number of outstanding
shares of each class of Common Stock as the result of the event requiring the
adjustment.
After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving company, each holder of an Option or an SAR shall, at no
additional cost, be entitled upon exercise of such Option or SAR to receive
(subject to any required action by stockholders) in lieu of the number and class
of shares as to which such Option or SAR shall then be so exercisable, the
number and class of shares of stock or other securities to which such Option
holder would have been entitled pursuant to the terms of the agreement of merger
or consolidation if, immediately prior to such merger or consolidation, such
Option holder had been the holder of record of the number and class of shares of
Common Stock equal to the number and class of shares as to which such Option or
SAR shall be so exercised.
If the Company is merged into or consolidated with another company
under circumstances where the Company is not the surviving company, or if the
Company is liquidated, or sells or otherwise disposes of substantially all of
its assets to another company while unexercised Options or SARs or unvested
Stock Awards remain outstanding under the Plan, unless provisions are made in
connection with such transaction for the continuance of the Plan and/or the
assumption or substitution of such Options or SARs with new options, stock
appreciation rights covering the stock of the successor company, or parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices, then all outstanding Options, SARs and Stock Awards shall be
vested as of the effective date of any such merger, consolidation, liquidation,
or sale (the "corporate event").
Except as previously expressly provided, neither the issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or services either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, nor the increase or decrease of the number
of authorized shares of stock, nor the addition or deletion of classes of stock,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number, class or price of shares of Common Stock then subject to outstanding
Options.
Adjustment under the preceding provisions of this section will be made
by the Committee, whose determination as to what adjustments will be made and
the extent thereof will be final, binding, and conclusive. No fractional
interests will be issued under the Plan on account of any such adjustment. No
adjustment will be made in a manner that causes an Incentive Stock Option to
fail to continue to qualify as an Incentive Stock Option under the Code.
The Board may make Stock Awards and may grant Options and SARs in
substitution for performance shares, phantom shares, stock awards, stock
options, stock appreciation rights, or similar awards held by an individual who
becomes an employee of the Company or an Affiliate in connection with a
transaction described in this Article IX. Notwithstanding any provision of the
Plan (other than the limitation of Section 5.1), the terms of such substituted
Stock Awards or Option or SAR grants shall be as the Board, in its discretion,
determines is appropriate.
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ARTICLE X
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued,
no certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable federal
and state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company's Common Stock may
then be listed. The Company shall have the right to rely on an opinion of its
counsel as to such compliance. Any share certificate issued to evidence Common
Stock when a Stock Award is granted or for which an Option or SAR is exercised
may bear such legends and statements as the Committee may deem advisable to
assure compliance with federal and state laws and regulations. No Option or SAR
shall be exercisable, no Stock Award shall be granted, no Common Stock shall be
issued, no certificate for shares shall be delivered, and no payment shall be
made under this Plan until the Company has obtained such consent or approval as
the Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
ARTICLE XI
GENERAL PROVISIONS
11.1. Tax Withholding. Whenever the Company proposes or is required to
distribute Common Stock under the Plan, the Company may require the recipient to
remit to the Company an amount sufficient to satisfy any federal, state and
local tax withholding requirements prior to the delivery of any certificate for
such shares or, in the discretion of the Committee, the Company may withhold
from the Common Stock to be delivered shares sufficient to satisfy all or a
portion of such tax withholding requirements. Whenever under the Plan payments
are to be made in cash, such payments may be net of an amount sufficient to
satisfy any Federal, state and local tax withholding requirements.
11.2. Employee Status. For purposes of determining the applicability of
Section 422 of the Code (relating to incentive stock options), or in the event
that the terms of any Option, SAR or Stock Award provide that an option or SAR
may be exercised only during employment or within a specified period of time
after Termination of Employment or that a Stock Award shall become transferable
and nonforfeitable only after completion of a specified period of employment,
the Committee may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
11.3. Effect on Employment and Service. Neither the adoption of this
Plan, its operation, nor any documents describing or referring to this Plan (or
any part thereof) shall confer upon any individual any right to continue in the
employ or service of the Company or an Affiliate or in any way affect any right
and power of the Company or an Affiliate or in any way affect any right and
power of the Company or an Affiliate to terminate the employment or service of
any individual at any time with or without assigning a reason therefor.
11.4. Holding Period. Notwithstanding anything to the contrary in the
Plan, Common Stock acquired through the exercise of an Option, SAR or Stock
Award granted to a Committee member may not be disposed of by such member during
the six-month period beginning on the date the Option, SAR or Stock Award is
granted to such Committee member.
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11.5. Unfunded Plan. The Plan, insofar as it provides for grants, shall
be unfunded, and the Company shall not be required to segregate any assets that
may at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
11.6. Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
11.7. Choice of Law. The Plan and all Agreements entered into under the
Plan shall be interpreted under the laws of the State of Maryland, without
regard to its conflict of laws provisions.
ARTICLE XII
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan. No amendment shall, without a
Participant's consent, adversely affect any rights of such Participant under any
outstanding Stock Award, Option or SAR outstanding at the time such amendment is
made.
ARTICLE XIII
EFFECTIVE DATE OF PLAN, DURATION OF PLAN
13.1 The Plan became effective as of ______________ upon
adoption by the Board, subject to approval within one (1) year by the holders of
a majority of the shares of Common Stock.
13.2 Unless previously terminated, the Plan will terminate ten
(10) years after the earlier of (i) the date the Plan is adopted by the Board,
or (ii) the date the Plan is approved by the shareholders, except that Options,
SARs and Stock Awards that are granted under the Plan prior to its termination
will continue to be administered under the terms of the Plan until the Options
terminate or are exercised.
Date:____________________ CNL American Properties Fund, Inc.
By:___________________________
Name:_________________________
Title:__________________________
-41-
<PAGE>
P R O X Y CNL AMERICAN PROPERTIES FUND, INC.
The undersigned hereby appoints James M. Seneff, Jr. and Robert A. Bourne,
and each of them, as proxies, with full power of substitution in each, to vote
all shares of common stock of CNL American Properties Fund, Inc. (the "Company")
which the undersigned is entitled to vote, at the Annual Meeting of Stockholders
of the Company to be held on May 13, 1999, at 10:30 a.m., local time, and any
adjournment thereof, on all matters set forth in the Notice of Annual Meeting
and Proxy Statement, dated March __, 1999, a copy of which has been received by
the undersigned, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING ITEMS:
1. Election of Five Directors
Nominees: |_| FOR ALL |_| WITHHELD FOR ALL |_|
-------------------------------------------
Robert A. Bourne FOR ALL NOMINEES, EXCEPT VOTE WITHHELD FOR:
G. Richard Hostetter (Write that nominee's name above)
Richard C. Huseman
J. Joseph Kruse
James M. Seneff, Jr.
2. Proposal for a one-for-two reverse stock split of the Company's common
stock (See Proxy Statement page ___)
|_| FOR |_| AGAINST |_| ABSTAIN
3. Proposal for the Company's 1999 stock incentive plan (See Proxy Statement
page ____)
3. Other Matters:
Grant authority upon such other matters as may come before the Meeting as
they determine to be in the best interest of the Company.
|_| FOR |_| AGAINST |_| ABSTAIN
(PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE, AND RETURN IN ENCLOSED
ENVELOPE)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IF YOU SIGN, DATE AND MAIL YOUR PROXY WITHOUT INDICATING HOW YOU WANT TO
VOTE, YOUR PROXY WILL BE COUNTED AS A VOTE "FOR" THE MATTERS STATED. IF YOU FAIL
TO RETURN YOUR PROXY, YOUR PROXY WILL NOT BE COUNTED. EACH STOCKHOLDER IS URGED
TO SUBMIT A SIGNED AND DATED PROXY.
Dated: ________________________, 1999
_____________________________________
_____________________________________
Signature(s) of Stockholder(s)
IMPORTANT: Please mark this
Proxy, date it, sign it
exactly as your name(s)
appear(s) and return it in the
enclosed postage paid
envelope. Joint owners should
each sign personally.
Trustees and others signing in
a representative or fiduciary
capacity should indicate their
full titles in such capacity.
