<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Servico, Inc.
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(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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)
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
SERVICO, INC.
1601 BELVEDERE ROAD
WEST PALM BEACH, FLORIDA 33406
April 14, 1997
Dear Fellow Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of Servico, Inc. which will be held at the Omni Hotel, 1601 Belvedere Road, West
Palm Beach, Florida 33406 on Tuesday, May 6, 1997 at 10:00 a.m. local time.
At the Annual Meeting, you will be asked to consider and vote upon the
election of one director to serve for a term of one year, the election of one
director to serve for a term of three years, a proposal to amend the Company's
Stock Option Plan to increase the number of shares issuable pursuant to the Plan
and such other business as may properly come before the Annual Meeting or any
adjournment thereof.
Your Board of Directors recommends that you vote your shares in favor of
these proposals.
We hope you will find it convenient to attend in person. Whether or not you
expect to attend, to assure representation at the Annual Meeting and the
presence of a quorum, please promptly date, sign and mail the enclosed proxy in
the return envelope provided.
On behalf of your Board of Directors and the employees of the Company, I
would like to express our appreciation for your continued support.
A copy of Servico's 1996 Annual Report to Shareholders is also enclosed.
Sincerely,
/s/ David Buddemeyer
---------------------
David Buddemeyer
President and Chief
Executive Officer
<PAGE> 3
SERVICO, INC.
1601 BELVEDERE ROAD
WEST PALM BEACH, FLORIDA 33406
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 6, 1997
---------------------
To the Shareholders of Servico, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Servico,
Inc., a Florida corporation ("Servico"), will be held on Tuesday, May 6, 1997,
commencing at 10:00 a.m., local time, at the Omni Hotel, 1601 Belvedere Road,
West Palm Beach, Florida 33406, for the following purposes:
1. To elect one director for a term expiring at the 1998 Annual Meeting
of Shareholders.
2. To elect one director for a term expiring at the 2000 Annual Meeting
of Shareholders.
3. To consider and act upon a proposal to amend the Company's Stock
Option Plan to increase the number of shares issuable pursuant to the
Plan.
4. To consider and act upon such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on March 21, 1997 as
the record date for the determination of shareholders entitled to notice of and
to vote on any matters which may properly come before the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person. Even if you plan to attend the Annual Meeting, you are requested to
mark, sign, date and return the accompanying proxy as soon as possible.
By order of the Board of Directors,
/s/ Robert D. Ruffin
----------------------
Robert D. Ruffin
Secretary
Dated: April 14, 1997
West Palm Beach, Florida
<PAGE> 4
SERVICO, INC.
1601 BELVEDERE ROAD
WEST PALM BEACH, FLORIDA 33406
---------------------
PROXY STATEMENT
---------------------
GENERAL
This Proxy Statement is furnished by the Board of Directors of Servico,
Inc., a Florida corporation ("Servico" or the "Company"), in connection with its
solicitation of proxies for use at the 1997 Annual Meeting of Shareholders of
Servico (the "Annual Meeting"), which will be held on May 6, 1997, commencing at
10:00 a.m., local time, at the Omni Hotel, 1601 Belvedere Road, West Palm Beach,
Florida 33406, and at any adjournments thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Shareholders. All shareholders are
entitled and encouraged to attend the Annual Meeting in person. This Proxy
Statement and the accompanying Proxy Card are being mailed to shareholders of
Servico on or about April 14, 1997.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted in accordance with the directions given, and, in
connection with any other business that may properly come before the Annual
Meeting, in the discretion of the persons named in the proxy. In voting by proxy
with regard to the election of directors, shareholders may vote in favor of all
nominees or withhold their votes as to all or any nominee. If no direction is
given on a proxy, it will be voted for the election of all nominees for
director.
A shareholder who has given a proxy may revoke it at any time before it is
exercised by giving notice of revocation to the Secretary of Servico, by
submitting a proxy bearing a later date or by attending the Annual Meeting and
voting in person. Attendance at the Annual Meeting will not, in itself,
constitute revocation of a proxy.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on March 21, 1997,
as the record date for determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting. Holders of record of the common stock, par value
$.01 per share, of Servico ("Common Stock") as of March 21, 1997, will be
entitled to one vote for each share held. On March 21, 1997, 9,396,005 shares of
Common Stock were outstanding and entitled to vote.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
Common Stock as of March 21, 1997, by (i) each person known to Servico to be the
beneficial owner of more than five percent of the issued and outstanding Common
Stock as of March 21, 1997, (ii) each of the members of Servico's Board of
Directors (two of whom are also nominees for re-election as directors), (iii)
each of Servico's current executive officers named in the "Summary Compensation
Table" under "Executive Compensation" below, and (iv) all directors and
executive officers of Servico as a group. All shares were owned directly with
sole voting and investment power unless otherwise indicated.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME AND ADDRESS COMMON STOCK COMMON STOCK
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
------------------- ------------------ ---------------------
<S> <C> <C>
BENEFICIAL OWNERS OF 5% OR MORE OF
OUTSTANDING
COMMON STOCK:
Energy Management Corporation 1,620,100(2) 17.2%
1010 Lamar
Suite 550
Houston, TX 77002
Pengo Securities Corp. 800,000(2) 8.5%
885 Third Avenue
New York, NY 10022
Morgan Stanley Group, Inc. 719,100(3) 7.7%
Morgan Stanley Asset Management, Inc.
1585 Broadway
New York, NY 10036
DIRECTORS:
John W. Adams 15,000(2)(4) *
c/o Smith Management Company, Inc.
885 Third Avenue
New York, NY 10022
David Buddemeyer 151,527(5) 1.6%
1601 Belvedere Road
West Palm Beach, FL 33406
Joseph C. Calabro 236,100(6) 2.5%
868 Lancaster Avenue
Devon, PA 19333
Peter R. Tyson 30,600(7) *
135 E. State Street
Kennett Square, PA 19348
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME AND ADDRESS COMMON STOCK COMMON STOCK
OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
------------------- ------------------ ---------------------
<S> <C> <C>
Richard H. Weiner 30,100(7) *
39 N. Pearl St.
Albany, NY 12207
NON-DIRECTOR EXECUTIVE OFFICERS:
Warren M. Knight 104,035(8) 1.1%
1601 Belvedere Road
West Palm Beach, FL 33406
Robert D. Ruffin 101,283(9) 1.1%
1601 Belvedere Road
West Palm Beach, FL 33406
Peter J. Walz 5,000(10) *
1601 Belvedere Road
West Palm Beach, FL 33406
All directors and executive officers as a 673,645(11) 6.9%
group (eight persons)
</TABLE>
- ---------------
* Represents less than 1%
(1) Ownership percentages are based on 9,396,005 shares of Common Stock
outstanding as of March 21, 1997 and shares of Common Stock subject to
outstanding stock options which are exercisable by the named individual or
group.
(2) Mr. John W. Adams, a director and executive officer of each Energy
Management Corporation ("EMC") and Pengo Securities Corp. ("Pengo"), is the
Chairman of the Board of Servico.
(3) Morgan Stanley Group, Inc. and its wholly owned subsidiary, Morgan Stanley
Asset Management, Inc. (collectively "Morgan Stanley"), filed a Schedule
13G dated February 13, 1997 with the SEC reporting ownership of 719,100
shares of Common Stock with shared voting power with respect to 132,100
shares and dispositive power with respect to all 719,100 shares. As
reported by Morgan Stanley, these shares are held in customer accounts
managed on a discretionary basis by Morgan Stanley Asset Management Inc.
and no individual account holds more than 5% of the Company's Common Stock.
(4) Includes currently exercisable options to purchase 15,000 shares.
(5) Includes currently exercisable options to purchase 109,700 shares.
(6) Includes currently exercisable options to purchase 30,000 shares. Mr.
Calabro has sole voting and dispositive power with respect to 203,100 of
such shares and shares voting and dispositive power with respect to 3,000
shares with his wife.
(7) Includes currently exercisable options to purchase 30,000 shares.
(8) Includes currently exercisable options to purchase 97,200 shares.
(9) Includes currently exercisable options to purchase 59,700 shares.
(10) Includes currently exercisable options to purchase 3,000 shares.
(11) Includes 401,600 shares of Common Stock which may be acquired pursuant to
currently exercisable options.
3
<PAGE> 7
ELECTION OF DIRECTORS
(PROPOSAL NUMBER 1 ON THE ENCLOSED PROXY CARD)
The Bylaws of Servico provide that the number of directors shall not be
less than one nor more than eleven and shall be determined from time to time by
resolution of the Board of Directors or by shareholders at an annual meeting.
The number of directors is currently set at five. The Bylaws further provide
that the Board of Directors shall be divided into three classes. It is
contemplated that directors in each class will be elected for a three-year term
in staggered years. At the 1994 Annual Meeting of Shareholders, John W. Adams
and Joseph C. Calabro were elected as the Class III directors to serve for terms
expiring at the 1997 Annual Meeting. At the 1995 Annual Meeting, Howard M. Kahn
was re-elected as the Class I director to serve for a term expiring at the 1998
Annual Meeting. At the 1996 Annual Meeting, David Buddemeyer, Peter R. Tyson and
Richard H. Weiner were re-elected as the Class II directors to serve for terms
expiring at the 1999 Annual Meeting.
Howard M. Kahn, who served as a Class I director, died March 26, 1997. In
an effort to equalize the number of directors in each class without reducing the
term of any existing director, John W. Adams, whose term as a Class III director
expires in 1997, has been nominated for re-election to the Board of Directors to
serve as the Class I director for the remaining year of the term expiring at the
1998 Annual Meeting or until a successor has been duly elected and qualified.
Joseph C. Calabro, the Class III director whose term expires at the 1997 Annual
Meeting, has been nominated for re-election to the Board of Directors to hold
office for a full three year term expiring at the 2000 Annual Meeting of
Shareholders or until a successor has been duly elected and qualified. Each of
the nominees is presently a director of Servico and each has consented to be
named as a nominee and to serve as a director if elected. Should any of the
nominees be unable or unwilling to serve as a director, the enclosed proxy will
be voted for such other person or persons as the Board of Directors may
recommend. Management does not anticipate that such an event will occur.
INFORMATION ABOUT THE NOMINEES, THE CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth the names and ages of the nominees, the
continuing directors and the executive officers of Servico as well as the
positions and offices held by such persons. A summary of the background and
experience of each of these individuals is set forth after the table.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH SERVICO
- ---- --- ---------------------
<S> <C> <C>
NOMINEE WHOSE TERM WOULD EXPIRE IN 1998:
John W. Adams 53 Chairman of the Board
NOMINEE WHOSE TERM WOULD EXPIRE IN 2000:
Joseph C. Calabro 45 Director
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1999:
David Buddemeyer 39 Director, President and Chief Executive Officer
Peter R. Tyson 50 Director
Richard H. Weiner 47 Director
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS:
Warren M. Knight 50 Vice President-Finance and Chief Financial Officer
Robert D. Ruffin 56 Vice President-Administration and Secretary
Peter J. Walz 53 Vice President-Acquisitions
</TABLE>
4
<PAGE> 8
JOHN W. ADAMS has been the Chairman of the Board of Servico since December
1995 and a director since April 1994. Since 1984, Mr. Adams has been President
of Smith Management Company, a private investment firm. Mr. Adams is also
Chairman of the Board of Directors of Harvard Industries, Inc., a manufacturer
of automobile components; Hawaiian Airlines, Inc., a passenger airline; and
Regency Health Services, Inc., a health services company.
DAVID BUDDEMEYER has been the Chief Executive Officer of Servico since
December 1995, a director since April 1994 and its President since May 1993. Mr.
Buddemeyer served as the Chief Operating Officer of the Company from May 1993 to
December 1995 and its Executive Vice President from June 1990 to May 1993. Prior
to such time, from 1987 to June 1990, he served as Vice President-Operations of
Prime Motor Inns, Inc., a hotel management company.
JOSEPH C. CALABRO has been a director of Servico since August 1992. Mr.
Calabro has been a principal of Joseph C. Calabro, C.P.A., a Devon, Pennsylvania
accounting firm, since 1982. Mr. Calabro has also been an officer and director
of Bibsy Corporation, which previously owned and operated a Holiday Inn hotel in
Bensalem, Pennsylvania, since 1971.
PETER R. TYSON has been a director of Servico since August 1992. From
December 1990 to the present, Mr. Tyson has been President of Peter R. Tyson &
Associates, Inc., a firm offering consulting services to clients in the
hospitality industry. Prior to forming Peter R. Tyson & Associates, Inc., Mr.
Tyson was the partner-in-charge of the hospitality industry consulting practice
in the Philadelphia office of the accounting and consulting firm of Laventhol &
Horwath, with which he was associated for 20 years.
RICHARD H. WEINER, has been a director of Servico since August 1992. Mr.
Weiner is a senior partner in the Albany, New York law firm of Cooper, Erving,
Savage, Nolan & Heller, where he has practiced law since 1975.
WARREN M. KNIGHT has been Vice President-Finance and Chief Financial
Officer of Servico since December 1991. Prior to such time, from March 1988 to
November 1991, Mr. Knight served as Director of Finance for W.A. Taylor & Co.,
an importer of distilled spirits into the United States.
ROBERT D. RUFFIN has been Vice President-Administration of Servico since
June 1991 and Secretary of Servico since January 1992. Mr. Ruffin joined Servico
in November 1990, and, prior to such time, Mr. Ruffin was employed by Kendavis
Holding Company for 29 years, and served as its Vice President-Industrial
Relations from 1986 through 1990.
PETER J. WALZ has been Vice President-Acquisitions of Servico since
February 1996. Prior to such time, from December 1994 to January 1996, he was a
consultant to the Company. From October 1993 to November 1994, Mr. Walz was an
executive officer of Hospitality Investment Trust, Inc., a development stage
lodging real estate investment trust. Prior to such time, from April 1987 to
September 1993, Mr. Walz was Executive Vice President of CMS Development, Inc.,
a developer of office buildings, condominiums and hotels.
DIRECTOR COMPENSATION
During 1996, Servico paid non-employee directors an annual retainer of
$18,000, as well as a fee per board meeting or board committee meeting of
$1,000. Mr. Adams receives annual compensation of $100,000 for serving as
Chairman of the Board, but receives no retainer, meeting or committee fees.
Servico also
5
<PAGE> 9
reimburses directors other than Mr. Adams for expenses associated with attending
Board and committee meetings. Under Servico's Stock Option Plan, each
non-employee director is automatically granted, on the date such director's term
of office commences and each year thereafter on the day following any annual
meeting of shareholders (as long as such director's term as a director is
continuing for the ensuing year), an option to acquire 5,000 shares of Common
Stock at an exercise price equal to the fair market value of the Common Stock on
the date of grant. All options granted to non-employee directors become
exercisable upon grant.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Servico's Board of Directors held 13 meetings during the last fiscal year.
No director attended fewer than 75 percent of the total aggregate number of
meetings of the Board of Directors and any committee of the Board of Directors
on which such director served during the period.
The Board of Directors of Servico currently has three standing
committees - the Audit Committee, the Compensation Committee and the Stock
Option Committee. The full Board of Directors currently serves as the Nominating
Committee.
The principal functions of the Audit Committee are to review Servico's
financial statements and management's disclosures, recommend to the Board of
Directors the appointment of independent public accountants to be employed by
Servico, confer with the independent public accountants concerning the scope of
their audit and, on completion of their audit, review the accountants' findings
and recommendations, review the adequacy of Servico's systems of internal
accounting controls, review areas of possible conflicts of interest and
sensitive payments and consider such other matters as the committee deems
appropriate. The Audit Committee held two formal meetings during the last fiscal
year. The present members of the Audit Committee are Joseph C. Calabro and Peter
R. Tyson.
The principal functions of the Compensation Committee are to approve or, in
some cases, to recommend to the Board of Directors, remuneration arrangements
and compensation plans involving Servico's directors and executive officers,
review bonus criteria and bonus recommendations and review compensation of
directors. The Compensation Committee held one formal meeting during the last
fiscal year. The present members of the Compensation Committee are John W.
Adams, Joseph C. Calabro, Peter R. Tyson and Richard H. Weiner.
The principal function of the Stock Option Committee is to administer the
Servico Stock Option Plan. The Stock Option Committee held one formal meeting
during the last fiscal year. The present members of the Stock Option Committee
are John W. Adams, Joseph C. Calabro and Peter R. Tyson.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning
compensation paid or accrued by Servico, to or on behalf of the Chief Executive
Officer and each of the other most highly compensated executive officers of
Servico who received in excess of $100,000 during the year ended December 31,
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------- -------------------------------
OTHER ANNUAL STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(4) COMPENSATION($)(5)
--------------------------- ---- --------- -------- --------------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
David Buddemeyer, 1996 350,000 96,745 -- 13,500 4,726
President and Chief 1995 275,000 70,905 -- 5,000 4,733
Executive Officer 1994 225,000 101,109 -- -- 6,980
Warren M. Knight, 1996 170,000 46,990 -- 13,500 4,844
Vice President-Finance and 1995 150,000 38,675 -- 5,000 3,921
Chief Financial Officer 1994 135,000 60,665 -- -- 3,036
Robert D. Ruffin, 1996 160,000 44,227 -- 13,500 5,192
Vice President-Administration 1995 150,000 38,675 -- 5,000 4,279
and Secretary 1994 135,000 60,665 -- -- 4,177
Peter J. Walz(1) 1996 122,596 -- 139,438(2) 15,000 2,375
Vice President-Acquisitions 1995 -- -- 348,730(2) -- --
Ronald E. McCauley(3) 1996 113,211 -- -- 13,500 0
1995 145,000 18,692 -- 5,000 3,542
1994 130,000 33,221 -- -- 2,323
</TABLE>
- ---------------
(1) Mr. Walz's employment with Servico began in January 1996.
(2) Represents commission payments made to Mr. Walz.
(3) Mr. McCauley served as Senior Vice President - Business Development until
his resignation on September 13, 1996.
(4) Represents the number of shares of Common Stock underlying the options.
(5) Each item included in this column represents a contribution made by Servico
under its 401(k) Plan on be half of the named executive based on such
executive's annual elective pre-tax deferred contribution (included under
Salary) to such plan.
STOCK OPTION PLAN
The Company's Stock Option Plan provides for the issuance of incentive
stock options within the meaning of Section 422A of the Internal Revenue Code of
1986 (the "Internal Revenue Code") and non-qualified stock options not intended
to meet the requirements of Section 422A of the Internal Revenue Code. The plan
is administered by a committee of the Board of Directors which, subject to the
terms of the plan, determines to whom grants are made and the vesting, timing
and amounts of such grants.
The following table sets forth information concerning stock option grants
made during 1996 to the executive officers named in the "Summary Compensation
Table," including the potential realizable value of each grant assuming that the
market value of the Common Stock appreciates from the date of grant to the
expiration of the option at annualized rates of 5% and 10%, in each case
compounded annually over the term of the option. These assumed rates of
appreciation have been specified by the Securities and Exchange Commission for
illustration purposes only and are not intended to predict future prices of the
Common Stock. The actual future value of the options will depend on the market
value of the Common Stock.
7
<PAGE> 11
STOCK OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
------------------------------------------------------- ASSUMED ANNUAL
NUMBER OF RATES OF STOCK
SECURITIES PERCENT OF PRICE APPRECIATION
UNDERLYING TOTAL OPTIONS EXERCISE FOR OPTION
OPTIONS/SARS GRANTED TO PRICE EXPIRATION --------------------
GRANTED(#) EMPLOYEES(%) ($/SH) DATE 5%($) 10%($)
------------ ------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
David Buddemeyer 13,500 7.11% $10.75 1/12/2006 91,300 231,300
Warren M. Knight 13,500 7.11% $10.75 1/12/2006 91,300 231,300
Robert D. Ruffin 13,500 7.11% $10.75 1/12/2006 91,300 231,300
Peter J. Walz 15,000 7.89% $10.75 1/12/2006 101,400 257,000
Ronald E. McCauley(1) 13,500 7.11% $10.75 1/12/2006 91,300 231,300
</TABLE>
- ---------------
(1) Mr. McCauley served as Senior Vice President-Business Development until his
resignation on September 13, 1996.
The following table sets forth certain summary information concerning
exercised and unexercised options to purchase Servico's Common Stock as of
December 31, 1996, under Servico's Stock Option Plan held by the executive
officers named in the "Summary Compensation Table."
STOCK OPTION EXERCISES IN
FISCAL YEAR 1996 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS(3)
FISCAL YEAR-END(#) AT FISCAL YEAR END($)
NAME AND POSITION ACQUIRED ON VALUE(2) ---------------------------- ----------------------------
DURING 1996 FISCAL YEAR EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David Buddemeyer, 45,000 388,125 106,000 17,500 1,279,750 99,063
President and Chief
Executive Officer
Warren M. Knight, -0- -0- 93,500 17,500 1,128,188 99,063
Vice President-Finance and
Chief Financial Officer
Robert D. Ruffin, 37,500 323,438 56,000 17,500 673,500 99,063
Vice President-Admini-
stration and Secretary
Peter J. Walz -0- -0- -0- 15,000 -0- 80,625
Vice President-Acquisitions
Ronald E. McCauley(1) 81,000 859,013 -0- -0- -0- -0-
</TABLE>
- ---------------
(1) Mr. McCauley served as Senior Vice President-Business Development until his
resignation on September 13, 1996.
(2) Value realized represents the number of options exercised during 1996
multiplied by the difference between the exercise price and the closing
price of Servico's Common Stock on the date of exercise.
8
<PAGE> 12
(3) The value of unexercised in-the-money options represents the number of
options held at year-end 1996 multiplied by the difference between the
exercise price and $16.125, the closing price of Servico's Common Stock at
year end 1996.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT
Employment Agreements. David Buddemeyer entered into an employment
agreement with Servico relating to his employment as President and Chief
Operating Officer as of May 14, 1993. Effective December 21, 1995, Mr.
Buddemeyer was elected Chief Executive Officer of the Company. The employment
agreement provides for a base salary subject to increases at the discretion of
the Board of Directors. The base salary paid to Mr. Buddemeyer during 1996 was
$350,000 and the base salary to be paid Mr. Buddemeyer during 1997 is $385,000.
Mr. Buddemeyer is also entitled to receive paid health insurance, paid
disability insurance and is entitled to participate, to the extent he is
eligible, under any benefit plans provided to other executives of Servico. Mr.
Buddemeyer is entitled to a minimum of four weeks paid vacation annually. The
employment agreement is terminable by either party upon 30 days written notice.
However, in the event that Mr. Buddemeyer is terminated other than "for cause",
as defined in the agreement, Servico will be required to pay him his base salary
and other benefits under this agreement for a period of one year.
Arrangements Regarding Termination of Employment and Changes of
Control. Servico has adopted a severance policy which provides for payments to
its executive officers in an amount equal to two and one-half times their annual
base compensation, less any other cash severance payments contractually owed to
them by Servico, in the event that there is either a change in the majority of
the Board of Directors or the acquisition by any individual or group of in
excess of 50% of Servico's outstanding Common Stock and the duties or
responsibilities of such executive officers are materially diminished within 24
months thereafter.
Servico has also entered into a severance arrangement with Robert D. Ruffin
which provides for payments equal to fourteen weeks of base salary for
involuntary employment termination without cause, as defined.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation of Servico's executive officers, including the chief
executive officer, is determined by the Compensation Committee of the Board of
Directors (the "Compensation Committee"), except for decisions regarding
Servico's Stock Option Plan, which are made by the Stock Option Committee of the
Board of Directors (the "Stock Option Committee"). During 1996, the Compensation
Committee was comprised of the five non-employee directors, John W. Adams,
Joseph C. Calabro, Howard M. Kahn, Peter R. Tyson and Richard H. Weiner. All of
the foregoing, other than Mr. Weiner, served as the Stock Option Committee.
Servico's executive compensation policies are designed to provide
competitive levels of compensation that integrate pay with Servico's short-term
and long-term performance goals, reward corporate performance and recognize
individual initiative and achievement. It is anticipated that these policies
will help Servico to continue to attract and retain quality personnel, thereby
enhancing Servico's long-term profitability and share value.
Executive compensation ranges have been designed to be competitive with
amounts paid to senior executives at companies in the hospitality industry which
compete with Servico, companies which are similar in size and profitability to
Servico and companies with which Servico competes for senior executives. Within
this framework, individual executive compensation is based on personal and
corporate achievement and the
9
<PAGE> 13
individual's level of responsibility and experience. However, in any particular
year, Servico's executives may be paid more or less than executives in peer
companies depending upon Servico's performance.
Base Compensation. The base salaries of Servico's executive officers were
based in part on comparative industry data and on various quantitative and
qualitative considerations regarding corporate and individual performance. An
executive's base salary is determined only after an assessment of his sustained
performance, current salary in relation to the target salary for the job
responsibilities and his experience and potential for advancement. Further, in
establishing base salaries for Servico's executive officers, numerous other
factors, including the following, are considered:
(i) Industry compensation trends.
(ii) Cost-of-living and other local and geographic considerations.
(iii) Consultation with other Servico executives.
(iv) Hospitality industry and job-specific skills and knowledge.
(v) Historical and expected contributions to Servico's performance.
(vi) Level, complexity, breadth and difficulty of duties.
In establishing the base salaries of the executive officers, the
Compensation Committee was cognizant of the roles of each executive officer in
the operations of Servico. The Compensation Committee specifically recognized
the improvements achieved in Servico's results of operations and financial
condition during the prior fiscal year and the roles and responsibilities of
each executive officer.
Bonus Program. An annual bonus program has been implemented at the Company
which rewards Servico's executive officers when greater than anticipated
corporate earnings are achieved. The objectives of the bonus program are to
motivate and reward the accomplishment of corporate objectives; reinforce a
strong performance orientation; provide a direct link between corporate
performance and executive compensation; and provide a fully competitive
compensation package which will attract, reward and retain individuals of the
highest quality. As a performance-based plan, cash bonus awards are paid only
upon the achievement of corporate performance objectives and no bonuses are paid
if the minimum established thresholds are not met. Target performance thresholds
are established by the non-employee directors based on quarterly and annual
criteria. A maximum ceiling is also established for awards under the bonus
program. The ceiling is determined after consideration of Servico's competitive
position in the industry, assessment of long-term goals and business performance
considerations. Under this annual bonus awards program, as established for 1996,
Servico agreed to allocate to a bonus pool an amount equal to a percentage of
the amount by which actual cash flow (as defined) exceeded budgeted cash flow
for each quarter. An aggregate of $136,836 in bonuses was paid or accrued in
1996 for executive bonuses based on quarterly performance. In addition, on an
annual basis, a percentage of the amount by which actual cash flow exceeded
budgeted cash flow (as defined) for 1996 was allocated to the bonus pool.
Aggregate annual bonuses were subject to a stated maximum less 1996 quarterly
bonus awards payable with respect to the year. An aggregate of $51,126 was
accrued to executive officers based on the annual performance criteria.
Stock Option Plan. Servico's long-term executive compensation incentives
are in the form of stock option awards. The Stock Option Committee believes that
stock option awards are an effective means of advancing the long-term interests
of Servico's shareholders by integrating executive compensation with the
long-term value of Servico Common Stock. Stock option awards are granted at the
prevailing market price on the date of grant and are valuable to executives only
if Servico Common Stock appreciates. During 1996, the Stock Option Committee
awarded options to purchase shares of Common Stock to the executive officers
identified in the "Stock Option Grants In Fiscal Year 1996" table. All of such
options were granted with an
10
<PAGE> 14
exercise price equal to $10.75 per share, the market price on the date of grant.
The Stock Option Committee also awarded options to purchase shares of Common
Stock to various non-executive employees of Servico during 1996. All of such
options were granted with an exercise price equal to $10.75 per share, the
market price on the date of grant. In determining whether (and to what extent)
to grant stock options to executives and employees of Servico, the Stock Option
Committee considers numerous factors, including, among others, those factors
listed under Base Compensation.
Chief Executive Officer. Like the other executive officers listed in the
"Summary Compensation Table", compensation for 1996 for David Buddemeyer,
Servico's President and Chief Executive Officer, consisted primarily of a base
salary and potential bonuses based on corporate performance. The Compensation
Committee determined Mr. Buddemeyer's base salary for 1996 after considering
many factors, including those factors described above under Base Compensation
applicable to all executives. Additionally, the Compensation Committee focused
on Mr. Buddemeyer's role in the continuing profitability of Servico and the
demand for executives with similar successful track records in the hospitality
industry. In establishing Mr. Buddemeyer's compensation, the Committee also took
particular note of the continued improvement in Servico's financial condition.
Servico reported revenues of $239.5 million and earnings before interest, tax,
depreciation and amortization ("EBITDA") of $57.9 million for the year ended
December 31, 1996, as compared to revenues of $178.5 million and EBITDA of $36.9
million for the year ended December 31, 1995.
Submitted by,
John W. Adams Joseph C. Calabro Peter R. Tyson Richard H. Weiner
11
<PAGE> 15
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total shareholder
return on Servico's Common Stock with the Dow Jones Equity Market Index and the
Dow Jones Lodging Index. The Common Stock began trading on the American Stock
Exchange under the symbol "SER" on August 18, 1992. As a result, the following
graph commences as of August 18, 1992. The graph assumes an investment of
$100.00 on August 18, 1992 in (i) Servico's Common Stock, (ii) the stocks
comprising the Dow Jones Equity Market Index and (iii) the Dow Jones Lodging
Index.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
1992 1992 1993 1994 1995 1996
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Servico, Inc. $100 $114 $193 $286 $300 $461
-----------------------------------------------------------------------------
Dow Jones Lodging Index $100 $110 $183 $198 $239 $289
-----------------------------------------------------------------------------
Dow Jones Equity Market Index $100 $105 $115 $116 $162 $199
-----------------------------------------------------------------------------
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following parties had a direct or indirect material interest in
transactions with Servico since the beginning of its most recently completed
fiscal year and such transactions are described below.
Energy Management Corporation. In April 1994, Servico issued one million
shares of its Common Stock to EMC in connection with a merger between
wholly-owned subsidiaries of Servico and EMC pursuant to that certain Stock
Acquisition and Standstill Agreement, as amended, (the "EMC Acquisition
Agreement") and the related Agreement and Plan of Merger, each dated April 13,
1994. The sole asset of the EMC subsidiary acquired by Servico was $7 million in
cash, which Servico agreed would be utilized for general working capital,
capital expenditures, possible acquisitions and other general corporate purposes
and not for the redemption of any of Servico's capital stock or for the payment
of dividends by Servico. In connection with the transaction Servico agreed,
during the term of the EMC Acquisition Agreement, to cause the nomination of one
designee of EMC to Servico's Board of Directors. EMC designated Mr. John W.
Adams to be its
12
<PAGE> 16
representative. Mr. Adams was appointed to Servico's Board of Directors on April
29, 1994, and was named Chairman of the Board on December 21, 1995.
Pursuant to the EMC Acquisition Agreement, EMC also agreed to certain
standstill provisions generally prohibiting it from acquiring voting securities
of Servico with voting rights of 30% or more of the voting rights of all
outstanding voting securities of Servico. EMC is also generally restricted in
the amount and manner by which it may transfer any Common Stock owned by it. On
May 5, 1994, Servico filed with the Securities and Exchange Commission on behalf
of EMC, and at EMC's expense, a registration statement on Form S-3, relating to
the proposed sale from time to time by EMC of all or any portion of its shares
of Common Stock on the American Stock Exchange. The amount of shares, if any,
which may actually be sold pursuant to such registration statement is not
currently determinable. Servico has agreed to use its best efforts to cause such
registration statement to remain effective until the termination of the EMC
Acquisition Agreement.
Pengo Securities Corp. In March 1995, Servico issued 800,000 shares of its
Common Stock to Pengo, which is affiliated with EMC, for $8 million, or $10 a
share, pursuant to that certain Stock Acquisition and Standstill Agreement dated
March 23, 1995, as amended, (the "Pengo Acquisition Agreement"). In connection
with the transaction, Servico agreed that in the event the EMC Acquisition
Agreement is terminated, it will continue to cause, during the term of the Pengo
Acquisition Agreement, the nomination of EMC's designee or such other person as
may be designated by Pengo to Servico's Board of Directors. Additionally, in
connection with this transaction, an affiliate of Pengo agreed to make an
additional $8 million equity investment in partnerships or joint ventures with
Servico for the purpose of acquiring hotel properties.
Pursuant to the Pengo Acquisition Agreement, Pengo also agreed to
standstill provisions substantially identical to those contained in the EMC
Acquisition Agreement. For purposes of the Pengo Acquisition Agreement, EMC,
Pengo and their affiliates are treated as a unified group. Servico also agreed
to file with the Securities and Exchange Commission on behalf of Pengo, and at
Pengo's expense, a registration statement on Form S-3, relating to the proposed
sale from time to time by Pengo of all or any portion of its shares of Common
Stock on the American Stock Exchange. The amount of shares, if any, which may
actually be sold pursuant to such registration statement is not determinable.
Limited Partnerships with Affiliated Entities. Subsidiaries of Servico
(the "Servico Subsidiaries") have entered into partnership agreements in
connection with the formation of partnerships for the purpose of owning hotel
properties with SOLVation Inc., Spire Realty Group, Worcester Hospitality
Company, Inc., Wolverine Hospitality Company, Inc., East Washington Hospitality
Company, Inc. and Jayhawk Hospitality Company, Inc. (the "EMC/Pengo
Affiliates"), all of which are affiliated with either EMC or Pengo, principal
shareholders of the Company and with John W. Adams, Chairman of the Board of the
Company. The partnerships own the following properties with the ownership
interests of the Company and the EMC/Pengo Affiliates indicated:
<TABLE>
<CAPTION>
EMC/PENGO
SERVICO AFFILIATES
HOTEL INTEREST INTEREST
- ----- -------- ----------
<S> <C> <C>
Holiday Inn, Select, Phoenix, Arizona 51% 49%
Holiday Inn, Augusta, Georgia 51% 49%
Holiday Inn, Fort Wayne, Indiana 51% 49%
Hilton Hotel, Sioux City, Iowa 51% 49%
Holiday Inn, Lawrence, Kansas 51% 49%
Holiday Inn, Manhattan, Kansas 51% 49%
Crowne Plaza, Worcester, Massachusetts 51% 49%
Crowne Plaza, Saginaw, Michigan 51% 49%
Holiday Inn, Richfield, Ohio 51% 49%
</TABLE>
13
<PAGE> 17
Subsidiaries of the Company serve as the General Partner for each of the
partnerships. Additionally, Servico receives management fees from the
partnerships with respect to each of these hotels. During 1996, such fees were
approximately $1,460,000.
Indebtedness of Management. On March 12, 1996, Messrs. Buddemeyer and
Ruffin exercised options held by them to acquire 45,000 and 37,500 shares of the
Company's Common Stock, respectively, by delivery of promissory notes in the
amounts of $180,000 and $150,000, respectively. Such notes represented the full
amount of the exercise price payable by each upon exercise of the options. The
notes bore interest at a rate of 6% per annum. On April 4, 1997, the Company
agreed to redeem from Messrs. Buddemeyer and Ruffin 17,000 and 14,200 shares,
respectively, of Servico Common Stock at a price per share of $17.25, the
closing price of the stock on such date. Proceeds of the redemptions were
utilized to satisfy the aforementioned promissory notes which were paid in full.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Servico's
directors, executive officers and 10% shareholders to file reports of ownership
and reports of changes in ownership of Servico's Common Stock and other equity
securities with the Securities and Exchange Commission and the American Stock
Exchange. Directors, executive officers and 10% shareholders are required to
furnish Servico with copies of all Section 16(a) forms they file. Based on a
review of the copies of such reports furnished to it, Servico believes that
during 1996 Servico's directors, executive officers and 10% shareholders
complied with all Section 16(a) filing requirements applicable to them.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the following directors served on the Compensation Committee
of the Board of Directors: John W. Adams, Joseph C. Calabro, Howard M. Kahn,
Peter R. Tyson and Richard H. Weiner. None of such persons are or have been
executive officers of Servico and no interlocking relationships exist between
such persons and the directors or executive officers of Servico.
PROPOSAL TO AMEND THE
SERVICO STOCK OPTION PLAN
(PROPOSAL NUMBER 2 ON THE ENCLOSED PROXY CARD)
DESCRIPTION OF THE SERVICO STOCK OPTION PLAN
The Servico Stock Option Plan (the "Plan") was established by Servico in
1992 to provide Servico with an effective means to attract, retain, and motivate
employees of Servico. The Plan is designed to comply with the requirements of
Section 16(b) of the Securities Exchange Act of 1934. Amendments to the Plan
were adopted by the Board of Directors in April 1994 and February 1995 and
approved by the shareholders of Servico in June 1994 and May 1995, respectively.
Such amendments increased the number of shares issuable pursuant to the Plan
from 1,000,000 to 1,425,000 shares, revised the Plan in an attempt to meet the
requirements for deductibility under the Internal Revenue Code, eliminated the
automatic vesting of options upon the occurrence of certain events and modified
the provision which provides for the automatic grant of options to non-employee
directors of Servico. A maximum of 1,425,000 shares of Common Stock were
issuable under the Plan, and as of March 21, 1997, 64,900 shares remained
available for issuance under the
14
<PAGE> 18
Plan. Additional shares may become available for issuance under the Plan,
however, to the extent any granted stock options expire or terminate
unexercised. As described below, you are being asked to amend the Plan to
increase the number of shares available for issuance under the Plan to
1,675,000.
The Plan is administered by the Stock Option Committee of the Board of
Directors (the "Stock Option Committee"), which, under the terms of the Plan,
must be comprised solely of two or more members of the Board of Directors, each
of whom must be a "non-employee director," within the meaning of Rule 16b-3
promulgated under the Securities Exchange Act of 1934 and an "outsider
director," within the meaning of Internal Revenue Code Section 162(m). The
Committee has the authority to interpret the provisions of the Plan and to make
all determinations deemed necessary or advisable for its administration.
The Plan provides for the issuance of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code and non-qualified stock
options not intended to meet the requirements of Section 422 of the Internal
Revenue Code. Incentive stock options may be granted to employees of Servico and
its subsidiaries, and non-qualified options may be granted to employees,
directors, independent contractors and agents of Servico and its subsidiaries.
Subject to the terms of the Plan, the Stock Option Committee determines the
employees to whom grants are made and the vesting, timing, amounts and other
terms of such grants. Stock options exercisable in one calendar year for shares
with a fair market value on the date of grant in excess of $100,000 will not be
treated as incentive stock options. Additionally, the Plan limits the number of
stock options, (whether incentive stock options or non-qualified aggregate
option), which may be granted to any individual employee in any given year to
options covering not more than 125,000 shares of Servico Common Stock.
Pursuant to the terms of the Plan, the exercise price of options may not be
less than the fair market value of the Common Stock on the date of grant, except
that the exercise price of any incentive stock option granted to the holder of
more than 10% of the outstanding Common Stock may not be less than 110% of the
fair market value of the Common Stock on the date of grant. The term of each
option may not exceed ten years, except the term of any incentive stock option
granted to the holder of more than 10% of the outstanding Common Stock may not
exceed five years. The option price may be paid in cash, promissory note, shares
of Common Stock or any other consideration acceptable to the Stock Option
Committee. The Plan sets forth additional provisions with respect to the
exercise of options by an optionee upon the termination of employment and upon
death or disability.
The Plan provides for an automatic grant of non-qualified options to
acquire 5,000 shares of Common Stock to non-employee directors on the date such
director's term of office commences and each year thereafter on the day
following any annual meeting of shareholders, as long as such person's term as a
director is continuing for the ensuing year. The exercise price of such options
is equal to the fair market value of the Common Stock on the date of the grant,
and the number of options granted is subject to adjustment upon certain changes
in Servico's capitalization.
The number of shares of Common Stock covered by outstanding options, the
number of shares of Common Stock available for issuance under the Plan, and the
exercise price per share of outstanding options, will be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or stock dividend. Unless otherwise provided
by the Stock Option Committee or the Board of Directors, all outstanding options
terminate immediately prior to the consummation of a dissolution or liquidation
of Servico, or sale of all or substantially all of the assets of Servico, or the
merger of Servico with or into another corporation. Upon the occurrence of any
of the events described in the preceding sentence, the Stock Option Committee or
the Board of Directors of Servico may, in their discretion, grant
15
<PAGE> 19
optionees the right to exercise options as to all or any part of the optioned
stock, including shares for which the option would not otherwise be exercisable.
The Stock Option Committee may amend or terminate the Plan, except that
shareholder approval is required to increase the number of shares of Common
Stock subject to the Plan, to change the class of persons eligible to
participate in the Plan, or to materially increase the benefits accruing to
participants under the Plan.
All employees, directors, independent contractors and agents of Servico are
eligible to receive stock options under the Plan. As of March 21, 1997, Servico
had five non-employee directors and approximately 4,200 full-time employees.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. The grant of an incentive stock option has no
immediate Federal income tax consequences to the optionee or to Servico. The
exercise of an incentive stock option while the optionee is an employee or
within three months after termination of employment, generally has no immediate
tax consequences to the optionee or to Servico. If the optionee is subject to
the alternative minimum tax, however, the exercise of an incentive stock option
would result in an increase in the optionees' alternative minimum taxable income
equal to the excess of the fair market value of the shares at the time of
exercise over the exercise price. If an optionee holds the shares acquired
pursuant to the exercise of an incentive stock option for the required holding
period, the optionee generally recognizes long-term capital gain or loss upon a
subsequent sale of the shares in the amount of the difference between the amount
realized upon the sale and the exercise price of the shares. In such a case,
Servico is not entitled to a deduction in connection with the grant or exercise
of the incentive stock option or the sale of shares acquired pursuant to such
exercise. If, however, an optionee exercises an incentive stock option more than
three months after termination of employment or disposes of the shares prior to
the expiration of the required holding period, the optionee generally recognizes
ordinary income equal to the excess of the fair market value of the shares on
the date of exercise (or the proceeds of the disposition, if less) over the
exercise price, and Servico is entitled to a corresponding deduction if the
compensation constitutes an ordinary and necessary business expense and the
limitations of Section 162(m) of the Internal Revenue Code do not apply. The
required holding period is the longer of two years from the date of grant and
one year after the date of issuance of the shares upon exercise of the option.
Non-qualified Options. The grant of a non-qualified stock option has no
immediate tax consequences to the optionee or Servico. Upon the exercise of a
non-qualified stock option, the optionee recognizes ordinary income subject to
employment taxes in an amount equal to the excess of the fair market value of
the shares on the date of exercise over the exercise price, and Servico is
entitled to a corresponding deduction if the compensation constitutes an
ordinary and necessary business expense and the limitations of Section 162(m) of
the Internal Revenue Code do not apply. The optionee's tax basis in the shares
is the exercise price plus the amount of ordinary income recognized by the
optionee, and the optionee's holding period will commence on the date the shares
are received. Upon a subsequent sale of the shares, any difference between the
optionee's tax basis in the shares and the amount realized on the sale is
treated as long-term or short-term capital gain or loss.
16
<PAGE> 20
OPTIONS GRANTED UNDER THE PLAN
As of March 21, 1997 options to purchase 789,100 shares of Common Stock
were outstanding and exercisable at exercise prices ranging from $4.00 per share
to $16.125 per share (in each case equal to the fair market value of the Common
Stock as of the dates of grant). As of March 21, 1997, 64,900 shares of Common
Stock remained eligible for grant under the Plan. As of March 21, 1997, the last
reported sales price of the Common Stock on the American Stock Exchange
composite tape was $19.00.
As described above, the Stock Option Committee has discretion to determine
the persons to whom grants of options are to be made, the number of options to
be granted and the terms and conditions of any grant. Accordingly, except for
the automatic grants to non-employee directors of Servico, it is not possible to
identify the persons who will receive options under the Plan, the actual number
of options to be granted to any individual under the Plan or the terms and
conditions of any option to be granted.
The table below indicates, as of March 21, 1997 the aggregate number of
options granted under the Plan since its inception to the persons and groups
indicated, and the number of outstanding options held by such persons and groups
as of such date.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR GROUP POSITION WITH SERVICO GRANTED OUTSTANDING
- --------------------------- --------------------- ------- -----------
<S> <C> <C> <C>
David Buddemeyer President and Chief Executive Officer 168,500 123,500
Warren M. Knight Vice President - Finance and Chief
Financial Officer 111,000 111,000
Robert D. Ruffin Vice President - Administration and
Secretary 111,000 73,500
Peter J. Walz Vice President-Acquisitions 15,000 15,000
Ronald E. McCauley Former Senior Vice
President - Business Development 98,500 -0-
John W. Adams Director 15,000 15,000
Joseph C. Calabro Director 30,000 30,000
Howard M. Kahn Director 30,000 30,000
Peter R. Tyson Director 30,000 30,000
Richard H. Weiner Director 30,000 30,000
All Current Executive Officers 405,500 323,000
All Current Directors who are not
Executive Officers 135,000 135,000
All Employees, other than Current
Executive Officers 819,600 331,100
</TABLE>
AMENDMENT TO THE PLAN
On April 4, 1997, the Board of Directors unanimously approved, subject to
the approval of Servico's shareholders, to amend the Plan to increase the number
of shares issuable pursuant to the Plan from 1,425,000 shares to 1,675,000
shares. The purpose of increasing the number of shares available for issuance
under the Plan is to ensure that Servico will continue to be able to grant
options as incentives to those individuals upon whose efforts Servico relies for
the continued success and development of its business including new employees as
the Company continues to expand its operations.
17
<PAGE> 21
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors believes that Servico's interests will be served by
increasing the number of shares available for issuance under the Plan. The Board
of Directors believes that awards made under the Plan have enabled Servico to
better compete for qualified personnel, to retain such personnel in the employ
of Servico and to motivate such personnel and align their long-term interests
with those of the shareholders. To remain competitive in attracting and
retaining qualified employees and to continue to provide such employees proper
motivation and incentives, the Board of Directors believes that the proposed
amendment increasing the number of shares available under the Plan should be
approved.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ADOPTION OF THE PROPOSAL TO AMEND THE PLAN.
VOTING PROCEDURES
A majority of the outstanding shares of Common Stock, represented in person
or by proxy, constitutes a quorum for the transaction of business at the Annual
Meeting. Under the Florida Business Corporation Act, the election of the Servico
Directors requires a plurality of the votes represented in person or by proxy at
the meeting. The proposal to amend the Servico Stock Option Plan requires the
affirmative vote of the majority of the shares of Common Stock voting in person
or by proxy at the Annual Meeting. A shareholder who abstains from voting on any
or all proposals will be included in the number of shareholders present at the
meeting for the purpose of determining the presence of a quorum. However, an
abstention with respect to the election of the Servico Directors will not be
counted either in favor of or against the election of the nominees. In the case
of the proposal to amend the Servico Stock Option Plan, an abstention will
effectively count as a vote against such proposal. Brokers who hold shares for
the account of their clients may vote such shares either as directed by their
clients or in their own discretion if permitted by the exchange or other
organization of which they are members. Members of the American Stock Exchange
are permitted to vote their client's proxies in their own discretion as to the
election of directors but are not permitted to vote in their own discretion as
to the proposal to amend the Servico Stock Option Plan. Accordingly, broker
non-votes will have no affect on the vote.
OTHER BUSINESS
The Board of Directors does not intend to bring any other business before
the meeting, and as far as is known by the Board, no matters are to be brought
before the meeting except as disclosed in the Notice of the Meeting. However, as
to any other business which may properly come before the meeting, it is intended
that proxies, in the form enclosed, will be voted in respect thereof in
accordance with the judgment of the persons voting such proxies.
INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP,
independent certified public accountants, to be Servico's auditors for the
fiscal year ending December 31, 1997. Ernst & Young also served as Servico's
independent certified public accountants for the fiscal year ended December 31,
1996. Representatives of Ernst & Young are expected to be present at the
meeting, will have the opportunity to make a statement, if they desire to do so,
and will be available to respond to appropriate questions from shareholders.
18
<PAGE> 22
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of Servico's 1996 Annual Report, including audited financial
statements, has been sent to all shareholders of Servico along with this Proxy
Statement.
SOLICITATION OF PROXIES
The proxy accompanying this Proxy Statement is solicited by the Servico
Board of Directors. Proxies may be solicited by officers, directors and regular
supervisory and executive employees of Servico, none of whom will receive any
additional compensation for their services. Such solicitations may be made
personally, or by mail, facsimile, telephone, telegraph or messenger. Servico
may reimburse brokers and other persons holding shares in their names or in the
names of nominees for expenses in sending proxy materials to beneficial owners
and obtaining proxies from such owners. Servico engaged Corporate Investor
Communications, Inc. to coordinate the solicitation of proxies by or through
brokers, banks, and other custodians, nominees and fiduciaries for a fee of
approximately $1,500. All of the costs of solicitation of proxies will be paid
by Servico.
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders' proposals intended to be presented at the 1998 Annual Meeting
must be received by Servico no later than December 11, 1997, for inclusion in
Servico's proxy statement and form of proxy for that meeting.
By order of the Board of Directors,
/s/ Robert D. Ruffin
------------------------
Robert D. Ruffin
Secretary
Dated: April 14, 1997
19
<PAGE> 23
APPENDIX A
SERVICO, INC.
STOCK OPTION PLAN
1. PURPOSES. The purposes of this Stock Option Plan (the "Plan") are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the employees of the Company
or its Subsidiaries (as defined in Section 2 below) as well as other individuals
who perform services for the Company or its Subsidiaries, and to promote the
success of the Company's business.
Options granted hereunder may be either "incentive stock
options", as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, or "nonqualified stock options," at the discretion of the Committee (as
defined in Section 2 below) and as reflected in the terms of the written option
agreement.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Common Stock" shall mean the Common Stock of the Company
(see Section 8 below).
(b) "Company" shall mean Servico, Inc., a Florida corporation.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Committee" shall mean the Committee appointed by the
Board of Directors in accordance with paragraph (a) of Section 4 of the Plan.
(e) "Continuous Status as an Employee" shall mean the absence
of any interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of sick leave,
military leave, or any other leave of absence approved by the Board of Directors
of the Company or the Committee.
(f) "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(h) "Incentive Stock Option" shall mean a stock option
intended to qualify as an incentive stock option within the meaning of Section
422 of the Code.
<PAGE> 24
(i) "Nonqualified Stock Option" shall mean a stock option not
intended to qualify as an Incentive Stock Option.
(j) "Option" shall mean a stock option granted pursuant to the
Plan.
(k) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(l) "Optionee" shall mean an Employee or other person who
receives an Option.
(m) "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Internal Revenue Code of
1986, as amended.
(n) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act or any successor rule.
(o) "Share" shall mean a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.
(p) "Subsidiary" shall mean a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. AVAILABLE STOCK OPTIONS. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of shares which may be Optioned and sold
under the Plan is One Million Two Hundred and Fifty Thousand (1,425,000) shares
of authorized, but unissued, or reserved $.01 par value Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for further grant under the Plan.
4. ADMINISTRATION.
(a) Procedure. The Plan shall be administered by a Committee
appointed by the Company's Board of Directors. The Committee shall consist of
not less than two members of the Board of Directors, each of whom is a
"non-employee director" as defined in Rule 16b-3 and an "outside director" as
defined for purposes of Section 162(m) of the Code. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors. From time to time the Board of Directors may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), and appoint new members in substitution therefor, and fill
vacancies however caused; provided, however, that at no time shall a Committee
of less than two (2)
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<PAGE> 25
members of the Board of Directors administer the Plan, and provided, further,
that all members of the Committee must be "disinterested persons" as defined in
Rule 16b-3 and "outside directors" under Section 162(m) of the Code.
(b) Powers of the Committee. Subject to the provisions of the
Plan, including, without limitation, Section 6 of the Plan, the Committee shall
have the authority, in its discretion, to: (i) grant Incentive Stock Options, in
accordance with Section 422 of the Code, or to grant Nonqualified Stock Options;
(ii) determine, upon review of relevant information and in accordance with
Section 8(b) of the Plan, the fair market value of the Common Stock; (iii)
determine the exercise price per share of Options to be granted which exercise
price shall be determined in accordance with Section 8(a) of the Plan; (iv)
determine the persons to whom, and the time or times at which, Options shall be
granted and the number of shares to be represented by each Option; (v) interpret
the Plan; (vi) prescribe, amend and rescind rules and regulations relating to
the Plan; (vii) determine the terms and provisions of each Option granted (which
need not be identical) and, with the consent of the holder thereof, modify or
amend each Option; (viii) accelerate or defer (with the consent of the Optionee)
the exercise date of any Option; (ix) authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an Option
previously granted by the Committee; and (x) make all other determinations
deemed necessary or advisable for the administration of the Plan.
(c) Effect of the Committee's Decision. All decisions,
determinations and interpretations of the Committee shall be final and binding
on all Optionees and any other holders of any Options granted under the Plan.
5. ELIGIBILITY. Incentive Stock Options may be granted only to
Employees. Nonqualified Stock Options may be granted to Employees as well as
directors (in accordance with the provisions of Section 6 of the Plan),
independent contractors and agents, as determined by the Committee. Any person
who has been granted an Option may, if he is otherwise eligible, be granted an
additional Option or Options. Subject to the provisions of Section 12 of the
Plan, the maximum number of Shares with respect to which Options may be granted
under the Plan to any Employee in any calendar year is 125,000 Shares.
No such Incentive Stock Option may be granted to an Employee
if, as the result of such grant, the aggregate fair market value (determined at
the time each option was granted) of the Shares with respect to which such
Incentive Stock Options are exercisable for the first time by such Employee
during any calendar year (under all such plans of the Company and any Parent and
Subsidiary) shall exceed One Hundred Thousand Dollars ($100,000).
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<PAGE> 26
6. AUTOMATIC GRANT OF OPTION TO NON-EMPLOYEE DIRECTORS. Subject to
Section 3 of the Plan, each person who is a non-Employee director of the Company
shall automatically receive on the date on which such person's term as a
director commenced and each year thereafter on the first business day following
any subsequent annual meeting, so long as such person's term as a director is
continuing for at least the ensuing year, an Option to acquire 5,000 Shares of
the Company's Common Stock. The number of Shares subject to the Options to be
granted under this Section 6, shall be adjusted in the event of a stock split or
payment of a stock dividend in accordance with the provisions of Section 11 of
the Plan as if such Options were outstanding on the record date with respect to
such events. The per Share exercise price for the Shares to be issued pursuant
to options granted under this Section 6 shall be as set forth in Section
9(a)(ii) of the Plan. The foregoing formula may not be amended more than once
every six months other than to comport with changes in the Code, or the rules
thereunder. Non-Employee directors shall have the right, if they so wish, to
decline receipt of any options to be granted under this Section 6 of the Plan.
7. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of (i) its adoption by the Board of Directors, or (ii) its approval by
vote of the holders of a majority of the outstanding shares of the Company
entitled to vote on the adoption of the Plan. The Plan shall continue in effect
until the date ten years following its effective date unless sooner terminated
under Section 14 of the Plan.
8. TERM OF OPTION. Subject to the provisions of the Plan, the term of
each Option shall be ten (10) years from the date of grant thereof or such
shorter term as may be provided in the stock option agreement. However, in the
case of an Incentive Stock Option granted to an Employee who, immediately before
the Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the maximum term of the Incentive Stock Option shall be
five (5) years from the date of grant thereof or such shorter time as may be
provided in such Optionee's stock option agreement.
9. EXERCISE PRICE AND CONSIDERATION.
(a) Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Committee, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, immediately
before the grant of such Incentive Stock Option, owns stock
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<PAGE> 27
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the fair market value per Share on the date of
grant.
(B) granted to any other Employee, the per
share exercise price shall be no less than one hundred percent (100%) of the
fair market value per Share on the date of grant.
(ii) In the case of a Nonqualified Stock Option, the
per Share exercise price shall be no less than one hundred percent (100%) of the
fair market value per Share on the date of grant and, with respect to Options
granted to non-Employee directors as provided in Section 6 of the Plan, shall be
equal to one hundred percent (100%) of the fair market value per Share on the
date of the grant.
(b) Determination of Fair Market Value. The fair market value
shall be determined by the Committee in its discretion; provided, however, that
where there is a public market for the Common Stock, the fair market value per
Share shall be the mean of the bid and asked prices or, if applicable, the
closing price of the Common Stock for the date of grant, as reported in the Wall
Street Journal (or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation (NASDAQ) System) or, in
the event the Common Stock is listed on a stock exchange, the fair market value
per Share shall be the closing price on such exchange on the date of grant of
the Option, as reported in the Wall Street Journal.
(c) Payment. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Committee and may consist entirely of cash, check, promissory
note, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, by exercising an Option and having the Company redeem
at the market value at the close of trading on the date on which the Option is
exercised a sufficient number of Shares acquired by exercise of the Option to
pay for all Options exercised or by any combination of such methods of payment,
or such other consideration and method of payment for the issuance of Shares to
the extent permitted under Florida Law.
10. EXERCISE OF OPTION.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Committee, including attainment of performance
criteria with respect to the Company and/or the Optionee, and as shall be
permissible under the terms of
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<PAGE> 28
the Plan. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Committee, consist of any
consideration and method of payment allowable under Section 9(c) of the Plan.
Until the issuance of Shares with respect to which the Option
is exercised, which in no event will be delayed more than thirty (30) days from
the date of the exercise of the Option, (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee. If any Employee
ceases to serve as an Employee, he may, but only within such period of time as
is determined by the Committee and set forth in the stock option agreement,
after the date he ceases to be an Employee of the Company, exercise his Option
to the extent that he was entitled to exercise it as of the date of such
termination. If he or his estate, as the case may be, does not exercise such
Option (which he was entitled to exercise) within the time specified herein, the
Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of
Section 9(b) above, in the event an Employee is unable to continue his
employment with the Company as a result of his total and permanent disability
(as defined in Section 105(d)(4) of the Internal Revenue Code of 1986, as
amended), he may, but only within three (3) months (or such other period of time
not exceeding twelve (12) months as is determined by the Committee) from the
date of disability, exercise his Option to the extent he was entitled to
exercise it at the date of such disability; provided, however, that if the
Company gives notice pursuant to this Plan of termination of the Option before
the expiration of such period then the Optionee shall exercise the Option within
such shorter period. To the extent that he was not entitled to exercise the
Option at the date of disability, or if he does not exercise such Option (which
he was
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<PAGE> 29
entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of the death of an
Optionee during the term of the Option who is at the time of his death an
Employee of the Company and who shall have been in Continuous Status as an
Employee since the date of grant of the Option, the Option shall immediately
vest and may be exercised at any time within twelve (12) months following the
date of death by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance; provided, however, that if the
Company gives notice pursuant to this Plan of termination of the Option before
the expiration of such period then the Optionee's estate or person who acquired
the right to exercise the Option by bequest or inheritance shall exercise the
Option within such shorter period.
11. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to
any required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend with
respect to the Common Stock or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Committee or the Board of
Directors of the Company, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option.
In the event of the proposed dissolution or liquidation of the
Company, or in the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Option will terminate immediately prior to the consummation of
such proposed
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<PAGE> 30
action, unless otherwise provided by the Committee or the Board of Directors of
the Company. The Committee or the Board of Directors of the Company may, in the
exercise of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Committee or the Board of Directors of the
Company and give each Optionee the right to exercise his Option as to all or any
part of the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable.
13. TIME FOR GRANTING OPTIONS. The date of grant of an Option shall,
for all purposes, be the date on which the Committee makes the determination
granting such Option. Notice of the determination shall be given to each
Employee to whom an Option is so granted within a reasonable time after the date
of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Committee Action; Shareholder Approval. Subject to the
limitations set forth in Section 6 of the Plan, the Committee may amend or
terminate the Plan from time to time in such respects as the Committee may deem
advisable; provided that the following revisions or amendments shall require
approval of the holders of a majority of the outstanding shares of the Company
entitled to vote:
(i) any increase in the number of Shares subject to
the Plan, other than in connection with an adjustment under Section 11 of the
Plan;
(ii) any change in the designation of the class of
persons eligible to be granted options;
(iii) any material increase in the benefits accruing
to participants under the Plan; or
(iv) any increase in the maximum number of Shares
with respect to which Options may be granted to any Employee.
(b) Shareholder Approval. If any amendment requiring
shareholder approval under Section 14(a) of the Plan is made, such shareholder
approval shall be solicited as described in Section 18 of the Plan.
(c) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Committee, which agreement must be in writing and signed by the Optionee and
the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of
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<PAGE> 31
such Option and the issuance and delivery of such Shares pursuant thereto shall
comply with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
With respect to persons subject to Section 16 of the Exchange
Act, transactions under this plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the plan administrators fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
16. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain, from any regulatory body
having jurisdiction, authority to issue Shares, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or seal such Shares as to which such requisite authority shall not have
been obtained.
17. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Committee shall approve.
18. SHAREHOLDER APPROVAL. This Plan shall be subject to approval by the
shareholders of the Company within twelve months before or after the date the
Plan is adopted. If such shareholder approval is obtained at a duly held
shareholders' meeting, it may be obtained by the affirmative vote of the holders
of a majority of the outstanding shares of the Company present or represented
and entitled to vote thereon. The approval of such shareholders of the Company
shall be: (1) solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder, or (2)
solicited after the Company has furnished in writing to the holders entitled to
vote substantially
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<PAGE> 32
the same information concerning the Plan as that which would be required by the
rules and regulations in effect under Section 14(a) of the Exchange Act at the
time such information is furnished.
If such shareholder approval is obtained by written consent in
the absence of a Shareholders' Meeting, it must be obtained by the written
consent of all shareholders of the Company who would have been entitled to cast
the minimum number of votes which would be necessary to authorize such action at
a meeting at which all shareholders entitled to vote thereon were present and
voting.
19. MISCELLANEOUS PROVISIONS. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment by the Company,
nor shall it interfere in any way with his right or the Company's right to
terminate his employment at any time. An Optionee shall have no rights as a
shareholder with respect to any Shares covered by his Option until the date of
the issuance of a stock certificate to him for such shares.
20. OTHER PROVISIONS. The Stock Option Agreement authorized under the
Plan shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the Option, as the Committee shall deem
advisable. Any Incentive Stock Option Agreement shall contain such limitations
and restrictions upon the exercise of the Incentive Stock Option as shall be
necessary in order that such option will be an Incentive Stock Option as defined
in Section 422 of the Code.
21. INDEMNIFICATION OF COMMITTEE MEMBERS. In addition to such other
rights of indemnification as they may have as Directors, the members of the
Committee shall be indemnified by the Company against the reasonable expenses,
including attorneys' fees actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member is liable
for negligence or misconduct in the performance of his duties; provided that
within 60 days after institution of any such action, suit or proceeding a
Committee member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
22. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to Options will be used for general corporate
purposes.
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<PAGE> 33
23. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
24. OTHER COMPENSATION PLANS. The adoption of the Plan shall not affect
any other stock option or incentive or other compensation plans in effect for
the Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees
and directors of the Company or any Subsidiary.
25. SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender.
26. HEADINGS, ETC. NO PART OF PLAN. Headings of Articles and Sections
hereof are inserted for convenience and reference; they constitute no part of
the Plan.
Dated: February 24, 1995
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<PAGE> 34
Sincerely,
LOGO
David A. Buddemeyer
President and Chief
Executive Officer
By order of the Board of Directors
LOGO
Robert D. Ruffin
Secretary
Dated: April 24, 1996
West Palm Beach, Florida
20
<PAGE> 35
APPENDIX B
PROXY
SERVICO, INC.
ANNUAL MEETING OF SHAREHOLDERS -- MAY 6, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Servico, Inc. ("Servico") hereby appoints
David Buddemeyer and Warren M. Knight, and each of them, the undersigned's
proxies, with full power of substitution, to vote all shares of Common Stock of
Servico which the undersigned would be entitled to vote if personally present at
the Annual Meeting of Shareholders to be held on Tuesday, May 6, 1997 at 10:00
A.M. local time, at the Omni Hotel, 1601 Belvedere Road, West Palm Beach,
Florida 33406 and at any adjournments or postponements thereof, to the same
extent and with the same power as if the undersigned was personally present at
said meeting or such adjournments or postponements thereof and, without limiting
the generality of the power hereby conferred, the proxy nominees named above and
each of them are specifically directed to vote as indicated below.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS SPECIFIED. IF NO CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE TWO NOMINEES LISTED IN ITEM NO. 1
AND FOR THE ADOPTION OF THE PROPOSAL TO AMEND SERVICO'S STOCK OPTION PLAN AS SET
FORTH IN ITEM NO. 2.
If there are amendments or variations to the matter proposed at the meeting
or at any adjournments or postponements thereof, or if any other business
properly comes before the meeting, this proxy confers discretionary authority on
the proxy nominees named herein and each of them to vote on such amendments,
variations or other business.
(Continued, and to be signed and dated on the other side.)
<TABLE>
<S> <C>
1. Election of one Class I Director to serve for a term of one year and the Election of one
Class III Director to serve for a term of three years.
[ ] For each nominee listed (except as marked to the contrary) [ ] WITHHOLD AUTHORITY
to vote for all nominees listed John W. Adams Class I and Joseph C. Calabro Class III
-------------------------------------------------------------------------------------------------------------------------------
(Instruction: To withhold authority to vote for any nominee, write that nominee's name in the space provided above.)
2. Proposal to Amend Servico's Stock Option Plan to increase the number of shares issuable pursuant to the plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned acknowledges receipt of the ac-
companying Notice of Annual Meeting of Sharehold-
ers and Proxy Statement for the May 6, 1997
meeting.
Dated:____________________________________, 1997
________________________________________________
Signature of Shareholder(s)
________________________________________________
Print Name(s) Here
(Please sign exactly as name or names appear
hereon. Full title of one signing in
representative capacity should be clearly
designated after signature. Names of all joint
holders should be written even if signed by
only one.)
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED
</TABLE>
