<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
RFS Hotel Investors Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
RFS HOTEL INVESTORS, INC.
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 21, 1996
------------------------
A special meeting of the shareholders (the "Special Meeting") of RFS Hotel
Investors, Inc. (the "Company") will be held at the offices of the Company, 889
Ridge Lake Boulevard, Suite 100, Memphis, Tennessee, on Friday, June 21, 1996 at
10:00 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to delete Article 7 of the
Company's Charter, which limits the Company's consolidated indebtedness to
30% of the Company's investment in hotel properties, at cost ("Proposal
One"); and
2. To consider and vote upon a proposal to amend Article 14 of the
Company's Charter to provide, in effect, that nothing contained therein
will prohibit the settlement of any transaction entered into through the
facilities of any national securities exchange registered under the
Securities Exchange Act of 1934 (the "Exchange Act") or on the national
market system of a national securities association registered under the
Exchange Act ("Proposal Two"); and
3. To transact such other business as may properly come before the
Special Meeting and any adjournments thereof.
Only shareholders of the Company of record as of the close of business on
May 10, 1996 will be entitled to notice of, and to vote at, the Special Meeting
and any adjournments thereof.
There is enclosed, as a part of this Notice, a Proxy Statement which
contains further information regarding the Special Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ Michael J. Pascal
-----------------------
MICHAEL J. PASCAL
Secretary and Treasurer
Memphis, Tennessee
May 17, 1996
IMPORTANT
MANAGEMENT SEEKS TO HAVE YOUR SHARES REPRESENTED AT THE SPECIAL MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU MAY HOLD. SHAREHOLDERS WHO DO NOT EXPECT
TO ATTEND THE SPECIAL MEETING ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE.
SHAREHOLDERS WHO ATTEND THE SPECIAL MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE
ALREADY SENT IN A PROXY.
<PAGE> 3
RFS HOTEL INVESTORS, INC.
PROXY STATEMENT
GENERAL INFORMATION
INTRODUCTION
This Proxy Statement and the accompanying proxy card and Notice of Special
Meeting are provided in connection with the solicitation of proxies by the Board
of Directors of RFS Hotel Investors, Inc., a Tennessee corporation (the
"Company"), for use at a special meeting of shareholders to be held at the
Company's offices, 889 Ridge Lake Boulevard, Suite 100, Memphis, Tennessee, on
Friday, June 21, 1996 at 10:00 a.m. local time (the "Special Meeting") and any
adjournments thereof. The mailing address of the principal executive offices of
the Company is 889 Ridge Lake Boulevard, Suite 100, Memphis, Tennessee 38120.
This Proxy Statement and the accompanying proxy card and Notice of Special
Meeting, all enclosed herewith, are first being mailed on or about May 17, 1996
to shareholders of record at the close of business on May 10, 1996 (the "Record
Date").
THE COMPANY
The Company is a Tennessee corporation which was formed in 1993 for the
purpose of acquiring equity interests in hotel properties and qualifying as a
real estate investment trust ("REIT") under the Internal Revenue Code of 1986,
as amended. The Company completed its initial public offering of common stock,
par value $.01 per share ("Common Stock") in August 1993 (the "IPO"). The
Company used the net proceeds from the sale of shares of Common Stock in the IPO
to acquire, through RFS Partnership, L.P., (the "Partnership"), for which the
Company serves as sole general partner, seven hotel properties (the "Initial
Hotels"), to finance certain capital improvements to pay initial franchise fees
and for general working capital. Since the IPO, the Company has completed three
additional underwritten public offerings, the proceeds from which have been used
principally to acquire hotel properties. At April 30, 1996, the Partnership
owned 48 hotel properties (the "Hotels"), with an aggregate of 6,724 rooms in 22
states. In order to qualify as a REIT, neither the Company nor the Partnership
can operate hotels. The Partnership leases the Hotels to RFS, Inc., a
wholly-owned subsidiary of Doubletree Corporation, pursuant to percentage leases
(the "Percentage Leases") which provide for rent payments based, in part, on the
revenues of the Hotels. The Company has elected to be taxed as a REIT for
federal income tax purposes. The Company currently owns a 98.7% interest in the
Partnership.
THE PROXY
The proxy will be voted as specified by the shareholder of record in the
spaces provided on the Proxy Card or, if no specification is made, it will be
voted in favor of the proposal set forth in the accompanying Notice of the
Special Meeting. The solicitation of proxies is being made primarily by the use
of the mails. The shareholder of record giving the proxy has the power to revoke
it either by delivering written notice of such revocation to the Secretary of
the Company prior to the Special Meeting or by attending the Special Meeting and
voting in person. Management requests that each shareholder promptly mark, sign
and return a proxy card as soon as possible. Management is recommending a vote
for the proposal discussed in this Proxy Statement. Beneficial owners of the
Company's Common Stock held in the name of a broker or other intermediary may
<PAGE> 4
vote and revoke a previous vote only through, and in accordance with procedures
established by, the record holder(s) or their agent(s).
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Proxy Statement does not constitute the solicitation of a
proxy, in any jurisdiction, from any person to whom it is unlawful to make such
proxy solicitation in such jurisdiction. The delivery of this Proxy Statement
shall not, under any circumstances, imply that there has not been any change in
the information set forth herein since the date of the Proxy Statement.
Each outstanding share of the Company's Common Stock, $.01 par value (the
"Common Stock"), and each outstanding share of the Company's Series A Preferred
Stock ("Preferred Stock") is entitled to one vote. Cumulative voting is not
permitted. Only shareholders of record at the close of business on May 10, 1996
will be entitled to notice of and to vote at the Special Meeting and at any
adjournments thereof. At the close of business on April 30, 1996, the Company
had outstanding 24,369,000 shares of Common Stock and 973,684 shares of
Preferred Stock. The Common Stock and the Preferred Stock will vote together as
a class on the matters being submitted to shareholders at the Special Meeting.
The cost of preparing and mailing this Proxy Statement and the accompanying
material, and the cost of any supplementary solicitations which may be made by
mail, telephone, telegraph or personally by officers and employees of the
Company, will be borne by the Company. To the extent necessary in order to
ensure sufficient representation at the meeting, the Company may request by
telephone or otherwise the return of proxies. The extent to which this will be
necessary will depend on the rate at which proxies are returned. Shareholders
are urged to return their proxies without delay.
REQUIRED VOTE
Under Tennessee law and the Company's Charter and Bylaws, a quorum (the
presence, in person or by proxy, of shareholders entitled to cast a majority of
the votes entitled to be cast at a shareholders' meeting) is required for votes
taken at the meeting to be valid. After a quorum has been established (in person
or by proxy) if the votes cast for adoption of the proposal to delete Article 7
of the Charter ("Proposal One") and for the proposal to amend Article 14 of the
Charter to provide that nothing contained therein will prohibit the settlement
of any transaction entered into through the facilities of any national
securities exchange registered under the Securities Exchange Act of 1934 (the
"Exchange Act") or on the national market system of a national securities
association registered under the Exchange Act ("Proposal Two") exceed the votes
cast against adoption of Proposal One and Proposal Two, respectively, each of
Proposal One and Proposal Two will be approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OR ADOPTION OF PROPOSAL ONE AND
FOR ADOPTION OF PROPOSAL TWO.
No specific provisions of the Tennessee Business Corporation Act, or the
Company's Charter or Bylaws, address the issue of abstentions or "broker
non-votes." Abstentions will not be counted "for" or "against" proposals, but
will be counted for the purpose of determining the existence of a quorum.
Therefore, because Proposal One and Proposal Two will be approved if the votes
cast in favor of each of Proposal One and Proposal Two exceed the votes cast
against each of Proposal One and Proposal Two, respectively, an abstention will
have no effect if the requirements of a quorum are otherwise met.
2
<PAGE> 5
Brokers or other intermediaries holding shares of Common Stock for
beneficial owners must vote those shares according to the specific instructions
they receive from the beneficial owners. If specific instructions are not
received, brokers generally may vote these shares in their discretion, but may
not exercise their voting discretion on certain proposals, such as Proposal One
and Proposal Two. This results in what is known as a "broker non-vote." "Broker
non-votes" will count toward the presence of a quorum and with respect to voting
on Proposal One and Proposal Two will be treated like an abstention, which will
have no effect if the requirements of a quorum are otherwise met.
PROPOSAL ONE
The Board of Directors has approved and recommends to the Shareholders
approval of the proposed amendment to the Company's Charter to delete Article 7
of the Charter (the "Debt Limitation"). Article 7 of the Charter currently
provides as follows:
7. Limitation on Indebtedness. The Corporation may not incur or allow
to exist as the end of any month Indebtedness (as defined below) in an
amount in excess of thirty percent (30%) of the Corporation's investment in
hotel properties, at cost, and after giving effect to the Corporation's use
of proceeds from any Indebtedness. For purposes of the foregoing
restrictions, "Indebtedness" of the Corporation shall mean all obligations
of the Corporation, its subsidiaries or any partnership in which the
Corporation serves as general partner, for borrowed money (including all
notes payable and drafts accepted representing extensions of credit) and
all obligations evidenced by bonds, debentures, notes or other similar
instruments on which interest charges are customarily paid, including
obligations under capital leases.
The Debt Limitation was developed at the time of the Company's IPO in
August 1993. Since the IPO, the Company has acquired, through the Partnership, a
total of 48 hotels, which acquisitions were financed principally with proceeds
from the Company's public offerings of Common Stock. The Company's ability to
raise equity capital is dependent, in large part, upon capital market
conditions, including the general levels of interest rates. The Board of
Directors believes adoption of Proposal One will increase the Company's ability
to obtain capital on advantageous terms to take advantage of acquisition and
development opportunities. Also, since the IPO, a number of other hotel REITs
and entities have been formed for purposes similar to the Company and the
Company believes the market for hotel acquisitions has become more competitive.
Most of these entities have no corporate limitation on their ability to incur
indebtedness or have limitations which are higher than the Company's Debt
Limitation. As competition for acquisitions has increased, the ability of buyers
to close on acquisitions, without a financing contingency, can be an important
advantage in acquiring hotel properties on favorable terms.
The Company believes that it is important for the Company to have
flexibility in financing the acquisitions of hotel properties. The Company
believes that as the Company continues to grow it will have access to a range of
financing alternatives, including public and private issuances of debt
securities as well as continued equity financings. Management believes that the
selective use of longer term debt can lower the Company's overall cost of
capital and increase shareholder value. Management believes adoption of Proposal
One will permit the Company to access debt financing sources more readily while
maintaining a policy limiting indebtedness to a level which management believes
is prudent.
If Proposal One is approved by vote of the shareholders of the Company at
the Special Meeting, the Board of Directors intends to adopt a policy, limiting
the amount of indebtedness that the Company will incur to an amount not in
excess of approximately 40% of the Company's investment in hotel properties, at
cost,
3
<PAGE> 6
after giving effect to the Company's use of proceeds from any indebtedness and
accounting for all investments in hotel properties under the purchase method of
accounting. As of April 30, 1996, the Company had outstanding indebtedness of
approximately $34.4 million, including approximately $26.1 million under its $50
million line of credit and approximately $8.3 million of other mortgage
indebtedness.
If Proposal One is approved by the Shareholders, there will be no
limitation in the Company's Charter or bylaws on the Company's ability to incur
indebtedness and the Board of Directors, in its discretion, will be able to
change its policy on limiting debt without shareholder approval. The elimination
of the Debt Limitation in the Charter will increase the risk that the Company
could become highly leveraged, resulting in an increase in debt service that
could adversely affect the Company's cash flow and ability to make distributions
to its shareholders and create an increased risk of default on its obligations
and increased risk of foreclosure on its property securing debt.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF PROPOSAL ONE TO
AMEND THE COMPANY'S CHARTER BY DELETING ARTICLE 7.
PROPOSAL TWO
Article 14 of the Company's Charter currently contains provisions (the
"Share Transfer Restrictions") which restrict the transfer of shares of the
Company's capital stock, if, following such transfer, any person would own more
than 9.9% of the outstanding shares of capital stock of the Company (including
any shares deemed to be owned by such persons under applicable provisions of the
Internal Revenue Code). The Share Transfer Restrictions, which are similar to
provisions found in the charter documents of many REITs, are designed to help
the Company monitor compliance with certain REIT tax law requirements which
provide that not more than 50% of the Company's outstanding capital stock can be
owned, directly or indirectly, by five or fewer persons. The Board of Directors
has approved and recommends to the shareholders that they approve and adopt an
amendment to the Company's Charter that would add a new paragraph (k) to Article
14, providing in its entirety as follows:
(k) Securities Exchange Transactions. Nothing in this Charter shall
prohibit the settlement of any transaction entered into through the
facilities of any national securities exchange registered under the
Securities Exchange Act of 1934 (the "Exchange Act") or of the national
market system of a national securities association registered under the
Exchange Act. The immediately preceding sentence shall not limit the
authority of the Board of Directors to take any and all actions it deems
necessary or advisable to protect the Corporation and the interests of its
shareholders in preserving the Corporation's status as a REIT, so long as
such actions do not prohibit the settlement of any transactions entered
into through the facilities of any national securities exchange registered
under the Exchange Act or of the national market system of a national
securities association registered under the Exchange Act.
In addition, the phrase "and paragraph (k)" would be added to the first sentence
in paragraph (d) of Article 14 of the Charter following the phrase
"Notwithstanding any other provision hereof to the contrary and subject to the
provisions of paragraph (e)".
The proposed amendment clarifies that nothing in the Company's Charter
would prohibit the settlement of any transaction entered into through the
facilities of any national securities exchange registered under the Exchange Act
or of the national market system of a national securities association registered
under the Exchange Act, while maintaining the authority of the Board of
Directors of the Company to take action necessary to maintain the Company's
status as a REIT for federal income tax purposes.
4
<PAGE> 7
The Company's Common Stock is currently traded on the Nasdaq Stock Market.
The Board of Directors believes it is important to assure the investment
community and any securities exchange or market system on which the Company's
securities may be traded in the future that the Share Transfer Restrictions in
the Company's Charter designed to protect the Company's status as a REIT do not
prohibit the settlement of any transactions through the facilities of such
exchange or system. The Company has been advised that the New York Stock
Exchange ("NYSE") currently requires a REIT having share transfer restrictions
to clarify that such restrictions will not prohibit settlement of any
transactions entered into through the NYSE. Adoption of Proposal Two would give
the Company the flexibility to list the Company's securities for trading on a
national securities exchange such as the NYSE, although the Company has not made
any definitive decisions regarding applying for such a listing.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF PROPOSAL TWO.
OWNERSHIP OF THE COMPANY'S COMMON STOCK
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 30, 1996, regarding
(i) each person known to the Company to be the beneficial owner of more than
five percent of its Common Stock and its Preferred Stock, (ii) each director,
(iii) each executive officer and (iv) all directors and executive officers as a
group. Unless otherwise indicated, such shares are owned directly, and the
indicated person has sole voting and investment power.
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE
COMMON STOCK PREFERRED STOCK(15)
------------------------------------ ----------------------------------
AMOUNT AND AMOUNT AND
NATURE OF PERCENT OF NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS BENEFICIAL OWNERSHIP CLASS
- ------------------------------------ -------------------- ---------- -------------------- ----------
<S> <C> <C> <C> <C>
Robert M. Solmson(1)(2)............. 184,695 * -- --
Minor W. Perkins(3)................. 80,000 * -- --
J. William Lovelace(2)(4)........... 86,100 * -- --
Michael J. Pascal(2)(5)............. 51,000 * -- --
Bruce E. Campbell, Jr.(6)(7)........ 25,000 * -- --
H. Lance Forsdick(6)(7)(8).......... 77,573 * -- --
Harry J. Phillips, Sr.(6)(7)........ 36,000 * -- --
Michael S. Starnes(6)(7)............ 40,000 * -- --
John W. Stokes, Jr.(6)(7)(9)........ 23,000 * -- --
FMR CORP............................ 2,405,100(10) 9.9% -- --
82 Devonshire Street
Boston, MA 02109
Merrill Lynch & Co., Inc. .......... 2,387,100(11) 9.8% -- --
World Financial Center, North
Tower
250 Vesey Street
New York, NY 10281
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE
COMMON STOCK PREFERRED STOCK(15)
------------------------------------ ----------------------------------
AMOUNT AND AMOUNT AND
NATURE OF PERCENT OF NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS BENEFICIAL OWNERSHIP CLASS
- ------------------------------------ -------------------- ---------- -------------------- ----------
<S> <C> <C> <C> <C>
Forstmann-Leff Associates, Inc. .... 1,996,250(12) 8.2% -- --
55 East 52nd Street
New York, NY 10055
Snyder Capital Management, Inc. .... 1,761,600(13) 7.2% -- --
350 California Street, Suite 1460
San Francisco, CA 94104
LGT Asset Management, Inc. ......... 1,410,300(14) 5.8% -- --
50 California Street, 27th Floor
San Francisco, CA 94111
Doubletree Corporation.............. -- -- 973,684 100.0%
410 North 44th Street, Suite 700
Phoenix, AZ 85508
All Directors and Executive Officers
as a Group (9 persons)(1)(2)(3)(4)(5)
(6)(7)(8)(9)(16).................. 603,368 2.5% -- --
</TABLE>
- ---------------
* Represents less than 1% of the outstanding Common Stock.
(1) Includes 7,086 shares issuable to a trust of which Mr. Solmson's children
are beneficiaries and over which Mr. Solmson has sole investment and voting
power, upon the trust's exercise of rights to redeem units of partnership
interest in RFS Partnership, L.P. for shares of Common Stock (the
"Redemption Rights"), 11,500 shares owned by trusts for the benefit of Mr.
Solmson's children, 15,000 shares of restricted Common Stock which vest at
the rate of 5,000 shares in each of October 1996, 1997 and 1998 and 15,000
shares of restricted Common Stock which vest at the rate of 5,000 shares
each April of 1997, 1998 and 1999. Prior to vesting, Mr. Solmson is
entitled to vote and receive distributions with respect to unvested shares
of restricted Common Stock. Any unvested shares at the time Mr. Solmson
ceases to be an officer will be forfeited. Also includes 5,609 shares
issuable to Mr. Solmson upon exercise of Redemption Rights and 80,000
shares issuable to Mr. Solmson upon exercise of vested options granted
under the Amended and Restated 1993 Restricted Stock and Stock Option Plan
(the "Plan").
(2) Does not include 60,000, 30,000 and 15,000 shares issuable upon exercise of
options granted under the Plan in October 1993 to Messrs. Solmson,
Lovelace, and Pascal respectively, which options vest at the rate of
20,000, 10,000 and 5,000 shares, respectively, in each of October 1996,
1997 and 1998, or 60,000, 30,000 and 30,000 shares issuable upon exercise
of options granted under the Plan in April 1994 to Messrs. Solmson,
Lovelace and Pascal, respectively, which options vest at the rate of
20,000, 10,000 and 10,000 shares, respectively, in each of April 1997, 1998
and 1999.
(3) Includes 1,900 shares owned by Mr. Perkins' wife and 75,000 shares of
restricted Common Stock which vest at the rate of 15,000 shares in each of
April 1997, 1998, 1999, 2000 and 2001. Prior to vesting, Mr. Perkins is
entitled to vote and receive distributions with respect to unvested shares
of restricted Common Stock. Any unvested shares at the time Mr. Perkins
ceases to be an officer will be forfeited. Does not include 200,000 shares
issuable upon exercise of options granted under the Plan in April 1996
which options vest at the rate of 40,000 shares in each of April 1997,
1998, 1999, 2000 and 2001.
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<PAGE> 9
(4) Includes 9,000 shares of restricted Common Stock which vest at a rate of
3,000 shares in each of October 1996, 1997 and 1998 and 9,000 shares of
restricted Common Stock which vest at the rate of 3,000 shares in each of
April 1997, 1998 and 1999. Prior to vesting Mr. Lovelace is entitled to
vote and receive distributions with respect to unvested shares of
restricted Common Stock. Any unvested shares at the time Mr. Lovelace
ceases to be an officer will be forfeited. Also includes 40,000 shares
issuable to Mr. Lovelace upon exercise of vested options granted under the
Plan.
(5) Includes 6,000 shares of restricted Common Stock which vest at the rate of
2,000 shares per year in each of October 1996, 1997 and 1998 and 6,000
shares of restricted Common Stock which vest at the rate of 2,000 shares
per year in each of April 1997, 1998 and 1999. Prior to vesting, Mr. Pascal
is entitled to vote and receive distributions with respect to unvested
shares of restricted Common Stock. Any unvested shares at the time Mr.
Pascal ceases to be an officer will be forfeited. Also includes 30,000
shares issuable to Mr. Pascal upon exercise of vested options granted under
the Plan.
(6) Includes 3,000 shares of restricted Common Stock issued to each Independent
Director. The shares vest at the rate of 1,000 shares in August of each
year for Messrs. Campbell, Starnes and Stokes and January of each year for
Mr. Phillips. Also includes 3,000 shares of restricted Common Stock issued
to each non-employee director under the Plan which shares vest at the rate
of 1,000 shares per year in each of April 1997, 1998 and 1999. Prior to
vesting, the director is entitled to vote and receive distributions with
respect to unvested shares. Any unvested shares at the time a director
ceases to be a director will be forfeited.
(7) Includes 10,000 shares issuable to each non-employee director upon exercise
of vested options granted under the Plan. Does not include 15,000 shares
issuable upon exercise of options granted under the Plan to each
non-employee director which options vest at the rate of 5,000 shares per
year in each of April 1997, 1998 and 1999.
(8) Includes 20,573 shares issuable to Mr. Forsdick upon exercise of Redemption
Rights. Also includes 1,000 shares owned by Mr. Forsdick's wife.
(9) Includes 1,000 shares owned by Mr. Stokes' wife.
(10) Based on information contained in Schedule 13G dated February 14, 1996, and
filed with the SEC on that dated. FMR Corp. reported that it has sole
voting power with respect to 268,800 shares of Common Stock and sole
dispositive power with respect to 2,405,100 shares of Common Stock.
(11) Based on information contained in Schedule 13G dated January 30, 1996 and
filed with the SEC in February, 1996. Merrill Lynch & Co. reported that it,
and various of its subsidiaries, have shared voting power and shared
dispositive power with respect to the shares of Common Stock.
(12) Based on information contained in Amendment No. 3 to Schedule 13G dated
February 13, 1996 and filed with the SEC on that date. Forstmann-Leff
Associates, Inc. reported that, through its subsidiary FLA Asset
Management, Inc., it has sole voting power with respect to 1,005,650 shares
of Common Stock, to 1,154,650 shares of Common Stock and shared dispositive
power with respect to 841,600 shares of Common Stock.
(13) Based on information contained in Schedule 13G, dated February 6, 1996 and
filed with the SEC on February 7, 1996. Snyder Capital Management, Inc.
reported that it has sole voting power with respect to 126,300 shares of
Common Stock, shared voting power with respect to 1,455,300 shares of
Common Stock, sole dispositive power with respect to 126,300 shares of
Common Stock and shared dispositive power with respect to 1,635,300 shares
of Common Stock.
(14) Based on information contained in Schedule 13G dated February 13, 1996 and
filed with the SEC in February, 1996. LGT Asset Management, Inc. reported
that it has sole voting power and sole dispositive power with respect to
the shares of Common Stock.
7
<PAGE> 10
(15) Each share of Preferred Stock is entitled to one vote. The Preferred Stock
and the Common Stock will vote together as a class on all matters being
submitted to shareholders at the Special Meeting.
(16) Assumes issuance of shares upon exercise of Redemption Rights to the named
person(s) but no other issuances of Redemption Rights by other persons.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
The Board of Directors will make provision for presentation of appropriate
proposals by shareholders at the 1997 annual meeting of shareholders, provided
that such proposals are submitted by eligible shareholders who have complied
with the relevant regulations of the SEC. Shareholder proposals intended to be
submitted for presentation at the 1997 annual meeting of shareholders of the
Company must be in writing and must be received by the Company at its executive
offices on or before December 1, 1996 for inclusion in the Company's proxy
statement and the form of proxy relating to such annual meeting.
OTHER MATTERS
The Board of Directors knows of no other business to be brought before the
Special Meeting. If any other matters properly come before the Special Meeting,
the proxies will be voted on such matters in accordance with the judgment of the
persons named as proxies therein, or their substitutes, present and acting at
the meeting.
The Company will furnish to each beneficial owner of shares of Common Stock
entitled to vote at the Special Meeting, upon written request to Michael J.
Pascal, the Company's Secretary and Treasurer, at the Company's executive
offices at 889 Ridge Lake Boulevard, Suite 100, Memphis, Tennessee, telephone
(901) 767-5154, copies of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 and Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1996, including the financial statements and
financial statement schedules filed by the Company with the SEC therewith.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Michael J. Pascal
------------------------
MICHAEL J. PASCAL
Secretary and Treasurer
May 17, 1996
8
<PAGE> 11
APPENDIX A
PROXY
RFS HOTEL INVESTORS, INC.
SPECIAL MEETING OF SHAREHOLDERS
JUNE 21, 1996
The undersigned hereby appoints Robert M. Solmson and Michael J. Pascal, or
either of them, with full power of substitution in each, proxies (and if the
undersigned is a proxy, substitute proxies) to vote all shares of Common Stock
of the undersigned in RFS Hotel Investors, Inc. at the Special Meeting of
Shareholders to be held at the Company's offices, 889 Ridge Lake Boulevard,
Suite 100, Memphis, Tennessee, at 10:00 a.m., local time, on Friday, June 21,
1996 and at any adjournment(s) thereof, as specified below:
1. Proposal to delete Article 7 of the Company's Charter which limits the
Company's consolidated indebtedness to 30% of the Company's investment in
hotel properties, at cost.
/ / FOR / / AGAINST / / ABSTAIN
2. Proposal to amend Article 14 of the Company's Charter to provide that
nothing contained therein will prohibit the settlement of any transaction
entered into through the facilities of any national securities exchange
registered under the Exchange Act or on the national market system of a
national securities association registered under the Exchange Act.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies (and if the undersigned is a proxy, any
substitute proxies) are authorized to vote upon such other business as may
properly come before the meeting.
(PLEASE SEE REVERSE SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE ON THIS CARD, THE PROXY
WILL BE VOTED "FOR" PROPOSAL ONE AND PROPOSAL TWO.
Dated: , 1996
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Signature
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Signature (if held jointly)
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Title
Please sign exactly as name
appears hereon. When interests
are held by joint tenants, all
owner(s) need to sign. When
signing as an attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
PRE-PAID ENVELOPE.
