BUCKHEAD AMERICA CORP
8-K, 1998-01-09
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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


       Date of Report (Date of earliest event reported): December 22, 1997


                          BUCKHEAD AMERICA CORPORATION
               (Exact name of registrant as specified in charter)


                         Commission File Number 0-22132


       Delaware                                    58-2023732
(State or other jurisdiction of           (IRS Employer Identification No.)
      incorporation)


 4243 Dunwoody Club Drive,
          Suite 200                                     30350
       Atlanta, Georgia                              (Zip Code)
(Address of principal executive offices)



        Registrant's telephone number including area code (770) 393-2662



  (Former name or former address, if changed since last report) Not Applicable







<PAGE>




ITEM 5.  OTHER EVENTS.

         On December 22, 1997,  Buckhead  America  Corporation  (the  "Company")
completed  a  private  placement  of $5  million  of  five-year,  eight  percent
convertible  debentures  ("Debentures")  to  funds  represented  by Bay  Harbour
Management,  L.C., ("Bay Harbour") a subsidiary of Tower Investment  Group, Inc.
("Tower").  Tower currently owns or controls  approximately 15% of the Company's
outstanding common Stock.

         The Debentures are  convertible  into shares  ("Conversion  Shares") of
Common  Stock  of the  Company  at a  price  of $9 per  share.  Pursuant  to the
Debenture Purchase  Agreement,  Bay Harbour has registration rights with respect
to the Shares and the Company is  required  to use its best  efforts to list the
Conversion Shares on the Nasdaq Stock Market.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.

         (a)      Financial Statements.

                  Not Applicable.

         (b)      Pro Forma Financial Information.

                  Not Applicable.

         (c)      Exhibits.

EXHIBIT
NUMBER                              DESCRIPTION

10.1      Form of Amended and Restated  Debenture  (incorporated by reference to
          Exhibit II to the Schedule  13D of Bay  Harbour,  Tower and Steven Van
          Dyke filed December 31, 1997 (File No. 005-47807)).

10.2      Debentures  Purchase  Agreement  dated as of December 22, 1997 between
          the Company and Bay Harbour for its managed accounts.

99        Press Release

504202.1

<PAGE>



                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                      BUCKHEAD AMERICA CORPORATION



Date:  January 9, 1998                By:/s/ Robert B. Lee
                                         ---------------------------------------
                                         Robert B. Lee, Vice President and Chief
                                         Financial Officer



504202.1




                                                                [Execution Copy]


________________________________________________________________________________


                                   $5,000,000

                         FIVE-YEAR CONVERTIBLE DEBENTURE





                          DEBENTURE PURCHASE AGREEMENT

                                      dated

                                December 22, 1997

                                     between

                          BUCKHEAD AMERICA CORPORATION

                                       and

                          BAY HARBOUR MANAGEMENT, L.C.


________________________________________________________________________________


<PAGE>


          DEBENTURES  PURCHASE  AGREEMENT  dated as of  December  22,  1997 (the
          "Agreement"),   between  BUCKHEAD  AMERICA  CORPORATION,   a  Delaware
          corporation  (the  "Company"),  and BAY HARBOUR  MANAGEMENT,  L.C.,  a
          Florida limited company, for its managed accounts (the "Purchaser").

          The parties hereto agree as follows:

     Issuance of Securities and Reservation of Reserved  Shares.  Subject to the
terms and conditions of this Agreement,  the Company has authorized the issuance
of Five Year Convertible Debentures (the "Debentures") in substantially the form
of Exhibit A hereto in the aggregate  principal  amount of  $5,000,000,  and the
Company has  authorized  the  reservation  of a  sufficient  number of shares of
Common Stock, par value $.01 per share (the "Common  Stock"),  of the Company to
provide for conversion of the Debentures (such reserved shares being referred to
herein as the "Reserved Shares").

     2.  Purchase,  Sale and  Delivery.  On the  basis  of the  representations,
warranties,  covenants and agreements,  but subject to the terms and conditions,
set forth in this  Agreement,  at the Closing (as  defined  below),  the Company
agrees  to sell and  deliver  to the  Purchaser,  and the  Purchaser  agrees  to
purchase from the Company,  the  Debentures  at 100% of the aggregate  principal
amount of the Debentures (the "Purchase Price"). The closing (the "Closing") for
the consummation of the  transactions  contemplated by this Agreement shall take
place on December 22, 1997 at the offices of Howard,  Darby & Levin, 1330 Avenue
of the Americas,  New York, New York 10019 or on such other date and location as
the Purchaser and the Company may mutually agree (such date of the Closing being
herein referred to as the "Closing Date"). The Purchase Price shall be delivered
to the  Company in funds  payable at Closing  by wire  transfer  of  immediately
available Federal funds  (instructions for which will be provided by the Company
to the Purchaser  prior to the Closing Date),  against receipt of the Debentures
issued to the order of the Purchaser's  designees (each a "Managed  Account" and
collectively,  the  "Managed  Accounts")  as set  forth in Annex I hereto in the
respective principal amount set forth beside the name of Managed Account.

     3.  Representations  and Warranties of the Company.  The Company represents
and warrants, and agrees, as follows:

          (a)  Organization.  The  Company and each of the  subsidiaries  of the
Company  (each  a  "Subsidiary"  and,  collectively,  the  "Subsidiaries"),  are
corporations  duly  organized,  validly  existing and in good standing under the
laws of their respective jurisdictions of incorporation,  and are duly qualified
and in  good  standing  to do  business  in  each  jurisdiction  in  which  such
qualification is necessary because of the property owned or leased or because of
the nature of business conducted by it, except for those jurisdictions where the
failure to be so qualified would not,  individually or in the aggregate,  have a
material  adverse  effect on the  condition  (financial or  otherwise),  assets,
liabilities,  operations, earnings, business or prospects of the Company and its
Subsidiaries, taken as a whole (a "Material Adverse Effect").


<PAGE>






          (a) Capital Stock; Indebtedness; Liens.

               (i) The  authorized  capital  stock of the Company as of the date
hereof consists of 3,000,000  shares of Common Stock,  par value $.01 per share,
and  200,000  shares of  Preferred  Stock,  par value $100 per  share,  of which
1,897,779  shares  of Common  Stock and  30,000  shares of  Preferred  Stock are
validly issued and outstanding, fully paid and non-assessable,  with no personal
liability attaching to the ownership thereof.  All outstanding shares of capital
stock of the Company  are duly  authorized  and not  subject to any  pre-emptive
rights.  Except for such  1,897,780  shares of Common  Stock,  30,000  shares of
Preferred Stock, the options set forth in Schedule 1(b)(ii),  there are no other
shares  of  capital  stock  or  other   securities  of  the  Company  issued  or
outstanding.

               (ii)  Except  as set  forth in  Schedule  1(b)(ii),  there are no
options, warrants, rights, calls, contracts,  commitments or agreements to which
the Company is a party or is bound  relating  to any shares of capital  stock or
other securities of the Company, whether or not outstanding.  Except for certain
former  stockholders of Lodgekeeper,  Inc. for whom the Company  maintains a S-3
registration  statement  with File No.  333-37691 (the  "Lodgekeeper  S- 3"), no
person has any right to cause the Company to effect the  registration  under the
Securities Act of 1933, as amended (the  "Securities  Act"),  of Common Stock or
any  other  securities  of the  Company.  There  are no  voting  trusts,  voting
agreements,  proxies or other  agreements  or  instruments  with  respect to the
voting of the Company's capital stock to which the Company is a party or, to the
best of the  Company's  knowledge,  among or between any persons  other than the
Company.

          (c)   Authorization   of  Agreement.   The  execution,   delivery  and
performance by the Company of this Agreement are within the Company's  corporate
powers and have been duly  authorized by all requisite  corporate  action by the
Company;  and this Agreement has been duly executed and delivered by the Company
and constitutes the valid and binding obligation of the Company,  enforceable in
accordance with its terms.

          (d)  Authorization of Debentures.  The issuance,  sale and delivery of
the  Debentures  are within the  Company's  corporate  powers and have been duly
authorized by all requisite  corporate  action of the Company,  and when issued,
sold and delivered in accordance  with the  provisions of this  Agreement,  each
Debenture  will  constitute  the valid and binding  obligation  of the  Company,
enforceable in accordance with its terms.

          (e) Authorization of Shares. Each Debenture is convertible into Common
Stock in accordance with the terms of this Agreement and of each Debenture.  The
Company  has duly  reserved a  sufficient  number of shares of Common  Stock for
issuance  upon  conversion  of each  Debenture.  The  reservation,  issuance and
delivery of the Reserved  Shares are within the Company's  corporate  powers and
have been duly authorized by all requisite corporate action of the Company,  and
when issued and delivered in accordance with the terms of this Agreement and the
terms  of the  Debentures,  the  Reserved  Shares  will be  validly  issued  and
outstanding,  fully paid and non-assessable with no personal liability attaching
to the  ownership  thereof,  and not subject to  preemptive or any other similar
rights of the  shareholders  of the Company or others.  The  stockholders of the
Company have no preemptive  rights with respect to the Debentures,  the Reserved
Shares or the Common Stock.

504231.1

<PAGE>






          (f) Non-Contravention;  No Required Consents. The execution,  delivery
and  performance  of this  Agreement,  the  issuance,  sale and  delivery of the
Debentures and the  reservation,  issuance and delivery of the Reserved  Shares,
and compliance  with the  provisions  hereof and thereof by the Company will not
(i) violate any applicable provision of law, statute, rule or regulation, or any
ruling,   writ,   injunction,   order,   judgment,   or  decree  of  any  court,
administrative  agency or other governmental body applicable to the Company, any
of the  Subsidiaries or any of their  properties or assets or (ii) conflict with
or result in any breach of any of the terms,  conditions  or  provisions  of, or
constitute  (with due notice or lapse of time,  or both) a default (or give rise
to any right of termination,  cancellation or  acceleration)  under or result in
the creation of any lien,  security interest,  charge or encumbrance upon any of
the properties or assets of the Company under the Company's or any  Subsidiary's
certificate of  incorporation  or bylaws,  or (x) any material note,  indenture,
mortgage,  lease,  contract,  agreement or  instrument to which the Company is a
party or by which it or any of its properties or assets are bound or affected or
(y) any material note, indenture,  mortgage, lease, agreement or other contract,
agreement or instrument to which any Subsidiary is a party or by which it or any
of its properties or assets are bound or affected.  Except for the filing of any
notice  subsequent to the Closing that may be required under applicable  Federal
or state securities laws or the Nasdaq Stock Market (which,  if required,  shall
be filed on a timely  basis as may be so  required),  no  consent,  approval  or
authorization  of, or declaration to, or filing with, any Person is required for
the valid authorization,  execution, delivery, and performance by the Company of
this Agreement or for the valid  authorization,  issuance,  sale and delivery of
the  Debentures  or for  the  valid  authorization,  reservation,  issuance  and
delivery of the Reserved  Shares.  The term "Person",  as used herein,  means an
individual, a corporation,  a partnership, a limited liability company, a trust,
an  unincorporated  association or any other entity or organization,  including,
without  limitation,  a  government  or  political  subdivision  or  an  agency,
instrumentality or official thereof.

          (g) Litigation. Except as disclosed in the Reports (as defined below),
there are no actions,  suits, claims,  investigations or legal or administrative
or  arbitration  proceedings  pending or, to the knowledge of the Company or any
Subsidiary,  threatened  against or  affecting  the  Company or any  Subsidiary,
whether at law or in equity,  or before or by any Federal,  state,  municipal or
other   governmental   department,   commission,   board,   bureau,   agency  or
instrumentality  which  individually  or in the  aggregate  would,  if adversely
determined,  have a Material  Adverse Effect,  or which in any manner draws into
question the validity of this  Agreement,  the Debentures or the Reserved Shares
or the transactions contemplated hereby or thereby.

          (h) Financial Statements. The consolidated financial statements of the
Company and the  Subsidiaries  set forth in the (i)  Company's  Annual Report on
Form  10-KSB for the year ended  December  31,  1996,  reported  on by KPMG Peat
Marwick LLP and (ii)  Company's  Quarterly  Reports on Form 10-QSB for the three
month  periods ended March 31, 1997,  June 30, 1997,  and September 30, 1997, in
each case fairly present the consolidated  financial position of the Company and
the Subsidiaries as of such dates and the consolidated  results of operation and
cash flows for such  periods  then  ended in  conformity  with  GAAP.  KPMG Peat
Marwick LLP is an independent accountant as defined under the Securities Act and
the rules and regulations promulgated thereunder.

504231.1

<PAGE>






          (i) Absence of Changes. Since September 30, 1997, the Company and each
Subsidiary has been operated in the ordinary course of business  consistent with
past  practice  and there has not been (i) any  material  adverse  change in the
condition (financial or otherwise), assets, liabilities,  operations,  earnings,
business or prospects of the Company and its Subsidiaries,  taken as a whole; or
(ii)  any  declaration,  setting  aside  or  payment  of any  dividend  or other
distribution  with  respect  to any  shares of Common  Stock,  or any  direct or
indirect redemption,  purchase or other acquisition of any such shares of Common
Stock.

          (j) No Defaults.  Neither the Company nor any Subsidiary is in default
(i)  under  its  certificate  of  incorporation  or  bylaws,  or any  indenture,
mortgage,  lease,  purchase or sales order, or any other contract,  agreement or
instrument to which the Company or any Subsidiary is a party or by which they or
any of their properties are bound or affected or (ii) with respect to any order,
writ,  injunction  or decree of any court or any  Federal,  state,  municipal or
other domestic or foreign governmental  department,  commission,  board, bureau,
agency or instrumentality, which defaults individually or in the aggregate would
have a Material  Adverse Effect.  There exists no condition,  event or act which
constitutes,  or which after notice, lapse of time, or both, would constitute, a
default  under  any of the  foregoing,  which  defaults  individually  or in the
aggregate would have a Material Adverse Effect.

          (k) SEC Reports.  The Company has  delivered to the  Purchaser its (i)
Annual  Report  on Form  10-KSB  for the year  ended  December  31,  1996,  (ii)
Quarterly Reports on Form 10-QSB for the three months ended March 31, 1997, June
30, 1997, and September 30, 1997 and (iii) Current  Reports on Form 8-K and Form
8-K/A dated April 25, 1997, May 22, 1997, May 29, 1997,  June 9, 1997,  July 22,
1997,  October 8, 1997,  December 8, 1997 and December 12, 1997  (together,  the
"Reports"). The description of the business,  operations,  properties and assets
of the Company contained in the Reports, as well as all other factual statements
concerning the Company contained therein,  are true, correct and complete in all
material  respects and do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.

          (l) Offering  Exemption.  Assuming the accuracy of the representations
set forth in Article 4, the offering and sale of the Debentures and the issuance
of the Reserved  Shares upon  conversion of the  Debentures are each exempt from
registration under the Security Act pursuant to Section 4(2) of such Act.

          (m) SEC Filings.  The Company has timely filed all reports required to
be filed under the Securities  Exchange Act of 1934, as amended,  (the "Exchange
Act") and any other material reports or documents  required to be filed with the
Securities and Exchange  Commission ("SEC") since November 30, 1996. The Company
meets  the  requirements  for the use of Form  S-3 for the  registration  of the
resale of the Reserved Shares by the Purchaser.

504231.1

<PAGE>






          (m)  Representations  and Warranties of the  Purchaser.  The Purchaser
represents and warrants to the Company as follows:

               (a)  Organization.  The  Purchaser  is  a  limited  company  duly
organized,  validly existing and in good standing under the laws of Florida, and
is duly  qualified and in good standing to do business in each  jurisdiction  in
which such qualification is necessary because of the property owned or leased or
because  of  the  nature  of  business   conducted  by  it,   except  for  those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect.

               (b)  Authorization  of  Agreement.  The  execution,  delivery and
performance  by the  Purchaser  of this  Agreement  are within  the  Purchaser's
company powers and have been duly authorized by all requisite  company action by
the  Purchaser;  and this  Agreement has been duly executed and delivered by the
Purchaser and  constitutes  the valid and binding  obligation of the  Purchaser,
enforceable in accordance with its terms.

               (c) Investment  Purpose.  The Managed  Accounts are acquiring the
Debentures for investment and not with a view to the distribution thereof except
in compliance with the Securities Act.

               (d) Investment Advisor; Managed Accounts. The Purchaser is (i) an
investment adviser  registered under Section 203 of the Investment  Advisers Act
of 1940, (ii) authorized to act in its capacity as investment  advisor on behalf
of each Managed  Account to (A) execute and perform this  Agreement and (B) make
the  representations  set forth herein,  and (iii) not required to register as a
broker-dealer pursuant to Section 15 of the Exchange Act.

               (e) Restricted  Securities.  The Purchaser  understands  that the
Debentures  have not been  registered  under the  Securities  Act; and that each
Debenture  is a  restricted  security  within the  meaning of Rule 144 under the
Securities Act.

               (f) Accredited  Investor.  Each Managed  Account is an Accredited
Investor (as that term is defined in Rule 501 of Regulation D promulgated  under
the Securities Act of 1933, as amended. The Purchaser is a resident of the State
of  Florida.   The  Managed  Accounts  are  organized  under  the  laws  of  the
jurisdiction set forth beside the name of each Managed Account in Annex I hereto
and conduct  their  investment  activities  through the offices of the Purchaser
located in Florida.  The Managed  Accounts do not conduct  business in any other
location.

               (g) Information.  The Purchaser acknowledges that it has received
copies of the Reports,  the Lodgekeeper S-3 and all other information  requested
from the Company.

          Conditions of  Obligations of the  Purchaser.  The  obligations of the
Purchaser to perform under this Agreement are subject to the satisfaction of the
following conditions at the Closing unless waived by the Purchaser:

     5. Debentures.  The Purchaser shall have received duly executed Debentures,
substantially  in the  form  of  exhibit  A  hereto,  evidencing  the  aggregate
principal amount of $5,000,000.

504231.1

<PAGE>






          (b) Origination Fee. The Purchaser, on behalf of the Managed Accounts,
shall  have  received  from the  Company  an  origination  fee in the  amount of
$100,000 in immediately available funds.

          (c) Purchaser's  Fees and Expenses.  The Purchaser shall have received
from  the  Company  an  amount,  not to  exceed  $50,000,  equal to all fees and
expenses paid or incurred by the Purchaser in connection  with the  negotiation,
execution and delivery of this Agreement and  consummation  of the  transactions
contemplated thereby,  including,  without limitation,  all fees and expenses of
counsel to the Purchaser, and all other related costs and expenses.

          (d) Actions Authorized; Certified Copy of Authorizing Resolutions. All
action  necessary to authorize the execution,  delivery and  performance of this
Agreement and the  consummation of the  transactions  contemplated  hereby shall
have been duly and validly taken by the Company, and the Company shall have full
power and right to consummate the transactions  contemplated hereby. The Company
shall have furnished to the Purchaser  such documents  relating to its corporate
existence and authority (including, without limitation,  certified copies of the
Company's  Certificate  of  Incorporation,  Bylaws,  resolutions  and minutes of
meetings of the Board of Directors  authorizing  this Agreement,  the Debentures
and the Reserved Shares and good standing  certificates  from the Secretaries of
State of the states of  Delaware  and  Georgia,  and such  other  matters as the
Purchaser or its counsel may reasonably request.

          (e) Legal Opinion.  The Purchaser shall have received an opinion dated
the Closing Date of Arnall,  Golden & Gregory,  LLP counsel to the Company, in a
form satisfactory to the Purchaser.

          (f)  Representations  and  Warranties;  Compliance;  No  Default.  The
representations  and  warranties  of the  Company in Section 3 shall be true and
correct in all respects on and as of the Closing  Date;  the Company  shall have
complied with all obligations,  covenants and conditions required to be complied
with by it  pursuant  to this  Agreement  or the  Debentures  on or prior to the
Closing;  and the  Purchaser  shall have  received a  certificate  signed by the
Company's  President and Chief  Executive  Officer to the foregoing  effect.  No
Event of Default under the Debentures and no event or condition which,  with the
giving of notice or the lapse of time or both,  would,  unless  cured or waived,
become such an Event of Default, shall have occurred and be continuing.

          (g) Other  Documents.  The Company is delivering to the Purchaser such
other certificates or documents as the Purchaser may reasonably request.

               (g) Transfer of Debentures.

               (a)   Restriction   on  Transfer.   A  Debenture   shall  not  be
transferable  except  upon the  conditions  specified  in this  Section 6, which
conditions  are  intended  to  ensure  compliance  with  the  provisions  of the
Securities Act in respect of the transfer of such Debenture.

               (b) Restrictive  Legend.  Each Debenture shall (unless  otherwise
permitted by the  provisions of Section 6(d)) be stamped or otherwise  imprinted
with legends in substantially the following form:

504231.1

<PAGE>








         THESE SECURITIES HAVE NOT BEEN REGISTERRED  UNDER THE SECURITIES ACT OF
         1933 OR ANY STATE  SECURITIES  ACTS OR LAWS,  AND HAVE BEEN  ISSUED AND
         SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION  REQUIREMENTS OF
         SUCH  ACTS  AND  LAWS,  INCLUDING  BUT  NOT  LIMITED  TO THE  EXEMPTION
         CONTAINED  IN  SECTION  4(2)  OF  THE  SECURITIES  ACT OF  1933.  THESE
         SECURITIES  MAY  NOT BE  SOLD  OR  TRANSFERRED  UNLESS  A  REGISTRATION
         STATEMENT  HAS  BECOME  AND IS  THEN  EFFECTIVE  WITH  RESPECT  TO SUCH
         SECURITIES  OR BUCKHEAD HAS  RECEIVED AN OPINION OF COUNSEL  REASONABLY
         SATISFACTORY TO IT, TO THE EFFECT THAT THE PROPOSED SALE OR TRANSFER IS
         EXEMPT FROM REGISTRATION  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
         AND ALL APPLICABLE STATE SECURITIES ACTS AND LAWS.

               (c)  Each   certificate  or  other   instrument   evidencing  the
securities  issued upon the  transfer  or  conversion  of a Debenture  (and each
certificate or other  instrument  evidencing any  untransferred  balance of such
Debenture)  shall bear such legend unless  transferred  pursuant to an effective
registration statement under the Securities Act or unless registration of future
transfer is not required by the applicable provisions of the Securities Act.

     7.  Registration of Registrable Stock.

          (a) Mandatory Shelf Registrations.

               (i) The Company shall, within 15 business days of delivery of (x)
a written request to register Registrable Stock (as defined below) by any holder
of Registrable  Stock or (y) the first written notice from the Purchaser (or any
other  holder of a  Debenture,  a "Holder")  of an intent to convert a Debenture
(the  "Initial  Conversion  Date"),  file  with  the  SEC a  Shelf  Registration
Statement  (as  defined  below)  relating to the offer and sale of the shares of
Common  Stock or other  securities  issued or issuable  upon  conversion  of the
Debentures (the  "Registrable  Stock") by the holders of Registrable  Stock from
time to time in  accordance  with the  methods of  distribution  elected by such
holders  and  set  forth  in  such  Shelf  Registration  Statement:  "register,"
"registered"  and  "registration"  each refer to a  registration  of Registrable
Stock  effected by filing with the SEC a  registration  statement in  compliance
with  the  Securities  Act  and  the  declaration  or  ordering  by  the  SEC of
effectiveness  of such  registration  statement.  "Shelf  Registration"  means a
registration effected pursuant to this Section 7. "Shelf Registration Statement"
means a shelf registration  statement of the Company filed with the SEC pursuant
to the provisions of this Section 7 which covers all of the  Registrable  Stock,
as  applicable,  on Form S-3 under  Rule 415 under the  Securities  Act,  or any
similar rule that may be adopted by the SEC,  amendments and supplements to such
registration  statement,  including  post-effective  amendments,  in  each  case
including  the  prospectus  contained  therein,  all  exhibits  thereto  and all
material incorporated by reference therein.

               (ii) The  Company  shall use its best  efforts  (x) to cause each
Shelf Registration  Statement to become effective as promptly as possible but in
no event more than

504231.1

<PAGE>






60 days after the Initial  Conversion Date and thereafter,  no more than 60 days
after the written request to register  Registrable  Stock, in each case,  unless
delayed by events entirely outside the control of the Company,  (y) to keep each
Shelf  Registration  Statement  continuously  effective  in order to permit  the
prospectus forming part thereof to be usable by the holders of Registrable Stock
for a period of at least six (6) months from the effective date thereof, and (z)
to cause all the Registrable Stock covered by each Shelf Registration  Statement
as of the effective date thereof to be listed on the Nasdaq  National  Market or
such other principal  securities market on which securities of the same class or
series issued by the Company are then listed or traded.

               (iii) A request to  register  Registrable  Stock may be made by a
holder of Registrable  Stock or a Holder that has provided a notice to convert a
Debenture  at any  time  after  the  Original  Issue  Date  (as  defined  in the
Debenture);  provided  that the holders of  Registrable  Stock may not make more
than  an  aggregate  of  five  (5)  independent  requests  to  the  Company  for
registration  of Registrable  Stock;  further  provided that no request shall be
made if (i) all  holders  of all shares of  Registrable  Stock are  eligible  to
resell the  Registrable  Stock pursuant to paragraph (k) of Rule 144 promulgated
under the  Securities  Act and (ii) all  shares of  Registrable  Stock have been
listed on the Nasdaq National Market or such other principal  securities  market
on which  securities  of the same class or series issued by the Company are then
listed or traded.

          (b)   Registration   Procedures.   In   connection   with  each  Shelf
Registration  Statement  to be filed by the Company  pursuant to this Section 7,
the Company shall:

               (i) prepare and file with the SEC a Shelf Registration  Statement
on Form S-3 with  respect to all  Registrable  Stock and use its best efforts to
cause such Shelf  Registration  Statement  to become  and  remain  effective  as
provided in this  Agreement for a period of at least six (6) months or until all
registered stock is sold, which ever occurs first;

               (ii)  submit to the SEC,  within  three  business  days after the
Company learns that no review of the Shelf  Registration  Statement will be made
by the staff of the SEC or that the staff of the SEC has no further  comments on
the Shelf Registration Statement, as the case may be, a request for acceleration
of  effectiveness  of the Shelf  Registration  Statement  to a time and date not
later than 48 hours after the submission of such request;

                prepare and file with the SEC such amendments and supplements to
such registration  statement and the prospectus used in connection  therewith as
may be necessary to keep such Shelf Registration Statement effective and current
for a period of at least six (6) months or until all  registered  stock is sold,
which ever occurs first, and to comply with the provisions of the Securities Act
with respect to the disposition of all shares covered by such Shelf Registration
Statement,  including  such  amendments  and  supplements as may be necessary to
reflect the intended method of disposition  from time to time of the prospective
seller or sellers of such Registrable Stock;

               (iv) furnish (x) to the  Purchaser,  and its legal  counsel,  (1)
promptly after the same is prepared and publicly distributed, filed with the SEC
or received by the Company, one copy of the Shelf Registration Statement and any
amendment thereto, each prospectus and each amendment or supplement thereto, (2)
each  letter  written by or on behalf of the  Company to the SEC or the staff of
the SEC and each item of correspondence from the

504231.1

<PAGE>






SEC or the staff of the SEC relating to such Shelf Registration Statement (other
than any portion of any thereof which contains information for which the Company
has  sought  confidential  treatment),   and  (y)  to  each  selling  holder  of
Registrable  Stock such number of copies of a prospectus in conformity  with the
requirements of the Securities Act, and such other documents, as such holder may
reasonably  request in order to facilitate the public sale or other  disposition
of the Registrable Stock owned by such holder;

               (v) use its best  efforts to  register  or qualify  the shares of
Registrable Stock covered by such Shelf Registration  Statement under such other
securities or blue sky or other applicable laws of such jurisdictions within the
United States as each  prospective  seller shall reasonably  request,  to enable
such  seller  to  consummate  the  public  sale  or  other  disposition  in such
jurisdictions of the shares of Registrable Stock owned by such seller; provided,
however,  that the Company shall not be required in connection therewith or as a
condition  thereto (x) to qualify to do business  in any  jurisdiction  where it
would not  otherwise be required to qualify but for this Section  8(b)(v) or (y)
to file a general consent to service of process in any such jurisdiction; and

               (vi) furnish to each  prospective  seller,  at the expense of the
Company, a signed counterpart,  addressed to the prospective  sellers, of (x) an
opinion  of  counsel  for the  Company,  dated the  effective  date of the Shelf
Registration Statement,  and (y) a "comfort" letter (or, in the case of any such
Person which does not satisfy the conditions  for receipt of a "comfort"  letter
specified in Statement on Auditing Standards No. 72, an "agreed upon procedures"
letter), dated the effective date of the Shelf Registration Statement, signed by
the independent  auditors who have certified the Company's financial  statements
included in the Shelf Registration  Statement,  covering  substantially the same
matters with respect to the Shelf  Registration  Statement  (and the  prospectus
included  therein) and (in the case of the "comfort" or "agreed upon procedures"
letter)  with  respect  to  events  subsequent  to the  date  of  the  financial
statements,  as are customarily  covered (at the time of such  registration)  in
opinions  of  issuer's  counsel  and  in  "comfort"  letters  delivered  to  the
underwriters in underwritten  public offerings of securities  (with, in the case
of an "agreed upon procedures" letter, such modifications or deletions as may be
required under Statement on Auditing Standards No. 35);  provided,  however that
the Company  shall only be obligated to bear the expense of the first  "comfort"
letter  requested  by the  prospective  sellers  and the  expense  to  obtain  a
"comfort"  letter in connection with another  registration  shall be paid by the
prospective sellers requesting such "comfort" letter.

          (c)  Designation  of  Underwriter.  In the  case  of any  registration
effected  pursuant  to this  Section 7, a majority in interest of the holders of
Registrable Stock shall have the right to designate the managing  underwriter in
any underwritten offering,  subject to the prior written consent of the Company,
which consent shall not be unreasonably withheld.

          (d) Cooperation by Prospective Sellers.

               (i)  Each  prospective  seller  of  Registrable  Stock,  and each
underwriter  designated  in accordance  with Section  7(c),  will furnish to the
Company such information as the Company may reasonably  require from such seller
or  underwriter  in connection  with any Shelf  Registration  Statement (and the
prospectus included therein).

504231.1

<PAGE>






               (ii) The holders holding shares of Registrable  Stock included in
the  registration  will not (until further  notice by the Company)  effect sales
thereof (or deliver a prospectus to any purchaser)  after receipt of telegraphic
or written  notice  from the  Company to suspend  sales to permit the Company to
correct or update a registration statement or prospectus. In connection with any
offering  each Holder who is a  prospective  seller,  will not use any  offering
document,  offering  circular or other  offering  materials  with respect to the
offer or sale of Registrable Stock, other than the prospectuses  provided by the
Company and any documents incorporated by reference therein.

               Expenses. All expenses incurred in complying with this Section 7,
including,  without limitation,  all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers,
Inc.),  fees and  expenses of  complying  with  securities  and "blue sky" laws,
printing  expenses  and fees and  disbursements  of counsel  for the Company and
reasonable fees and  disbursements of one counsel for the holders of Registrable
Stock, and of the independent  certified public accountants shall be paid by the
Company;  provided,   however,  that  all  underwriting  discounts  and  selling
commissions  applicable  to  the  Registrable  Stock  covered  by  registrations
effected  pursuant to this Section 7 shall not be borne by the Company but shall
be borne by the seller or sellers.

504231.1

<PAGE>






          (f)  Indemnification.

               (i) The Company  shall  indemnify and hold harmless the seller of
any shares of Registrable  Stock registered under the Securities Act pursuant to
this  Section 7, each  underwriter  of such shares,  if any,  each broker or any
other person acting on behalf of such seller and each other person,  if any, who
controls any of the foregoing persons,  within the meaning of the Securities Act
or the Exchange Act, against any losses, claims,  damages or liabilities,  joint
or several,  to which any of the foregoing  persons may become subject under the
Securities  Act,  or the  Exchange  Act or  otherwise,  insofar as such  losses,
claims,  damages or liabilities (or actions in respect  thereof) arise out of or
are based upon an untrue  statement  or alleged  untrue  statement of a material
fact contained in any registration  statement under which such Registrable Stock
was registered  under the Securities  Act, any  preliminary  prospectus or final
prospectus  contained therein,  or any amendment or supplement  thereto,  or any
document  prepared or furnished by the Company  incident to the  registration or
qualification of any Registrable  Stock pursuant to this Section 7, or arise out
of or are  based  upon the  omission  or  alleged  omission  to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under which they were made, not
misleading,  or any  violation  by the  Company of the  Securities  Act or state
securities  or "blue sky" laws  applicable to the Company and relating to action
or inaction  required of the Company in  connection  with such  registration  or
qualification  under such state securities or blue sky laws; and shall reimburse
such seller,  such underwriter,  broker or other person acting on behalf of such
seller  and each such  controlling  person  for any legal or any other  expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss,  claim,  damage,  liability  or action;  provided,  however,  the
Company  shall not be liable in such case (i) to the extent  that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged  untrue   statement  or  omission  or  alleged   omission  made  in  any
registration  statement under which such Registrable  Stock was registered under
the Securities Act, any  preliminary  prospectus or final  prospectus  contained
therein,  or any  amendment  or  supplement  thereto,  in  reliance  upon and in
conformity with written  information  furnished to the Company by such seller or
underwriter  expressly for use therein and (ii) with respect to any  preliminary
prospectus to the extent that any such loss, claim,  damage or liability of such
seller  results  from the fact that such  seller or  underwriter  sold shares of
Registrable  Stock to a person to whom there was not sent or given,  at or prior
to the written confirmation of such sale, a copy of the final prospectus,  or of
the final  prospectus  as then  amended  or  supplemented,  if the  Company  has
previously furnished copies thereof to such seller or underwriter.

               (ii)  Each  prospective  seller  of  Registrable  Stock  and  any
underwriter  acting on its behalf shall indemnify and hold harmless (in the same
manner  and to the same  extent as set forth in (i)  above)  the  Company,  each
director of the  Company,  each  officer of the Company who shall sign any Shelf
Registration  Statement  and any  person who  controls  the  Company  within the
meaning of the  Securities  Act or the Exchange  Act, with respect to any untrue
statement or omission from any Shelf  Registration  Statement,  any  preliminary
prospectus  or  prospectus  contained  therein,  or any  amendment or supplement
thereof,  or any registration or  qualification  under state securities or "blue
sky" laws, if such untrue statement or omission was made in reliance upon and in
conformity  with  written  information  furnished  to  the  Company  through  an
instrument duly executed by such seller or such underwriter, as the case may be,

504231.1

<PAGE>






specifically  for use in the  preparation of any Shelf  Registration  Statement,
preliminary prospectus, prospectus or amendment or supplement; provided that the
maximum amount of liability in respect of such indemnification shall be limited,
in the case of each prospective  seller of Registrable Stock, to an amount equal
to the net proceeds actually  received by such prospective  seller from the sale
of Registrable Stock effected pursuant to such registration,  except in the case
of an intentional misrepresentation by such prospective seller or underwriter.

               (iii) Notwithstanding the foregoing provisions of this Section 7,
if pursuant to an underwritten public offering of Common Stock, the Company, the
selling shareholders and the underwriters enter into an underwriting or purchase
agreement  relating  to  such  offering  which  contains   provisions   covering
indemnification among the parties thereto in connection with such offering,  the
indemnification  provisions  of  Section  7(f) shall be deemed  inoperative  for
purposes of such offering to the extent inconsistent therewith.

               Each party  entitled to  indemnification  under this Section 7(f)
(the  "indemnified  party")  shall give notice to the party  required to provide
indemnification (the "indemnifying party") promptly after such indemnified party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the  indemnifying  party (at its  expense)  to assume the  defense of any
claim or any litigation resulting therefrom, provided that the counsel who shall
conduct  the  defense  of  such  claim  or   litigation,   shall  be  reasonably
satisfactory  to the  indemnified  party and shall not,  without the indemnified
party's consent (which consent shall not be unreasonably  withheld),  be counsel
to the  indemnifying  party,  and the indemnified  party may participate in such
defense,  but only at such indemnified party's expense,  and provided,  further,
that the  omission by any  indemnified  party to give notice as provided  herein
shall not relieve the indemnifying  party of its obligations  under this Section
7(f)  except to the  extent  that the  omission  results  in a failure of actual
notice to the indemnifying  party and such indemnifying  party is damaged solely
as a result of the failure to give notice. No indemnifying party, in the defense
of any  such  claim or  litigation,  shall,  except  with  the  consent  of each
indemnified party, consent to entry of any judgment or enter into any settlement
which  does not  include  as an  unconditional  term  thereof  the giving by the
claimant or plaintiff to such indemnified  party of a release from all liability
in respect to such claim or litigation.

     8. Covenants.  The Company agrees that:

          (a)   Information.  The Company shall deliver to each Holder:

               (i) (A) as soon as available and in any event within 5 days after
filing of each of the  Company's  Quarterly  Reports  on Form  10-QSB  (or other
applicable form) and Current Reports on Form 8-K with the SEC, copies of each of
such reports; and (B) as soon as available and in any event within 10 days after
filing  of  each of the  Company's  Annual  Reports  on Form  10-KSB  (or  other
applicable form) including copies of the Company's Annual Report to Shareholders
and Proxy Statement with the SEC, copies of each of such reports;

               (ii) promptly upon the mailing thereof to the shareholders of the
Company generally,  copies of all information (other than as described in clause
(i)) so mailed;

               (iii)  simultaneously  with the delivery of each set of financial
statements  referred to above, a certificate of the chief  financial  officer or
the chief accounting officer of the

504231.1

<PAGE>






Company stating whether any Event of Default,  as defined in the Debentures,  or
any condition or event which, with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default, exists on the date of
such  certificate  and, if any Event of Default or any such  condition  or event
then exists,  setting forth the details thereof and the action which the Company
is taking or proposes to take with respect thereto;

               (iv) from time to time such additional  information regarding the
financial position or business of the Company and its Subsidiaries as any Holder
may reasonably  request (it being  understood and agreed that no Holder shall be
entitled to request any  confidential or proprietary  information of the Company
and its Subsidiaries pursuant to this clause (iv)).

               Inspection of Property, Books and Records. The Company will keep,
and will use its best efforts to cause each Subsidiary to keep,  proper books of
record and account in which full,  true and correct entries shall be made of all
dealings and  transactions in relation to its business and activities;  and will
permit, and will cause each Subsidiary to permit,  representatives of any Holder
at  such  Holder's  expense  to  visit  and  inspect  any  of  their  respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss  their  respective  affairs,  finances and accounts  with
their respective officers,  employees and independent public accountants, all at
such reasonable  times, upon reasonable notice and as often as may reasonably be
desired  (it being  understood  and agreed  that no Holder  shall be entitled to
request  any  confidential  or  proprietary  information  of the Company and its
Subsidiaries pursuant to this subsection (e)).

          (c) Use of Proceeds.  The Company will use the proceeds of the sale of
the Debentures for working capital,  renovation of existing hotel properties and
other valid corporate purposes.

          (d) SEC Filings and S-3 Requirements. The Company will timely file all
reports  required  to be filed  under the  Exchange  Act and any other  material
reports or  documents  required to be filed in order for the Company to meet the
requirements  for use of Form S-3 for registration of the resale of the Reserved
Shares by the Purchaser.

     9. Miscellaneous.

          (a) Survival of Representations, Warranties and Agreements. All repre-
sentations and warranties  hereunder  shall survive the Closing.  All statements
contained in any  certificate  or other  instrument  delivered by the Company or
pursuant to this Agreement or in connection with the  transactions  contemplated
by this Agreement shall constitute representations and warranties by the Company
under this Agreement.

          (b) Entire  Agreement;  Benefit.  This Agreement and the Schedules and
Exhibits hereto,  and the Debentures,  contain the entire agreement  between the
Company and the Purchaser with respect to the transactions  contemplated  hereby
and supersede  all prior  agreements  or  understandings  among the parties with
respect thereto.  This Agreement and the terms and provisions hereof are for the
sole  benefit of the  Company,  the  Purchaser,  the Managed  Accounts and their
respective successors and permitted assigns.

504231.1

<PAGE>






          (c) Headings.  Descriptive headings are for convenience only and shall
not  control or affect the  meaning or  construction  of any  provision  of this
Agreement.

          (d) Notices. All notices or other communications  provided for in this
Agreement  shall be in writing and shall be sent by confirmed  telecopy (with an
undertaking  to provide a hard copy) or  delivered  by hand or sent by overnight
courier service prepaid to the address specified below.

(d) If to the Company:

                Buckhead America Corporation
                4243 Dunwoody Club Drive
                Suite 200
                Atlanta, Georgia  30350-5206
                Attention:  Chief Executive Officer
                Telecopy:  770-393-2480

with a copy to:

                Arnall Golden & Gregory, LLP
                2800 One Atlantic Center
                1201 West Peachtree Street
                Atlanta, GA  30309
                Attention:  B. Joseph Alley, Jr.
                Telecopy:  404-873-8689

If to the Purchaser:

                Bay Harbour Management, L.C.
                885 Third Avenue, 38th Floor
                New York, NY  10022
                Attention:  Mr. Douglas Teitelbaum
                Telecopy:  212-371-7497

with a copy to:

                Howard, Darby & Levin
                1330 Avenue of the Americas
                New York, New York  10019
                Attention:  Warren G. Caywood, Esq.
                Telecopy:  212-841-1010

or to such  other  address  as the party to whom  notice is to be given may have
furnished to the other party in writing in accordance herewith.

          (e)  Counterparts.  This  Agreement  may be  executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument,  but  all  such  counterparts  together  shall  constitute  but  one
agreement.

504231.1

<PAGE>








          (f)  Amendments.  This  Agreement  shall not be altered  or  otherwise
amended  except  pursuant to an instrument in writing  signed by each of (i) the
Company and (ii) the Purchaser, so long as it holds the Debentures or any of the
Reserved Shares issued upon conversion thereof.

          (f) Assignment. This Agreement shall not be assignable by either party
without the consent of the other party, except that the Agreement, or the rights
under this  Agreement,  in whole or in part, may be assigned by the Purchaser to
any party (or parties) who purchases a Debenture.

          (h) Expenses; Documentary Taxes; Indemnification.

               (i) The Company shall pay (A) all  out-of-pocket  expenses of the
Purchaser,  including fees and  disbursements  of counsel for the Purchaser,  in
connection  with  the  preparation  of this  Agreement,  (B)  all  out-of-pocket
expenses of each Holder,  including fees and  disbursements  of counsel for such
Holder,  in connection  with any waiver or consent under this Agreement or under
the Debenture or any amendment of this Agreement or the Debenture or any default
or alleged  default  under this  Agreement or under the  Debenture and (C) if an
Event of  Default,  as  defined  in the  Debenture,  occurs,  all  out-of-pocket
expenses  incurred by each Holder,  including fees and disbursements of counsel,
in connection with such Event of Default and collection,  bankruptcy, insolvency
and  other  enforcement  proceedings  resulting  therefrom.  The  Company  shall
indemnify each Holder against any transfer taxes, documentary taxes, assessments
or charges made by any  governmental  authority by reason of the  execution  and
delivery of this Agreement or the Debenture or any conversion of the Debenture.

               (ii) The Company hereby  indemnifies  and holds the Purchaser and
each  Holder  and  their  respective  its  affiliates,  shareholders,  officers,
directors,  employees  and  agents  (collectively,  the  "Indemnified  Parties")
harmless from and against any and all actions,  causes of action, suits, losses,
costs,  claims,  liabilities  and damages,  and expenses  incurred in connection
therewith  (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought),  including attorneys' and
other  experts'  fees  and   disbursements   (collectively,   the   "Indemnified
Liabilities"),  incurred by the  Indemnified  Parties or any of them as a result
of, or arising  out of, or  relating  to (A) any  transaction  financed or to be
financed in whole or in part, directly or indirectly, with the proceeds from the
sale of the Debentures;  (B) the entering into and performance of this Agreement
and  any  other  document  delivered  in  connection  herewith  by  any  of  the
Indemnified  Parties,  provided that no indemnity  shall be sought on account of
claims  arising  solely out of (x) any  violation of law by the Purchaser or any
Holder  or (y) the  breach  by the  Purchaser  or any  Holder  of any  contract,
agreement or  instrument to which the Purchaser or such Holder is a party or (C)
the  enforcement  of the rights of the  Indemnified  Parties  under this Section
9(h).

               (iii) An Indemnified  Party shall give notice to the Indemnifying
Party of any claim of  indemnification  pursuant to this Section  9(h)  promptly
after  such  Indemnified  Party has  actual  knowledge  of any claim as to which
indemnity may be sought and shall permit the Indemnifying Party (at its expense)
to assume  the  defense  of any  claim or any  litigation  resulting  therefrom,
provided that the counsel who shall conduct the defense of such claim or

504231.1

<PAGE>






litigation,  shall be reasonably satisfactory to the Indemnified Party and shall
not,  without  the  Indemnified  Party's  consent  (which  consent  shall not be
unreasonably   withheld),   be  counsel  to  the  Indemnifying  Party,  and  the
Indemnified Party may participate in such defense,  but only at such Indemnified
Party's  expense and  provided,  further,  that the omission by the  Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its  obligations  under  this  Section  9(h)  except to the  extent  that the
omission  results in a failure of actual  notice to the  Indemnifying  Party and
such  Indemnifying  Party is damaged  solely as a result of the  failure to give
notice.  No Indemnifying  Party, in the defense of any such claim or litigation,
shall,  except with the consent of each Indemnified  Party,  consent to entry of
any  judgment  or enter  into  any  settlement  which  does  not  include  as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to such
Indemnified  Party of a release  from all  liability in respect to such claim or
litigation.  In any case in which the  Indemnifying  Party  does not  assume the
defense of any claim or any litigation for which indemnification may or has been
sought pursuant to this Section 9(h), the Indemnified Party shall be entitled to
be represented by the counsel of such  Indemnified  Party's choice in connection
with the defense  (including any investigation) of any third party claim against
or involving  such  Indemnified  Party and, the Company  shall pay, or reimburse
such Indemnified  Party for, the fees and expenses of such counsel and all other
expenses  relating to such defense.  This indemnity  shall survive  repayment or
transfer of the Debentures, the conversion of any Debenture into Reserved Shares
or  the  transfer  of any  Reserved  Shares.  The  Company's  obligation  to any
Indemnified  Party under this indemnity  shall be without regard to fault on the
part of the Company with respect to the violation or condition  which results in
liability  of any  Indemnified  Party.  If and to the extent that the  foregoing
undertaking is determined to be unenforceable for any reason, the Company hereby
agrees to make the maximum  contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.

               (iv) Nothing contained in this Section 9(h), or elsewhere in this
Agreement, shall be deemed an election of remedies under this Agreement or limit
in any way the  liability  of any party under any other  agreement to which such
party is a party relating to this Agreement or the transactions  contemplated by
this Agreement.

          (i) Severability.  If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction,  such invalidity or unenforceability shall
not affect the validity or  enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

          (j) Further Assurances.  Each party to this Agreement will perform any
and all acts and execute any and all  documents as may be  necessary  and proper
under the  circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.

          (k)  Construction.  The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,  and no
rules of strict construction will be applied against any party.

     CHOICE  OF LAW.  THIS  AGREEMENT  SHALL BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

504231.1

<PAGE>






          (m)  CONSENT TO  JURISDICTION.  EACH OF THE  HOLDERS  AND THE  COMPANY
HEREBY SUBMITS TO THE  JURISDICTION  OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN  DISTRICT  OF NEW YORK AND OF ANY NEW YORK STATE  COURT  SITTING IN NEW
YORK CITY FOR  PURPOSES OF ALL LEGAL  PROCEEDINGS  ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE DEBENTURE OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF
THE HOLDERS AND THE COMPANY  IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY  OBJECTION  WHICH IT MAY NOW OR HEREAFTER  HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING  BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN  INCONVENIENT  FORUM.
EACH OF THE HOLDERS  AND THE  COMPANY  CONSENTS TO THE SERVICE OF PROCESS IN ANY
SUCH  PROCEEDING  BY THE  DELIVERY (BY  OVERNIGHT  COURIER) TO IT AT ITS ADDRESS
SPECIFIED  IN SECTION 9(D) OF THIS  AGREEMENT  (OR IN THE CASE OF A HOLDER OTHER
THAN THE PURCHASER,  TO ITS ADDRESS AS IT APPEARS IN THE REGISTER  MAINTAINED BY
THE COMPANY).  EACH OF THE HOLDERS AND THE COMPANY  FURTHER  AGREES THAT A FINAL
JUDGMENT  IN ANY SUCH  PROCEEDING  SHALL BE  CONCLUSIVE  AND  BINDING AND MAY BE
ENFORCED IN OTHER  JURISDICTIONS  BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.

          (n) WAIVER OF JURY TRIAL.  THE COMPANY AND EACH OF THE HOLDERS  HEREBY
IRREVOCABLY  WAIVES  ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL  PROCEEDING
ARISING OUT OF OR RELATING TO THIS  AGREEMENT OR THE  TRANSACTIONS  CONTEMPLATED
HEREBY.



504231.1

<PAGE>



     IN  WITNESS  WHEREOF,  this  Debenture  Purchase  Agreement  has been  duly
executed by an officer of each of the parties hereto  thereunto duly  authorized
all on the date first above written.


                                               BUCKHEAD AMERICA CORPORATION



                                               By:______________________________
                                                  Name:
                                                  Title:


                                               BAY HARBOUR MANAGEMENT, L.C.



                                               By:______________________________
                                                  Name:
                                                  Title:



          

<PAGE>



                                                                         Annex I


     The  Debentures are to be issued to the following  Managed  Accounts in the
amount set forth beside the name of each Managed Account:



                                          Jurisdiction of
Managed Account                           Organization          Principal Amount

Trophy Hunter Investments, L.P.              Florida              $1,000,000.00
Lipstick, Ltd.                               Bahamas                $750,000.00
Bay Harbour 90-1, L.P.                       Florida              $1,250,000.00
Bay Harbour Partners, Ltd.                   Bahamas              $2,000,000.00
                                                                   ------------
            Total                                                 $5,000,000.00









                                   EXHIBIT 99


FOR IMMEDIATE RELEASE:

                      BUCKHEAD AMERICA COMPLETES $5 MILLION
                     CONVERTIBLE DEBENTURE PRIVATE PLACEMENT

         ATLANTA - Buckhead America Corporation, a hospitality services company,
said it completed the private  placement of $5 million of  five-year,  8 percent
convertible debentures with Bay Harbour Management,  L.C., a subsidiary of Tower
Investment Group, Inc., Tampa Florida. Tower already owns or controls 15 percent
of Buckhead's Common stock.

         The debentures are convertible into Buckhead common stock at a price of
$9 a share.

         Douglas C. Collins,  president and chief executive  officer of Buckhead
America,  said,  "Proceeds  from this  placement  will be used for the continued
expansion  of the  Country  Hearth  Inn  chain,  for  the  renovation  of  hotel
properties  acquired  from  The  Lodge  Keeper  Group,  Inc.  last  year and for
acquisitions."

         PaineWebber,  Inc.  acted as financial  advisor to Buckhead  America in
this transaction.

         Buckhead  America is a diversified  hospitality  services company whose
holdings  include the Country Hearth Inn mid-priced hotel chain,  hotels,  hotel
loans, hotel management contracts and other hospitality-related assets.

         Buckhead  America  common  shares trade on the NASDAQ  National  Market
System under the stock symbol "BUCK".


12/23/97

504202.1


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