UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-15581
CNL AMERICAN PROPERTIES FUND, INC.
(Exact name of registrant as specified in its charter)
Florida 59-3239115
(State or other jurisdiction of (I.R.S. EmployerIdentification No.)
incorporation or organization)
450 South Orange Avenue
Orlando, Florida 32801
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (407) 540-2000
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class: Name of exchange on which registered:
None Not Applicable
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $0.01 par value per share
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant has made three offerings of Shares of common stock
(the "Shares") on Form S-11 under the Securities Act of 1933, as amended. The
number of Shares held by non-affiliates as of March 15, 2002 was 38,784,588.
Since no established market for such Shares exists, there is no market value for
such Shares. Each Share was originally sold at $20 per Share.
The number of Shares of common stock outstanding as of March 28, 2002 was
44,075,641.
DOCUMENTS INCORPORATED BY REFERENCE:
Registrant incorporates by reference portions of the CNL American
Properties Fund, Inc. Definitive Proxy Statement for the 2002 Annual Meeting of
Stockholders (Items 10, 11, 12 and 13 of Part III) to be filed no later
than April 30, 2002.
PART I
Item 1. Business
CNL American Properties Fund, Inc., a Maryland corporation, is a
self-advised real estate investment trust ("REIT"). The Company's operations are
divided into two business segments, real estate and specialty finance. The real
estate segment operates principally through CNL Restaurant Properties, Inc.
("CNL-RP"), a wholly owned subsidiary of the Company, and CNL APF Partners, LP,
a limited partnership wholly owned by CNL-RP and in which CNL APF GP Corp. and
CNL APF LP, subsidiaries of the Company, serve as general and limited partner,
respectively. The specialty finance segment operates through the Company's
wholly-owned subsidiary CNL Franchise Network Corp and a partnership between the
Company and Bank of America, CNL Franchise Network, LP ("CNL-FN"). The Company's
subsidiaries also include CNL Fund Advisors, Inc., CNL Financial GP Holding
Corp., CNL Financial LP Holding, LP, CNL Financial Services GP Corp. and CNL
Financial Services, LP. The term "Company" includes, unless the context
otherwise requires, CNL American Properties Fund, Inc. and its direct and
indirect subsidiaries. Please see note 13 of the Company's Consolidated
Financial Statements appearing in Item 8 of this report for certain financial
information about the Company's two business segments.
The Company provides a complete range of financial, development, advisory
and other real estate services to operators of national and regional restaurant
chains. The Company's ability to offer complete "turn-key," build-to-suit
development services, from site selection to construction management, together
with its ability to provide its customers with financing options, such as
triple-net leasing, mortgage loans and secured equipment financing, makes the
Company a preferred provider for all of the real estate related business needs
of operators of national and regional restaurant chains. At December 31, 2001,
the Company has financial interests in over 1200 properties diversified among
more than 100 concepts in 47 states. The Company's servicing portfolio of net
lease properties and mortgages includes over 2,500 units of which over 1,300 are
serviced on behalf of third parties.
The Company was formed in May 1994, at which time it received initial
capital contributions of $200,000 for 10,000 shares of the Company's common
stock, par value $0.01 per share ("Company Shares"). Since inception, the
Company has completed three separate public offerings of Company Shares. The
Company received the final proceeds of $210,736 from its third public offering
of Company Shares in January 1999, at which point the Company had received
aggregate subscription proceeds from its three offerings of $747,464,420
(37,373,221 Company Shares), including $5,572,261 (278,613 Company Shares)
issued through the Company's reinvestment plan. Net proceeds to the Company from
its three offerings and the initial capital contributions, after deduction of
stock issuance costs, totaled $670,351,200, all of which have been invested in
properties or mortgage loans.
The Company's goal is to be a leading provider of financial, development,
advisory and other real estate services to operators of national and regional
restaurant chains. In furtherance of this goal, on September 1, 1999, the
Company became internally advised and gained complete acquisition, development
and in-house management functions by acquiring its external advisor, CNL Fund
Advisors, Inc. (the "Advisor"). Prior to September 1, 1999, the Company had no
employees, so the Advisor provided these functions on behalf of the Company and
was responsible for the day-to-day operations of the Company, including raising
capital, investment analysis, acquisitions, due diligence, asset management and
accounting services. The acquisition of the Advisor also provided the Company
with restaurant development capabilities including site selection, construction
management and build-to-suit development.
At the same time that it acquired the Advisor, the Company acquired CNL
Financial Corporation and CNL Financial Services, Inc. which are referred to,
together, as the CNL Restaurant Financial Services Group, to increase its
financing capabilities and expand its mortgage loan portfolio. The CNL
Restaurant Financial Services Group makes and services mortgage loans, and
securitizes a portion of such loans, to operators of national and regional
restaurant chains comparable to the restaurant chain operators that currently
are tenants of the Company.
Upon consummation of the mergers on September 1, 1999, all employees of the
acquired entities became employees of the Company, and any obligations for the
Company to pay fees to the Advisor (such as acquisition fees and asset
management fees) under the advisory agreement between the Company and the
Advisor terminated.
Subsequent to acquiring the Advisor, the Company examined various
alternatives to improve its capital position and to further diversify its
business platform in an attempt to maximize stockholder value over the
long-term. The Company adopted a new strategy to service the franchise
restaurant marketplace made possible by the REIT Modernization Act. The
Company's new strategy focused on two segments of the Company's operations - the
Company's existing real estate segment and a specialty finance segment allied
with a major financial institution as its strategic partner. In June 2000, the
Company formed a partnership, CNL Franchise Network, L.P. ("CNL-FN" or the
"Partnership") and contributed certain assets and operations in exchange for an
84.39% interest. Bank of America, contributed its franchise finance originations
group in exchange for a 9.18% non-voting redeemable interest in the Partnership.
Bank of America also served as lender at the time of alliance on a $500 million
warehouse credit facility and a $43.75 million subordinated debt facility (the
"Subordinated Note Payable"), as well as administrative agent on a $125 million
revolving credit facility and as provider of a $175 million bridge financing.
Bank of America's interest in the Partnership on a fully diluted basis after a
conversion of the fully committed Subordinated Note Payable is 29.12%. The
strategic alliance with Bank of America reduces the Company's reliance on public
markets to raise capital by broadening the Company's financial products and
offerings and enhancing the Company's securitization platform.
The Company also issued a 6.43% limited partnership interest in CNL-FN to
CNL Financial Group, Inc., an affiliate of a director of the Company, in
exchange for the operations of CNL Advisory Services, Inc. ("CAS"). CAS
specializes in providing merger, acquisition and other advisory services to
restaurant operators and expands the Company's services to the sector.
The Company has also explored alternatives in which to direct its existing
loan and lease assets, including the tax-deferred real estate exchange market.
While asset securitization is one sales channel for loans or leases, another is
the tax-deferred real estate exchange market allowed under Section 1031 of the
Internal Revenue Code ("Section 1031 Exchanges"). Generally, Section 1031
Exchanges allow an investor who realizes a gain from selling appreciated real
estate to defer paying taxes on such gain by reinvesting the sales proceeds in
like-kind real estate. The Company conducts Section 1031 Exchanges through its
CNL-FN subsidiary and through a partnership with a third party client. The
Company and its partnership sold approximately $108.0 million of real estate in
Section 1031 exchanges, generating $9.1 million in gains in 2001. The Company
expects this sales channel to grow significantly in 2002. In addition, CNL-FN
will continue to investigate other sales channels in which to direct its
existing loan and lease assets while the securitization market remains
unappealing.
The Company's Second Amended and Restated Articles of Incorporation require
it to provide stockholder liquidity by December 31, 2005, either by listing on a
national exchange, by merging with another public company or by liquidating. The
Company's shares, while public, are not listed on a national exchange. The
Company pursued but eventually abandoned a listing strategy in 1999 because of
unsatisfactory market conditions in the publicly traded REIT market. Instead,
the Company entered into a partnership with Bank of America, building an
origination and securitization business that enabled it to not have to rely on
the public equity markets.
The Company continues to monitor the public markets and intends to either
list on a national exchange or merge with another company by December 31, 2005.
The Company's Board of Directors does not intend to liquidate the Company. To
comply with certain tax guidelines governing taxable REIT subsidiaries, the
Company may pursue other alternatives related to CNL-FN that would provide
stockholder liquidity for all or a portion of the Company's investment by
December 31, 2005.
The Company's customer base is characterized by a large number of
individual customers, each with divergent needs and most enjoying multiple
relationships with the Company. Management identified a need to upgrade its
information systems in order to integrate its services more efficiently. During
2000, the Company invested $4 million to upgrade its information systems. The
implementation of these changes became effective in the fourth quarter of 2000.
In addition, the Company spent $1.2 million in research and evaluation of an
e-commerce presence for the purchase and sale of real estate and related Company
services. The Company expects that its updated systems and technology will
enable it to serve restaurant operators more efficiently. Management did not
incur similar types or amounts of capital expenditures in 2001.
Leases
As of December 31, 2001, the Company had acquired, either directly or
indirectly through joint venture arrangements, 651 properties, which are
generally subject to long-term, triple-net leases. Although there are variations
in the specific terms of the leases, the following summarizes the general
structure of the Company's leases. The leases of the properties owned by the
Company and the joint ventures in which the Company is a co-venturer provide for
initial terms generally ranging from 13 to 25 years and expire between 2006 and
2024. The leases are on a triple-net basis which means the lessee is responsible
for all repairs and maintenance, property taxes, insurance and utilities. The
leases of the properties provide for minimum base annual rental payments
(payable in monthly installments) ranging from approximately $31,000 to
$369,000. In addition, certain leases provide for percentage rent based on sales
in excess of a specified amount. In addition, the majority of the leases provide
that, commencing in specified lease years (generally the sixth lease year), the
annual base rent required under the terms of the lease will increase.
Generally, the Company's property leases provide for two to five five-year
or ten-year renewal options subject to the same terms and conditions as the
initial lease. Lessees of 520 of the Company's 651 properties also have been
granted options to purchase the property at the property's then fair market
value after a specified portion of the lease term has elapsed. Fair market value
will be determined through an appraisal by an independent appraisal firm. The
option purchase price may equal the Company's original cost to purchase the
property (including acquisition costs), plus a specified percentage from the
date of the lease or a specified percentage of the Company's purchase price, if
that amount is greater than the property's fair market value at the time the
purchase option is exercised.
The leases also generally provide that, in the event the Company wishes to
sell the property subject to that lease, the Company first must offer the lessee
the right to purchase the property on the same terms and conditions, and for the
same price, as any offer which the Company has received for the sale of the
property.
Major Tenants
During 2001, no single lessee, borrower or restaurant chain contributed
more than ten percent of the Company's total rental, earned, investment income
and interest income relating to its properties, mortgage loans, secured
equipment leases and certificates. In the event that certain lessees, borrowers
or restaurant chains contribute more than ten percent of the Company's rental,
earned, investment income and interest income in future years, any failure of
such lessees, borrowers or restaurant chains could materially affect the
Company's income. As of December 31, 2001, no single lessee or borrower, or
group of affiliated lessees or borrowers, leased properties or was the borrower
under mortgage loans with an aggregate carrying value in excess of 20 percent of
total assets of the Company.
Real Estate Held for Sale
The Company has developed a program through which it may profitably sell
certain real estate properties to private investors as an alternative to either
retaining the properties as a long-term investment or offering to sell net lease
cash flows in the securitization marketplace. As of December 31, 200l, the
Company has a total of $171.6 million assets classified as Real Estate Held for
Sale. For the twelve months ended December 31, 2001, the total gross proceeds
from real estate sales aggregated to $105.6 million; cost of sales to $97.6
million. The accounting for these properties differs from that of similar
properties without this designation as the Company does not record depreciation
or accrued rent on these properties. The properties held for sale are
contemplated being sold within the first year.
From time to time, certain properties classified as long-term investments
may be subsequently re-designated to held for sale classification. The company
has re-designated 93 properties with a net book value of $115.7 million during
2001.
Mortgage Loans
Mortgage loans held for sale are wholly or partially collateralized by
first mortgages on the land and/or buildings of franchised restaurant businesses
and consist of approximately $300.2 million in fixed-rate loans and
approximately $6.7 million in variable-rate loans at December 31, 2001. The
fixed-rate loans carry a weighted average interest rate of 9.59 percent and the
variable-rate loans carry interest rates that adjust monthly based on
fluctuations in 30-day LIBOR (averaging 8.43 percent throughout 2001). The
mortgage loans are due in monthly installments with maturity dates ranging from
2002 to 2021. The fixed-rate mortgage loans generally prohibit prepayment for
certain periods or include prepayment penalties.
Competition
The fast-food, family-style and casual dining restaurant business is
characterized by intense competition. The operators of the restaurants located
on the Company's properties compete with independently owned restaurants,
restaurants which are part of local or regional chains, and restaurants in other
well-known national chains, including those offering different types of food and
service.
Local competition may enhance a restaurant's success rather than detract
from it. Many successful fast-food, family-style and casual dining restaurants
are located in "eating islands", areas within which a variety of restaurants
operate. This variety allows diners an opportunity to diversify their eating
habits, giving them an incentive to return in the future. As a result, fast
food, family style and casual dining restaurants frequently experience better
operating results when there are other restaurants in the area.
The Company competes with other persons and entities in locating suitable
properties to acquire and in locating purchasers for properties held for sale.
The Company also competes with other financing sources such as banks, mortgage
lenders and sale/leaseback companies for suitable tenants for its properties,
borrowers for its mortgage loans and lessees and borrowers for its Secured
Equipment Leases.
The recessionary economy and historically low interest rates at which
mortgage financing could be accessed contributed to a decline in net lease
volume in 2001 while the low interest rates made loan referrals to portfolio
providers more attractive. Management believes that the Company's volume levels
may increase in 2002 due to the projected rebound in the economy as well as the
opportunities afforded by the continued consolidation in the financing arena and
the Company's ability to provide a diverse array of financial products to meet
client's needs. Competition in the financing arena continues to be fierce
despite the exit of numerous competitors, as remaining competitors appear well
capitalized and provide meaningful competition. The Company believes that the
rationalization in the financing marketplace will be of long term benefit to the
company as well as other experienced, well capitalized competitors.
The Company recycles its capital by periodically conducting securitizations
of loans and net leases, by conducting whole loan sales and by selling select
properties to private investors. By recycling its capital, the Company believes
that it maintains brand loyalty and fosters ongoing client relationships by
providing the Company with an opportunity to offer a variety of financing
solutions to the sector. While consolidation in the industry has created an
opportunity to potentially increase volume, it has also led to increased
investor scrutiny of franchise-backed securities issued in a securitization. In
order to mitigate the volatility in the securitization market the Company has
engaged in a strategy to diversify its capital sources. Alternative capital
strategies include whole loan sales, structured note offerings and increased
loan referrals to portfolio providers as well as the sale of select properties
to private investors. The creation of diversified capital channels will enable
the Company to provide a diverse array of financial products to satisfy the
needs of its clients. In addition, management believes that it will create the
most stable platform for long-term growth and profitability by diversifying its
capital sources and products.
Employees
As of December 31, 2001, the Company employed 132 associates.
Item 2. Properties
As of December 31, 2001, the Company owned, either directly or indirectly
through joint venture arrangements, 651 properties, located in 40 states.
Reference is made to the Schedule of Real Estate and Accumulated Depreciation
filed with this report for a listing of the properties and their respective
costs, including acquisition fees and certain acquisition expenses.
As of December 31, 2001, the Company owned 562 of the 651 properties in fee
simple and ten properties through joint venture arrangements.
As of December 31, 2001, 36 of the 651 properties owned by the Company
consisted of building only. The Company does not own the underlying land. In
connection with the acquisition of each of these properties, the Company entered
into either a tri-party agreement with the tenant and the owner of the land or
an assignment of interest in the ground lease with the landlord, as described in
Item 1. Business-Leases.
As of December 31, 2001, the Company had pledged 426 properties as
collateral related to the Secured Credit Facility and Bonds Payable.
Description of Properties
Land. The Company's property lot sizes range from approximately 4,000 to
199,000 square feet depending upon building size and local demographic factors.
Sites purchased by the Company are in locations zoned for commercial use which
have been reviewed for traffic patterns and volume.
The following table lists the properties owned by the Company as of
December 31, 2001 by state. More detailed information regarding the location of
the properties is contained in the Schedule of Real Estate and Accumulated
Depreciation filed with this report.
Total Number of
State Restaurant Properties
Alabama 23
Arizona 18
California 35
Colorado 13
Connecticut 1
Delaware 1
Florida 84
Georgia 23
Idaho 3
Illinois 27
Indiana 9
Iowa 7
Kansas 8
Kentucky 9
Louisiana 11
Maryland 7
Michigan 13
Minnesota 10
Mississippi 9
Missouri 28
Nebraska 3
Nevada 4
New Hampshire 3
New Jersey 6
New Mexico 4
New York 4
North Carolina 23
Ohio 52
Oklahoma 10
Oregon 6
Pennsylvania 11
Rhode Island 1
South Carolina 13
Tennessee 33
Texas 85
Utah 4
Virginia 22
Washington 14
West Virginia 11
Wisconsin 3
--------------
TOTAL PROPERTIES 651
==============
Buildings. The buildings generally are rectangular and are constructed from
various combinations of stucco, steel, wood, brick and tile. Building sizes
range from approximately 1,000 to 12,700 square feet. Generally, buildings on
properties owned by the Company are freestanding and are surrounded by paved
parking areas. Buildings are suitable for conversion to various uses, although
modifications may be required prior to use for other than restaurant operations.
As of December 31, 2001, two of the Company's properties were under construction
or renovation. Depreciation expense is computed for buildings and improvements
using the straight-line method using a depreciable life of 39 years for federal
income tax purposes. As of December 31, 2001, the aggregate depreciated cost
basis of the properties owned by the Company (including properties owned through
joint ventures) for federal income tax purposes was $443.0 million.
The following table lists the properties owned by the Company as of
December 31, 2001 by restaurant chain.
Restaurant Chain Number of Properties
Jack in the Box 62
International House of Pancakes 48
Golden Corral 47
Pizza Hut 44
Arby's 38
Burger King 36
Bennigan's 27
Chevy's Fresh Mex 25
Black Eyed Pea 25
Steak & Ale 20
Denny's 19
Ruby Tuesday 18
Baker's Square 17
Applebee's 15
Darryl's 15
Other 195
-----
TOTAL: 651
=====
Management considers the properties to be well maintained and sufficient
for the Company's operations.
Management believes that the properties are adequately covered by
insurance. In addition, the Company has obtained contingent liability and
property coverage. This insurance is intended to reduce the Company's exposure
in the unlikely event a tenant's insurance policy lapses or is insufficient to
cover a claim relating to the property.
Leases. The Company leases the properties to operators of selected national
and regional fast-food restaurant chains. The leases are generally on a
long-term "triple net" basis, meaning that the tenant is responsible for
repairs, maintenance, property taxes, utilities and insurance. Generally, a
lessee is required, under the terms of its lease agreement, to make such capital
expenditures as may be reasonably necessary to refurbish restaurant buildings,
premises, signs and equipment so as to comply with the lessee's obligations, if
applicable, under the franchise agreement to reflect the current commercial
image of its restaurant chain. These capital expenditures are required to be
paid by the lessee during the term of the lease. The terms of the leases of the
properties owned by the Company are described in Item 1. Business - Leases.
At December 31, 2001, 2000, 1999, 1998 and 1997, the properties were 92%,
95%, 97%, 99% and 100% occupied, respectively. The following is a schedule of
the average rent per property for the years ended December 31:
2001 2000 1999 1998 1997
-------------- -------------- --------------- -------------- --------------
Rental Revenues (1) $ 84,775,244 $ 91,520,103 $ 61,907,812 $ 33,129,661 $ 15,490,615
Properties (2) 644 725 642 408 244
Average Rent Per Property $ 131,639 $ 126,235 $ 96,430 $ 81,200 $ 63,486
(1) Rental income includes the Company's share of rental income from the
properties owned through joint venture arrangements. Rental revenues have
been adjusted, as applicable, for any amounts for which the Company has
established an allowance for doubtful accounts. Rents do not include
properties under construction at December 31, 2001.
(2) Excludes properties that were vacant at December 31 and that did not
generate rental revenues during the year.
The following table lists properties owned by the Company as of December
31, 2001 by tenant and includes average age of buildings, annualized total
rental revenue and percent of total revenue. To calculate annualized total
rental revenue, the Company multiplied the monthly rental revenue for each
restaurant property owned and leased at December 31, 2001 by 12 to present the
annualized rental revenues for a 12 month period. The Company has not included
any contingent rental income in the calculation of annualized total rental
revenue.
Total Number
of Annualized
Tenant Restaurant Average Age Total Percent of
- ------ Properties of Buildings Rental Total Rental
(1) (years) Revenue(2) Revenue
-------------- -------------- ------------- --------------
IHOP Properties, Inc. 48 4.4 $ 5,654,967 7.49%
Jack in the Box Eastern Division, L.P. 33 3.0 3,387,158 4.49%
Jack in the Box, Inc. 30 3.1 3,595,382 4.76%
Golden Corral Corporation 40 3.3 6,404,451 8.48%
S&A Properties Corporation 40 20.2 6,803,726 9.01%
Castle Hill Holdings V, L.L.C. 20 18.0 450,472 0.60%
Houlihan's Restaurants, Inc. 19 21.3 2,785,195 3.69%
Vicorp Restaurant, Inc. 18 19.7 2,418,886 3.20%
Rio Bravo Acquisitions, Inc. 15 2.0 3,670,320 4.86%
Other 339 7.9 40,329,913 53.42%
----- ------------- ------------
Total 602 $75,500,470 100.00%
===== ============= ============
(1) Excludes properties that were vacant at December 31, 2001 and that did not
generate rental revenues during the year.
(2) The Company has straight-lined the contractual increases in rental income
over the life of each of the leases in order to calculate rental revenue in
accordance with generally accepted accounting principles.
The following table shows the aggregate number of leases in the Company's
property portfolio which expire each calendar year through the year 2016, as
well as the number of leases which expire after December 31, 2016. The table
does not reflect the exercise of any of the renewal options provided to the
tenant under the terms of such leases.
Base Rent
--------------------------------------------
Year Number (1) Amount(2) Percent
----
------------------ ------------------ -------------------
2002 12 $ 700,154 0.89%
2003 -- -- --
2004 1 100,935 0.13%
2005 8 892,500 1.14%
2006 7 679,942 0.87%
2007 -- -- --
2008 2 217,492 0.28%
2009 2 179,208 0.23%
2010 13 1,339,350 1.71%
2011 19 2,452,643 3.13%
2012 33 4,645,518 5.93%
2013 39 4,591,102 5.86%
2014 87 14,018,265 17.89%
2015 37 4,657,197 5.94%
2016 70 4,939,217 6.30%
Thereafter 299 38,934,403 49.70%
--------- --------------- ----------
Total 629 $78,347,926 100.00%
========= =============== ==========
(1) Excludes properties for which the leases have been terminated.
(2) The Company has straight-lined the contractual increases in rental income
over the life of each of the leases in order to calculate rental revenue in
accordance with generally accepted accounting principles.
Item 3. Legal Proceedings
As of December 31, 2001, neither the Company nor any of its properties was
a party to or the subject of any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
As of March 15, 2002, there were 32,357 stockholders of record of common
stock. There is no public trading market for the Company Shares, and even though
the Company intends to list the Company Shares on the New York Stock Exchange or
other national securities exchange or over-the-counter market no later than
December 31, 2005, there is no assurance that listing will occur. If listing
occurs, there is no assurance that a public market for the Company Shares will
develop. In October 1998, the Board of Directors elected to implement the
Company's redemption plan. Under the redemption plan, the Company elected to
redeem Company Shares, subject to certain conditions and limitations. During
1999, the Company terminated the redemption plan. As of December 31, 2001, the
Company estimates that the fair value per share is $17.13. (For Florida
intangible tax purposes, this is the equivalent of the Just Value per share.)
The Company obtained this valuation from a third party firm, which based its
valuation on an analysis of comparable publicly traded real estate investment
trusts and a discounted cash flow analysis. Because the Company Shares are not
publicly traded, investors are cautioned that the estimated fair value of the
shares may not be realized upon sale of the shares.
The Company expects to make distributions to the stockholders pursuant to
the provisions of the Articles of Incorporation. For the years ended December
31, 2001 and 2000, the Company declared cash distributions of $66.5 million and
$66.3 million, respectively, to stockholders. For federal income tax purposes,
20 percent and 40 percent of distributions paid in 2001 and 2000, respectively,
were considered to be ordinary income and 80 percent and 60 percent,
respectively, were considered to be a return of capital. No amounts distributed
to stockholders for the years ended December 31, 2001 and 2000 are required to
be or have been treated by the Company as a return of capital for purposes of
calculating the stockholders' return on their invested capital. The following
table presents total distributions and distributions per Company Share (In
Thousands, except for per share data):
First Second Third Fourth Year
-------------- --------------- -------------- --------------- ---------------
2001 Quarter
Total distributions
declared $16,582 $16,582 $16,582 $16,720 $66,467
Distributions per
Share 0.38 0.38 0.38 0.38 1.52
2000 Quarter
Total distributions
declared $16,582 $16,582 $16,582 $16,582 $66,330
Distributions per
Share 0.38 0.38 0.38 0.38 1.52
In March 2002, the Company declared distributions to stockholders of $16.8
million ($0.38124 per Share) payable in March 2002.
The Company intends to continue to declare distributions of cash to the
stockholders.
Item 6. Selected Financial Data (In Thousands)
2001 2000 1999 1998 1997
-------------- -------------- -------------- -------------- ------------
Year ended December 31:
Revenues $ 264,815 $ 116,633 $ 75,501 $ 42,187 $19,458
Net earnings/(loss) (24,452) 2,927 (49,837) 32,152 15,564
Cash distributions declared 66,466 66,329 60,079 39,449 16,854
Funds from operations (2) 32,080 32,688 45,455 37,191 17,733
Earnings/(loss) per Share (1) (0.56) 0.07 (1.26) 1.21 1.33
Cash distributions declared
per Share (1) 1.52 1.52 1.52 1.52 1.49
Weighted average number
of shares outstanding (1) 43,590 43,496 39,403 26,648 11,712
At December 31:
Total assets $ 1,559,114 $ 1,599,503 $1,138,193 $680,352 $339,078
Long-term obligations 484,815 312,484 -- -- --
Total stockholders' equity (3) 526,182 607,738 672,214 660,810 321,638
(1) All Share and per Share amounts have been restated herein to reflect the
one-for-two reverse stock split.
(2) Funds from operations are net earnings determined in accordance with
Generally Accepted Accounting Principles ("GAAP") excluding depreciation
and amortization, gains and losses on sale of real estate, impairment
provisions and nonrecurring items of income and expense of the Company.
Funds from operations are generally considered by industry analysts to be
the most appropriate measure of performance. FFO (i) does not represent
cash generated from operating activities determined in accordance with GAAP
(which, unlike FFO, generally reflects all cash effects of transactions and
other events that enter into the determination of net earnings), (ii) is
not necessarily indicative of cash flow available to fund cash needs and
(iii) should not be considered as an alternative to net earnings determined
in accordance with GAAP as an indication of the Company's operating
performance, or to cash flow from operating activities determined in
accordance with GAAP as a measure of either liquidity or the Company's
ability to make distributions. Accordingly, the Company believes that in
order to facilitate a clear understanding of the consolidated historical
operating results of the Company, FFO should be considered in conjunction
with the Company's net earnings and cash flows as reported in the
accompanying consolidated financial statements and notes thereto. However,
the Company's measure of FFO may not be comparable to similarly titled
measures of other REITS because these REITS may not apply the definition of
FFO in the same manner as the Company.
(3) Includes subscriptions received of $0, $0, $210,736, $385,523,966 and
$222,482,560, net of stock issuance costs of $1,493,437, $1,493,436,
$1,662,749, $38,415,512 and $22,422,045 for the years ended December 31,
2001, 2000, 1999, 1998 and 1997, respectively, and net of $50,891 and
$639,528 of common stock shares retired for the years ended December 31,
1999 and 1998, respectively. Stock issuance costs consist of selling
commissions, marketing support and due diligence expense reimbursement
fees, soliciting dealer servicing fees and organizational and offering
expenses. The ratio of stock issuance costs to subscriptions received was
0, 0, 1:0.13, 1:10 and 1:10 during 2001, 2000, 1999, 1998 and 1997,
respectively.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following information, including, without limitation, the Quantitative
and Qualitative Disclosures About Market Risk that are not historical facts, may
be forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements generally are characterized by the use of terms such as
"believe," "expect" and "may." Although the company believes that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, the company's actual results could differ materially
from those set forth in the forward-looking statements. Factors that might cause
such a difference include: changes in general economic conditions, changes in
real estate conditions, availability of capital from borrowings under the
company's credit facilities, the availability of other debt and equity financing
alternatives, changes in interest rates under the company's current credit
facilities and under any additional variable rate debt arrangements that the
company may enter into the future, the ability of the company to refinance
amounts outstanding under its credit facilities at maturity on terms favorable
to the company, the ability of the company to locate suitable tenants for its
restaurant properties and borrowers for its mortgage loans, the ability of
tenants and borrowers to make payments under their respective leases, secured
equipment leases or mortgage loans, the ability of the company to re-lease
properties that are currently vacant or that become vacant and the ability of
the company to securitize or sell mortgage loans on a favorable and timely
basis. Given these uncertainties, readers are cautioned not to place undue
reliance on such statements.
Organization and Business
CNL American Properties Fund, Inc. ("CNL-APF" or the "Company") is a
self-advised real estate investment trust ("REIT") operating as a holding
company for two primary subsidiary operating companies, CNL Restaurant
Properties, Inc. and CNL Franchise Network, Corp. The Company was founded in
1994 and at December 31, 2001, has financial interests in over 1,200 properties
diversified among more than 100 restaurant concepts in 47 states. The Company's
total real estate holdings subject to lease includes 800 properties of which
approximately 150 properties are classified as held for sale. At December 31,
2001, the servicing portfolio of net lease properties and mortgages included
over 2,500 units of which over 1,300 are serviced on behalf of third parties.
The Company's operations are divided into two business segments, real
estate and specialty finance. The real estate segment, operated principally
through the Company's wholly owned subsidiary CNL Restaurant Properties, Inc.
("CNL-RP") and its subsidiaries, is charged with overseeing and maximizing value
on a portfolio of primarily long-term triple-net lease properties. Those
responsibilities related to the real estate segment include portfolio
management, property management and dispositions. In addition, CNL-RP manages
approximately $649.9 million in affiliate portfolios and earns management fees
related thereto. The specialty finance segment, operated through the Company's
wholly-owned subsidiary CNL Franchise Network Corp ("CNL-FNC") and a partnership
with Bank of America, CNL Franchise Network, LP ("CNL-FN") and its subsidiaries,
delivers financial solutions in the forms of financing, servicing, development
and advisory services to national and regional restaurant operators.
Effective January 1, 2001, CNL-FNC elected to be treated as a taxable REIT
subsidiary ("TRS") pursuant to the provisions of the REIT Modernization Act. As
a TRS, CNL-FNC will be able to engage in activities that would previously have
caused income to the Company from CNL-FN to be disqualified from being eligible
REIT income under the federal income tax rules governing REITs. CNL-FNC
originates mortgages and triple-net lease properties for sale to third parties
and, in some cases, securitization. CNL-FNC also performs net lease and loan
servicing on behalf of third parties. While the Company intends to continue
managing its existing core portfolio of real estate leases and loans, management
expects that the activities of CNL-FNC will be an increasingly significant part
of the Company's business on a going-forward basis.
Liquidity and Capital Resources
CNL American Properties Fund, Inc.
CNL-APF is primarily a holding company that receives distributions from its
two primary subsidiaries, CNL-RP and CNL-FNC. In 2001, CNL-APF did not receive
any distributions from CNL-FNC. CNL-APF distributions to stockholders totaled
approximately $66.5 million in 2001, compared to $66.3 million and $60.1 million
in 2000 and 1999, respectively. The 2001 distribution was primarily funded
through distributions from CNL-RP, but also included a loan from an affiliate,
which was subsequently converted to stock, stock purchases by an affiliate and
borrowings on the Company's line of credit. No amounts distributed or to be
distributed to the stockholders as of March 15, 2002, are required to be or have
been treated by the Company as a return of capital for purposes of calculating
the stockholders' return on their invested capital.
Because the Company is committed to reinvest cash flow in the specialty
finance segment as opposed to distributing excess cash, the Company's Chairman,
through a private company affiliate, CNL Financial Group, Inc., advanced $12.4
million to the Company during 2001 to ensure that the Company could maintain its
historical distribution level to stockholders. The Company is pursuing a
strategy built around CNL-RP's strong capital base and stable cash flows coupled
with CNL-FNC's specialty finance growth business. In 2002, the Company intends
to reinvest the majority of excess cash flows or pay down debt in its specialty
finance business and not distribute those funds.
Specialty Finance Segment (CNL Franchise Network Corporation)
In June 2000 the Company divided its operations into the real estate and
specialty finance businesses. The objective of the Company was to combine the
real estate segment, an entity with a strong capital base and stable cash flows,
with a specialty finance growth business that could partner with a large
financial institution and provide an additional source of liquidity. The Company
and Bank of America entered into an alliance in June 2000 that provided a broad
product offering primarily focused on the origination of triple-net lease,
securitized debt and portfolio loan financing. The portfolio loan product
provided CNL-FN fees without assuming ownership risk. In forming the alliance,
the Company invested certain of its CNL-RP assets and operations into CNL-FN and
Bank of America provided CNL-FN with a $43.75 million subordinated debt facility
and a $500.0 million warehouse credit facility. The business strategy of CNL-FN
targeted the origination of triple-net leases and loans, temporarily putting
those assets on warehouse credit facilities and periodically securitizing those
assets. In a securitization the Company sells or transfers a pool of loans or
properties with triple-net leases to certain special purpose entities which, in
turn, issue to investors securities backed by an interest in the revenue
originating from the loans or triple-net leases. These transactions serve as a
way to recycle and diversify capital.
The Company expected to continue its business of originating securitized
loans and net leases and selling or refinancing these assets in future franchise
securitizations, having completed similar transactions in 1998 and 1999. In
August of 2000 the Company successfully completed the first securitization of
triple-net leases in the franchise asset class, which is a refinancing under
accounting rules. However, the franchise asset-backed securitization market
began to experience considerable volatility in late 2000 and throughout 2001 as
a result of rising delinquencies among previously securitized loan pools of
competitors. In addition, falling treasury rates, macroeconomic uncertainties
and sluggish restaurant sales contributed to market volatility. What resulted
were wider bond spreads that translated into investors demanding higher interest
rates on the securities issued in securitizations and an increase in ratings
actions. In public securitizations, the quality of the underlying loans is
periodically reviewed by rating agencies to affirm the ratings originally issued
on the bonds sold to investors. Should an issuer suffer a ratings action, it
could result in material adverse consequences impacting the issuer's ability to
successfully sell or refinance the loans underlying the securitization
transaction and thereby render future forays into securitization transactions
uneconomical. Many of the Company's competitors experienced downgrades or
ratings actions on bonds previously issued, and either shut down operations or
did not have the capital to continue to originate new financing. The Company to
date has avoided any rating action of previously securitized loan or lease
pools.
The events in the franchise finance sector resulted in CNL-FN using private
market sales channels to either refinance or sell approximately $162.5 million
in loans during 2001. At December 31, 2001, the Company is holding $430.2
million in debt from warehouse credit facilities. This debt was collateralized
by $315.8 million in mortgage loans held for sale and $171.6 million in real
estate held for sale. As a result of the market volatility, in October 2001 the
Company and Bank of America renegotiated certain terms of their strategic
alliance. The following points summarize the noteworthy developments:
o Bank of America agreed to provide a $10.0 million unsecured credit
facility (the "Liquidity Facility") to CNL-RP. The Liquidity Facility
is for a term of one year and contains an option to extend the facility
subject to renewal of the warehouse credit facility maintained by
CNL-FN. CNL-RP then entered into a $10.0 million unsecured credit
facility (the "Mirror Credit Facility") with CNL-FN that has
substantially the same terms as the Liquidity Facility. The purpose of
the Mirror Credit Facility is to augment the liquidity of CNL-FN for
working capital and meeting any margin calls on CNL-FN's warehouse
credit facilities.
o Bank of America agreed to provide a two-year $30.0 million unsecured
revolving credit facility (the "Revolver") to CNL-RP in connection with
the payoff of CNL-RP's then-current revolving credit facility.
o CNL-FN agreed to remove or sell by October 13, 2002 approximately
$187.0 million in restaurant loans currently held as collateral under
the Bank of America warehouse credit facility. CNL-FN and CNL-RP
provided a guarantee of $15.0 million, which will be reduced ratably as
certain conditions are met, including the removal or sale of the
restaurant loans. In the event a balance exists on October 13, 2002,
CNL-FN, or CNL-RP in the event CNL-FN does not have adequate liquidity,
will remit the balance of the guarantee to Bank of America as
additional enhancement capital against the remaining balance.
o CNL-FN and CNL-RP agreed to a $15.0 million guarantee on Bank of
America's subordinated debt facility, which consists of a note payable
having an outstanding amount of $43.75 million as of December 31, 2001.
The $15.0 million guarantee has provisions for its reduction tied to
achievement of an earnings target, full availability of the Liquidity
Facility and the removal of the $187.0 million in loans described
above. CNL-FN may also prepay the subordinated note. If the
subordinated note guarantee is not paid by October 13, 2002, Bank of
America will have a one-month option to convert the outstanding
guarantee to a preferred security of CNL-RP with a face value of 80
percent of the outstanding guarantee. The terms will be substantially
equivalent to the subordinated note.
o Bank of America agreed to forfeit a conversion feature on $15.0 million
of the $43.75 million subordinated note, which reduced their potential
ownership percentage of CNL-FN from 29.12 percent to 22.28 percent.
o Bank of America agreed to renew its warehouse credit facility with
CNL-FN. Step-down provisions take the facility from $325.0 million to
$275.0 million by April 1, 2002.
During 2001, recognizing the volatility in the franchise asset-backed
securitization market, the Company redirected the origination efforts of its
specialty finance segment to triple-net leases. A triple-net lease is a form of
financing to a restaurant operator whereby the Company purchases the real estate
and subsequently leases it to the restaurant operator under a long-term
triple-net lease. The triple-net lease is a long-term lease with periodic rent
increases and requires the tenant to pay expenses on the property. The lease
somewhat insulates the Company from requiring significant cash outflows for
maintenance, repair or insurance; however, if the tenant experiences financial
problems, rental payments could be interrupted.
The Company also explored alternatives in which to direct its existing loan
and lease assets, including the tax-deferred real estate exchange market. While
asset securitization is one sales channel for loans or leases, another is the
tax-deferred real estate exchange market allowed under Section 1031 of the
Internal Revenue Code ("Section 1031 Exchanges"). Generally, Section 1031
Exchanges allow an investor who realizes a gain from selling appreciated real
estate to defer paying taxes on such gain by reinvesting the sales proceeds in
like-kind real estate. In addition, the Company is a partner in a partnership
with a third party client through which similar activities are performed. The
Company and its partnership sold approximately $108.0 million generating $9.1
million in gains in Section 1031 exchanges in 2001. The Company expects this
sales channel to grow significantly in 2002. In addition, CNL-FN will continue
to investigate other sales channels in which to direct its existing loan and
lease assets while the securitization market remains unappealing.
In 2001, CNL-FNC's primary cash flows were derived from lease and interest
income earned in excess of interest expense paid ("net spread"), net gains from
Section 1031 Exchanges and servicing revenues. Significant cash outflows consist
of operating expenses and capital enhancements in the loan portfolio. Through
its warehouse credit facility provided by Bank of America and by another lender
to its subsidiary, CNL-FN, CNL-FNC enjoyed a credit capacity of $525.0 million
as of December 31, 2001. The facilities are periodically marked-to-market,
incorporating both asset securitization market assumptions, assumptions on the
Company's derivatives and delinquency assumptions. Primarily as a result of the
volatility in the franchise asset-backed sector in 2001, CNL-FN met $21.2
million in capital enhancements on its facilities. Over the course of the year,
CNL-FN had fully drawn its subordinated note payable and in February 2002, drew
$5.0 million on the Mirror Credit Facility.
In 2002, the Company intends to focus origination efforts within its
specialty finance segment on the triple-net lease financing product. CNL-FN's
warehouse facilities provide advances for approximately 95 percent of appraised
real estate value. The Company expects the remaining five percent to be provided
by cash flow from CNL-FN's operations. Cash from operations could be negatively
impacted if interest rates increased significantly, reducing the net spread.
At December 31, 2001, CNL-FN has approximately $51.9 million in capital
supporting its loan and lease portfolio. During 2002, as the loans are sold or
refinanced and the leased restaurant properties are sold, part of that capital
is expected to be released. CNL-FN expects to reinvest most of its capital in
new loans or triple-net leases in 2002. Should CNL-FN meet its financial
performance objectives in 2002, it will consider making a distribution to the
Company in the fourth quarter of 2002.
Liquidity risks within the Company's specialty finance segment include the
possible occurrence of economic events that could have a negative impact on the
franchise asset-backed securitization market and affect the quality or
perception of the loans or leases underlying CNL-FN's securitization
transactions. The quality of the securitized loans and leases is periodically
reviewed by rating agencies to affirm or alter the ratings originally issued on
the bonds sold to investors. Upon the occurrence of a significant amount of
delinquencies and/or defaults, one or more of the three rating agencies may
choose to place a specific transaction on ratings watch or even downgrade one or
more classes of securities to a lower rating. Conversely, upon above average
performance of the securities backed by a specific pool of loans or leases, one
or more rating agencies could also chose to upgrade a given transaction by
changing the original rating on one or more securities to a higher rating. The
predecessor to CNL-FN executed a public securitization in August 1998 and
subsequently CNL-FN executed a public securitization in November 1999 whereby
approximately $571.7 million in loans were sold to a third-party entity that
subsequently issued securities to investors. In addition, CNL-FN executed a
private structured note offering in 2001 that refinanced approximately $60.8
million in loans transferred to a consolidated special purpose entity. The
entity subsequently issued $42.6 million in securities to an investor. The
entities on all three of these transactions are bankruptcy remote entities and
are separate legal entities whose assets are not available to satisfy the claims
of creditors of the Company, any subsidiary or its affiliates. To date, the
ratings on the loans underlying the securities issued in all three of these
transactions have been affirmed. Should the loans underlying the securities
undergo a negative ratings action, CNL-FN could experience material adverse
consequences impacting its ability to successfully sell or refinance the $187.0
million in loans related to the $15.0 million guarantee in favor of Bank of
America, and could suffer effects limiting its ability to engage in future
securitization transactions. To potentially avoid those consequences, CNL-FN
could choose to contribute capital to serve as additional collateral supporting
one or more of these entities used to facilitate a securitization in order to
avoid a negative ratings action.
In summary, the Company's specialty finance segment expects to meet its
liquidity requirements in 2002 with a combination of cash from operations and
borrowings on the warehouse credit facilities. CNL-FN renews its warehouse
credit facilities annually and to date has been successful in doing so. CNL-FN's
longer-term liquidity requirements are expected to be met through the successful
renewal of its warehouse credit facilities, successful execution of the
Company's Section 1031 Exchange business, portfolio debt origination fees, asset
securitizations and augmented by operating cash flows provided by servicing and
advisory services. However, there can be no assurance that future expansion will
be successful due to competitive, regulatory, market, economic or other factors.
Real Estate Segment (CNL Restaurant Properties, Inc.)
CNL-RP operates as a real estate company and its cash flows primarily
consist of rental income from tenants on restaurant properties owned, interest
income on mortgage loans, dispositions of properties and income from holding
residual interests in prior loan securitizations. The Company's cash outflows
are predominantly interest expense, operating expenses, reinvestment of
disposition proceeds and distributions to the Company.
CNL-RP's short-term debt includes the $30.0 million Revolver entered into
in October 2001 and a $48.7 million secured note payable entered into in October
1999 (the "Secured Credit Facility"). The Secured Credit Facility matures on
February 18, 2003 and CNL-RP anticipates selling properties to pay off the note
during 2002. The Company, from time to time, utilizes the Revolver to manage the
timing of inflows and outflows. The Company's Revolver is a two-year facility,
maturing in October 2003, and includes a one-year renewal option. At December
31, 2001, the Revolver had an outstanding balance of $10.0 million.
CNL-RP also had medium-term and long-term bond financing. In October 2001,
CNL-RP issued $132.0 million in medium-term bonds, Series 2001. The bonds carry
an interest rate of LIBOR plus 48 basis points and mature in 2006. The bonds are
collateralized by 119 properties with a carrying value of approximately $179.6
million. Proceeds from the bond issuance were applied to pay down CNL-RP's
previous $125.0 million Revolver and the Secured Credit Facility by $45.0
million. In August 2000, CNL-RP issued Triple Net Lease Mortgage Bonds, Series
2000-A. The bonds had an aggregate principal balance of $280.9 million with
anticipated maturities of August 2009 (Class A-1) and April 2017 (Class A-2).
The debt is fixed at a rate of 7.925 percent. At December 31, 2001, the
outstanding principal balance on the Series 2000-A bonds was $270.4 million and
was collateralized by 257 properties with a carrying value of approximately
$332.6 million.
In 2002, CNL-RP's strategy for the Secured Credit Facility includes
refinancing the facility or selling properties, the proceeds of which will be
applied to pay off the Secured Credit Facility and principal obligations on the
Series 2001 and Series 2000-A long-term bond financings. In addition, CNL-RP
will continue to sell non-performing and under performing assets and will
reinvest those proceeds in higher-yielding investments.
Liquidity risks within the real estate business include the potential that
a tenant's financial condition could deteriorate, causing it to fail to make its
rent payments and thereby reducing CNL-RP's income. Generally, CNL-RP uses a
triple-net lease to lease its properties to its tenants. The triple-net lease is
a long-term lease with periodic rent increases and requires the tenant to pay
expenses on the property. The lease somewhat insulates CNL-RP from requiring
significant cash outflows for maintenance, repair or insurance; however, if the
tenant experiences financial problems, rental payments could be interrupted.
In addition, CNL-RP faces other liquidity risks, including the possibility
that it will be unable to meet its obligations under the Secured Credit Facility
and the possibility that it could be liable for the $15.0 million guarantee on
Bank of America's subordinated debt facility if CNL-FN fails to remove $187.0
million of restaurant loans currently residing on the Bank of America warehouse
credit facility by October 13, 2002. In the event that CNL-RP defaulted on its
obligations under the Secured Credit Facility, CNL-RP would have to pay the
outstanding balance, which could materially adversely affect the Company's
liquidity and capital resources.
CNL-RP believes the combination of availability on its line of credit and
the projected disposition volume in 2002 will permit it to meet its short-term
liquidity objectives. Long-term liquidity requirements will be met through a
combination of selectively disposing assets and reinvesting the proceeds in
higher-yielding investments and cash from operating activities.
Interest Rate Risk
Floating interest rates on the Revolver, Secured Credit Facility, Mortgage
Warehouse Facility and the 2001 Series bonds expose the Company to interest rate
risk. As of December 31, 2001, the Company had $10.0 million, $48.7 million,
$430.2 million and $130.4 million outstanding under its Revolver, Secured Credit
Facility, Mortgage Warehouse Facility and the 2001 Series bonds. The Company
believes it has mitigated this risk by entering into interest rate swap
agreements and an interest rate cap agreement, which the Company believes will
reduce the impact of fluctuating interest rates on its floating rate debt.
In addition, the Company invests in certain financial instruments that are
subject to various forms of market risk such as interest rate fluctuations,
credit risk and prepayment risk. Management believes that the value of its
mortgage loans held for sale and investments held for sale could potentially
change as a result of fluctuating interest rates, credit risk, market sentiment
and other external forces, which could materially adversely affect the Company's
liquidity and capital resources.
Generally, the Company uses derivative financial instruments (primarily
interest rate swap contracts) to hedge against fluctuations in interest rates
from the time it originates and holds fixed-rate mortgage loans until the time
it sells them. The Company will terminate certain of these contracts and both
the gain or loss on the sale of the loans and the additional gain or loss on the
termination of the interest rate swap contracts are measured and recognized in
the consolidated statement of operations. Under interest rate swaps, the Company
agrees with other parties to exchange, at specified intervals, the difference
between fixed-rate and floating-rate interest amounts calculated by reference to
an agreed upon notional principal amount.
Management estimates that a one-percentage point increase in long-term
interest rates as of December 31, 2001 would have resulted in a decrease in the
fair value of its fixed-rate loans of $14.6 million. This decline in fair value
would have been offset by an increase in the fair value of certain interest rate
swap positions of $11.8 million. In addition, a one-percentage point increase in
short-term interest rates for the year ended December 31, 2001 would have
resulted in additional interest costs of approximately $6.5 million. This
sensitivity analysis contains certain simplifying assumptions (for example, it
does not consider the impact of changes in prepayment risk or credit spread
risk). Therefore, although it gives an indication of the Company's exposure to
interest rate change, it is not intended to predict future results and the
Company's actual results will likely vary.
Management believes inflation has not significantly affected the Company's
earnings because the inflation rate has remained moderate. Additionally, the
Company's earnings primarily reflect long-term investments with fixed rents or
interest rates. The Company mainly finances these investments with a combination
of equity, senior notes and borrowings under the revolving lines of credit or
warehouse facilities. During inflationary periods, which generally are
accompanied by rising interest rates, the Company's ability to grow may be
adversely affected because the yield on new investments may increase at a slower
rate than new borrowing costs. However, sustained low inflation could lead to
net lease pricing pressure as tenants request decreasing rates for longer
maturities.
Critical Accounting Policies
The Company records the acquisition of land, buildings and equipment at
cost, including acquisition, closing and construction period interest costs.
Land and buildings are leased to restaurant operators generally on a triple-net
basis, which means that the tenant is responsible for all operating expenses
relating to the property, including property taxes, insurance, maintenance and
repairs. The property and secured equipment leases held for investment are
accounted for using either the direct financing or the operating method unless
the Company has classified these properties pursuant to their intent to sell. In
connection with lease accounting, management estimates residual values and
collectable rents.
Management reviews its properties and loans for impairment whenever events
or changes in circumstances indicate that the carrying amount of the assets may
not be recoverable. Management determines whether impairment in value has
occurred by comparing the estimated future undiscounted cash flows, including
the residual value of the property or collateral, with the carrying cost of the
individual asset. If impairment is indicated, the assets are adjusted to
estimated fair value.
Mortgage loans held for sale are loans originated that the Company intends
to sell or securitize. They are recorded at fair market value which is estimated
using quoted prices, the present value of the expected cash flows and the
estimated impact of any defaults, and may therefore be recorded at an amount
greater than cost. The Company utilizes derivative instruments to partially
offset the effect of fluctuating interest rates on the value of its mortgage
loans held for sale. As long as the Company qualifies for hedge accounting
treatment, valuation adjustments relating to these loans, including increases
above cost, and any gains or losses on related hedge instruments are reflected
in the statement of operations.
Certain loans originated by the Company were sold to independent trusts
that, in turn, issued securities to investors backed by these assets. The
Company retains the servicing rights and participates in certain cash flows from
the trusts. The present value of expected excess of net cash flows, after
payment of principal and interest to bond or other certificate holders, over the
estimated cost of servicing is recorded at the time of sale as a retained
interest. Retained interests in securitized assets are included in other
investments. Accounting for the retained interests requires that the Company
estimate, using market trends and historical experience, expected prepayments
and defaults. This information is considered, along with prevailing discount
rates and the terms of the bonds and certificates, to arrive at an initial value
and to periodically review the value for gains or losses. Permanent impairments,
representing the excess of carrying value over estimated current fair value, are
recorded as an expense. Unrealized gains and losses are not reflected in current
earnings but are reflected in stockholder's equity as part of other
comprehensive income (loss).
The Company has also entered into certain derivative contracts in order to
hedge its exposure to fluctuations in interest rates on variable rate debt. As
long as certain criteria for hedge accounting are met the changes in fair value
of these contracts is reflected in other comprehensive income (loss) and as a
component of stockholders' equity. If the requirements are not met changes in
the fair value of these contracts are reflected in earnings.
Results from Operations
The Company experienced a net loss of $24.5 million in 2001 compared to net
earnings of $2.9 million and a net loss of $49.8 million in 2000 and 1999,
respectively. The Company operated as one segment during 1999 and through June
2000, the date of its strategic alliance with Bank of America. Thereafter the
Company operated through its real estate and specialty finance segments. Because
of the lack of comparability, the discussion below focuses on the consolidated
financial performance of the Company. As appropriate, this discussion includes
information on segment operating results.
Revenues
Revenues in 2001 were $264.8 million compared to $116.6 million and $75.5
million in 2000 and 1999, respectively. Revenue from sales of real estate were
$105.6 million in 2001 compared to $0.0 in 2000 and 1999. During the year ended
December 31, 2001 CNL-FN began its program of selling real estate properties to
private investors in Section 1031 Exchanges, and as a result the gross proceeds
from Section 1031 Exchanges now appear as a component of operating revenues. The
costs associated with these sales were $97.6 million and they are now reflected
as a component of expenses. In addition, the Company is a partner in a
partnership with a third party client through which similar activities are
performed. During 2001, the Company and its partnership sold $108.0 million in
restaurant properties as a Section 1031 Exchange generating $9.1 million in net
gains or partnership earnings.
Rental income from operating leases, earned income from direct financing
leases and interest income from mortgage, equipment and notes receivables was
$140.3 million in 2001 compared to $107.4 million and $69.1 million in 2000 and
1999, respectively. The 2001 increase resulted from Company efforts to increase
its base of income earning leases and loans. The average yield on the loans and
leases in 2001 was 10.0 percent compared to 9.1 percent in 2000. The average
outstanding balance of loans and leases in 2001 was $1.4 billion compared to
$1.2 billion in 2000.
Investment and interest income was $5.8 million in 2001 compared to $8.2
million and $6.7 million in 2000 and 1999, respectively. From August 1999
through October 2000 the Company held a residual investment in a pool of loans
that was subsequently liquidated.
During the years ended December 31, 2001, 2000 and 1999 the Company earned
$13.9 million, $7.9 million and $0.3 million, respectively, in other income.
This increase is attributable to the inclusion of servicing operations revenue
associated with the Company's September 1999 acquisition of CNL Financial
Services, Inc., consulting revenues associated with the Company's June 2000
acquisition of the operations of CNL Advisory Services, Inc., construction
management services revenues associated with the Company's January 2001
acquisition of CNL Restaurant Property Services, Inc. and referral fees earned
from bank product referrals associated with the Company's June 2000 alliance
with Bank of America.
Expenses
General operating and administrative expenses were approximately $30.4
million, $24.9 million and $8.8 million for the years ended December 31, 2001,
2000 and 1999, respectively. Effective September 1, 1999, the Company became
internally advised and internal costs to acquire properties are generally
expensed. In addition, the Company developed its securitization and investment
sales strategies and incurred increased costs in managing a maturing portfolio
throughout 2000 and 2001. General and administrative expenses include amounts
associated with advisory activities subsequent to the acquisition of CAS in June
2000, reflecting a full year in 2001. Also, in January 2001 the Company acquired
the Development Company operations adding approximately $2.9 million in expenses
in this category during the year ended December 31, 2001.
Interest expense was $68.5 million, $47.6 million and $10.2 million for the
years ended December 31, 2001, 2000 and 1999, respectively. The Company has
continued to expand its operations through increased property acquisitions and
origination of mortgage loans substantially funded through the Company's
Mortgage Warehouse Facilities. The increase in interest expense corresponds to
revenue growth of $138.6 million between 2000 and 2001, and $38.3 million
between 1999 and 2000 as the Company leveraged additional volume. Maintaining
sufficient volume is key to the Company's ability to maintain its competitive
position in this business. The Company has also incurred debt to finance certain
transaction costs incurred in 1999 and 2000 associated with the Company's
strategic initiatives. These include expenses associated with the transition to
an internally advised REIT, the proposed merger with the CNL Income Funds and
with listing the Company's shares, both of which were subsequently withdrawn,
and costs associated with the strategic alliance with Bank of America as a
partner.
Expense categories such as property expenses, state taxes, and depreciation
and amortization expenses have reflected and will continue to reflect the level
of assets invested in leased properties. The Company has decreased certain
property expenses, in part, through decreasing the length of time necessary to
re-lease a defaulted tenant's property. In addition, this category includes
amortization on intangible assets, such as goodwill. During 2001, the Company
has amortized $3.1 million in goodwill pursuant to existing accounting
standards. In July 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 141 Business Combinations ("FAS
141") and Statement of Financial Accounting Standards No. 142 Goodwill and Other
Intangible Assets ("FAS 142"). FAS 141 requires business combinations initiated
after June 30, 2001 to be accounted for using the purchase method of accounting,
and broadens the criteria for recording intangible assets separate from
goodwill. Recorded goodwill and intangibles will be evaluated against the new
criteria and may result in certain intangibles being subsumed into goodwill, or
alternatively, amounts initially recorded as goodwill may be separately
identified and recognized apart from goodwill. FAS 142 requires the use of a
non-amortization approach to account for purchased goodwill and certain
intangibles. Under a non-amortization approach, goodwill and certain intangibles
will not be amortized into results of operations, but instead would be reviewed
for impairment and written down and charged to results of operations only in the
periods in which the recorded value of goodwill and certain intangibles is more
than its fair value. The Company expects that the adoption of these accounting
standards will have the impact of reducing its amortization of goodwill and
intangibles commencing January 1, 2002; however, impairment reviews may result
in future periodic write-downs.
The Company adopted Statement of Financial Accounting Standards No. 133
("FAS 133"), as amended, on January 1, 2001, which requires all derivative
instruments to be recorded on the balance sheet at fair value. Effective January
1, 2001, the Company recorded a cumulative effect adjustment loss of $21.2
million to recognize at fair value all derivative instruments at that are
designated as fair-value hedging instruments. The Company recorded an offsetting
cumulative effect adjustment gain of $17.4 million to recognize the difference
(attributable to the hedged risks) between the carrying values and fair values
of related hedged assets or liabilities. The adoption of FAS 133 thereby
resulted in a $3.8 million charge against Company earnings.
Effective January 1, 2001, the Company's subsidiary, CNL Franchise Network
Corp. ("CNL-FNC"), elected to be treated as a taxable REIT subsidiary ("TRS")
pursuant to the provisions of the REIT Modernization Act. As a TRS, its
operating partnership, CNL-FN, is able to engage in activities resulting in
income that previously would have been disqualified from being eligible REIT
income under the federal income tax regulations. The treatment of loan valuation
adjustments, loss reserves, loan fees, depreciation, and other items for federal
income tax purposes differs from the treatment of these items for financial
reporting purposes. In the aggregate, the Company has an excess of available
future deductible items over future taxable items and as such may benefit from
these items when the taxable subsidiaries produce a greater level of taxable
income. At present, the Company has not recorded this potential future benefit
because the subsidiaries involved do not have sufficient historical earnings on
which to base a potential future benefit.
Throughout 2001, many economic indicators suggested the U.S. economy was in
recession. On September 11, the country was challenged further by the tragic
events in New York, Washington D.C. and Pennsylvania. Throughout the period, the
government has responded with stimuli in various forms including action by U.S.
Federal Reserve policymakers to decrease interest rates. In addition, Congress
enacted legislation to decrease personal income tax rates. Management believes
that the Company will benefit from the stimuli as interest rates on short-term
borrowings have reached historic lows. In addition, the restaurant industry
should benefit from the economic stimuli. While certain restaurant chains and
franchise operators in 2001 experienced financial difficulties arising from
diverse factors including deterioration in operations, over leverage and the
general economy, management expects the Company's core customer - the casual
dining and quick service franchise operators - to sustain operations during this
downturn. While management believes its underwriting standards are effective in
assessing the credit strength and management of a restaurant operator, the
Company is not immune from the cyclical nature of the business and many of its
clients may continue to be affected by poor performance of some restaurant
chains. Although the Company's operating lease agreements and loans provide the
Company the right to terminate an investment, evict an operator, demand
immediate repayment, or take other remedies, bankruptcy laws afford certain
rights to a party that has filed for bankruptcy or reorganization. An operator
in bankruptcy may be able to restrict the Company's ability to collect unpaid
rent or interest and to collect interest during the bankruptcy proceeding.
Further, the Company may be required to fund certain expenses in order to retain
control of the property or to take possession of the property or even control
the franchise, which may expose the Company to successor liabilities and further
affect liquidity.
In 2001, the Company recorded $28.2 million in provision for loss on loans
compared to $1.8 million and $1.0 million in 2000 and 1999, respectively. In
addition the Company recorded $27.2 million in impairment provisions in 2001
compared to $2.6 million and $7.8 million in 2000 and 1999, respectively. The
provisions increased significantly in 2001 primarily as a result of Phoenix
Restaurant Group, Inc. and its subsidiaries (collectively referred to as "PRG")
filing bankruptcy on October 31, 2001. During 2001, an affiliate of the Company
advanced approximately $5.8 million to PRG. The proceeds were used to pay
outstanding obligations, including obligations to the Company. CNL-RP has
provided loans and equipment lease or triple-net lease financing to PRG of
approximately $61.2 million.
In the two weeks prior to the bankruptcy filing, PRG closed 40 operating
Black-Eyed Pea units as well as 25 operating Denny's units. With these
reductions, PRG now operates 44 Denny's and 48 Black-Eyed Peas. PRG is seeking
to reorganize while keeping some of its restaurants operating. In order to
permit continued operation of the open stores and preserve the value of its
investments with PRG, the Company entered into a commitment in November 2001 to
advance $3.5 million to PRG as interim financing, referred to as
debtor-in-possession financing. As of March 19, 2002, the Company had advanced
$3.25 million to PRG. CNL-RP is analyzing a variety of alternatives for
maximizing the value of the remaining investment.
On January 18, 2002 the Company filed an involuntary bankruptcy petition
against Roadhouse Grill, Inc., franchisor of the casual steak chain, Roadhouse
Grill. CNL-RP owns 13 Roadhouse Grill properties and CNL-FN owns one. Roadhouse
Grill has not submitted to the petition and ultimately, the Federal Bankruptcy
Court will rule on this matter. The bankruptcy filing is expected to result in
the return of one or two CNL-RP sites enabling management to sell or re-lease
the property. The Company's impairment provisions include $3.7 million for
Roadhouse Grill which was recorded in the fourth quarter of 2001.
In January 2002, Houlihan's Restaurant Group ("HRG") filed for voluntary
bankruptcy under the provisions of Chapter 11. HRG operates and franchises the
Houlihan's concept, operates the Darryl's and J. Gilbert's concepts and operates
five separately branded seafood restaurants. CNL-RP had financed 19 Houlihan's
or Darryl's units totaling $26.3 million. As of January 31, 2002 the leases were
current. Eleven of the 19 leases have been rejected. Condemnation proceeds are
in escrow for a partial taking on one of the eleven sites. The remaining 10
rejected sites have been retaken and marketing efforts are proceeding. All of
the sites not rejected are currently operating. The Company's impairment
provisions include $4.9 million for HRG which was recorded in the fourth quarter
of 2001.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
This information is described above in Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Item 8. Financial Statements and Supplementary Data
Report of Independent Certified Public Accountants
To the Board of Directors and Stockholders of
CNL American Properties Fund, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and comprehensive
income/(loss), and of cash flows present fairly, in all material respects, the
financial position of CNL American Properties Fund, Inc. (a Maryland
corporation) and its subsidiaries at December 31, 2001 and 2000, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion,
the financial statement schedules listed in the index apprearing under item
14(a) (2) present fairly, in all material respects, the information set forth
therein when read in conjunction with the related financial statements. These
financial statements and financial statement schedules are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements and financial statment schedules based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1 to the consolidated financial statements, on January 1,
2001 the Company changed its method of accounting for derivative financial
instruments.
/s/ PricewaterhouseCoopers LLP
Orlando, Florida
March 19, 2002
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands except for per share data)
December 31,
2001 2000
--------------- ---------------
ASSETS
Real estate investment properties $ 652,218 $ 785,604
Net investment in direct financing leases 137,104 169,222
Real estate held for sale 171,564 ---
Mortgage loans held for sale 315,835 394,321
Mortgage, equipment and other notes receivable 103,962 72,771
Other investments 32,797 33,519
Cash and cash equivalents 19,333 23,772
Restricted cash 12,456 1,876
Receivables, less allowance for doubtful accounts
of $4,315 and $7,257, respectively 4,990 3,370
Accrued rental income 19,322 16,028
Intangibles and other assets 89,533 99,020
---------------- -----------------
$ 1,559,114 $ 1,599,503
================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Credit facility $ 10,000 $ 80,000
Note payable 48,731 85,617
Mortgage warehouse facilities 430,169 463,765
Subordinated note payable 43,750 34,000
Bonds payable 441,065 278,484
Due to related parties 5,201 6,569
Other payables 35,505 24,857
---------------- -----------------
Total liabilities 1,014,421 973,292
---------------- -----------------
Minority interests, including redeemable partnership interest 18,511 18,473
---------------- -----------------
Commitments and Contingencies (Note 14)
Stockholders' equity:
Preferred stock, without par value. Authorized
and unissued 3,000,000 shares -- --
Excess shares, $0.01 par value per share.
Authorized and unissued 78,000,000 shares -- --
Common stock, $0.01 par value per share. Authorized
62,500,000 shares, issued 44,112,943 and 43,533,221
shares, respectively, outstanding 44,075,641 and
43,495,919 shares, respectively 441 435
Capital in excess of par value 798,154 789,926
Accumulated other comprehensive income 1,370 242
Accumulated distributions in excess of net earnings (273,783) (182,865)
---------------- -----------------
Total stockholders' equity 526,182 607,738
---------------- -----------------
$ 1,559,114 $ 1,599,503
================ =================
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except for per share data)
Year Ended December 31,
2001 2000 1999
-------------- -------------- -------------
Revenues:
Sale of real estate $ 105,645 $ -- $ --
Rental income from operating leases 82,339 69,717 49,755
Earned income from direct financing leases 15,145 16,064 12,153
Interest income from mortgage, equipment and other
notes receivables 42,855 21,589 7,203
Investment and interest income 5,845 8,205 6,683
Net decrease in value of mortgage loans
held for sale, net of related hedge (5,070) (6,855) (551)
Gain on sale of mortgage loans 4,120 -- --
Other income 13,936 7,913 258
--------------- --------------- --------------
264,815 116,633 75,501
--------------- --------------- --------------
Expenses:
Cost of real estate sold 97,587 -- --
General operating and administrative 30,388 24,946 8,820
Interest expense 68,542 47,612 10,205
Property expenses 2,919 2,598 1,316
State and other taxes 964 1,193 906
Depreciation and amortization 21,197 17,714 10,346
Transaction costs -- 10,315 6,799
Loss on investment in securities 122 5,348 --
Loss on termination of cash flow hedge accounting 8,060 -- --
Provision for loss on loans 28,200 1,804 1,037
Advisor acquisition expense -- -- 76,334
Impairment provisions 27,174 2,576 7,779
--------------- --------------
---------------
285,153 114,106 123,542
--------------- --------------- --------------
Earnings/(loss) before minority interest in (income)/
loss of consolidated joint ventures, equity in
earnings of unconsolidated joint venture and loss
on sales of assets (20,338) 2,527 (48,041)
Minority interest in (income)/loss of
consolidated joint ventures (242) 1,024 (41)
Equity in earnings of unconsolidated joint venture 1,106 97 97
Loss on sales of assets (1,137) (721) (1,852)
--------------- --------------- --------------
Earnings/(loss) before cumulative effect of accounting
change (20,611) 2,927 (49,837)
Cumulative effect of accounting change (3,841) -- --
--------------- --------------- --------------
Net earnings/(loss) $ (24,452) $ 2,927 $ (49,837)
=============== =============== ==============
Earnings/(loss) per share of common stock (basic and diluted):
Before cumulative effect of accounting change $ (0.47) $ 0.07 $ (1.26)
Cumulative effect of accounting change (0.09) -- --
--------------- --------------- --------------
Net earnings / (loss) $ (0.56) $ 0.07 $ (1.26)
=============== =============== ==============
Weighted average number of shares
of common stock outstanding 43,589,985 43,495,919 39,402,941
=============== =============== ==============
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME/(LOSS)
Years Ended December 31, 2001, 2000 and 1999
(In Thousands)
Accumulated Accumulated
Common stock distributions other Compre-
----------------- Capital in in excess compre- hensive
Number Par excess of of net hensive Income/
of Shares value par value earnings income/(loss) Total (loss)
--------- ----- ---------- ------------- ------------- ------------ ----------
Balance at December 31, 1998 37,338 $ 373 $ 669,984 $ (9,547) -- $ 660,810 $ --
Subscriptions received for common
stock through public offering 11 -- 211 -- -- 211 --
Stock issuance costs -- -- (1,663) -- -- (1,663) --
Common stock issued
through merger 6,150 62 122,938 -- -- 123,000 --
Net loss -- -- -- (49,837) -- (49,837) (49,837)
Other comprehensive loss,
market revaluation on
available for sale securities -- -- -- -- (177) (177) (177)
----------
Total comprehensive loss -- -- -- -- -- -- $ (50,014)
==========
Retirement of common stock (3) -- (51) -- -- (51) --
Distributions declared and
paid ($1.52 per share) -- -- -- (60,079) -- (60,079) --
--------- ------ ---------- ------------- ------------- ------------
Balance at December 31, 1999 43,496 435 791,419 (119,463) (177) 672,214 --
Stock issuance costs -- -- (1,493) -- -- (1,493) --
Net earnings -- -- -- 2,927 -- 2,927 2,927
Other comprehensive income,
market revaluation on
available for sale securities -- -- -- -- 419 419 419
----------
Total comprehensive income -- -- -- -- -- -- $ 3,346
==========
Distributions declared and
paid ($1.52 per share) -- -- -- (66,329) -- (66,329)
--------- ------- ---------- ------------- ------------- ------------
Balance at December 31, 2000 43,496 $ 435 $ 789,926 $ (182,865) $ 242 $ 607,738
========= ======= ========== ============= ============= ============
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME/(LOSS)
Years Ended December 31, 2001, 2000 and 1999
(In Thousands)
Accumulated Accumulated
Common stock distributions other Compre-
------------------ Capital in in excess compre- hensive
Number Par excess of of net hensive income/
of Shares value par value earnings income/(loss) Total (loss)
--------- ----- ---------- ------------- ------------- ---------- ----------
Balance at December 31, 2000 43,496 $ 435 $ 789,926 $ (182,865) $ 242 $ 607,738 $ --
Shares issued 580 6 9,722 -- -- 9,728 --
Stock issuance costs -- -- (1,494) -- -- (1,494) --
Net loss -- -- -- (24,452) -- (24,452) (24,452)
Other comprehensive income,
market revaluation on
available for sale securities -- -- -- -- 839 839 839
Cumulative effect adjustment
to recognize fair value of
cash flow hedges -- -- -- -- (5,172) (5,172) (5,172)
Reclassification of cash flow
hedge losses to statement of
operations -- -- -- -- 8,060 8,060 8,060
Current period adjustment to
recognize change in fair value
of cash flow hedges -- -- -- -- (2,599) (2,599) (2,599)
---------
Total comprehensive loss -- -- -- -- -- -- $ (23,324)
=========
Distributions declared and
paid ($1.52 per share) -- -- -- (66,466) -- (66,466)
--------- ----- ---------- ------------- ------------- ----------
Balance at December 31, 2001 44,076 $ 441 $ 798,154 $ (273,783) $ 1,370 $ 526,182
========= ===== ========== ============= ============= ==========
See accompanying notes to consolidated financial
statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended December 31,
2001 2000 1999
------------ ----------- -----------
Cash Flows from Operating Activities:
Net earnings/(loss) $ (24,452) $ 2,927 $ (49,837)
------------ ----------- -----------
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization 21,197 17,714 10,346
Cumulative effect adjustment 3,841 -- --
Advisor acquisition expense -- -- 76,333
Impairment provisions 27,174 2,576 7,779
Provision for loss on loans 28,200 2,027 1,988
Loss on sales of assets 1,137 721 1,852
Gain on sale of mortgage loans (4,119) -- --
Increase in real estate held for sale (37,507) -- --
Loss on investment in securities 122 5,348 --
Net decrease in value of mortgage loans held for sale,
net of related hedge 5,070 6,855 551
Equity in earnings of joint venture, net of distributions (397) 7 28
Proceeds from sale of loans 105,975 -- 294,228
Proceeds from securitization transaction -- -- 257,812
Purchase of other investments -- -- (31,247)
Investment in mortgage loans held for sale (116,995) (205,584) (266,302)
Collection on mortgage loans held for sale 37,267 6,981 2,073
Changes in other operating assets and liabilities 1,689 4,466 1,657
------------ ----------- -----------
Total adjustments 72,654 (158,889) 357,098
------------ ----------- -----------
Net Cash Provided by (Used in) Operating Activities 48,202 (155,962) 307,261
------------ ----------- -----------
Cash Flows from Investing Activities:
Additions to real estate investment properties (26,052) (160,901) (286,411)
Investment in direct financing leases --- (15,369) (63,664)
Proceeds from sale of assets 12,659 15,869 7,555
Proceeds from sale or maturities of securities 982 7,721 ---
Investment in mortgage, equipment and other notes receivable (11,458) (11,131) (31,005)
Collection on mortgage, equipment and other notes receivable 9,325 8,335 3,894
Investment in joint venture (10) --- (187)
Purchase of other investments --- (2,832) ---
Redemption of certificates of deposit --- -- 2,000
Increase in restricted cash (10,580) (1,876) ---
Increase in intangibles and other assets --- (378) (1,862)
------------ --------------- -----------
Net cash used in investing activities (25,134) (160,562) (369,680)
------------ --------------- -----------
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(In Thousands)
Year Ended December 31,
2001 2000 1999
----------- ------------ ------------
Cash Flows from Financing Activities:
Reimbursement of costs paid by related parties on
behalf of the Company $ -- $ -- $ (1,492)
Proceeds from borrowings on credit facility, note payable and
subordinated note payable 63,949 397,538 439,941
Payment on credit facility, note payable and subordinated note
payable (159,590) (586,425) (61,580)
Proceeds from borrowings on mortgage warehouse facilities 325,264 301,227 27,101
Payments on mortgage warehouse facilities (358,860) (7,719) (352,809)
Contribution from minority interest of
consolidated joint venture -- 40 740
Subscriptions received from stockholder 9,692 -- 211
Retirement of shares of common stock -- -- (51)
Distributions to minority interest (234) (147) (67)
Distributions to stockholders (66,466) (66,330) (60,079)
Loan from stockholder 2,708 -- --
Payment of stock issuance costs (1,493) (1,493) (737)
Issuance of bonds 177,223 280,906 --
Payment on bonds (10,066) (2,422) --
Payment of loan costs and bond issuance costs (9,634) (20,891) (5,947)
----------- ------------ ------------
Net cash (used in) provided by financing activities (27,507) 294,284 (14,769)
----------- ------------ -------------
Net Decrease in Cash and Cash Equivalents (4,439) (22,240) (77,188)
Cash and Cash Equivalents at Beginning of Year 23,772 46,012 123,200
----------- ------------ ------------
Cash and Cash Equivalents at End of Year $ 19,333 $ 23,772 $ 46,012
=========== ============ ============
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Related parties paid certain acquisition and stock
issuance costs on behalf of the Company as follows:
Acquisition costs $ -- $ -- $ 579
Stock issuance costs -- -- 124
----------- ------------ ------------
$ -- $ -- $ 703
=========== ============ ============
Capital lease obligation incurred for the lease
of the Company's office space and furniture $ -- $ -- $ 10,057
=========== ============ ============
Interest paid $ 66,569 $ 39,023 $ 10,937
=========== ============ ============
Interest capitalized $ 390 $ 2,253 $ 3,889
=========== ============ ============
See accompanying notes to consolidated financial statements.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2001, 2000 and 1999
1. Significant Accounting Policies:
-------------------------------
Organization - CNL American Properties Fund, Inc. is a self-administered
real estate investment trust ("REIT") that offers financial, development,
advisory and other real estate services to operators of select national
and regional fast food, family-style and casual dining restaurant chains.
The term "Company" includes, unless the context otherwise requires, CNL
American Properties Fund, Inc. and its majority owned and controlled
subsidiaries. These subsidiaries include CNL-APF Partners, LP and CNL
Franchise Network, LP.
On June 1, 2000, the Company formed CNL Franchise Network, LP ("CNL-FN")
and transferred certain assets and operations to it in exchange for a
combined general and limited partnership interest of 84.39 percent. A
limited partnership interest of 9.18 percent was issued to Bank of
America in exchange for its franchise finance business unit. In addition,
a limited partnership interest of 6.43 percent was issued to CNL
Financial Group, Inc., an affiliate of a director of the Company, in
exchange for its merger, acquisition and advisory services business. The
excess of the purchase price over the fair value of the net tangible
assets acquired from the new partners of approximately $17.0 million was
recorded as goodwill. This partnership and the related Strategic Alliance
Agreement with Bank of America expanded the Company's financial products
and services. The bank's interest is redeemable at their option under
certain conditions after a specified date for a cash payment of $14.3
million.
On September 1, 1999, the Company acquired CNL Fund Advisors, Inc. (the
"Advisor"), CNL Financial Corporation and CNL Financial Services, Inc.
("CNL Restaurant Financial Services Group") by issuing 6.15 million
shares. Prior to the acquisition, the Advisor and CNL Restaurant
Financial Services Group had been affiliated with the Company. The
acquisitions were accounted under the purchase method of accounting. The
Company expensed the $76.3 million excess of the purchase price of the
Advisor over the fair value of the net acquired assets. The Company
recognized $45.7 million in excess purchase price of CNL Restaurant
Financial Services Group.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
1. Significant Accounting Policies - Continued:
-------------------------------------------
Principles of Consolidation - The consolidated financial statements of
the Company include its majority owned and controlled affiliates. All
significant intercompany balances and transactions among consolidated
affiliates have been eliminated. The equity method of accounting is
applied to those investments in joint ventures that are not subject to
control by the Company due to the significance of rights held by other
parties.
Use of Estimates - Preparation of the financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities.
Significant estimates included provisions for impairment of real estate
and loans, valuation of loans held for sale and valuation of other
investments. Actual results could differ from those estimates.
Real Estate and Lease Accounting - The Company records its properties
comprised of land, buildings and equipment at cost. Management reviews
its properties for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable
through operations or sale. Management determines whether impairment in
value has occurred by comparing the estimated future undiscounted cash
flows, including the residual value of the property, with the carrying
cost of the individual property. If impairment is indicated, the assets
are adjusted to estimated fair value. Properties acquired that the
Company intends to sell or securitize within one year of acquisition are
recorded at cost. Rental income is recognized without regard to potential
future rent increases and the asset is not depreciated. Revenue from sale
of real estate is recognized at the time of closing when collectibility
of the sales price is reasonably assured and the earnings process is
substantially complete.
Properties leased to restaurant operators are generally on a triple-net
basis, which means the tenant is responsible for all operating expenses
relating to the property, including property taxes, insurance,
maintenance and repairs. The leases are accounted for using either the
direct financing or the operating method.
Direct financing method - The leases accounted for using the direct
financing method are recorded at the net investment that, at the
inception of the lease, generally represents the cost of the asset.
Unearned income is deferred and amortized to income over the lease
terms so as to produce a constant periodic rate of return on net
investment in the leases.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
1. Significant Accounting Policies - Continued:
-------------------------------------------
Operating method - Land, building and secured equipment leases are
accounted for using the operating method. Revenue is recognized as
rentals are earned and depreciation is charged to operations on a
straight-line basis over the life of the related assets. Rental
income is recognized on a straight-line basis over the lease term.
Buildings and equipment are depreciated on the straight-line
method over their estimated useful lives of 30 and seven years,
respectively.
Loans - The Company originates loans to restaurant operators that are
generally secured by real estate or equipment. The Company accounts for
loans depending on the following classification:
Mortgage loans held for sale - Loans originated that the Company
intends to sell or securitize generally within one year of
origination are recorded at fair market value. Quoted prices for
similar loans and the present value of the expected cash flows net
of the estimated impact of any defaults are used to determine fair
value. The Company segregates its loans held for sale into two
portfolios and determines fair market value in the aggregate for
each portfolio.
Mortgage, equipment and other notes receivable - Loans originated
that are expected to be held until maturity are recorded at the
lower of cost or market value and are reduced for any estimated
future loss. Whenever it appears that future collection on
specific notes appears doubtful, a valuation allowance is
established. The allowance represents the difference between the
carrying amount and the amount management expects to receive.
Increases and decreases in the allowance due to changes in the
measurement of the impaired loans are included in the provision
for loss on loans. Loans continue to be classified as impaired
unless they are brought fully current and the collection of
scheduled interest and principal is considered probable. When a
loan or portion of a loan, including an impaired loan, is
determined to be uncollectible, the portion deemed uncollectible
is charged against the allowance and subsequent recoveries, if
any, are credited to the allowance. Accrual of interest is
discontinued when management believes, after considering economic
and business conditions and collection efforts, that the
borrowers' financial condition is such that collection of interest
is doubtful. Subsequent interest is recorded as income.
Borrowers are charged a fee to originate their loan, which is recognized
as income over the related loan life, or when the loan is sold.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
1. Significant Accounting Policies - Continued:
-------------------------------------------
Securitizations - Certain loans are originated and sold to entities
that, in turn, issue securities to investors backed by these assets.
The Company retains the servicing rights and participates in cash flows
from the retained equity positions and lower rated securities. The
present value of the expected cash flows for each retained security,
after payment of principal and interest to third-party bond or
certificate holders, over the estimated cost of servicing is recorded
at the time of sale as a retained interest. Retained interests in
securitized assets are included in other investments. Accounting for
the retained interests requires that the Company estimate their value
using market trends and historical experience, expected prepayments and
defaults. This information is considered, along with prevailing
discount rates and the terms of the bonds and certificates, to arrive
at current fair value amounts.
Restricted Cash - Restricted cash relates to cash received in
connection with securitized assets that are subject to certain
restrictions until released by the trustee.
Cash and Cash Equivalents - The Company considers all highly liquid
investments with a maturity of three months or less when purchased to
be cash equivalents. These amounts may exceed federally insured levels,
however the company has not experienced any such losses.
Investments - Investments classified as held to maturity securities are
carried at amortized cost. Investments classified as available for sale
securities are stated at fair market value. The market value adjustment
is included in accumulated other comprehensive income.
Derivative Financial Instruments - The Company utilizes derivative
instruments to partially offset the effect of fluctuating interest
rates on the value of its mortgage loans held for sale and the cash
flows associated with a portion of its variable-rate debt. The Company
adopted Statement of Financial Accounting Standards No. 133 ("FAS
133"), as amended, on January 1, 2001, which requires all derivative
instruments to be recorded on the balance sheet at fair value. Changes
in the value of derivatives associated with hedge transactions are
recorded either in current earnings or in other comprehensive income
depending on the type.
Fair-value hedge transactions - When the Company hedges changes in
the fair value of an asset or liability, the effective changes in
the value of the derivative instrument are generally offset in the
income statement by changes in the value of the hedged item.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
1. Significant Accounting Policies - Continued:
-------------------------------------------
Cash-flow hedge transactions - When the Company hedges variability
of cash flows related to a variable-rate asset or liability or a
forecasted transaction, effective changes in the value of the
derivative instrument are reported in other comprehensive income
and subsequently recognized in operations in the periods in which
earnings are impacted by the variability of the cash flows of the
hedged item or forecasted transaction.
The ineffective portion of all hedges are reflected in earnings.
Effective January 1, 2001, the Company recorded a cumulative effect
adjustment loss of $21.2 million to recognize the value of all
derivative instruments that are designated as fair-value hedging
instruments and an offsetting cumulative effect adjustment of $17.4
million to recognize the excess of the fair values of related hedged
assets over the carrying value. In addition, effective January 1, 2001
a cumulative effect adjustment through stockholders' equity of $5.2
million was recorded to recognize at fair value all derivative
instruments that are designated as cash-flow hedging instruments.
During 2001, the Company determined that a forecasted debt issuance
would not occur and also terminated a cash flow hedge upon repayment of
the related debt. The termination of the hedges and the hedge
accounting for the related derivative instruments resulted in an $8.0
million charge to the statement of operations.
Loan Costs - Loan costs incurred in connection with the note payable,
credit and mortgage warehouse facilities and bonds payable have been
capitalized and are being amortized over the term of the related debt
using the straight-line method which approximates the effective
interest method. Loan costs are included in intangibles and other
assets in the financial statements. As of December 31, 2001 and 2000,
the Company had capitalized loan costs of $32.2 million and $28.0
million, respectively and recorded accumulated amortization of $13.0
million and $8.7 million, respectively.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
1. Significant Accounting Policies - Continued:
-------------------------------------------
Income Taxes - The Company has made an election to be taxed as a REIT
for federal income tax purposes. The Company generally will not be
subject to federal corporate income taxes on amounts distributed to
stockholders, providing it distributes at least 95 percent of its
taxable income and meets certain other requirements for qualifying as a
REIT. Earnings and profits, which determine the taxability of dividends
to stockholders, differ from reported net income as a result of
differing treatment of items for financial reporting versus tax
purposes, such as different lives and methods used to depreciate
investment properties. Notwithstanding qualification as a REIT for tax
purposes, the Company is subject to certain state taxes on its income
and property.
Effective January 1, 2001, the Company's subsidiary, CNL Franchise
Network Corp. ("CNL-FNC"), elected to be treated as a taxable REIT
subsidiary ("TRS") pursuant to the provisions of the REIT Modernization
Act. As a TRS, its operating Partnership, CNL-FN, is able to engage in
activities resulting in income that previously would have been
disqualified from being eligible REIT income under the federal income
tax regulations. Certain activities reside within CNL-FNC that are
therefore subject to federal income taxes.
Earnings Per Share - Basic earnings per share are calculated based upon
net earnings (income available to common stockholders) divided by the
weighted average number of shares of common stock outstanding during
the reporting period. The Company's subsidiary, CNL-FN, has entered
into a subordinated note payable with a conversion feature that allows
one of the partners to convert the note into additional ownership of
the subsidiary. For the years ended December 31, 2001 and 2000, the
impact of this conversion feature was not dilutive.
Reclassification - Certain items in the prior years' financial
statements have been reclassified to conform to the 2001 presentation.
These reclassifications had no effect on stockholders' equity or net
earnings.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
1. Significant Accounting Policies - Continued:
-------------------------------------------
Goodwill - Goodwill is recorded in intangibles and other assets and
represents the excess of the purchase price and related costs over the
fair value assigned to the net assets and liabilities of acquired
operations. Goodwill is amortized on a straight-line basis using a
20-year life and relates to the following acquisitions:
CNL Financial Services, Inc. and CNL Financial Corporation acquired
on September 1, 1999 as more fully described in Note 1 -- $40.5
million.
Bank of America franchise origination's group and CNL Financial
Group, Inc.'s advisory services operations- acquired as part of the
formation of CNL-FN in June 2000 as more fully described above --
$13.2 million and $2.6 million, respectively.
For the years ended December 31, 2001 and 2000, accumulated
amortization related to goodwill is $4.9 million and $1.8 million,
respectively, and $3.1 million and $1.8 million, respectively, is
recorded as amortization expense.
Subsequent to December 31, 2001, the Company will cease amortizing
goodwill as required by FAS 142. This standard requires the use of a
non-amortization approach to account for purchased goodwill and certain
intangibles. Under a non-amortization approach, goodwill and certain
intangibles will not be amortized into results of operations, but
instead would be reviewed for impairment and written down and charged
to results of operations only in the periods in which the then recorded
value of goodwill and certain intangibles is more than its fair value.
The Company expects the adoption of this standard to result in
decreased amortization of goodwill and is currently unaware of any
impairment in its recorded value.
Consolidated Statement of Cash Flows - Supplemental Disclosure -
Effective May 11, 2001, the Company reclassified $60.9 million from
mortgage loans held for sale as investments in mortgage, equipment and
other notes receivable.
From time to time, certain properties classified as long-term
investments may be subsequently re-designated to held for sale
classification. The Company re-designated 93 properties with a net book
value of $115.7 million during 2001.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
1. Significant Accounting Policies - Continued:
-------------------------------------------
During the year ended December 31, 1999, the Company issued 3,800,000
shares of common stock for $76 million to acquire the net assets of CNL
Fund Advisors, Inc. and its subsidiary. During the year ended December
31, 1999, the Company also issued 2,350,000 shares of common stock for
$47 million to acquire the net assets of CNL Financial Services, Inc.
and CNL Financial Corporation and its subsidiaries.
During the year ended December 31, 2000, the Company formed CNL
Franchise Network, LP ("CNL-FN"). CNL-FN issued partnership interests
to Bank of America and CNL Financial Group, Inc. in exchange for the
following:
Bank of America contributed $14.3 million for the operations of its
franchise finance business which was recorded as goodwill.
CNL Financial Group, Inc. contributed its merger, acquisition and
advisory services group consisting of the following:
(In Thousands)
Cash $ 40
Receivables 25
Due from related parties 409
Other assets 363
Goodwill 2,725
--------------
Total Assets 3,562
--------------
Accounts payable and accrued expenses 123
Due to related parties 40
Other payables 199
--------------
Total liabilities 362
--------------
Net equity $ 3,200
==============
In October 2000, a trust liquidated and distributed $170.3 million in
mortgage loans and $139.5 million in related mortgage warehouse debt
facilities to satisfy the Company's investment.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
1. Significant Accounting Policies - Continued:
-------------------------------------------
Other New Accounting Standards - In October 2001, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets" (FAS 144). This statement requires that a long-lived
asset be tested for recoverability whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable.
The carrying amount of a long-lived asset is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result from
the use and eventual disposition of the asset. The assessment is based
on the carrying amount of the asset at the date it is tested for
recoverability. An impairment loss is recognized when the carrying
amount of a long-lived asset exceeds its fair value. If an impairment
is recognized, the adjusted carrying amount of a long-lived asset is
its new cost basis. The adoption of FAS 144 is required in fiscal year
2002 and is not expected to impact the carrying value of the Company's
long-lived assets upon adoption.
2. Real Estate Investment Properties:
---------------------------------
Real estate investment properties consist of the following at December
31:
(In Thousands)
2001 2000
--------- ----------
Land $ 328,327 $ 381,351
Buildings 356,845 418,659
Equipment 2,143 2,346
---------- ----------
687,315 802,356
Less accumulated depreciation (36,813) (24,922)
---------- ----------
650,502 777,434
Construction in progress 1,716 8,170
---------- ----------
$ 652,218 $ 785,604
========== ==========
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
2. Real Estate Investment Properties - Continued:
---------------------------------------------
During 2001 and 2000, the Company sold several properties that were
subject to operating leases and received net proceeds of $11.2 million
and $12.2 million, respectively, and recorded losses of $1.0 million
and $0.7 million, respectively.
In 2001 and 2000, the Company's real estate segment recorded provisions
for impairment of $20.9 million and $1.7 million, respectively. The
tenants of these properties experienced financial difficulties and
ceased payment of rents under the terms of their lease agreements. The
provisions represent the amount necessary to reduce the carrying value
to the estimated net realizable values of the properties based on
discounted cash flows of sale or re-lease terms.
Substantially all property leases have initial terms of 13 to 25 years
(most expiring between 2006 and 2024) and provide for scheduled rent
increases, and in some cases, contingent rent. The leases generally
allow the tenant to purchase the property at the greater of the
Company's purchase price plus a specified percentage or fair market
value at specified times. Fixed and determinable lease revenues are
recognized on a straight-line basis over the terms of the leases. For
the years ended December 31, 2001, 2000 and 1999, the Company
recognized $6.9 million, $9.4 million and $5.1 million, respectively,
of such accrued rental income.
Future minimum contractual lease payments to be received under
noncancellable operating leases at December 31, 2001 (In Thousands) are
as follows:
2002 $ 61,646
2003 62,718
2004 64,473
2005 65,467
2006 65,194
Thereafter 666,522
-----------
$ 986,020
===========
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
3. Net Investment in Direct Financing Leases:
-----------------------------------------
The components of net investment in direct financing leases at December
31 follows:
2001 2000
---------- ----------
(In Thousands)
Minimum lease payments
receivable $ 280,553 $ 348,616
Estimated residual values 28,538 37,949
Interest receivable from
secured equipment leases 26 63
Less unearned income (172,013) (217,406)
---------- ----------
Net investment in direct
financing leases $ 137,104 $ 169,222
========== ==========
The following is a schedule of future minimum lease payments to be
received on direct financing leases at December 31, 2001 (In
Thousands):
2002 $ 17,284
2003 17,423
2004 17,288
2005 17,225
2006 17,069
Thereafter 194,264
-----------
$ 280,553
===========
The Company's real estate segment recorded provisions for losses on
direct financing leases totaling $6.3 million and $0.9 million,
respectively, during the years ended December 31, 2001 and 2000
respectively. The tenants of these properties experienced financial
difficulties and ceased payment of rents under the terms of their lease
agreements. The provisions represent the amount necessary to reduce the
carrying values of the direct financing leases to their estimated net
realizable values based on discounted cash flows of sale or re-lease
terms.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
4. Real Estate Held for Sale:
--------------------------
Real estate held for sale consist of the following at December 31,
2001:
(In Thousands)
Land and buildings $ 171,564
5. Mortgage Loans Held for Sale:
----------------------------
Mortgage loans held for sale are wholly or partially collateralized by
first mortgages on land and/or buildings of franchised restaurant
businesses and consist of approximately $300.2 million in fixed-rate
loans and approximately $6.7 million in variable-rate loans at December
31, 2001. The fixed-rate loans carry a weighted average interest rate
of 9.59 percent and the variable-rate loans carry interest rates that
adjust monthly based on fluctuations in 30-day LIBOR (averaging 8.43
percent throughout 2001). The mortgage loans are due in monthly
installments with maturity dates ranging from 2002 to 2021. The
fixed-rate mortgage loans generally prohibit prepayment for certain
periods or include prepayment penalties.
Mortgage loans held for sale at December 31 consist of the following:
2001 2000
--------- ---------
(In Thousands)
Outstanding principal $ 306,887 $ 400,952
Accrued interest income 2,059 3,049
Deferred financing income (1,640) (2,274)
Valuation adjustment 8,529 (7,406)
-------------- ------------
$ 315,835 $ 394,321
============== ============
The valuation adjustment at December 31, 2001 reflects the increase in
current value over historical cost of $15.8 million, net of an
estimated $7.3 million decline in value associated with borrower
delinquencies.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
6. Mortgage, Equipment and Other Notes Receivable:
----------------------------------------------
Mortgage, equipment and other notes receivable consist of the following
at December 31:
2001 2000
----------- ---------
(In Thousands)
Outstanding principal $ 132,519 $ 71,545
Accrued interest income 694 3,632
Deferred financing income (893) (86)
Unamortized loan costs/premiums 1,273 788
Allowance for uncollectible notes (29,631) (3,108)
------------ -----------
$ 103,962 $ 72,771
============ ===========
Approximately $87.5 million and $24.7 million of the outstanding
principal balance as of December 31, 2001 and 2000, respectively, is
secured by mortgages. The remaining principal is secured by equipment
and other collateral. As of December 31, 2001 and 2000, approximately
$40 million and $13.6 million in notes receivable were considered
impaired and approximately $38.5 million and $3.9 million were on
non-accrual status with regard to recognition of interest. The Company
recognized $1.0 million and $0.2 million of interest income as of
December 31, 2001 and 2000, respectively, on impaired loans.
Changes in the allowance for loan losses for 2001 and 2000 are
summarized as follows (In Thousands):
2001 2000
--------- -----------
Balance at beginning of year $ 3,108 $ 1,949
Provision for loan losses 28,200 1,804
Recoveries on loans previously charged off -- --
Loans charged off (1,677) (645)
----------- -----------
Balance at end of year $ 29,631 $ 3,108
============ ==========
Management believes the net carrying value of the notes approximates
fair value based on current rates at which similar loans would be made
to borrowers with similar credit and for similar maturities.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
7. Other Investments:
-----------------
In August 1998, the Company acquired an investment in certain franchise
loan certificates (the "1998 Certificates") issued in connection with a
mortgage loan securitization transaction sponsored by CNL Financial
Corporation, which was an affiliate prior to its acquisition by the
Company in 1999 (see Note 1). Certain of the 1998 Certificates bear
interest at an 8.4 percent pass through rate per annum and the
remainder bear interest at adjustable pass through rates which
generated an effective yield of 8.74 percent in 2001. At December 31,
2001 the carrying value of this investment was $16.0 million and the
fair market value of the 1998 Certificates was $10.3 million. The
difference between the carrying value and fair value is the result of
using a higher discount rate at December 31, 2001 to determine fair
value as compared to the rate used to price the initial investment.
In connection with the merger on September 1, 1999 of the Company and
CNL Restaurant Financial Services Group (see Note 1), the Company
acquired investments in an interest-only certificate and other residual
interests with a fair market value of $5.2 million. The interest only
certificate and the other residual interests are classified as
available for sale and are carried at fair market value based on
estimated discounted cash flows. The accumulated unrealized gain at
December 31, 2001 was $ 1.1 million.
In August 1999, the Company created and retained a residual interest in
a $500 million loan sale facility syndicated with two third parties.
This facility permitted the Company to sell loans on a regular basis to
a trust. As of December 31, 1999, the Company had sold $300 million in
loans to the trust. In October of 2000, the trust liquidated and the
Company received mortgage loans net of related debt of approximately
$31 million and recorded a loss of approximately $3.1 million on
liquidation of the residual interest.
Certain mortgage loans were securitized in November 1999 and franchise
loan trust certificates were sold to investors. The securitization
resulted in a loss of approximately $1 million. The Company retained
certain subordinated investment securities ("the 1999 Certificates").
The 1999 Certificates totaling $21.1 million at December 31, 1999 were
recorded by allocating the previous carrying amount of the mortgages
between the assets sold and the retained interests based on their
relative fair values. Approximately $7.7 million of the 1999
Certificates were classified as available for sale and were sold in
April 2000. The remaining balance of approximately $13.4 million are
classified as held to maturity. As of December 31, 2001, an other than
temporary impairment of approximately $2.3 million on the residual
value of the investment has been recognized.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
7. Other Investments - Continued:
-----------------------------
The key assumptions used in calculating the value of these retained
interests at the time of securitization are based on normal market
assumptions as follows:
o five percent prepayment penalty computed after taking into
consideration the period of time covered by a yield maintenance and
lockout prepayment penalties;
o a cumulative default ratio (CDR) of zero;
o prevailing market discount rates at the time of securitization
generally ranging from 8.36 percent to 65.1 percent; and
o weighted average lives ranging from 6.17 to 17.81 years on the
certificated traunches.
Subsequently, the values of the retained securities are measured using
updated prepayment and CDR assumptions with adjustments to prevailing
market discount rates based on consultations with investment bankers.
The following table shows the effects on an individual key assumption
under two negative scenarios. Prepayment assumptions, after
consideration of yield maintenance and lockout, would not have a
further material impact on these scenarios.
1998-1 1999-1
Certificates Certificates
($ in millions) ($ in millions)
------------------ -----------------
Fair value of retained interests $15.6 $12.9
Weighted-average life (in years) of
certificated traunches. 11.4 15.1
Residual cash flows discount rate (annual)
Impact on fair value of 100 bp adverse change $(0.7) $(0.7)
Impact on fair value of 200 bp adverse change $(1.3) $(1.3)
Expected Credit Losses (annual rate)
Impact on fair value of 2% adverse change $(3.0) $(1.0)
Impact on fair value of 3% adverse change $(4.6) $(1.4)
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
7. Other Investments - Continued:
-----------------------------
These sensitivities are hypothetical and should be used with caution.
Changes in fair value based on a percentage variation in assumptions
generally cannot be extrapolated because the relationship of the change
in assumption to the change in fair value may not be linear. Also, the
effect of a variation in a particular assumption on the fair value of
the retained interest is calculated without changing any other
assumption; in reality, changes in one factor may result in changes in
another (for example, increases in market interest rates may result in
lower prepayments and increased credit losses), which might magnify or
counteract the sensitivities.
The following table represents the securitized portfolio and all
managed loans as of December 31 (In Thousands):
Principal Amount > 60 Days
Total Principal Amount Past Due
--------------------------------- ------------------------------
Type of Loan 2001 2000 2001 2000
------------------------------------------- -------------- --------------- ------------- -------------
(In Thousands) (In Thousands)
Mortgage loans $ 870,953 $ 940,136 $ 38,757 $ 8,209
Equipment and other loans 44,993 46,871 31,164 41,314
---------------- ----------------- --------------- --------------
Total loans managed or
securitized 915,946 987,007 69,921 49,523
Less:
Loans securitized (475,904) (512,154) (10,139) --
Loans held for sale or
securitization (307,523) (403,308) (18,617) (1,162)
---------------- ----------------- --------------- --------------
Loans held in portfolio (Note 6) $ 132,519 $ 71,545 $ 41,165 $ 48,361
================ ================= =============== ==============
The Company had net charge-offs during the years ended December 31,
2001 and 2000 of $3.4 million and $0, respectively.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
7. Other Investments - Continued:
-----------------------------
The following table summarizes cash flows received from and paid to
securitization trusts for the years ended December 31 (In Thousands):
2001 2000
--------- ---------
Servicing fees received $ 1,730 $ 1,826
Other cash flows received on
retained interests 8,517 7,557
Servicing advances 5,746 66
Repayments of servicing advances 3,796 --
8. Borrowings:
----------
Borrowings consist of the following at December 31 (In Thousands):
2001 2000
----------------------------- -------------------------------
Amount Average Rate Amount Average Rate
----------------------------- -------------------------------
Revolver $ 10,000 6.55% $ 80,000 8.80%
Note Payable 48,731 6.98% 85,617 6.98%
Mortgage Warehouse Facilities 430,169 5.13% 463,765 7.98%
Subordinated Note Payable 43,750 8.50% 34,000 8.50%
Series 2000-A Bonds Payable 270,392 7.88% 278,484 7.88%
Series 2001-4 Bonds Payable 40,311 8.90% - -
Series 2001 Bonds Payable 130,362 2.82% - -
------------ --------------
$ 973,715 $ 941,866
============ ==============
CNL-RP has a $10.0 million unsecured credit facility (the "Liquidity
Facility"). The facility is for a term of one year and contains an
option to extend the facility subject to renewal of the warehouse
credit facility maintained by CNL-FN.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
8. Borrowings - Continued:
----------------------
In October 2001, the Company entered into a two-year unsecured $30.0
million revolving credit facility (the "Revolver"). Interest on
advances under the Revolver accrue at LIBOR plus 225 basis points. The
Revolver includes financial covenants that provide for the maintenance
of certain financial ratios. As of December 31, 2001, the Revolver had
an outstanding balance of $10.0 million.
The Company entered into a note payable in 1999 in the amount of $147.0
million. During 2001 and 2000, the Company applied proceeds received
from the issuance of bonds to pay down the note. Borrowings under the
note bear interest at the rate of the lender's commercial paper plus 56
basis points per annum. As of December 31, 2001, the interest rate was
6.98 percent. The note is collateralized by mortgages on properties and
matures in February 2003. The note includes financial covenants that
provide for the maintenance of certain financial ratios.
CNL-FN maintains mortgage warehouse facilities with a total borrowing
capacity of $525.0 million that bear interest at LIBOR plus a weighted
average of 94 basis points per annum. In connection with entering into
the Revolver in October 2001, the Company agreed to reduce the
borrowing capacity by $50.0 million by April 1, 2002. In addition, the
Company entered into a guarantee related to removal or disposition of
approximately $187.0 million of loans. The guarantee is reduced
pro-rata as loans are removed. If any amounts are still outstanding
relating to these loans in October 2002, the Company will be required
to remit the $15.0 million net of any pro rata reductions so achieved.
In June 2000, CNL-FN entered into a $43.75 million senior subordinated
note payable. The principal balance together with unpaid interest is
due in full in 2007. In October 2001, the Company agreed to a $15.0
guarantee for a portion of the subordinated note. The guarantee has
provisions for its reduction tied to achievement of earnings targets,
full availability of the facility and removal of the targeted amount of
loans from the mortgage warehouse facility. The Company also amended
the note to permit prepayments. If any of the targets are not met by
October 13, 2002, the lender will have a one-month option to convert
exactly 80 percent of the guarantee to a preferred security of CNL-APF
Partners, LP with terms substantially equivalent to the subordinated
note. As part of the agreement, Bank of America agreed to reduce their
potential ownership percentage in CNL Franchise Network, LP from 29.12
percent to 22.28 percent.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
8. Borrowings - Continued:
----------------------
In August of 2000, the Company issued triple net lease mortgage bonds,
Series 2000-A. Collateral for the bonds consist of 257 commercial real
estate properties operated as restaurants leased to tenants, with a
carrying value of $332.5 million at December 31, 2001. It is
anticipated that the $103.7 million of the bonds will have a final
payment date in August 2009 and the remainder will have a final payment
date in April 2017. The bond indenture provides for an optional
redemption at their remaining principal balance when remaining rents
due under the leases that serve as collateral are less than ten percent
of the aggregate initial rents due under the leases.
In May 2001, the Company issued Asset Backed Bonds, Series 2001-4. The
proceeds of $42.1 million were applied to pay down short-term debt. The
Company applied 63 mortgage loans as collateral for the bonds which had
a carrying value of approximately $60.3 million as of December 31,
2001. The offering resulted in an initial weighted average life of
approximately 7.8 years and a rate of interest of approximately 8.90
percent per annum. The bond indenture requires monthly principal and
interest payments received from borrowers to be applied to the bonds.
The bond indenture also provides for an optional redemption of the
bonds at their remaining principal balance when the remaining amounts
due under the loans that serve as collateral for the bonds are less
than 15 percent of the aggregate amounts due under the loans at the
time of issuance.
In October 2001, the Company issued $131.0 million in Triple Net Lease
Mortgage Bonds, Series 2001. Collateral for the bonds consist of 119
commercial real estate properties operated as restaurant units which
have a carrying value of approximately $181.2 million as of December
31, 2001. The bonds are scheduled to amortize over a 15-year period,
but mature in five years. Interest is payable monthly at LIBOR plus 48
basis points. The Company incurred $5.1 million in bond issuance costs,
which is being amortized over five years, and entered into an interest
rate cap agreement with a strike rate of 4.5 percent to protect against
future increases in LIBOR. The proceeds were used to pay off the
Company's previous $125.0 million credit facility and approximately
$44.8 million was applied to pay down the Company's secured credit
facility.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
8. Borrowings - Continued:
----------------------
The following schedule of maturities on outstanding indebtedness
assumes that loan repayments are made on the mortgage warehouse
facilities in accordance with loan amortization schedules with
corresponding lender extensions of the facilities and that bonds
payable amortize in accordance with estimated payment amounts.
(In Thousands)
2002 $ 33,942
2003 72,563
2004 42,327
2005 30,180
2006 32,327
Thereafter 762,376
------------
$ 973,715
============
In the event the mortgage warehouse lenders do not grant extensions,
outstanding indebtdness of approximately $251.8 million and $178.4
million will be due in October 2002 and March 2003, respectively.
9. Income Tax:
----------
For income tax purposes the Company's TRS treats loan valuation
adjustments, loss reserves, loan fees, depreciation, and other items
different from the treatment of these items for financial reporting
purposes. In the aggregate, the Company's TRS has an excess of
available future deductible items over future taxable items and as such
may benefit from these items when the taxable subsidiaries produce a
greater level of taxable income. At present, the Company has not
recorded this potential future benefit because the subsidiaries
involved do not have sufficient historical earnings on which to base a
potential future benefit.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
9. Income Tax - Continued:
----------------------
The consolidated provision for federal income taxes is composed of the
following estimates for the year ending December 31, 2001 of the
Company's TRS (In Thousands):
Federal Tax
---------------
Expected tax at US statutory rate $ 136
Adjustments arising from:
Non-deductible goodwill amortization 902
Hedge and loan valuation related items 203
Unconsolidated affiliates (1,228)
Loan origination fees (117)
Other (79)
Valuation allowances 183
---------------
Provision (benefit) for income taxes $ --
===============
Through December 31, 2000, the Taxable REIT Subsidiary had not been
subject to federal income tax. The components of the net deferred tax
asset as of December 31, 2001 are as follows:
(In Thousands)
Deferred tax asset:
Hedge and loan valuation related differences $ 5,266
Loan origination fees 535
Net operating losses 183
Other 1,000
---------
Total 6,984
Valuation allowance (6,984)
---------
Net recorded deferred tax asset $ --
=========
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
10. Distributions:
-------------
For the years ended December 31, 2001, 2000 and 1999, approximately 20
percent, 40 percent and 97 percent, respectively, of the distributions
received by stockholders were considered to be ordinary income and
approximately 80 percent, 60 percent and three percent, respectively,
were considered a return of capital for federal income tax purposes.
Distributions were funded through cash from operations, borrowings on
the Company's credit facility, stock purchases by an affiliate and a
loan from an affiliate, subsequently converted to equity.
11. Related Party Transactions:
The following summarizes the more significant related party
transactions with affiliated entities:
For the year ending
December 31:
-------------------------------
Amounts received (paid) in thousands 2001 2000 1999
------- ------- --------
Services purchased from affiliates (1) $(4,564) $(4,492) $(12,432)
Rent to affiliates for office space (2) (1,007) (888) (835)
Servicing fees from affiliates (3) 3,656 1,560 ---
Interest income from an affiliated joint
venture (4) 2,024 150 ---
Sale (purchase) of properties from an
affiliate (5) 13,430 --- (39,700)
Affiliate advances to Company for note (6) 2,700 --- ---
Affiliate purchase of stock (7) 9,700 --- ---
Affiliate purchase of equipment leases (8) 1,100 --- ---
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
11. Related Party Transactions - Continued:
--------------------------------------
(1) Services purchased from affiliates include human resources, tax
planning and compliance, computer systems support, investor
relations and other services including property and acquisition
management services prior to September 1999.
(2) Future commitments due under the operating lease are as follows (In
Thousands):
2002 $ 1,043
2003 1,074
2004 1,106
2005 1,139
2006 1,173
Thereafter 10,496
----------
$ 16,031
==========
(3) Property management and other administrative services provided to
affiliates investing in restaurant net lease properties and loans.
(4) Interest income ranging from 9.1 to 9.2 percent received from loans
made to an affiliated joint venture. The outstanding loan balance
at December 31, 2001 and 2000 was $16.7 million and $6.9 million,
respectively, earning interest.
(5) The Company sold 11 properties to affiliates during 2001. During
1999, over 40 properties were acquired by the Company from an
affiliate.
(6) Amounts borrowed from affiliates in the form of demand promissory
notes that bear interest at LIBOR plus 2.5 percent.
(7) Amounts borrowed from affiliates similar to the terms described in
(6) above, that were subsequently extinguished through the issuance
of 579,722 shares of Company stock.
(8) Proceeds received from an affiliate for the purchase of collection
rights of the current and future cash flows of three equipment
leases, for which no gain or loss was recognized.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
11. Related Party Transactions - Continued:
--------------------------------------
In February 2002, the Company approved the purchase of a five percent
limited partner ownership in an affiliate owning the building in which
the Company occupies space. The purchase price is comprised of a
payment of $150,000 and assumption of a $1.3 million guarantee.
During the year ended December 31, 2001, an affiliate advanced
approximately $5.8 million to Phoenix Restaurant Group, Inc. and its
subsidiaries (collectively referred to as `PRG"), a tenant and borrower
of the Company. PRG used these proceeds to pay outstanding obligations,
including obligations to the Company.
12. Concentration of Credit Risk:
No individual lessee or borrower, or affiliated groups of lessees or
borrowers or restaurant chains represented more than ten percent of the
Company's revenues during the years ended December 31, 2001, 2000 or
1999.
Although the Company's properties are geographically diverse throughout
the United States and lessees and borrowers operate a variety of
restaurant concepts, 15 restaurant chains constitute 70 percent of the
Company's properties. Failure of any one of these restaurant chains or
any significant lessees or borrowers could significantly impact results
of operations if the Company is not able to timely protect its
interest.
Cash accounts and other liquid investments maintained on behalf of the
Company at commercial banks may exceed federally insured levels;
however, the Company has not experienced any losses in such accounts.
13. Segment Information:
-------------------
In June 1, 2000, the Company created separate legal entities to operate
and measure two distinct lines of business. CNL-APF Partners LP is a
real estate company that oversees real estate, mortgage and equipment
loans generally until maturity. CNL Franchise Network, LP is a
specialty finance company focused on originating sale-leaseback and
debt financing with the intent to sell or securitize these assets
generally within a year.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
13. Segment Information - Continued:
-------------------------------
The following tables summarize the results for the years 2001 and 2000
for the portfolio management and specialty finance segments (In
Thousands):
Year Ended December 31, 2001
-----------------------------------------------------
Consolidated
Specialty Totals
Real Estate Finance Eliminations Year Ended
------------ --------- ------------ ------------
Revenues $ 98,537 $ 168,317 $ (2,039) $ 264,815
------------ --------- ------------ ------------
Cost of real estate sold -- 97,587 -- 97,587
General operating and
administrative expenses 8,994 22,595 (1,201) 30,388
Property expenses and state and
other taxes 3,707 176 -- 3,883
Interest expense 38,566 30,739 (763) 68,542
Depreciation and amortization 14,127 7,145 (75) 21,197
Provision for losses on assets 26,906 268 -- 27,174
Loss on sale of assets 1,116 21 -- 1,137
Loss on investment in securities -- 122 -- 122
Cumulative effect of accounting
change -- 3,841 -- 3,841
Loss on termination of cash flow
hedge 1,643 6,417 -- 8,060
Provision for loan losses 28,200 -- -- 28,200
Minority interest and equity
earnings 132 (996) -- (864)
------------ --------- ------------ ------------
123,391 167,915 (2,039) 289,267
------------ --------- ------------ ------------
Net earnings/(loss) $ (24,854) $ 402 $ -- $ (24,452)
============ ========= ============= ============
Assets at December 31, 2001 $ 916,473 $ 642,641 $ -- $ 1,559,114
Investments accounted for under
the equity method at
December 31, 2001 1,058 N/A N/A 1,058
Additions to long-lived assets:
Real estate 3,769 22,283 -- 26,052
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
13. Segment Information - Continued (In Thousands):
----------------------------------------------
June - December 2000
--------------------------------
Consolidated
January 1 - Specialty Totals
May 31, 2000 Real Estate Finance Year Ended
-------------- ------------- ------------ ---------------
Revenues $ 40,733 $ 61,016 $ 14,884 $ 116,633
-------------- ------------- ------------ ---------------
General operating and
administrative expenses 7,249 6,400 11,297 24,946
Property expenses and state
and other taxes 603 3,188 -- 3,791
Interest expense 15,178 20,854 11,580 47,612
Depreciation and amortization 5,555 8,380 3,779 17,714
Transaction cost 1,440 8,174 701 10,315
Provision for Losses on assets 67 2,509 -- 2,576
(Gain) loss on sale of assets (26) 747 -- 721
Loss on investment in
securities -- -- 5,348 5,348
Provision for loan losses 1,804 -- -- 1,804
Minority interest and equity
earnings 21 29 (1,171) (1,121)
-------------- ------------- ------------ ----------------
31,891 50,281 31,534 113,706
-------------- ------------- ------------ ----------------
Net earnings/(loss) $ 8,842 $ 10,735 $ (16,650) $ 2,927
============== ============= ============ ================
Assets at December 31, 2000 N/A $ 990,840 $608,663 $ 1,599,503
Investments accounted for
under the equity method at
December 31, 2000 N/A 1,067 N/A 1,067
Additions to long-lived assets:
Real estate 50,581 15,792 109,897 176,270
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31, 2001, 2000 and 1999
14. Commitments and Contingencies:
In the ordinary course of business, the Company has outstanding
commitments to qualified borrowers and tenants. These commitments,
including development agreements, if accepted by the potential
borrowers, obligate the Company to provide funding. The accepted and
unfunded commitment totaled approximately $19.4 million at December 31,
2001, of which $5.8 million has been scheduled for closing.
15. Selected Quarterly Financial Data:
---------------------------------
The following table presents selected unaudited quarterly financial
data for each fiscal quarter during the years ended December 31, 2001
and 2000 (In Thousands, except for per share data):
2001 Quarter First Second Third Fourth Year
-------------------------- -------- -------- -------- --------- ---------
Revenue $ 46,920 $ 41,270 $ 39,199 $ 137,426 * $ 264,815
Earnings/(loss)
before cumulative
effect of
accounting change 12,015 5,195 (27,644) (10,177) (20,611)
Cumulative effect of
accounting change (3,841) -- -- -- (3,841)
Net earnings/(loss) 8,174 5,195 (27,644) (10,177) (24,452)
Earnings/(loss) per
share (Basic
and Diluted) 0.19 0.12 (0.64) (0.23) (0.56)
2000 Quarter First Second Third Fourth Year
-------------------------- -------- -------- -------- --------- ---------
Revenue $ 26,512 $ 25,874 $ 27,988 $ 36,259 $ 116,633
Net earnings/(loss) 7,379 655 3,576 (8,683) 2,927
Earnings/(loss) per
share (Basic
and Diluted) 0.17 0.02 0.08 (0.20) 0.07
* Reflects a reclassification to present revenue from sale of real
estate at gross rather than net.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item is incorporated by reference to the
Company's Definitive Proxy Statement to be filed with the Commission no later
than April 30, 2002.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to the
Company's Definitive Proxy Statement to be filed with the Commission no later
than April 30, 2002.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is incorporated by reference to the
Company's Definitive Proxy Statement to be filed with the Commission no later
than April 30, 2002.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by reference to the
Company's Definitive Proxy Statement to be filed with the Commission no later
than April 30, 2002.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report.
1. Consolidated Financial Statements
Report of Independent Certified Public Accountants.
Consolidated Balance Sheets at December 31, 2001 and 2000.
Consolidated Statements of Operations for the years ended
December 31, 2001, 2000 and 1999.
Consolidated Statements of Stockholders' Equity and
Comprehensive Income (Loss) for the years ended December 31,
2001, 2000 and 1999.
Consolidated Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
Schedule II - Vauation and Qualifying Accounts for the years
ended December 31, 2001, 2000 and 1999.
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 2001.
Notes to Schedule III - Real Estate and Accumulated
Depreciation at December 31, 2001.
Schedule IV - Mortgage Loans on Real Estate at December 31,
2001.
All other Schedules are omitted as the required information is
inapplicable or is presented in the financial statements or
notes thereto.
3. Exhibits
2.1 Agreement and Plan of Merger, by and among the
Registrant, CFA Acquisition Corp., CNL Fund Advisors,
Inc. and CNL Group, Inc., dated March 11, 1999
(included as Exhibit 10.38 to the Registrant's
Registration Statement No. 333-74329 on Form S-4 (the
"Form S-4") as originally filed and incorporated
herein by reference).
2.2 Agreement and Plan of Merger, by and among the
Registrant, CFC Acquisition Corp., CFS Acquisition
Corp., CNL Financial Corp., CNL Financial Services,
Inc., CNL Group, Inc., Five Arrows Realty Securities
L.L.C., Robert A. Bourne, Curtis B. McWilliams and
Brian Fluck, dated March 11, 1999 (included as
Exhibit 10.39 to the Form S-4 as originally filed and
incorporated herein by reference).
3.1 CNL American Properties Fund, Inc. Amended and
Restated Articles of Incorporation, as amended
(included as Exhibit 3.1 to the Registrant's Form
10-Q for the quarter ended June 30, 1999 and
incorporated herein by reference).
3.2 CNL American Properties Fund, Inc. Amended and
Restated Bylaws (included as Exhibit 3.2 to the
Registrant's Registration Statement No. 333-37657 on
Form S-11 and incorporated herein by reference).
3.3 CNL American Properties Fund, Inc. Second Amended and
Restated Articles of Incorporation (included as
Exhibit 3.3 to the Registrant's Form 10-Q for the
quarter ended June 30, 2000 and incorporated herein
by reference).
4.1 Form of Stock Certificate (included as Exhibit 4.5 to
the Registrant's Registration Statement No. 33-78790
on Form S-11 and incorporated herein by reference).
10.1 Form of Indemnification Agreement dated as of April
18, 1995, between the Registrant and each of James M.
Seneff, Jr., Robert A. Bourne, G. Richard Hostetter,
J. Joseph Kruse, Richard C. Huseman, John T. Walker,
Jeanne A. Wall, Lynn E. Rose and Edgar J. McDougall,
dated as of January 27, 1997, between the Registrant
and Steven D. Shackelford, dated as of February 18,
1998, between the Registrant and Curtis B.
McWilliams, and dated as of September 1, 1999,
between the Registrant and each of Howard J. Singer,
John L. Farren, Timothy J. Neville, Michael I. Wood
and Barry L. Goff (included as Exhibit 10.9 to the
Registrant's Registration Statement No. 333-15411 on
Form S-11 and incorporated herein by reference).
10.2 Amended and Restated Agreement of Limited Partnership
of CNL APF Partners, LP (included as Exhibit 10.50 to
Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.3 Amended and Restated Credit Agreement by and among
CNL APF Partners, LP, Registrant, First Union
National Bank, First Union Capital Markets Group,
Banc of America Securities LLC, NationsBank, N.A.,
The Chase Manhattan Bank and other financial
institutions, dated June 9, 1999 (included as Exhibit
10.51 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.4 First Amendment to Amended and Restated Credit
Agreement dated as of December 31, 1999 between CNL
APF Partners, LP and First Union National Bank, as
Agent (included as Exhibit 10.4 to the Registrant's
Form 10-K for the year ended December 31, 1999 and
incorporated herein by reference).
10.5 Franchise Receivable Funding and servicing Agreement
dated as of October 14, 1999 between CNL APF
Partners, LP and Neptune Funding Corporation
(included as Exhibit 10.5 to the Registrant's Form
10-K for the year ended December 31, 1999 and
incorporated herein by reference).
10.6 Interim Wholesale Mortgage Warehouse and Security
Agreement dated as of September 18, 1998, and Amended
Agreement dated as of August 30, 1999 between CNL APF
Partners, LP and Prudential Securities Credit
Corporation (included as Exhibit 10.6 to the
Registrant's Form 10-K for the year ended December
31, 1999 and incorporated herein by reference).
10.7 1999 Performance Incentive Plan (included as Exhibit
10.1 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.8 Registration Rights Agreement by and among the
Registrant, Robert A. Bourne, Curtis B. McWilliams,
John T. Walker, Howard Singer, Steven D. Shackelford
and CNL Group, Inc., dated as of March 11, 1999
(included as Exhibit 10.40 to Amendment No. 1 to the
Form S-4 and incorporated herein by reference).
10.9 Registration Rights Agreement by and among the
Registrant, Five Arrows Realty Securities L.L.C.,
James M. Seneff, Jr., Robert A. Bourne, Curtis B.
McWilliams and CNL Group, Inc., dated as of March 11,
1999 (included as Exhibit 10.41 to Amendment No. 1 to
the Form S-4 and incorporated herein by reference).
10.10 Employment Agreement by and between Curtis B.
McWilliams and the Registrant, dated September 15,
1999 (included as Exhibit 10.42 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference).
10.11 Employment Agreement by and between Steven D.
Shackelford and the Registrant, dated September 15,
1999 (included as Exhibit 10.43 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference).
10.12 Employment Agreement by and between John T. Walker
and the Registrant, dated September 15, 1999
(included as Exhibit 10.44 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.13 Employment Agreement by and between Howard J. Singer
and the Registrant, dated September 15, 1999
(included as Exhibit 10.45 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.14 Employment Agreement by and between Barry L. Goff and
the Registrant, dated September 15, 1999 (included as
Exhibit 10.46 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.15 Employment Agreement by and between Robert W. Chapin
and the Registrant, dated September 15, 1999
(included as Exhibit 10.47 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.16 Employment Agreement by and between Timothy J.
Neville and the Registrant, dated September 15, 1999
(included as Exhibit 10.48 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.17 Holdback Agreement by and among the Registrant and
Stockholders, dated August 31, 1999 (included as
Exhibit 10.56 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.18 Amended and Restated Credit and Reimbursement
Agreement by and among CNL APF Partners, LP, CNL APF
LP Corp., CNL APF GP Corp., Bank of America, N.A. and
Bank of America Securities LLC, dated as of June 15,
2000 (included as Exhibit 10.18 to the Registrant's
Form 10-Q for the quarter ended June 30, 2000).
10.19 Employment Agreement by and between Michael Wood and
the Registrant, dated August 31, 1999 (included as
Exhibit 10.19 to the Registrant's Form 10-Q for the
quarter ended March 31, 2001).
10.20 Employment Agreement by and between Brent Heaton and
the Registrant, dated September 29, 1999 (included as
Exhibit 10.20 to the Registrant's Form 10-Q for the
quarter ended March 31, 2001).
10.21 Addendum to Employment Agreement dated as of November
1, 1999, between the Registrant and Curtis McWilliams
(included as Exhibit 10.21 to the Registrant's Form
10-Q for the quarter ended March 31, 2001). The
following persons have signed a substantially
identical Addendum relating to their respective
employment agreements; Steve Shackelford (dated
November 1, 1999), John Walker (dated November 3,
1999), Barry Goff (dated November 1, 1999), and Brent
Heaton (dated November 3, 1999).
10.22 Addendum to Employment Agreement dated as of November
1, 1999, between the Registrant and Robert Chapin
(included as Exhibit 10.22 to the Registrant's Form
10-Q for the quarter ended March 31, 2001). The
following persons have signed a substantially
identical Addendum relating to their respective
employment agreements: Howard Singer (dated November
1, 1999), Michael Wood (dated November 8, 1999) and
Timothy Neville (dated November 24, 1999).
10.23 Second Addendum to Employment Agreement dated as of
June 16, 2000, between the Registrant and Curtis
McWilliams (included as Exhibit 10.23 to the
Registrant's Form 10-Q for the quarter ended March
31, 2001). The following persons have signed a
substantially identical Second Addendum relating to
their respective employment agreements: Howard Singer
(dated June 19, 2000), Robert Chapin (dated June 20,
2000) and Brent Heaton (dated October 30, 2000).
10.24 Second Addendum to Employment Agreement dated as of
August 20, 2000, between the Registrant and Barry
Goff (included as Exhibit 10.24 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001).
10.25 Second Addendum to Employment Agreement dated as of
September 1, 2000, between the Registrant and Steve
Shackelford (included as Exhibit 10.25 to the
Registrant's Form 10-Q for the quarter ended March
31, 2001).
10.26 Second Addendum to Employment Agreement dated as of
2000, between the Registrant and Timothy Neville
(included as Exhibit 10.26 to the Registrant's Form
10-Q for the quarter ended March 31, 2001).
10.27 Second Addendum to Employment Agreement dated as of
October 24, 2000, between the Registrant and Michael
Wood (included as Exhibit 10.27 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001).
10.28 Second Addendum to Employment Agreement dated as of
October 25, 2000, between the Registrant and John
Walker (included as Exhibit 10.28 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001).
10.29 Amended and Restated Master Purchase Agreement dated
as of October 11, 2001, among Bank of America, N.A.,
CNL Financial VII, LP and CNL Franchise Network, LP
(filed herewith).
10.30 Third Amended and Restated Side Letter dated as of
October 11, 2001, among Bank of America, N.A., CNL
Financial VII, LP and CNL Franchise Network, LP
(filed herewith).
21 Subsidiaries of the Registrant (filed herewith).
(b) The Registrant filed no reports on Form 8-K during the period October
1, 2001 through December 31, 2001.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 29th day of
March, 2002.
CNL AMERICAN PROPERTIES FUND, INC.
By:
/s/ JAMES M. SENEFF, JR.
-----------------------------------
James M. Seneff, Jr.
co-Chief Executive Officer
/s/ CURTIS B. McWILLIAMS
-----------------------------------
Curtis B. McWilliams
co-Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ JAMES M. SENEFF, JR. Director, Chairman of the Board and March 28, 2002
- --------------------------
James M. Seneff, Jr. co-Chief Executive Officer
(Principal Executive Officer)
/s/ CURTIS B. McWILLIAMS co-Chief Executive Officer March 28, 2002
- --------------------------
Curtis B. McWilliams (Principal Executive Officer)
/s/ STEVEN D. SHACKELFORD Executive Vice President, March 28, 2002
- --------------------------
Steven D. Shackelford Chief Financial Officer, Secretary and
Treasurer (Principal Financial and
Accounting Officer)
/s/ ROBERT A. BOURNE Director March 28, 2002
- --------------------------
Robert A. Bourne
/s/ G. RICHARD HOSTETTER Director March 28, 2002
- --------------------------
G. Richard Hostetter
/s/ J. JOSEPH KRUSE Director March 28, 2002
- --------------------------
J. Joseph Kruse
/s/ RICHARD C. HUSEMAN Director March 28, 2002
- --------------------------
Richard C. Huseman
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2001, 2000 and 1999
Additions Deductions
---------------------------- -----------------------------
Balance at Charged Charged to Deemed Balance
Beginning to Other Uncollec- at End
Year Description of Year Costs and Accounts tible Collected of Year
Expenses
-------- ---------------- ------------ ------------ -------------- ----------- ------------- --------------
1999 Allowance for
doubtful
accounts
(a) $2,056,815 $1,036,928 $3,057,049 $ 572,483 $ 389,093 $ 5,189,216
============ ============ ============== =========== ============= ==============
2000 Allowance for
doubtful
accounts $5,189,216 $1,678,144 $ 5,414,580 (b) $ 543,173 (c) $ 1,069,187 $ 10,669,580
(a)
============ ============ ============== =========== ============= ==============
2001 Allowance for
doubtful
accounts $10,669,580 $ 452,276 $ 1,371,314 $2,557,461 (c) $4,119,549 $ 5,816,160
(a)
============ ============ ============== =========== ============= ==============
(a) Deducted from receivables and accrued rental income on the balance sheet.
(b) Reduction of rental, earned and other income.
(c) Amounts written off as uncollectible.
CNL AMERICAN PROPERTIES FUND, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2001
Costs Gross Amount Life on
Capitalized at Which Which
Subsequent to Carried at Deprecia-
Initial Cost Acquistion Close of Period tion in
Latest
Buildings Accumu- Date of Income
and Building lated Con- State-
Impair- Emcum- Improve Improve- Carrying and Improve- Depreci- struc- Date ment is
ment brance Land ments ments Costs Land ments Total tion tion Acquired Computed
Properties the Company
has invested in Under
Operating Leases:
Applebee's Restaurants:
Antioch, Tennessee (o) 609,696 770,331 - - 609,696 770,331 1,380,027 86,126 1991 8/98 (e)
Clarksville, Tennessee (o) 556,070 983,010 - - 556,070 983,010 1,539,080 109,904 1995 8/98 (e)
Columbia, Tennessee (o) 625,868 936,068 - - 625,868 936,068 1,561,936 104,656 1996 8/98 (e)
Cookeville, Tennessee (o) 489,867 1,003,630 - - 89,867 1,003,630 1,493,497 112,209 1993 8/98 (e)
Hendersonville, Tennessee (o) 549,651 966,628 - - 549,651 966,628 1,516,279 108,073 1994 8/98 (e)
Hermitage, Tennessee (o) 735,272 827,474 - - 735,272 827,474 1,562,746 92,515 1992 8/98 (e)
Hopkinsville, Kentucky (o) 390,058 943,019 - - 390,058 943,019 1,333,077 105,433 1997 8/98 (e)
Lebanon, Tennessee (o) 568,168 925,046 - - 568,168 925,046 1,493,214 103,424 1998 8/98 (e)
Madison, Tennessee (o) 740,165 835,996 - - 740,165 835,996 1,576,161 93,467 1995 8/98 (e)
Montclair, California 874,094 880,494 - 874,094 880,494 1,754,588 93,807 1997 12/96 (e)
Moscow, Idaho 537,410 - - - 537,410 (g) 537,410 (h) 1999 8/99 (h)
Rockford, Illinois (o) 603,828 - - - 603,828 (g) 603,828 (h) 1996 1/99 (h)
Salem, Oregon 778,321 - 1,153,535 - 778,321 1,153,535 1,931,856 85,376 1999 10/99 (e)
Arby's Restaurants:
Allen, Texas (o) 508,994 - - - 508,994 (g) 508,994 (h) 1999 12/99 (h)
Arab, Alabama (o) 230,720 455,946 - - 230,720 455,946 686,666 53,301 1988 5/98 (e)
Atlanta, Georgia (o) 648,459 - 655,353 - 648,459 655,353 1,303,812 47,469 1998 8/98 (e)
Auburndale, Florida (o) 326,788 391,270 - - 326,788 391,270 718,058 38,439 1995 1/99 (e)
Avon, Indiana (o) 338,486 497,282 - - 338,486 497,282 835,768 88,337 1996 9/96 (e)
Bartow, Florida (o) 226,428 414,175 - - 226,428 414,175 640,603 19,558 1995 1/99 (e)
Brooksville, Florida (o) 266,606 421,780 - - 266,606 421,780 688,386 19,917 1994 1/99 (e)
Brooksville, Florida (o) 248,277 368,959 - - 248,277 368,959 617,235 17,423 1984 1/99 (e)
Canton, Georgia (o) 586,476 - 606,850 - 586,476 606,850 1,193,326 61,627 1998 12/98 (e)
Columbus, Ohio (o) 441,770 - 594,458 - 441,770 594,458 1,036,228 43,058 1998 7/98 (e)
Columbus, Ohio (o) 483,868 - 576,483 - 483,868 576,483 1,060,351 58,442 1999 12/98 (e)
Douglasville, Georgia (o) 708,710 - 546,363 - 708,710 546,363 1,255,074 35,214 1999 12/99 (e)
Flower Mound, Texas (o) 434,130 - 618,352 - 434,130 618,352 1,052,482 39,488 2000 1/00 (e)
Grand Rapids, Michigan (o) 312,670 - - - 312,670 (g) 312,670 (h) 1995 8/95 (h)
Greensboro, North Carolina (o) 363,478 404,650 - - 363,478 404,650 768,128 59,519 1990 8/97 (e)
Greenville, North Carolina (o) 277,986 490,143 - - 277,986 490,143 768,128 72,094 1995 8/97 (e)
Hudson, Florida (o) 270,539 488,818 - - 270,539 488,818 759,357 23,083 1993 1/99 (e)
Indianapolis, Indiana (o) 439,935 - 677,335 - 439,935 677,335 1,117,269 48,937 2000 12/99 (e)
Jonesville, North Carolina (o) 228,364 539,764 - - 228,364 539,764 768,128 79,393 1995 8/97 (e)
Kernersville, North Carolina (o) 273,325 413,077 - - 273,325 413,077 686,402 60,759 1994 8/97 (e)
Kinston, North Carolina (o) 268,545 485,160 - - 268,545 485,160 753,705 71,362 1995 8/97 (e)
Lakeland, Florida (o) 235,996 452,008 - - 235,996 452,008 688,004 21,345 1990 1/99 (e)
Lawrenceville, Georgia (o) 668,582 - 755,749 - 668,582 755,749 1,424,331 39,871 1999 6/00 (e)
Lexington, North Carolina (o) 320,924 463,347 - - 320,924 463,347 784,271 69,438 1992 7/97 (e)
Myrtle Beach, South Carolina (o) 421,481 - 633,406 - 421,481 633,406 1,054,887 49,853 1999 7/99 (e)
New Port Richey, Florida (o) 242,777 398,029 - - 242,777 398,029 640,806 18,796 1992 1/99 (e)
Orange Park, Florida (o) 463,047 - 592,539 - 463,047 592,539 1,055,586 44,579 1998 5/98 (e)
Plant City, Florida (o) 196,251 443,976 - - 196,251 443,976 640,226 22,199 1991 1/99 (e)
Redford , Michigan (o) 412,516 - 673,289 - 412,516 673,289 1,085,805 63,845 1998 1/99 (e)
Renton, Washington (o) 583,115 - 778,732 - 583,115 778,732 1,361,847 41,100 1999 5/00 (e)
Tampa, Florida (o) 322,412 371,694 - - 322,412 371,694 694,106 36,516 1992 1/99 (e)
The Colony, Texas (o) 504,327 - - - 504,327 (g) 504,327 (h) 1999 12/99 (h)
Vancouver, Washington (o) 733,180 - 665,895 - 733,180 665,895 1,399,075 61,953 1999 3/99 (e)
Walker, Michigan (o) 498,403 - 701,467 - 498,403 701,467 1,199,871 52,610 1999 9/99 (e)
Whitehall, Ohio (o) 522,786 - 289,350 - 522,786 289,350 812,136 29,755 1998 12/98 (e)
Bakers Square Restaurants:
Alsip, Illinois (o) 449,010 728,259 - - 449,010 728,259 1,177,269 50,851 1978 10/99 (e)
Burbank, Illinois (o) 679,830 1,041,258 - - 679,830 1,041,258 1,721,088 72,706 1987 10/99 (e)
Cherry Valley, Illinois (o) 419,238 848,874 - - 419,238 848,874 1,268,112 59,273 1979 10/99 (e)
Coon Rapids, Minnesota (o) 543,966 1,131,838 - - 543,966 1,131,838 1,675,804 79,031 1991 10/99 (e)
Deerfield, Illinois (o) 573,069 468,307 - - 573,069 468,307 1,041,376 32,700 1980 10/99 (e)
Downers Grove, Illinois (o) 537,805 778,410 - - 537,805 778,410 1,316,215 36,758 1978 10/99 (e)
Homewood, Illinois (o) 601,418 760,181 - - 601,418 760,181 1,361,599 35,897 1978 10/99 (e)
LaGrange, Illinois (o) 591,206 770,392 - - 591,206 770,392 1,361,599 36,380 1977 10/99 (e)
Lansing, Illinois (o) 647,562 869,687 - - 647,562 869,687 1,517,248 60,726 1977 10/99 (e)
Mankato, Minnesota (o) 488,663 1,141,844 - - 488,663 1,141,844 1,630,506 79,729 1992 10/99 (e)
Matteson, Illinois (o) 664,403 852,845 - - 664,403 852,845 1,517,248 59,550 1970 10/99 (e)
Merrillville, Indiana (o) 567,083 1,176,715 - - 567,083 1,176,715 1,743,798 82,164 1978 10/99 (e)
Palatine, Illinois (o) 686,927 674,672 - - 686,927 674,672 1,361,599 31,860 1999 10/99 (e)
Palos Heights, Illinois (o) 375,257 734,314 - - 375,257 734,314 1,109,571 51,273 1977 10/99 (e)
Saint Charles, Illinois (o) 614,512 630,952 - - 614,512 630,952 1,245,464 44,056 1977 10/99 (e)
Westmont, Illinois (o) 518,276 591,047 - - 518,276 591,047 1,109,323 41,270 1980 10/99 (e)
Willowbrook, Illinois (o) 586,045 718,306 - - 586,045 718,306 1,304,351 50,156 1977 10/99 (e)
Bandana's Bar-B-Q Restaurants:
Arnold, Missouri (m) (o) 373,239 - 873,481 - 373,239 873,481 1,246,720 70,272 1999 6/99 (e)
Collinsville, Illinois (m) (o) 346,699 829,363 - - 346,699 829,363 1,176,062 77,570 1987 3/99 (e)
Columbia, Missouri (m) (o) 501,566 - 920,312 - 501,566 920,312 1,421,878 30,428 1985 1/99 (e)
Crystal City, Missouri (m) 273,460 875,101 - - 273,460 875,101 1,148,561 60,462 1999 8/99 (e)
Fenton, Missouri (m) 624,303 - 1,026,766 - 624,303 1,026,766 1,651,068 88,695 1986 3/99 (e)
Bennigan's Restaurants:
Arvada, Colorado (o) 714,194 1,302,733 - - 714,194 1,302,733 2,016,927 206,092 1997 4/97 (e)
Batavia, Illinois (o) 944,185 - 1,529,062 - 944,185 1,529,062 2,473,247 101,937 2000 1/00 (e)
Bedford, Texas (o) 768,333 - - - 768,333 (g) 768,333 (h) 1986 6/98 (h)
Canton, Ohio (o)1,433,543 - 835,463 - 1,433,543 835,463 2,269,006 41,773 2000 5/00 (e)
Clearwater, Florida (o) 900,038 - - - 900,038 (g) 900,038 (h) 1979 6/98 (h)
Colorado Springs, Colorado (o) 794,255 - - - 794,255 (g) 794,255 (h) 1979 6/98 (h)
Copley, Ohio (o)1,433,543 - 835,463 - 1,433,543 835,463 2,269,006 41,773 2000 5/00 (e)
Englewood, Colorado (o) 665,141 - - - 665,141 (g) 665,141 (h) 1984 6/98 (h)
Englewood, New Jersey (o)1,460,179 901,042 - - 1,460,179 901,042 2,361,220 106,418 1982 6/98 (e)
Florham Park, New Jersey (o)1,077,645 - - - 1,077,645 (g)1,077,645 (h) 1983 6/98 (h)
Glenview, Illinois (o)1,019,248 - 1,789,742 - 1,019,248 1,789,742 2,808,991 69,601 2000 11/00 (e)
Grapevine, Texas (o)1,038,598 - 1,523,346 - 1,038,598 1,523,346 2,561,944 105,506 1999 11/99 (e)
Houston, Texas (o) 908,502 - - - 908,502 (g) 908,502 (h) 1979 6/98 (h)
Jacksonville, Florida (o) 779,387 - - - 779,387 (g) 779,387 (h) 1983 6/98 (h)
Jacksonville, Florida (o) 832,557 - - - 832,557 (g) 832,557 (h) 1981 6/98 (h)
Lone Tree, Colorado (o)1,075,230 - 1,502,305 - 1,075,230 1,502,305 2,577,535 79,270 1999 6/00 (e)
Mount Laurel, New Jersey (o)1,305,939 1,030,685 - - 1,305,939 1,030,685 2,336,624 121,729 1982 6/98 (e)
North Richland Hills, Texas (o) 886,048 - - - 886,048 (g) 886,048 (h) 1979 6/98 (h)
Ocala, Florida (o) 693,453 - 1,072,916 - 693,453 1,072,916 1,766,369 80,469 1998 12/98 (e)
Oklahoma City, Oklahoma (o) 756,750 - - - 756,750 (g) 756,750 (h) 1986 6/98 (h)
Orlando, Florida (o)1,585,461 874,143 - - 1,585,461 874,143 2,459,604 103,241 1978 6/98 (e)
Pensacola, Florida (o) 692,093 - - - 692,093 (g) 692,093 (h) 1983 6/98 (h)
Saint Louis Park, Minnesota (o) 885,111 - - - 885,111 (g) 885,111 (h) 1976 6/98 (h)
Tampa, Florida (o) 741,286 - - - 741,286 (g) 741,286 (h) 1980 6/98 (h)
Woodridge, Illinois (o) 789,680 - - - 789,680 (g) 789,680 (h) 1987 12/98 (h)
Big Boy Restaurants:
Las Vegas, Nevada (m) 656,263 - 1,312,746 - 656,263 1,312,746 1,969,009 109,825 1997 1/98 (e)
Mansfield, Ohio (m) 366,776 - 778,584 - 366,776 778,584 1,145,360 73,829 1999 1/99 (e)
O'Fallon, Missouri (m) 369,314 - 704,550 - 369,314 704,550 1,073,864 64,814 1984 2/99 (e)
Overland Park, Kansas (m) 466,949 - 630,982 - 466,949 630,982 1,097,931 56,863 1984 4/99 (e)
Saint Clairsville, Ohio (m) 437,383 - 770,447 - 437,383 770,447 1,207,830 74,424 1991 2/99 (e)
Black Angus Restaurants:
Dublin, California (o)1,023,054 - 1,275,135 - 1,023,054 1,275,135 2,298,188 95,635 1999 9/99 (e)
Orem, Utah (o) 799,168 - 1,229,788 - 799,168 1,229,788 2,028,956 91,192 1999 10/99 (e)
Black-eyed Pea Restaurants:
Fort Worth, Texas (m) 679,384 - ,028,766 - 679,384 1,028,766 1,708,150 73,988 1999 11/99 (e)
Glendale, Arizona (m) 744,764 - ,082,896 - 744,764 1,082,896 1,827,660 97,245 1998 4/99 (e)
Grapevine, Texas (m) 892,828 - ,323,506 - 892,828 1,323,506 2,216,334 95,417 1999 9/99 (e)
Herndon, Virginia (m) 362,141 989,635 - - 362,141 989,635 1,351,776 114,350 1996 7/98 (e)
Hillsboro, Texas 404,881 - - - 404,881 (g) 404,881 (h) 1996 10/97 (h)
Killeen, Texas (m) 518,990 - ,013,637 - 518,990 1,013,637 1,532,627 75,740 1999 9/99 (e)
McKinney, Texas (m) 690,692 - ,121,270 - 690,692 1,121,270 1,811,961 88,237 1999 7/99 (e)
Mesa, Arizona (m) 784,939 863,063 - - 784,939 863,063 1,648,002 5,550 1994 9/97 (e)
Mesa, Arizona (m) 821,177 - ,050,746 - 821,177 1,050,746 1,871,923 78,378 1999 10/99 (e)
Norman, Oklahoma (m) 568,489 - 958,822 - 568,489 958,822 1,527,311 87,023 1998 3/99 (e)
Boston Market Restaurants:
Atlanta, Georgia (o) 774,448 - 507,587 - 774,448 507,587 1,282,034 80,363 1997 4/97 (e)
Columbus, Ohio (o) 353,608 606,470 - - 353,608 606,470 960,078 78,245 1997 5/98 (e)
Gambrills, Maryland (o) 667,992 - 661,776 - 667,992 661,776 1,329,768 97,423 1997 8/97 (e)
Glendale, Arizona (o) 566,562 403,730 - - 566,562 403,730 970,292 53,416 1997 4/98 (e)
Indianapolis, Indiana (o) 885,567 - 648,755 - 885,567 648,755 1,534,322 93,704 1997 9/97 (e)
Jessup, Maryland (m) 631,336 - 675,111 - 631,336 675,111 1,306,447 101,261 1997 7/97 (e)
Lansing, Michigan (o) 515,827 - 572,706 - 515,827 572,706 1,088,532 81,128 1997 10/97 (e)
Newport News, Virginia 473,596 586,377 - - 473,596 586,377 1,059,974 87,951 1997 7/97 (e)
Riverdale, Maryland (o) 526,092 - 504,483 - 526,092 504,483 1,030,575 71,464 1997 10/97 (e)
Waldorf, Maryland (o) 651,867 - 775,634 - 651,867 775,634 1,427,501 116,338 1997 7/97 (e)
Warwick, Rhode Island (o) 234,685 589,367 - - 234,685 589,367 824,052 77,830 1994 4/98 (e)
Burger King Restaurants:
Asheboro, North Carolina 597,021 962,188 - - 597,021 962,188 1,559,210 89,607 1982 3/99 (e)
Burbank, Illinois (o) 543,095 - 552,491 - 543,095 552,491 1,095,586 38,436 1996 8/96 (e)
Chadbourn, North Carolina 217,079 - 858,549 - 217,079 858,549 1,075,628 69,357 1999 4/99 (e)
Chattanooga, Tennessee (o) 680,192 - 526,711 - 680,192 526,711 1,206,903 36,643 1997 5/97 (e)
Chattanooga, Tennessee (o) 769,842 - 376,964 - 769,842 376,964 1,146,806 26,225 1997 5/97 (e)
Chicago, Illinois (o) 917,717 - 713,170 - 917,717 713,170 1,630,887 49,614 1996 2/97 (e)
Clinton, North Carolina 349,582 - - - 349,582 (g) 349,582 (h) 1999 2/00 (h)
Columbus, Ohio 445,471 434,907 - - 445,471 434,907 880,378 40,502 1971 3/99 (e)
Coon Rapids, Minnesota 387,913 560,993 - - 387,913 560,993 948,906 52,244 1991 3/99 (e)
Cut Off, Louisiana 323,106 1,219,165 - - 323,106 1,219,165 1,542,270 113,538 1991 3/99 (e)
Highland, Indiana (o) 672,815 - 553,461 - 672,815 553,461 1,226,275 38,503 1996 8/96 (e)
John's Island, South Carolina 477,686 719,221 - - 477,686 719,221 1,196,907 66,980 1989 3/99 (e)
Kent, Ohio (o) 233,468 689,696 - - 233,468 689,696 923,164 112,941 1970 12/96 (e)
Lacey, Washington 308,272 - - - 308,272 (g) 308,272 (h) 1993 1/99 (h)
Lake Charles, Louisiana 360,438 1,062,531 - - 360,438 1,062,531 1,422,969 98,951 1988 3/99 (e)
Lancaster, Ohio 339,900 745,696 - - 339,900 745,696 1,085,597 69,445 1987 3/99 (e)
Lynnwood, Washington 448,745 626,866 - - 448,745 626,866 1,075,610 59,328 1988 1/99 (e)
Manchester, New Hampshire 775,925 458,838 - - 775,925 458,838 1,234,763 42,731 1971 3/99 (e)
Montgomery, Alabama (m) 379,798 695,812 - - 379,798 695,812 1,075,610 65,853 1990 1/99 (e)
Montgomery, Alabama (m) 402,927 - - - 402,927 (g) 402,927 (h) 1988 1/99 (h)
Natchez, Mississippi 273,353 718,493 - - 273,353 718,493 991,846 66,912 1973 3/99 (e)
Oak Lawn, Illinois (o) 1,211,346 - 741,406 - 1,211,346 741,406 1,952,753 51,579 1996 9/96 (e)
Ooltewah, Tennessee (o) 546,261 - 658,946 - 546,261 658,946 1,205,207 45,842 1997 7/97 (e)
Opelousas, Louisiana 625,123 958,670 - - 625,123 958,670 1,583,793 89,279 1974 3/99 (e)
Portland, Oregon 500,000 - - - 500,000 - 500,000 (f) 2001 10/01 (f)
Rochester, New Hampshire 261,321 802,689 - - 261,321 802,689 1,064,010 74,753 1975 3/99 (e)
Shelton, Washington 424,416 822,399 - - 424,416 822,399 1,246,814 77,834 1995 1/99 (e)
Spanaway, Washington 416,548 762,244 - - 416,548 762,244 1,178,792 23,094 1998 2/01 (e)
Saint Paul, Minnesota 281,966 581,637 - - 281,966 581,637 863,603 54,167 1967 3/99 (e)
Tampa, Florida (m) 481,173 - 652,659 - 481,173 652,659 1,133,832 43,386 1999 1/00 (e)
Tappahannock, Virginia 363,327 596,839 - - 363,327 596,839 960,166 55,582 1987 3/99 (e)
Warren, Michigan 375,952 820,967 - - 375,952 820,967 1,196,919 76,455 1987 3/99 (e)
Wilmington, North Carolina 348,663 - 701,825 - 348,663 701,825 1,050,488 57,808 1999 4/99 (e)
Chevy's Fresh Mex Restaurants:
Altamonte Springs, Florida (o) 1,259,828 1,623,073 - - 1,259,828 1,623,073 2,882,901 147,114 1999 4/99 (e)
Annapolis, Maryland 1,372,280 - - - 1,372,280 (g)1,372,280 (h) 1999 12/99 (h)
Arapahoe, Colorado (o) 986,426 1,680,312 - - 986,426 1,680,312 2,666,738 228,696 1994 12/97 (e)
Atlanta, Georgia (o) 1,463,644 1,874,198 - - 1,463,644 1,874,198 3,337,842 169,876 1999 4/99 (e)
Auburn Hills, Michigan (o) 1,122,087 2,017,496 - - 1,122,087 2,017,496 3,139,583 182,864 1999 4/99 (e)
Beaverton, Oregon (o) 938,162 1,681,670 - - 938,162 1,681,670 2,619,832 228,662 1995 12/97 (e)
Bloomington, Minnesota (o) 869,178 1,309,759 - - 869,178 1,309,759 2,178,937 118,716 1999 4/99 (e)
Brandon, Florida (o) 844,185 1,425,740 - - 844,185 1,425,740 2,269,926 129,228 1999 4/99 (e)
Clearwater, Florida (o) 984,259 1,103,690 - - 984,259 1,103,690 2,087,949 100,038 1999 4/99 (e)
Greenbelt, Maryland (o) 945,234 1,475,339 - - 945,234 1,475,339 2,420,573 200,607 1994 12/97 (e)
Independence, Missouri (o) 1,239,264 1,490,392 - - 1,239,264 1,490,392 2,729,656 135,088 1999 4/99 (e)
Jacksonville, Florida (o) 1,725,325 1,574,207 - - 1,725,325 1,574,207 3,299,532 142,685 1999 4/99 (e)
Kissimmee, Florida (o) 570,815 1,536,290 - - 570,815 1,536,290 2,107,105 139,248 1999 4/99 (e)
Lake Mary, Florida (o) 88,077 2,019,028 - - 88,077 2,019,028 2,107,105 183,003 1999 4/99 (e)
Lake Oswego, Oregon (o) 963,047 1,505,671 - - 963,047 1,505,671 2,468,718 204,731 1995 12/97 (e)
Las Vegas, Nevada (o) 1,156,847 1,188,272 - - 1,156,847 1,188,272 2,345,119 115,852 1997 12/98 (e)
Merriam, Kansas (o) 1,032,271 1,074,834 - - 1,032,271 1,074,834 2,107,105 97,422 1999 4/99 (e)
Naperville, Illinois (o) 960,779 1,365,563 - - 960,779 1,365,563 2,326,342 166,891 1990 5/98 (e)
Nashville, Tennessee (o) 956,799 2,692,320 - - 956,799 2,692,320 3,649,119 244,030 1999 4/99 (e)
Olathe, Kansas (o) 470,047 1,541,280 - - 470,047 1,541,280 2,011,327 139,700 1999 4/99 (e)
Orlando, Florida (o) 1,495,716 1,674,517 - - 1,495,716 1,674,517 3,170,232 151,777 1999 4/99 (e)
Tampa, Florida (o) 869,408 1,548,972 - - 869,408 1,548,972 2,418,380 140,398 1999 4/99 (e)
Tampa, Florida (o) 878,358 1,449,034 - - 878,358 1,449,034 2,327,392 131,339 1999 4/99 (e)
Taylor, Michigan (o) 844,918 1,712,340 - - 844,918 1,712,340 2,557,257 155,205 1999 4/99 (e)
Chick-Fil-A Restaurant:
Rockwall, Texas (o) 528,118 - 340,297 - 528,118 340,297 868,415 61,788 1996 10/96 (e)
Chipotle Mexican Grill Restaurant:
Upland, California (o) 788,248 - 209,449 - 788,248 209,449 997,697 38,397 1996 7/96 (e)
Culpepper Restaurant:
Bridgeton, Missouri (m) -- 595,741 - - - 595,741 595,741 20,465 1989 3/99 (e)
Darryl's Restaurants:
Evansville, Indiana (m) (o) 563,479 - - - 563,479 (g) 563,479 (h) 1983 6/97 (h)
Hampton, Virginia (o) 698,367 523,919 - - 698,367 523,919 1,222,286 36,029 1983 6/97 (e)
Huntsville, Alabama (m) (o) 777,842 609,765 - - 777,842 609,765 1,387,607 41,932 1981 6/97 (e)
Knoxville, Tennessee (m) (o) 589,574 - - - 589,574 (g) 589,574 (h) 1983 6/97 (h)
Louisville, Kentucky (o) 647,375 - - - 647,375 (g) 647,375 (h) 1983 6/97 (h)
Mobile, Alabama 495,195 - - - 495,195 (g) 495,195 (h) 1983 6/97 (h)
Montgomery, Alabama (m) (o) 346,380 - - - 346,380 (g) 346,380 (h) 1984 6/97 (h)
Nashville, Tennessee (m) (o) 513,218 - - - 513,218 (g) 513,218 (h) 1981 6/97 (h)
Orlando, Florida 1,485,631 772,853 - - 1,485,631 772,853 2,258,484 119,054 1983 6/97 (e)
Pensacola, Florida (o) 389,394 - - - 389,394 (g) 389,394 (h) 1983 6/97 (h)
Raleigh, North Carolina (m) 1,131,164 719,865 - - 1,131,164 719,865 1,851,029 109,974 1972 6/97 (e)
Raleigh, North Carolina (m) (o) 840,525 465,154 - - 840,525 465,154 1,305,679 33,316 1980 6/97 (e)
Richmond, Virginia (m) (o) 618,125 - - - 618,125 (g) 618,125 (h) 1982 6/97 (h)
Richmond, Virginia 311,196 - - - 311,196 (g) 311,196 (h) 1982 6/97 (h)
Winston-Salem, North Carolina 436,867 - - - 436,867 (g) 436,867 (h) 1978 6/97 (h)
Del Taco Restaurant:
Mesa, Arizona (o) 642,483 - 581,759 - 642,483 581,759 1,224,242 42,301 1999 10/99 (e)
Denny's Restaurants:
Duncan, South Carolina (o) 219,702 - - - 219,702 (g) 219,702 (h) 1992 3/99 (h)
Greensboro, North Carolina (o) 361,025 572,098 - - 361,025 572,098 933,123 53,278 1992 3/99 (e)
Greenville, South Carolina (o) 457,851 454,566 - - 457,851 454,566 912,417 42,333 1985 3/99 (e)
Houston, Texas (o) 392,818 664,851 - - 392,818 664,851 1,057,669 61,916 1985 3/99 (e)
Kansas City, Missouri 400,847 - 826,367 - 400,847 826,367 1,227,214 65,172 1997 6/99 (e)
Landrum, South Carolina (o) 155,398 - - - 155,398 (g) 155,398 (h) 1992 3/99 (h)
Lee's Summit, Missouri (m) 539,650 - 670,448 - 539,650 670,448 1,210,098 54,542 1979 5/99 (e)
McKinney, Texas (m) 439,961 - 608,063 - 439,961 608,063 1,048,024 4,121 1996 4/96 (e)
Merriam, Kansas (m) 644,889 - 991,991 - 644,889 991,991 1,636,880 86,577 1981 5/99 (e)
Mooresville, North Carolina (o) 307,292 - - - 307,292 (g) 307,292 (h) 1992 3/99 (h)
North Kansas City, Missouri (m) 450,010 - 760,630 - 450,010 760,630 1,210,640 66,198 1979 5/99 (e)
Pasadena, Texas 466,555 - 506,094 - 466,555 506,094 972,649 106,838 1981 9/95 (e)
Santee, South Carolina (o) 328,506 358,314 - - 328,506 358,314 686,819 33,369 1992 3/99 (e)
Sedalia, Missouri (m) 318,979 - 1,013,110 - 318,979 1,013,110 1,332,089 89,052 1999 5/99 (e)
Shawnee, Oklahoma 528,090 - 625,653 - 528,090 625,653 1,153,743 132,077 1987 9/95 (e)
Tampa, Florida (m) 397,302 - - - 397,302 (g) 397,302 (h) 1997 8/97 (h)
Topeka, Kansas (o) 414,731 - - - 414,731 (g) 414,731 (h) 1989 3/99 (h)
Winter Springs, Florida (o) 555,232 - - - 555,232 (g) 555,232 (h) 1994 3/99 (h)
Einstein Brothers' Bagels Restaurants:
Dearborn, Michigan 464,957 - 178,078 - 464,957 178,078 643,035 26,710 1997 7/97 (e)
Springfield, Virginia 633,691 - - - 633,691 - 633,691 (f) 1997 7/97 (f)
Fazoli's Restaurant:
Southaven, Mississippi (o) 485,013 - - - 485,013 (g) 485,013 (h) 1999 2/99 (h)
Golden Corral Family Steakhouse Restaurants:
Bellevue, Nebraska 440,812 - 1,039,283 - 440,812 1,039,283 1,480,095 94,200 1999 4/99 (e)
Brunswick, Georgia 456,629 - 1,170,630 - 456,629 1,170,630 1,627,259 127,780 1998 9/98 (e)
Carlsbad, New Mexico 384,221 - 643,854 - 384,221 643,854 1,028,074 135,919 1995 9/95 (e)
Cleburne, Texas 359,455 - 653,853 - 359,455 653,853 1,013,308 136,213 1995 10/95 (e)
Clovis, New Mexico 426,349 805,517 - - 426,349 805,517 1,231,866 93,002 1997 7/98 (e)
Columbia, Missouri (o) 848,133 - 1,008,678 - 848,133 1,008,678 1,856,811 100,648 1999 1/99 (e)
Columbia, Tennessee 442,218 930,207 - - 442,218 930,207 1,372,424 99,103 1996 12/96 (e)
Columbus, Ohio 1,031,098 - 1,092,939 - 1,031,098 1,092,939 2,124,037 224,650 1995 11/95 (e)
Cookeville, Tennessee 806,377 - 1,086,502 - 806,377 1,086,502 1,892,879 88,562 1999 7/99 (e)
Corpus Christi, Texas 576,548 - 934,918 - 576,548 934,918 1,511,466 135,036 1997 9/97 (e)
Corsicana, Texas 349,227 - 699,756 - 349,227 699,756 1,048,983 149,664 1995 8/95 (e)
Council Bluffs, Iowa 546,078 - 993,149 - 546,078 993,149 1,539,227 113,100 1998 8/98 (e)
Davenport, Iowa 601,296 1,344,016 - - 601,296 1,344,016 1,945,312 121,452 1998 4/99 (e)
Dover, Delaware 1,043,108 - 977,508 - 1,043,108 977,508 2,020,616 198,208 1995 12/95 (e)
Dubuque, Iowa 564,242 - 1,056,315 - 564,242 1,056,315 1,620,557 120,294 1998 8/98 (e)
Duncan, Oklahoma 161,390 - 1,028,945 - 161,390 1,028,945 1,190,335 140,043 1997 11/97 (e)
Edmond, Oklahoma 569,664 - 1,017,781 - 569,664 1,017,781 1,587,445 118,732 1998 7/98 (e)
Enid, Oklahoma 364,536 - 865,147 - 364,536 865,147 1,229,683 120,152 1997 11/97 (e)
Evansville, Indiana 601,394 - 1,194,533 - 601,394 1,194,533 1,795,926 86,406 1999 7/99 (e)
Evansville, Indiana (o) 585,396 - 1,519,454 - 585,396 1,519,454 2,104,850 97,422 1999 12/99 (e)
Flowood, Mississippi (o) 595,717 - 1,094,345 - 595,717 1,094,345 1,690,062 73,255 1999 12/99 (e)
Fort Dodge, Iowa 320,880 - 1,155,880 - 320,880 1,155,880 1,476,760 113,620 1999 1/99 (e)
Fort Walton Beach, Florida 590,538 - 1,176,436 - 590,538 1,176,436 1,766,974 156,848 1997 1/98 (e)
Fort Wayne, Indiana 740,240 - 1,378,548 - 740,240 1,378,548 2,118,788 88,340 1999 12/99 (e)
Fort Worth, Texas 640,320 898,171 - - 640,320 898,171 1,538,491 192,101 1995 8/95 (e)
Henderson, Kentucky 380,659 - 1,127,382 - 380,659 1,127,382 1,508,042 97,543 1999 4/99 (e)
Hopkinsville, Kentucky (m) 456,646 - 861,803 - 456,646 861,803 1,318,449 90,135 1996 2/97 (e)
Jacksonville, Florida 615,554 - 1,184,073 - 615,554 1,184,073 1,799,628 171,023 1997 9/97 (e)
Jacksonville, Florida 541,264 - 1,173,738 - 541,264 1,173,738 1,715,002 169,530 1997 9/97 (e)
Jacksonville, Florida (o) 681,984 - 1,345,152 - 681,984 1,345,152 2,027,136 87,148 1999 12/99 (e)
Kansas City, Missouri 409,153 - 943,712 - 409,153 943,712 1,352,865 133,684 1997 10/97 (e)
Lufkin, Texas 479,197 - 954,051 - 479,197 954,051 1,433,248 161,651 1997 1/97 (e)
Moberly, Missouri 374,230 - 838,342 - 374,230 838,342 1,212,572 130,402 1997 5/97 (e)
Mobile, Alabama 428,841 - 1,031,457 - 428,841 1,031,457 1,460,298 140,384 1997 12/97 (e)
Muskogee, Oklahoma 395,839 - 887,540 - 395,839 887,540 1,283,379 110,935 1997 4/98 (e)
Olathe, Kansas 548,821 - 1,099,448 - 548,821 1,099,448 1,648,268 137,421 1997 4/98 (e)
Omaha, Nebraska 570,004 - 1,271,666 - 570,004 1,271,666 1,841,669 123,912 1998 12/98 (e)
Orlando, Florida 72,404 - - - 72,404 - 72,404 (f) 2001 5/00 (f)
Palatka, Florida 322,433 - 987,385 - 322,433 987,385 1,309,818 135,645 1997 12/97 (e)
Pensacola, Florida 657,606 - 1,347,285 - 657,606 1,347,285 2,004,890 132,468 1999 3/99 (e)
Port Richey, Florida 626,999 - 1,130,692 - 626,999 1,130,692 1,757,691 202,431 1996 9/96 (e)
Rock Hill, South Carolina (o) 718,003 - 1,202,177 - 718,003 1,202,177 1,920,181 89,754 1999 10/99 (e)
Tampa, Florida 825,650 - 1,161,192 - 825,650 1,161,192 1,986,842 228,288 1995 2/96 (e)
Texarkana, Texas (o) 664,537 - 1,136,955 - 664,537 1,136,955 1,801,492 53,690 2000 7/00 (e)
Tulsa , Oklahoma (o) 705,094 - 1,305,383 - 705,094 1,305,383 2,010,477 98,282 1999 9/99 (e)
Universal City, Texas 357,429 - 650,249 - 357,429 650,249 1,007,678 137,269 1995 9/95 (e)
Winchester, Kentucky 303,633 - 970,489 - 303,633 970,489 1,274,123 148,261 1997 6/97 (e)
Ground Round Restaurants:
Allentown, Pennsylvania (o) 405,631 884,954 - - 405,631 884,954 1,290,585 125,247 1983 10/97 (e)
Cincinnati, Ohio (o) 282,099 534,632 - - 282,099 534,632 816,731 75,666 1981 10/97 (e)
Dubuque, Iowa (o) 693,733 810,458 - - 693,733 810,458 1,504,190 114,703 1982 10/97 (e)
Ewing Township, New Jersey (o) 371,254 685,847 - - 371,254 685,847 1,057,101 95,162 1979 11/97 (e)
Janesville, Wisconsin (o) 451,235 548,178 - - 451,235 548,178 999,412 77,583 1982 10/97 (e)
Kalamazoo, Michigan (o) 287,331 712,081 - - 287,331 712,081 999,412 100,780 1980 10/97 (e)
Parma, Ohio (o) 388,699 793,475 - - 388,699 793,475 1,182,173 112,300 1977 10/97 (e)
Reading, Pennsylvania (o) 728,574 793,410 - - 728,574 793,410 1,521,984 112,291 1982 10/97 (e)
Waterloo, Iowa (o) 436,471 659,089 - - 436,471 659,089 1,095,560 93,280 1982 10/97 (e)
Wauwatosa, Wisconsin (o) 627,680 804,399 - - 627,680 804,399 1,432,079 113,846 1977 10/97 (e)
Guthrie's Restaurant:
Hoover, Alabama (o) 493,536 619,786 - - 493,536 619,786 1,113,322 89,520 1997 9/97 (e)
Hardee's Restaurants:
Chalkville, Alabama (o) 201,069 465,165 - - 201,069 465,165 666,234 43,320 1992 3/99 (e)
Columbia, Tennessee (o) 226,300 - - - 226,300 (g) 226,300 (h) 1993 3/99 (h)
Gulf Shores, Alabama (o) 409,444 604,784 - - 409,444 604,784 1,014,229 56,322 1993 3/99 (e)
Horn Lake, Mississippi (o) 302,787 - - - 302,787 (g) 302,787 (h) 1993 3/99 (h)
Johnson City, Tennessee 215,567 - - - 215,567 (g) 215,567 (h) 1993 3/99 (h)
Mobile, Alabama 336,696 - - - 336,696 (g) 336,696 (h) 1993 3/99 (h)
Petal, Mississippi (o) 324,298 420,017 - - 324,298 420,017 744,315 39,115 1993 3/99 (e)
Rock Hill, South Carolina 256,050 476,149 - - 256,050 476,149 732,198 44,343 1993 3/99 (e)
Tusculum, Tennessee (o) 217,396 522,802 - - 217,396 522,802 740,199 48,687 1993 3/99 (e)
Warrior, Alabama (o) 177,659 - - - 177,659 (g) 177,659 (h) 1992 3/99 (h)
West Point, Mississippi (o) 173,386 - - - 173,386 (g) 173,386 (h) 1993 3/99 (h)
Houlihan's Restaurants:
Bethel Park, Pennsylvania 846,183 595,601 - - 846,183 595,601 1,441,783 90,990 1972 6/97 (e)
Langhorne, Pennsylvania (m) 817,039 648,765 - - 817,039 648,765 1,465,804 99,112 1976 6/97 (e)
Plymouth Meeting, Pennsylvania 1,181,460 908,880 - - 1,181,460 908,880 2,090,340 138,849 1974 6/97 (e)
International House Of Pancakes Restaurants:
Auburn, Washington (o) 632,811 1,135,312 - - 632,811 1,135,312 1,768,123 97,988 1997 4/99 (e)
Castle Rock, Colorado (o) 540,896 - 1,196,239 - 540,896 1,196,239 1,737,135 83,418 1999 10/99 (e)
Clarksville, Tennessee (o) 375,987 964,430 - - 375,987 964,430 1,340,417 97,676 1997 12/98 (e)
Corpus Christi, Texas (o) 567,462 - - - 567,462 (g) 567,462 (h) 1997 8/99 (h)
Elk Grove, California (o) 584,766 - - - 584,766 (g) 584,766 (h) 1997 8/97 (h)
Fairfax, Virginia (o) 1,096,763 649,916 - - 1,096,763 649,916 1,746,679 46,549 1995 6/97 (e)
Fort Worth, Texas (o) 501,388 746,474 - - 501,388 746,474 1,247,862 86,874 1997 9/98 (e)
Fort Worth, Texas (o) 565,639 923,669 - - 565,639 923,669 1,489,308 82,877 1998 4/99 (e)
Greeley, Colorado (o) 416,279 - 867,972 - 416,279 867,972 1,284,251 88,145 1998 12/98 (e)
Greenville, South Carolina (o) 476,847 961,606 - - 476,847 961,606 1,438,453 93,753 1998 12/98 (e)
Hollywood, California (o) 1,407,002 - - - 1,407,002 (g)1,407,002 (h) 1996 6/97 (h)
Homewood, Alabama (o) 545,112 1,029,900 - - 545,112 1,029,900 1,575,012 104,307 1996 12/98 (e)
Houston, Texas (o) 645,365 790,258 - - 645,365 790,258 1,435,624 57,240 1996 7/97 (e)
Kansas City, Missouri (o) 512,481 831,202 - - 512,481 831,202 1,343,683 90,578 1998 9/98 (e)
Killeen, Texas (o) 380,687 775,713 - - 380,687 775,713 1,156,399 84,531 1997 9/98 (e)
Lake Jackson, Texas (o) 460,167 744,128 - - 460,167 744,128 1,204,295 53,899 1997 8/97 (e)
Leesburg, Virginia (o) 665,015 580,798 - - 665,015 580,798 1,245,813 90,266 1994 5/97 (e)
Leon Valley, Texas (o) 593,624 918,024 - - 593,624 918,024 1,511,648 89,588 1997 12/98 (e)
Loveland, Colorado (o) 488,259 - - - 488,259 (g) 488,259 (h) 1997 8/97 (h)
Murfreesboro, Tennessee (o) 647,414 871,268 - - 647,414 871,268 1,518,683 87,843 1998 12/98 (e)
Phoenix, Arizona (o) 668,112 941,796 - - 668,112 941,796 1,609,907 84,504 1998 4/99 (e)
Port Arthur, Texas (o) 382,950 957,912 - - 382,950 957,912 1,340,862 93,393 1997 12/98 (e)
Poughkeepsie, New York (o) 504,533 806,624 - - 504,533 806,624 1,311,157 92,762 1996 7/98 (e)
Pueblo, Colorado (o) 387,562 891,943 - - 387,562 891,943 1,279,505 90,416 1997 12/98 (e)
Roseville, Michigan (o) 282,868 843,648 - - 282,868 843,648 1,126,517 85,058 1997 12/98 (e)
Southaven, Mississippi (o) 579,175 1,176,434 - - 579,175 1,176,434 1,755,609 114,698 1997 12/98 (e)
Stockbridge, Georgia (o) 765,743 652,671 - - 765,743 652,671 1,418,413 47,274 1997 7/97 (e)
Victoria, Texas (o) 319,237 - - - 319,237 (g) 319,237 (h) 1997 8/97 (h)
J. Gilbert's Restaurant:
McLean, Virginia 944,585 689,363 - - 944,585 689,363 1,633,948 105,314 1971 6/97 (e)
Jack in the Box Restaurants:
Allen, Texas (o) 711,642 - 726,339 - 711,642 726,339 1,437,981 68,173 1999 3/99 (e)
Austin, Texas (o) 447,208 - 880,283 - 447,208 880,283 1,327,490 51,350 1999 3/00 (e)
Avondale, Arizona (o) 605,063 - 623,222 - 605,063 623,222 1,228,286 45,141 1998 8/98 (e)
Bacliff, Texas (o) 419,488 - 697,861 - 419,488 697,861 1,117,349 102,648 1997 8/97 (e)
Carson, California (o) 457,821 - 708,581 - 457,821 708,581 1,166,402 49,671 1999 10/99 (e)
Chandler, Arizona (o) 481,456 - 636,588 - 481,456 636,588 1,118,043 67,428 1998 9/98 (e)
Chandler, Arizona (o) 604,724 - 600,686 - 604,724 600,686 1,205,411 53,559 1999 4/99 (e)
Channelview, Texas 361,238 - 711,595 - 361,238 711,595 1,072,833 102,780 1997 9/97 (e)
Corinth, Texas (o) 396,864 - 576,370 - 396,864 576,370 973,234 41,329 1997 9/97 (e)
Corning, California (o) 163,533 994,490 - - 163,533 994,490 1,158,024 75,858 1999 9/99 (e)
Dallas, Texas (o) 369,886 - 467,819 - 369,886 467,819 837,706 33,885 1997 3/97 (e)
Enumclaw, Washington (o) 124,468 - 773,506 - 124,468 773,506 897,973 115,919 1997 7/97 (e)
Florissant, Missouri (o) 389,265 - 779,211 - 389,265 779,211 1,168,476 101,623 1997 2/98 (e)
Folsom, California (o) 635,343 - 652,472 - 635,343 652,472 1,287,815 45,351 1997 9/97 (e)
Fort Worth, Texas (o) 341,693 - 732,173 - 341,693 732,173 1,073,866 42,710 2000 4/00 (e)
Fort Worth, Texas (o) 482,309 716,199 - - 482,309 716,199 1,198,508 54,080 1999 8/99 (e)
Fresno, California (o) 462,813 - 548,493 - 462,813 548,493 1,011,305 37,893 1998 8/98 (e)
Fresno, California (o) 286,850 - 606,547 - 286,850 606,547 893,397 89,214 1997 8/97 (e)
Georgetown, Texas (o) 499,875 - 866,353 - 499,875 866,353 1,366,228 60,199 1999 12/99 (e)
Granbury, Texas (o) 404,270 - 831,716 - 404,270 831,716 1,235,986 53,957 1999 12/99 (e)
Gun Barrel City, Texas (o) 284,046 - 549,495 - 284,046 549,495 833,541 39,801 1998 5/98 (e)
Hillsboro, Oregon (o) 699,776 - 864,724 - 699,776 864,724 1,564,500 62,143 1999 9/99 (e)
Hollister, California (o) 537,223 - 592,536 - 537,223 592,536 1,129,759 93,739 1997 4/97 (e)
Houston, Texas (o) 403,002 - 610,815 - 403,002 610,815 1,013,817 108,584 1996 9/96 (e)
Houston, Texas (o) 375,776 - 643,445 - 375,776 643,445 1,019,221 114,301 1996 9/96 (e)
Houston, Texas (o) 370,342 - 548,107 - 370,342 548,107 918,449 85,186 1997 5/97 (e)
Houston, Texas (o) 420,521 - 543,338 - 420,521 543,338 963,859 82,938 1997 6/97 (e)
Houston, Texas (o) 545,485 - 527,020 - 545,485 527,020 1,072,504 102,471 1996 3/96 (e)
Humble, Texas (o) 390,509 - 542,599 - 390,509 542,599 933,108 38,802 1997 12/96 (e)
Humble, Texas (o) 372,584 746,622 - - 372,584 746,622 1,119,206 53,730 1999 9/99 (e)
Humble, Texas (o) 437,667 - 591,877 - 437,667 591,877 1,029,544 105,218 1996 9/96 (e)
Hutchins, Texas (o) 272,937 - 653,792 - 272,937 653,792 926,729 47,356 1998 4/98 (e)
Irvine, California (o) 899,898 - 733,701 - 899,898 733,701 1,633,599 66,770 1999 4/99 (e)
Kent, Washington (o) 737,038 - 553,688 - 737,038 553,688 1,290,725 40,105 1997 4/97 (e)
Las Vegas, Nevada (o) 730,674 - 547,445 - 730,674 547,445 1,278,120 39,653 1997 4/97 (e)
Los Angeles, California (o) 1,076,096 - 591,340 - 1,076,096 591,340 1,667,436 58,904 1999 1/99 (e)
Los Angeles, California (o) 911,754 - 531,018 - 911,754 531,018 1,442,772 36,909 1997 5/97 (e)
Los Angeles, California (o) 740,616 - 678,189 - 740,616 678,189 1,418,805 92,216 1997 9/97 (e)
Los Angeles, California (o) 853,821 - 602,301 - 853,821 602,301 1,456,122 41,864 1998 5/98 (e)
Lufkin, Texas (o) 418,351 - 651,064 - 418,351 651,064 1,069,415 68,961 1998 9/98 (e)
Lufkin, Texas (o) 363,967 - 776,605 - 363,967 776,605 1,140,572 74,097 1999 2/99 (e)
Menlo Park, California (o) 685,448 860,792 - - 685,448 860,792 1,546,240 54,995 1999 12/99 (e)
Moscow, Idaho (o) 217,851 - 751,664 - 217,851 751,664 969,515 118,913 1992 4/97 (e)
Nacogdoches, Texas (o) 383,591 - 643,055 - 383,591 643,055 1,026,645 46,248 1998 5/98 (e)
Ontario, California (o) 771,241 - 793,229 - 771,241 793,229 1,564,471 72,622 1999 4/99 (e)
Orange, Texas (o) 387,533 - 787,843 - 387,533 787,843 1,175,376 71,697 1999 4/99 (e)
Oxnard, California (o) 681,663 - 642,924 - 681,663 642,924 1,324,587 96,353 1997 7/97 (e)
Palmdale, California (o) 631,275 - 567,912 - 631,275 567,912 1,199,187 88,264 1997 5/97 (e)
Peoria, Arizona (o) 496,689 - 721,614 - 496,689 721,614 1,218,303 65,472 1999 4/99 (e)
Pflugerville, Texas (o) 717,246 - 657,685 - 717,246 657,685 1,374,931 47,638 1998 6/98 (e)
Salem, Oregon (o) 501,168 - 699,067 - 501,168 699,067 1,200,235 50,488 1999 6/99 (e)
San Antonio, Texas (o) 311,466 - 700,979 - 311,466 700,979 1,012,445 63,600 1999 4/99 (e)
San Antonio, Texas (o) 274,362 - 781,797 - 274,362 781,797 1,056,159 73,378 1999 3/99 (e)
Spring, Texas (o) 475,748 - 719,239 - 475,748 719,239 1,194,987 52,010 1999 9/99 (e)
Saint Louis, Missouri (o) 474,296 - 727,491 - 474,296 727,491 1,201,787 50,565 1998 9/98 (e)
Tacoma, Washington (o) 495,529 - 759,800 - 495,529 759,800 1,255,329 68,382 1999 4/99 (e)
Tigard, Oregon (o) 353,396 - 904,688 - 353,396 904,688 1,258,084 91,522 1999 12/98 (e)
Tyler, Texas (o) 289,257 - 699,525 - 289,257 699,525 988,782 61,999 1999 5/99 (e)
Waxahachie, Texas (o) 477,580 - 538,255 - 477,580 538,255 1,015,835 38,987 1998 4/98 (e)
Weatherford, Texas (o) 464,986 - 785,149 - 464,986 785,149 1,250,136 70,293 1999 3/99 (e)
West Sacramento, California (o) 523,089 - 617,131 - 523,089 617,131 1,140,221 89,056 1997 9/97 (e)
Woodland, California (o) 358,130 - 668,383 - 358,130 668,383 1,026,513 94,598 1997 10/97 (e)
Jack in the Box/Arco Gas Station-Convenience Stores:
Benicia, California (o) 745,752 1,551,697 - - 745,752 1,551,697 2,297,449 94,826 1999 1/00 (e)
Coachella, California (o) 370,963 1,406,532 - - 370,963 1,406,532 1,777,495 88,885 1999 2/00 (e)
Joe's Crab Shack Restaurant:
Lilburn, Georgia (o) 1,089,268 931,637 - - 1,089,268 931,637 2,020,905 84,443 1999 4/99 (e)
Jose Pepper's Restaurant:
Blue Springs, Missouri (m) 251,188 - 737,672 - 251,188 737,672 988,860 62,759 1982 6/99 (e)
KFC Restaurants:
Baton Rouge, Louisiana 106,180 - 625,743 - 106,180 625,743 731,922 41,190 1987 6/99 (e)
Baton Rouge, Louisiana 180,532 - - - 180,532 (g) 180,532 (h) 2000 8/00 (h)
Gretna, Louisiana 404,923 - 385,254 - 404,923 385,254 790,177 23,808 1991 5/99 (e)
New Orleans, Louisiana 315,037 - 541,553 - 315,037 541,553 856,591 34,061 1991 5/99 (e)
New Orleans, Louisiana 158,829 - 491,957 - 158,829 491,957 650,785 31,271 1991 5/99 (e)
New Orleans, Louisiana 310,574 - 532,557 - 310,574 532,557 843,132 33,488 1992 5/99 (e)
New Orleans, Louisiana 205,795 - 564,058 - 205,795 564,058 769,853 35,864 1995 5/99 (e)
Putnam, Connecticut 301,723 - - - 301,723 (g) 301,723 (h) 1997 7/97 (h)
Krystal Restaurants:
Brandon, Mississippi (o) 340,115 687,423 - - 340,115 687,423 1,027,537 49,647 2000 12/99 (e)
Chattanooga, Tennessee (o) 445,493 594,649 - - 445,493 594,649 1,040,141 52,912 1994 3/99 (e)
Greenville, Alabama (o) 190,146 614,193 - - 190,146 614,193 804,339 32,416 2000 5/00 (e)
Montgomery, Alabama (o) 311,103 506,943 - - 311,103 506,943 818,045 36,613 2000 12/99 (e)
Scottsboro, Alabama (o) 255,500 561,315 - - 255,500 561,315 816,815 35,862 1999 12/99 (e)
Leeann Chin Chinese Cuisine Restaurants:
Chanhassen, Minnesota (o) 376,929 639,875 - - 376,929 639,875 1,016,804 131,444 1995 11/95 (e)
Golden Valley, Minnesota (o) 665,422 - 481,311 - 665,422 481,311 1,146,733 85,500 1996 9/96 (e)
Little Lake Bryan Land:
Orlando, Florida 6,271,201 - - - 6,271,201 - 6,271,201 (n) (n) (n) (n)
On the Border Restaurant:
San Antonio, Texas (m) - - 1,190,160 - - 1,190,160 1,190,160 11,322 1997 1/98 (e)
Pizza Hut Restaurants:
Adrian, Michigan 242,239 - - - 242,239 - 242,239 (f) 1989 1/96 (f)
Beaver, West Virginia 212,053 - - - 212,053 - 212,053 (f) 1986 5/96 (f)
Beckley, West Virginia 209,432 - - - 209,432 - 209,432 (f) 1978 5/96 (f)
Bedford, Ohio 174,721 - - - 174,721 - 174,721 (f) 1975 1/96 (f)
Belle, West Virginia 46,737 - - - 46,737 - 46,737 (f) 1980 5/96 (f)
Bluefield, West Virginia 120,449 - - - 120,449 - 120,449 (f) 1986 5/96 (f)
Bolivar, Ohio 190,009 410,096 - - 190,009 410,096 600,105 26,721 1996 3/97 (e)
Bowling Green, Ohio 135,831 191,595 - - 135,831 191,595 327,426 12,484 1992 2/97 (e)
Bowling Green, Ohio 200,442 - - - 200,442 - 200,442 (f) 1985 1/96 (f)
Carrollton, Ohio 187,082 533,487 - - 187,082 533,487 720,569 34,760 1990 3/97 (e)
Cleveland, Ohio 116,849 - - - 116,849 - 116,849 (f) 1978 1/96 (f)
Cleveland, Ohio 226,163 - - - 226,163 - 226,163 (f) 1987 1/96 (f)
Cleveland, Ohio 126,494 - - - 126,494 - 126,494 (f) 1986 1/96 (f)
Collinsville, Illinois 507,544 - 328,353 - 507,544 328,353 835,897 49,250 1997 7/97 (e)
Cooper City, Florida (o) 267,703 128,483 - - 267,703 128,483 396,187 5,353 1998 10/00 (e)
Cross Lanes, West Virginia 215,881 - - - 215,881 - 215,881 (f) 1990 5/96 (f)
Defiance, Ohio 242,239 - - - 242,239 - 242,239 (f) 1977 1/96 (f)
East Cleveland, Ohio 194,012 - - - 194,012 - 194,012 (f) 1986 1/96 (f)
Euclid, Ohio 202,050 - - - 202,050 - 202,050 (f) 1983 1/96 (f)
Huntington, West Virginia 212,093 - - - 212,093 - 212,093 (f) 1978 5/96 (f)
Hurricane, West Virginia 180,803 - - - 180,803 - 180,803 (f) 1978 5/96 (f)
Lambertville, Michigan 99,166 - - - 99,166 - 99,166 (f) 1994 1/96 (f)
Marathon, Florida (o) 161,249 234,940 - - 161,249 234,940 396,188 9,789 1980 10/00 (e)
Marietta, Ohio 169,454 - - - 169,454 - 169,454 (f) 1986 5/96 (f)
Mayfield Heights, Ohio 202,552 - - - 202,552 - 202,552 (f) 1980 4/96 (f)
Middleburg Heights, Ohio 216,518 - - - 216,518 - 216,518 (f) 1975 1/96 (f)
Millersburg, Ohio 213,090 635,104 - - 213,090 635,104 848,194 41,381 1989 3/97 (e)
Milton, West Virginia 99,815 - - - 99,815 - 99,815 (f) 1986 5/96 (f)
Monroe, Michigan 152,215 - - - 152,215 - 152,215 (f) 1994 1/96 (f)
New Philadelphia, Ohio 149,206 - 388,321 - 149,206 388,321 537,527 25,302 1975 3/97 (e)
New Philadelphia, Ohio 223,981 442,758 - - 223,981 442,758 666,739 28,849 1983 3/97 (e)
North Olmsted, Ohio 259,922 - - - 259,922 - 259,922 (f) 1976 1/96 (f)
Norwalk, Ohio 261,529 - - - 261,529 - 261,529 (f) 1993 1/96 (f)
Rocky River, Ohio 142,570 - - - 142,570 - 142,570 (f) 1977 1/96 (f)
Ronceverte, West Virginia 99,733 - - - 99,733 - 99,733 (f) 1991 5/96 (f)
Sandusky, Ohio 259,922 - - - 259,922 - 259,922 (f) 1978 1/96 (f)
Seven Hills, Ohio 239,023 - - - 239,023 - 239,023 (f) 1983 1/96 (f)
Steubenville, Ohio 228,199 475,421 - - 228,199 475,421 703,620 30,977 1983 3/97 (e)
Strongsville, Ohio 186,476 - - - 186,476 - 186,476 (f) 1976 4/96 (f)
Toledo, Ohio 128,604 - - - 128,604 - 128,604 (f) 1988 4/96 (f)
Toledo, Ohio 176,170 - - - 176,170 - 176,170 (f) 1985 1/96 (f)
Toledo, Ohio 197,227 - - - 197,227 - 197,227 (f) 1978 1/96 (f)
Toledo, Ohio 208,480 - - - 208,480 - 208,480 (f) 1975 1/96 (f)
Uhrichsville, Ohio 279,779 562,521 - - 279,779 562,521 842,300 36,652 1983 3/97 (e)
Weirton, West Virginia (m) - 178,187 - - - 178,187 178,187 28,933 1979 3/97 (e)
Wellsburg, West Virginia 167,170 168,363 - - 167,170 168,363 335,533 27,338 1980 3/97 (e)
Pollo Tropical Restaurants:
Coral Springs, Florida (o) 852,746 1,108,491 - - 852,746 1,108,491 1,961,237 117,109 1994 9/98 (e)
Davie, Florida (o) 712,865 873,395 - - 712,865 873,395 1,586,260 92,271 1993 9/98 (e)
Fort Lauderdale, Florida (o) 397,878 923,975 - - 397,878 923,975 1,321,852 97,615 1996 9/98 (e)
Lake Worth, Florida (o) 435,465 915,232 - - 435,465 915,232 1,350,697 96,691 1994 9/98 (e)
Miami, Florida (o) 789,680 604,283 - - 789,680 604,283 1,393,964 65,961 1995 9/98 (e)
Miami, Florida (o) 683,560 614,256 - - 683,560 614,256 1,297,816 67,049 1995 9/98 (e)
Miami, Florida (o) 911,013 1,011,766 - - 911,013 1,011,766 1,922,779 110,440 1993 9/98 (e)
Miami, Florida (o) 654,766 1,195,901 - - 654,766 1,195,901 1,850,667 130,539 1994 9/98 (e)
Miami, Florida (o) 1,244,893 918,257 - - 1,244,893 918,257 2,163,149 92,580 1994 12/98 (e)
North Miami, Florida (o) 918,258 764,150 - - 918,258 764,150 1,682,408 83,411 1995 9/98 (e)
Sunrise, Florida (o) 569,436 968,749 - - 569,436 968,749 1,538,185 102,345 1994 9/98 (e)
Ponderosa Restuarants:
Appleton, Wisconsin 181,153 561,582 - - 181,153 561,582 742,735 41,439 1980 10/99 (e)
Blue Springs, Missouri (o) 691,797 - 1,136,902 - 691,797 1,136,902 1,828,699 131,367 1997 4/98 (e)
Eureka, Missouri 379,675 604,449 - - 379,675 604,449 984,124 44,602 1999 10/99 (e)
Indiana, Pennsylvania 714,789 - 1,317,317 - 714,789 1,317,317 2,032,106 73,184 2000 5/00 (e)
Johnstown, Pennsylvania (o) 599,391 - 1,159,989 - 599,391 1,159,989 1,759,380 120,130 1998 11/98 (e)
Kissimmee, Florida 637,984 824,276 - - 637,984 824,276 1,462,260 62,980 1980 10/99 (e)
Massena, New York 129,816 659,340 - - 129,816 659,340 789,156 48,653 1988 10/99 (e)
Middletown, New York 214,177 853,505 - - 214,177 853,505 1,067,682 60,823 1979 10/99 (e)
Oneonta, New York 366,941 524,341 - - 366,941 524,341 891,282 38,691 1999 10/99 (e)
Popeye's Famous Fried Chicken Restaurants:
Thomasville, Georgia (o) 113,780 407,429 - - 113,780 407,429 521,209 43,044 1998 9/98 (e)
Valdosta, Georgia (o) 158,880 378,057 - - 158,880 378,057 536,937 41,509 1998 9/98 (e)
Randy's Steak and Seafood Restaurant:
Murfreesboro, Tennessee 514,900 - 936,376 - 514,900 36,376 1,451,276 35,209 1995 8/97 (e)
Red Robin Restaurant:
Columbus, Ohio 721,887 - - - 721,887 (g) 721,887 (h) 1999 1/00 (h)
Rio Bravo Fresh Mexican Cantina Restaurant:
Morrow, Georgia (o) 934,922 1,842,623 - - 934,922 1,842,623 2,777,545 167,014 1999 4/99 (e)
Roadhouse Grill Restaurants:
Brandon, Florida (o) 914,103 - 691,171 - 914,103 691,171 1,605,274 63,836 1999 2/99 (e)
Centerville, Ohio (m) 1,227,973 - 761,806 - 1,227,973 761,806 1,989,779 44,439 2000 3/00 (e)
Clearwater, Florida (o) 1,370,391 - 946,608 - 1,370,391 946,608 2,317,000 82,400 1999 4/99 (e)
Columbus, Ohio (m) 894,077 - 1,038,617 - 894,077 1,038,617 1,932,694 43,981 1999 11/99 (e)
Fairfield, Ohio (o) 1,151,865 - 910,321 - 1,151,865 910,321 2,062,187 67,921 1999 10/99 (e)
Fredericksburg, Virginia 1,138,168 - 616,835 - 1,138,168 616,835 1,755,003 (c) (d) 2/01 (c)
Grove City, Ohio 649,962 - 978,307 - 649,962 978,307 1,628,269 72,368 1999 10/99 (e)
Jacksonville, Florida 1,313,730 - 887,733 - 1,313,730 887,733 2,201,463 56,701 1999 2/00 (e)
Jacksonville, Florida (o) 394,026 - 1,442,752 - 394,026 1,442,752 1,836,779 147,306 1998 12/98 (e)
Pensacola, Florida (m) (o) 927,463 - 691,228 - 927,463 691,228 1,618,691 63,778 1978 2/99 (e)
Pineville, North Carolina 1,207,143 - 1,091,507 - 1,207,143 1,091,507 2,298,651 71,589 1999 1/00 (e)
Rock Hill, South Carolina (m) 608,698 - 903,887 - 608,698 903,887 1,512,584 45,194 1998 7/00 (e)
Roswell, Georgia (m) 908,635 - 1,084,536 - 908,635 1,084,536 1,993,171 42,176 2000 11/00 (e)
Union Township, Ohio 703,734 - 1,053,632 - 703,734 1,053,632 1,757,366 35,121 2000 4/00 (e)
Rubio's Baja Grill Restaurant:
Taylorsville, Utah (o) 889,562 - 487,475 - 889,562 487,475 1,377,037 74,471 1997 6/97 (e)
Ruby Tuesday's Restaurants:
Bartow, Florida (o) 416,311 - 963,488 - 416,311 963,488 1,379,799 69,424 1999 11/99 (e)
Champlin, Minnesota (o) 505,639 - - - 505,639 (g) 505,639 (h) 1999 3/00 (h)
Colorado Springs, Colorado (o) 696,078 - 1,005,509 - 696,078 1,005,509 1,701,587 78,768 1999 7/99 (e)
Coral Springs, Florida (o) 715,220 - 1,012,777 - 715,220 1,012,777 1,727,997 83,820 1999 7/99 (e)
Dillon, Colorado (o) 556,515 - 1,132,988 - 556,515 1,132,988 1,689,503 81,009 1999 11/99 (e)
Draper, Utah (o) 518,832 - - - 518,832 (g) 518,832 (h) 1999 5/99 (h)
Independence, Missouri 980,703 - - - 980,703 (g) 980,703 (h) 1999 3/99 (h)
Kansas City, Missouri 633,404 - - - 633,404 (g) 633,404 (h) 1999 2/00 (h)
Lakeland, Florida (o) 574,441 742,781 - - 574,441 742,781 1,317,222 77,263 1998 11/98 (e)
Lakewood, Washington (o) 430,741 - - - 430,741 (g) 430,741 (h) 1999 1/00 (h)
London, Kentucky (o) 354,415 - - - 354,415 (g) 354,415 (h) 1997 11/97 (h)
Louisville, Kentucky (o) - - - - - (g) - (h) 1999 10/99 (h)
Orange City, Florida (o) 719,563 - - - 719,563 (g) 719,563 (h) 1999 4/99 (h)
Puyallup, Washington - - - - - (g) - (h) 1999 6/99 (h)
Sebring, Florida (o) - - - - - (g) - (h) 1999 7/99 (h)
Somerset, Kentucky (o) 545,612 - 868,606 - 545,612 868,606 1,414,218 101,221 1998 7/98 (e)
Vero Beach, Florida (o) 536,564 - 1,267,552 - 536,564 1,267,552 1,804,116 77,462 1999 1/00 (e)
Ruth's Chris Steak House Restaurants:
King of Prussia, Pennsylvania (o) 965,223 549,565 - - 965,223 549,565 1,514,788 83,957 1977 6/97 (e)
Tampa, Florida (o) 1,076,442 1,062,751 - - 1,076,442 1,062,751 2,139,194 163,711 1996 6/97 (e)
Ryan's Family Steak House Restaurant:
Spring Hill, Florida (o) 591,371 - 1,175,273 - 591,371 1,175,273 1,766,643 197,366 1996 1/97 (e)
Saint Louis Bread Company Restaurant:
Florissant, Missouri (o) 705,522 - 626,845 - 705,522 626,845 1,332,367 106,210 1996 12/96 (e)
Sonny's Real Pit Bar-B-Q Restaurants:
Athens, Georgia (o) 628,688 962,524 - - 628,688 962,524 1,591,211 114,844 1981 6/98 (e)
Conyers, Georgia 371,021 593,171 - - 371,021 593,171 964,191 70,774 1994 6/98 (e)
Doraville, Georgia (o) 585,461 812,822 - - 585,461 812,822 1,398,282 96,982 1990 6/98 (e)
Marietta, Georgia (o) 527,572 870,710 - - 527,572 870,710 1,398,282 103,889 1988 6/98 (e)
Norcross, Georgia (o) 734,105 961,287 - - 734,105 961,287 1,695,392 114,696 1986 6/98 (e)
Smyrna, Georgia (o) 634,379 643,323 - - 634,379 643,323 1,277,701 76,758 1981 6/98 (e)
Thomasville, Georgia (o) 263,022 - - - 263,022 (g) 263,022 (h) 1999 12/99 (h)
Venice, Florida 498,746 - - - 498,746 (g) 498,746 (h) 1978 7/99 (h)
Sophia's House of Pancakes Restaurant:
Benton Harbor, Michigan (m) 168,583 - 876,117 - 168,583 876,117 1,044,700 82,973 1992 1/99 (e)
Sprint PCS Retail Store:
Saint Joseph, Missouri (m) 378,786 - 388,489 - 378,786 388,489 767,275 65,824 1996 9/96 (e)
Steak & Ale Restaurants:
Altamonte Springs, Florida (o) 1,006,396 690,731 - - 1,006,396 690,731 1,697,127 81,579 1979 6/98 (e)
Austin, Texas (o) 705,557 - - - 705,557 (g) 705,557 (h) 1969 6/98 (h)
Birmingham, Alabama (o) 715,432 - - - 715,432 (g) 715,432 (h) 1993 6/98 (h)
College Park, Georgia (o) 802,361 - - - 802,361 (g) 802,361 (h) 1973 6/98 (h)
Conroe, Texas (o) 590,733 - - - 590,733 (g) 590,733 (h) 1993 6/98 (h)
Greenville, South Carolina (o) 670,594 - - - 670,594 (g) 670,594 (h) 1976 6/98 (h)
Houston, Texas (o) 776,694 - - - 776,694 (g) 776,694 (h) 1972 6/98 (h)
Houston, Texas (o) 964,354 - - - 964,354 (g) 964,354 (h) 1973 6/98 (h)
Huntsville, Alabama (o) 641,125 - - - 641,125 (g) 641,125 (h) 1974 6/98 (h)
Jacksonville, Florida (o) 670,491 - - - 670,491 (g) 670,491 (h) 1977 6/98 (h)
Maitland, Florida (o) 684,164 - - - 684,164 (g) 684,164 (h) 1969 6/98 (h)
Memphis, Tennessee (o) 810,316 798,412 - - 810,316 798,412 1,608,728 80,862 1979 12/98 (e)
Mesquite, Texas (o) 592,342 - - - 592,342 (g) 592,342 (h) 1988 6/98 (h)
Miami, Florida (o) 594,142 - - - 594,142 (g) 594,142 (h) 1974 6/98 (h)
Middletown, New Jersey (o) 933,759 763,368 - - 933,759 763,368 1,697,127 90,158 1985 6/98 (e)
Norcross, Georgia (o) 740,132 - - - 740,132 (g) 740,132 (h) 1984 12/98 (h)
Orlando, Florida (o) 922,679 725,256 - - 922,679 725,256 1,647,936 85,656 1978 6/98 (e)
Palm Harbor, Florida (o) 487,021 - - - 487,021 (g) 487,021 (h) 1983 6/98 (h)
Pensacola, Florida (o) 354,419 - - - 354,419 (g) 354,419 (h) 1978 6/98 (h)
Tulsa, Oklahoma (o) 433,713 - - - 433,713 (g) 433,713 (h) 1969 6/98 (h)
Super Smokers BBQ Restaurant:
Saint Peters, Missouri 376,905 692,124 - - 376,905 692,124 1,069,028 60,992 1981 3/99 (e)
Taco Bell Restaurants:
Colonial Heights, Virginia (o) 447,458 383,785 - - 447,458 383,785 831,243 35,411 1994 2/99 (e)
Hayes, Virginia (o) 299,870 - - - 299,870 (g) 299,870 (h) 1994 2/99 (h)
Livingston, Tennessee (o) 212,438 - - - 212,438 (g) 212,438 (h) 1998 10/98 (h)
Richmond, Virginia (o) 402,947 - - - 402,947 (g) 402,947 (h) 1994 2/99 (h)
Richmond, Virginia (o) 474,588 478,974 - - 474,588 478,974 953,562 44,194 1994 2/99 (e)
Richmond, Virginia (o) 404,578 451,129 - - 404,578 451,129 855,707 41,625 1994 2/99 (e)
Saint Louis, Missouri (o) 308,915 351,160 - - 308,915 351,160 660,075 37,457 1991 10/98 (e)
Saint Louis, Missouri (o) 349,637 - - - 349,637 (g) 349,637 (h) 1991 10/98 (h)
Wentzville, Missouri (o) 339,250 - - - 339,250 (g) 339,250 (h) 2000 5/00 (h)
Williamsburg, Virginia (o) 343,906 - - - 343,906 (g) 343,906 (h) 1994 2/99 (h)
Taco Bell/Pizza Hut Restaurants:
Arlington, Texas 276,616 - 589,368 - 276,616 589,368 865,984 26,149 2000 8/00 (e)
Dallas, Texas 355,763 - 496,898 - 355,763 496,898 852,661 27,605 2000 4/00 (e)
Dallas, Texas (o) 335,174 694,862 - - 335,174 694,862 1,030,036 54,690 1997 7/99 (e)
Dallas, Texas 185,095 - 631,760 - 185,095 631,760 816,856 (c) (d) 2/01 (c)
Texas Roadhouse Restaurants:
Ammon, Idaho (o) 504,934 - 829,740 - 504,934 829,740 1,334,674 56,755 1999 12/99 (e)
Arvada, Colorado (o) 538,204 - 1,149,066 - 538,204 1,149,066 1,687,270 48,581 2000 9/00 (e)
Aurora, Colorado (o) 656,917 - 1,208,688 - 656,917 1,208,688 1,865,605 73,055 1999 3/00 (e)
Cedar Rapids, Iowa (o) 581,847 - 1,135,505 - 581,847 1,135,505 1,717,352 63,084 2000 5/00 (e)
College Station, Texas (o) 520,037 - 1,074,176 - 520,037 1,074,176 1,594,213 53,709 2000 6/00 (e)
Concord, North Carolina (o) 664,266 - 987,133 - 664,266 987,133 1,651,400 52,163 2000 5/00 (e)
Dickson City, Pennsylvania (o) 596,439 - 1,078,721 - 596,439 1,078,721 1,675,160 9,309 2000 11/00 (e)
Gastonia, North Carolina (o) 235,195 - 1,115,831 - 235,195 1,115,831 1,351,026 76,328 1999 12/99 (e)
Hickory, North Carolina (o) 560,423 - 1,032,294 - 560,423 1,032,294 1,592,717 74,288 1999 9/99 (e)
Joliet, Illinois (o) 535,714 - 1,290,109 - 535,714 1,290,109 1,825,823 61,997 2000 7/00 (e)
Shively, Kentucky (o) 713,534 995,529 - - 713,534 995,529 1,709,064 71,096 1998 11/99 (e)
TGI Friday's Restaurants:
El Paso, Texas 599,160 - - - 599,160 (g) 599,160 (h) 1992 8/98 (h)
Goodyear, Arizona (o) 967,242 - 1,726,827 - 967,242 1,726,827 2,694,069 107,892 1999 2/00 (e)
Henderson, Nevada (o) 1,385,425 - - - 1,385,425 (g)1,385,425 (h) 1999 10/99 (h)
Independence, Missouri (o) 856,278 - - - 856,278 (g) 856,278 (h) 1999 3/99 (h)
Lakeland, Florida 517,979 - 1,276,692 - 517,979 1,276,692 1,794,670 11,480 1993 7/99 (e)
Leawood, Kansas (o) 2,459,048 - - - 2,459,048 (g)2,459,048 (h) 2000 6/00 (h)
Mesa, Arizona (o) 914,342 - - - 914,342 (g) 914,342 (h) 1997 5/98 (h)
Shawnee, Kansas (o) 884,743 - - - 884,743 (g) 884,743 (h) 1999 3/00 (h)
Temecula, California (o) 1,239,565 - - - 1,239,565 (g)1,239,565 (h) 1999 12/99 (h)
Union City, California (o) 1,213,121 - - - 1,213,121 (g)1,213,121 13,552 1999 4/00 (e)
Tiffany's Restaurant:
Woodson Terrace, Missouri (m) 744,126 - 1,221,749 - 744,126 1,221,749 1,965,875 61,087 1994 5/99 (e)
Tin Alley Grill Restaurants:
Crystal, Minnesota (o) 370,667 431,642 - - 370,667 431,642 802,309 61,090 1981 10/97 (e)
Gloucester, New Jersey (o) 422,489 528,849 - - 422,489 528,849 951,338 74,847 1981 10/97 (e)
TropiGrill Restaurants:
Altamonte Springs, Florida (o) 548,886 700,855 - - 548,886 700,855 1,249,741 74,043 1994 9/98 (e)
Orlando, Florida (o) 618,372 631,369 - - 618,372 631,369 1,249,741 66,702 1994 9/98 (e)
Village Inn Restaurant:
Omaha, Nebraska (o) 511,811 756,304 - - 511,811 756,304 1,268,115 52,809 1989 10/99 (e)
Wendy's Old Fashioned Hamburgers Restaurants:
Atascadero, California (o) 485,625 - 705,993 - 485,625 705,993 1,191,618 34,425 2000 7/00 (e)
Camarillo, California (o) 640,066 - 688,918 - 640,066 688,918 1,328,984 126,207 1996 7/96 (e)
Knoxville, Tennessee (o) 358,027 - 444,622 - 358,027 444,622 802,649 81,455 1996 5/96 (e)
Knoxville, Tennessee (o) 555,813 - 442,025 - 555,813 442,025 997,838 49,420 1998 8/98 (e)
Paso Robles, California (o) 489,097 - 735,631 - 489,097 735,631 1,224,728 52,995 1999 9/99 (e)
Westlake Village, California (o) 841,374 - 699,082 - 841,374 699,082 1,540,456 85,438 1998 5/98 (e)
TOTAL: 328,869,201 179,951,994 195,250,146 - 328,869,201 375,202,139 704,071,340 36,007,162
=========== =========== =========== =========== =========== =========== ==========
Property of Joint Venture in Which
the Company has a 59.22% Interest
and has Invested in Under
an Operating Lease:
Bennigan's Restaurant:
Orlando, Florida 708,297 - 1,008,108 - 708,297 1,008,108 1,716,405 105,690 1998 11/98 (e)
======= ========= ======= ========= ========= =======
Properties the Company
has invested in Under
Direct Financing Leases:
Applebee's Restaurants:
Freeport, Illinois (o) 197,631 1,008,908 - - (g) (g) (g) (i) 1996 2/99 (i)
Moscow, Idaho -- - 1,238,460 - (g) (g) (g) (h) 1999 8/99 (h)
Rockford, Illinois (o) - 1,096,139 - - (g) (g) (g) (h) 1996 1/99 (h)
Tullahoma, Tennessee (o) 324,362 1,009,364 - - (g) (g) (g) (i) 1995 8/98 (i)
Arby's Restaurants:
Allen, Texas (o) - - 609,272 - (g) (g) (g) (h) 1999 12/99 (h)
Circleville, Ohio (o) 310,889 - 629,853 - (g) (g) (g) (i) 1999 12/99 (i)
Grand Rapids, Michigan (o) - 938,296 - - (g) (g) (g) (h) 1995 8/95 (h)
Huntsville, Alabama - - 595,801 - (j) (g) (g) (h) 1978 12/99 (h)
Newark, Ohio - - 339,772 - (j) (g) (g) (h) 1999 12/99 (h)
The Colony, Texas (o) - - 593,454 - (g) (g) (g) (h) 1999 12/99 (h)
Bennigan's Restaurants:
Bedford, Texas (o) - 954,774 - - (g) (g) (g) (h) 1986 6/98 (h)
Clearwater, Florida (o) - 1,043,049 - - (g) (g) (g) (h) 1979 6/98 (h)
Colorado Springs, Colorado (o) - 902,872 - - (g) (g) (g) (h) 1979 6/98 (h)
Englewood, Colorado (o) - 1,131,082 - - (g) (g) (g) (h) 1984 6/98 (h)
Florham Park, New Jersey (o) - 1,092,401 - - (g) (g) (g) (h) 1983 6/98 (h)
Houston, Texas - 985,394 - - (g) (g) (g) (h) 1979 6/98 (h)
Jacksonville, Florida (o) - 819,356 - - (g) (g) (g) (h) 1983 6/98 (h)
Jacksonville, Florida (o) - 1,061,339 - - (g) (g) (g) (h) 1981 6/98 (h)
North Richland Hills, Texas (o) - 983,252 - - (g) (g) (g) (h) 1979 6/98 (h)
Oklahoma City, Oklahoma - 1,015,084 - - (g) (g) (g) (h) 1986 6/98 (h)
Pensacola, Florida (o) - 980,438 - - (g) (g) (g) (h) 1983 6/98 (h)
Saint Louis Park, Minnesota (o) - 1,280,033 - - (g) (g) (g) (h) 1976 6/98 (h)
Tampa, Florida - 1,324,729 - - (g) (g) (g) (h) 1980 6/98 (h)
Winston-Salem, North Carolina (o) 247,828 992,552 - - (g) (g) (g) (i) 1982 6/98 (i)
Woodridge, Illinois (o) - 991,688 - - (g) (g) (g) (h) 1987 12/98 (h)
Black-eyed Pea Restaurants:
Albuquerque, New Mexico (m) - 705,746 - - (j) (g) (g) (h) 1993 10/97 (h)
Albuquerque, New Mexico (m) - 704,757 - - (j) (g) (g) (h) 1993 10/97 (h)
Bedford, Texas (m) - 655,028 - - (j) (g) (g) (h) 1993 3/97 (h)
Dallas, Texas - 698,827 - - (j) (g) (g) (h) 1991 10/97 (h)
Dallas, Texas (m) - 655,011 - - (j) (g) (g) (h) 1996 3/97 (h)
Dallas, Texas - 685,977 - - (j) (g) (g) (h) 1994 8/99 (h)
Forestville, Maryland (m) - 681,034 - - (j) (g) (g) (h) 1989 10/97 (h)
Fort Worth, Texas - 655,014 - - (j) (g) (g) (h) 1991 3/97 (h)
Hendersonville, Tennessee - 735,005 - - (j) (g) (g) (h) 1974 8/97 (h)
Hillsboro, Texas - - 716,364 - (g) (g) (g) (h) 1996 10/97 (h)
Oklahoma City, Oklahoma - 651,523 - - (j) (g) (g) (h) 1992 3/97 (h)
Phoenix, Arizona - 677,681 - - (g) (g) (g) (h) 1991 9/97 (h)
Phoenix, Arizona - 682,141 - - (g) (g) (g) (h) 1994 9/97 (h)
Phoenix, Arizona (m) - 677,805 - - (g) (g) (g) (h) 1993 9/97 (h)
Scottsdale, Arizona (m) - - 823,188 - (g) (g) (g) (h) 1997 9/97 (h)
Tucson, Arizona (m) - 678,333 - - (g) (g) (g) (h) 1995 9/97 (h)
Waco, Texas (m) - 699,815 - - (j) (g) (g) (h) 1991 10/97 (h)
Burger King Restaurants:
Clinton, North Carolina - - 696,507 - (g) (g) (g) (h) 1999 2/00 (h)
Lacey, Washington - 840,711 - - (g) (g) (g) (h) 1993 1/99 (h)
Montgomery, Alabama (m) - 966,175 - - (g) (g) (g) (h) 1988 1/99 (h)
Olympia, Washington - 920,058 - - (j) (g) (g) (h) 1996 1/99 (h)
Port Angeles, Washington - 696,026 - - (j) (g) (g) (h) 1985 1/99 (h)
Prattville, Alabama (m) 262,664 812,946 - - (g) (g) (g) (i) 1992 1/99 (i)
Tuskegee, Alabama (m) 127,618 899,076 - - (g) (g) (g) (i) 1980 1/99 (i)
Chevys Fresh Mex Restaurant:
Annapolis, Maryland - - 1,540,332 - (g) (g) (g) (h) 1999 12/99 (h)
Darryl's Restaurants:
Evansville, Indiana (m) - 974,401 - - (g) (g) (g) (h) 1983 6/97 (h)
Knoxville, Tennessee (m) - 709,047 - - (g) (g) (g) (h) 1983 6/97 (h)
Louisville, Kentucky - 915,201 - - (g) (g) (g) (h) 1983 6/97 (h)
Mobile, Alabama - 1,009,042 - - (g) (g) (g) (h) 1983 6/97 (h)
Montgomery, Alabama (m) - 952,382 - - (g) (g) (g) (h) 1984 6/97 (h)
Nashville, Tennessee (m) - 736,400 - - (g) (g) (g) (h) 1981 6/97 (h)
Pensacola, Florida - 725,709 - - (g) (g) (g) (h) 1983 6/97 (h)
Richmond, Virginia (m) - 775,617 - - (g) (g) (g) (h) 1982 6/97 (h)
Richmond, Virginia - 650,175 - - (g) (g) (g) (h) 1982 6/97 (h)
Winston-Salem, North Carolina - 812,752 - - (g) (g) (g) (h) 1978 6/97 (h)
Denny's Restaurants:
Akron, Ohio (o) 137,424 938,202 - - (g) (g) (g) (i) 1992 3/99 (i)
Duncan, South Carolina (o) - 826,770 - - (g) (g) (g) (h) 1992 3/99 (h)
Landrum, South Carolina (o) - 492,869 - - (g) (g) (g) (h) 1992 3/99 (h)
Mooresville, North Carolina (o) - 736,649 - - (g) (g) (g) (h) 1992 3/99 (h)
Tampa, Florida (m) - - 715,957 - (g) (g) (g) (h) 1997 8/97 (h)
Topeka, Kansas (o) - 700,166 - - (g) (g) (g) (h) 1989 3/99 (h)
Winter Springs, Florida (o) - - 886,915 - (g) (g) (g) (h) 1994 3/99 (h)
Fazoli's Restaurant:
Southaven, Mississippi (o) - 609,277 - - (g) (g) (g) (h) 1999 2/99 (h)
Hardee's Restaurants:
Aynor, South Carolina (o) 44,871 557,446 - - (g) (g) (g) (i) 1993 3/99 (i)
Biscoe, North Carolina (o) 60,301 519,290 - - (g) (g) (g) (i) 1993 3/99 (i)
Columbia, Tennessee - 644,519 - - (g) (g) (g) (h) 1993 3/99 (h)
Horn Lake, Mississippi - 622,268 - - (g) (g) (g) (h) 1993 3/99 (h)
Iuka, Mississippi 130,258 546,459 - - (g) (g) (g) (i) 1993 3/99 (i)
Johnson City, Tennessee - 618,318 - - (g) (g) (g) (h) 1993 3/99 (h)
Mobile, Alabama - 540,173 - - (g) (g) (g) (h) 1993 3/99 (h)
Warrior, Alabama (o) - 518,434 - - (g) (g) (g) (h) 1992 3/99 (h)
West Point, Mississippi - 569,388 - - (g) (g) (g) (h) 1993 3/99 (h)
International House Of Pancakes Restaurants:
Alexandria, Virginia (o) - 852,645 - - (j) (g) (g) (h) 1972 5/99 (h)
Anderson, South Carolina (o) - 957,414 - - (j) (g) (g) (h) 1997 10/98 (h)
Blue Bell, Pennsylvania (o) - 829,834 - - (j) (g) (g) (h) 1997 10/99 (h)
Chesapeake, Virginia (o) - 059,499 - - (j) (g) (g) (h) 1998 12/99 (h)
Christiansburg, Virginia (o) - 918,143 - - (j) (g) (g) (h) 1998 1/00 (h)
Corpus Christi, Texas (o) - 864,457 - - (j) (g) (g) (h) 1997 8/99 (h)
Crestwood, Illinois (o) - 935,262 - - (j) (g) (g) (h) 1996 11/98 (h)
Elk Grove, California -- 1,039,584 - - (g) (g) (g) (h) 1997 8/97 (h)
Flagstaff, Arizona (o) 293,762 1,121,276 - - (g) (g) (g) (i) 1997 5/99 (i)
Fredericksburg, Virginia (o) - 972,595 - - (j) (g) (g) (h) 1997 9/99 (h)
Hickory, North Carolina (o) - 1,202,183 - - (j) (g) (g) (h) 1997 3/99 (h)
Hollywood, California (o) - 994,845 - - (g) (g) (g) (h) 1996 6/97 (h)
Houston, Texas (o) - 1,017,365 - - (j) (g) (g) (h) 1997 7/99 (h)
Houston, Texas (o) - 764,708 - - (j) (g) (g) (h) 1998 1/00 (h)
Loveland, Colorado (o) - 963,597 - - (g) (g) (g) (h) 1997 8/97 (h)
Maryville, Tennessee (o) 243,825 963,231 - - (g) (g) (g) (i) 1997 12/98 (i)
Montgomery, Alabama (o) - 843,378 - - (j) (g) (g) (h) 1998 11/99 (h)
Pittsburg, California (o) - 1,014,264 - - (j) (g) (g) (h) 1998 4/99 (h)
Plano, Texas (o) - 982,443 - - (j) (g) (g) (h) 1997 9/99 (h)
Salem, New Hampshire (o) - 779,153 - - (j) (g) (g) (h) 1997 4/99 (h)
San Antonio, Texas (o) - 1,081,335 - - (j) (g) (g) (h) 1997 6/99 (h)
Tuscaloosa, Alabama (o) - 930,720 - - (j) (g) (g) (h) 1998 8/99 (h)
Victoria, Texas (o) - 814,015 - - (g) (g) (g) (h) 1997 8/97 (h)
Virginia Beach, Virginia (o) - 1,013,830 - - (j) (g) (g) (h) 1997 4/99 (h)
Warner Robins, Georgia (o) - 833,493 - - (j) (g) (g) (h) 1997 8/99 (h)
KFC Restaurants:
Baton Rouge, Louisiana - - 578,860 - (g) (g) (g) (h) 2000 8/00 (h)
Port Allen, Louisiana (o) - 952,737 - - (g) (g) (g) (h) 1996 5/99 (h)
Putnam, Connecticut - 530,846 - - (g) (g) (g) (h) 1997 7/97 (h)
NI's International Buffet Restaurant:
Eastlake, Ohio 256,332 1,473,307 - - (g) (g) (g) (i) 1996 12/96 (i)
Popeye's Famous Fried Chicken Restaurant:
Starke, Florida (o) 208,910 427,066 - - (g) (g) (g) (i) 1997 9/97 (i)
Red Robin Restaurant:
Columbus, Ohio - - 1,397,822 - (g) (g) (g) (h) 1999 1/00 (h)
Ruby Tuesday's Restaurants:
Champlin, Minnesota (o) - - 1,151,835 - (g) (g) (g) (h) 1999 3/00 (h)
Draper, Utah (o) - - 1,036,077 - (g) (g) (g) (h) 1999 5/99 (h)
Independence, Missouri - - 554,092 - (g) (g) (g) (h) 1999 3/99 (h)
Kansas City, Missouri - - 1,115,425 - (g) (g) (g) (h) 1999 2/00 (h)
Lakewood, Washington - - 1,127,476 - (g) (g) (g) (h) 1999 1/00 (h)
London, Kentucky (o) - - 845,249 - (g) (g) (g) (h) 1997 11/97 (h)
Louisville, Kentucky (o) - - 1,072,199 - (j) (g) (g) (h) 1999 10/99 (h)
Orange City, Florida (o) - - 1,047,180 - (g) (g) (g) (h) 1999 4/99 (h)
Puyallup, Washington - - 934,118 - (j) (g) (g) (h) 1999 6/99 (h)
Sebring, Florida (o) 230,901 - 775,843 - (g) (g) (g) (i) 1999 7/99 (i)
Saint George, Utah - - 895,583 - (j) (g) (g) (h) 1999 9/99 (h)
Sonny's Real Pit Bar-B-Q Restaurants:
Thomasville, Georgia (o) - - 988,618 - (g) (g) (g) (h) 1999 12/99 (h)
Venice, Florida - 1,004,407 - - (g) (g) (g) (h) 1978 7/99 (h)
Steak & Ale Restaurants:
Austin, Texas (o) - 745,609 - - (g) (g) (g) (h) 1969 6/98 (h)
Birmingham, Alabama - 681,623 - - (g) (g) (g) (h) 1993 6/98 (h)
College Park, Georgia (o) - 909,525 - - (g) (g) (g) (h) 1973 6/98 (h)
Conroe, Texas (o) - 1,032,606 - - (g) (g) (g) (h) 1993 6/98 (h)
Greenville, South Carolina (o) - 1,180,342 - - (g) (g) (g) (h) 1976 6/98 (h)
Houston, Texas (o) - 1,092,606 - - (g) (g) (g) (h) 1972 6/98 (h)
Houston, Texas (o) - 978,733 - - (g) (g) (g) (h) 1973 6/98 (h)
Huntsville, Alabama (o) - 810,041 - - (g) (g) (g) (h) 1974 6/98 (h)
Jacksonville, Florida - 879,060 - - (g) (g) (g) (h) 1977 6/98 (h)
Maitland, Florida (o) - 791,599 - - (g) (g) (g) (h) 1969 6/98 (h)
Mesquite, Texas (o) - 908,017 - - (g) (g) (g) (h) 1988 6/98 (h)
Miami, Florida (o) - 1,176,774 - - (g) (g) (g) (h) 1974 6/98 (h)
Norcross, Georgia (o) - 966,814 - - (g) (g) (g) (h) 1984 12/98 (h)
Palm Harbor, Florida (o) - 816,569 - - (g) (g) (g) (h) 1983 6/98 (h)
Pensacola, Florida (o) - 826,191 - - (g) (g) (g) (h) 1978 6/98 (h)
Tulsa, Oklahoma (o) - 1,067,543 - - (g) (g) (g) (h) 1969 6/98 (h)
Taco Bell Restaurants:
Hayes, Virginia (o) - 443,302 - - (g) (g) (g) (h) 1994 2/99 (h)
Livingston, Tennessee (o) - - 436,198 - (g) (g) (g) (h) 1998 10/98 (h)
Richmond, Virginia (o) - 575,079 - - (g) (g) (g) (h) 1994 2/99 (h)
Saint Louis, Missouri (o) - 471,686 - - (g) (g) (g) (h) 1991 10/98 (h)
Wentzville, Missouri (o) - - 589,290 - (g) (g) (g) (h) 5/00 (h)
Williamsburg, Virginia (o) - 438,410 - - (g) (g) (g) (h) 1994 2/99 (h)
Texas Roadhouse Restaurant:
Fayetteville, North Carolina - 944,114 - - (j) (g) (g) (h) 1998 2/99 (h)
TGI Friday's Restaurants:
El Paso, Texas - 1,089,566 - - (g) (g) (g) (h) 1992 8/98 (h)
Henderson, Nevada (o) - - 1,973,551 - (g) (g) (g) (h) 1999 10/99 (h)
Independence, Missouri (o) - - 1,664,913 - (g) (g) (g) (h) 1999 3/99 (h)
Leawood, Kansas (o) - - 1,430,005 - (g) (g) (g) (h) 2000 6/00 (h)
Mesa, Arizona (o) - - 1,440,217 - (g) (g) (g) (h) 1997 5/98 (h)
Shawnee, Kansas (o) - - 1,748,685 - (g) (g) (g) (h) 1999 3/00 (h)
Temecula, California (o) - - 1,476,765 - (g) (g) (g) (h) 1999 12/99 (h)
Union City, California (o) - - 1,984,765 - (g) (g) (g) 1999 4/00 (h)
TGI Friday's/Redfish Looziana Roadhouse Restaurant:
San Diego, California (o) 2,399,895 - 3,646,084 - (g) (g) (g) (i) 1998 3/99 (i)
Wendy's Old Fashioned Hamburgers Restaurants:
Carmel Mountain, California (o) - 594,856 - - (j) (g) (g) (h) 1997 10/98 (h)
Knoxville, Tennessee (o) - - 463,995 - (j) (g) (g) (h) 1998 9/98 (h)
San Diego, California (o) - - 590,058 - (j) (g) (g) (h) 1996 12/96 (h)
Santa Maria, California (o) - - 699,815 - (j) (g) (g) (h) 2000 4/00 (h)
Sevierville, Tennessee (o) - - 531,726 - (j) (g) (g) (h) 1996 6/96 (h)
Seymour, Tennessee (o) - - 472,670 - (j) (g) (g) (h) 1998 10/98 (h)
---------------------------------------
----------------------------------------
TOTAL: 5,477,471 100,248,690 42,054,989 -
=================== ===================
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2001
(a) Transactions in real estate and accumulated depreciation during 2001,
2000, and 1999 are summarized as follows:
Cost Accumulated
(b)(m) Depreciation
------------- ------------
Properties the Company has Invested
in Under Operating Leases:
Balance, December 31, 1998 400,193,650 6,242,782
Acquisitions (k) 298,070,278 --
Depreciation expense (e) -- 8,499,814
------------- ------------
Balance, December 31, 1999 $ 698,263,928 $ 14,742,596
Acquisitions (k) 114,897,263 --
Depreciation expense (e) -- 9,697,535
------------- ------------
Balance, December 31, 2000 $813,161,191 $ 24,440,131
Acquisitions/Dispositions/Reclasses
to held for sale (k) (109,089,851) --
Depreciation expense (e) -- 11,567,031
------------- ------------
Balance December 31, 2001 $704,071,340 $ 36,007,162
============= ============
Property of Joint Venture in Which
the Company has a 59.22% Interest and
has Invested in Under an Operating
Lease:
Balance, December 31, 1998 $ 2,215,177 $ 7,303
Constructing Funding
Adjustment (498,772) --
Depreciation expense -- 31,180
------------- ------------
Balance, December 31, 1999 $ 1,716,405 $ 38,483
Depreciation expense -- 33,604
------------- ------------
Balance, December 31, 2000 $ 1,716,405 $ 72,087
Depreciation Expense -- 33,603
------------- ------------
Balance, December 31, 2001 $1,716,405 $ 105,690
============= ============
(b) As of December 31, 2001, 2000, and 1999, the aggregate cost of the
Properties owned by the Company and its subsidiaries for federal income
tax purposes was $745,344,972, $870,916,565, and $757,550,394
respectively. Substantially, all of the leases are treated as operating
leases for federal income tax purposes.
(c) Property was not placed in service as of December 31, 2001; therefore,
no depreciation was taken.
(d) Scheduled for completion in 2002.
(e) Depreciation expense is computed for buildings and improvements based
upon estimated lives of 30 years.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2001
(f) The building portion of this property is owned by the tenant;
therefore, depreciation is not applicable.
(g) For financial reporting purposes, certain components of the lease
relating to land and/or building have been recorded as a direct
financing lease. Accordingly, costs relating to these components of
this lease are not shown.
(h) For financial reporting purposes, the portion of this lease relating to
the building has been recorded as direct financing lease. The cost of
the building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(i) For financial reporting purposes, the lease for the land and building
has been recorded as direct financing lease. The cost of the land and
building has been included in net investment in direct financing
leases; therefore, depreciation is not applicable.
(j) The Company owns the building only relating to this property. This
property is subject to a ground lease between the tenant and an
unaffiliated third party. In connection therewith, the Company entered
into either a tri-party agreement with the tenant and the owner of the
land or an assignment of interest in the ground lease with the landlord
of the land. The tri-party agreement or assignment of interest each
provide that the tenant is responsible for all obligations under the
ground lease and provide certain rights to the Company to help protect
its interest in the building in the event of a default by the tenant
under the terms of the ground lease.
(k) During the year ended December 31, 1999, the Company (i) incurred
acquisition fees totaling $6,185,005, paid to the Advisor, (ii)
purchased land and buildings from affiliates of the Company for an
aggregate cost of approximately $39,700,000 and (iii) paid development
or construction management fees to affiliates of the Company totaling
$56,352. Such amounts are included in land and buildings on operating
leases, net investment in direct financing leases and other assets at
December 31, 2001, 2000 and 1999. Effective with the acquisition of the
Advisor in September 1999, the Company ceased incurring acquisition
fees, therefore, no such fees were incurred during the years ended
December 31, 2001 and 2000.
(l) For financial reporting purposes, the undepreciated cost of the
following properties was written down to its net realizable value due
to an anticipated impairment in value. The Company recognized the
impairments by recording an allowance for loss on land, building or
investment in direct financing lease as of December 31, 2001. The
impairments at December 31, 2001 represent the difference between the
properties' carrying values and the property manager's estimate of the
net realizable value of the properties based upon anticipated sales
prices to interested third parties. The cost of the properties
presented on this schedule is the gross amount at which the properties
were carried at December 31, 2001, excluding the allowances for loss.
CNL AMERICAN PROPERTIES FUND, INC.
AND SUBSIDIARIES
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
December 31, 2001
(m) These properties have been impaired in the aggregate by $22,718,979 as
of December 31, 2001.
(n) The Company owns a parcel of land on which two restaurants were
constructed during 2001.
(o) The property is encumbered at December 31, 2001.
Principal Amount
of Loans Subject
to Delinquent
Principal or
Interest Final Periodic Prior Face Amount Carrying Amount Interest
Description Rate Maturity Date Payment Term Liens of Mortgages of Mortgages
207 loans held for sale with
original amounts ranging 12/03/2004 to
from $69,000 to $17,924,000 7.53% to 10.84% 10/01/2021 N/A N/A N/A $ 315,834,741 $ 40,394,101
89 loans as mortgage notes
receivable with original
amounts ranging from $140,000 12/01/2001 to
to $8,475,000 3.09% to 15.00% 01/01/2021 N/A N/A N/A $ 80,866,098 $ 18,120,092
2001 2000 1999
Balance at beginning of period 419,903,472 63,466,474 19,631,693
New mortgage loans 86,630,251 370,029,447 46,738,038
Accrued interest (833,527) 2,906,089 346,101
Collection of principal (761,778) (7,946,989) (2,466,072)
Deferred financing income (116,628,521) (2,227,842) (11,336)
Unamortized loan costs 311,300 (376,164) 91,007
Valuation loan costs 15,823,041 (6,854,932) (551,011)
Provision for uncollectible
mortgage notes (7,743,399) 907,389 (311,946)
----------------------------------------
Balance at end of period 396,700,839 419,903,472 63,466,474
========================================
AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
Dated as of October 11, 2001
BETWEEN:
BANK OF AMERICA, N.A., as buyer ("Buyer", which term shall include any
"Principal" as defined and provided for in Annex I), or as agent pursuant hereto
("Agent"),
CNL FINANCIAL VII, LP, as seller ("Seller")
and
CNL FRANCHISE NETWORK, LP, as originator ("Originator").
1. APPLICABILITY
Buyer may, from time to time, agree to enter into transactions in which
Seller transfers to Buyer Eligible Assets against the transfer of funds
by Buyer, with a simultaneous agreement by Buyer to transfer to Seller
such Purchased Assets at a date certain, against the transfer of funds
by Seller. Each such transaction shall be referred to herein as a
"Transaction", and, unless otherwise agreed in writing, shall be
governed by this Agreement.
This Agreement amends and restates that certain Master Repurchase
Agreement, dated as of June 16, 2000, as amended by certain amendments
dated as of June 8, 2001, June 13, 2001 and August 13, 2001, among
Buyer, Seller and Originator.
2. DEFINITIONS AND INTERPRETATION
a) Defined Terms.
"Accepted Servicing Standards" shall have the meaning assigned thereto
in the Custody Agreement.
"Additional Purchased Assets" shall have the meaning assigned thereto
in Section 6(a) hereof. The term "Additional Purchased Assets" shall
also include the Repo Deposit Amount (as defined in the CNL APF
Guaranty) paid by CNL APF to Buyer pursuant to the terms of the CNL APF
Guaranty; provided, however, that the Repo Deposit Amount shall not be
included in the Market Value of any or all Purchased Assets for
purposes of calculating either a Purchase Price for any Purchase Date
or any margin maintenance under Section 6 herein.
"Adjusted Tangible Net Worth" means the net worth of Originator as
determined in accordance with GAAP, minus the sum of all intangibles
(as determined in accordance with GAAP) other than originated and
purchased servicing rights; provided, however, whether or not required
by GAAP, the Adjusted Tangible Net Worth of the Originator shall not be
reduced by charges to comprehensive net income pursuant to FAS No. 133
and relating to (i) Cash Flow Hedges and (ii) all other hedging
arrangements with respect to the Purchased Assets (other than Net Lease
Loans) to the extent that such charges related to such other hedging
arrangements do not exceed $2,000,000 per quarter.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting equity,
by contract or otherwise.
"Agent" means Bank of America, N.A. or any successor.
"Agreement" means this Amended and Restated Master Repurchase
Agreement, as it may be amended, supplemented or otherwise modified
from time to time.
"Appraisal" means, with respect to a Rehab Loan, an appraisal of the
related Mortgaged Property securing a Rehab Loan (i) from a
professional real estate appraiser who (A) is a member in good standing
of the Appraisal Institute and (B) if the state in which the subject
Mortgaged Property is located certifies or licenses appraisers, is
certified or licensed in such state, (ii) conducted in accordance with
the standards of the Appraisal Institute, and (iii) performed within
three months of the later of (A) the date on which the related Loan
became a Rehab Loan and (B) the date such Appraisal is delivered to the
Buyer, or such other form of appraisal approved by the Buyer in its
sole discretion.
"ARM Loans" means the Loans set forth in Exhibit D hereto, as such list
may be amended from time to time to delete any such Loans that are not
the subject of a Transaction hereunder.
"Bill of Sale" means a document duly executed by Seller with respect to
each delivery of documents relating to the Purchased Assets to
Custodian in the form attached to the Custody Agreement.
"Borrower" means the obligor or obligors on a Note, including any
Person that has acquired the related collateral and assumed the
obligations of the original obligor or obligors under the Note and, in
the case of Net Lease Loans, the Tenant of the related Mortgaged
Property.
"Borrower Group" means (i) the Borrowers with respect to any group of
Loans that are cross- defaulted, cross-collateralized or both or (ii)
Borrowers that are Affiliates of each other.
"Borrower/Guarantor FCCR" means, with respect to each Loan for any
period, the ratio of (a) the sum of Borrower's and, if applicable,
guarantor's (to the extent not already consolidated with Borrower's)
(i) pre-tax income (less non-recurring income for such period), (ii)
interest expense, (iii) all non-cash amounts in respect of depreciation
and amortization and (iv) non-recurring expenses approved by
Originator, (v) discretionary management fees, and (vi) all operating
lease or rent expense, to (b) the sum of Borrower's and, if applicable,
guarantor's (i) interest payments on any debt, (ii) current portion of
principal on any debt, (iii) current portion of capital lease
obligations, and (iv) all operating lease or rent expense for such
period.
"Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day upon which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Custodian is obligated by law or executive
order to be closed.
"Buyer's Margin Amount" means, with respect to any Transaction as of
any date of determination, the amount obtained by application of
Buyer's Margin Percentage to the Repurchase Price for such Transaction
as of such date.
"Buyer's Margin Percentage" shall have the meaning assigned thereto in
the Side Letter.
"Cash Flow Hedges" means cash flow hedging transactions with respect to
Net Lease Loans.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement,(b) any change in any law, rule or
regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c)
compliance by Buyer (or any Affiliate of Buyer) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"CNL APF" means CNL APF Partners, LP or any successor.
"CNL APF Guaranty" means the Guaranty of CNL APF in favor of the Buyer,
dated as of October 11, 2001.
"CNL Retained Loans" shall mean Loans identified on Exhibit F attached
hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning assigned thereto in Section 8
hereof.
"Collateral Agency Agreement" means the Collateral Agency Agreement,
dated as of June 16, 2000, as amended, between Wells Fargo Bank
Minnesota, National Association, formerly known as Norwest Bank
National Association, as collateral agent, and Originator.
"Collection Account" shall have the meaning assigned thereto in the
Custody Agreement.
"Commitment Fee" shall have the meaning assigned thereto in the Side
Letter.
"Computer Tape" means a computer tape or other electronic medium
generated by or on behalf of Seller and delivered to Buyer and
Custodian which provides information relating to the Program Assets,
including the information set forth in the Loan Schedule, in a format
acceptable to Buyer.
"Concept" means any of the franchise concepts set forth in Exhibit B
hereto, as such list may be amended from time to time with the written
consent of the Buyer, provided that the Buyer shall respond to any
request to amend such list within two weeks after its receipt of any
such request, provided that Buyer shall have the right to remove any
Concept previously listed on Exhibit B or otherwise previously
approved, with thirty days prior notice to Seller, if Buyer determines
in its sole discretion (exercised in good faith) that such concept
should no longer be considered an approved Concept; provided further,
that with respect to any Concept that Buyer determines should no longer
be considered an approved Concept or that Buyer removes from Exhibit B,
Buyer shall not withdraw its approval to purchase a Loan secured by
Mortgaged Property operated as such Concept if Buyer has already
approved the purchase of such Loan under a Transaction.
"Confirmation" shall have the meaning assigned thereto in Section 4(b)
hereof.
"Construction Loan" means a type of Mortgage Loan or Net Lease Loan
with respect to which (i) the Loan proceeds are received by the
Borrower in a series of disbursements and used to pay the costs of
construction of a new or remodeled franchise facility and related
improvements and (ii) a certificate of occupancy relating to such
construction has not been issued. A Construction Loan shall no longer
be deemed a Construction Loan for the purposes of this Agreement upon
the latest to occur of (such event, the "Conversion"): (i) the final
disbursement of Loan proceeds to the related Borrower, (ii) the
issuance of a certificate of occupancy with respect to all of the
related improvements, and (iii) any amendment or modification of any of
the related Loan Documents as a result of the completion of
construction; provided, however, that any Loan that is initially
purchased hereunder as a Construction Loan shall remain a Construction
Loan solely for purposes of clause (xvi) of the definition of Eligible
Asset hereunder notwithstanding the Conversion of such Loan.
"Custody Agreement" means the Custody and Servicing Agreement, dated as
of June 16, 2000, as amended, among Seller, Buyer, Originator, Servicer
and Custodian.
"Custodian" means Wells Fargo Bank Minnesota, National Association,
formerly known as Norwest Bank Minnesota, National Association, or its
successors and permitted assigns.
"Custodian's Loan File" shall have the meaning assigned thereto in the
Custody Agreement.
"Default" means any event, that, with the giving of notice or the
passage of time or both, would constitute an Event of Default.
"Default Rate" means, as of any date of determination, the lesser of
(i) the Pricing Rate plus 4% and (ii) the maximum rate permitted by
applicable law.
"Defaulted Loan" means a Loan that is current in respect of monthly
payments due thereunder but with respect to which (i) bankruptcy or
insolvency proceedings have been commenced by or against the related
Borrower, (ii) the Servicer has declared such Loan to be in default or
(iii) there has occurred any other material default or event of default
(however defined) under the related Note, Mortgage or related
agreements; provided, however, that a breach of a fixed charge coverage
ratio covenant shall not, in and of itself, be deemed a material
default.
"Delinquent Loan" means a Loan for which any related payment has not
been received on or before the date forty-five (45) days after the date
on which such payment is due pursuant to the related Note, provided
that a Delinquent Loan shall remain a Delinquent Loan until the related
Borrower cures such delinquency and makes four successive monthly
payments on a timely basis, including any related grace period.
"Documented Rehab Loan" means a Rehab Loan that (A) is subject to (and
in compliance with) fully executed modification documents providing for
the cure of any related delinquency and/or default, (B) is an REO Loan,
(C) is subject to a final court judgment with respect to a foreclosure,
bankruptcy or similar proceeding, (D) is subject to a plan of
reorganization approved by a bankruptcy court or is receiving adequate
protection payments pursuant to an order of a bankruptcy court or (E)
is a Net Lease Loan that was delinquent or in default due to a default
by the related Tenant and such Tenant has (1) entered into modification
documents providing for the cure of the related delinquency and/or
default and is in compliance with such modification documents or (2)
been replaced by a new Tenant, which is in occupancy and is in
compliance with the related lease, and in the case of each of (A)
through (E), has been approved by Buyer in its sole discretion.
"Effective Date" shall mean the date set forth on the top of the first
page of this Agreement.
"Eligible Asset" shall have the meaning assigned thereto in the Side
Letter.
"Event of Default" shall have the meaning assigned thereto in Section
18 hereof.
"Existing Loan" shall mean each Purchased Asset subject to Transactions
under this Agreement as of the Effective Date.
"Existing Mortgage Loan" shall mean each Mortgage Loan subject to
Transactions under this Agreement as of the Effective Date and
identified on Exhibit G attached hereto.
"Exit Fee" shall have the meaning assigned thereto in the Side Letter.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative
functions over Seller.
"Guarantee" means, as to any Person, any obligation of such Person
directly or indirectly guaranteeing any Indebtedness of any other
Person or in any manner providing for the payment of any Indebtedness
of any other Person.
"Hedge Counterparty": A Person (i) (A) with long-term and commercial
paper or short-term deposit ratings of "P-1" by Moody's Investors
Service and "A-1" by Standard & Poor's and (B) which shall agree in
writing that, in the event that any of its long-term or commercial
paper or short-term deposit ratings cease to be at or above "A-2" by
Moody's and "A" by Standard & Poor's, it shall secure its obligations
in accordance with the request of the Buyer or Buyer shall have the
option to treat such failure as an Early Termination Event (as defined
in the ISDA Master Agreement) by such Hedge Counterparty, (ii) that has
entered into a Hedge Instrument and (iii) that is acceptable to the
Buyer.
"Hedge Instrument" means any interest rate cap agreement, interest rate
floor agreement, interest rate swap agreement or other interest rate
hedging agreement entered into by the Seller or Originator with a Hedge
Counterparty. Each Hedge Instrument shall meet the requirements set
forth in Section 37 hereof with respect thereto.
"Hedge Report" means the weekly report, substantially in the form
attached hereto as Exhibit I, delivered by Originator, or a designated
third party, to Buyer and detailing each Hedge Instrument with respect
to the Purchased Assets, including without limitation, the value of all
such Hedge Instruments.
"Income" means, with respect to any Program Asset at any time, any
principal thereof and all interest, dividends and other collections and
distributions thereon, but not including any commitment nor origination
fees.
"Indebtedness" shall mean, for any Person: (a) all obligations for
borrowed money; (b) obligations of such Person to pay the deferred
purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such
trade accounts payable are payable and paid within ninety (90) days of
the date the respective goods are delivered or the respective services
are rendered; (c) indebtedness of others secured by a lien on the
Property of such Person, whether or not the respective indebtedness so
secured has been assumed by such Person; (d) obligations (contingent or
otherwise) of such Person in respect of letters of credit or similar
instruments issued for account of such Person; (e) capital lease
obligations of such Person; (f) obligations of such Person under
repurchase agreements or like arrangements; (g) indebtedness of others
guaranteed on a recourse basis by such Person; (h) all obligations of
such Person incurred in connection with the acquisition or carrying of
fixed assets by such Person; (i) indebtedness of general partnerships
of which such Person is a general partner; and (j) any other contingent
liabilities of such Person.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, including all rules and regulations promulgated thereunder.
"Investment Policy Manual" means the CNL American Properties Fund, Inc.
Investment Policy Manual, dated as of May, 2000, which has been
approved in writing by Buyer, as the same may be amended from time to
time with the Buyer's written consent, provided that the Buyer shall
respond to proposed changes to the Investment Policy Manual within two
weeks after its receipt of the requested change.
"Late-CO Loan" means a Construction Loan with respect to which a final
certificate of occupancy has not been issued on or before the date that
is eight (8) months after the earlier of the date of the related Note
and the date such Loan becomes a Program Asset.
"LIBOR" shall mean, for each day, the rate determined by the Buyer on
such date (or, in the event such day is not a Business Day, the prior
Business Day) on the basis of the offered rate for one-month U.S.
dollar deposits, as such rate appears on Telerate Page 3750 as of 11:00
a.m. (London time) on such date; provided that if such rate does not
appear on Telerate Page 3750, the rate for such date will be determined
on the basis of the offered rates of the Reference Banks for one-month
U.S. dollar deposits, as of 11:00 a.m. (London time) on such date. In
such event, the Buyer will request the principal London office of each
of the Reference Banks to provide a quotation of its rate. If on such
date, two or more Reference Banks provide such offered quotations,
LIBOR shall be the arithmetic mean of all such offered quotations
(rounded to the nearest whole multiple of 1/16%). If on such date,
fewer than two Reference Banks provide such offered quotations, LIBOR
shall be the higher of (i) LIBOR as determined on the previous LIBOR
determination date and (ii) the Reserve Interest Rate. Notwithstanding
the foregoing, if, under the priorities described above, LIBOR for a
LIBOR determination date would be based on LIBOR for the previous LIBOR
determination date for the third consecutive LIBOR determination date,
the Buyer shall select an alternative comparable index (over which the
Buyer has no control), used for determining one-month Eurodollar
lending rates that is calculated and published (or otherwise made
available) by an independent party.
"Liquidity Facility" means the revolving liquidity facility in an
aggregate principal amount not to exceed $10,000,000 pursuant to the
Promissory Note and Credit Agreement (Mirror Liquidity Facility), dated
as of October 9, 2001, between Originator and CNL APF.
"Loan" means a Mortgage Loan or Net Lease Loan, in each case originated
by Originator or any of its Affiliates or CNL American Properties Fund,
Inc. or any of its Subsidiaries in accordance with the Investment
Policy Manual.
"Loan Allocation Table" means, with respect to each Loan, the Loan
Allocation Table substantially in the form annexed hereto as Exhibit E.
"Loan Documents" shall have the meaning assigned thereto in the Custody
Agreement.
"Loan Schedule" means the list of Loans delivered by Originator or
Seller to Buyer and Custodian together with each Transaction Notice and
attached by the Custodian to the Trust Receipt and setting forth as to
each Loan the related Borrower name, the address of the related
Mortgaged Property and the outstanding principal balance of the Loan as
of the initial Purchase Date, together with any other information
specified by Buyer from time to time in good faith.
"Lockbox Agreement" means the agreement so named, in the form required
by Buyer, to be entered into among Seller, Originator and Lockbox Bank.
"Lockbox Bank" means each entity acting as a lockbox bank maintaining
an account on behalf of the Buyer pursuant to a Lockbox Agreement.
"Low FCCR Loan" means any Loan that is not in compliance with any of
the following minimum fixed charge coverage ratio requirements (based
on the financial information of the related Borrower, Tenant, guarantor
or Note, as applicable, for the prior twelve months as of the related
date of determination beginning with the twelve month period ending on
September 30, 2001):
(i) in the case of Mortgage Loans, a minimum
Borrower/Guarantor FCCR of 1.2x and a minimum Note FCCR
of 1.2x; and
(ii) in the case of Net Lease Loans, a minimum
Borrower/Guarantor FCCR of 1.1x and a minimum Note FCCR
of 1.1x, to the extent that the related Tenant is
required to provide note level data to Seller or
Originator.
With respect to any Borrower, Tenant, guarantor or Note, as applicable,
for which insufficient financial data is available to determine the
foregoing ratios based on a trailing twelve month period, the related
Borrower/Guarantor FCCR or Note FCCR shall be determined using
financial data from the first nine months of the fiscal year of the
related date of determination; provided, however, that if neither
twelve months nor nine months of financial data is available, the
related Borrower/Guarantor FCCR or Note FCCR shall be determined using
financial data as of the most recent fiscal year end; provided,
further, that with respect to those Loans for which neither twelve
months nor nine months of financial data is available (except with
respect to Loans secured by newly constructed or newly acquired
Mortgaged Property), if the related Borrower/Guarantor FCCR or Note
FCCR is based on only first or second quarter (of the fiscal year of
the related date of determination) financial statements and is less
than 1.0x, such Loans shall be Low FCCR Loans.
"Margin Call" As defined in Section 6(a).
"Margin Deficit" shall have the meaning assigned thereto in Section
6(a) hereof.
"Market Value" means (i) with respect to any Program Asset that is an
Eligible Asset, as of any date of determination, the market price as
determined by Buyer in its sole discretion, and (ii) with respect to a
Program Asset that is not an Eligible Asset, zero.
"Master Contribution Agreement" means the Amended and Restated Master
Contribution Agreement, dated as of October 11, 2001, among CNL
Franchise Network, LP, CNL Financial LP Holding, LP and Seller.
"Master Letter for Securitizations" means the Master Letter for
Securitizations, dated as of June 16, 2000, among Banc of America
Securities LLC, CNL American Properties Fund, Inc., Originator and CNL
APF.
"Master Loan Agreement" means the Master Loan Agreement, dated as of
June 16, 2000, between CNL Funding 2001-A, LP and Originator, as
amended, supplemented, modified or restated from time to time, and any
other master loan purchase agreement between Originator and a Net Lease
Borrower approved by Buyer from time to time.
"Material Adverse Change" means, with respect to a Person, any material
adverse change in the business, condition (financial or otherwise),
operations, performance, properties taken as a whole or prospects of
such Person.
"Material Adverse Effect" means (a) a Material Adverse Change with
respect to Seller or Seller and its Affiliates that are party to any
Program Document taken as a whole; (b) a material impairment of the
ability of Seller or any Affiliate that is a party to any Program
Document to perform under any Program Document and to avoid any Event
of Default;(c) a material adverse effect upon the legality, validity,
binding effect or enforceability of any Program Document against Seller
or any Affiliate that is a party to any Program Document; or (d) a
material adverse effect upon the value or marketability of any Program
Asset.
"Maximum Aggregate Purchase Price" means $325,000,000; provided,
however, that during the period beginning on January 1, 2002 and ending
on March 31, 2002, the Maximum Aggregate Purchase Price shall mean
$300,000,000; provided, further, that after March 31, 2002, the Maximum
Aggregate Purchase Price shall mean $275,000,000.
"Maximum Aggregate Rehab Purchase Price" means $25,000,000.
"Mortgage" means a mortgage, deed of trust, or other instrument that
creates a lien on the related Mortgaged Property and secures a Note.
"Mortgage Loan" means a Loan (other than a Net Lease Loan or 1031 Loan)
secured by a valid and enforceable, first priority lien on Mortgaged
Property used in the operation of a franchise facility.
"Mortgaged Property" means, with respect to a Mortgage Loan or Net
Lease Loan, the related Borrower's fee and/or leasehold interest in
real property (including all improvements, buildings, fixtures, leases
and building equipment and personal property located thereon or used in
connection therewith, and all additions, alterations and replacements
made at any time with respect to the foregoing), and all other
collateral securing repayment of the debt evidenced by the related Note
and the related Borrower's interest therein.
"Net Lease Borrower" shall have the meaning specified in Section
13(g)(a) herein.
"Net Lease Loan" means a Loan to a Net Lease Borrower for the purpose
of financing the related Mortgaged Property by such Affiliate subject
to a net lease or in connection with a sale-leaseback or net lease
transaction with the related Tenant, which Loan is secured by a valid
and enforceable, first priority lien on the related Mortgaged Property;
provided, however, that on and after January 1, 2002, all Net Lease
Loans shall be (i)(A) Tier I or Tier II Loans with a minimum lease rate
of 9.0% (or such other rate as the Buyer may approve in its sole
discretion) or (B) in the Buyer's sole discretion, Tier III or Tier IV
Loans with a minimum lease rate of 9.5% (or such other rate as the
Buyer may approve in its sole discretion), and (ii) secured by
Mortgaged Property capable of being exchanged for "like kind" property,
as defined in Section 1031 of the Code, in the 1031 tax-free exchange
market; provided, further, that on and after January 1, 2002, all
references to "1031 Loans" herein or in the Program Documents shall be
deemed to be references to "Net Lease Loans."
"Netting Agreement" means the Master Collateral Security and Netting
Agreement dated as of June 16, 2000 among Buyer and certain Affiliates
and the Originator and certain Affiliates.
"90+ Delinquent Loan" means a Delinquent Loan for which the related
payment has not been received on or before the date that is ninety-one
or more days after the date on which such payment is due pursuant to
the related Note.
"Non-Documented Rehab Loan" means a Rehab Loan that is not a Documented
Rehab Loan.
"Non-Securitizable Loan" means any Construction Loan, Late-CO Loan, CNL
Retained Loan, ARM Loan, Low FCCR Loan, Delinquent Loan, Defaulted
Loan, 60+ Delinquent Loan, 90+ Delinquent Loan, Rehab Loan or any other
Loan that the Buyer determines in its sole discretion is not
securitizable; provided, that prior to January 1, 2002, all 1031 Loans
shall be Non-Securitizable Loans.
"Note" means, with respect to any Loan, the related promissory note
together with all riders thereto and amendments thereof or other
evidence of indebtedness of the related Borrower.
"Note FCCR" means, with respect to each Loan for any period, the ratio
of (a) the sum, with respect to each Mortgaged Property securing the
related Note, of (i) pre-tax income (less non-recurring income for such
period), (ii) interest expense, (iii) all non-cash amounts in respect
of depreciation and amortization and (iv) non-recurring expenses
approved by Originator, (v) discretionary management fees, and (vi) all
operating lease or rent expense, to (b) the sum, with respect to each
Mortgaged Property securing the related Note, of (i) interest payments
on any debt, (ii) the current portion of principal on any debt, (iii)
current portion of capital lease obligations, and (iv) all operating
lease or rent expense for such period; provided, that, with respect to
each Note secured by multiple Mortgaged Properties, the Note FCCR shall
be calculated using the aggregate of the above amounts for each
Mortgaged Property.
"Notice Date" shall have the meaning assigned thereto in Section 4
hereof.
"Obligations" means (a) all of Seller's obligation to pay the
Repurchase Price on the Repurchase Date, and other obligations and
liabilities of Seller and Servicer, to Buyer, its Affiliates or
Custodian arising under, or in connection with, the Program Documents
or otherwise, whether now existing or hereafter arising; (b) any and
all sums paid by Buyer or on behalf of Buyer pursuant to the Program
Documents in order to preserve any Program Asset or its interest
therein; (c) in the event of any proceeding for the collection or
enforcement of any of Seller's or Servicer's indebtedness, obligations
or liabilities referred to in clause (a), the reasonable expenses of
retaking, holding, collecting, preparing for sale, selling or otherwise
disposing of or realizing on any Program Asset, or of any exercise by
Buyer or such Affiliate of its rights under the related agreements,
including without limitation, reasonable attorneys' fees and
disbursements and court costs; and (d) all of Seller's and Servicer's
indemnity obligations to Buyer or Custodian or both pursuant to the
Program Documents.
"Originator" means CNL Franchise Network, LP, a Delaware limited
partnership, and its permitted successors and assigns.
"Originator Guaranty" means the Amended and Restated Guaranty of the
Originator in favor of the Buyer, dated as of October 11, 2001.
"Partnership Agreement" means the CNL Franchise Network, LP limited
partnership agreement, dated as of June 16, 2000, among CNL Franchise
Network GP Corp., CNL Franchise Network LP Corp. and CNL Financial
Group, Inc.
"Performing Rehab Loan" means a Documented Rehab Loan (other than an
REO Loan) with respect to which the related Borrower has made all
related payments for three or more months; provided, however, that with
respect to a Non-Documented Rehab Loan, if a Borrower has made all
related payments pursuant to a workout plan evidenced by a "termsheet"
approved by Buyer in its sole discretion, then such payments shall
apply towards such three-month period so long as modification documents
consistent with such term sheet are executed in connection therewith;
provided, further, that no Non-Documented Rehab Loan shall be a
Performing Rehab Loan.
"Person" shall mean any legal person, including any individual,
corporation, partnership, association, joint-stock company, trust,
limited liability company, unincorporated organization, governmental
entity or other entity of similar nature.
"Price Differential" means, with respect to each Transaction as of any
date, the aggregate amount obtained by daily application of the Pricing
Rate for such Transaction to the Purchase Price on a 360-day-per-year
basis for the actual number of days during the period commencing on
(and including) the Purchase Date and ending on (but excluding) the
date of determination (reduced by any amount of such Price Differential
in respect of such period previously paid by Seller to Buyer) with
respect to such Transaction.
"Pricing Rate" means the per annum percentage rate for determination of
the Price Differential as set forth in Section 3(b) hereof or as
otherwise set forth in the Confirmation.
"Prime Rate" means the daily prime loan rate as reported in The Wall
Street Journal or if more than one rate is published, the highest of
such rates.
"Principal" shall have the meaning given to it in Annex I.
"Program Assets" means, as of any date of determination, all Purchased
Assets and Additional Purchased Assets then subject to Transactions
under this Agreement.
"Program Documents" means this Agreement, the Custody Agreement, any
Servicing Agreement, the Netting Agreement, the Originator Guaranty,
the CNL APF Guaranty, any Securities Account Control Agreement or
assignment of Hedge Instrument, the Master Contribution Agreement, the
Side Letter and any other agreement entered into by Seller and/or
Originator, on the one hand, and Buyer or one of its Affiliates (or
Custodian on its behalf) on the other, in connection herewith or
therewith.
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Date" means the date on which Program Assets are to be
transferred by Seller to Buyer.
"Purchase Price" shall have the meaning assigned thereto in the Side
Letter.
"Purchased Assets" means, with respect to a Transaction, the related
Loans, together with the related Records, Servicing Rights, Seller's or
Originator's rights under any related Hedge Instruments, and other
Collateral, such other property, rights, titles or interests as are
specified on a related Transaction Notice, and all instruments, chattel
paper, securities, investment property, accounts, and general
intangibles comprising or relating to all of the foregoing. The term
"Purchased Assets" with respect to any Transaction at any time also
shall include Additional Purchased Assets delivered pursuant to Section
6(a) hereof.
"Qualified Servicer" means any corporation, limited liability company
or partnership that (i) is an established commercial loan servicer with
at least five (5) years experience servicing franchise loans, (ii) has
a net worth (determined in accordance with GAAP) of not less than
$25,000,000, (iii) is organized and doing business under the laws of
any state of the United States or the District of Columbia, (iv)
satisfies the representations and warranties of the Servicer set forth
in Section 5.8 of the Custody Agreement and (v) is ranked "Average" or
better as a primary servicer of commercial mortgage loans by Standard &
Poor's, a Division of the McGraw Hill Companies; provided that prior to
the occurrence of a Servicer Termination Event or Event of Default, CNL
Financial Services, LP shall be deemed to be a Qualified Servicer.
"Records" means all instruments, agreements and other books, records,
and reports and data generated by other media for the storage of
information maintained by Seller or any other person or entity with
respect to a Program Asset. Records shall include the Notes, any
Mortgages, the Custodian's Loan Files and any other instruments
necessary to document or service a Loan.
"Reference Banks" Any leading banks selected by the Agent which are
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market with an established place of business in London.
"Rehab Loan" means a Loan approved by the Buyer in its sole discretion
that is otherwise not an Eligible Asset hereunder or under any other
lending facility with respect to which such Loan was previously
financed or financeable, in either case, due to the delinquency or
default status of such Loan; provided, however, that any Performing
Rehab Loan with respect to which the Borrower has made all related
payments for more than one year shall no longer be deemed a "Rehab
Loan" and if approved by Buyer in its sole discretion shall otherwise
constitute an Eligible Asset hereunder; provided, further, that no Loan
shall become a Rehab Loan if such Loan formerly was a Rehab Loan.
"REO Loan" means a Loan approved by Buyer in its sole discretion to a
special purpose subsidiary of the Originator secured by a Mortgage on
Mortgaged Property acquired by such subsidiary (or another Affiliate of
the Originator and transferred to such subsidiary) through a
foreclosure or deed-in-lieu of foreclosure for which all redemption
periods and rights of appeal have expired.
"Repurchase Date" shall have the meaning assigned thereto in Section
3(b) and shall also include the date determined by application of
Section 19.
"Repurchase Price" means the price at which Purchased Assets are to be
transferred from Buyer to Seller upon termination of a Transaction,
which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Purchase Price, the Price
Differential and the Exit Fee, as applicable, as of the date of such
determination.
"Reserve Interest Rate" With respect to any LIBOR determination date,
the rate per annum that the Agent determines to be either (i) the
arithmetic mean (rounded to the nearest whole multiple of 1/16%) of the
one-month U.S. dollar lending rates which New York City banks selected
by the Agent are quoting on the relevant LIBOR determination date to
the principal London offices of leading banks in the London interbank
market or (ii) in the event that the Agent can determine no such
arithmetic mean, the lowest one-month U.S. dollar lending rate which
New York City banks selected by the Agent are quoting on such LIBOR
determination date to leading European banks.
"Securities Account Control Agreement" means an agreement, in form and
substance acceptable to Buyer, among Seller, Originator, a securities
intermediary and Buyer, pursuant to which Buyer obtains a perfected
security interest in one or more Hedge Instruments.
"Servicer" means (i) CNL Financial Services, LP, a Delaware limited
partnership, or (ii) any other servicer approved by Buyer in its sole
discretion.
"Servicer Termination Event" shall have the meaning assigned thereto in
the Custody Agreement.
"Servicing Agreement" means any agreement (other than the Custody
Agreement) giving rise or relating to Servicing Rights with respect to
a Program Asset, including any assignment or other agreement relating
to such agreement.
"Servicing Rights" means contractual, possessory or other rights of
Seller or any other Person arising under a Servicing Agreement, the
Custody Agreement or otherwise, to administer or service a Program
Asset or to possess related Records.
"Side Letter" means the Third Amended and Restated Side Letter, dated
as of October 11, 2001, among Seller, Originator and Buyer.
"60+ Delinquent Loan" means a Delinquent Loan for which the related
payment has not been received on or before the date that is sixty-one
or more days after the date on which such payment is due pursuant to
the related Note.
"Space Lease" means a leasehold estate pursuant to which the tenant is
leasing the building and/or other improvements (or a portion thereof)
located on the subject real estate and the tenant does not have an
ownership interest in such building or improvements.
"Strategic Alliance Agreement" means the Strategic Alliance Agreement,
dated as of June 16, 2000, as amended, among CNL American Properties
Fund, Inc., CNL/CAS Corp. and Banc of America Mortgage Capital
Corporation.
"Subordinated Note Agreement" means the Senior Subordinated Note
Agreement, dated as of June 16, 2000, as amended October 11, 2001,
between CNL Franchise Network, LP and Banc of America Mortgage Capital
Corporation.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes
of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or
one or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person.
"Substitute Assets" has the meaning assigned thereto in Section 16(a).
"Tenant" means the tenant of a Mortgaged Property pursuant to a lease
or sub-lease of such Mortgaged Property, together with such tenant's
Affiliates and any guarantor of such tenant's obligations under such
lease.
"1031 Loan" means a Net Lease Loan that is (i)(A) a Tier I or Tier II
Loan with a minimum lease rate of 9.0% (or such other rate as the Buyer
may approve in its sole discretion) or (B) in the Buyer's sole
discretion, a Tier III or Tier IV Loan with a minimum lease rate of
9.5% (or such other rate as the Buyer may approve in its sole
discretion), and (ii) secured by Mortgaged Property capable of being
exchanged for "like kind" property, as defined in Section 1031 of the
Code, in the 1031 tax-free exchange market and identified as a 1031
Loan in the related Loan Allocation Table.
"Termination Date" has the meaning assigned thereto in Section 27.
"Tier I Loan" means any Loan secured by Mortgaged Property used in the
operation of a Tier I franchise Concept set forth in Schedule B hereto,
as such Schedule may be amended from time to time in writing by Seller
and Buyer.
"Tier II Loan" means any Loan secured by Mortgaged Property used in the
operation of a Tier II franchise Concept set forth in Schedule B
hereto, as such Schedule may be amended from time to time in writing by
Seller and Buyer.
"Tier III Loan" means any Loan secured by Mortgaged Property used in
the operation of a Tier III franchise Concept set forth in Schedule B
hereto, as such Schedule may be amended from time to time in writing by
Seller and Buyer.
"Tier IV Loan" means any Loan secured by Mortgaged Property used in the
operation of a Tier IV franchise Concept set forth in Schedule B
hereto, as such Schedule may be amended from time to time in writing by
Seller and Buyer.
"Transaction" has the meaning assigned thereto in Section 1.
"Transaction Notice" means a written request of Seller to enter into a
Transaction, in the form attached to the Custody Agreement which is
delivered to Buyer and Custodian.
"Trust Receipt" means a Trust Receipt and Certification as defined in
the Custody Agreement.
"Underwriting Package" means, with respect to each Loan, the
Transaction Summary as defined in the Investment Policy Manual.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect on the date hereof in the State of New York or the Uniform
Commercial Code as in effect in the applicable jurisdiction.
"Wet Funded Loan" means a Loan for which the related Custodian's Loan
File has not been delivered to the Custodian as of the related Purchase
Date.
"Wet Funded Custodian's Loan File" shall have the meaning assigned
thereto in the Custody Agreement.
b) Capitalized terms used but not defined in this Agreement shall have
the meanings assigned thereto in the Custody Agreement.
c) Interpretation.
Headings are for convenience only and do not affect interpretation. The
following rules of this subsection (c) apply unless the context requires
otherwise. The singular includes the plural and conversely. A gender includes
all genders. Where a word or phrase is defined, its other grammatical forms have
a corresponding meaning. A reference to a subsection, Section, Annex or Exhibit
is, unless otherwise specified, a reference to a Section of, or annex or exhibit
to, this Agreement. A reference to a party to this Agreement or another
agreement or document includes the party's successors and permitted substitutes
or assigns. A reference to an agreement or document is to the agreement or
document as amended, modified, novated, supplemented or replaced, except to the
extent prohibited by any Program Document. A reference to legislation or to a
provision of legislation includes a modification or re-enactment of it, a
legislative provision substituted for it and a regulation or statutory
instrument issued under it. A reference to writing includes a facsimile
transmission and any means of reproducing words in a tangible and permanently
visible form. A reference to conduct includes, without limitation, an omission,
statement or undertaking, whether or not in writing. An Event of Default
subsists until it has been waived in writing by Buyer. The words "hereof",
"herein", "hereunder" and similar words refer to this Agreement as a whole and
not to any particular provision of this Agreement. The term "including" is not
limiting and means "including without limitation." In the computation of periods
of time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including." This Agreement may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall be
made, in accordance with GAAP, consistently applied. References herein to
"fiscal year" and "fiscal quarter" refer to such fiscal periods of Seller or
Originator, as applicable. Except where otherwise provided in this Agreement any
determination, statement or certificate by Buyer or an authorized officer of
Buyer provided for in this Agreement is conclusive and binds the parties in the
absence of manifest error. A reference to an agreement includes a security
interest, guarantee, agreement or legally enforceable arrangement whether or not
in writing. A reference to a document includes an agreement (as so defined) in
writing or a certificate, notice, instrument or document, or any information
recorded in computer disk form. Where Seller or Originator is required to
provide any document to Buyer under the terms of this Agreement, the relevant
document shall be provided in writing or printed form unless Buyer requests
otherwise. At the request of Buyer, the document shall be provided in computer
disk form or both printed and computer disk form. This Agreement is the result
of negotiations among and has been reviewed by counsel to Buyer, Originator and
Seller, and is the product of both parties. In the interpretation of this
Agreement, no rule of construction shall apply to disadvantage one party on the
ground that such party proposed or was involved in the preparation of any
particular provision of this Agreement or this Agreement itself. Except where
otherwise expressly stated Buyer may give or withhold, or give conditionally,
approvals and consents, may be satisfied or unsatisfied, and may form opinions,
make determinations and exercise discretion at its absolute discretion. Any
requirement of good faith, discretion or judgment by Buyer shall not be
construed to require Buyer to request or await receipt of information or
documentation not immediately available from or with respect to Seller,
Originator, a servicer of the Program Assets, any other Person or the Program
Assets themselves.
3. THE TRANSACTIONS
a) Seller shall repurchase Purchased Assets from Buyer on each related
Repurchase Date. Such obligation to repurchase subsists without regard to any
prior or intervening liquidation or foreclosure with respect to each Purchased
Asset (but liquidation or foreclosure proceeds received by Buyer shall be
applied to reduce the Repurchase Price except as otherwise provided herein).
Seller is obligated to obtain the Purchased Assets from Buyer or its designee
(including the Custodian) at Seller's expense on (or after) the related
Repurchase Date.
b) Provided that the applicable conditions in Sections 9(a) and (b)
have been satisfied, each Purchased Asset that is repurchased by Seller on the
17th day of each month (or, if such 17th day is not a Business Day, the
immediately following Business Day) following the related initial Purchase Date
(the day of the month so determined for each month, or any other date designated
by Seller to Buyer for such a repurchase on at least one Business Day's prior
notice to Buyer, a "Repurchase Date", which term shall also include the date
determined by application of Section 19) shall automatically become subject to a
new Transaction unless Buyer is notified by Seller at least one (1) Business Day
prior to any Repurchase Date, provided that if the Repurchase Date so determined
is later than the Termination Date, the Repurchase Date for such Transaction
shall automatically reset to the Termination Date, and the provisions of this
sentence as it might relate to a new Transaction shall expire on such date. For
each new Transaction, unless otherwise agreed, (y) the accrued and unpaid Price
Differential shall be settled in cash on each related Repurchase Date, and (z)
the Pricing Rate shall be as set forth in the Side Letter; provided that, upon
written request delivered to Buyer not less than two (2) Business Days prior to
a Purchase Date, Seller may request that Buyer quote a Pricing Rate that will be
a fixed percentage for the 30, 60 or 90 day period commencing on such Purchase
Date; provided further, however, that not more than five (5) Transactions shall
be subject to a fixed percentage Pricing Rate at any time. In the event the
Pricing Rate is based on LIBOR, Agent shall establish LIBOR on each Business
Day, and the Pricing Rate will change upon each change in LIBOR.
c) If Seller repurchases Purchased Assets for which the Pricing Rate is
a fixed rate on any date prior to the last day of the 30, 60 or 90 day period
for which such rate is fixed or if Seller repurchases Purchased Assets on any
day which is not a Repurchase Date for such Purchased Assets, Seller shall
indemnify Buyer and hold Buyer harmless from any losses, costs and/or expenses
which Buyer may sustain or incur arising from the reemployment of funds obtained
by Buyer hereunder or from fees payable to terminate the deposits from which
such funds were obtained ("Breakage Costs"), in each case for the remainder of
the applicable 30, 60 or 90 day period. Buyer shall deliver to Seller a
statement setting forth the amount and basis of determination of any Breakage
Costs in such detail as determined in good faith by Buyer to be adequate, it
being agreed that such statement and the method of its calculation shall be
adequate and shall be conclusive and binding upon Seller, absent manifest error.
This Section shall survive termination of this Agreement and repurchase of all
Program Assets subject to Transactions hereunder.
4. ENTERING INTO TRANSACTIONS; TRANSACTION NOTICE, CONFIRMATIONS
a) Unless otherwise agreed, Seller or Originator shall give Buyer and
Custodian at least one (1) Business Day prior notice (two (2) Business Days if
Seller requests a fixed Pricing Rate) of any proposed Purchase Date (the date on
which such notice is given, the "Notice Date"). On the Notice Date, Seller or
Originator shall (i) request that Buyer enter into a Transaction by furnishing
to Buyer and Custodian a Transaction Notice and Loan Schedule, (ii) deliver to
Buyer a Computer Tape and (iii) deliver to Custodian the Custodian's Loan File
or Wet Funded Custodian's Loan File for each Loan subject to such Transaction.
On each Purchase Date, including any Repurchase Date on which Seller transfer
Loans to Buyer, Seller shall transfer Rehab Loans and CNL Retained Loans to
Buyer in separate Transactions from all other Purchased Assets.
b) In the event that the parties hereto desire to enter into a
Transaction on terms other than as set forth herein, the parties shall execute a
"Confirmation" specifying such terms prior to entering into such Transaction.
Any such Confirmation and the related Transaction Notice, together with this
Agreement, shall constitute conclusive evidence of the terms agreed between
Buyer and Seller with respect to the Transaction to which the Confirmation
relates.
5. PAYMENT AND TRANSFER
Unless otherwise agreed, all transfers of funds hereunder shall be in
immediately available funds and all Program Assets transferred shall be
transferred to the Custodian pursuant to the Custody Agreement. Any Repurchase
Price received by Buyer after 12:00 noon New York City time shall be applied on
the next succeeding Business Day.
6. MARGIN MAINTENANCE
a) If at any time the aggregate Market Value of all Program Assets
subject to all Transactions is less than the aggregate Buyer's Margin Amount for
all such Transactions (a "Margin Deficit"), then Buyer may by notice to Seller
require Seller in such Transactions, at Buyer's option, to transfer to Buyer
cash or additional Eligible Assets acceptable to Buyer ("Additional Purchased
Assets"), so that the cash and aggregate Market Value of the Program Assets,
including any such Additional Purchased Assets, will thereupon equal or exceed
such aggregate Buyer's Margin Amount (such requirement, a "Margin Call").
b) Notice required pursuant to Section 6(a) may be given by any means
provided in Section 35 hereof. Any notice given before 1:00 p.m. New York time
on a Business Day shall be met, and the related Margin Call satisfied, no later
than 5:00 p.m. New York time on the next succeeding Business Day; notice given
after 1:00 p.m. New York time on a Business Day shall be met, and the related
Margin Call satisfied, no later than 2:00 p.m. New York time on the second
succeeding Business Day. The failure of Buyer, on any one or more occasions, to
exercise its rights hereunder, shall not change or alter the terms and
conditions to which this Agreement is subject or limit the right of Buyer to do
so at a later date. Seller, Originator and Buyer each agree that a failure or
delay by Buyer to exercise its rights hereunder shall not limit or waive Buyer's
rights under this Agreement or otherwise existing by law or in any way create
additional rights for Seller or Originator.
7. INCOME PAYMENTS
Where a particular term of a Transaction extends over the date on which
Income is paid in respect of any Purchased Assets subject to that Transaction,
such Income shall be the property of Buyer. Notwithstanding the foregoing, prior
to the occurrence of an Event of Default, all Income received, whether by
Seller, Originator, Buyer, Custodian, Servicer or any servicer or any other
Person, in respect of the Program Assets shall be applied in accordance with
Section 4.1(c) of the Custody Agreement.
8. SECURITY INTEREST
Seller and Buyer intend that the Transactions hereunder be sales to
Buyer of the Program Assets and not loans from Buyer to Seller secured by the
Program Assets. However, in order to preserve Buyer's rights under this
Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as other than sales, and as security for Seller's
performance of all of its Obligations, Seller hereby grants Buyer a fully
perfected first priority security interest in the following property, whether
now existing or hereafter acquired: the Program Assets, the Records, and all
related Servicing Rights, Property, insurance, Income, accounts (including any
interest of Seller in escrow accounts) and any other contract rights, payments,
rights to payment (including payments of interest or finance charges), and all
instruments, chattel paper, securities, investment property, accounts, and
general intangibles and other assets comprising or relating to the Program
Assets, any interest in the Program Assets or the servicing of the Program
Assets, any securities account, including the Collection Account, and all
security entitlements to financial assets now or hereafter carried in or
credited to any securities account, and any now existing or hereafter arising
proceeds and distributions with respect to any of the foregoing and any other
property, rights, titles or interests as are specified on a Transaction Notice
(collectively, the "Collateral"). The parties acknowledge and agree that the
perfection of such security interest is intended to be accomplished through
possession of the related Program Assets by Buyer, the Custodian or by any other
Person on Buyer's behalf, and that such possession unless otherwise agreed is
for Buyer's own account and, pursuant to the Netting Agreement, the account of
Buyer's Affiliates pursuant thereto.
9. CONDITIONS PRECEDENT
a) As conditions precedent to the first Transaction to occur on or
after the Effective Date, Buyer shall have received on or before the day of such
first Transaction the following, in form and substance satisfactory to Buyer and
duly executed by each party thereto:
i) The Program Documents duly executed and delivered by the
parties thereto and being in full force and effect, free of any
modification, breach or waiver;
ii) Evidence that all other actions necessary or, in the opinion
of Buyer, desirable to perfect and protect Buyer's interest in the
Program Assets and other Collateral have been taken, including,
without limitation, duly executed and filed Uniform Commercial Code
financing statements on Form UCC-1;
iii) A certified copy of Seller's and Originator's partnership or
corporate resolutions, as applicable, approving the Program Documents
and Transactions thereunder (either specifically or by general
resolution), and all documents evidencing other necessary partnership
or corporate action or governmental approvals as may be required in
connection with the Program Documents;
iv) An incumbency certificate of the secretaries of Seller's and
Originator's general partners certifying the names, true signatures
and titles of Seller's and Originator's representatives duly
authorized to request Transactions hereunder and to execute the
Program Documents and the other documents to be delivered thereunder;
v) An opinion of Seller's and Originator's counsel as to such
matters as Buyer may reasonably request and in form and substance
acceptable to Buyer, including without limitation true sale and
non-consolidation opinions;
vi) A copy of the Investment Policy Manual certified by an
officer of the Originator's general partner;
vii) The Originator Guaranty and the CNL APF Guaranty;
viii) A copy of the executed Liquidity Facility documents;
ix) Any other documents reasonably requested by Buyer.
b) The obligation of Buyer to enter into each Transaction pursuant to
this Agreement is subject to the following conditions precedent:
i) Buyer or its designee shall have received on or before the day
of a Transaction with respect to such Purchased Assets (unless
otherwise specified in this Agreement) the following, in form and
substance satisfactory to Buyer and (if applicable) duly executed:
(A) Transaction Notice, Loan Schedule and Computer Tape
delivered pursuant to Section 4(a);
(B) The related Trust Receipt; and
(C) Such certificates, customary opinions of counsel or
other documents as Buyer may reasonably request,
provided that such opinions of counsel shall not be
required in connection with each Transaction but shall
only be required from time to time as deemed necessary
by Buyer in its good faith.
ii) No Default or Event of Default shall have occurred and be
continuing.
iii) Buyer shall not have determined that the introduction of or
a change in any requirement of law or in the interpretation or
administration of any requirement of law applicable to Buyer has made
it unlawful, and no Governmental Authority shall have asserted that it
is unlawful, for Buyer to enter into Transactions with a Pricing Rate
based on LIBOR.
iv) All representations and warranties in the Program Documents
shall be true and correct on the date of such Transaction.
v) The then aggregate outstanding Purchase Price for all Program
Assets, when added to the Purchase Price for the requested
Transaction, shall not exceed (i) the Maximum Aggregate Purchase Price
with respect to all Program Assets other than Rehab Loans and (ii) the
Maximum Aggregate Rehab Purchase Price with respect to all Program
Assets that are Rehab Loans.
vi) No event or events shall have been reasonably determined by
Buyer to have occurred resulting in the effective absence of a "repo
market" for a period of at least two (2) consecutive days respecting
loans or mortgage-backed or asset-backed securities such that Buyer is
or was unable to finance or fund purchases under this Agreement
through the "repo market" or Buyer's customers.
vii) The Purchased Assets (other than 1031 Loans, ARM Loans and
Rehab Loans) shall be the subject of or covered by and shall include
one or more Hedge Instruments satisfactory to Buyer and Buyer shall
have received satisfactory evidence that such Hedge Instruments are
fully subject to a Securities Account Control Agreement or other
assignment instrument to Buyer acceptable to Buyer and otherwise
comply with Section 37 hereof.
viii) Seller shall have delivered the Underwriting Package for
each Loan constituting a Purchased Asset in such Transaction to Buyer
not less than three (3) Business Days prior to the date of the related
Transaction Notice, and Buyer shall have approved each such Loan in
its sole discretion. Buyer agrees that it shall notify Seller of its
approval or disapproval of each proposed Loan within three Business
Days after its receipt of the complete Underwriting Package related to
such proposed Loan. For purposes of this provision, an Underwriting
Package received by Buyer after 1:00 p.m. New York City time shall be
deemed to be received on the following Business Day.
ix) Each Loan constituting a Purchased Asset in such Transaction
shall have an interest rate not less than the 10 year U.S. Treasury
Note rate plus 2.75% as of the initial Purchase Date of such Purchased
Asset.
x) Buyer shall have received and approved the Loan Allocation
Table related to each Loan constituting a Purchased Asset in such
Transaction.
xi) Satisfaction of any conditions precedent to the first
Transaction on or after the Effective Date as set forth in clause (a)
of this Section 9 that were not satisfied prior to such first Purchase
Date.
10. RELEASE OF PURCHASED ASSETS
Upon timely payment in full of the Repurchase Price and all other
Obligations owing with respect to a Purchased Asset, if no Default or Event of
Default has occurred and is continuing, Buyer shall, and shall direct Custodian
to, release such Purchased Asset unless such release would give rise to or
perpetuate a Margin Deficit. Except as set forth in Sections 6(a) and 16, Seller
shall give at least three (3) Business Days' prior written notice to Buyer if
such repurchase shall occur on other than a Repurchase Date.
If such a Margin Deficit is applicable, Buyer shall notify Seller of
the amount thereof and Seller may thereupon satisfy the Margin Call in the
manner specified in Section 6.
11. RELIANCE
With respect to any Transaction, Buyer may conclusively rely upon, and
shall incur no liability to Seller in acting upon, any request or other
communication that Buyer reasonably believes to have been given or made by a
person authorized to enter into a Transaction on Seller's behalf.
12. REPRESENTATIONS AND WARRANTIES
Each of Seller and Originator hereby represents and warrants, and shall
on and as of the Purchase Date for any Transaction and on and as of each date
thereafter through and including the related Repurchase Date be deemed to
represent and warrant, that:
a) Due Organization and Qualification. Each of Seller and Originator is
duly organized, validly existing and in good standing under the laws of the
jurisdiction under whose laws it is organized. Each of Seller and Originator is
duly qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals necessary for
the conduct of its business as currently conducted and the performance of its
obligations under the Program Documents or any failure to obtain such a license,
permit, charter, registration or approval will not cause a Material Adverse
Effect or impair the enforceability of any Loan.
b) Power and Authority. Each of Seller and Originator has all necessary
partnership or corporate power and authority to conduct its business as
currently conducted, to execute, deliver and perform its obligations under the
Program Documents and to consummate the Transactions.
c) Due Authorization. The execution, delivery and performance of the
Program Documents by each of Seller and Originator has been duly authorized by
all necessary partnership or corporate action and do not require any additional
approvals or consents or other action by or any notice to or filing with any
Person other than any that have heretofore been obtained, given or made.
d) Noncontravention. None of the execution and delivery of the Program
Documents by Seller or Originator or the consummation of the Transactions and
transactions thereunder:
(i) conflicts with, breaches or violates any provision of the
partnership or corporate agreements of Seller or Originator or any
law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to
Seller or Originator or its properties;
(ii) constitutes a material default by Seller or Originator under
any loan or repurchase agreement, mortgage, indenture or other
agreement or instrument to which Seller or Originator is a party or by
which it or any of its properties is or may be bound or affected; or
(iii) results in or requires the creation of any lien upon or in
respect of any of the assets of Seller or Originator except the lien
relating to the Program Documents.
e) Legal Proceedings. There is no action, proceeding or investigation
by or before any court, governmental or administrative agency or arbitrator
affecting any of the Program Assets, Seller, Originator, Servicer or any of
their Affiliates, pending or threatened, which, if decided adversely, would have
a Material Adverse Effect.
f) Valid and Binding Obligations. Each of the Program Documents to
which Seller, Originator or Servicer is a party, when executed and delivered by
Seller, Originator or Servicer, as applicable, will constitute the legal, valid
and binding obligations of Seller, Originator or Servicer, as applicable,
enforceable against Seller, Originator or Servicer, as applicable, in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles.
g) Financial Statements. The financial statements of Originator, copies
of which have been furnished to Buyer, (i) are, as of the dates and for the
periods referred to therein, complete and correct in all material respects, (ii)
present fairly the financial condition and results of operations of Originator
as of the dates and for the periods indicated and (iii) have been prepared in
accordance with GAAP consistently applied, except as noted therein (subject as
to interim statements to normal year-end adjustments). Since the date of the
most recent financial statements, there has been no material adverse change in
such financial condition or results of operations. Except as disclosed in such
financial statements, Originator is not subject to any contingent liabilities or
commitments that, individually or in the aggregate, have a material possibility
of causing a Material Adverse Change with respect to Originator.
h) Accuracy of Information. None of the documents or information
prepared by or on behalf of Seller, Originator or Servicer and provided by
Seller, Originator or Servicer to Buyer relating to Seller's, Originator's or
Servicer's financial condition contain any statement of a material fact with
respect to Seller, Originator or Servicer or the Transactions that was untrue or
misleading in any material respect when made. Since the furnishing of such
documents or information, there has been no change, nor any development or event
involving a prospective change known to Seller, Originator or Servicer, that
would render any of such documents or information untrue or misleading in any
material respect.
i) No Consents. No consent, license, approval or authorization from, or
registration, filing or declaration with, any regulatory body, administrative
agency, or other governmental instrumentality, nor any consent, approval, waiver
or notification of any creditor, lessor or other nongovernmental person, is
required in connection with the execution, delivery and performance by Seller or
Originator of this Agreement or the consummation by Seller or Originator of any
other Program Document, other than any that have heretofore been obtained, given
or made.
j) Compliance With Law, Etc. No practice, procedure or policy employed
or proposed to be employed by Seller or Originator in the conduct of its
businesses violates any law, regulation, judgment, agreement, order or decree
applicable to it which, if enforced, would result in either a Material Adverse
Change with respect to Seller or Originator or a Material Adverse Effect.
k) Solvency: Fraudulent Conveyance. Each of Seller and Originator is
solvent and will not be rendered insolvent by the Transaction and, after giving
effect to such Transaction, neither Seller nor Originator will be left with an
unreasonably small amount of capital with which to engage in its business.
Neither Seller nor Originator intends to incur, nor believes that it has
incurred, debts beyond its ability to pay such debts as they mature. Neither
Seller nor Originator is contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
Seller or Originator or any of their assets. The amount of consideration being
received by Seller upon the sale of the Program Assets to Buyer constitutes
reasonably equivalent value and fair consideration for such Program Assets.
Seller is not transferring any Program Assets with any intent to hinder, delay
or defraud any of its creditors. The amount of consideration being received by
Originator upon the sale and/or contribution of the Program Assets to Seller
constitutes reasonably equivalent value and fair consideration for such Program
Assets. Originator is not transferring any Program Assets with any intent to
hinder, delay or defraud any of its creditors.
l) Investment Company Act Compliance. Seller is not required to be
registered as an "investment company" as defined under the Investment Company
Act nor as an entity under the control of an "investment company" as defined
under the Investment Company Act.
m) Taxes. Each of Seller and Originator has filed all federal and state
tax returns which are required to be filed and paid all taxes, including any
assessments received by it, to the extent that such taxes have become due (other
than for taxes that are being contested in good faith or for which it has
established adequate reserves). Any taxes, fees and other governmental charges
payable by Seller or Originator in connection with a Transaction and the
execution and delivery of the Program Documents have been paid.
n) Additional Representations. With respect to each Loan, Seller and
Originator, jointly and severally, hereby make all of the applicable
representations and warranties set forth in Appendix A to the Custody Agreement
as of the date the Custodian's Loan File or Wet Funded Custodian's Loan File, as
applicable, is delivered to the Custodian. Further, as of each Purchase Date,
the Seller and the Originator shall be deemed to have represented and warranted
in like manner that neither the Seller nor the Originator has any actual
knowledge that any such representation or warranty may have ceased to be true in
a material respect as of such date, except as otherwise stated in Section 9 of a
Transaction Notice, any such exception to identify the applicable representation
or warranty and specify in reasonable detail the related actual knowledge of the
Seller or Originator. For so long as the Servicer is an Affiliate of Originator,
knowledge of Servicer shall be imputed to Originator for this purpose. The
Servicer shall be deemed to have knowledge if any employee of the Servicer has
actual knowledge and the Servicing Manager or any more senior officer of the
Servicer has actual knowledge or should have actual knowledge of the relevant
facts in the performance of its servicing responsibilities in accordance with
Accepted Servicing Standards. In addition, Originator agrees to make the
representations and warranties set forth in Appendix A to the Custody Agreement
as of the "cut-off date" of the securitization or whole loan sale of the related
Loans by Seller or Buyer, as applicable; provided, however, that to the extent
that Originator has at the time of such securitization or whole loan sale actual
knowledge of any facts or circumstances that would render any of such
representations and warranties materially false, Originator shall have no
obligation to make such materially false representation and warranty.
o) No Broker. Neither Seller nor Originator has dealt with any broker,
investment banker, agent, or other person, except for Buyer, who may be entitled
to any commission or compensation in connection with the sale of Program Assets
pursuant to this Agreement; provided, that if Seller or Originator has dealt
with any broker, investment banker, agent, or other person, except for Buyer,
who may be entitled to any commission or compensation in connection with the
sale of Program Assets pursuant to this Agreement, such commission or
compensation shall have been paid in full by Seller or Originator, as
applicable.
p) Corporate Separateness.
(i) The capital of Seller and Originator is adequate for the
respective business and undertakings of Seller and Originator.
(ii) Other than as provided in this Agreement and the other Program
Documents, Seller is not engaged in any business transactions with
Originator or any of its Affiliates other than transactions in the
ordinary course of its business on an "arms-length" basis.
(iii) At least one director of the general partner of Seller shall
be a person who shall at no time be, or have been, a director or
officer of, employed by any direct or ultimate parent or other
Affiliate of Originator, or who shall at no time be, or have been, and
who shall not have an Affiliate who at any time is or was,
"controlling", "controlled" by or under common "control" with or owns,
directly or indirectly, 50% or more of, any direct or ultimate parent
or other Affiliate of Originator; provided, however, that such
director may serve, or may have served previously, with compensation
therefor in such a capacity for any other special purpose entity
formed by any Affiliate of the Seller.
(iv) The funds and assets of the Seller are not, and will not be,
commingled with the funds of any other person.
q) Reserved.
r) Hedging. With respect to each Purchased Asset (other than 1031
Loans, ARM Loans and Rehab Loans), Seller has entered into a Hedge Instrument,
which Hedge Instrument is identified on the Hedge Report, and such Hedge
Instrument complies with the requirements of Section 37 hereof and is fully
subject to a Securities Account Control Agreement or other assignment instrument
acceptable to Buyer.
s) Rehab Loans. The schedule of Rehab Loans attached hereto as Exhibit
H is a complete, true and accurate list of the Rehab Loan subject to
Transactions as of the Effective Date.
The representations and warranties set forth in this Agreement shall
survive transfer of the Program Assets to Buyer and shall continue for so long
as the Program Assets are subject to this Agreement.
13. COVENANTS OF SELLER AND ORIGINATOR
Each of Seller and Originator, as applicable, hereby covenants with
Buyer as follows:
a) Defense of Title. Each of Seller and Originator warrants and will
defend the right, title and interest of Buyer in and to all Collateral against
all adverse claims and demands.
b) No Amendment or Compromise. Without Buyer's prior written consent,
neither Seller, Originator nor those acting on Seller's or Originator's behalf
shall amend or modify, or waive any term or condition of, or settle or
compromise any claim in respect of, any item of the Program Assets, any related
rights or any of the Program Documents or the Liquidity Facility, provided that
Servicer may amend or modify a Loan if such amendment or modification does not
affect the amount or timing of any payment of principal or interest, extend its
scheduled maturity date, modify its interest rate, or constitute a cancellation
or discharge of its outstanding principal balance and does not materially and
adversely affect the security afforded by the real property, furnishings,
fixtures, or equipment securing the Loan.
c) No Assignment. Except as permitted herein, neither Seller,
Originator nor any servicer shall sell, assign, transfer or otherwise dispose
of, or grant any option with respect to, or pledge, hypothecate or grant a
security interest in or lien on or otherwise encumber (except pursuant to the
Program Documents), any of the Program Assets or any interest therein, provided
that this Section shall not prevent any transfer of Program Assets in accordance
with the Program Documents.
d) Servicing of Loans. Seller shall cause Servicer to service, or cause
to be serviced, all Loans that are part of the Program Assets in accordance with
prudent servicing practices, pending any delivery of such servicing to Buyer
pursuant to the Servicing Agreement, employing at least the same procedures and
exercising the same care that Servicer customarily employs in servicing Loans
for its own account. Seller shall notify servicers of Buyer's interest hereunder
and Seller shall notify Buyer of the name and address of all servicers of Loans.
Buyer shall have the right to approve each servicer and the form of all
Servicing Agreements or servicing side letter agreements. Seller shall cause the
servicer to hold or cause to be held all escrow funds collected with respect to
such Loans in trust accounts and shall apply the same for the purposes for which
such funds were collected. Seller shall cause the Borrower under each Note to
remit all payments to the Lockbox Bank and not otherwise. Upon Buyer's request,
Seller shall provide reasonably promptly to Buyer a letter addressed to and
agreed to by each servicer of Loans, in form and substance reasonably
satisfactory to Buyer, advising such servicer of such matters as Buyer may
reasonably request. If Seller should discover that, for any reason whatsoever,
Seller or any entity responsible to Seller by contract for managing or servicing
any such Loan has failed to perform fully Seller's obligations under the Program
Documents or any of the obligations of such entities with respect to the Program
Assets, Seller shall promptly notify Buyer.
e) Preservation of Collateral; Collateral Value. Seller shall do all
things necessary to preserve the Collateral so that it remains subject to a
first priority perfected security interest hereunder. Without limiting the
foregoing, Seller and Originator will comply with all rules, regulations and
other laws of any Governmental Authority and cause the Collateral to comply with
all applicable rules, regulations and other laws. Neither Seller nor Originator
will allow any default for which Seller or Originator is responsible to occur
under any Collateral or any Program Documents and Seller and Originator shall
fully perform or cause to be performed when due all of its obligations under any
Collateral or the Program Documents.
f) Maintenance of Papers, Records and Files. Seller shall acquire, and
Seller or the Servicer of the Program Assets shall build, maintain and have
available, a complete file in accordance with lending industry custom and
practice for each Program Asset. Seller or the Servicer of the Program Assets
will maintain all such Records not in the possession of Custodian in good and
complete condition in accordance with industry practices and preserve them
against loss.
(i) Seller shall collect and maintain or cause to be
collected and maintained all Records relating to the Program Assets in
accordance with industry custom and practice, including those
maintained pursuant to the preceding subsection, and all such Records
shall be in Custodian's possession unless Buyer otherwise approves.
Neither Seller nor Originator will allow any such papers, records or
files that are an original or an only copy to leave Custodian's
possession, except for individual items removed in connection with
servicing a specific Loan, in which event Seller or Originator will
obtain or cause to be obtained a receipt from a financially responsible
person for any such paper, record or file.
(ii) For so long as Buyer has an interest in or lien on any
Program Asset, Seller and Originator will hold or cause to be held all
related Records in trust for Buyer. Seller or Originator shall notify,
or cause to be notified, every other party holding any such Records of
the interests and liens granted hereby.
(iii) Upon reasonable advance notice from Custodian or Buyer,
Seller and Originator shall (x) make any and all such Records available
to Custodian or Buyer to examine any such Records, either by its own
officers or employees, or by agents or contractors, or both, and make
copies of all or any portion thereof, (y) permit Buyer or its
authorized agents to discuss the affairs, finances and accounts of
Seller or Originator with its respective chief operating officer and
chief financial officer and to discuss the affairs, finances and
accounts of Seller or Originator with its independent certified public
accountants.
g) Financial Statements: Accountants' Reports: Other Information.
Seller and Originator shall keep or cause to be kept in reasonable detail books
and records of account of its assets and business and shall clearly reflect
therein the transfer of Program Assets to Buyer. Seller and Originator shall
furnish or cause to be furnished to Buyer the following:
(i) Financial Statements. (x) As soon as available and in any
event within 90 days after the end of each fiscal year, the
consolidated, audited balance sheets of Originator and Seller as of the
end of each fiscal year of Originator and Seller, and the audited
financial statements of income and changes in equity of Originator and
Seller, and the audited statement of cash flows of Originator and
Seller, for such fiscal year and (y) as soon as available and in any
event within 45 days after the end of each quarter, the consolidated,
unaudited balance sheets of Originator and Seller as of the end of each
quarter, and the consolidated, unaudited financial statements of income
of Originator and Seller, and the unaudited statement of changes in
equity and cash flows of Originator, for the portion of the fiscal year
then ended; provided, that Buyer may request statements of income and
changes in equity of Seller, which Originator or Seller shall provide
within 10 days of receipt of such request; provided, that Seller or
Originator shall not be required to provide such statements of income
and changes in equity of Seller prior to 45 days after the end of the
related quarter, and (z) within 30 days after the end of each month
which is not a quarter end, unaudited statements (excluding cash flow
statements and statements of changes in equity) as provided in clause
(y) with respect to Seller, CNL Financial VIII, LP, each owner of
Mortgaged Property securing any Net Lease Loan (each such owner, a "Net
Lease Borrower") and, beginning with the month ending on November 30,
2001, Originator, all of which have been prepared in accordance with
GAAP and certified by Originator's and Seller's, as applicable, chief
financial officer. Additionally, (a) Originator shall provide to Buyer
weekly cash position reports detailing Originator's liquidity and
projections for cash sources and uses for the 60 day period following
the date of such weekly report, (b) Seller and Originator shall
promptly furnish or cause to be furnished to Buyer financial, asset
sales, or loan status reports upon Buyer's reasonable request, (c)
Originator, or a designated third party, shall deliver to Buyer each
week a Hedge Report and (d) Originator shall deliver to Buyer each
month a report in the form of Exhibit J attached hereto detailing
dispositions of Net Lease Loans.
(ii) Loan Data. Monthly reports in form and scope
satisfactory to Buyer, setting forth data regarding the performance of
the Program Assets for the immediately preceding month, and such other
information as Buyer may reasonably request, including, without
limitation, any other information regarding the Program Assets
requested by Buyer, the Originator's origination pipeline, the
performance of any loans serviced by or on behalf of Originator and any
other financial information regarding Originator reasonably requested
by Buyer.
(iii) Monthly Servicing Diskettes. On or before the 20th day
of each month, a computer tape or a diskette (or any other electronic
transmission acceptable to Buyer) in a format acceptable to Buyer
containing such information with respect to the Program Assets as Buyer
may reasonably request upon reasonable prior notice.
(iv) Quarterly Certification. Seller shall execute and
deliver a quarterly certification substantially in the form of Exhibit
A-1 attached hereto and Originator shall execute and deliver a
quarterly certification (including all related calculations)
substantially in the form of Exhibit A-2 attached hereto.
(v) Investment Committee Binders. The Originator shall
deliver to Buyer a copy of each of the Originator's investment
committee binders at the time such binders are delivered to the members
of the investment committee; provided, however, that the copies
provided to Buyer may reflect the redaction of information regarding
loans and other investment and/or credit decisions unrelated to this
Agreement.
(vi) Monthly Rehab Loan Reports. With respect to the Rehab
Loans, Seller shall prepare and deliver a monthly report containing
such information with respect to such Rehab Loans as Buyer may request
upon reasonable prior notice. Seller shall use its best efforts to
obtain, or cause to be obtained, monthly financial statements from the
related Borrower of each Rehab Loan and, upon receipt of such monthly
financial statements, shall provide copies of such monthly financial
statements to Buyer. Seller shall recalculate the Note FCCR and
Borrower/Guarantor FCCR with respect to the related Rehab Loans every
sixty (60) days and promptly report such recalculated ratios to Buyer.
h) Notice of Material Events. Each of Seller and Originator shall
promptly inform Buyer in writing of any of the following:
xii) any Default, Event of Default or default or breach by
Seller or Originator of any obligation under any Program Document, or
the occurrence or existence of any event or circumstance that Seller or
Originator reasonably expects will with the passage of time become a
Default, Event of Default or such a default or breach by Seller or
Originator;
xiii) any change in the insurance coverage required of Seller
or Originator or any other Person pursuant to any Program Document,
with copy of evidence of same attached;
xiv) any material dispute, litigation, investigation,
proceeding or suspension between Seller or the Originator, on the one
hand, and any Governmental Authority or any other Person;
xv) any material change in accounting policies or financial
reporting practices of Seller or Originator;
xvi) the occurrence of any material employment dispute
involving any chief financial officer, chief executive officer or
president or comparable officer of Seller or Originator, which has a
material possibility of leading to litigation or the termination or
departure of such officer, and a description of the strategy for
resolving it;
xvii) any event, circumstance or condition that has resulted,
or has a possibility of resulting, in either a Material Adverse Change
with respect to Seller or Originator or a Material Adverse Effect; and
xviii) the occurrence of any downgrade in the Servicer's
rating or any event that permits a trustee or applicable party to
remove or replace the Servicer under any securitization transaction or
any event, which with the giving of notice or lapse of time, or both,
would become a Servicer Termination Event.
i) Maintenance of Licenses. Each of Seller and Originator shall
maintain, all licenses, permits or other approvals necessary for each of Seller
and Originator to conduct its business and to perform its obligations under the
Program Documents, and each of Seller and Originator shall conduct its business
strictly in accordance with applicable law except where failure to maintain such
licenses, permits or other approvals would not be reasonably likely to have a
Material Adverse Effect.
j) No Withholdings for Taxes. Any payments made by Seller to Buyer
shall be free and clear of, and without deduction or withholding for, any taxes;
provided, however, that if Seller shall be required by law to deduct or withhold
any taxes from any sums payable to Buyer, then Seller shall (A) make such
deductions or withholdings and pay such amounts to the relevant authority in
accordance with applicable law, (B) pay to Buyer the sum that would have been
payable had such deduction or withholding not been made, and (C) at the time
Price Differential is paid, pay to Buyer all additional amounts as specified by
Buyer to preserve the after-tax yield Buyer would have received if such tax had
not been imposed. This provision does not apply to income taxes payable by Buyer
on its taxable income.
k) Change in Nature of Business. Seller shall not make any material
change in the nature of its business as carried on at the date hereof.
l) Reserved.
m) Limitation on Distributions. If a Default has occurred and is
occurring, neither Seller nor Originator shall pay any dividends or
distributions with respect to any capital stock or other equity interests in
Seller or Originator, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of Seller or Originator.
n) Use of Custodian. Without the prior written consent of Buyer, Seller
and Originator shall use no third party custodian as document custodian other
than the Custodian with respect to third party purchasers, prospective third
party purchasers, lenders and prospective third party lenders with respect to
mortgage loans of the same type as the Program Assets.
o) Merger of Originator. Originator shall not at any time, directly or
indirectly, (i) liquidate or dissolve or enter into any consolidation or merger;
provided that Originator may enter into a consolidation or merger so long as (1)
Originator is the surviving entity after such consolidation or merger, or the
surviving entity assumes all obligations hereunder and does not adversely impact
the capital of the guarantying entity, and (2) such consolidation or merger does
not breach the provisions of (iii) below; (ii) form or enter into any
partnership, joint venture, syndicate or other combination which would have a
material adverse effect on the business or financial condition of Originator and
Originator's Subsidiaries, taken as a whole; or (iii) make any material change
in the nature of the business of Originator or Originator's Subsidiaries.
p) Insurance. Seller will, and shall cause the Servicer to, obtain and
maintain insurance with responsible companies in such amounts and against such
risks as are customarily carried by business entities engaged in similar
businesses similarly situated, and will furnish Buyer on request full
information as to all such insurance, and provide within fifteen (15) days after
receipt of such request the certificates or other documents evidencing the
renewal of each such policy.
q) Affiliate Transaction. Neither Seller nor Originator will at any
time, directly or indirectly, sell, lease or otherwise transfer any property or
assets to, or otherwise acquire any property or assets from, or otherwise engage
in any transactions with, any of their Affiliates unless the terms thereof are
no less favorable to Seller or Originator, as applicable, than those that could
be obtained at the time of such transaction in an arm's length transaction with
a Person who is not such an Affiliate.
r) Change of Fiscal Year. Neither Seller nor Originator will at any
time, directly or indirectly, except upon ninety (90) days' prior written notice
to Buyer, change the date on which Seller's or Originator's fiscal year begins
from Seller's or Originator's current fiscal year beginning date.
s) Reserved.
t) Commitment Fee. Seller shall pay to Buyer the Commitment Fee on or
prior to the Effective Date.
u) Delivery of Servicing Rights. With respect to the Servicing Rights
of each Loan, Seller shall deliver such Servicing Rights to the designee of
Buyer, within 45 days of a Purchase Date, unless otherwise stated in writing by
Buyer; provided that on each Repurchase Date that is subject to a new
Transaction, such delivery requirement is deemed restated for such new
Transaction (and the immediately preceding delivery requirement is deemed to be
rescinded) in the absence of directions to the contrary from Buyer, and a new
45-day period is deemed to commence as of such Repurchase Date; provided further
that, unless there occurs an Event of Default or Servicer Termination Event
under any of the Program Documents, Buyer shall extend such delivery requirement
for so long as the related Loans are subject to a Transaction. Notwithstanding
the foregoing, unless there occurs an Event of Default or Servicer Termination
Event under any of the Program Documents, Seller may (by notifying Buyer and
Custodian) appoint any Person to act as Servicer under the Custody Agreement;
provided that such Person assumes all of the obligations of the Servicer
hereunder and under the Custody Agreement, including the obligation to deliver
the Servicing Rights to the designee of Buyer as set forth in the first sentence
of this clause (u); provided, further, that if such Person is not a Qualified
Servicer and Seller does not replace such Person with a Qualified Servicer
within three (3) Business Days of such Person's appointment, Buyer shall be
entitled to replace such Person as Servicer in its sole discretion. The Seller's
transfer of the Servicing Rights under this Section shall be in accordance with
customary standards in the industry.
v) Exit Fee. With respect to each Purchased Asset, on the first
Repurchase Date on which such Purchased Asset is not subject to a new
Transaction and is not subject to a securitization with respect to which Buyer
(i) is acting as lead underwriter or (ii) has been engaged as an advisor
pursuant to a written engagement letter, Seller shall remit or cause to be
remitted to Buyer, in addition to the Repurchase Price with respect to such
Purchased Asset, the applicable Exit Fee in immediately available funds.
14. REPURCHASE DATE PAYMENTS/COLLECTIONS
On each Repurchase Date, Seller shall remit or shall cause to be
remitted to Buyer the Repurchase Price.
15. REPURCHASE OF PROGRAM ASSETS; CHANGE OF LAW
a) Upon discovery by Seller or Originator of a breach of any of the
representations and warranties set forth in Appendix A to the Custody Agreement,
Seller or Originator shall give prompt written notice thereof to Buyer. Upon any
such discovery by Buyer, Buyer will notify Seller. It is understood and agreed
that the representations and warranties set forth in Appendix A to the Custody
Agreement shall survive delivery of the respective Custodian's Loan Files to the
Custodian and shall inure to the benefit of Buyer. The fact that Buyer has
conducted or has failed to conduct any partial or complete due diligence
investigation in connection with its purchase of any Loan shall not affect
Buyer's right to demand repurchase as provided under this Agreement. Originator
shall within five (5) Business Days of the earlier of Originator's discovery or
Originator's receiving notice, with respect to any Loan, of (i) any breach of a
representation or warranty contained in Appendix A to the Custody Agreement or
(ii) any failure to deliver any of the items required to be delivered as part of
the Custodian's Loan File within the time period required for delivery pursuant
to the Custody Agreement, promptly cure such breach or delivery failure in all
material respects. If within five (5) Business Days after the earlier of
Originator's discovery of such breach or delivery failure or Originator's
receiving notice thereof such breach or delivery failure has not been remedied
by Originator, Originator shall promptly upon receipt of written instructions
from Buyer either (i) purchase such Loan at a purchase price equal to the
Repurchase Price with respect to such Loan by depositing such Repurchase Price
in the Collection Account, or (ii) transfer comparable Substitute Assets to
Buyer, as provided in Section 16 hereof.
b) If Buyer determines that the introduction of, any change in, or the
interpretation or administration of any requirement of law has made it unlawful
or commercially impracticable to engage in any Transactions with a Pricing Rate
based on LIBOR, then Seller (i) shall, upon its receipt of notice of such fact
and demand from Buyer (with a copy of such notice to Custodian), repurchase the
Program Assets subject to the Transaction on the next succeeding Business Day
and, at Seller's election, concurrently enter into a new Transaction with Buyer
with a Pricing Rate based on the Prime Rate plus the margin set forth in the
Side Letter as part of the Pricing Rate and (ii) may elect, by giving notice to
Buyer and Custodian, that all new Transactions shall have Pricing Rates based on
the Prime Rate plus such margin.
c) If Buyer determines in its sole discretion that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on Buyer's capital or on the capital of any Affiliate of Buyer as a
consequence of such Change in Law on this Agreement, then from time to time
Seller will compensate Buyer or Buyer's Affiliate, as applicable, for such
reduced rate of return suffered as a consequence of such Change in Law. Buyer
shall provide Seller with prompt notice as to any Change in Law. Notwithstanding
any other provisions in this Agreement, in the event of any such Change in Law
Seller will have the right to terminate all Transactions then outstanding
without any prepayment penalty as of a date selected by Seller, which date shall
be prior to the then applicable Repurchase Date and which date shall thereafter
for all purposes hereof be deemed to be the Repurchase Date.
16. SUBSTITUTION
a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other assets which are substantially the same as the Program Assets
(the "Substitute Assets) for any Program Assets. Such substitution shall be made
by transfer to Buyer of such other Substitute Assets and transfer to Seller of
such Program Assets. After substitution, the Substitute Assets shall be deemed
to be Program Assets.
b) In the case of any Transaction for which the Repurchase Date is
other than the Business Day immediately following the Purchase Date and with
respect to which Seller does not have any existing right to substitute
Substitute Assets for the Purchased Assets, Seller shall have the right, subject
to the proviso to this sentence, upon notice to Buyer, which notice shall be
given at or prior to 10 a.m. (New York City time) on the second preceding
Business Day, to substitute Substitute Assets for any Purchased Assets;
provided, however, that Buyer may elect, by the close of business on the
Business Day following which such notice is received, or by the close of the
next Business Day if notice is given after 10 a.m. (New York City time) on such
day, not to accept such substitution. In the event such substitution is accepted
by Buyer, such substitution shall be made by Seller's transfer to Buyer of such
Substitute Assets and Buyer's transfer to Seller of such Purchased Assets, and
after such substitution, the Substitute Assets shall be deemed to be Purchased
Assets. In the event Buyer elects not to accept such substitution, Buyer shall
offer Seller the right to terminate the Transaction.
c) In the event Seller exercises its right to substitute or terminate
under subsection (b), Seller shall be obligated to pay to Buyer, by the close of
the Business Day of such substitution, as the case may be, an amount equal to
(A) Buyer's actual cost in bona fide third party transactions (including all
fees, expenses and commissions) of (i) entering into replacement transactions;
(ii) entering into or terminating hedge transactions; and/or (iii) terminating
transactions or substituting securities in like transactions with third parties
in connection with or as a result of such substitution or termination, and (B)
to the extent Buyer determines not to enter into replacement transactions, the
Breakage Costs incurred by Buyer directly arising or resulting from such
substitution or termination.
17. REPURCHASE TRANSACTIONS
Buyer may, in its sole election, engage in repurchase transactions with
the Program Assets or otherwise pledge, hypothecate, assign, transfer or
otherwise convey the Program Assets with a counterparty of Buyer's choice, in
all cases subject to Buyer's obligation to reconvey the Program Assets (and not
substitutes therefor) on the Repurchase Date. In the event Buyer engages in a
repurchase transaction with any of the Program Assets or otherwise pledges or
hypothecates any of the Program Assets, Buyer shall have the right to assign to
Buyer's counterparty any of the applicable representations or warranties in
Appendix A to the Custody Agreement and the remedies for breach thereof, as they
relate to the Program Assets that are subject to such repurchase transaction.
18. EVENTS OF DEFAULT
With respect to any Transactions covered by or related to this
Agreement, the occurrence of any of the following events shall constitute an
"Event of Default":
a) Seller fails to transfer the Purchased Assets to Buyer on the
applicable Purchase Date (provided Buyer has tendered the related Purchase
Price);
b) Seller either fails to repurchase the Purchased Assets on the
applicable Repurchase Date or fails to perform its obligations under Section 6;
c) either Seller, Originator or Servicer shall fail to perform, observe
or comply with any other material term, covenant or agreement contained in the
Program Documents (other than Appendix A to the Custody Agreement) and such
failure is not cured within the time period expressly provided or, if no such
cure period is provided, within ten (10) Business Days of the earlier of (i)
such party's receipt of written notice from Buyer or Custodian of such breach or
(ii) the date on which such party obtains actual notice or knowledge of the
facts giving rise to such breach;
d) any representation or warranty made by Seller or Originator (or any
of Seller's or Originator's officers) in the Program Documents or in any other
document (other than the representations or warranties in Appendix A to the
Custody Agreement) shall have been incorrect or untrue in any material respect
when made or repeated or deemed to have been made or repeated;
e) Seller, Originator, or any of Seller's or Originator's Subsidiaries
shall fail to pay any of Seller's, Originator's or Seller's or Originator's
Subsidiaries' Indebtedness, or any interest or premium thereon when due (whether
by scheduled maturity, requirement prepayment, acceleration, demand or
otherwise), or shall fail to make any payment when due under Seller's,
Originator's or Seller's or Originator's Subsidiaries' Guarantee of another
person's Indebtedness for borrowed money, and such failure shall entitle any
related counterparty to declare any such Indebtedness or Guarantee to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
f) a custodian, receiver, conservator, liquidator, trustee,
sequestrator or similar official for Seller, Originator or any of Seller's or
Originator's Subsidiaries, or of any of Seller's, Originator's or their
respective Property (as a debtor or creditor protection procedure), is appointed
or takes possession of such property; or Seller, Originator or any of Seller's
or Originator's Subsidiaries generally fails to pay Seller's, Originator's or
Seller's or Originator's Subsidiaries' debts as they become due; or Seller,
Originator or any of Seller's or Originator's Subsidiaries is adjudicated
bankrupt or insolvent; or an order for relief is entered under the Federal
Bankruptcy Code, or any successor or similar applicable statute, or any
administrative insolvency scheme, against Seller, Originator or any of Seller's
or Originator's Subsidiaries; or any of Seller's, Originator's or Seller's or
Originator's Subsidiaries' Property is sequestered by court or administrative
order; or a petition is filed against Seller, Originator or any of Seller's or
Originator's Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, moratorium, delinquency or
liquidation law of any jurisdiction, whether now or subsequently in effect;
provided that, if any event described in this subsection (f) is not voluntarily
caused or consented to by Seller Originator or an applicable Subsidiary, a
30-day cure period shall be applicable to stay or discharge such event;
g) Seller, Originator or any of Seller's or Originator's Subsidiaries
files a voluntary petition in bankruptcy seeks relief under any provision of any
bankruptcy, reorganization, moratorium, delinquency, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction whether
now or subsequently in effect; or consents to the filing of any petition against
it under any such law; or consents to the appointment of or taking possession by
a custodian, receiver, conservator, trustee, liquidator, sequestrator or similar
official for Seller, Originator or any of Seller's or Originator's Subsidiaries,
or of all or any part of Selle's, Originator's or Seller's or Originator's
Subsidiaries' Property; or makes an assignment for the benefit of Seller,
Originator or Seller's or Originator's Subsidiaries' creditors;
h) any final, nonappealable judgment or order for the payment of money
in excess of $1,000,000 (which is not insured) is rendered against Seller,
Originator or any of Seller's or Originator's Subsidiaries and remains
undischarged or unsatisfied after the passage of 30 days following the date on
which it is entered;
i) any Governmental Authority or any person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the Property of Seller, Originator or any of Seller's or
Originator's Subsidiaries, or shall have taken any action to displace the
management of Seller, Originator or any of Seller's or Originator's Subsidiaries
or to curtail its authority in the conduct of the business of Seller, Originator
or any of Seller's or Originator's Subsidiaries, or takes any action in the
nature of enforcement to remove, limit or restrict the approval of Seller,
Originator or any of Seller's or Originator's Subsidiaries as an issuer, buyer
or a seller/servicer of Loans or securities backed thereby, and such action
provided for in this subsection (i) shall not have been discontinued or stayed
within 30 days;
j) Seller, Originator or any of Seller's or Originator's Subsidiaries
shall default under, or fail to perform as requested under, or shall otherwise
breach the material terms of any instrument, agreement or contract relating to
Indebtedness, and such default, failure or breach shall entitle any counterparty
to declare such Indebtedness to be due and payable prior to the maturity
thereof;
k) in the good faith judgment of Buyer any Material Adverse Change
shall have occurred with respect to Seller, Originator or any of Seller's or
Originator's Subsidiaries taken as a whole;
l) Seller, Originator or Servicer shall admit its inability to, or
intention not to, perform any of Seller's, Originator's or Servicer's respective
material Obligations;
m) Seller or Originator dissolves, merges or consolidates with another
entity unless Seller or Originator, as applicable, is the surviving party, or
sells, transfers, or otherwise disposes of a material portion of Seller's or
Originator's (as applicable) business or assets or unless Buyer's written
consent is given;
n) this Agreement shall for any reason cease to create a valid, first
priority security interest or ownership interest upon transfer in any material
portion of the Program Assets or Collateral purported to be covered hereby;
o) either Seller's or Originator's audited annual financial statements
or the notes thereto or other opinions or conclusions stated therein shall be
qualified or limited by reference to the status of Seller or Originator as a
"going concern" or a reference of similar import;
p) a Change in Control of Originator shall have occurred which has not
been approved by Buyer;
q) (A) the Adjusted Tangible Net Worth of Originator is less than (1)
$28,000,000 prior to January 1, 2002 and $30,000,000 thereafter; (B) the ratio
of Non-Warehouse Debt of the Originator to the GAAP shareholder's equity of
Originator exceeds 2:1, where "Non-Warehouse Debt" means, on any date, all
liabilities for funded debt (borrowed money), hedging liabilities and repurchase
obligations under repurchase agreements, less the sum of (1) the value on the
Originator's balance sheet of all cash and acceptable short term investments in
excess of $5,000,000, plus (2) 95% of the value on the Originator's balance
sheet of mortgage loans held for sale, mortgage note receivables, land and
buildings, construction in process, real estate held for sale and investment in
direct financing leases; (C) the Originator does not hold (1) an average of
$3,000,000 of unrestricted cash for the trailing four week period as of any date
of determination and (2) $1,000,000 of unrestricted cash at all times; (D) the
Originator's GAAP pre-tax net-income (excluding the effects related to
impairment of good will, Cash Flow Hedges, and all other hedging arrangements
with respect to the Purchased Assets (other than Net Lease Loans) to the extent
that such effects with respect to the other hedging arrangements do not exceed
$2,000,000 per quarter) is less than (1) $1,000,000 for the period beginning on
July 1, 2001 and ending on March 31, 2002 or (2) $1,000,000 per quarter for each
quarter thereafter; (E) the aggregate outstanding Repurchase Price of all Loans
is in excess of $100,000,000 and the weighted average Borrower/Guarantor FCCR
for such Loans, excluding Construction, Rehab, CNL Retained and Delinquent
Loans, is less than 1.35x; or (F) the Liquidity Facility is not in full force
and effect in accordance with its terms; provided, however, that if the Buyer
terminates the liquidity facility with CNL APF under the Promissory Note
(Liquidity Facility), dated as of October 9, 2001, between the Buyer and CNL
APF, for any reason other than an uncured Event of Default (as defined therein)
by CNL APF, the failure by the Originator to maintain the Liquidity Facility
shall not be an Event of Default hereunder; provided, further, that if (1) the
Originator fails to maintain the Liquidity Facility for any reason other than an
uncured Event of Default (as defined therein) by the Originator thereunder and
(2) in Buyer's reasonable discretion, the Originator enters into a comparable
replacement liquidity facility with a financially-capable third party within
sixty (60) days of the Liquidity Facility becoming unavailable, the Originator's
failure to maintain the Liquidity Facility for such sixty day period shall not
be an Event of Default hereunder. Notwithstanding the foregoing proviso, such
sixty day period shall in no way limit, waive or alter the Seller and
Originator's obligations and liabilities with respect to, without limitation,
any agreement, covenant, representation, Repurchase Price, Margin Call, or
indemnity in connection with the terms of the Program Documents, or otherwise,
during such sixty day period.
r) any material amendment is made to the Investment Policy Manual which
was not previously approved in writing by Buyer; and
s) any default or event of default, however defined, under, or
termination of the Strategic Alliance Agreement, the Subordinated Debt Agreement
or the Partnership Agreement.
Notwithstanding the foregoing, Seller and Originator shall be entitled
to (A) a 60-day cure period from the earlier of (i) such party's receipt of
written notice from Buyer or Custodian of a default or breach or (ii) the date
on which such party obtains actual notice or knowledge of the facts giving rise
to a default or breach for any technical, minor or unintentional defaults or
breaches of covenant under a Program Document if such default or breach is
solely of a non-monetary nature and (B) a 10-day cure period from the earlier of
(i) such party's receipt of written notice from Buyer or Custodian of a default
or breach or (ii) the date on which such party obtains actual notice or
knowledge of the facts giving rise to a default or breach for any default or
breach that relates to any financial or operational report that is required to
be delivered to Buyer and relates to the ability to evaluate the business
performance of Originator, Seller, any of their material affiliates or any of
their material assets (each, a "Report"); provided, however, that in no event
shall the term non-monetary be deemed to denote or include an obligation that
relates to either a payment obligation or any Report; provided, further, that,
to the extent that the applicable Program Document contains any cure, grace or
other similar period with respect to any default or breach referenced in this
paragraph, Seller and Originator shall be entitled to elect whether to give
effect to the provisions of this paragraph or to give effect to such applicable
provisions of such Program Document with respect to any such default or breach.
provisions of such Program Document with respect to any such default or breach.
19. REMEDIES
Upon the occurrence of an Event of Default, Buyer, at its option (which
option shall be deemed to have been exercised immediately upon the occurrence of
an Event of Default pursuant to Section 18(f) or (g) hereof), shall have any or
all of the following rights and remedies, which may be exercised by Buyer:
a) The Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur.
b) Seller's obligations hereunder to repurchase all Purchased Assets at
the Repurchase Price therefor on the Repurchase Date in such Transactions shall
thereupon become immediately due and payable; all Income paid after such
exercise or deemed exercise shall be retained by Buyer and applied to the
aggregate Repurchase Prices and any other amounts owing by Seller hereunder;
Seller and Originator shall immediately deliver to Buyer or its designee any and
all original papers, records and files relating to the Purchased Assets subject
to such Transaction then in Seller's and Originator's possession and/or control;
and all right, title and interest in and entitlement to such Purchased Assets
and Servicing Rights thereon shall be deemed transferred to Buyer.
Buyer may (A) sell, on or following the Business Day following the date
on which the Repurchase Price became due and payable pursuant to Section 19(b)
without notice or demand of any kind, at a public or private sale and at such
price or prices as Buyer may reasonably deem satisfactory any or all Program
Assets or (B) in its sole discretion elect, in lieu of selling all or a portion
of such Program Assets, to give Seller credit for such Program Assets in an
amount equal to the Market Value of the Program Assets against the aggregate
unpaid Repurchase Price and any other amounts owing by Seller hereunder. The
proceeds of any disposition of Program Assets shall be applied first to the
reasonable costs and expenses incurred by Buyer in connection with or as a
result of an Event of Default; second to Breakage Costs, costs of cover and/or
related hedging transactions; third to the aggregate Repurchase Prices; and
fourth to all other Obligations.
The parties recognize that it may not be possible to purchase or sell
all of the Program Assets on a particular Business Day, or in a transaction with
the same purchaser, or in the same manner because the market for such Program
Assets may not be liquid. In view of the nature of the Program Assets, the
parties agree that liquidation of a Transaction or the underlying Purchased
Assets does not require a public purchase or sale and that a good faith private
purchase or sale shall be deemed to have been made in a commercially reasonable
manner. Accordingly, Buyer may elect the time and manner of liquidating any
Program Asset and nothing contained herein shall obligate Buyer to liquidate any
Program Asset on the occurrence of an Event of Default or to liquidate all
Program Assets in the same manner or on the same Business Day or constitute a
waiver of any right or remedy of Buyer. Notwithstanding the foregoing, the
parties' to this Agreement agree that the Transactions have been entered into in
consideration of and in reliance upon the fact that all Transactions hereunder
constitute a single business and contractual obligation and that each
Transaction has been entered into in consideration of the other Transactions.
In addition to its rights hereunder, Buyer shall have the right to
proceed against any of Seller's assets which may be in the possession of Buyer,
any of Buyer's Affiliates or its designee (including the Custodian), including
the right to liquidate such assets and to set-off the proceeds against monies
owed by Seller to Buyer pursuant to this Agreement. Buyer may set off cash, the
proceeds of the liquidation of the Program Assets and Additional Purchased
Assets, any other Collateral or its proceeds and all other sums or obligations
owed by Buyer to Seller hereunder against all of Seller's Obligations to Buyer,
whether under this Agreement, under a Transaction, or under any other agreement
between the parties, or otherwise, whether or not such Obligations are then due,
without prejudice to Buyer's right to recover any deficiency.
Buyer may direct all Persons servicing the Program Assets to take such
action with respect to the Program Assets as Buyer determines appropriate.
Seller shall be liable to Buyer for the amount of all expenses (plus
interest thereon at a rate equal to the Default Rate), and Breakage Costs and
all costs and expenses incurred within 30 days of the Event of Default in
connection with hedging or covering transactions related to the Program Assets.
Each of Seller and Originator shall cause all sums received by it with
respect to the Program Assets to be deposited with Custodian (or such other
Person as Buyer may direct) after receipt thereof.
Buyer shall without regard to the adequacy of the security for the
Obligations, be entitled to the appointment of a receiver by any court having
jurisdiction, without notice, to take possession of and protect, collect,
manage, liquidate, and sell the Program Assets and any other Collateral or any
portion thereof, collect the payments due with respect to the Program Assets and
any other Collateral or any portion thereof, and do anything that Buyer is
authorized hereunder to do. Seller shall pay all costs and expenses incurred by
Buyer in connection with the appointment and activities of such receiver.
Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waive, to the extent
permitted by law, any right Seller might otherwise have to require Buyer to
enforce its rights by judicial process. Seller also waives, to the extent
permitted by law, any defense Seller might otherwise have to the Obligations,
arising from use of nonjudicial process, enforcement and sale of all or any
portion of the Program Assets and any other Collateral or from any other
election of remedies. Seller recognizes that nonjudicial remedies are consistent
with the usages of the trade, are responsive to commercial necessity and are the
result of a bargain at arm's length.
In addition to all the rights and remedies specifically provided
herein, Buyer shall have all other rights and remedies provided by applicable
federal, state, foreign, and local laws, whether existing at law, in equity or
by statute.
Upon the occurrence of an Event of Default, Buyer shall have, except as
otherwise expressly provided in this Agreement, the right to exercise any of its
rights and/or remedies without presentment, demand, protest or further notice of
any kind other than as expressly set forth herein, all of which are hereby
expressly waived by Seller.
Seller hereby authorizes Buyer, at Seller's expense, to file such
financing statement or statements relating to the Program Assets and the
Collateral without Seller's signature thereon as Buyer at its option may deem
appropriate, and appoints Buyer as Seller's attorney-in-fact to execute any such
financing statement or statements in Seller's name and to perform all other acts
which Buyer deems appropriate to perfect and continue the lien and security
interest granted hereby and to protect, preserve and realize upon the Program
Assets and the Collateral, including, but not limited to, the right to endorse
notes, complete blanks in documents and execute assignments on behalf of Seller
as its attorney-in-fact. This power of attorney is coupled with an interest and
is irrevocable without Buyer's consent.
20. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
No failure on the part of Buyer to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Buyer of any right, power
or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All rights and remedies of Buyer
provided for herein are cumulative and in addition to any and all other rights
and remedies provided by law, the Program Documents and the other instruments
and agreements contemplated hereby and thereby, and are not conditional or
contingent on any attempt by Buyer to exercise any of its rights under any other
related document. Buyer may exercise at any time after the occurrence of an
Event of Default one or more remedies, as it so desires, and may thereafter at
any time and from time to time exercise any other remedy or remedies.
21. USE OF EMPLOYEE PLAN ASSETS
No assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") shall be
used by either party hereto in a Transaction.
22. INDEMNITY
a) Seller agrees to pay on demand (i) all reasonable out-of-pocket
costs and expenses of Buyer in connection with the preparation, execution,
delivery, modification and amendment of this Agreement (including, without
limitation, (A) all collateral review and UCC search and filing fees and
expenses and (B) the reasonable fees and expenses of counsel for Buyer with
respect thereto, with respect to advising Buyer as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under this Agreement, with respect to negotiations with Seller or
with other creditors of Seller or any of its Subsidiaries arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors' rights
generally and any proceeding ancillary thereto) and (ii) all costs and expenses
of Buyer in connection with the enforcement of this Agreement, whether in any
action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally (including, without limitation,
the reasonable fees and expenses of counsel for Buyer) whether or not the
transactions contemplated hereby are consummated.
b) Seller agrees to indemnify and hold harmless Buyer and each of its
respective Affiliates and their officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against (and will reimburse
each Indemnified Party as the same is incurred) any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees
and expenses of counsel) that may be incurred by or asserted or awarded against
any Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or other proceeding (whether or not such Indemnified Party is a party
thereto) relating to, resulting from or arising out of any of the Program
Documents and all other documents related thereto, any breach of a
representation or warranty of Seller or Originator or Seller's or Originator's
officer in this Agreement or any other Program Document, and all actions taken
pursuant thereto) (i) the Transactions, the actual or proposed use of the
proceeds of the Transactions, this Agreement or any of the transactions
contemplated thereby, including, without limitation, any acquisition or proposed
acquisition or (ii) the actual or alleged presence of hazardous materials on any
Property or any environmental action relating in any way to any Property, except
to the extent such claim, damage, loss, liability or expense is found in a
final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct or
is the result of a claim made by Seller or Originator against the Indemnified
Party, and such Seller or Originator is ultimately the successful party in any
resulting litigation or arbitration. Seller also agrees not to assert any claim
against Buyer or any of its Affiliates, or any of their respective officers,
directors, employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or otherwise
relating to the Facilities, the actual or proposed use of the proceeds of the
Transactions, this Agreement or any of the transactions contemplated thereby.
THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES,
WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) OF THE INDEMNIFIED PARTIES.
c) Without limitation on the provisions of Section 4, if any payment of
the Repurchase Price of any Transaction is made by Seller other than on the then
scheduled Repurchase Date thereto as a result of an acceleration of the
Repurchase Date pursuant to Section 19 or for any other reason, Seller shall,
except as otherwise provided in Sections 15(c) and 24, upon demand by Buyer, pay
to Buyer any Breakage Costs incurred as of a result of such payment.
d) If Seller fails to pay when due any costs, expenses or other amounts
payable by it under this Agreement, including, without limitation, reasonable
fees and expenses of counsel and indemnities, such amount may be paid on behalf
of Seller by Buyer, in its sole discretion.
e) Without prejudice to the survival of any other agreement of Seller
hereunder, the agreements and obligations of Seller contained in this Section
shall survive the payment in full of the Repurchase Price and all other amounts
payable hereunder and delivery of the Program Assets by Buyer against full
payment therefor.
23. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
Seller hereby expressly waives, to the fullest extent permitted by law,
every statute of limitation on a deficiency judgment, any reduction in the
proceeds of any Program Assets as a result of restrictions upon Buyer or
Custodian contained in the Program Documents or any other instrument delivered
in connection therewith, and any right that it may have to direct the order in
which any of the Program Assets shall be disposed of in the event of any
disposition pursuant hereto.
24. REIMBURSEMENT
All sums reasonably expended by Buyer in connection with the exercise
of any right or remedy provided for herein shall be and remain Seller's
obligation. Seller agrees to pay, with interest at the Default Rate to the
extent that an Event of Default has occurred, the reasonable out- of-pocket
expenses and reasonable attorneys' fees incurred by Buyer and/or Custodian in
connection with the enforcement of the Program Documents, the taking of any
action, including legal action, required or permitted to be taken by Buyer
(without duplication to Buyer) and/or Custodian pursuant thereto, any "due
diligence" or loan agent reviews conducted by Buyer or on its behalf or any
refinancing or restructuring in the nature of a "workout". If Buyer determines
that, due to the introduction of, any change in, or the compliance by Buyer with
(i) any eurocurrency reserve requirement or (ii) the interpretation of any law,
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
an increase in the cost to Buyer in engaging in the present or any future
Transactions, then Seller agrees to pay to Buyer, from time to time, upon demand
by Buyer (with a copy to Custodian) the actual cost of additional amounts as
specified by Buyer to compensate Buyer for such increased costs. Notwithstanding
any other provisions in this Agreement, in the event of any such change in the
eurocurrency reserve requirement or the interpretation of any law, regulation or
any guideline or request from any central bank or other Governmental Authority,
Seller will have the right to terminate all Transactions then outstanding as of
a date selected by Seller, which date shall be prior to the applicable
Repurchase Date and which date shall thereafter for all purposes hereof, be
deemed to be the Repurchase Date. In addition, Buyer shall promptly notify
Seller if any events in clause (i) or (ii) of this Section 24 occur.
25. FURTHER ASSURANCES
Seller and Originator agree to do such further acts and things and to
execute and deliver to Buyer such additional assignments, acknowledgments,
agreements, powers and instruments as are reasonably required by Buyer to carry
into effect the intent and purposes of this Agreement, to perfect the interests
of Buyer in the Program Assets or to better assure and confirm unto Buyer its
rights, powers and remedies hereunder.
26. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION
This Agreement supersedes and integrates all previous negotiations,
contracts, agreements and understandings between the parties relating to a sale
and repurchase of Program Assets and Additional Purchased Assets thereto, and
it, together with the other Program Documents, and the other documents delivered
pursuant hereto or thereto, contains the entire final agreement of the parties.
No prior negotiation, agreement, understanding or prior contract shall have any
validity hereafter.
27. TERMINATION
This Agreement shall remain in effect until the earlier of (i) October
8, 2002, provided that such date may be extended, in Buyer's sole discretion,
upon written request of the Seller delivered to Buyer not less than 90 days
prior to such date, or (ii) at Buyer's option, the occurrence of an Event of
Default (such date, the "Termination Date"). However, no such termination shall
affect Seller's outstanding obligations to Buyer at the time of such
termination. Seller's obligations to indemnify Buyer pursuant to this Agreement
shall survive the termination hereof. Failure of Buyer to respond to Seller's
request for an extension pursuant to clause (i) above shall be deemed a
rejection of such request.
Neither Seller nor Originator shall have any obligation to pay any exit
or termination fees in connection with the termination of this Agreement or the
repurchase of any Program Assets, except as expressly set forth herein.
28. ASSIGNMENT
The Program Documents are not assignable by Seller. Buyer may from time
to time assign all or a portion of its rights and obligations under this
Agreement and the Program Documents; provided, however, Buyer must obtain the
consent of Seller for such assignment, which consent shall not be unreasonably
withheld; and provided further that Buyer shall maintain, for review by Seller
upon written request, a register of assignees and a copy of an executed
assignment and acceptance by Buyer and assignee ("Assignment and Acceptance"),
specifying the percentage or portion of such rights and obligations assigned.
Upon such assignment, (a) such assignee shall be a party hereto and to each
Program Document to the extent of the percentage or portion set forth in the
Assignment and Acceptance, and shall succeed to the applicable rights and
obligations of Buyer hereunder, and (b) Buyer shall, to the extent that such
rights and obligations have been so assigned by it to another Person approved by
Seller (such approval not to be unreasonably withheld) which assumes the
obligations of Buyer, be released from its obligations hereunder accruing
thereafter and under the Program Documents. Unless otherwise stated in the
Assignment and Acceptance, Seller shall continue to take directions solely from
Buyer unless otherwise notified by Buyer in writing. Buyer may distribute to any
prospective assignee any document or other information delivered to Buyer by
Seller. Notwithstanding any assignment by Buyer pursuant to this Section 28,
Buyer shall remain liable as to the Transactions.
29. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement nor any
consent to any failure to comply herewith or therewith shall in any event be
effective unless the same shall be in writing and signed by Seller, Originator
and Buyer, and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
30. SEVERABILITY
If any provision of Program Document is declared invalid by any court
of competent jurisdiction, such invalidity shall not affect any other provision
of the Program Documents, and each Program Document shall be enforced to the
fullest extent permitted by law.
31. BINDING EFFECT; GOVERNING LAW
This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective successors and assigns, except that Seller may not
assign or transfer any of its rights or obligations under this Agreement or any
other Program Document without the prior written consent of Buyer. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF.
32. CONSENT TO JURISDICTION
SELLER HEREBY WAIVES TRIAL BY JURY. SELLER HEREBY IRREVOCABLY CONSENTS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING
OUT OF OR RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING. SELLER
HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION SELLER MAY HAVE TO, NON-EXCLUSIVE
PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT
TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS.
33. SINGLE AGREEMENT
Seller, Originator and Buyer acknowledge that, and have entered
hereinto and will enter into each Transaction hereunder in consideration of and
in reliance upon the fact that, all Transactions hereunder constitute a single
business and contractual relationship and have been made in consideration of
each other. Accordingly, Seller, Originator and Buyer each agree (i) to perform
all of its obligations in respect of each Transaction hereunder, and that a
default in the performance of any such obligations shall constitute a default by
it in respect of all Transactions hereunder, and (ii) that payments, deliveries
and other transfers made by any of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries and other
transfer in respect of any other Transaction hereunder, and the obligations to
make any such payments, deliveries and other transfers may be applied against
each other and netted.
34. INTENT
Seller and Buyer recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of the United
States Code, as amended ("USC") (except insofar as the Loans subject to such
Transaction or the term of such Transaction would render such definition
inapplicable), and a "securities contract" as that term is defined in Section
741 of Title 11 of the USC (except insofar as the Loans subject to such
Transaction or the term of such Transaction would render such definition
inapplicable).
It is understood that Buye's right to liquidate the Program Assets
delivered to it in connection with the Transactions hereunder or to exercise any
other remedies pursuant to Section 19 hereof is a contractual right to liquidate
such Transaction as described in Sections 555 and 559 of Title 11 of the USC.
35. NOTICES AND OTHER COMMUNICATIONS
Except as provided herein, any notice required or permitted by this
Agreement shall be in writing and shall be effective and deemed delivered only
when received by the party to which it is sent; provided, however, that a
facsimile transmission shall be deemed to be received when transmitted so long
as the transmitting machine has provided an electronic confirmation (without
error message) of such transmission. Any such notice shall be sent to a party at
the address or facsimile transmission number set forth below:
if to Seller:
CNL Financial VII, LP
103 Foulk Road, Suite 204
Wilmington, Delaware 19830
Attention: Treasurer
Telephone: (302) 656-1950
Facsimile: (302) 652-8667
if to Originator:
CNL Franchise Network, LP
450 South Orange Avenue
Orlando, Florida 32801
Attention: Treasurer
Telephone: (407) 540-2000
Facsimile: (407) 422-2933
with a copy to the same address:
Attention: Steve Shackelford, Chief Financial Officer
Telephone: (407) 540-2100
Facsimile: (407) 540-2102
if to Buyer or Agent:
Bank of America, N.A.
901 Main Street, 66th Floor
Dallas, Texas 75202
Attention: Ms. Carolyn M. Warren
Telephone: (214) 209-0994
Facsimile: (214) 209-0338
or, for Transaction Notices and related documents:
Attention: Ms. Deborah Furr
Telephone: (214) 209-1527
Facsimile: (214) 209-2710
as such address or number may be changed by like notice.
36. CONFIDENTIALITY
This Agreement and its terms, provisions, supplements and amendments,
and notices hereunder, are proprietary to Buyer and Agent and shall be held by
Seller (and Seller shall cause Servicer to hold it) in strict confidence and
shall not be disclosed to any third party without the consent of Buyer except
for (i) disclosure to Seller's direct and indirect parent companies, attorneys,
agents or accountants, provided that such attorneys or accountants likewise
agree to be bound by this covenant of confidentiality or (ii) upon prior written
notice to Buyer, disclosure required by law, rule, regulation or order of a
court or other regulatory body or (iii) to the extent necessary in dealing with
obligors or tenants in connection with Program Assets or (iv) with prior written
notice to Buyer, to any approved Hedge Counterparty to the extent necessary to
obtain any Hedge Instrument hereunder or (v) with prior written notice to Buyer,
any required Securities and Exchange Commission or state securities' law
disclosures or filings.
37. HEDGE INSTRUMENTS
a) Each Hedge Instrument shall expressly provide that in the event of
the repurchase or other removal of a Loan from the terms of this Agreement, the
related or allocated portion of the related Hedge Instrument as determined by
Buyer (the "Related Hedge") shall either be liquidated or assigned to a
qualified successor hedge counterparty, as Buyer deems appropriate.
b) Any Hedge Instrument that provides for any payment obligation on the
part of Seller must (i) contain a non-petition covenant as to Seller, (ii)
absent a default under such Hedge Instrument, limit payment dates thereunder to
Repurchase Dates, and (iii) contain a provision limiting any cash payments due
from Seller on any day under such Hedge Instrument, prior to the occurrence of
an Event of Default, solely to funds available therefor in the Collection
Account on Repurchase Dates pursuant to the Custody Agreement and, following the
occurrence of an Event of Default, to Income or liquidation proceeds in respect
of the related Purchased Assets; provided, however, that the Hedge Counterparty
shall not be entitled to, and shall agree not to assert, a lien on any of the
Purchased Assets.
c) Each Hedge Instrument must (i) provide for the direct payment of any
amounts thereunder to the Collection Account, (ii) contain or permit an
assignment of all of Seller's or Originator's rights (but none of its
obligations) under such Hedge Instrument to Buyer and shall include an express
consent of the Hedge Counterparty to such assignment, (iii) provide that in the
event of the occurrence of an Event of Default, such Hedge Instrument may either
be liquidated or assigned to a qualified successor hedge counterparty upon the
direction of Buyer, (iv) prohibit the Hedge Counterparty from "setting-off" or
"netting" other obligations of Seller or its Affiliates against such Hedge
Counterparty's payment obligations thereunder, provided that such Hedge
Instrument may permit such Hedge Counterparty to net its payment obligations to
Seller against Seller's payment obligations under any Hedge Instrument that also
constitutes a Purchased Asset, (v) provide that the Related Hedge(s) will either
be liquidated or assigned to a qualified successor hedge counterparty upon the
removal of the related Loans from the terms of this Agreement, (vi) have
economic terms that are fixed and not subject to alteration after the date of
assumption or execution of each Related Hedge and (vii) be the subject of a
Securities Account Control Agreement or other assignment instrument acceptable
to Buyer and the Hedge Counterparty.
d) To the extent (i) the Buyer is the owner (or otherwise entitled to
the economic benefit) of the Purchased Assets and is in control of the Income
from such Purchased assets and (ii) such Income is no longer subject to the
priorities set forth in Section 4.01 of the Custody Agreement, Buyer shall cause
such Income to be applied, as a first priority, to the payment of amounts due
(as of the date Buyer obtains possession or control of such Income) to the Hedge
Counterparty in respect of the Related Hedges. In the event Buyer liquidates the
Purchased Assets following an Event of Default, Buyer shall cause the proceeds
of such liquidation to be applied, as a first priority, to the payment of
amounts due to the Hedge Counterparty as a result of the termination of the
Related Hedges by Buyer prior to or in connection with such liquidation. Except
as expressly set forth in this Section 37(d) or as otherwise expressly agreed by
Buyer, each Hedge Instrument shall be without recourse to Buyer or the Purchased
Assets. Upon application of the Income or liquidation proceeds from the
Purchased Assets to payment of amounts then due and owing to the Hedge
Counterparty under the Related Hedges, the Hedge Counterparty shall have no
further claim to the portion of such Income or liquidation proceeds remaining
after such payment. The Hedge Counterparty shall be a third party beneficiary of
this Agreement and the Custody Agreement to the extent of its right to
distributions in respect of Purchased Assets in accordance herewith.
38. Initial Sub-limit Waiver
In connection with the execution of this Agreement, the Side Letter, the
Originator Guaranty, the CNL APF Guaranty and the related reduction of certain
of the limitations on various asset-types described in the definition of
"Eligible Asset" as set forth in the Second Amended and Restated Side Letter,
dated as of June 8, 2001 (the "Second Side Letter"), among Seller, Originator
and Buyer, the parties hereto acknowledge that the aggregate amount of certain
of the Existing Loans will exceed such limitations as set forth in the Side
Letter. Buyer hereby waives any breach of such limitations in the Side Letter
solely for the period commencing on the Effective Date and ending on December
14, 2001 (the "Waiver"). The Waiver shall not be applied in any manner so as to
allow Seller to exceed the various limitations set forth in the Side Letter if
such limitations are not breached on the Effective Date. The Waiver shall only
apply to Existing Loans and shall terminate on December 11, 2001, at which time
Seller hereby agrees to comply with all limitations set forth in the Side
Letter. The Waiver shall not apply to any breaches of the limitations described
in the definition of "Eligible Assets" set forth in the Second Letter and
existing as of the Effective Date.
[Signature Page Follows]
IN WITNESS WHEREOF, Seller, Originator and Buyer have caused their names to
be signed to this Agreement by their respective officers thereunto duly
authorized as of the date first above written.
CNL FINANCIAL VII, LP, as Seller
By: CNL Financial VII, Inc., as its general partner
By:____________________________________
Name:
Title:
CNL FRANCHISE NETWORK, LP, as Originator
By: CNL Franchise Network GP Corp., as its general
partner
By:____________________________________
Name:
Title:
BANK OF AMERICA, N.A., as Buyer
and Agent, as applicable
By:____________________________________
Name:
Title:
[TPW: NY05:10000306.8] 17557-00054 10/18/01 01:24PM
THIRD AMENDED AND RESTATED SIDE LETTER
Dated as of October 11, 2001
CNL Financial VII, LP
103 Foulk Road, Suite 204
Wilmington, Delaware 19803
CNL Franchise Network, LP
450 South Orange Avenue
Orlando, Florida 32801
Bank of America, N.A.
901 Main Street, 66th Floor
Dallas, Texas 75202
Ladies and Gentlemen:
Reference is hereby made to, and this third amended and restated side
letter is hereby incorporated by reference into, the Amended and Restated Master
Repurchase Agreement, dated as of October 11, 2001 (the "Master Repurchase
Agreement"), among CNL Financial VII, LP, as seller (the "Seller"), CNL
Franchise Network, LP, as originator (the "Originator") and Bank of America,
N.A., as buyer (the "Buyer"). Any capitalized term used but not defined herein
shall have the meaning assigned to such term in the Master Repurchase Agreement.
Section 1. Definitions.
The following terms referenced in Section 2 of the Master Repurchase
Agreement shall have the meanings set forth below:
"Buyer"s Margin Percentage" shall mean, with respect to any
Transaction, a percentage agreed to by Buyer and Seller as set forth in the
related Confirmation, or, in the absence of any such agreement (A) prior to
January 1, 2002, the weighted average of the following percentages by the
greater of the outstanding principal balance and the Market Value of the related
Loans:
(1) in the case of Construction Loans, 105.263%,
(2) in the case of Late-CO Loans, 111.11%,
(3) in the case of Net Lease Loans and Mortgage Loans (other than
Non-Securitizable Loans), 103.093%,
(4) in the case of Delinquent Loans and Defaulted Loans, the greater
of 133.33% of the outstanding principal balance and 111.11% of the Market
Value of such Loans,
(5) in the case of 60+ Delinquent Loans, the greater of 200% of the
outstanding principal balance and 111.11% of the Market Value of such Loans,
(6) in the case of CNL Retained Loans, the percentage set forth in
Exhibit F of the Master Repurchase Agreement with respect to each CNL
Retained Loan, which percentage shall only be applied against the original
principal balance of the related CNL Retained Loan,
(7) in the case of ARM Loans, 111.11%,
(8) in the case of Low FCCR Loans, 105.263%,
(9) in the case of Non-Documented Rehab Loans, 250.00%,
(10) in the case of Documented Rehab Loans, 181.818%,
(11) in the case of Performing Rehab Loans (and any other Rehab Loans
approved by the Buyer in its sole Discretion), 133.33%, and
(12) in the case of 1031 Loans, (A) 105.263% of the outstanding
principal balance with respect to 1031 Loans that are Construction Loans
and have been Program Assets for less than 12 months and 1031 Loans that
are not Construction Loans and have been Program Assets for less than 8
months and (B) 105.263% of the greater of the outstanding principal balance
and the Market Value with respect to 1031 Loans that are Construction Loans
and have been Program Assets for 12 months or more and 1031 Loans that are
not Construction Loans and have been Program Assets for 8 months or more,
and
and (B) on or after January 1, 2002, the weighted average of the following
percentages by the greater of the outstanding principal balance and the Market
Value of the related Loans, unless otherwise noted:
(1) in the case of Construction Loans, 105.263%,
(2) in the case of Late-CO Loans, 111.11%,
(3) in the case of Net Lease Loans and 1031 Loans, the greater of
111.11% of the Market Value and 103.093% of the outstanding principal
balance of the related Loans,
(4) in the case of Purchased Assets other than Net Lease Loans, 1031
Loans and ARM Loans, 105.263%,
(5) in the case of Delinquent Loans and Defaulted Loans, the greater
of 133.33% of the outstanding principal balance and 111.11% of the Market
Value of such Loans,
(6) in the case of 60+ Delinquent Loans, the greater of 200% of the
outstanding principal balance and 111.11% of the Market Value of such
Loans,
(7) in the case of CNL Retained Loans, the percentage set forth in
Exhibit F of the Master Repurchase Agreement with respect to each CNL
Retained Loan, which percentage shall only be applied against the original
principal balance of the related CNL Retained Loan,
(8) in the case of ARM Loans, 117.647%,
(9) in the case of Low FCCR Loans that are Net Lease Loans or 1031
Loans, the greater of 111.111% of the Market Value and 103.093% of the
outstanding principal balance of the related Loans,
(10) in the case of Low FCCR Loans that are Mortgage Loans, 105.263%,
(11) in the case of Non-Documented Rehab Loans, 250.00%,
(12) in the case of Documented Rehab Loans, 181.818%, and
(13) in the case of Performing Rehab Loans (and any other Rehab Loans
approved by the Buyer in its sole Discretion), 133.33%.
"Commitment Fee" shall mean $487,500.
"Eligible Asset" shall mean each Loan meeting the representations and
warranties set forth on Appendix A to the Custody Agreement and for which the
aggregate outstanding Repurchase Price for such Loan as of any date of
determination, together with the aggregate outstanding Repurchase Price for all
other Loans then subject to Transactions, shall not exceed an amount equal to:
(1) 100% of the Maximum Aggregate Purchase Price with respect to the
aggregate amount of Loans consisting of Tier I Loans and 50% of the Maximum
Aggregate Purchase Price with respect to the aggregate amount of Tier I
Loans secured by Mortgaged Property used in the operation of the same
Concept,
(2) 100% of the Maximum Aggregate Purchase Price with respect to the
aggregate amount of Loans consisting of Tier II Loans and 30% of the
Maximum Aggregate Purchase Price with respect to the aggregate amount of
Tier II Loans secured by Mortgaged Property used in the operation of the
same Concept,
(3) 50% of the Maximum Aggregate Purchase Price with respect to the
aggregate amount of Loans consisting of Tier III Loans and 15% of the
Maximum Aggregate Purchase Price with respect to the aggregate amount of
Tier III Loans secured by Mortgaged Property used in the operation of the
same Concept,
(4) 30% of the Maximum Aggregate Purchase Price with respect to the
aggregate amount of Loans consisting of Tier IV Loans and 10% of the
Maximum Aggregate Purchase Price with respect to the aggregate amount of
Tier IV Loans secured by Mortgaged Property used in the operation of the
same Concept,
(5) 15% of the Maximum Aggregate Purchase Price with respect to the
aggregate amount of Loans to the same Borrower Group,
(6) 40% of the Maximum Aggregate Purchase Price with respect to the
aggregate amount of Loans to the four (4) Borrower Groups representing the
greatest portion of the Program Assets,
(7) 25% of the Maximum Aggregate Purchase Price with respect to the
aggregate amount of Loans secured by Collateral in the same U.S. state,
(8) $100,000,000 with respect to the aggregate amount of Construction
Loans,
(9) zero percent (0%) of the Maximum Aggregate Purchase Price with
respect to the aggregate amount of Program Assets as to which any
representation or warranty with respect to any such Program Asset has been
materially breached, as determined by Buyer,
(10) the lesser of (A) thirty percent (30%) of the Maximum Aggregate
Purchase Price and (B) forty percent (40%) of the aggregate outstanding
principal balance of all Mortgage Loans constituting Program Assets, with
respect to the aggregate amount of Mortgage Loans secured by Space Leases,
(11) 5% of the Maximum Aggregate Purchase Price with respect to the
aggregate amount of Delinquent Loans, 60+ Delinquent Loans and Defaulted
Loans (other than Rehab Loans),
(12) $5 million with respect to the aggregate amount of Rehab Loans
secured by Space Leases,
(13) zero percent (0%) of the Maximum Aggregate Purchase Price with
respect to the aggregate amount of 90+ Delinquent Loans that are not Rehab
Loans,
(14) 50 percent (50%) of the Maximum Aggregate Purchase Price with
respect to the aggregate amount of Wet Funded Loans, (1)
(15) zero percent (0%) of the Maximum Aggregate Purchase Price with
respect to the aggregate amount of Construction Loans that are Program
Assets in excess of twenty four (24) months,
(16) zero percent (0%) of the Maximum Aggregate Purchase Price with
respect to the aggregate amount of ARM Loans that are Program Assets after
March 31, 2002,
(17) zero percent (0%) of the Maximum Aggregate Purchase Price with
respect to the aggregate amount of Loans (other than Existing Mortgage
Loans) that are Program Assets in excess of eighteen (18) months,
(18) with respect to the aggregate amount of Mortgage Loans, ARM
Loans, Delinquent and Defaulted Loans that are Mortgage Loans, and Rehab
Loans that are Mortgage Loans, (A) $210,000,000 prior to April 1, 2002, and
(B) $125,000,000 thereafter; provided, however, that with respect to any
Mortgage Loan, ARM Loan, Delinquent and Defaulted Loans that are Mortgage
Loans, and Rehab Loans that are Mortgage Loans not subject to a Transaction
as of the Effective Date, such Loan shall not be an Eligible Asset if the
Buyer has not approved, in its sole discretion, the takeout or exit
strategy for such Loan,
(19) with respect to the aggregate amount of 1031 Loans, zero percent
(0%) of the Maximum Aggregate Purchase Price if Section 1031 of the Code is
repealed, replaced, amended or interpreted in any way that, in the Buyer's
sole discretion, may have a material adverse effect on the tax benefits
available pursuant to such section or on the market for 1031 exchange
property,
(20) with respect to the aggregate amount of Net Lease Loans and 1031
Loans on and after January 1, 2002, zero percent (0%) of the Maximum
Aggregate Purchase Price with respect to the Net Lease Loans and 1031 Loans
that are not (A)(1) Tier I or Tier II Loans with a minimum lease rate of
9.0% (or such other rate as the Buyer may approve in its sole discretion)
or (2) in the Buyer's sole discretion, Tier III or Tier IV Loans with a
minimum lease rate of 9.5% (or such other rate as the Buyer may approve in
its sole discretion), and (B) secured by Mortgaged Property capable of
being exchanged for "like kind" property, as defined in Section 1031 of the
Code, in the 1031 tax-free exchange market,
(21) the lesser of (A) $25,000,000 and (B) twenty-five percent (25%)
of the aggregate outstanding Purchase Price of Net Lease Loans with respect
to the aggregate amount of 1031 Loans that are Program Assets in excess of
twelve (12) months,
(22) with respect to the aggregate amount of Low FCCR Loans (excluding
Rehab Loans), (A) $70,000,000 prior to March 31, 2002, and (B) $50,000,000
thereafter,
(23) zero percent (0%) of the Maximum Aggregate Purchase Price with
respect to the aggregate amount of Construction Loans with respect to which
a certificate of occupancy has not been issued on or before the date that
is twelve (12) months after the earlier of the date of the related Note and
the date such Loan becomes a Program Asset,
(24) unless otherwise approved in writing by the Buyer in its sole
discretion, zero percent (0%) of the Maximum Aggregate Rehab Purchase Price
with respect to the aggregate amount of Non-Documented Rehab Loans subject
to Transactions for more than six months,
(25) unless otherwise approved in writing by the Buyer in its sole
discretion, zero percent (0%) of the Maximum Aggregate Rehab Purchase Price
with respect to the aggregate amount of Documented Rehab Loans subject to
Transactions for more than one year,
(26) zero percent (0%) of the Maximum Aggregate Rehab Purchase Price
with respect to the aggregate amount of Rehab Loans that fail to perform
pursuant to the related workout, modification or bankruptcy plan and such
failure is not cured within thirty days,
(27) zero percent (0%) of the Maximum Aggregate Rehab Purchase Price
with respect to the aggregate amount of Rehab Loans for which the Buyer has
not been provided with an Appraisal within thirty days of such Rehab Loan
first becoming subject to a Transaction, and
(28) zero percent (0%) of the Maximum Aggregate Purchase Price with
respect to the aggregate amount of Existing Mortgage Loans that remain
subject to Transactions after October 13, 2002.
"Exit Fee" shall mean a fee in an amount equal to the product of (A)
the outstanding principal balance of the related Purchased Asset multiplied by
(B) the applicable percentage set forth in the definition of Purchase Price for
such Purchased Asset (which, if more than one percentage is set forth, shall be
the largest percentage) multiplied by (C):
(i) with respect to any Net Lease Loan or 1031 Loan subject to a
Transaction under the Master Repurchase Agreement as of the Effective Date,
(A) 25 basis points (0.25%) prior to March 31, 2002 and (B) 75 basis points
(0.75%) thereafter,
(ii) with respect to any Purchased Asset other than a Net Lease Loan
or 1031 Loan subject to a Transaction under the Master Repurchase Agreement
as of the Effective Date, (A) zero basis points (0%) prior to January 1,
2002 and (B) 75 basis points (0.75%) thereafter; and
(iii) with respect to any Purchased Asset that was first purchased by
the Buyer under the Master Repurchase Agreement on or after the Effective
Date, 75 basis points (0.75%).
"Purchase Price" shall mean the price at which Purchased Assets are
transferred by Seller to Buyer in a Transaction, which shall (unless otherwise
agreed) be equal to:
(1) in the case of Construction Loans, 95% of the lesser of (A) the
Market Value of the related Purchased Assets and (B) the
outstanding principal balance of the related Purchased Assets,
(2) in the case of Late-CO Loans, 90% of the lesser of (A) the Market
Value of the related Purchased Assets and (B) the outstanding
principal balance of the related Purchased Assets,
(3) in the case of Net Lease Loans and Mortgage Loans (other than
Non-Securitizable Loans) prior to January 1, 2002, 97% of the
lesser of (A) the Market Value of the related Purchased Assets
and (B) the outstanding principal balance of the related
Purchased Assets,
(4) in the case of Net Lease Loans and 1031 Loans on and after
January 1, 2002, the lesser of (A) 90% of the Market Value of the
related Purchased Assets and (B) 97% of the outstanding principal
balance of the related Purchased Assets,
(5) in the case of Purchased Assets other than Net Lease Loans, 1031
Loans and ARM Loans, on and after January 1, 2002, the lesser of
(A) the Market Value of the related Purchased Assets and (B) 95%
of the outstanding principal balance of the related Purchased
Assets,
(6) in the case of Delinquent Loans and Defaulted Loans (other than
Rehab Loans), the lesser of (A) 90% of the Market Value of the
related Purchased Assets and (B) 75% of the outstanding principal
balance of the related Purchased Assets,
(7) in the case of 60+ Delinquent Loans (other than Rehab Loans), the
lesser of (A) 90% of the Market Value of the related Purchased
Assets and (B) 50% of the outstanding principal balance of the
related Purchased Assets,
(8) in the case of CNL Retained Loans, the amount set forth in
Exhibit F of the Master Repurchase Agreement with respect to each
CNL Retained Loan,
(9) in the case of ARM Loans, (A) prior to January 1, 2002, 90% of
the lesser of (1) the Market Value of the related Purchased
Assets and (2) the outstanding principal balance of the related
Purchased Assets, and (B) as of January 1, 2002, 85% of the
outstanding principal balance of the related Purchased Assets,
(10) in the case of 1031 Loans prior to January 1, 2002, (A) 95% of
the outstanding principal balance of the related Purchased Assets
with respect to (I) 1031 Loans that are Construction Loans and
have been Program Assets for less than 12 months and (II) 1031
Loans that are not Construction Loans and have been Program
Assets for less than 8 months or (B) 95% of the lesser of (I) the
Market Value of the related Purchased Assets and (II) the
outstanding principal balance of the related Purchased Assets
with respect to (a) 1031 Loans that are Construction Loans and
have been Program Assets for 12 months or more and (b) 1031 Loans
that are not Construction Loan and have been Program Assets for 8
months or more,
(11) in the case of Low FCCR Loans that are Net Lease Loans, the
lesser of (A) 90% of the Market Value of the related Purchased
Assets and (B) 97% of the outstanding principal balance of the
related Purchased Assets,
(12) in the case of Low FCCR Loans that are Mortgage Loans, 95% of the
lesser of (A) the Market Value of the related Purchased Assets
and (B) the outstanding principal balance of the related
Purchased Assets,
(13) in the case of Non-Documented Rehab Loans, 40% of the lesser of
(A) the Market Value of the related Purchased Assets and (B) the
outstanding principal balance of the related Purchased Assets,
(14) in the case of Documented Rehab Loans, 55% of the lesser of (A)
the Market Value of the related Purchased Assets and (B) the
outstanding principal balance of the related Purchased Assets,
and
(15) in the case of Performing Rehab Loans (and any other Rehab Loan
approved by the Buyer in its sole Discretion), 75% of the lesser
of (A) the Market Value of the related Purchased Assets and (B)
the outstanding principal balance of the related Purchased
Assets.
"Pricing Rate" means:
(i) with respect to each Purchased Asset that is not a Rehab Loan, an
amount equal to LIBOR plus:
(A) with respect to Net Lease Loans and 1031 Loans, 90 basis
points (0.90%),
(B) with respect to ARM Loans, (1) 90 basis points (0.90%) prior
to January 1, 2002 and (2) 200 basis points (2.00%) thereafter,
(C) with respect to Low FCCR Loans and 60+ Delinquent Loans, 200
basis points (2.00%),
(D) with respect to all other Purchased Assets that are not Rehab
Loans, Net Lease Loans, 1031 Loans, ARM Loans, Low FCCR Loans or 60+
Delinquent Loans, (1) 90 basis points (0.90%) prior to January 1, 2002
and (2) 125 basis points (1.25%) thereafter, and
(ii) with respect to Rehab Loans, an amount equal to LIBOR plus 400
basis points (4.00%).
Section 2. Counterparts.
This side letter may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, Seller, Originator and Buyer have caused their
names to be signed hereto by their respective officers thereunto duly authorized
on the date first above written.
CNL FINANCIAL VII, LP
By: CNL Financial VII, Inc., as general partner
By:____________________________
Name:
Title:
CNL FRANCHISE NETWORK, LP
By: CNL Franchise Network GP Corp., as
general partner
By:____________________________
Name:
Title:
BANK OF AMERICA, N.A.
By:____________________________
Name:
Title:
Subsidiaries of the Registrant
CNL American Properties Fund, Inc.
CNL Franchise Network Corp.
CNL Financial GP Holding Corp.
CNL Franchise Network GP Corp.
CNL Franchise Network LP Corp.
CNL Financial Services GP Corp.
CNL Funding 2001-A, Inc.
CNL Financial VII, Inc.
CNL Funding 98-1, Inc.
CNL Funding 99-1, Inc.
CNL Franchise Network, LP
CNL Financial VII, LP
CNL Funding 2001-A, LP
CNL Financial LP Holding, LP
CNL RP Services, LLC
CNLinet, LLC
CNL Advisory Services, LLC
CNL Financial Services, LP
CNL Funding 2001-4, Inc.
CNL Funding 2002-A, Inc.
CNL Funding 2001-4, LP
CNL Funding 2002-A, LP
CNL Financial VIII, Inc.
CNL Financial VIII, LP
CNL Funding 98-1, LP
CNL Funding 99-A, LP
CNL Restaurant Property Services, Inc.
CNL Restaurant Investors Properties, Inc.
CNL Restaurant Investors, LLC
CNL Investors Properties, LLC
CNL Restaurant Properties, Inc.
CNL/MSC Indiana Joint Venture
CNL/Corral South Joint Venture
CNL Fund Advisors, Inc.
CNL Restaurant Development, Inc.
CNL APF LP Corp.
CNL APF GP Corp.
CNL Restaurant Net Lease GP Holding Corp.
CNL/MSC Joint Venture No. 752
CNL/MSC Joint Venture No. 779
CNL/MSC Joint Venture No. 857
CNL/MSC Joint Venture No. 182
CNL/MSC Joint Venture No. 1005
CNL/MSC Joint Venture No. 740
CNL APF Partners, LP
CNL/Lee Vista Joint Venture
CNL/Chevys Annapolis Joint Venture
CNL Restaurant Net Lease Holdings, LP
CNL Restaurant Bond Holdings, Inc.
CNL Funding 2000-A, Inc.
CNL Funding 2000-A, LP
CNL Restaurant Bond Holdings, LP
CNL Restaurants XVIII, Inc.
CNL Net Lease Funding 2001, Inc.
CNL Net Lease Funding 2001, LP
EXHIBITS
EXHIBIT INDEX
Exhibit Number
2.1 Agreement and Plan of Merger, by and among the
Registrant, CFA Acquisition Corp., CNL Fund Advisors,
Inc. and CNL Group, Inc., dated March 11, 1999
(included as Exhibit 10.38 to the Registrant's
Registration Statement No. 333-74329 on Form S-4 (the
"Form S-4") as originally filed and incorporated
herein by reference).
2.2 Agreement and Plan of Merger, by and among the
Registrant, CFC Acquisition Corp., CFS Acquisition
Corp., CNL Financial Corp., CNL Financial Services,
Inc., CNL Group, Inc., Five Arrows Realty Securities
L.L.C., Robert A. Bourne, Curtis B. McWilliams and
Brian Fluck, dated March 11, 1999 (included as
Exhibit 10.39 to the Form S-4 as originally filed and
incorporated herein by reference).
3.1 CNL American Properties Fund, Inc. Amended and
Restated Articles of Incorporation, as amended
(included as Exhibit 3.1 to the Registrant's Form
10-Q for the quarter ended June 30, 1999 and
incorporated herein by reference).
3.3 CNL American Properties Fund, Inc. Amended and
Restated Bylaws (included as Exhibit 3.2 to the
Registrant's Registration Statement No. 333-37657 on
Form S-11 and incorporated herein by reference).
3.3 CNL American Properties Fund, Inc. Second Amended and
Restated Articles of Incorporation (included as
Exhibit 3.3 to the Registrant's Form 10-Q for the
quarter ended June 30, 2000 and incorporated herein
by reference).
4.1 Form of Stock Certificate (included as Exhibit 4.5 to
the Registrant's Registration Statement No. 33-78790
on Form S-11 and incorporated herein by reference).
10.1 Form of Indemnification Agreement dated as of April
18, 1995, between the Registrant and each of James M.
Seneff, Jr., Robert A. Bourne, G. Richard Hostetter,
J. Joseph Kruse, Richard C. Huseman, John T. Walker,
Jeanne A. Wall, Lynn E. Rose and Edgar J. McDougall,
dated as of January 27, 1997, between the Registrant
and Steven D. Shackelford, dated as of February 18,
1998, between the Registrant and Curtis B.
McWilliams, and dated as of September 1, 1999,
between the Registrant and each of Howard J. Singer,
John L. Farren, Timothy J. Neville, Michael I. Wood
and Barry L. Goff (included as Exhibit 10.9 to the
Registrant's Registration Statement No. 333-15411 on
Form S-11 and incorporated herein by reference).
10.2 Amended and Restated Agreement of Limited Partnership
of CNL APF Partners, LP (included as Exhibit 10.50 to
Amendment No. 2 to the Form S-4 and incorporated
herein by reference).
10.3 Amended and Restated Credit Agreement by and among
CNL APF Partners, LP, Registrant, First Union
National Bank, First Union Capital Markets Group,
Banc of America Securities LLC, NationsBank, N.A.,
The Chase Manhattan Bank and other financial
institutions, dated June 9, 1999 (included as Exhibit
10.51 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.4 First Amendment to Amended and Restated Credit
Agreement dated as of December 31, 1999 between CNL
APF Partners, LP and First Union National Bank, as
Agent (included as Exhibit 10.4 to the Registrant's
Form 10-K for the year ended December 31, 1999 and
incorporated herein by reference).
10.5 Franchise Receivable Funding and servicing Agreement
dated as of October 14, 1999 between CNL APF
Partners, LP and Neptune Funding Corporation
(included as Exhibit 10.5 to the Registrant's Form
10-K for the year ended December 31, 1999 and
incorporated herein by reference).
10.6 Interim Wholesale Mortgage Warehouse and Security
Agreement dated as of September 18, 1998, and Amended
Agreement dated as of August 30, 1999 between CNL APF
Partners, LP and Prudential Securities Credit
Corporation (included as Exhibit 10.6 to the
Registrant's Form 10-K for the year ended December
31, 1999 and incorporated herein by reference).
10.7 1999 Performance Incentive Plan (included as Exhibit
10.1 to Amendment No. 1 to the Form S-4 and
incorporated herein by reference).
10.8 Registration Rights Agreement by and among the
Registrant, Robert A. Bourne, Curtis B. McWilliams,
John T. Walker, Howard Singer, Steven D. Shackelford
and CNL Group, Inc., dated as of March 11, 1999
(included as Exhibit 10.40 to Amendment No. 1 to the
Form S-4 and incorporated herein by reference).
10.9 Registration Rights Agreement by and among the
Registrant, Five Arrows Realty Securities L.L.C.,
James M. Seneff, Jr., Robert A. Bourne, Curtis B.
McWilliams and CNL Group, Inc., dated as of March 11,
1999 (included as Exhibit 10.41 to Amendment No. 1 to
the Form S-4 and incorporated herein by reference).
10.10 Employment Agreement by and between Curtis B.
McWilliams and the Registrant, dated September 15,
1999 (included as Exhibit 10.42 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference).
10.11 Employment Agreement by and between Steven D.
Shackelford and the Registrant, dated September 15,
1999 (included as Exhibit 10.43 to Amendment No. 2 to
the Form S-4 and incorporated herein by reference).
10.12 Employment Agreement by and between John T. Walker
and the Registrant, dated September 15, 1999
(included as Exhibit 10.44 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.13 Employment Agreement by and between Howard J. Singer
and the Registrant, dated September 15, 1999
(included as Exhibit 10.45 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.14 Employment Agreement by and between Barry L. Goff and
the Registrant, dated September 15, 1999 (included as
Exhibit 10.46 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.15 Employment Agreement by and between Robert W. Chapin
and the Registrant, dated September 15, 1999
(included as Exhibit 10.47 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.16 Employment Agreement by and between Timothy J.
Neville and the Registrant, dated September 15, 1999
(included as Exhibit 10.48 to Amendment No. 2 to the
Form S-4 and incorporated herein by reference).
10.17 Holdback Agreement by and among the Registrant and
Stockholders, dated August 31, 1999 (included as
Exhibit 10.56 to Amendment No. 2 to the Form S-4 and
incorporated herein by reference).
10.18 Amended and Restated Credit and Reimbursement
Agreement by and among CNL APF Partners, LP, CNL APF
LP Corp., CNL APF GP Corp., Bank of America, N.A. and
Bank of America Securities LLC, dated as of June 15,
2000 (included as Exhibit 10.18 to the Registrant's
Form 10-Q for the quarter ended June 30, 2000).
10.19 Employment Agreement by and between Michael Wood and
the Registrant, dated August 31, 1999 (included as
Exhibit 10.19 to the Registrant's Form 10-Q for the
quarter ended March 31, 2001).
10.20 Employment Agreement by and between Brent Heaton and
the Registrant, dated September 29, 1999 (included as
Exhibit 10.20 to the Registrant's Form 10-Q for the
quarter ended March 31, 2001).
10.21 Addendum to Employment Agreement dated as of November
1, 1999, between the Registrant and Curtis McWilliams
(included as Exhibit 10.21 to the Registrant's Form
10-Q for the quarter ended March 31, 2001). The
following persons have signed a substantially
identical Addendum relating to their respective
employment agreements; Steve Shackelford (dated
November 1, 1999), John Walker (dated November 3,
1999), Barry Goff (dated November 1, 1999), and Brent
Heaton (dated November 3, 1999).
10.22 Addendum to Employment Agreement dated as of November
1, 1999, between the Registrant and Robert Chapin
(included as Exhibit 10.22 to the Registrant's Form
10-Q for the quarter ended March 31, 2001). The
following persons have signed a substantially
identical Addendum relating to their respective
employment agreements: Howard Singer (dated November
1, 1999), Michael Wood (dated November 8, 1999) and
Timothy Neville (dated November 24, 1999).
10.23 Second Addendum to Employment Agreement dated as of
June 16, 2000, between the Registrant and Curtis
McWilliams (included as Exhibit 10.23 to the
Registrant's Form 10-Q for the quarter ended March
31, 2001). The following persons have signed a
substantially identical Second Addendum relating to
their respective employment agreements: Howard Singer
(dated June 19, 2000), Robert Chapin (dated June 20,
2000) and Brent Heaton (dated October 30, 2000).
10.24 Second Addendum to Employment Agreement dated as of
August 20, 2000, between the Registrant and Barry
Goff (included as Exhibit 10.24 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001).
10.25 Second Addendum to Employment Agreement dated as of
September 1, 2000, between the Registrant and Steve
Shackelford (included as Exhibit 10.25 to the
Registrant's Form 10-Q for the quarter ended March
31, 2001).
10.26 Second Addendum to Employment Agreement dated as of
2000, between the Registrant and Timothy Neville
(included as Exhibit 10.26 to the Registrant's Form
10-Q for the quarter ended March 31, 2001).
10.27 Second Addendum to Employment Agreement dated as of
October 24, 2000, between the Registrant and Michael
Wood (included as Exhibit 10.27 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001).
10.28 Second Addendum to Employment Agreement dated as of
October 25, 2000, between the Registrant and John
Walker (included as Exhibit 10.28 to the Registrant's
Form 10-Q for the quarter ended March 31, 2001).
10.29 Amended and Restated Master Purchase Agreement dated
as of October 11, 2001, among Bank of America, N.A.,
CNL Financial VII, LP and CNL Franchise Network, LP
(filed herewith).
10.30 Third Amended and Restated Side Letter dated as of
October 11, 2001, among Bank of America, N.A., CNL
Financial VII, LP and CNL Franchise Network, LP
(filed herewith).
21 Subsidiaries of the Registrant (filed herewith).