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
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6(e) (2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
CNL American Properties Fund, Inc.
(Name of Registrant as Specified in Its Chart
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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CNL AMERICAN PROPERTIES FUND, INC.
CNL Center at City Commons
450 South Orange Avenue
Orlando, Florida 32801
April 18, 2003
Dear Stockholders:
You are cordially invited to attend the annual meeting of stockholders
of CNL American Properties Fund, Inc. (the "Company") on June 26, 2003 at 3:00
p.m. at CNL Center at City Commons, 450 South Orange Avenue, Orlando, Florida.
The directors and officers of the Company look forward to greeting you
personally.
Enclosed for your review are the 2002 Annual Report, the Notice of
Annual Meeting of Stockholders, the proxy statement and the proxy card. The
proxy statement gives a detailed account of the business to be conducted at the
meeting. An update will also be given at the meeting on the current status of
the Company.
Regardless of the number of shares you own in the Company, it is very
important that your shares be represented. Our goal is to minimize operational
expenses so we ask that you please return your proxy card promptly because
re-soliciting stockholders adds unnecessary costs to the Company. You may vote
over the Internet, by telephone or by mailing a traditional proxy card. Voting
over the Internet, by telephone, or by written proxy will ensure your
representation at the annual meeting if you choose not to attend in person.
As we prepare for the exciting year ahead, the Board of Directors
unanimously recommends that you vote in favor of the proposed items. Please
complete and return the proxy card today. Your vote counts. 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 Vice Chairman of the Board
CNL AMERICAN PROPERTIES FUND, INC.
CNL Center at City Commons
450 South Orange Avenue
Orlando, Florida 32801
Notice of 2003 Annual Meeting of Stockholders and Proxy Statement
Annual Meeting to be Held June 26, 2003
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of CNL
American Properties Fund, Inc. (the "Company") will be held at 3:00 p.m. local
time, on June 26, 2003, at CNL Center at City Commons, 450 South Orange Avenue,
Orlando, Florida, for the following purposes:
1. To elect five directors;
2. To approve an amendment to the Company's Articles of Incorporation to
change the Company's name to CNL Restaurant Properties, Inc.;
3. To approve an amendment to the Company's Articles of Incorporation to
provide for the indemnification of the Company's officers, directors,
employees and agents to the fullest extent permitted by Maryland law;
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 April 1, 2003, 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. All
stockholders, whether or not they plan to attend the meeting, are requested to
complete, date and sign the enclosed proxy card and return it promptly in the
envelope provided. You may also grant your proxy by telephone or Internet by
following the instructions on the proxy card. It is important that your shares
be voted. By voting your proxy promptly, you can help the Company avoid
additional expenses to ensure a quorum is met so the meeting can be held. 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/ Steven D. Shackelford
Steven D. Shackelford
Secretary
April 18, 2003
Orlando, Florida
TABLE OF CONTENTS
PROXY STATEMENT...............................................................2
PROPOSAL I:
Election of Directors.....................................................4
PROPOSAL II:
Proposed Name Change.....................................................14
PROPOSAL III:
Proposal to Clarify Indemnification Obligations in the Company's
Second Amended and Restated Articles of Incorporation....................15
AUDIT COMMITTEE REPORT...................................... ............... 16
SECURITY OWNERSHIP.......................................................... 17
CERTAIN TRANSACTIONS........................................................ 19
INDEPENDENT AUDITORS........................................................ 21
OTHER MATTERS............................................................... 21
PROPOSALS FOR NEXT ANNUAL MEETING........................................... 22
ANNUAL REPORT............................................................... 23
CNL AMERICAN PROPERTIES FUND, INC.
CNL Center at City Commons
450 South Orange Avenue
Orlando, Florida 32801
PROXY STATEMENT
General Information
This proxy statement is furnished by the Board of Directors of CNL
American Properties Fund, Inc. (the "Company"), a Maryland corporation, in
connection with the solicitation by management of proxies to be voted at the
Annual Meeting of Stockholders of the Company to be held on June 26, 2003, 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
April 1, 2003, the record date, will be entitled to vote at the annual meeting.
As of the record date, April 1, 2003, 45,248,670 shares of the
Company's common stock, which are referred to as the Company Shares, were
outstanding. Each Company Share 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 beneficially owned in the aggregate
approximately 15.0 percent of the outstanding Company Shares. It is anticipated
that this proxy statement and the enclosed proxy first will be mailed to
stockholders on or about April 18, 2003.
Proxies and Voting Procedures
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 on a proxy that is received, 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 that the proxy is revoked, (2) by delivery, at the annual meeting or
otherwise, 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.
Our Voting Recommendations
Our Board of Directors recommends that you vote:
o "FOR" each of our nominees to the Board of Directors;
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o "FOR" the proposal to change our name to CNL Restaurant Properties,Inc.; and
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o "FOR" the proposal to clarify our indemnification obligations set
forth in our Second Amended and Restated Articles of
Incorporation.
Solicitation Expenses
Solicitation of proxies will be primarily by mail. However, directors,
officers and other employees of the Company also may solicit proxies, for no
additional compensation, 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. In addition, the Company has
engaged N. S. Taylor & Associates, Inc., a professional proxy solicitation firm,
to aid in the solicitation of proxies at a fee estimated to be approximately
$4,000 plus reimbursement of reasonable out-of-pocket costs and expenses. The
Company has agreed to indemnify N. S. Taylor & Associates, Inc. against certain
liabilities that it may incur arising out of the services it provides in
connection with the annual meeting.
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, 56 Mr. Bourne has served as a Director and Vice
Chairman of the Board of the Company since
May 1994. Mr. Bourne served as President of
the Company from 1994 through February 1999.
He also served as Treasurer from February
1999 through August 1999 and from May 1994
through December 1994. He also served in
various executive positions with CNL Fund
Advisors, Inc., the Company's Advisor, prior
to its merger with a subsidiary of the
Company, including as President from 1994
through September 1997 and as Director from
1994 through August 1999. Mr. Bourne serves
as President and Treasurer of CNL Financial
Group, Inc. (formerly CNL Group, Inc.),
Treasurer of CNL Hospitality Properties,
Inc., a public, unlisted real estate
investment trust, and as Director, President
and Treasurer of CNL Hospitality Corp., its
advisor. In addition, Mr. Bourne serves as
Director and Treasurer of CNL Retirement
Properties, Inc., a public, unlisted real
estate investment trust, and as a Director
and Treasurer of its advisor, CNL Retirement
Corp. Mr. Bourne also serves as a Director
of CNL Bank, an independent, state-chartered
commercial bank. He has served as a Director
since 1992, Vice Chairman of the Board since
February 1996, Secretary and Treasurer from
February 1996 through 1997, and President
from July 1992 through February 1996 of
Commercial Net Lease Realty, Inc., a public
real estate investment trust listed on the
New York Stock Exchange. Mr. Bourne also
serves as Director, President and Treasurer
for various affiliates of CNL Financial
Group, Inc. including CNL Investment Company
and CNL Securities Corp., both of which are
engaged in the business of real estate
finance, and CNL Institutional Advisors,
Inc., a registered investment advisor for
pension plans. Mr. Bourne has participated
as a general partner or co-venturer in over
100 real estate ventures involved in the
financing, acquisition, construction, and
leasing of restaurants, office buildings,
apartment complexes, hotels, and other real
estate. Mr. Bourne began his career as a
certified public accountant employed by
Coopers & Lybrand, Certified Public
Accountants, from 1971 through 1978, where
he attained the position of Tax Manager in
1975. Mr. Bourne graduated from Florida
State University in 1970 where he received a
Bachelor of Arts degree in Accounting, with
honors.
G. Richard Hostetter, Esq., 63 Mr. Hostetter has served as an Independent
Director of the Company since March 1995. He
also served as a Director of CNL Hospitality
Properties, Inc. from July 1997 until
February 1999. Since September 1999, he has
served as a Director and a Manager of
Century Capital Markets, LLC, a sponsor of a
commercial paper conduit. 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 also was a general and limited partner.
Since January 1999, he has served as
President of MRH, Inc., the successor to
Mills, Ragland & Hostetter, Inc. Mr.
Hostetter was associated with the law firm
of Miller and Martin of Chattanooga,
Tennessee 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, resulting in
his extensive participation in transactions
involving the sale, lease, and
sale/leaseback of approximately 250
restaurant units. Mr. Hostetter graduated
from the University of Georgia. He received
his Juris Doctor from Emory University
School of Law in 1966. He has been licensed
to practice law in Tennessee and Georgia.
Richard C. Huseman, 64 Dr. Huseman has served as an Independent
Director of the Company since March 1995. He
is a professor in the College of Business
Administration of the University of Central
Florida, for which he also served as the
Dean of the College of Business
Administration from 1990 to 1995. Dr.
Huseman served as a Director of CNL
Hospitality Properties, Inc. from July 1997
to February 1999, and has served as a
consultant in the area of managerial
strategies to a number of Fortune 500
corporations, including IBM, AT&T, Mobil,
Exxon-Mobil, 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. Dr. Huseman
received a Bachelor of Arts degree from
Greenville College in 1961, and a Master of
Arts degree and a PhD from the University of
Illinois in 1963 and 1965, respectively.
J. Joseph Kruse, 70 Mr. Kruse has served as an Independent
Director of the Company since March 1995. He
has been President and Chief Executive
Officer of Kruse & Co., Inc., a merchant
banking company engaged in real estate,
since 1993. Mr. Kruse also serves as
Chairman of Topsider Building Systems. Mr.
Kruse served as a Director of CNL
Hospitality Properties, Inc. from July 1997
to February 1999. 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 a former Chairman of the Federal
Reserve Board and the Secretary of the
Treasury of the United States. Mr. Kruse did
evaluations of commercial real estate and
retail shopping mall projects and continues
to serve as Senior Advisor to the firm. He
also serves presently as a Senior Advisor to
Process Sensors Corporation, Blue Water
Venture Capital, and to Air Ambulance
Network. Mr. Kruse received a Bachelor of
Science degree in Education from the
University of Florida in 1957 and a Master
of Science degree in Administration in 1958
from Florida State University. He also
graduated from the Advanced Management
Program of the Harvard Graduate School of
Business and the Aspen Institute for
Humanistic Studies.
James M. Seneff, Jr., 56 Mr. Seneff has served as co-Chief Executive
Officer of the Company since December 2000,
and as a Director of the Company since May
1994. Mr. Seneff has served as Chairman of
the Board since 1994, and as Chief Executive
Officer of the Company from 1994 through
August 1999. Mr. Seneff served as Chairman
of the Board and Chief Executive Officer of
the Company's Advisor until its merger with
a subsidiary of the Company in September
1999, and in June 2000 was re-elected to
those positions of the Advisor. Mr. Seneff
is a principal stockholder of CNL Holdings,
Inc., the parent company of CNL Financial
Group, Inc., and has served as a Director,
Chairman of the Board and Chief Executive
Officer of CNL Financial Group, Inc. since
its formation in 1980. CNL Financial Group,
Inc. is the parent company, either directly
or indirectly through subsidiaries, of CNL
Real Estate Services, Inc., CNL Capital
Markets, Inc., which is engaged in the
business of real estate finance, and CNL
Investment Company, CNL Brokerage Services,
Inc. and CNL Securities Corp. Mr. Seneff
also serves as a Director, Chairman of the
Board and Chief Executive Officer of CNL
Hospitality Properties, Inc., as well as in
the same capacity for CNL Hospitality Corp.,
its advisor. In addition, he serves as a
Director, Chairman of the Board and Chief
Executive Officer of CNL Retirement
Properties, Inc., as well as in the same
capacity for its advisor, CNL Retirement
Corp. Since 1992, Mr. Seneff has also served
as a Director, Chairman of the Board and
Chief Executive Officer of Commercial Net
Lease Realty, Inc. Mr. Seneff has also
served as a Director, Chairman of the Board
and Chief Executive Officer of CNL
Securities Corp. since 1979, CNL Investment
Company since 1990 and CNL Institutional
Advisors, Inc. since 1990. Since 1971, Mr.
Seneff has been active in the acquisition,
development, and management of real estate
projects and, directly or through an
affiliated entity, has served as a general
partner or co-venturer in over 100 real
estate ventures. These ventures have
involved the financing, acquisition,
construction and leasing of restaurants,
office buildings, apartment complexes,
hotels and other real estate. Mr. Seneff
formerly served as a Director of First Union
National Bank of Florida, N.A., and
currently serves as the Chairman of the
Board of CNL Bank. Mr. Seneff previously
served on the Florida State Commission on
Ethics and is a former member and past
Chairman of the State of Florida Investment
Advisory Council, which recommends to the
Florida Board of Administration investments
for various Florida employee retirement
funds. The Florida Board of Administration,
Florida's principal investment advisory and
money management agency, oversees the
investment of more than $60 billion of
retirement funds. Mr. Seneff received his
degree in Business Administration from
Florida State University in 1968.
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.
The Board of Directors recommends a vote FOR all of the above named nominees for
election as directors.
Compensation of Directors
During the year ended December 31, 2002, Messrs. Hostetter, Huseman and
Kruse, Independent Directors, earned $12,000 for serving on the Board of
Directors. Messrs. Seneff and Bourne did not receive compensation for serving on
the Board of Directors during the year ended December 31, 2002. Each Independent
Director also received $1,000 per Board meeting, $1,000 per Audit Committee
meeting, $750 per meeting for all other Committee meetings and $500 for each
telephonic meeting in which the director participated. They also received $1,000
per Special Committee meeting and $500 for each telephonic Special Committee
meeting in which the director participated. The Chairman of the Audit Committee
received $1,500 per meeting and the Chairman of any other Committee received
$1,000 per meeting.
The Board of Directors met 39 times during the year ended December 31,
2002, and the average attendance by directors at Board meetings was 100 percent.
Each current member attended 100 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 are Messrs. Bourne, Hostetter, Huseman and Kruse. 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. For the year ended
December 31, 2002, each of Messrs. Hostetter and Kruse met the definition of
"independent" under Section 303.01(B)(2)(a) and (3) of the New York Stock
Exchange listing standards. During the year ended December 31, 2002, Mr. Bourne
did not meet such definition of "independent," due primarily to his service as
President of the Company through February 1999. The Board of Directors has
adopted a written charter for the Audit Committee. The Audit Committee met six
times during the year ended December 31, 2002.
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 consists 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 two times
during the year ended December 31, 2002.
The Company has a standing Compensation Committee consisting of Messrs.
Seneff, 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 seven times during the year ended December 31,
2002.
During 1999, the Board of Directors established a Nominating Committee.
The Nominating Committee consists of Messrs. Seneff, Huseman and Hostetter. The
Nominating Committee makes recommendations to the Board regarding the size of
the Board and its makeup in terms of specific areas of expertise and diversity.
The Nominating Committee also nominates candidates to fill any vacancies on the
Board and will consider nominees recommended by stockholders. The Nominating
Committee did not meet during the year ended December 31, 2002.
During 2002, the Board of Directors established a Human Capital
Committee. The Human Capital Committee consists of Messrs. Seneff, Kruse and
Huseman. The Human Capital Committee monitors leadership effectiveness within
the Company and identifies areas for leadership development. The Human Capital
Committee met twice during the year ended December 31, 2002.
Executive Officers
The executive officers of the Company are as follows:
Name Position
<s> <c>
CNL American Properties Fund, Inc.:
James M. Seneff, Jr. Chairman of the Board and co-Chief Executive Officer
Curtis B. McWilliams President and co-Chief Executive Officer
Steven D. Shackelford Executive Vice President, Chief Administrative Officer, Chief Financial Officer, Secretary
and Treasurer
CNL Franchise Network Corp. and CNL Restaurant Properties, Inc. are wholly owned
subsidiaries of the Company. These companies have the following senior officers:
CNL Franchise Network Corp.:
Curtis B. McWilliams President and Chief Executive Officer
Robert W. Chapin, Jr. Executive Vice President and National Sales Manager
Michael T. Shepardson Executive Vice President
David H. Wesley Senior Vice President and Chief Credit Officer
CNL Restaurant Properties, Inc.:
Barry L. Goff President
Michael I. Wood Executive Vice President and Chief Operating Officer
Curtis B. McWilliams, age 47. Mr. McWilliams has served as President of
the Company since May of 2001 and co-Chief Executive Officer of the Company
since December 2000. He previously served as Chief Executive Officer of the
Company from September 1999 to December 2000. Mr. McWilliams has also served as
President and Chief Executive Officer of CNL Franchise Network Corp, a wholly
owned subsidiary of the Company since August 2002. Prior to acquisition of the
business organized as CNL Restaurant Properties, Inc., a wholly owned subsidiary
of the Company, Mr. McWilliams served as President of the Company from February
1999 until September 1999. From April 1997 to February 1999, he served as
Executive Vice President of the Company. Mr. McWilliams joined CNL Financial
Group, Inc. in April 1997 and served as an Executive Vice President until
September 1999. In addition, Mr. McWilliams served as President of the Company's
Advisor and as President of CNL Financial Services, Inc., a corporation engaged
in the business of real estate financing, from April 1997 until the acquisition
of such entities by the Company in September 1999. From September 1983 through
March 1997, Mr. McWilliams was employed by Merrill Lynch & Co. The majority of
his career at Merrill Lynch & Co. was in the Investment Banking division where
he served as a Managing Director. Mr. McWilliams received a B.S.E. in Chemical
Engineering from Princeton University in 1977 and a Master of Business
Administration degree with a concentration in finance from the University of
Chicago in 1983.
Steven D. Shackelford, age 39. Mr. Shackelford was promoted to
Executive Vice President and Chief Administrative Officer in December 2002. Mr.
Shackelford has also served as Chief Financial Officer since January 1997. He
served as Senior Vice President of the Company from January 1997 until July
2000, when he was promoted to Executive Vice President. Mr. Shackelford also
served as Secretary and Treasurer of the Company since September 1999. He also
served as Chief Financial Officer of the Company's Advisor from September 1996
until its merger into a subsidiary of the Company in September 1999. 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 by gaining access to capital markets located in the
United States. From August 1992 to March 1995, he was a manager in the Paris,
France office of Price Waterhouse, serving several multi-national clients. Mr.
Shackelford was an audit staff and senior from 1986 to 1992 in the Orlando,
Florida office of Price Waterhouse. Mr. Shackelford received a Bachelor of Arts
degree in Accounting, with honors, and a Master of Business Administration
degree from Florida State University and is a certified public accountant.
Michael T. Shepardson, age 42. Mr. Shepardson has served as Executive
Vice President of CNL Franchise Network Corp. since June 2000. He has served as
President of CNL Advisory Services, Inc., a wholly owned subsidiary of the
Company that advises restaurant operators on merger and acquisition
opportunities, since September 1998. Prior to joining CNL, Mr. Shepardson was
from June 1995 to September 1998 Managing Director, Corporate Finance for CMC,
Ltd., a financial and marketing boutique in the promotional products and direct
marketing sectors. In this capacity, he managed all aspects of the firm's
national M&A and financial consulting engagements in these sectors. He also
served in a number of capacities, most recently as Senior Vice President and
Senior Lender for SunTrust Bank. Mr. Shepardson received both his Bachelor of
Arts degree in Political Science and Master of Business Administration degree
with a concentration in Finance from the University of Notre Dame. As part of
his MBA curriculum, he studied at both the London Business School and the London
School of Economics.
David H. Wesley, age 50. Mr. Wesley has served as Senior Vice President
and Chief Credit Officer of CNL Franchise Network Corp. since July 2002. He has
more than 28 years of lending and risk management experience at major financial
institutions, which included Washington Mutual, SunTrust Bank, First Union
National Bank and American Bank and Trust Company. From 1998 to 2002, Mr. Wesley
served as Senior Vice President and Deputy Chief Credit Office at Washington
Mutual in Houston, Texas. In this position he was responsible for maintaining
the overall quality of the Bank's loan portfolio, credit policy and credit
oversight areas. Mr. Wesley has been an active member of The Risk Management
Association, the leading association of lending, credit, and risk management
professionals serving the financial services industry. He has also served as
Florida Chapter President and Big Bend Group Chairman and is currently a board
member of both the Florida Chapter and the Central Florida Chapter.
Additionally, Mr. Wesley is a former Gulf Coast Chapter president and board
member in Houston, Texas as well as a former Texas Chapter board member. In
2001, Mr. Wesley was recipient of the RMA VIP Award that recognized outstanding
contributions made by individuals. David also currently serves as a member of
the Chapter and Member Relations Council of the Risk Management Association at
the international level. Mr. Wesley earned a Master in Business Administration
degree from the University of Mississippi and a Bachelor of Business
Administration degree from Mississippi State University.
Robert W. Chapin, Jr., age 41. Mr. Chapin has served as Executive Vice
President and National Sales Manager since September 2002. He previously served
as Senior Vice President and Chief Development Officer of CNL Franchise Network
Corp. from July 2000 to August 2002. Additionally, he served in the capacity of
Senior Vice President of Operations for the Company from September 1999 to July
2000 and as Senior Vice President of Development for CNL Restaurant Services,
Inc., which provided turnkey real estate development services on a fee for
services basis exclusively to the restaurant industry. From July 1997 to June
1998, Mr. Chapin served as a full-time consultant with CNL Financial Group,
Inc., working on a number of strategic project initiatives. From 1994 to June
1997, Mr. Chapin served as President of Leader Enterprises, a full-service
sports marketing firm representing elite athletes on a national basis in golf,
football, baseball and motorsports. From 1988 to 1993, Mr. Chapin was employed
by VOA Associates, a Chicago-based design and development company. He served as
the Managing Principal of the Florida office of VOA, which served clients
throughout the southeastern United States, South America and Southeast Asia. Mr.
Chapin received his Bachelor of Science degree from Appalachian State University
in North Carolina.
Barry L. Goff, age 41. Mr. Goff has served as President of CNL
Restaurant Properties, Inc. since October 2000. Mr. Goff joined the Advisor in
August 1998 as Chief Investment Officer and served in such position until
September 1999. Following the merger of the Advisor into the Company, Mr. Goff
assumed the role of Chief Investment Officer and Senior Vice President of the
Company until April 2000. Since April 2000, Mr. Goff has served as an Executive
Vice President of CNL Franchise Network Corp. Prior to joining the Advisor and
from 1989 to July 1998, Mr. Goff was an attorney and a shareholder of Lowndes,
Drosdick, Doster, Kantor & Reed, PA., a law firm in Orlando, Florida, where he
specialized in U.S. and international taxation. Prior to joining Lowndes in
1989, Mr. Goff practiced law with Loeb & Loeb in Los Angeles. Mr. Goff received
his Bachelor of Science degree in Business Administration from the University of
Central Florida in 1983, his Juris Doctor degree from the University of Florida
in 1986, and a Master of Laws in Taxation from New York University in 1988.
Michael I. Wood, age 41. Mr. Wood has served as Executive Vice
President and Chief Operating Officer of CNL Restaurant Properties, Inc., a
wholly owned subsidiary of the Company, since July 2000. From September 1999 to
July 2000, Mr. Wood served as Senior Vice President of Asset Management for the
Company. Mr. Wood joined the Advisor in September 1997 and was appointed Senior
Vice President of Asset Management in December 1997, serving in such position
until September 1999. Prior to joining the Advisor, Mr. Wood spent more than 10
years with Xerox Corporation in a variety of positions in its real estate
investment and corporate real estate divisions. His most recent position with
Xerox was as manager of real estate acquisitions and dispositions where he was
responsible for Xerox's major real estate projects. Mr. Wood has achieved the
professional designation of Certified Commercial Investment Member. He received
a Bachelor of Science degree in Computer Science and a Master of Business
Administration degree from the University of North Carolina at Chapel Hill.
Executive Compensation
The following table sets forth the compensation earned by the Company's
co-Chief Executive Officers and the next most highly compensated officers.
Compensation
Name and Principal Position Year Salary ($) Bonus ($)
--------------------------- ---- ---------- ---------
James M. Seneff, Jr.........................2002 __ __
Chairman of the Board and.. 2001 __ __
Co-Chief Executive Officer* 2000 __ __
Curtis B. McWilliams........................2002 300,000 __
President and 2001 300,000 __
Co-Chief Executive Officer 2000 300,000 __
Steven D. Shackelford.......................2002 200,000 100,000
Executive Vice President,Chief Financial 2001 200,000 50,000
Officer, Secretary and Treasurer 2000 200,000 100,000
*Mr. Seneff assumed the co-Chief Executive Officer title on December 20, 2000.
He does not draw a salary for services rendered.
Executive Employment Contracts
In August 1999 the Company entered into an employment agreement with
Mr. Curtis McWilliams, under which Mr. McWilliams serves as the Company's
President and co-Chief Executive Officer. The initial term of the agreement
commenced on September 1, 1999 for a period of three years, automatically
renewable for one-year terms. The agreement provides that, upon termination by
the Company without cause or upon the resignation of Mr. McWilliams for good
reason, the Company will pay Mr. McWilliams a cash payment equal to two times
his base salary in effect on the date of his termination, plus any accrued but
unpaid base salary and vacation. In addition, the Company agreed to accelerate
any stock that would otherwise vest in the twelve months following his
termination. The agreement includes in its definition of "good reason", among
other things, the Company's failure to assign the agreement to any successor to
the business of the Company. Additionally, in the event the Company terminates
his employment due to his death or disability, the Company agreed to provide Mr.
McWilliams or his estate a lump sum equal to twelve months of his base salary.
In November 1999 the Company entered into an addendum with Mr. McWilliams
including within the definition of "good reason" an assignment of the agreement
by a purchaser of the Company to another person or entity without Mr.
McWilliams' consent. The addendum also provided, among other things, that upon
his termination any compensation received by Mr. McWilliams under the agreement
would not alter his entitlement to any deferred compensation otherwise due
pursuant to the terms of a deferred compensation plan. In June 2000 the Company
entered into an additional addendum with Mr. McWilliams providing that upon his
termination due to a change in control Mr. McWilliams would receive a cash
payment equal to his executive base salary as in effect on the date of his
termination.
In August 1999 the Company entered into an employment agreement with
Mr. Steve Shackelford, under which Mr. Shackelford serves as the company's
Senior Vice President/Chief Financial Officer. The initial term of the agreement
commenced on September 1, 1999 for a period of three years, automatically
renewable for one-year terms. The agreement provides that, upon termination by
the Company without cause or upon the resignation of Mr. Shackelford for good
reason, the Company will pay Mr. Shackelford a payment equal to two times his
base salary in effect on the date of his termination, plus any accrued but
unpaid base salary and vacation. In addition, the Company agreed to accelerate
any stock that would otherwise vest in the twelve months following his
termination. The agreement includes in its definition of "good reason", among
other things, the Company's failure to assign the agreement to any successor to
the business of the Company. Additionally, in the event that the Company
terminated his employment due to his death or disability, the Company agreed to
provide Mr. Shackelford or his estate a lump sum equal to twelve months of his
base salary. In November 1999 the Company entered into an addendum including
within the definition of "good reason" an assignment of the agreement by a
purchaser of the Company to another person or entity without Mr. Shackelford's
consent. In addition, the addendum increased Mr. Shackelford's base salary and
provided, among other things, that upon his termination any compensation
received by Mr. Shackelford under the agreement would not alter his entitlement
to any deferred compensation otherwise due pursuant to the terms of a deferred
compensation plan. In June 2000 the Company entered into an additional addendum
with Mr. Shackelford providing that upon his termination due to a change in
control Mr. Shackelford would receive a cash payment equal to his executive base
salary as in effect on the date of his termination.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is comprised of Messrs. Seneff, Huseman and
Kruse. The Compensation Committee determines compensation for the Company's
executive officers, reviews and approves management's recommendations for the
annual salaries of all the Company officers and administers any stock incentive
or other compensation plans adopted by the Company, including the 1999
Performance Incentive Plan (the "Plan"). The Company's primary business
objective is to maximize stockholder value over the long term. The Compensation
Committee believes that the Company's compensation package must be structured in
a manner that will help the Company attract and retain qualified executives and
will align compensation of such executives with the interests of stockholders.
The compensation package currently consists of salary, bonus and long-term
compensation in the form of stock options, stock appreciation rights or
restricted stock issued pursuant to the Plan.
Salary and Bonus
Salary and bonus are determined by the Compensation Committee using a
subjective evaluation process. In making determinations of salary and bonus for
particular officers, including the co-Chief Executive Officers, the Compensation
Committee considers the general performance of the Company, the officer's
position, level and scope of responsibility, the officer's anticipated
performance and contributions to the Company's achievement of its long-term
goals, and the salary and bonus for the officer recommended by management.
As part of its overall compensation philosophy, the Committee has
determined appropriate target levels for base salary, annual incentives,
long-term compensation, and total compensation. In general, the Committee has
determined that total compensation should be targeted at the 50th percentile of
the market but individual pay determinations will be based on individual
responsibilities and contributions. To the extent the Committee determines that
individual compensation levels fall below the targeted levels, the Committee
will adjust these compensation levels as appropriate.
Long-Term Incentive Compensation
The Board of Directors and the stockholders approved the Plan as the
principal means of providing long-term incentives. The Compensation Committee
believes that the use of equity incentives aligns the interest of executive
officers with those of stockholders and promotes long-term stockholder value
better than does cash alone. The Plan provides for grants of stock options,
stock appreciation rights and restricted stock to key employees, directors and
officers of the Company. The Compensation Committee administers the Plan and
determines the participants who receive awards, the terms of the awards, the
schedule for exercisability or nonforfeitability, the time and conditions for
expiration of the awards, and the form of payment upon exercise. The
Compensation Committee may make determinations under the Plan that are not
uniform as to the participants and that do not consider whether possible
participants are similarly situated. The Committee has never granted any awards
under the Plan.
Compensation Committee
James M. Seneff, Jr.
Richard C. Huseman
J. Joseph Kruse
Compensation Committee Interlocks and Insider Participation
Currently, Messrs. Huseman and Kruse are not officers or employees of
the Company. Mr. Seneff has served as co-Chief Executive Officer of the Company
since December 2000 and Chairman of the Board of the Company since 1994, and as
Chairman of the Board and Chief Executive Officer of the Company's Advisor, CNL
Financial Advisors, Inc., a wholly owned subsidiary of the Company, since June
2000, but does not receive compensation for serving in such offices. In
addition, Mr. Seneff served as Chief Executive Officer of the Company from 1994
through August 1999.
<page>
PROPOSAL II
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO CHANGE THE COMPANY'S NAME
The Board of Directors of the Company has unanimously approved and
directed that there be submitted to the Company' stockholders for their approval
a proposal to amend Article I of the Company's Second Amended and Restated
Articles of Incorporation, as amended (the "Second Restated Articles of
Incorporation"), to change the name of the Company to "CNL Restaurant
Properties, Inc." (the "Name Change Amendment").
The text of the proposed amendment is set forth below:
RESOLVED, that Section 1.1 of Article I of the Company's
Second Restated Articles of Incorporation be amended to read as
follows:
Section 1.1 Name.
The name of the corporation (the "Company") is:
CNL Restaurant Properties, Inc.
So far as may be practicable, the business of the Company
shall be conducted and transacted under that name, which name, and the
word "Company" wherever used in these Second Amended and Restated
Articles of Incorporation of CNL Restaurant Properties, Inc. (these
"Articles of Incorporation"), except where the context otherwise
requires, shall refer to the Directors collectively but not
individually or personally and shall not refer to the Stockholders or
to any officers, employees or agents of the Company or of such
Directors.
Under circumstances in which the Directors determine that the
use of the name "CNL Restaurant Properties, Inc." is not practicable,
they may use any other designation or name for the Company.
The Name Change Amendment will not change any other aspect of Article I
After extensive discussions with the Company's branding specialists and
supported by the customer survey research, the Company has concluded that it is
important to more closely link its name to the market it serves. As the oldest
and largest independent Real Estate Investment Trust exclusively serving the
Restaurant Industry, the Company believes that it is in its best interests to
specifically identify its area of expertise and market position in its name -
CNL Restaurant Properties, Inc.
Approval of the Name Change Amendment requires the affirmative vote of
the holders of a majority of the outstanding shares of the Company's common
stock entitled to vote thereon. Proxies received will be voted for approval of
the Name Change Amendment unless stockholders designate otherwise. The Company's
officers and directors have advised the Company that they intend to vote their
shares of common stock for the Name Change Amendment.
The Name Change Amendment, if approved by stockholders, will become effective
on the date such amendment is filed with the Maryland Department of Assessments
and Taxation. It is anticipated that the appropriate filing to effect the Name
Change Amendment will be made as soon after the annual meeting as practicable.
The Board of Directors recommends that stockholders vote FOR this proposal to
amend the Company's Second Amended and Restated Articles of Incorporation.
<page>
PROPOSAL III
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO CLARIFY THE COMPANY'S INDEMNIFICATION OBLIGATIONS
The Board of Directors of the Company has unanimously approved and
directed that there be submitted to the Company's stockholders for their
approval a proposal to amend Article VII of the Company's Second Restated
Articles of Incorporation to clarify the indemnification already provided to the
Company's officers, directors, employees and agents (the "Indemnification
Amendment").
The text of the proposed amendment is set forth below:
RESOLVED, that Section 7.3 of Article VII of the Company's
Second Restated Articles of Incorporation be amended to read as
follows:
Section 7.3 Indemnification. The Company shall indemnify and advance
expenses to any Party (as such term is defined in Section 2-418 of the
MGCL) to the fullest extent permitted by Maryland law in effect from
time to time (but in the case of any amendment to the MGCL or other
change in Maryland law, to the extent such amendment or change permits
the Company to provide broader indemnification or advancement rights
than Maryland law permitted prior to such amendment or change).
In recent years there has been an increase in the amount of litigation
seeking to impose liability on directors and officers of publicly-held
corporations. The costs of defending or settling these actions, whether or not
they are well founded, may be substantial. Even in proceedings in which a
director, officer, employee or agent is not named as a defendant, an individual
may incur substantial expenses or attorneys' fees if he or she is called as a
witness or becomes involved in the proceeding in any other way. As a result, an
individual may conclude that potential exposure to the costs and risks of
proceedings in which he or she may become involved exceeds any benefit to him or
her from serving as a director, officer, employee or agent of the Company. In an
effort to obtain and retain qualified directors, officers, employees and agents,
many public companies have included in their articles of incorporation
indemnification provisions incorporating the fullest protection allowed by the
laws of their state of formation. Although the Company has not experienced
difficulty in attracting and retaining well qualified directors, officers,
employees or agents in the past, the Board of Directors believes that the
continued success of the Company in attracting and retaining qualified
directors, officers, employees and agents is dependent, at least in part, on the
Company's ability to be competitive with other corporations which have adopted
arrangements providing directors, officers, employees and agents with the
fullest protection available from personal financial risks.
The Board of Directors believes that the Second Restated Articles of
Incorporation already requires the Company to indemnify all persons whom it may
indemnify under the Maryland General Corporation Law. The Board of Directors
believes that the Indemnification Amendment will simplify the indemnification
provisions contained in the Company's Second Restated Articles of Incorporation,
allowing the Company to remain competitive in recruiting directors, officers,
employees and agents.
The Board of Directors acknowledges that current and future directors
and officers could benefit from the approval of the Indemnification Amendment
and, in this connection, the directors and officers may be considered to have a
conflict of interest.
Approval of the Indemnification Amendment requires the affirmative vote
of the holders of a majority of the outstanding shares of the Company's common
stock entitled to vote thereon. Proxies received will be voted for approval of
the Indemnification Amendment unless stockholders designate otherwise. The
Company's officers and directors have advised the Company that they intend to
vote their shares of common stock for the Indemnification Amendment.
The Board of Directors recommends that stockholders vote FOR this
proposal to amend the Company's Second Amended and Restated Articles of
Incorporation.
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission (the "Commission"), nor shall such information be incorporated by
reference into any previous or future filings under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company incorporates it by specific reference.
Review and Discussions with Management. The Audit Committee has
reviewed and discussed the Company's audited financial statements for the fiscal
year ended December 31, 2002, with the management of the Company.
Review and Discussions with Independent Auditors. The Audit Committee
has discussed with PricewaterhouseCoopers LLP, the Company's independent
accountants, the matters required to be disclosed by SAS 61 (Codification of
Statements on Accounting Standards) which includes, among other items, matters
related to the conduct of the audit of the Company's financial statements.
The Audit Committee has also received written disclosures and the
letter from PricewaterhouseCoopers LLP required by Independence Standards Board
Standard No. 1 (which relates to the accountant's independence from the Company
and its related entities) and has discussed with PricewaterhouseCoopers LLP
their independence from the Company.
Conclusion. Based on the review and discussions referred to above, the
Audit Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Annual Report of the Company on Form
10-K for the fiscal year ended December 31, 2002, for filing with the
Commission.
Audit Committee
Robert A. Bourne
J. Joseph Kruse
G. Richard Hostetter
SECURITY OWNERSHIP
The following table sets forth, as of April 1, 2003, the number and
percentage of Company Shares beneficially owned by (i) each person or entity
known by the Company to own beneficially 5% or more of the outstanding Company
Shares, (ii) the named officers, (iii) the directors, and (iv) all executive
officers and directors as a group. Unless otherwise noted below, the persons
named in the table have the sole voting and sole investment power with respect
to each of the shares beneficially owned by them. The address of the named
officers and directors, unless otherwise noted, is CNL Center at City Commons,
450 South Orange Avenue, Orlando, Florida 32801.
<s> <c>
Number of Percent of
Company Shares Company
Name and Address of Beneficial Owner Beneficially Owned Shares Outstanding
James M. Seneff, Jr........................................... 5,468,592(2) 12.1%
Robert A. Bourne.............................................. 990,858(3) 2.2%
Curtis B. McWilliams.......................................... 290,322 (1)
Steven D. Shackelford......................................... 26,600 (1)
G. Richard Hostetter.......................................... 2,739 (1)
SunTrust Bank of Chattanooga, N.A.
P.O. Box 1638
Mail Code M0321
Chattanooga, TN 37401
J. Joseph Kruse............................................... __ __
494 Woonasquatucket Avenue, Unit 114
North Providence, RI 02911
Richard C. Huseman............................................ __ __
3504 Lake Lynda Drive, Suite 100A
Orlando, FL 32817
All executive officers and directors as
a group (7 persons)........................................... 6,779,111 15.0%
(1) Less than 1%
(2) Includes 4,758,132 shares owned by CNL Financial Group, Inc., a wholly owned
subsidiary of CNL Holdings, Inc., in which Mr. Seneff and his spouse own 100% of
the outstanding stock. In addition, 26,819 shares are held by two trusts of
which a fellow business associate serves as trustee. Mr. Seneff disclaims
beneficial ownership of the shares held in the trusts. Finally, 2,750 shares are
held by J&R Investments of Orlando, Ltd. Mr. Seneff owns 49.5% of J&R
Investments, Inc., which is the General Partner of J&R Investments of Orlando,
Ltd. Mr. Seneff disclaims beneficial ownership of these securities except to the
extent of his pecuniary interest.
(3) Includes 19,842 shares held in trust of which Mr. Bourne's personal attorney
and a fellow business associate serve as trustees. Mr. Bourne disclaims
beneficial ownership of the shares held in the trusts. In addition, 2,750 shares
are held by J&R Investments of Orlando, Ltd. Mr. Bourne owns 49.5% of J&R
Investments, Inc., which is the General Partner of J&R Investments of Orlando,
Ltd. Mr. Bourne disclaims beneficial ownership of these securities except to the
extent of his pecuniary interest.
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 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 on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for the last fiscal year, the Company believes
that all its officers, directors, and greater than ten percent beneficial owners
complied with all filing requirements applicable to them with respect to
transactions during fiscal 2002.
<page>
CERTAIN TRANSACTIONS
CNL Securities Corp., an affiliate of the Company's Chairman, is
entitled to receive, in connection with each common stock offering, a soliciting
dealer servicing fee payable annually by the Company beginning on December 31 of
the year following the year in which each offering terminated in the amount of
0.20 percent of the stockholders' investment in the Company in connection with
such offering. CNL Securities Corp. in turn may reallow all or a portion of such
fee to broker-dealers whose clients purchased shares in such offering and held
shares on such date. During 2002, the Company incurred $1.5 million of such
fees, all of which were reallowed. The soliciting dealer servicing fee will
terminate as of the beginning of any year in which the Company is liquidated or
the shares become listed on a national securities exchange or over-the-counter
market.
CNL Financial Group, Inc. and CNL Shared Services, Inc., affiliates of
the Company's Chairman, provide certain administrative services (including
services for tax and regulatory compliance, stockholder distributions and
reporting, investor relations, human resources, pay services, purchasing and
information technology) to the Company on a day-to-day basis. The costs incurred
related to these functions were $4.0 million for the year ended December 31,
2002.
As of December 31, 2001, the Company has finalized a lease agreement
for its office space (the "Lease") with an affiliate of the Company's Chairman.
The Lease provides for rent increases annually, expiring in October 2014. The
Company incurred rental and other expenses relating to this lease of $1.5
million during the year ended December 31, 2002.
In May 2002, the Company purchased a combined five percent partnership
interest in CNL Plaza, Ltd. and CNL Plaza Venture, Ltd. (the "Plaza") for $0.2
million. Affiliates of the Company's Chairman own the remaining partnership
interests. The Company received distributions of $0.1 million during the year
ended December 31, 2002. Since November 1999, the Company has leased its office
space from the Plaza and the lease expires in October 2014. In addition, the
Company has guaranteed 8.33 percent or $1.3 million of a $15.5 million unsecured
promissory note of the Plaza.
Mortgage loans held for sale includes an $11.1 million receivable as of
December 31, 2002 from CNL Restaurant Investors Properties, LLC ("CRIP"), a
related party under common control. CRIP acquires or constructs assets for lease
under operating and capital lease agreements to qualified tenants. The Company's
receivable from CRIP is recorded at cost and is collateralized by CRIP's assets
under lease. Interest is payable at rates ranging from 9.1 percent to 10.0
percent. Amounts are repayable to the Company in accordance with the monthly
maturities specified in the lease agreements entered into by CRIP and qualified
tenants. For the year ended December 31, 2002, the Company recorded interest
income of $1.0 million.
The Company, through the acquisition of the Advisor on September 1,
1999, provides certain services relating to management of parties affiliated
with the Company's Chairman and their properties pursuant to management
agreements. Under these agreements, the Company is responsible for collecting
rental payments, inspecting the properties and the tenants' books and records,
assisting in responding to tenant inquiries and notices and providing
information to the related parties about the status of the leases and the
properties. For these services, the related parties have agreed to pay the
Company an annual fee. For the year ended December 31, 2002, the Company earned
$2.3 million of such fees.
During the year ended December 31, 2001, CNL Financial Group, Inc., an
affiliate of the Company's Chairman, advanced $6.0 million to the Company in the
form of a demand balloon promissory note. The loan bore interest at a rate of
LIBOR plus 2.5 percent. During the year ended December 31, 2001, the Company
converted the outstanding principal balance plus accrued interest under the
advances into 359,722 shares of Company stock. During 2001, the Company also
issued 220,000 shares to CNL Financial Group, Inc. in exchange for $3.7 million
paid to the Company in cash. As of December 31, 2001, CNL Financial Group, Inc.
had advanced an additional $2.7 million under the same terms as the previous
advance. During 2002, CNL Financial Group, Inc. advanced an additional $7.5
million to the Company under the same terms of the previous advances. In June
2002, the Company converted the $10.3 million of outstanding principal plus
accrued interest under the advances into 604,177 shares of stock. During
September 2002 the Company also issued 569,177 additional shares to CNL
Financial Group, Inc. in exchange for $9.75 million paid to the Company in cash.
As of December 31, 2002, CNL Financial Group, Inc. had advanced an additional
$4.25 million to the Company under the same terms of the previous advances.
In order to ensure that the Company could maintain its historical level
of distributions to its stockholders, the Company's Chairman, through CNL
Financial Group, Inc., purchased 1,173,354 shares of the Company's stock in
exchange for $20.1 million in cash, including the conversion of amounts
previously treated as advances. Also, the Chairman advanced to the Company $4.2
million in December 2002. The Company's Chairman was under no obligation to do
so. Should the Company's Chairman determine not to purchase additional shares or
loan additional funds to the Company, and the Company does not generate adequate
cash flow from other sources, the Company may have to reduce the distribution
rate.
In September 2002, the Company acquired a portfolio of 109 real estate
properties, which have been classified as held for sale, for approximately $117
million by acquiring all of the limited partner and general partners interests
in CNL Net Lease Investors, LP, ("NLI"). The Chairman of the Board and Vice
Chairman of the Board of Directors of the Company, through an affiliate, owned
the .01% general partner interest in NLI prior to the acquisition by the Company
and agreed to waive their rights to benefit from the transaction. During 2002,
the Company sold 22 properties to several of the CNL Income Funds, which are
affiliates of the Chairman and Vice Chairman of the Board of Directors of the
Company, for $25.9 million and recorded losses of $0.9 million.
During the year ended December 31 2002, a tenant and borrower of the
Company assigned loans in the amount of $7.5 million to Restaurants Acquisitions
I, LLC, an affiliate of the Company. The Company agreed to the assignment and
advanced an additional $3.6 million to the affiliate in exchange for an $11.1
million participating note. The note bears interest at a rate of ten percent per
annum and matures on May 1, 2014. The participating note entitles the Company to
receive a percentage of all cash flows generated by the borrower on a quarterly
basis until the note matures.
<page>
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.
The following table outlines the fees paid or accrued by the Company
for the audit and other services provided by PriceWaterhouseCoopers LLP for
2002.
Audit Fees (1) $205,000
All Other Fees (2) 346,000
-------
Total $551,000
========
(1) Audit services of PriceWaterhouseCoopers LLP for 2002 consisted of the
examination of the consolidated financial statements of the Company and
quarterly review of financial statements.
(2) All Other Fees relates to tax consulting and compliance services.
The Audit Committee of the Board of Directors has considered whether
the provision of the services described under the captions "Financial
Information Systems Design and Implementation" and "All Other Fees" is
consistent with maintaining the independence of PricewaterhouseCoopers LLP.
OTHER MATTERS
The Board of Directors 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, she or they determine to be in the best interests of the
Company.
<page>
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 2003 has to be received at the Company's office at
CNL Center at City Commons, 450 South Orange Avenue, Orlando, Florida 32801, no
later than December 19, 2003.
Under the Company's bylaws, 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 Company's
Secretary. 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 2004, the Company's
Secretary must receive notice of any such proposal no earlier than March 28,
2004, and no later than April 27, 2004 (other than proposals intended to be
included in the proxy statement and form of proxy which, as noted above, have to
be received by December 19, 2003). Generally, such notice must set forth: (1) 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
Securities Exchange Act of 1934, as amended (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (2) 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; (3) 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 Company Shares 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, Inc., Attn. Corporate Secretary, CNL Center at
City Commons, 450 South Orange Avenue, Orlando, Florida 32801.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 2002, accompanies this Proxy Statement.
By Order of the Board of Directors,
/s/ Steven D. Shackelford
Steven D. Shackelford
Secretary
April 18, 2003
Orlando, Florida