Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant (X)
Filed by a party other than the registrant ( )
Check the appropriate box:
( ) Preliminary proxy statement
(X) Definitive proxy statement
( ) Definitive additional materials
( ) Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
Ridgewood Hotels, Inc.
(Name of Registrant as Specified in Its Charter)
Henk H. Evers
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
(X) No fee required. ( ) Fee computed on table below per Exchange
Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
_____________________________________________________
(2) Aggregate number of securities to which
transaction applies:
_____________________________________________________
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
_____________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________
(5) Total fee paid:
_____________________________________________________
( ) Fee paid previously with preliminary materials:
_____________________________________________________
( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid: _____________________________
(2) Form, schedule or registration statement no.
_________________________________________________
(3) Filing party:
_________________________________________________
(4) Date filed:
_________________________________________________
<PAGE>
Ridgewood Hotels, Inc.
2859 Paces Ferry Road
Suite 700
Atlanta, Georgia 30339
July 28, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting
of Stockholders of Ridgewood Hotels, Inc. on Friday, August 18,
2000 at 2:00 p.m. at the Chateau Elan Winery & Resort, 100 Rue
Charlemagne, Braselton, Georgia 30517. The formal Notice of the
Annual Meeting of Stockholders and the Proxy Statement are
attached. Please read them carefully.
It is important that your shares be voted at the meeting.
If you do not plan to attend, please complete the enclosed proxy
card by indicating your vote on the issues presented and sign,
date and return the proxy in the prepaid envelope provided. If
you are able to attend the meeting and wish to vote in person,
you may withdraw your proxy at that time.
Sincerely,
/s/ Henk H. Evers
Henk H. Evers
President
<PAGE>
RIDGEWOOD HOTELS, INC.
2859 Paces Ferry Road, Suite 700
Atlanta, Georgia 30339
(770) 434-3670
________________________________
Notice of Annual Meeting of Stockholders
August 18, 2000
__________________________
To the Stockholders of Ridgewood Hotels, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (together with any adjournments or postponements
thereof, the "Meeting") of Ridgewood Hotels, Inc. (the "Company")
will be held at 2:00 p.m., local time, on Friday, August 18,
2000, at Chateau Elan Winery & Resort, 100 Rue Charlemagne,
Braselton, Georgia 30517, for the following purposes:
1. To elect six directors of the Company to hold office until
the next Annual Meeting of Stockholders or until the
election and qualification of their successors; and
2. To transact such other business as may properly come before
the Meeting.
These items are more fully described in the accompanying
Proxy Statement, which is hereby made a part of this Notice of
Annual Meeting.
The close of business on July 26, 2000 has been fixed as the
record date for the determination of stockholders entitled to
notice of, and to vote at, the Meeting. A complete list of stock
holders entitled to vote at the Meeting will be available for
examination by any stockholder for any purpose relating to the
Meeting, during normal business hours, for a period of at least
ten days prior to the Meeting, at the Company's corporate offices
located at the address set forth above.
A copy of the Company's Annual Report for the fiscal year
ended March 31, 2000 is enclosed. The Annual Report is not a
part of the proxy soliciting material enclosed with this Notice.
By Order of the Board of Directors
/s/ Henk H. Evers
Henk H. Evers
President
Atlanta, Georgia
July 28, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY CARD. A RETURN ENVELOPE (WHICH IS
POSTAGE-PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR
THAT PURPOSE. EVEN IF YOU RETURN YOUR PROXY CARD, YOU MAY STILL
VOTE IN PERSON IF YOU ATTEND THE MEETING AND WITHDRAW YOU PROXY
AT THAT TIME. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD
OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE
AT THE MEETING, YOU MUST BRING TO THE MEETING A LETTER FROM THE
BROKER, BANK OR OTHER NOMINEE CONFIRMING YOUR BENEFICIAL
OWNERSHIP OF THE SHARES AND YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
RIDGEWOOD HOTELS, INC.
2859 Paces Ferry Road, Suite 700
Atlanta, Georgia 30339
_______________________________
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 18, 2000
______________________________________________________
INFORMATION CONCERNING SOLICITATION AND VOTING
General
This Proxy Statement (the "Proxy Statement") and the
accompanying form of proxy are being furnished to the
stockholders of Ridgewood Hotels, Inc. ("Ridgewood" or the
"Company") in connection with the solicitation of proxies by the
Board of Directors of the Company (the "Board") from holders of
its outstanding common stock, par value $.01 per share (the
"Common Stock"), for use at the Annual Meeting of Stockholders of
the Company (the "Meeting") to be held on August 18, 2000 at 2:00
p.m., local time, at Chateau Elan Winery & Resort, 100 Rue
Charlemagne, Braselton, Georgia 30517, for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders.
This Proxy Statement, the accompanying form of proxy and the
Annual Report to Stockholders are expected to be mailed to
stockholders of the Company on or about July 31, 2000.
Solicitation
The cost of soliciting proxies will be borne by the Company.
In addition to solicitations by mail, officers and regular
employees of the Company may solicit proxies personally and by
telephone, telegraph or other means for which they will receive
no compensation in addition to their normal compensation. The
Company will also reimburse brokers and other persons holding
Common Stock in their names or in the names of their nominees for
their reasonable expense in forwarding proxies and proxy
materials to beneficial owners.
Voting Rights and Outstanding Shares
The Board has fixed the close of business on July 26, 2000
as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Meeting.
On that date, 2,513,480 shares of the Common Stock were
outstanding and entitled to vote at the Meeting. Each share of
Common Stock is entitled to one vote. On the Record Date, the
Company also had 450,000 shares of Series A Convertible Preferred
Stock ("Preferred Stock") outstanding. Fountainhead Development
Corp., Inc. ("Fountainhead") owned of record all of the issued
and outstanding shares of Preferred Stock. Shares of Preferred
Stock are entitled to vote only as permitted by the Certificate
of Designations, Preferences and Rights of Series A Convertible
Preferred Stock of the Company ("Certificate of Designations")
and as required by Delaware law. Pursuant to the Certificate of
Designations, shares of Preferred Stock become entitled to vote
on all matters presented to the stockholders of the Company,
together with and not separate from the shares of Common Stock,
in the event that, and for so long as, the Company has failed to
pay, in full, two quarterly dividends, whether or not
consecutive, payable on the Preferred Stock. Due to the failure
of the Company to pay dividends for the quarterly periods ended
April 30, 1999, July 31, 1999, October 31, 1999, January 31, 2000
and April 30, 2000, Fountainhead, as the holder of all of the
issued and outstanding shares of Preferred Stock, has the right
to vote on all matters presented to the stockholders for
consideration at the Meeting. In addition, shares of Preferred
Stock, voting as a class, are entitled to elect one director to
serve on the Board of Directors of the Company for so long as
50,000 shares of Preferred Stock are outstanding. At this time,
Fountainhead, as the holder of all of the issued and outstanding
shares of Preferred Stock, has not exercised this right to elect
an additional director.
The Company has been advised that certain beneficial owners,
directors and executive officers of the Company who hold in the
aggregate approximately 71% of the outstanding shares of the
stock entitled to vote at the Meeting intend to vote their shares
in favor of the nominees and in accordance with the
recommendations of the Board of Directors.
The presence at the Meeting, in person or by proxy, of a
majority of the outstanding shares of Common Stock and Preferred
Stock (taken together as a whole and not as separate classes) as
of the Record Date will constitute a quorum for transacting
business at the Meeting. Provided that a quorum is present at
the Meeting, directors will be elected by a plurality of the
votes present in person or represented by proxy and entitled to
vote at the Meeting.
All votes will be tabulated by the inspector of elections
appointed for the Meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker non-votes.
Abstentions will be counted for purposes of determining both the
presence or absence of a quorum for the transaction of business
and the total number of votes cast with respect to a particular
matter. Broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the
transaction of business but will not be counted for or against
the particular proposal on which the broker has expressly not
voted. Broker non-votes with respect to proposals set forth in
this Proxy Statement will, therefore, not be considered votes
cast and, accordingly, will not affect the determination as to
whether a majority of votes cast has been obtained with respect
to such matters.
Revocability of Proxies
The shares of Common Stock represented by proxy will be
voted as instructed if received in time for the Meeting. If no
instructions are indicated, such shares will be voted in favor of
(FOR) (i) each nominee for election as a director specified
herein, and (ii) in the discretion of the proxy holder, as to any
other matter that may properly come before the Meeting. A
stockholder who has given a proxy may revoke it at any time
before it is exercised by written notice to the Company
(Attention: Henk Evers, President) at 2859 Paces Ferry Road,
Suite 700, Atlanta, Georgia 30339 or by attending the Meeting in
person and voting at the Meeting. Attendance at the Meeting,
however, will not itself constitute the revocation of a proxy.
PROPOSAL 1: ELECTION OF DIRECTORS
Six directors are to be elected at the Meeting and, if
elected, will serve until the next Annual Meeting of Stockholders
or until their successors have been elected and qualified. The
Company's Bylaws, as amended, provide that the Board shall
consist of no less than one member, with the actual number to be
established by resolution of the Board. The Board is currently
comprised of seven directors. However, the Board has set the
number of directors at six effective upon the election of
directors at the Meeting.
The nominees of the Board are set forth below. Five of the
nominees listed below are current members of the Board and have
been nominated to continue to serve as directors. Two of the
current members of the Board, Messrs. Earley and Walden have not
been nominated by the Board and, upon the election of directors
at the Meeting, will no longer be directors of the Company. Mr.
Mastandrea is not a current member of the Board and has been
nominated to fill one of the positions currently held by Messrs.
Walden and Earley. The other position has been eliminated as of
the Meeting by the reduction in the size of the Board from seven
to six directors. In the event any nominee is unable or declines
to serve as a director at the time of the Meeting, the proxies
will be voted for any nominee who shall be designated by the
present Board to fill the vacancy. If additional persons are
nominated for election as directors, then the proxy holders
intend to vote all proxies received by them for the nominees
listed below unless instructed otherwise. As of the date of this
Proxy Statement, the Company is not aware of any nominee who is
unable or who will decline to serve as a director, if elected.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR EACH OF THE NOMINEES LISTED BELOW
Nominees for Election as Directors
Set forth below are the names, ages (as of July 29, 2000),
positions and offices held and a brief description of the
business experience during the past five years of each person
nominated to serve as a director of the Company.
Henk H. Evers, (age 41), has served as President and Chief
Operating Officer of the Company since January 11, 2000 and as a
director of the Company since February 3, 2000. Since January
1999, Mr. Evers has served as the Chief Executive Officer of
Fountainhead Development Corp., Inc. ("Fountainhead"). Since
being appointed President of the Company on January 11, 2000, Mr.
Evers has devoted substantially all his time to the Company's
affairs. From November 1994 until January 1999, Mr. Evers was
the General Manager of the Chateau Elan Winery and Resort, where
he was in charge of developing the Chateau Elan brand name and
properties in Georgia, California, Florida and Scotland. Prior
to that, Mr. Evers was a member of the executive committee for
various Marriott International properties for approximately 13
years.
Luther A. Henderson, (age 79), has been a director of the
Company since its formation in 1985. From 1983 to 1985, Mr.
Henderson served as a director of CMEI, Inc., the Company's
predecessor. From 1980 to 1993, Mr. Henderson served as a
director of Pier 1 Imports Inc., a commercial retailer. Mr.
Henderson is also a member of the Board of Directors of Beeba's
Creations, Inc. and is President of Pirvest, Inc.
Sheldon E. Misher, (age 59), has served as Secretary of the
Company since January 11, 2000 and as a director of the Company
since February 3, 2000. Since May 1999, Mr. Misher has been
associated with Commonwealth Associates, a venture capital and
merchant banking firm located in New York, New York. From 1969
to 1999, Mr. Misher practiced law with the firm of Bacher, Tally,
Polevoy & Misher, located in New York, New York, where he was
most recently a Senior Partner.
Donald E. Panoz, (age 64), has served as Chief Executive
Officer of the Company since January 11, 2000 and as Chairman of
the Board since February 3, 2000. In 1986, Mr. Panoz founded
Fountainhead and has served as its Chairman since inception.
Since July 1999, Mr. Panoz has served as the Chairman of Elan
Motor Sports Technologies, Inc., an auto racing design,
development and manufacturing company located in Braselton,
Georgia. Since 1997, Mr. Panoz has served as the Chairman of
Panoz Motor Sports, a race car manufacturer and competitor that
he founded. Since 1996, Mr. Panoz has served as the Chairman and
Chief Executive Officer of L'Auberge International Hospitality
Company, a hotel and resort management company that he co-founded
with Nancy C. Panoz. From 1969 until 1996, Mr. Panoz served as
the Chairman and Chief Executive Officer of Elan Corporation plc,
a leading worldwide pharmaceutical research and development
company located near Dublin, Ireland that he co-founded with
Nancy C. Panoz. Since 1992, Mr. Panoz has been a director of
Warner Chilcott plc, a publicly traded pharmaceutical company
headquartered in Dublin, Ireland, and served as its Chairman from
1996 to 1998. Since 1981, Mr. Panoz has served as the Chairman
and Chief Executive Officer of Chateau Elan Winery and Resort, a
422 bedroom inn, conference center and winery located
approximately 40 miles northeast of Atlanta, Georgia. Mr. Panoz
also serves on the Board of Directors of the Georgia Chamber of
Commerce. Mr. Panoz is married to Nancy C. Panoz.
Nancy C. Panoz, (age 63), has served as Vice Chairman of the
Board of Directors of the Company since February 3, 2000. Since
1996, Mrs. Panoz has also served as the Vice Chairman of
L'Auberge International Hospitality Company, a company that she
co-founded with her husband. In 1989, Mrs. Panoz became
President of the Chateau Elan Winery and Resort, which she
founded with Donald E. Panoz in 1981. In 1985, Mrs. Panoz founded
Elan Natural Waters, Inc., a company that owns and operates a
mineral water bottling plant in Blairsville, Georgia, and has
served as its President and Chairman since inception. In 1985,
Mrs. Panoz founded Nanco Holdings, Inc., an investment and real
estate holding company. In 1969, Mrs. Panoz co-founded Elan
Corporation with Donald E. Panoz, and served as Elan's Managing
Director from 1977 to 1983 and its Vice Chairman from 1983 to
1995. Mrs. Panoz currently serves on the board of directors of
numerous non-profit organizations, including the Atlanta
Convention and Visitors Bureau, the Georgia Chamber of Commerce
and the Gwinnett Foundation, Inc. Mrs. Panoz is married to
Donald. E. Panoz.
Anthony Mastandrea (age 34) is not an officer or director of
the Company. Since December 1998, Mr. Mastandrea has been the
Chief Financial Officer and a director of Fountainhead Holdings,
Ltd. From May 1994 until November 1998, Mr. Mastandrea was the
Controller for Fountainhead Development Corp., Inc. Prior to
joining Fountainhead Development Corp., Mr. Mastandrea was a
manager with KPMG Peat Marwick in Atlanta, Georgia and is a
Certified Public Accountant.
With the exception of Donald E. Panoz and Nancy C. Panoz,
there are no family relationships among any of the executive
officers or directors of the Company. Executive Officers of the
Company are elected or appointed by the Board and hold office
until their successors are elected or until death, resignation or
removal.
Board of Directors and Committees
The Board of Directors is currently comprised of seven
directors. Five of the current directors, Henk H. Evers, Sheldon
E. Misher, Luther A. Henderson, Donald E. Panoz and Nancy C.
Panoz are nominees set forth above. The remaining two current
directors, Michael E. Earley and N. Russell Walden have not been
nominated to serve another term. Prior to February 3, 2000, the
Board was comprised of three directors, Messrs. Earley, Henderson
and Walden. As more fully described under the heading "Change of
Control" below, on January 11, 2000, the Company entered into a
management agreement with Fountainhead and issued to Fountainhead
1,000,000 shares of Common Stock. In connection with the
management agreement, the number of directors was increased from
three to seven and Messrs. Evers, Misher, Panoz and Mrs. Panoz
were appointed by the directors of the Company to fill the
vacancies, effective February 3, 2000. During the fiscal year
ending March 31, 2000, the Board held five meetings. Each member
of the Board attended at least 75% of the Board meetings which
were held during the period that he/she served as a director.
The Board has established an audit committee (the "Audit
Committee") and a compensation committee (the "Compensation
Committee"). The Board does not have a nominating committee. The
Audit Committee reviews, acts and reports to the Board of
Directors on various auditing and accounting matters, including
the appointment of independent accountants, the scope of the
annual audits, fees to be paid to the independent accountants,
the performance of the independent accountants and the Company's
accounting practices. The present members of the Audit Committee
are Messrs. Evers, Henderson and Misher. During the fiscal year
ended March 31, 2000, the Audit Committee met one time, and such
meeting was attended, in person or by telephone, by all directors
who were members of the Audit Committee at the time of such
meeting.
The Compensation Committee is responsible for reviewing
matters relating to compensation and making recommendations to
the Board concerning compensation of the Company's officers,
directors and employees. The present members of the Compensation
Committee are Messrs. Evers and Misher and Mrs. Panoz. The
Compensation Committee met one time during the fiscal year ending
March 31, 2000, and each such meeting was attended by each member
of the Compensation Committee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of the Record
Date regarding the beneficial ownership of the capital stock of
the Company by (i) each person who is currently a director of the
Company; (ii) each person who is a nominee for election as a
director of the Company; (iii) each executive officer of the
Company named in the Summary Compensation Table included
elsewhere herein; (iv) each beneficial owner of more than 5% of
the Common Stock and Preferred Stock of the Company; and (v) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
Class of No. of Shares
Name and Address of Shares Bene- Beneficially Percentage
Beneficial Owner(1) ficially Owned Owned of Class
<S> <C> <C> <C>
Fountainhead Development Common Stock 3,065,000(2) 79.3%
Corp., Inc.
1394 Broadway Avenue Series A
Braselton, GA 30157 Preferred Stock 450,000(3) 100.0%
Donald E. Panoz+ Common Stock 3,065,000(4)(5) 79.3%
Series A
Preferred Stock 450,000(3)(5) 100.0%
Nancy C. Panoz+ Common Stock 3,065,000(4)(5) 79.3%
Series A
Preferred Stock 450,000(3)(5) 100.0%
Sheldon E. Misher + Common Stock 0 0%
Henk H. Evers + ++ Common Stock 0 0%
Luther A. Henderson+ Common Stock 58,800(6) 2.3%
5608 Malvey Ave.
Suite 104-A
Ft. Worth, TX 76107
N. Russell Walden(7)+ Common Stock 130,000 5.2%
3190 Ridgewood Road
Atlanta, Georgia 30327
All executive officers Common Stock 3,253,800(5)(8) 83.8%
and directors as a Series A
group (7 persons) Preferred Stock 450,000(3)(5) 100.0%
_______________________________________________
<FN>
+ Director of the Company
++ Executive Officer
</FN>
</TABLE>
(1) Unless otherwise indicated, the mailing address of each
beneficial owner is 2859 Paces Ferry Road, Suite 700,
Atlanta, Georgia 30339. Information as to the beneficial
ownership of Common Stock has either been furnished to the
Company by or on behalf of the indicated persons or is taken
from reports on file with the Securities and Exchange
Commission.
(2) Includes (i) 1,350,000 shares of Common Stock that may be
received upon the conversion of the Preferred Shares and
(ii) 65,000 shares of Common Stock underlying an option
granted to Fountainhead by N. Russell Walden that is
immediately exercisable.
(3) Fountainhead acquired the Preferred Stock from ADT Security
Services, Inc. ("ADT"). Under the terms of the stock
purchase agreement with respect to the shares, Fountainhead
may be required to return the shares to ADT in the event
that ADT is required by court order, in litigation pending
in the Court of Chancey in Delaware involving ADT (see
"Legal Proceedings"), to return the Preferred Stock to the
Company. If, as a result of the return of the Preferred
Stock, ADT receives Common Stock, Fountainhead has agreed to
acquire such shares from ADT.
(4) Includes (i) 1,350,000 shares of Common Stock that may be
received upon the conversion of the Preferred Shares held by
Fountainhead, (ii) 1,650,000 shares of Common Stock held by
Fountainhead, and (iii) 65,000 shares of Common Stock
underling an option granted to Fountainhead by Mr. Walden
that is immediately exercisable.
(5) Mr. and Mrs. Panoz, who are husband and wife, are directors
and collectively may be deemed to beneficially own all of
the voting stock of Fountainhead Holdings, Ltd.
("Holdings"), which in turn owns all of the voting stock of
Fountainhead. Although they may be deemed to meet the
definition of beneficial ownership with respect to the
voting stock of Holdings, they have no economic interest in
such voting stock. Because these shares of the Company are
held of record by Fountainhead, each of Mr. and Mrs. Panoz
may be deemed to be a beneficial owner of all such shares.
(6) Includes 18,000 shares of Common Stock underlying options
that are immediately exercisable.
(7) As of January 11, 2000 Mr. Walden was no longer an executive
officer of the Company.
(8) Includes (i) 1,350,000 shares of Common Stock that may be
received upon the conversion of the Preferred Shares held by
Fountainhead; (ii) 18,000 shares of Common Stock underlying
options that are immediately exercisable; and (iii) shares
held by Mr. Walden who is a current director but not a
nominee for election as a director.
CHANGE OF CONTROL OF THE COMPANY
On January 10, 2000, the Company entered into a management
agreement with Fountainhead, pursuant to which Fountainhead
retained the Company to perform management services at Chateau
Elan Winery and Resort, one of Fountainhead's properties, for a
period of five years. In consideration of Fountainhead's
agreement to enter into the management agreement and a payment of
$10,000 by Fountainhead to the Company, the Company issued to
Fountainhead 1,000,000 shares of Common Stock. In the management
agreement, Fountainhead agreed to pay the Company a base
management fee equal to 2% of the gross revenues of the
properties being managed, plus an annual incentive management fee
to be determined each year based on the profitability of the
properties being managed during that year.
The management agreement has a term of five years but is
terminable upon the transfer by Fountainhead of all or a material
portion of the properties covered by the management agreement.
If the management agreement is terminated upon such a transfer or
upon the occurrence of an event of default by Fountainhead,
Fountainhead shall pay to the Company a portion of the projected
fees owed to the Company under the management agreement, with
adjustments based on the term of the management agreement
remaining. In such event, Fountainhead may elect to surrender to
the Company shares of Common Stock in lieu of a cash payment.
In connection with the management agreement, the number of
directors constituting the full Board of Directors of the Company
was increased from three to seven members. Fountainhead's
designees, Donald E. Panoz, Nancy C. Panoz, Sheldon E. Misher and
Henk H. Evers, were appointed by the directors of the Company to
fill the resulting vacancies on the Company's Board of Directors,
effective as of February 3, 2000.
Pursuant to a Stock Purchase Agreement between Fountainhead
and N. Russell Walden dated January 11, 2000 (the "Walden
Agreement"), Fountainhead purchased from Mr. Walden 650,000
shares of Common Stock. The consideration paid by Fountainhead
for the shares was $1,300,000 or $2.00 per share. To fund the
acquisition of the shares, Fountainhead used its own funds for an
initial cash payment of $780,000 and issued two promissory notes
to Mr. Walden, each in the principal amount of $260,000,
representing the balance of the purchase price. These notes
become due and payable in full on January 11, 2001 and January
11, 2002, respectively. Each note bears interest at a rate of 6%
per year, which interest is payable quarterly, commencing March
31, 2000. Pursuant to the Walden Agreement, Fountainhead has an
option to purchase up to 65,000 additional shares of Common Stock
from Mr. Walden, which option remains in effect for 15 months
from the date of the Walden Agreement. In the event Mr. Walden
wishes to sell any of the Common Stock owned by him and subject
to Fountainhead's option, Fountainhead has a right of first
refusal to purchase such shares at a purchase price of $2.00 per
share.
Pursuant to a Stock Purchase Agreement between Fountainhead
and ADT, Fountainhead purchased from ADT 450,000 shares of
Preferred Stock (the "ADT Shares"). The consideration paid by
Fountainhead for the ADT Shares was approximately $1,650,000.
Each share of Preferred Stock is convertible into three shares of
Common Stock. To fund the acquisition of the ADT Shares,
Fountainhead used working capital and paid the purchase price in
cash. The ADT Shares are subject to certain rights of ADT to
require Fountainhead to return the ADT Shares to ADT in the event
ADT is required by a court order, in litigation pending in the
Court of Chancery in Delaware involving ADT (see "Legal
Proceedings"), the Company and certain present and former
directors of the Company, to return the ADT Shares to the
Company. In such case, Fountainhead would receive a return of
all consideration paid to ADT pursuant to the ADT Agreement and
would be obligated to purchase any Common Stock issued to ADT as
a result of such court order.
CERTAIN LEGAL PROCEEDINGS
On May 2, 1995 a complaint was filed in the Court of
Chancery of the State of Delaware (New Castle County) entitled
William N. Strassburger v. Michael M. Early, Luther A. Henderson,
John C. Stiska, N. Russell Walden, and Triton Group, Ltd.,
defendants, and Ridgewood Hotels, Inc., nominal defendant, C.A.
No. 14267 (the "Complaint"). The plaintiff is an individual
shareholder of the Company who purported to file the Complaint
individually, representatively on behalf of all similarly
situated shareholders, and derivatively on behalf of the Company.
The Complaint challenges the actions of the Company and its
directors in consummating the Company's August 1994 repurchases
of its Common Stock held by Triton Group, Ltd. and Hesperus
Partners Ltd. in five counts, denominated Waste of Corporate
Assets, Breach of Duty of Loyalty to Ridgewood, Breach of Duty of
Good Faith, Intentional Misconduct, and Breach of Duty of Loyalty
and Good Faith to Class. On July 5, 1995, the Company filed a
timely answer generally denying the material allegations of the
complaint and asserting several affirmative defenses. Discovery
has been concluded, and on March 19, 1998, the Court dismissed
all class claims, with only the derivative claims remaining for
trial. The case was tried to Vice Chancellor Jacobs during the
period February 1 through February 3, 1999.
On January 24, 2000 the Court rendered its Opinion. The
Court found in favor of the plaintiff and against three of the
four individual director-defendants (Messrs. Walden, Stiska and
Earley). The Court held that the repurchase transactions being
challenged were unlawful under Delaware law, for two primary
reasons: (1) the transactions were entered into for the improper
purpose of entrenching Mr. Walden in his then-current position of
President and Director, and thus constituted an unlawful self-
dealing transaction; and (2) the use of the Company's assets to
repurchase its Common Stock held by Triton Group, Ltd. and
Hesperus Partners Ltd. was not demonstrated to the Court's
satisfaction to be "entirely fair" to the minority shareholders
under the entire fairness doctrine under Delaware law. Having
found that the challenged transactions were unlawful, the Court
determined that further proceedings would be necessary to
identify the precise form that the final decree in this case
should take. Although the Court's opinion contemplates further
proceedings, no further hearing date has yet been scheduled to
address the remaining remedy issues.
On May 15, 2000, the Plaintiff filed a Memorandum in support
of Judgment After Trial requesting, among other things, that the
Court enter an order rescinding the Company's issuance of the
Preferred Stock in connection with the repurchase transactions
and requesting that the Court enter a judgment for damages
against Messrs. Stiska, Earley and Walden. The Company expects
that the defendants will file written responses to plaintiffs
memorandum, but no scheduling order has been entered.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Compensation Of Non-Employee Directors
During fiscal year ending March 31, 2000, directors who were
not officers of the Company received a retainer of $13,200 plus
$800 for each Board meeting attended. All directors were
reimbursed for expenses incurred in connection with attending
Board and committee meetings.
On June 26, 2000, the Company issued non-qualified stock
options to purchase up to 25,000 shares of Common Stock at an
exercise price of $2.25 per share to Mr. Misher in connection
with his serving as a director and Secretary of the Company.
Executive Compensation
The following Summary Compensation Table sets forth the
compensation for the past three fiscal years awarded or paid by
the Company to all individuals serving as Chief Executive Officer
of the Company at any time during the fiscal year ended March 31,
2000 and the Company's President.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation
Name and Fiscal All Other
Principal Position Year (1) Salary Bonus Compensation
<S> <C> <C> <C>
Henk H. Evers(2) 2000 $ 75,000(4) 0 0
President
Donald E. Panoz (3) 2000 0 0 0
Chief Executive Officer
N. Russell Walden (4) 2000 98,076 0 0
President & Chief
Executive Officer 1999 200,000 0 $1,186(5)
1998 200,000 $41,000 4,500
_______________
<FN>
(1) Information shown is for the seven month period ending March
31, 2000 and the fiscal years ending August 31, 1999 and August
31, 1998.
(2) Mr. Evers was appointed as President and Chief Operating
Officer effective January 11, 2000. At the Company's request,
Fountainhead has agreed to pay Mr. Evers' salary as an advance to
the Company. The Company has accrued $75,000 in expenses
relating to the advanced compensation for the period ending March
31, 2000.
(3) Mr. Panoz was appointed Chief Executive Officer of the
Company on January 11, 2000. Mr. Panoz received no compensation
from the Company during the fiscal year ended March 31, 2000.
(3) Mr. Walden resigned as President and Chief Executive Officer
of the Company as of January 11, 2000 and is no longer an
executive officer of the Company.
(5) The amounts shown in this column consist of Company matching
contributions on behalf of the named person under the
Ridgewood Hotels Employee Savings Plan.
</FN>
</TABLE>
Option Grants in Last Fiscal Year.
There were no stock options granted during fiscal year
ending March 31, 2000 to the executive officers named in the
Summary Compensation Table.
Aggregated Stock Option Exercises in Fiscal Year 2000 and Fiscal
Year-End Option Values.
During the fiscal year ending March 31, 2000, no officers
named in the Summary Compensation Table exercised any options.
In connection with his resignation as President and Chief
Executive Officer on January 11, 2000 and the execution of a
Consulting Agreement between Mr. Walden and the Company
(described below), Mr. Walden agreed to the cancellation of
150,000 options to purchase Common Stock of the Company. The
Company paid Mr. Walden $25,000 as consideration for his
cancellation of the options. As a result, Mr. Walden held no
unexercised options as of March 31, 2000. No other officers
named in the Summary Compensation Table held any options as of
March 31, 2000.
Employment and Termination Agreements
Mr. Walden was a party to a Post-Employment Consulting
Agreement with the Company, dated September 4, 1991, and amended
as of August 13, 1998 (the "Employment Agreement"), until such
agreement was terminated effective January 11, 2000. Under the
terms of the Employment Agreement, in the event Mr. Walden's
employment was terminated by the Company without cause or Mr.
Walden terminated his employment with cause (defined as (1)
removal from his present position or title by the Company, (2) a
decrease in his salary or (3) forcing him to relocate), Mr.
Walden was permitted to remain with the Company as a consultant
for a period of 12 months. In exchange for such consulting
services, the Company was obligated to pay Mr. Walden an amount
equal to his annual salary immediately prior to the event of
termination and to provide him with certain other benefits.
On January 11, 2000, Mr. Walden entered into a Consulting
Agreement with the Company (the "Consulting Agreement").
According to the terms of the Consulting Agreement, Mr. Walden
will serve as a consultant to the Company for a period of six
months, for which he will receive a payment of $50,000. The
Company also agreed to provide Mr. Walden with health insurance
benefits substantially similar to those offered to employees of
the Company for a period of three years. In the Consulting
Agreement, Mr. Walden released all claims against the Company
except with respect to such health insurance benefits and
compensation and terminated his Employment Agreement and
participation in the Company's Supplemental Retirement and Death
Benefit Plan. Mr. Walden also agreed to the cancellation of
150,000 options to purchase Common Stock of the Company, for
which the Company agreed to pay him $25,000.
Supplemental Retirement and Death Benefit Plan
The Ridgewood Hotels, Inc. Supplemental Retirement and Death
Benefit Plan (the "SERP") was adopted, effective January 1, 1987,
to provide supplemental retirement benefits for selected
employees of the Company. As of March 31, 2000 no employees of
the Company were participating in the SERP.
Mr. Walden was the sole participant in the SERP until
January 11, 2000, when he was replaced as an officer of the
Company. He subsequently entered into a Consulting Agreement
with the Company in which he agreed to a full termination of his
rights and benefits under the SERP. In connection therewith, the
Company agreed to pay Mr. Walden $55,000 per year for a period of
15 years in accordance with the terms and conditions of the SERP.
Such annual payment represented a decrease in the amount of
benefit to which Mr. Walden would otherwise have been entitled
under the SERP.
<TABLE>
PERFORMANCE GRAPH
(Graph Appears Here)
<CAPTION>
Measurement Dow Jones Ridgewood Russell 2000
Period
<S> <C> <C> <C>
1995 100 100 100
101 74 102
108 76 107
109 53 112
1996 114 35 113
122 35 118
136 41 113
136 118 129
1997 142 82 144
152 47 140
148 38 150
144 41 146
1998 114 41 126
116 25 142
111 24 137
123 24 152
1999 108 35 146
97 29 164
96 94 171
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 10, 2000, the Company entered into the management
agreement with Fountainhead, pursuant to which Fountainhead
retained the Company to perform management services at Chateau
Elan Winery and Resort, one of Fountainhead's properties, for a
period of five years. In consideration of Fountainhead's
agreement to enter into the management agreement and a payment of
$10,000 by Fountainhead to the Company, the Company issued to
Fountainhead 1,000,000 shares of Common Stock. In the management
agreement, Fountainhead agreed to pay the Company a base
management fee equal to 2% of the gross revenues of the
properties being managed, plus an annual incentive management fee
to be determined each year based on the profitability of the
properties being managed during that year.
The management agreement has a term of five years but is
terminable upon the transfer by Fountainhead of all or a material
portion of the properties covered by the management agreement.
If the management agreement is terminated upon such a transfer or
upon the occurrence of an event of default by Fountainhead,
Fountainhead shall pay to the Company a portion of the projected
fees owed to the Company under the Agreement, with adjustments
based on the term of the management agreement remaining. In such
event, Fountainhead may elect to surrender to the Company shares
of Common Stock in lieu of a cash payment.
At the request of the Company, since January 11, 2000,
Fountainhead has paid the salary of the Company's President as an
advance to the Company. The Company accrued $75,000 in expenses
relating to the advanced compensation during the fiscal year
ending March 31, 2000. Fountainhead has agreed that the Company
may repay the advance by issuing shares of Common Stock to
Fountainhead at $2.00 per share or by reimbursing Fountainhead in
cash.
ACCOUNTANTS
The Board has selected Arthur Andersen, LLP as the
independent accountants of the Company for the fiscal year ending
March 31, 2000 and currently plans to appoint Arthur Andersen,
LLP as independent auditors for the fiscal year ending March 31,
2001. The Company has been advised by Arthur Andersen, LLP that
neither it nor any member of Arthur Andersen, LLP has any
financial interest, direct or indirect, in the Company or any of
its subsidiaries. In addition to examining and reporting upon
the Company's financial statements, Arthur Andersen, LLP also
reviews the Company's filings with the SEC and provides
consultations on financial statement implications of matters
under consideration by the Company.
Arthur Andersen, LLP replaced PricewaterhouseCoopers, LLP
who served as independent auditors of the Company for the fiscal
years August 31, 1988 through August 31, 1999. The Company's
principal accountant's report on the financial statements for the
years preceding the dismissal of PricewaterhouseCoopers, LLP did
not contain an adverse opinion or disclaimer opinion, nor was it
modified as to uncertainty, audit scope or accounting principles.
There were no disagreements with PricewaterhouseCoopers, LLP on
any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure. The
Company had no discussions with PricewaterhouseCoopers, LLP as to
specific accounting matters or type of opinion that might be
rendered, other than those related to the normal engagement of
certifying accountants. The Company has been advised that
representatives of Arthur Andersen, LLP will be present at the
Meeting and will have the opportunity to make a statement at the
Meeting if they so desire. Such representatives will also be
available to answer questions and provide information to the
stockholders. The Company does not expect that any
representatives of PricewaterhouseCoopers, LLP will be available
at the Meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as
amended, requires the Company's directors, executive officers,
and persons who own beneficially more than 10% of a registered
class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership
of such securities of the Company. Directors, executive officers
and greater than 10% stockholders are required by SEC regulations
to furnish the Company with copies of all Section 16(a) reports
they file.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and
representatives that no other reports were required, all Section
16(a) filing requirements applicable to its directors, executive
officers and greater than 10% beneficial owners were complied
with during the fiscal year ended March 31, 2000.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for
stockholder action at subsequent annual meetings of the Company
consistent with Rule 14a-8 promulgated under the 1934 Act. For
such proposals to be considered at the 2001 Annual Meeting of
Stockholders, such proposals must be received by the Company not
later than April 1, 2001. Such proposals should be directed to
Mr. Sheldon Misher, Secretary, Ridgewood Hotels, Inc., 2859 Paces
Ferry Road, Suite 700, Atlanta, Georgia 30339. The Company
reserves the right to decline to include in the Company's proxy
statement any stockholder's proposal which does not comply with
the rules of the Securities and Exchange Commission for inclusion
therein.
OTHER MATTERS
The Board does not know of any other matters to be presented
for action at the Meeting other than as set forth in this Proxy
Statement. If any other matters are properly presented to the
Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise to act, in accordance
with their best judgments on such matters.
Whether or not you plan to attend the Meeting, each
stockholder is urged to complete, date and sign the proxy and
return it promptly in the enclosed return envelope.
By Order of the Board of Directors
/s/ Henk H.Evers
________________________________
Henk H. Evers, President
Atlanta, Georgia
July 28, 2000
<PAGE>
PROXY
RIDGEWOOD HOTELS, INC.
2859 Paces Ferry Road, Suite 700
Atlanta, Georgia 30339
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of
Ridgewood Hotels, Inc., a Delaware corporation (the "Company"),
hereby appoints Henk H. Evers and Sheldon E. Misher, and each of
them, with full power of substitution, the proxies and attorneys
of the undersigned, to vote as specified hereon at the Annual
Meeting of Stockholders (the "Annual Meeting") of the Company to
be held at Chateau Elan Winery & Resort, 100 Rue Charlemagne,
Brasleton, Georgia 30517, on Friday, August 18, 2000 at 2:00
P.M., local time, and at any adjournments or postponements
thereof, with all powers (other than the power to revoke the
proxy) that the undersigned would have if personally present at
the Annual Meeting, to act and vote in their discretion upon any
other matter or matters that may properly be brought before the
Annual Meeting and to appear and vote all the shares of Common
Stock of the Company that the undersigned may be entitled to
vote. The undersigned hereby acknowledges receipt of the
accompanying Proxy Statement and Annual Report to Stockholders,
and hereby revokes any proxy or proxies heretofore given by the
undersigned relating to the Annual Meeting.
This proxy may be revoked at any time prior to the voting
thereof.
(Continued and to be signed on the other side)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSAL:
1. ELECTION OF DIRECTORS:
Nominees: For Withhold For All
All All Except*
01 Henk H. Evers ___ ___ ___
02 Luther A. Henderson
03 Anthony Mastandrea
04 Sheldon E. Misher
05 Donald E. Panoz
06 Nancy C. Panoz
*INSTRUCTIONS: To withhold authority to vote for any
nominee, enter the name of such nominee in the
space provided below:
UNLESS OTHERWISE MARKED, THIS PROXY WILL BE VOTED AS IF MARKED
"FOR" THE PROPOSAL ABOVE.
Dated: _________________ ,2000
-----------------------
(Signature)
-----------------------
(Signature)
Note: Please sign your name exactly as it appears on the
left. Executors, administrators, trustees, guardians, corporate
officers, attorneys and agents should give their full titles and
submit evidence of appointment unless previously furnished to the
Company. All joint owners should sign.
YOUR VOTE IS IMPORTANT TO US. PLEASE SIGN, DATE AND RETURN THIS
PROXY USING THE ENCLOSED ENVELOPE. YOUR PROMPT ATTENTION WILL BE
APPRECIATED.
