NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
------------------------
BUCKHEAD AMERICA CORPORATION
------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1999
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[LOGO]
4243 DUNWOODY CLUB DRIVE
SUITE 200
ATLANTA, GEORGIA 30350
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
TO THE STOCKHOLDERS OF
BUCKHEAD AMERICA CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BUCKHEAD
AMERICA CORPORATION (the "Company") will be held at the Dunwoody Country Club,
1600 Dunwoody Club Drive, Dunwoody, Georgia 30350 on May 27, 1999 at 11:30 a.m.,
(E.D.T.), for the following purposes:
1. To elect seven directors to serve until the next annual meeting of
stockholders and until their successors are elected and have
qualified.
2. To consider a proposal to approve the Company's 1999 Employee Stock
Option Plan.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Proxy Statement dated April 29, 1999, is attached. Only record holders
of the Company's $.01 par value Common Stock at the close of business on April
19, 1999, will be eligible to vote at the meeting.
If you are not able to attend the meeting, please execute, complete, date
and return the proxy in the enclosed envelope. If you attend the meeting, you
may revoke the proxy and vote in person.
By Order of the Board of Directors:
[SIG CUT]
ROBERT B. LEE
Secretary
Date: April 29, 1999
A copy of the Annual Report to Stockholders of Buckhead America Corporation
for the year ended December 31, 1998 containing financial statements is
enclosed.
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[LOGO]
4243 DUNWOODY CLUB DRIVE
SUITE 200
ATLANTA, GEORGIA 30350
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1999
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Buckhead America Corporation, a Delaware corporation
("Buckhead" or the "Company") of proxies for use at the 1999 Annual Meeting of
Stockholders to be held on May 27, 1999 at 11:30 a.m. (E.D.T.), at the Dunwoody
Country Club, 1600 Dunwoody Club Drive, Dunwoody, Georgia 30350.
This Proxy Statement and the accompanying form of proxy are being first
mailed to Stockholders on or about April 29, 1999. The Stockholder giving the
proxy may revoke it at any time before it is exercised at the meeting by: (i)
delivering to the Secretary of the Company a written instrument of revocation
bearing a date later than the date of the proxy; (ii) duly executing and
delivering to the Secretary a subsequent proxy relating to the same shares; or
(iii) attending the meeting and voting in person (attendance at the meeting will
not in and of itself constitute revocation of a proxy). Any proxy which is not
revoked will be voted at the Annual Meeting in accordance with the Stockholder's
instructions. If a Stockholder returns a properly signed and dated proxy card
but does not mark any choices on one or more items, his or her shares will be
voted in accordance with the recommendations of the Board of Directors as to
such items. The proxy card gives authority to the proxies to vote shares in
their discretion on any other matter properly presented at the Annual Meeting.
Proxies will be solicited from the Company's Stockholders by mail. The
Company will pay all expenses in connection with the solicitation, including
postage, printing and handling, and the expenses incurred by brokers,
custodians, nominees and fiduciaries in forwarding proxy material to beneficial
owners. The Company may employ a proxy solicitation firm to solicit proxies in
connection with the Annual Meeting and the Company estimates that the fee
payable for such services will be less than $10,000. It is possible that
directors, officers and regular employees of the Company may make further
solicitation personally or by telephone, telegraph or mail. Directors, officers
and regular employees of the Company will receive no additional compensation for
any such further solicitation.
Only holders (the "Stockholders") of record of the Company's $.01 par value
Common Stock at the close of business on April 19, 1999 (the "Record Date"), are
entitled to notice of, and to vote at, the Annual Meeting. On the Record Date,
the Company had outstanding a total of 1,963,935 shares of $.01 par value Common
Stock (excluding a total of 59,342 shares of treasury stock held by the Company,
which are not entitled to vote). Each such share will be entitled to one vote
(non-cumulative) on each matter to be considered at the Annual Meeting. A
majority of the outstanding shares of Common Stock, present in person or
represented by proxy at the Annual Meeting, will constitute a quorum for the
transaction of business at the Annual Meeting. Abstentions and broker non-votes
are counted for purposes of determining the presence or absence of a quorum for
the transaction of business.
Votes cast by proxy or in person at the Annual Meeting will be counted by
the persons appointed by the Company to act as election inspectors for the
meeting. Prior to the meeting, the inspectors will sign an oath to perform their
duties in an impartial manner and to the best of their abilities. The inspectors
will ascertain the number of shares outstanding and the voting power of each of
such shares, determine the shares represented at the meeting and the validity of
proxies and ballots, count all votes and ballots and perform certain other
duties as required by law.
Nominees for election as directors will be elected by a plurality of the
votes cast by the holders of shares entitled to vote in the election.
Accordingly, the seven nominees receiving the highest vote totals will be
elected as directors of the Company at the Annual Meeting. The affirmative vote
of holders of a majority of the outstanding shares of Common Stock of the
Company entitled to vote and present in person or by proxy at the Annual Meeting
is required for approval of the Company's 1999 Employee Stock Option Plan. It is
expected that shares beneficially held by officers and directors of the Company,
which in the aggregate represent approximately 31.1% of the outstanding shares
of Common Stock, will be voted in favor of each proposal. With respect to
election of directors, abstentions, votes "withheld" and broker non-votes will
be disregarded and have no effect on the outcome of the vote. With respect to
the proposal to approve the Company's 1999 Employee Stock Option Plan,
abstentions will have the effect of a vote against the proposal and broker
non-votes will be disregarded and will have no effect on the outcome of the
vote. There are no rights of appraisal or similar dissenter's rights with
respect to any matter to be acted upon pursuant to this Proxy Statement.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends a vote FOR the election of
each of the nominees named below for election as director and FOR the proposal
to approve the Company's 1999 Employee Stock Option Plan.
ELECTION OF DIRECTORS
The proxy holders intend to vote FOR election of the nominees named below
as directors of the Company, unless otherwise specified in the proxy. Directors
of the Company elected at the Annual Meeting to be held on May 27, 1999 will
hold office until the next Annual Meeting or until their successors are elected
and qualified.
Each of the nominees has consented to serve on the Board of Directors, if
elected. Should any nominee for the office of director become unable to accept
nomination or election, which is not anticipated, it is the intention of the
persons named in the proxy, unless otherwise specifically instructed in the
proxy, to vote for the election of such other person as the Board of Directors
may recommend.
The name and age of each nominee, his principal occupation, and the period
during which such person has served as a director are set forth below:
NAME OF NOMINEE AGE SERVICE AS
DIRECTOR POSITION
Douglas C. Collins 46 Since 1995 Chairman of the Board of Directors,
President, Chief, Executive Officer,
and Treasurer
Robert B. Lee 44 Since 1997 Senior Vice President, Chief Financial
Officer, Secretary and Director
Ronald L. Devine 55 Since 1999 President - The Lodge Keeper Group and
Director
William K. Stern 72 Since 1992 Director
Steven A. Van Dyke 40 Since 1997 Director
David C. Glickman 36 Since 1999 Director
David B. Mumford 40 Since 1999 Director
Douglas C. Collins. Mr. Collins became President and Chief Executive
Officer of the Company in December 1992 and became Chairman in March, 1999.
Prior to joining the Company, Mr. Collins served as President of Days Inns from
February 1992 through September 1992 and Director of Days Inns from September
1992 through November 1992. Mr. Collins served as Senior Vice President and
Chief Financial Officer of Days Inns from August 1990 through February 1992,
after serving as President of Imperial Hotels Corporation, a hotel chain owner
and operator, from April 1988 until May 1990. Mr. Collins joined Imperial Hotels
Corporation in August, 1980, serving as Vice President of Finance and
Development from June 1984 to April 1988.
Robert B. Lee. Mr. Lee became Secretary of the Company in December 1992,
became Vice President and Chief Financial Officer in July 1993, and became a
director in 1997. Mr. Lee was named Senior Vice President of Buckhead in May
1996. Prior to joining the Company, Mr. Lee served as the Corporate Controller
of Days Inns from October 1990 until December 1992. He functioned in numerous
capacities up to senior manager in the accounting and audit practice of KPMG
Peat Marwick LLP from December 1979 to October 1990.
Ronald L. Devine. Mr. Devine was the President and Chief Executive Officer
of The Lodge Keeper Group, Inc. ("Lodge Keeper") prior to its acquisition by the
Company and served in that capacity for more than the last five years. Mr.
Devine continues to serve as President of Lodge Keeper and is an executive
officer of the Company. Mr. Devine became a director of the Company in March
1999.
William K. Stern. Mr. Stern, a director of the Company, has over forty
years of experience in the hospitality industry. He had served as Vice President
of Loews Hotels since 1969 and as President of Loews Representation
International, Inc. ("LRI"), a separate division of Loews Hotels, since 1972. In
1987, Mr. Stern established "The Grande Collection of Hotels," a deluxe division
of LRI. Mr. Stern also served as the Chief Executive Officer of the Grande
Collection division. Mr. Stern has been the owner of Stern Services
International, a hotel consulting company, since 1992.
Steven A. Van Dyke. Mr. Van Dyke, a director of the Company is the
President and Chief Executive Officer of Bay Harbour Management, L.C. ("Bay
Harbour") and has served in that capacity for more than the last five years. Bay
Harbour is an investment advisor and manages multimillion dollar private equity
and debt funds.
David C. Glickman. Mr. Glickman became a director of the Company in March
1999. In April 1999, Mr. Glickman became Acquisition Director with the LCP
Group, an investment firm. Prior to April 1999, he was an Associate Director
with Bear Stearns & Co., Inc., an investment banking firm, and had served in
that capacity for more than the last five years.
David B. Mumford. Mr. Mumford became a director of the Company in March
1999. He is the president of Mumford Company, Inc., a national leader in the
brokerage of hotel real estate, and has served in that capacity for more than
the last five years.
INFORMATION ABOUT THE BOARD OF DIRECTORS
MEETINGS OF THE BOARD OF DIRECTORS--During 1998 there were six meetings of the
Board of Directors. Each incumbent director attended at least 75% of all
meetings of the Board of Directors.
DIRECTOR COMPENSATION--The Company pays directors who are not full-time
employees of the Company an annual fee of $12,000 for service on the Board of
Directors and a fee of $750 for each Board meeting attended. Directors are
entitled to reimbursement of their traveling costs and other out-of-pocket
expenses incurred in attending Board and Committee meetings.
Robert M. Miller, the former Chairman of the Board of Directors of the Company,
received annual fees of $87,000 and $750 per attendance at board of directors
meetings during 1998 and 1997. Mr. Miller resigned as a director of the Company
in March 1999. Mr. Miller received total compensation in 1999 of $78,750.
All non-employee directors serve on all standing committees (such as audit,
nominations, and compensation). Functions normally addressed by such committees
are conducted at regularly scheduled and special meetings of the entire Board of
Directors.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to the
Chief Executive Officer, and the other executive officers whose salary and bonus
for 1998 exceeded $100,000 ("Named Executive Officers") for the years ended
December 31, 1998, 1997 and 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
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<CAPTION>
LONG TERM
COMPENSATION
AWARDS
SECURITIES
UNDERLYING
NAME AND PRINCIPAL YEAR ENDED ANNUAL OPTIONS/ ALL OTHER
POSITION DECEMBER 31, COMPENSATION SARS (#) COMPENSATION($)
- -------------------------- ---------------- --------------------- ------------------ -----------------
<S> <C> <C> <C>
SALARY($) BONUS($)
Douglas C. Collins 1998 $ 250,000 110,470 18,000 (c) $ 14,000 (d)
Chief Executive 1997 235,000 94,005 16,000 1,500
Officer 1996 235,000 72,000 7,000 4,750
Robert B. Lee 1998 115,500 25,457 12,000 (c) 9,000 (e)
Chief Financial 1997 105,000 31,502 9,000 1,449
Officer 1996 98,600 22,292 4,000 3,022
Gregory C. Plank 1998 150,000 48,062 9,000 (c) 6,500 (f)
President - 1997 135,000 40,502 6,000 -
Franchising 1996 (a) 81,000 24,111 15,000 35,312
Ronald L. Devine 1998 111,481 24,572 9,000 (c) 5,000 (g)
President - Lodge 1997 (b) 70,240 21,005 9,000 -
Keeper
- --------------------
</TABLE>
(a) Mr. Plank's employment with the Company began on May 20, 1996.
(b) Mr. Devine's employment with the Company began on May 8, 1997.
(c) See "Option Grants Table."
(d) Employer's portion of 401(k) contribution ($4,000) and non-qualified
deferred compensation plan ($10,000).
(e) Employer's portion of 401(k) contribution ($4,000) and non-qualified
deferred compensation plan ($5,000).
(f) Employer's portion of 401(k) contribution ($4,000) and non-qualified
deferred compensation plan ($2,500).
(g) Employer's portion of non-qualified deferred compensation plan.
OPTION GRANTS TABLE
The following table sets forth the number of shares of Common Stock
underlying options granted to the named executive officers during the year ended
December 31,1998. No stock appreciation rights were granted.
OPTION GRANTS IN 1998
INDIVIDUAL GRANTS
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<CAPTION>
INDIVIDUAL GRANTS
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NAME NUMBER OF % OF TOTAL EXERCISE EXPIRATION DATE (2)
SECURITIES OPTIONS GRANTED PRICE
UNDERLYING TO EMPLOYEES IN ($/SHARE)(1)
OPTIONS FISCAL YEAR
GRANTED(#)
- --------------------- ------------------ ------------------- ------------ ------------------------
<S> <C> <C> <C>
Douglas C. Collins 6,000 8.3% $ 7.37 May 28, 2008
6,000 8.3% $ 7.37 May 28, 2009
6,000 8.3% $ 7.37 May 28, 2010
Robert B. Lee 4,000 5.6% $ 7.37 May 28, 2008
4,000 5.6% $ 7.37 May 28, 2009
4,000 5.6% $ 7.37 May 28, 2010
Gregory C. Plank 3,000 4.2% $ 7.37 May 28, 2008
3,000 4.2% $ 7.37 May 28, 2009
3,000 4.2% $ 7.37 May 28, 2010
Ronald L. Devine 3,000 4.2% $ 7.37 May 28, 2008
3,000 4.2% $ 7.37 May 28, 2009
3,000 4.2% $ 7.37 May 28, 2010
</TABLE>
(1) The exercise price was fixed as the market price at the date of grant.
(2) The options vest and become exercisable in three equal, annual installments
of 33-1/3% each on (i) the grant date, (ii) the first anniversary of the
grant date, and (iii) the second anniversary of the grant date, and have a
term expiring ten years from the date of grant.
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OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth the number and year-end value of unexercised
options granted to the Named Executive Officers as of December 31, 1998 No
options were exercised by the Named Executive Officers during 1998
1998 YEAR-END OPTION VALUES
NUMBER OF SHARES OF VALUE OF UNEXERCISED
COMMON STOCK UNDERLYING IN-THE-MONEY OPTIONS AT YEAR-
UNEXERCISED OPTIONS AT END ($)(1)
YEAR-END (#)
-------------------------- -----------------------------
NAME EXERCISABLE/UNEXERCISABLE
EXERCISABLE/UNEXERCISABLE
- -------------------- -------------------------- -----------------------------
Douglas C. Collins 53,666/17,334 $ 39,300/0
Robert B. Lee 24,000/11,000 13,100/0
Gregory C. Plank 22,000/8,000 0/0
Ronald L. Devine 9,000/9,000 0/0
(1) Calculated based on the $4.75 closing sale price on The Nasdaq Stock Market
of the underlying securities on December 31, 1998.
EMPLOYMENT AGREEMENTS
Douglas C. Collins. The Company has entered into an employment contract
with Mr. Collins for a term which expires in July 2002. If the contract is
terminated by the Company (1) prior to the end of its term, (2) other than for
cause, and (3) within twelve months following a change-in-control (generally,
acquisition of control of over 50% of the Common Stock or a change in a majority
of the board of directors), Mr. Collins shall be entitled to the greater of (x)
his annual salary (as defined) payable through the end of his employment term
and (y) one-half of his annual salary (as defined) for the rest of the year in
which such termination occurs. If such event occurred as of January 1, 1999, Mr.
Collins would be entitled to a payment of $1,382,382.
If Mr. Collins terminates his contract (1) between 90 and 120 days
following a change-in-control or (2) within 30 days following any demotion,
diminution of responsibility or pay or forced relocation occurring within twelve
months of a change-in-control, he shall be entitled to the lesser of (x) his
annual salary (as defined) through the end of his employment term, and (y)
one-half of his annual salary (as defined) for the year in which such
termination occurs. If such event occurred as of January 1, 1999, Mr. Collins
would be entitled to a payment of $192,890.
If Mr. Collins' employment is otherwise terminated without cause before the
expiration of his employment term, the Company must pay him an amount equal to
his annual salary (as defined) for the year in which such termination occurs. If
such event occurred as of January 1, 1999, Mr. Collins would be entitled to a
payment of $385,781.
Robert B. Lee. The Company has entered into an employment contract with Mr.
Lee for a term which expires in July 2002. If the contract is terminated by the
Company (1) prior to the end of its term, (2) other than for cause, and (3)
within twelve months following a change-in-control (as defined above), Mr. Lee
shall be entitled to the greater of (x) his annual salary (as defined) payable
through the end of his employment term and (y) one-half of his annual salary (as
defined) for the rest of the year in which such termination occurs. If such
event occurred as of January 1, 1999, Mr. Lee would be entitled to a payment of
$577,339.
If Mr. Lee terminates his contract (1) between 90 and 120 days following a
change-in-control or (2) within 30 days following any demotion, diminution of
responsibility or pay or forced relocation occurring within twelve months of a
change-in-control, he shall be entitled to the lesser of (x) his annual salary
(as defined) through the end of his employment term, and (y) one-half of his
annual salary (as defined) for the year in which such termination occurs. If
such event occurred as of January 1, 1999, Mr. Lee would be entitled to a
payment of $80,559.
If Mr. Lee's employment is otherwise terminated without cause before the
expiration of his employment term, the Company must pay him an amount equal to
his annual salary (as defined) for the year in which such termination occurs. If
such event occurred as of January 1, 1999, Mr. Lee would be entitled to a
payment of $116,118.
Gregory C. Plank. The Company has entered into an employment contract with
Mr. Plank for a term which expires in May 2000. If the contract is terminated by
the Company (1) prior to the end of its term, (2) other than for cause, and (3)
within twelve months following a change-in-control (as defined above), Mr. Plank
shall be entitled to the greater of (x) his annual base salary payable through
the end of his employment term and (y) one-half of his base salary for the rest
of the year in which such termination occurs. If such event occurred as of
January 1, 1999, Mr. Plank would be entitled to a payment of $212,500.
If Mr. Plank terminates his contract (1) between 90 and 120 days following
a change-in-control or (2) within 30 days following any demotion, diminution of
responsibility or pay or forced relocation occurring within twelve months of a
change-in-control, he shall be entitled to the lesser of (x) his annual base
salary through the end of his employment term, and (y) one-half of his base
salary for the year in which such termination occurs. If such event occurred as
of January 1, 1999, Mr. Plank would be entitled to a payment of $75,000.
If Mr. Plank's employment is otherwise terminated without cause before the
expiration of his employment term, the Company must pay him an amount equal to
his annual base salary for the year in which such termination occurs. If such
event occurred as of January 1, 1999, Mr. Plank would be entitled to a payment
of $150,000.
Ronald L. Devine. The Company has entered into an employment contract with
Mr. Devine for a term which expires in May 2000. If the contract is terminated
by the Company (1) prior to the end of its term, (2) other than for cause, and
(3) within twelve months following a change-in-control (as defined above), Mr.
Devine shall be entitled to the greater of (x) his annual base salary payable
through the end of his employment term and (y) one-half of his base salary for
the rest of the year in which such termination occurs. If such event occurred as
of January 1, 1999, Mr. Devine would be entitled to a payment of $153,333.
If Mr. Devine terminates his contract (1) between 90 and 120 days following
a change-in-control or (2) within 30 days following any demotion, diminution of
responsibility or pay or forced relocation occurring within twelve months of a
change-in-control, he shall be entitled to the lesser of (x) his annual base
salary through the end of his employment term, and (y) one-half of his base
salary for the year in which such termination occurs. If such event occurred as
of January 1, 1999, Mr. Devine would be entitled to a payment of $57,500.
If Mr. Devine's employment is otherwise terminated without cause before the
expiration of his employment term, the Company must pay him an amount equal to
his annual base salary for the year in which such termination occurs. If such
event occurred as of January 1, 1999, Mr. Devine would be entitled to a payment
of $115,000.
BENEFIT PLANS
1995 Employee Stock Option Plan
The Company's 1995 Employee Stock Option Plan (the "1995 Plan") provides
for the grant of options to acquire a maximum of 170,000 shares of Common Stock.
As of March 31, 1999, options for 55,333 shares had been exercised under the
1995 Plan, options for 113,000 shares were outstanding, and 1,667 shares
remained available for issuance under the 1995 Plan. Unless sooner terminated by
the Board, the 1995 Plan terminates on April 17, 2005.
1997 Employee Stock Option Plan
The Company's 1997 Employee Stock Option Plan (the "1997 Plan") provides
for the grant of options to acquire a maximum of 80,000 shares of Common Stock.
As of March 31, 1999, options for 0 shares had been exercised under the 1997
Plan, options for 73,000 shares were outstanding, and 7,000 shares remained
available for issuance under the 1997 Plan. Unless sooner terminated by the
Board, the 1997 Plan terminates on April 29, 2007.
1998 Employee Stock Option Plan
The Company's 1998 Employee Stock Option Plan (the "1998 Plan") provides
for the grant of options to acquire a maximum of 90,000 shares of Common Stock.
As of March 31, 1999, options for 0 shares had been exercised under the 1998
Plan, options for 90,000 shares were outstanding, and 0 shares remained
available for issuance under the 1998 Plan. Unless sooner terminated by the
Board, the 1997 Plan terminates on March 31, 2008.
1999 Employee Stock Option Plan
The Board of Directors has recommended that the stockholders approve the
Company's 1999 Employee Stock Option Plan. See "Proposal to Approve the Buckhead
America Corporation 1999 Employee Stock Option Plan" below.
CERTAIN TRANSACTIONS
On December 22, 1997, the Company issued $5,000,000 of Convertible
Debentures to investment funds managed by Tower Investment Group, Inc., now
known as Bay Harbour Management, L.C. ("Bay Harbour"). Bay Harbour manages
investment funds which, at that time, owned 262,000 (13.8%) of the outstanding
common shares of the Company. Bay Harbour presently owns 449,147 (23.1%) of the
outstanding common shares of the Company. Mr. Van Dyke, a director of the
Company is the Chief Executive Officer of Bay Harbour.
The related debenture notes bear interest at 8% payable quarterly in
arrears, and are due December 22, 2002. The debentures are convertible into
common shares of the Company at any time at $9.00 per share. If all such
debentures were converted, an additional 555,555 shares of Common Stock would be
issued.
In connection with the Lodge Keeper acquisition, the Company assumed a
lease for office space in Prospect, Ohio. The lease requires annual rent
payments of approximately $50,000 through 2001. Members of the immediate family
of Mr. Devine, an executive officer and director of the Company, own 50% of the
lessor.
Also in connection with the Lodge Keeper acquisition, Mr. Devine executed a
$250,000 note payable to the Company for certain inventory and equipment which
did not relate to Lodge Keeper's primary business. The note bears interest at
10% and is due in monthly installments of $5,312 until June 2002.
During 1998, Mumford Company, Inc. earned aggregate brokerage commissions
of $142,313 relating to the Company's sale of seven leasehold interests in hotel
properties. Mr. Mumford, a director of the Company, is the President of Mumford
Company, Inc. Mr. Mumford was not a director of the Company at the time the sale
transactions occurred.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who beneficially own more than 10% of the Company's stock to file
initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc. Executive officers, directors and greater than 10% beneficial
owners are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of copies of forms received by it pursuant to
Section 16(a) of the Exchange Act, or written representations from certain
reporting persons, the Company believes that during 1998 all Section 16(a)
filing requirements applicable to its executive officers, directors and greater
than 10% beneficial owners were complied with except that those filings
described below were filed late:
Reporting Person Type and (#) of Reports Number of
Not Timely Filed in 1998 Transactions
- -------------------------------- --------------------------- -------------------
Steven A. Van Dyke and Form 4 (6) 19
Additional Reporting Persons:
Douglas P. Teitelbaum
Tower Investment Group, Inc.
Bay Harbour Management, L.C.
PROPOSAL TO APPROVE THE COMPANY'S
1999 EMPLOYEE STOCK OPTION PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
On March 29, 1999, the Board adopted, subject to stockholder approval, the
1999 Employee Stock Option Plan (the "1999 Plan"). The 1999 Plan authorizes the
issuance of options covering up to 90,000 shares of Common Stock (subject to
adjustment in the event of stock dividends, stock splits, combination of shares,
recapitalizations, or other changes in the outstanding Common Stock). The 1998
Plan will be utilized to attract, retain and motivate key employees and advisors
of the Company and to align key employee and stockholder interests.
Options may be granted under the 1999 Plan to those employees, officers or
directors of, and consultants and advisors to, the Company, who, in the opinion
of the Board of Directors (the "Board"), are in a position to contribute
materially to the Company's continued growth and development and to its
long-term financial success. The Company estimates that, as of the date of this
Proxy Statement, approximately 15 employees (including officers), four
non-officer directors and no more than one consultant and advisor of the Company
will be eligible to participate in the 1999 Plan. The following discussion
contains a summary of the 1999 Plan.
Shares Reserved for the Plan
The Company's 1999 Plan provides for the grant of options to acquire a
maximum of 90,000 shares of Common Stock, subject to adjustment in the event of
stock dividends, stock splits, combination of shares, recapitalizations, or
other changes in the outstanding Common Stock. Any such adjustment will be made
by the Board in its discretion. Shares issued under the 1999 Plan may consist,
in whole or in part, of authorized and unissued shares, treasury shares or
shares purchased on the open market.
The 1999 Plan permits the grant of options intended to be incentive stock
options, within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") ("ISO's"), and options which are not ISOs ("NSOs"). The
Board determines the terms and conditions of options granted under the 1999
Plan, including exercise prices and whether or not an option is a NSO or an ISO.
ISO's, however, may only be granted to persons who are employees.
Purpose of Plan
The Company desires to attract and retain persons of skill and experience
and to encourage their highest levels of performance on behalf of the Company
and its subsidiaries. The 1999 Plan accordingly affords eligible persons the
opportunity to acquire stock rights in the Company. As of March 31,1999, only a
limited number of additional shares were available for grant under the Company's
1995 Plan (1,667 shares), the 1997 Plan (7,000 shares) and the 1998 Plan (0
shares). The 1999 Plan is not qualified under Section 401(a) of the Code and is
not subject to the provisions of the Employee Retirement Income Security Act of
1974.
Duration of Plan
Stock options may be granted pursuant to the 1999 Plan from time to time
prior to the earliest of (1) March 31, 2009; (2) the date on which all Shares
have been issued under the 1999 Plan; or (3) such date as the Board of Directors
shall determine in its sole discretion.
Administration of the Plan
The 1999 Plan is administered by the Board. Subject to the terms of the
1999 Plan, in administering the 1999 Plan and the stock options granted under
the 1999 Plan, the Board shall have the authority to (1) determine the employees
of the Company and its subsidiaries to whom ISOs may be granted and to determine
the directors, officers and employees of the Company and its subsidiaries, and
the consultants and advisors, to whom NSOs may be granted; (2) determine the
time or times at which options may be granted; (3) determine the option price
for shares subject to each option; (4) determine whether each option granted
shall be an ISO or a NSO; (5) determine the time or times when each option shall
become exercisable and the duration of the exercise period; (6) determine
whether restrictions are to be imposed on shares subject to options and the
nature of such restrictions; and (7) interpret the 1998 Plan and prescribe and
rescind rules and regulations, if any, relating to and consistent with the 1999
Plan.
No members of the Board of Directors shall be liable for any action or
determination made in good faith with respect to the 1999 Plan or any option. No
member of the Board shall be liable for any act or omission of any other member
of the Board or for any act or omission on his or her own part, including but
not limited to the exercise of any power or discretion given under the 1999
Plan, except those resulting from such member's own gross negligence or willful
misconduct. In addition to such other rights of indemnification as he may have
as a member of the Board, each member of the Board shall be entitled to
indemnification by the Company with respect to administration of the 1999 Plan
and the granting of stock options under it.
Amendment of the Plan
The 1999 Plan may be terminated or amended by the Board of Directors at any
time, except that the following actions may not be taken without stockholder
approval: (a) materially increasing the number of shares that may be issued
under the 1999 Plan (except by certain adjustments under the 1999 Plan); (b)
materially modifying the requirements as to eligibility for participation in the
1999 Plan; and (c) materially increasing the benefits accruing to participants
under the 1999 Plan. Stock options may not be granted under the 1999 Plan after
the date of termination of the 1999 Plan, but options granted prior to that date
shall continue to be exercisable according to their terms.
Eligibility for Participation
Each person who is serving as an officer, director, or employee of the
Company or any of its subsidiaries is eligible to participate in the 1999 Plan.
Furthermore, certain consultants and advisors who are natural persons that have
provided bona fide services to the Company may also be eligible to participate
in the 1999 Plan.
Nothing contained in the 1999 Plan or in any stock option agreement may
confer upon any person any right to continue as director, officer or employee of
the Company or its subsidiaries or as a consultant or advisor, or limit in any
way any right of stockholders or of the Board, as applicable, to remove such
person.
New Plan Benefits
It is not possible to determine how many eligible employees will actually
participate in the 1999 Plan in the future, and the Board has currently made no
decisions with respect to stock option grants thereunder. Therefore, it is not
possible to determine the dollar value or number of shares of Common Stock that
will be distributed under the 1999 Plan in the future or the identities of the
recipients of those grants.
Grant of Stock Options
The Board may grant stock options to eligible persons in such amounts and
on such terms not inconsistent with the 1999 Plan as it may deem appropriate up
to the number of shares remaining subject to the 1999 Plan. The date upon which
a stock option is approved by the Board shall be the "Grant Date."
The Company and each eligible person shall execute an agreement providing
for the grant of stock options in accordance with the pertinent provisions of
the 1999 Plan. No consideration shall be paid in connection with any such grant
unless the sale of shares is made simultaneously with the grant.
Option Exercise Price
The exercise price per share for the shares subject to NSOs shall be at
whatever price is approved by the Board, but not less than 90% of the fair
market value per share of the Common Stock on the Grant Date. The exercise price
per share for the shares subject to ISOs shall be not less than the fair market
value per share of Common Stock on the Grant Date, except that in the case of an
ISO to be granted to an employee owning more than 10% of the total combined
voting power of all classes of stock of the Company, the exercise price per
share shall be not less than 110% of the fair market value per share of Common
Stock on the Grant Date. The "fair market value" shall be the highest closing
price on the Nasdaq National Market on the last business day for which the price
or quotes are available prior to the Grant Date.
Vesting of Options
Unless otherwise provided by the Board, options granted under the 1999 Plan
will generally vest at the rate of 33 1/3% per annum over a two-year period,
with 33 1/3% vesting on the grant date, 33 1/3% on the first anniversary thereof
and the remaining 33 1/3% on the second anniversary thereof, so that all options
are vested after two years.
Adjustments to Exercise Price and Number of Shares
Except as set forth above, in the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or other changes in
corporate structure affecting the Common Stock, such substitution or adjustment
shall be made in the aggregate number of shares reserved for issuance under the
Plan and in the number and option price of shares subject to outstanding options
granted under the Plan as may be determined to be appropriate by the Board, in
its sole discretion, provided that the number of shares subject to any award
shall always be a whole number.
In general, if the Company is merged into or consolidated with another
corporation under circumstances in which the Company is not the surviving
corporation, or if the Company is liquidated or sells or otherwise disposes of
substantially all of its assets to another corporation (any such merger,
consolidation, etc., being hereinafter referred to as a "Non-Acquiring
Transaction") while unexercised options are outstanding under the Plan, after
the effective date of a Non-Acquiring Transaction each holder of an outstanding
option shall be entitled, upon exercise of such option, to receive such stock or
other securities as the holders of the same class of stock as those shares
subject to the option shall be entitled to receive in such Non-Acquiring
Transaction based upon the agreed upon conversion ratio or per share
distribution. However, in the discretion of the Board of Directors, any
limitations on exercisability of options may be waived so that all options, from
and after a date prior to the effective date of such Non-Acquiring Transaction
shall be exercisable in full. Furthermore, in the discretion of the Board, the
right to exercise may be given to each holder of an option during a 30-day
period preceding the effective date of such Non-Acquiring Transaction. Any
outstanding options not exercised within such 30-day period may be canceled by
the Board as of the effective date of any such Non-Acquiring Transaction. To the
extent that the foregoing adjustments relate to stock or securities of the
Company, such adjustments shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive.
Except as specifically described above, optionees shall have no rights by
reason of any subdivision or consolidation of shares of stock of any class or
the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class or by reason of any dissolution,
liquidation, merger, or consolidation or spinoff of stock of another
corporation, and no issue by the Company of shares of stock of any class shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares subject to the option. The grant of any option
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or to transfer all or any part of its business or assets.
Duration and Termination of Options
Each option expires on the date specified by the Board, but not more than
(i) ten years from the Grant Date in the case of NSOs, (ii) ten years from the
Grant Date in the case of ISOs generally, and (iii) five years from the Grant
Date in the case of ISOs granted to an employee owning more than 10% of the
total combined voting power of all classes of stock of the Company. If approved
by the Board, after request by the grantee, an ISO may be converted into an NSO
and the term of such option may be extended.
In general, if an optionee's employment terminates by reason of death, the
stock option held by such optionee may thereafter be exercised to the extent
such option was exercisable at the time of death or on such accelerated basis as
the Board may determine at or after grant, by the legal representative of the
estate or the legatee of the optionee under the will of the optionee, for a
period of one (1) year from date of such optionee's death or until the
expiration of the stock option, whichever period is shorter. In the event of the
termination of optionee's employment by reason of his disability, the stock
option may generally be exercised, to the extent it was exercisable at the time
of his termination or on such accelerated basis as the Board shall determine at
or after grant, for a period of three (3) years from the date of such
termination or until the expiration of the stated term of the stock option,
whichever period is shorter. In any event, if the stock option is designated as
an ISO, and is exercised more than one (1) year after termination of employment
due to disability, the stock option shall be treated as a NSO. In the event an
employee's employment is terminated due to normal or early retirement, the
option may generally be exercised by the optionee, to the extent it was
exercisable at the time of such normal or early retirement or on such
accelerated basis as the Board shall determine at or after grant, for a period
of three (3) years from the date of such termination or until the expiration of
the stated term of the stock option, whichever period is shorter. In such event,
if the stock option was designated as an ISO and is exercised more than three
(3) months after such termination of employment due to normal or early
retirement, the stock option shall be treated as a NSO. In the event that
employment is terminated due to voluntary resignation of employment by the
optionee, the stock option shall thereupon terminate. In the event of
involuntary termination of the optionee's employment by the Company or any
Subsidiary without "cause", the stock option may be exercised, to the extent
otherwise then exercisable, for the lesser of three (3) months or the balance of
such stock option's term. In the event the optionee's employment with the
Company is terminated for any other reason, including termination of the
optionee's employment for "cause," the stock option shall thereupon terminate.
For purposes of the 1999 Plan, "cause" means a felony conviction of a
participant or the failure of a participant to contest prosecution for a felony
or participant's willful misconduct or dishonesty, or other unauthorized
activity, any of which, in the good faith opinion of the Board, is directly and
materially harmful to the business or reputation of the Company or any
Subsidiary.
All options must be exercised prior to expiration and any options not
vested at the time of expiration may not be exercised.
Means of Exercise of Options
Options are exercised by giving written notice to the Company at its
principal office address, accompanied by full payment of the purchase price
therefor either (a) in United States dollars in cash or by check, or (b) if
permitted at or after grant, the delivery of shares of Common Stock having a
fair market value equal as of the date of the exercise to the cash exercise
price of the option, or a combination of (a) or (b).
Non-transferability of Options
No option is transferable except by will or by the laws of descent and
distribution, and all options are exercisable, during the lifetime of the
optionee, only by the optionee or the optionee's guardian or legal
representative. Shares subject to options granted under the 1999 Plan that have
lapsed or terminated may again be subject to options granted under such 1999
Plan.
Tax Treatment
The following discussion addresses certain anticipated federal income tax
consequences to recipients of options granted under the 1999 Plan. It is based
on the Internal Revenue Code of 1986, as amended (the "Code"), and
interpretations thereof as in effect on the date of this Proxy Statement. This
summary is not intended to be exhaustive and, among other things, does not
describe state, local or foreign tax consequences.
Generally, an optionee to whom a NSO is granted will not recognize income
as a result of the grant of the option. However, upon exercise of the NSO, the
optionee will generally recognize ordinary compensation income equal to the
excess, if any, of the fair market value of the stock received pursuant to
exercise of the option (the "Shares") over the exercise price. Such taxation
upon the exercise of the option will be deferred (i) if the shares are subject
to restrictions imposed by the Board which could result in a substantial risk of
their forfeiture or (ii) if the optionee is subject to the "short-swing profit"
forfeiture provisions of Section 16(b) of the Exchange Act ("Section 16(b)
Liability"), unless in either event, the optionee makes an election pursuant to
Section 83(b) of the Code (an "83(b) Election"), within 30 days of receipt of
the Shares, to be taxed on the date of receipt of the Shares. If no 83(b)
Election is made, the optionee will recognize ordinary compensation income at
the time the shares are no longer subject to such restrictions or the optionee
is no longer subject to Section 16(b) Liability as a result of the transfer of
the Shares, in an amount equal to the excess of the value of the Shares at such
time over the amount paid for them.
Provided it complies with any applicable income tax reporting requirements,
the Company normally will be entitled to a deduction for federal income tax
purposes at the time that the optionee recognizes compensation income due to the
exercise of the option. The amount of the deduction is equal to the amount of
compensation income recognized by the optionee due to the exercise of the
option.
An optionee to whom an ISO which qualifies under Section 422 of the Code is
granted generally will not recognize compensation income at the time of grant of
the ISO or at the time of its exercise. However, the excess of the fair market
value of the Shares of stock subject to the option (the "Incentive Shares") over
the exercise price of the option at the time of its exercise is an adjustment to
taxable income in determining an optionee's alternative minimum taxable income
and ultimately his alternative minimum tax (AMT). As a result, this adjustment
could cause the optionee to be subject to AMT or increase his existing AMT
liability.
If an optionee who has exercised an ISO does not sell the Incentive Shares
until more than one year after exercise and more than two years after the date
of the grant, such optionee will normally recognize long-term capital gain or
loss equal to the difference, if any, between the selling price of the Incentive
Shares and the exercise price. If the optionee sells the Incentive Shares before
the time periods expire (a "disqualifying disposition") he or she will recognize
ordinary compensation income equal to the lesser of (i) the difference, if any,
between the fair market value of the Incentive Shares on the date of exercise
and the exercise price of the option, or (ii) the difference, if any between the
selling price for the Incentive Shares and the exercise price of the option. Any
other gain or loss on such sale will normally be capital gain or loss.
Unless there is a disqualifying disposition of the Incentive Shares, the
Company does not receive a deduction for federal income tax purposes with
respect to the Incentive Shares. Upon a disqualifying disposition and provided
the Company complies with any applicable reporting requirements, the Company
normally will be entitled to a deduction for federal income tax purposes at the
time that the optionee recognizes compensation income due to the exercise of the
option. The amount of the deduction is equal to the amount of compensation
income recognized by the optionee due to the exercise of the option.
OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS
AND CERTAIN EXECUTIVE OFFICERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1999 by: (i) each person
(or group of affiliated persons) known by the Company to be the beneficial owner
of more than 5% of the outstanding Common Stock; (ii) the Named Executive
Officers who beneficially own shares of the Company's Common Stock; (iii) each
director and nominee for director of the Company; and (iv) all of the Company's
executive officers and directors as a group. Except as otherwise indicated in
the footnotes to this table, the Company believes that the persons named in this
table have sole voting and investment power with respect to all the shares of
Common Stock indicated.
BENEFICIAL OWNERSHIP
BENEFICIAL OWNER AS OF MARCH 31, 1999
- ----------------------------------------------- -----------------------------
SHARES - PERCENTAGE+
--------- -----------
Bay Harbour Management L.C.(1) 1,054,702 41.9
Hotel-Motel Management Corporation(2) 182,750 9.3
Heartland Advisors, Inc.(3) 184,600 9.4
Leon M. & Marsha C. Wagner(4) 124,181 6.3
NY Motel Enterprises(5) 112,821 5.7
Douglas C. Collins(6) 78,774 3.9
Robert B. Lee(7) 41,808 2.1
Ronald L. Devine (8) 77,452 3.9
Gregory C. Plank(9) 27,000 1.4
William K. Stern(10) 43,666 2.2
Steven A. Van Dyke(1) 1,071,399 42.4
All officers, directors and nominees for
directors as a group (8 persons)(11) 1,333,591 49.6
+ Where a stockholder owns options or other rights to acquire Common Stock,
and such rights are exercisable within sixty days after March 31, 1999,
such rights are deemed to be exercised for purposes of computing that
stockholder's percentage ownership.
* Represents beneficial ownership of less than 1%.
(1) The shares beneficially owned include 499,147 shares held of record by
Trophy Hunter Investments, Ltd. ("Trophy"). Through contracts and
arrangements, voting and disposition power over these shares is held by Bay
Harbour Management L.C. ("Bay Harbour"), a registered investment advisor
under the Investment Advisors Act of 1940. Also includes an aggregate of
555,555 shares which may be acquired upon conversion of a convertible
debenture held by investment funds managed by Bay Harbour. Mr. Steven A.
Van Dyke is the majority stockholder, President and Chief Executive Officer
of Bay Harbour, and beneficially owns the sole general partner of Trophy,
and may therefore be deemed to be the beneficial owner of the shares held
by Bay Harbour. Mr. Van Dyke directly owns 8,031 shares and has the right
to acquire an additional 8,666 shares within the next 60 days pursuant to
option agreements. The address of Bay Harbour Management L.C., is Suite
270, 777 South Harbour Island Boulevard, Tampa, FL 33602.
(2) The address of Hotel-Motel Management Corporation is 3485 N. Desert Drive,
Suite 106, Building 2, East Point, GA 30344.
(3) Includes shares of common stock held in investment advisory accounts of
Heartland Advisors, Inc. As a result, various persons have the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the securities. The interests of one such
account, Heartland Value Fund, a series of Heartland Group, Inc., a
registered investment company, relates to more than 5% of the class. The
address of Heartland Advisors, Inc. is 790 North Milwaukee Street,
Milwaukee, WI 53202.
(4) Mr. Wagner holds 111,036 shares directly and Ms. Wagner, his spouse, holds
13,145 shares directly. The address of the Wagners is 1325 Avenue of the
Americas, 22nd Floor, New York, NY 10019.
(5) The address of NY Motel Enterprises is 440 West 57th Street, New York, NY
10019.
(6) Includes 6,508 shares beneficially held by DC Hospitality, Inc., which is
85% owned by Mr. Collins and 15% owned by Mr. Lee and 59,666 shares subject
to options which are currently exercisable or which become exercisable
within 60 days of the date of this Proxy Statement.
(7) Includes 6,508 shares beneficially held by DC Hospitality, Inc., which is
15% owned by Mr. Lee and 85% owned by Mr. Collins and 28,000 shares subject
to options which are either currently exercisable or which become
exercisable within 60 days of the date of this Proxy Statement.
(8) Includes options to purchase 12,000 shares which are exercisable within 60
days of the date of this Proxy Statement.
(9) Includes options to purchase 25,000 shares which are either currently
exercisable or which become exercisable within 60 days of the date of this
Proxy Statement.
(10) Includes options to purchase 33,666 shares which are either currently
exercisable or which become exercisable within 60 days of the date of this
Proxy Statement.
(11) Includes options to purchase 166,998 shares which are currently exercisable
or which become exercisable within 60 days of the date of this Proxy
Statement. Does not include 38,002 shares subject to outstanding options
which options are not currently exercisable and will not become exercisable
within 60 days of the date of this Proxy Statement. Also includes shares
beneficially owned by Bay Harbor (See Note (1)) and DC Hospitality, Inc.
(See Note (6)).
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of KPMG LLP has been the independent certified public
accountants of the Company since March 1993. Approval or selection of the
independent certified public accountants of the Company is not submitted for a
vote at the Annual Meeting of Stockholders. The Board of Directors of the
Company has historically selected the independent certified public accountants
of the Company, and the Board believes that it would be to the detriment of the
Company and its Stockholders for there to be any impediment (such as selection
or ratification by the Stockholders) to its exercising its judgment to remove
the Company's independent certified public accountants if, in its opinion, such
removal is in the best interest of the Company and its Stockholders.
It is anticipated that a representative from the accounting firm of KPMG
LLP will be present at the Annual Meeting of Stockholders to answer appropriate
questions and make a statement if the representative desires to do so.
STOCKHOLDER PROPOSALS
Appropriate proposals of shareholders intended to be presented at the
Company's 2000 Annual Meeting of Shareholders pursuant to Rule 14a-8 promulgated
under the Exchange Act must be received by the Company by January 4, 2000 for
inclusion in its proxy statement and form of proxy relating to that meeting. In
addition, all shareholder proposals submitted outside of the shareholder
proposal rules included in Rule 14a-8 promulgated under the Exchange Act must be
received by the Company by March 8, 2000, in order to be considered timely. If
such shareholder proposals are not timely received, proxy holders will have
discretionary voting authority with regard to any such shareholder proposals
which may come before the 2000 Annual Meeting. If the date of the next annual
meeting is advanced or delayed by more than 30 calendar days from the date of
the annual meeting to which this Proxy Statement relates, the Company shall, in
a timely manner, inform its shareholders of the change, and the date by which
proposals of shareholders must be received.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission, 450 Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C.
20549; and at regional offices of the Commission at the Citicorp Center, 500
West Madison, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center,
New York, New York 10048. Copies of such material may be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such material may also be inspected
and copied at the offices of the Nasdaq Stock Market, 1735 K Street, Washington,
D.C. 20006-1500, on which the Company's Common Stock is listed. In addition, the
Commission maintains a site on the World Wide Web portion of the Internet that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of such site is http://www.sec.gov.
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY, STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO SIGN, COMPLETE, DATE AND
RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE, TO WHICH NO POSTAGE NEED BE
AFFIXED.
By Order of the Board of Directors
[Sig Cut]
ROBERT B. LEE
Secretary
Dated: April 29, 1999
<PAGE>
4913-PS-99
<PAGE>
ANNEX 1
BUCKHEAD AMERICA CORPORATION
1999 EMPLOYEE STOCK OPTION PLAN
effective as of
May 27, 1999
<PAGE>
BUCKHEAD AMERICA CORPORATION
1999 EMPLOYEE STOCK OPTION PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Buckhead America Corporation 1999 Employee Stock
Option Plan (the "Plan") is to enable Buckhead America Corporation (the
"Company") to attract, retain and reward directors, employees, and key advisors
to the Company and its Subsidiaries and Affiliates, and strengthen the mutuality
of interests between such persons and the Company's shareholders, by offering
them performance-based stock incentives in the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer
under the Plan, provided that the Company directly or indirectly owns at
least 20% of the combined voting power of all classes of stock of such
entity or more than 50% of the ownership interests in such entity.
b. "Board" means the Board of Directors of the Company.
c. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
d. "Company" means Buckhead America Corporation, a corporation
organized under the laws of the State of Delaware, or any successor
corporation.
e. "Disability" means disability as determined under procedures
established by the Board for purposes of this Plan and shall in all events
be consistent with the definition of disability provided in Section 422 of
the Code (or any successor provision). (Section 422 of the Code sets forth
the requirements for a stock option to qualify as an incentive stock option
under the Internal Revenue Code of 1986, as amended, see "Incentive Stock
Option" below.)
f. "Early Retirement" means retirement, with the express written
consent for purposes of this Plan of the Company, at or before the time of
such retirement, from active employment with the Company and any Subsidiary
or Affiliate pursuant to the early retirement provisions of the applicable
pension plan of such entity.
g. "Fair Market Value" means, as of any given date, unless otherwise
determined by the Board in good faith:
(i) if the Stock is listed on an established stock exchange or
exchanges, or traded on the NASDAQ National Market System
("NASDAQ/NMS") the highest closing price of the Stock as listed
thereon on the applicable day, or if no sale of Stock has been made on
any exchange or on NASDAQ/NMS on that date, on the next preceding day
on which there was a sale of Stock;
(ii) if the Stock is not listed on an established stock exchange
or NASDAQ/NMS but is instead traded over-the-counter, the mean of the
dealer "bid" and "ask" prices of the Stock in the over-the-counter
market on the applicable day, as reported by the National Association
of Securities Dealers, Inc.;
(iii) if the Stock is not listed on any exchange or traded
over-the-counter, the value determined in good faith by the Board.
h. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422
of the Code (or any successor provision).
i. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
j. "Normal Retirement" means retirement from active employment with
the Company and any Subsidiary or Affiliate on or after age 65.
k. "Outstanding Stock" shall include all shares of Common Stock, $.01
par value, of the Company as well as the number of shares of Common Stock
into which then outstanding shares of capital stock of the Company, of
whatever class, are convertible as of the year-end immediately preceding
the date of calculation thereof (as adjusted by the Board for certain
events).
l. "Plan" means this Buckhead America Corporation 1998 Employee Stock
Option Plan, as hereinafter amended from time to time.
m. "Retirement" means Normal or Early Retirement.
n. "Stock" means the Common Stock, $.01 par value per share, of the
Company.
o. "Stock Option" or "Option" means any option to purchase shares of
Stock granted pursuant to Section 5 below.
p. "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns
stock possessing 100% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
In addition, the term "Cause" shall have the meaning set forth in Section
5(i) below.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Board. The Board shall have full
authority to grant Stock Options, pursuant to the terms of the Plan, to
directors, officers and other employees and persons eligible under Section 4.
In particular, the Board shall have the authority:
(i) subject to Section 4 hereof, to select the directors,
officers and other employees of the Company or its Subsidiaries and
Affiliates, or other eligible persons, to whom Stock Options may from
time to time be granted hereunder;
(ii) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, or any combination thereof, are
to be granted hereunder to one or more eligible employees;
(iii) to determine the number of shares to be covered by each
such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (including, but
not limited to, the share price and any restriction or limitation, or
any vesting acceleration or waiver of forfeiture restrictions
regarding any Stock Option and/or the shares of Stock relating
thereto, based in each case on such factors as the Board shall
determine, in its sole discretion);
(v) to determine whether and under what circumstances a Stock
Option may be settled in cash;
(vi) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining
the amount (if any) of any deemed earnings on any deferred amount
during any deferral period).
The Board shall have the authority to adopt, alter and repeal such rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan and any award
issued under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan.
All decisions made by the Board pursuant to the provisions of the Plan
shall be made in the Board's sole discretion and shall be final and binding on
all persons, including the Company and Plan participants.
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 90,000 shares. Such shares may consist, in whole or in
part, of authorized and unissued shares or treasury shares.
Subject to Section 6(b) below, if any shares of Stock that have been
optioned hereunder cease to be subject to a Stock Option or any such award
otherwise terminates without a payment being made to the participant in the form
of Stock, such shares shall again be available for distribution in connection
with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividends, stock split or other changes in corporate
structure affecting the Stock, and subject to Sections 5(k) and 5(m), such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Options granted under the Plan and in the number of
shares subject to other outstanding awards granted under the Plan as may be
determined to be appropriate by the Board, in its sole discretion, provided that
the number of shares subject to any award shall always be a whole number.
SECTION 4. ELIGIBILITY.
Directors, officers and other employees of the Company or its Subsidiaries
and Affiliates (but as to incentive stock options, excluding any person who
serves only as a director) who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and/or
its Subsidiaries and Affiliates are eligible to be granted awards under the
Plan. In addition, the Board may grant awards, other than Incentive Stock
Options, to its consultants or advisors who are natural persons that have
provided bona fide services to the Company in connection with matters other than
the offer and sale of securities in a capital-raising transaction.
SECTION 5. STOCK OPTIONS.
Any Stock Option granted under the Plan shall be in such form as the Board
may from time to time approve. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options, and (ii) Non-Qualified Stock Options.
Subject to the restrictions contained in Section 4 hereof concerning the
grant of Incentive Stock Options, the Board shall have the authority to grant to
any optionee Incentive Stock Options, Non-Qualified Stock Options, or both types
of Stock Options.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Board shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Board at the time of grant
but shall be (i) not less than 100% (or, in the case of an employee who
owns stock possessing more than 10 percent of the total combined voting
power of all classes of capital stock of the Company or of any of its
subsidiary or parent corporations, not less than 110%) of the Fair Market
Value of the Stock at grant, in the case of Incentive Stock Options, and
(ii) not less than 90% of the Fair Market Value of the Stock at grant, in
the case of Non-Qualified Stock Options.
(b) Option Term. The term of each Stock Option shall be fixed by the
Board, but no Stock Option shall be exercised more than ten years (or, in
the case of an Incentive Stock Option held by an employee who owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or any of its subsidiary or parent
corporations, more than five years) after the date the Option is granted.
(c) Exercisability. Stock Options shall be exercised at such time or
times and subject to such terms and conditions as shall be determined by
the Board at or after grant. If the Board provides, in its sole discretion,
that any Stock Option is exercisable only in installments, the Board may
waive such installment exercise provisions at any time at or after grant in
whole or in part, based on such factors as the Board shall determine, in
its sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5(c), Stock Options may be exercised in
whole or in part at any time during the option period, by giving written
notice of exercise to the Company specifying the number of shares to be
purchased.
Such notice shall be accompanied by payment in full of the purchase
price either by cash, check or such other instrument as the Board may
accept. As determined by the Board, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee based, in each case, on
the Fair Market Value of the Stock on the date the option is exercised.
No shares of Stock shall be issued until full payment therefor has
been made. An optionee shall generally have the rights to dividends or
other rights of a shareholder with respect to shares subject to the Option
when the optionee has given written notice of exercise, has paid in full
for such shares, and, if requested, has given the representation described
in Section 9(a).
(e) Non-Transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or Title
I of the Employee Retirement Income Security Act, or the rules thereunder,
and all Stock Options shall be exercisable, during the optionee's lifetime,
only by the optionee.
(f) Termination by Death. Subject to Section 5(k), if an optionee's
employment by the Company and any Subsidiary or Affiliate terminates by
reason of death any Stock Option held by such optionee may thereafter be
exercised to the extent such option was exercisable at the time of death or
on such accelerated basis as the Board may determine at or after grant (or
as may be determined in accordance with procedures established by the
Board), by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of one year (or such
other period as the Board may specify at grant) from the date of such death
or until the expiration of the stated term of such Stock Option, whichever
period is the shorter.
(g) Termination by Reason of Disability. Subject to Section 5(k), if
an optionee's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Disability, any Stock Option held by such optionee
may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination or on such accelerated basis as the
Board may determine at or after grant (or as may be determined in
accordance with procedures established by the Board), for a period of three
years (or such other period as the Board may specify at grant) from the
date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter;
provided, however, that, if the optionee dies within such three-year period
(or such other period as the Board shall specify at grant), any unexercised
Stock Option held by such optionee shall thereafter be exercisable pursuant
to Section 5(f). In the event of termination of employment by Disability,
if a Stock Option heretofore designated as an Incentive Stock Option is
exercised more than one (1) year after such termination of employment, such
Stock Option shall be treated as a Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Subject to Section 5(k), if
an optionee's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Normal or Early Retirement, any Stock Option held
by such optionee may be exercised by the optionee, to the extent it was
exercisable at the time of such Retirement or on such accelerated basis as
the Board may determine at or after grant (or as may be determined in
accordance with procedures established by the Board), for a period of three
years (or such other period as the Board may specify at grant) from the
date of such termination or the expiration of the stated term of such Stock
Option, whichever period is the shorter; provided, however, that if the
optionee dies within such three-year period (or such other period as the
Board may specify at grant), any unexercised Option held by such optionee
shall thereafter be exercisable pursuant to Section 5(f). In the event of
termination of employment by Retirement, if a Stock Option theretofore
designated as an Incentive Stock Option is exercised more than three (3)
months after such termination of employment, such Stock Option shall be
treated as a Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Board (or
pursuant to procedures established by the Board) at or after grant, if an
Employee's employment by the Company and any Subsidiary or Affiliate
terminates:
(i) due to voluntary resignation of employment by the Optionee,
the Stock Option shall thereupon terminate;
(ii) due to death, Disability, Normal or Early Retirement, then
the provisions of Sections 5(f), 5(g), 5( h), as appropriate, shall
apply;
(iii) due to involuntary termination of the Optionee's employment
by the Company, any Subsidiary or Affiliate without "Cause", the Stock
Option shall thereupon terminate, except that the Stock Option may be
exercised, to the extent otherwise then exercisable, for the lesser of
three months or the balance of such Stock Option's term;
(iv) for any other reason, including termination of the
Optionee's employment for Cause, the Stock Option shall thereupon
terminate.
For purposes of this Plan, "Cause" means a felony conviction of a
participant or the failure of a participant to contest prosecution for a
felony, or a participant's willful misconduct or dishonesty, or other
unauthorized activity any of which, in the good faith opinion of the Board,
is directly and materially harmful to the business or reputation of the
Company or any Subsidiary or Affiliate.
(j) Buyout Provisions. The Board may at any time offer to buy out for
a payment in cash or Stock an option previously granted, based on such
terms and conditions as the Board shall establish and communicate to the
optionee at the time that such offer is made.
(k) Certain Recapitalizations. In general, if the Company is merged
into or consolidated with another corporation under circumstances in which
the Company is not the surviving corporation, or if the Company is
liquidated, or sells or otherwise disposes of substantially all of its
assets to another corporation (any such merger, consolidation, etc., being
hereinafter referred to as a "Non-Acquiring Transaction") while unexercised
options are outstanding under the Plan, after the effective date of a
Non-Acquiring Transaction each holder of an outstanding option shall be
entitled, upon exercise of such option, to receive such stock or other
securities as the holders of the same class of stock as those shares
subject to the option shall be entitled to receive in such Non-Acquiring
Transaction based upon the agreed upon conversion ratio or per share
distribution. However, in the discretion of the Board of Directors, any
limitations on exercisability of options may be waived so that all options,
from and after a date prior to the effective date of such Non-Acquiring
Transaction shall be exercisable in full. Furthermore, in the discretion of
the Board, the right to exercise may be given to each holder of an option
during a 30-day period preceding the effective date of such Non-Acquiring
Transaction. Any outstanding options not exercised within such 30-day
period may be cancelled by the Board as of the effective date of any such
Non-Acquiring Transaction. To the extent that the foregoing adjustments
relate to stock or securities of the Company, such adjustments shall be
made by the Board, whose determination in that respect shall be final,
binding and conclusive.
(l) Subdivision or Consolidation. Except as set forth in this Plan,
optionees shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
of any class or by reason of any dissolution, liquidation, merger, or
consolidation or spinoff of stock of another corporation, and no issue by
the Company of shares of stock of any class shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of
shares subject to the option. The grant of any option pursuant to the Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or to transfer all or any part of its business or
assets.
(m) Fractional Shares. If any adjustment referred to herein shall
result in a fractional share for any optionee under any option hereunder,
such fraction shall be completely disregarded and the optionee shall only
be entitled to the whole number of shares resulting from such adjustment.
SECTION 6. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but, except as
otherwise provided herein, no amendment, alteration, or discontinuation shall be
made which would impair the rights of an optionee or participant under a Stock
Option theretofore granted, without the optionee's or participant's consent, or
which, without the approval of the Company's stockholders, would:
(a) materially increase the benefits accruing to participants under
the Plan;
(b) materially increase the number of securities which may be issued
under the Plan; or
(c) materially modify the requirements as to eligibility for
participation in the Plan.
The Board may amend the terms of any Stock Option theretofore granted,
prospectively or retroactively, but, subject to Section 3 above, no such
amendment shall impair the rights of any holder without the holder's consent.
The Board may also substitute new Stock Options for previously granted Stock
Options (on a one for one or other basis), including previously granted Stock
Options having higher option exercise prices.
Subject to the above provisions, the Board shall have broad authority to
amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
SECTION 7. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Board may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that, unless the Board otherwise determines with
the consent of the affected participant, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 8. WITHHOLDING.
The Company's obligation to deliver shares upon the exercise of any Option
granted under the Plan or to make any payments required by any option agreement
shall be subject to the Optionee's satisfaction of any applicable federal,
state, and local income and employment tax and withholding requirements in a
manner and form satisfactory to the Company.
SECTION 9. GENERAL PROVISIONS.
(a) The Board may require each person purchasing shares pursuant to a
Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee or participant is acquiring the shares for
investment and without a view to distribution thereof. The certificates for
such shares may include any legend which the Board deems appropriate to
reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such conditions, stop-transfer orders
and other restrictions as the Board may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed, and any
applicable Federal or state securities law, and the Board may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements
may be either generally applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of the
Company or any Subsidiary or Affiliate any right to continued employment
with the Company or a Subsidiary or Affiliate, as the case may be, nor
shall it interfere in any way with the right of the Company or a Subsidiary
or Affiliate to terminate the employment of any of its employees at any
time.
(d) No later than the date as of which an amount first becomes
includable in the gross income of the participant for Federal income tax
purposes with respect to the exercise of any Option, the participant shall
pay to the Company, or make arrangements satisfactory to the Board
regarding the payment of, any Federal, state, or local taxes of any kind
required by law to be withheld with respect to such amount. The obligations
of the Company under the Plan shall be conditional on such payment or
arrangements and the Company and its Subsidiaries or Affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes from
any payment of any kind otherwise due to the participant.
(e) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Georgia.
SECTION 10. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of May 27, 1999, upon the approval of the
Plan by a majority of the votes cast by the holders of the Company's capital
stock entitled to vote thereon at the Company's Annual Meeting of Stockholders
to be held on such date.
SECTION 11. TERM OF PLAN.
No Stock Option shall be granted pursuant to the Plan on or after the tenth
anniversary of the effective date of the Plan, but awards granted prior to such
tenth anniversary may extend beyond that date.
ANNEX 2
[COPY OF MAGAZINE COVER]
JUNE 1998 AMERICAN HOTEL & MOTEL ASSOCIATION
LODGING
KNOW THY GUEST
How Common Sense and Technology
Make for Happy Guests
Hotels and Gaming
The Nice Guy Finishes First
Marketing for Small Properties
Special Lodging Technology Supplement
<PAGE>
Profile
By Bill Gillette
A WINNING
PHILOSOPHY
Doug Collins reaps the rewards of his humanitarian instincts
Reprinted with permission from
Lodging, June 1998
[PHOTOGRAPH OF DOUG COLLINS]
Trivia question: Who coined the phrase, "Nice guys finish last?" Avid
sports fan Doug Collins, the 45-year-old president/CEO of Atlanta-based Buckhead
America Corp., knows the answer. It was Leo Durocher, the feisty, belligerent
baseball player and manager who summed up his win-at-all-costs philosophy in
those oft-quoted words. But just because Collins knows the quote doesn't mean he
ascribes to it. In fact, the opposite is true: Here's a nice guy who is getting
overdue recognition as a winner in the hotel industry.
"He has qualities that are typical of a person in his position - he's very
enthusiastic, very gung-ho," says Bob Lee, Buckhead's senior vice president/CEO.
"But on the other hand, he doesn't hide behind an image. Whether he's hanging
around with CEOs or people on the property level, Doug is the same.""
"He truly is a nice guy," says Greg Plank, president/CEO of County Hearth
Inns, Buckhead's signature franchise chain. "He can make the tough business
decisions and he enjoys doing deals, but at the same time, he's very
people-oriented. He never fails to take the time to consider the human
implications of the deals he makes."
In the early `90s, Collins saw, up close and personal, how big-money deals
can have human implications. After a 10-year stint with Imperial Hotels, Collins
was hired by Tollman-Hundley, then owner of Days Inns of America, to be Days'
chief financial officer. Given what was to occur at Days over the next couple of
years, this was roughly akin to being named first mate on the Titantic.
Overloaded with junk debt and sailing directly into a nationwide recession, Days
was foundering.
"We faced a huge financial challenge," Collins says. "It was an interesting
time, to say the least."
By late 1991, Days had filed for bankruptcy. In 1992, Henry Silverman's
Hospitality Franchise Systems (now Cendant Corporation) purchased the Days Inn
franchise rights and moved operations from Atlanta to New Jersey, naming Collins
president. Left behind in Atlanta in the wake of the sale was $500 million in
bankruptcy claims along with assorted real estate, mortgages, nonperforming
loans, underperforming hotels and other fiscal flotsam and jetsam.
"That half-billion in bankruptcy claims had to be settled, and the other
assets that neither HFS nor Tollman-Hundley wanted had to be administered," says
Lee. "That's when the new Buckhead was created. Those various nonliquid assets
became the holdings of Buckhead America, and it was the company's charge to
manage them and resolve the claims."
Meanwhile, Collins was commuting between Atlanta and New Jersey as Days'
president. He didn't relocate, he says, because he saw a chance to make
something of the mess Buckhead was charged with sorting out.
"An opportunity arose at Buckhead to manage the real estate and other
assets that had been owned by Days," Collins says. "It was obvious Buckhead had
great potential."
So did the Titantic. What Collins won't tell you about his choice to leave
Days and take the helm at Buckhead is that it meant not having to be away from
his wife and four children or uprooting them and moving to New Jersey. Thus, in
late 1992, Collins relinquished command of one of the world's largest franchised
economy chains to stay home and keep beleaguered Buckhead afloat.
So far, Collins and his crew have managed to keep Buckhead not only
floating, but steaming full speed ahead. Last year, the old debts and bankruptcy
claims were paid off or settled, and the motley assortment of hotels left over
from the sale have either been sold or turned around into well-performing
properties. Canny acquisitions have increased the Buckhead roster to a total of
30 franchised Country Hearth Inns (with another 25 under development), plus 28
more owned, leased, or managed properties. What started as a company with a
payroll of two- Collins and Lee - now employs 1,000.
With characteristic modesty, Collins is reluctant to take credit for
Buckhead's success; rather, he attributes it to his associates both on the
corporate and property level.
"I'm most proud of the team we've put together," he says. "We hire good
people, pay them well, treat them with respect, and let them do their job."
In an industry that is often accused of not practicing what it preaches
when it comes to dealing with people, Collins does both.
"One of the mistakes we make in our industry is underestimating the people
who work for us," Collins says. "If you give them a sense of ownership, they
will work hard to make their hotel do well. They won't feel like they're just
punching in and punching out."
This isn't just lip service. Collins makes sure everyone in the company
benefits from its success. Corporate executives and hotel managers participate
in a stock-option plan, while desk clerks, housekeepers, and maintenance people
are all on bonus programs. In addition, Collins and company have managed to
create a corporate culture in which employees are encouraged to focus on
pursuing long-term careers with Buckhead. "We always try to promote from
within," he says.
"We have people in this company who started out as part-time desk clerks
and are now running million-dollar businesses."
Collins' people-oriented operational philosophy carries over in his
approach to doing deals - an aspect of the business, Lee notes admiringly, at
which Collins excels.
"Doug's a great closer; he really knows how to get things finished," Lee
says. "He has an ability to not let insignificant things get in the way of what
you're trying to do. But at the same time, his focus on people really comes
through on the acquisition side. He saw firsthand what happened when HFS bought
Days - about 500 people lost their jobs - and he's very aware of that when we do
deals. In all the acquisitions we've made, everyone who wanted to stay with us
has stayed. We've never let one person go - not one."
Buckhead's most recent acquisition occurred in September, when Collins
negotiated the purchase of Hatfield Inns' eight properties in Kentucky and
southern Missouri. "Doug called all the general managers and wrote them personal
letters," Plank says. "He wanted to make sure they felt comfortable."
Ron Devine, president of the Prospect, Ohio-based Lodge Keeper Group, has
done two major deals with Collins and Buckhead. It was Lodge Keeper that
developed the Country Hearth chain, which Buckhead purchased four years ago.
Last year, Lodge Keeper itself was purchased by Buckhead to serve as its
management arm.
"Not only does Doug care about the people who work for him, he cares about
the other side in a deal," Devine says. "That came through when Buckhead
acquired us. It wasn't one of those scenarios where a company says, `OK, we
bought your company and here's the changes we're going to make.' We took care of
all the people things beforehand."
Typical of Collins' approach is the way he and Devine negotiated part of
the Lodge Keeper transaction-not in a conference room, surrounded by lawyers and
accountants, but at an Atlanta Braves baseball game, surrounded by Collins'
family.
"It was a wonderful way to do business," says Devine, a Cleveland Indians
fan who, in addition to doing business with Collins between innings, managed to
strike a separate transaction with one of the Collins kids. "We make a deal that
she'd root for the Indians - unless they're playing the Braves."
Something gained for both sides: a typical Collins transaction.
"When you're doing any transaction, it's extremely important to be fair,"
Collins says. "If you try to squeeze every nickel out of a deal, someone will
get upset and it'll come back to haunt you."
Or, as Plank puts it, "In the final analysis, when it comes to dealing with
people, Doug will always do the right thing."
In February, the American Hotel & Motel Association's Economy Lodging
Council recognized Collins' accomplishments by naming him Economy Lodging Person
of the Year - proof, perhaps, that nice guys don't always finish last.
Bill Gillette is a freelance travel and business writer based in Cleveland.
ANNEX 3
[BUCKHEAD AMERICA LOGO]
4243 Dunwoody Club Drive, Suite 200
Atlanta, Georgia 30350-5206
770-393-2662 o FAX 770-393-2480
Douglas Collins
President
Chief Executive Officer
Dear Shareholder:
This year at Buckhead America Corporation we are conserving company resources
for the creation of shareholder value by producing an annual report that is as
simple, straightforward and informative as possible. At the same time, we wanted
to give you an idea of how your company presents itself to the world and how the
world sees your company.
The result is this package of material.
Please find enclosed:
o Your copy of the 1998 Buckhead America Corporation Annual Report.
o Notice of the 1999 Annual Meeting of Shareholders and related Proxy
Statement and Proxy Card.
o A marketing brochure for the Country Hearth Inn "Rural Gold" program.
o A marketing flyer for The Lodge Keeper Group's hotel-management activities.
o A reprint of an article regarding Buckhead America from Lodging Magazine,
one of the hospitality industry's most respected, independent publications.
These are very exciting times at your company. Thank you for your continued
support, and we hope to report continuing positive developments to you in the
future.
Very truly yours,
/s/ Douglas Collins
[COUNTRY HEARTH INN LOGO]
<PAGE>
ANNEX 4
PROXY
BUCKHEAD AMERICA CORPORATION
4243 DUNWOODY CLUB DRIVE
SUITE 200
ATLANTA, GA 30350
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Douglas C.
Collins and Robert B. Lee, and each of them, as Proxies, each with the power to
appoint his substitute, and hereby authorizes each of them to represent and to
vote, as designated on the reverse side, all the shares of Common Stock of
Buckhead America Corporation (the "Company") held of record by the undersigned
on April 19, 1999, at the Annual Meeting of Shareholders to be held on May 27,
1999 or any adjournment thereof (the "Meeting").
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Vote by Telephone Vote by Internet
It's fast, convenient, and immediate! It's fast, convenient, and your
Call Toll-Free on a Touch-Tone Phone vote is immediately confirmed and
1-877-PRX-VOTE (1-877-779-8683). posted.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy
and Proxy Card. Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683. For http://www.eproxyvote.com/buck
shareholders residing outside the
United States call collect on a
touch-tone phone 1-201-536-8073. 3. Enter your 14-digit Voter
Control Number located on your
3. Enter your 14-digit Voter Control Proxy Card above your name.
Number located on your Proxy Card
above your name. 4. Follow the instructions provided.
4. Follow the recorded instructions.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/buck anytime!
</TABLE>
Do not return your Proxy Card if you are voting by Telephone or Internet
Proxies voted by Telephone or Internet must be received by 3:00 P.M. EDT - May
26, 1999
[ X ] Please mark
votes as in
this example.
THE PROXIES SHALL VOTE AS SPECIFIED BY THE STOCKHOLDER, OR IF NO INDICATION IS
MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE LISTED PROPOSALS.
1. ELECTION OF DIRECTORS
Nominees: (01) Douglas C. Collins, (02) Ronald L. Devine, (03) David C.
Glickman, (04) Robert B. Lee, (05) David B. Mumford, (06) William K. Stern, and
(07) Stephen A. Van Dyke
FOR ALL NOMINEES [ ] [ ] WITHHELD FROM ALL NOMINEES
[ ] ______________________________________
For all nominees except as noted above
2. Proposal to approve the adoption of the Company's 1999 Employee Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
IF VOTING BY MAIL, PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(Stockholders should sign exactly as name appears on stock. Where there is
more than one owner each should sign. Executors, Administrators, Trustees
and others signing in a representative capacity should so indicate.)
Signature:_______________ Date:________ Signature:_______________ Date:________
