<PAGE>
JAMESON INNS, INC.
8 Perimeter Center East, Suite 8050
Atlanta, Georgia 30346-1603
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 29, 1996
To the Stockholders of
JAMESON INNS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Jameson Inns, Inc., a Georgia corporation (the "Company"), will be
held at Corporate Sports Unlimited Farm, on Hurricane Shoals Road,
Lawrenceville, Georgia 30243, on Saturday, June 29, 1996, at 11:00
a.m., local time, for the following purposes:
1. To elect one director to Class III for a three-year term;
2. To ratify the adoption of the Jameson 1996 Stock Incentive
Plan.
3. To consider and act upon a proposal to ratify the
appointment of Ernst & Young LLP as the independent auditor
of the Company for 1996; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on May 28,
1996, as the record date for the meeting, and only holders of record
of Common Stock at such time will be entitled to vote at the meeting
or any adjournment thereof. A complete list of the stockholders
entitled to vote at the meeting will be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of ten days prior to the date of the
meeting at the offices of the Company and at the time and place of the
meeting.
By Order of the Board of
Directors,
Steven A. Curlee
Secretary
Atlanta, Georgia
June 4, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU DO ATTEND
THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. <PAGE>
<PAGE>
Jameson Inns, Inc.
8 Perimeter Center East, Suite 8050
Atlanta, Georgia 30346-1603
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 29, 1996
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Jameson Inns, Inc., a
Georgia corporation (the "Company"), of proxies to be voted at the
Annual Meeting of Stockholders of the Company to be held on June 29,
1996, or at any adjournment thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting. This
Proxy Statement and accompanying proxy were first forwarded on or
about June 5, 1996, to stockholders of record on May 28, 1996.
If the accompanying proxy is properly executed and returned, the
shares represented by the proxy will be voted at the Annual Meeting.
If a stockholder indicates in his or her proxy a choice with respect
to any matter to be acted upon, that stockholder's shares will be
voted in accordance with such choice. If no choice is indicated, such
shares will be voted "FOR" (1) the election of the nominee for
director named below, (2) ratification of the adoption of the Jameson
1996 Stock Option Plan and (3) ratification of the appointment of the
independent auditor. A stockholder giving a proxy may revoke it by
giving written notice of revocation to the Secretary of the Company at
any time before it is voted, by executing another valid proxy bearing
a later date and delivering such proxy to the Secretary of the Company
prior to or at the Annual Meeting, or by attending the Annual Meeting
and voting in person.
The expenses of this proxy solicitation, including the cost of
preparing and mailing this Proxy Statement and accompanying proxy will
be borne by the Company. Such expenses will also include the charges
and expenses of banks, brokerage firms, and other custodians, nominees
or fiduciaries for forwarding solicitation material regarding the
Annual Meeting to beneficial owners of the Company's Common Stock.
Solicitation of proxies may be made by mail, telephone, personal
interviews or by other means by the Board of Directors or employees of
the Company who will not be additionally compensated therefor, but who
may be reimbursed for their out-of-pocket expenses in connection
therewith.
STOCKHOLDERS ENTITLED TO VOTE
Stockholders of record at the close of business on May 28, 1996
(the "Record Date"), will be entitled to vote at the Annual Meeting.
As of the Record Date, there were issued and outstanding 7,248,740
shares of Common Stock, par value $.10 per share (the "Common Stock"),
of the Company. Each share of Common Stock is entitled to one vote.
There is no cumulative voting with respect to the election of
directors. The presence in person or by proxy of the holders of
issued and outstanding shares having a majority of the votes entitled
to vote at the Annual Meeting will constitute a quorum for the
transaction of business. Votes withheld from the nominee for
director, abstentions and broker non-votes will be counted for
purposes of determining whether a quorum has been reached. Under the
law of Georgia, the Company's state of incorporation, directors are
elected by a plurality of votes cast. As required by Rule 16b-3 under
the Securities Exchange Act of 1934, as amended, approval of the
proposal to ratify the adoption of the Jameson 1996 Stock Incentive
Plan will require the affirmative vote of the holders of a majority of
the shares of Common Stock present or represented by proxy at the
Annual Meeting. As provided in the Company's bylaws, each of the
other proposals before the stockholders will be approved if the number
of votes cast at the Annual Meeting for the action exceeds the number
of votes cast opposing the action. With regard to the election of a
director, votes may be cast in favor of or withheld from the nominee;
votes that are withheld will be excluded entirely from the vote and
will have no effect. Based on the Company's understanding of Georgia
state law requirements, abstentions, broker non-votes and withheld
votes will not be considered "votes cast." Broker non-votes will have
<PAGE>
no effect on the outcome of the election of a director or other
proposals. Votes will be tabulated by an inspector of elections
appointed by the Board of Directors of the Company.
PROPOSAL ONE
ELECTION OF DIRECTOR
The Amended and Restated Articles of Incorporation (the
"Articles") of the Company provide that the Board of Directors of the
Company (the "Board of Directors") shall consist of not less than two
nor more than 15 directors, as determined from time to time by
resolution of the Board of Directors. The number of directors is
currently fixed at four. The Board of Directors is divided into three
classes. The terms of such classes are staggered so that, except with
respect to directors appointed to fill vacancies created by an
increase in the number of directors, only one class is elected at the
annual meeting of stockholders each year for a three-year term. The
term of the Class III directors, consisting of only Thomas W. Kitchin,
will expire at the Annual Meeting. The accompanying proxy solicits
your vote for one Class III director. If elected, Mr. Kitchin's term
will expire at the annual meeting of stockholders to be held in 1999.
The Board of Directors has nominated Thomas W. Kitchin for re-
election as a Class III director. The persons named as proxies in the
accompanying proxy, who have been designated by the Board of
Directors, intend to vote, unless otherwise instructed in such proxy,
for the election of Mr. Kitchin. Should Mr. Kitchin become unable for
any reason to stand for election as a director of the Company, it is
intended that the persons named in such proxy will vote for the
election of such other person as the Board of Directors may recommend.
The Company knows of no reason why Mr. Kitchin will be unavailable or
unable to serve.
The Board of Directors recommends a vote "FOR" the following
nominee for director.
Nominee for Director
Class III
(Term Expires 1999)
Thomas W. Kitchin, 53, is President, Chief Executive Officer, a
director and Chairman of the Board of Directors of the Company. He
has been an officer and director of the Company since its
incorporation in 1988. He served from 1977 until December 1986 as the
President and Chairman of the Board of an oil and gas company. Prior
thereto, Mr. Kitchin was involved in the banking business for 16
years. Mr. Kitchin is a Director of the American Hotel and Motel
Association, the Georgia Hospitality and Travel Association, the
Georgia State University Cecil B. Day School of Hospitality
Administration and the Association for Publicly Traded Companies. Mr.
Kitchin is the father of Craig R. Kitchin, Chief Financial Officer and
Treasurer of the Company.
Directors Continuing in Office
Class I
(Term Expires 1997)
Robert D. Hisrich, Ph. D., 51, became a director in October 1993.
Dr. Hisrich has held the A. Malachi Mixon III Chair in Entrepreneurial
Studies and has been a professor at the Weatherford School of
Management, Case Western Reserve University, Cleveland, Ohio, since
September 1993. From 1985 until his appointment at Case Western
Reserve University, Dr. Hisrich held the Bovaird Chair of
Entrepreneurial Studies and Private Enterprise and was a Professor of
marketing at The University of Tulsa, Tulsa, Oklahoma, and was a
Director of the Enterprise Development Center at The University of
Tulsa. In the spring of 1992, Dr. Hisrich was a Visiting Professor of
Entrepreneurship Studies at the University of Limerick, Limerick,
<PAGE>
Ireland, and from 1990 through 1991, he was a Fulbright Professor and
holder of the Alexander Hamilton Chair in Entrepreneurship at the
Foundation for Small Enterprise Economic Development, Budapest,
Hungary. In the spring of 1989, Dr. Hisrich was a Fulbright Professor
at the International Management Center, Budapest, Hungary. In
addition, since 1974 Dr. Hisrich has been Director of H & B
Associates, a marketing and management consulting firm. He has also
held a number of other academic positions and is widely published in
the areas of marketing, management and entrepreneurship. Dr. Hisrich
has a B.A. degree in English and science from DePauw University, an
M.B.A. degree in marketing from the University of Cincinnati and a
Ph.D. degree in business administration from the University of
Cincinnati.
Thomas J. Kearns, 57, became a director in July 1994. Mr.
Kearns has been Director of Financial Services, Investment Banking,
for Josephthal Lyon & Ross Incorporated since April 1995. He is also
president of Thomas J. Kearns Inc., a financial consulting firm, and
has been in the securities business for 29 years. He became a
director of the Company in 1994. Until 1990, Mr. Kearns was a first
vice president of Merrill Lynch Capital Markets, where he was employed
for 16 years. Since 1990 he has been a director of CWM Mortgage
Holdings, Inc. (formerly Countrywide Mortgage Investments, Inc)., a
publicly-held real estate mortgage investment company. From April
1994 to January 1995 he was a managing director of Commonwealth
Associates, an investment banking firm. Mr. Kearns was nominated and
serves on the Board of Directors as the designee of Commonwealth
Associates pursuant to an agreement between Commonwealth Associates
and the Company.
Class II
(Term Expires 1998)
Michael E. Lawrence, 51, became a director in April 1994. Since
March 1994, he has been a director of Sea Pines Associates, Inc., a
publicly held corporation with approximately $35 million in annual
revenues which owns and operates real estate and recreational
properties on Hilton Head Island, South Carolina. Mr. Lawrence is
president of Sea Pines Company where he has served as the chief
financial officer since February 1990. Since that date he has also
been vice president and chief financial officer of Sea Pines Real
Estate Company and a director, vice president and chief financial
officer of Sea Pines Country Club, Inc., all subsidiaries of Sea Pines
Associates, Inc. Prior to joining Sea Pines Associates, Inc., Mr.
Lawrence was a management consultant with Ernst & Young from 1969
through 1989 and was a partner in that firm from 1982 through 1989.
Mr. Lawrence is a certified public accountant with an M.B.A. degree
from Emory University.
Compensation of Directors
Each director other than Mr. Kitchin receives from the Company an
annual fee of $10,000 and reimbursement of expenses incurred in
attending Board or Committee meetings. Payment of the annual fee is
not contingent upon attendance at Board or Committee meetings.
Under the Jameson Inns, Inc. Director Stock Option Plan (the
"Director Plan"), each director of the Company who is not otherwise an
employee of the Company or any of its subsidiaries or affiliates is
granted an option to purchase ("Director Option") 25,000 shares of
Common Stock upon his initial election as a director of the Company.
Dr. Hisrich, Mr. Lawrence and Mr. Kearns, who were elected or
appointed as directors prior to the adoption in 1995 of Director Plan,
each received a Director Option to purchase 25,000 shares of Common
Stock in 1995 upon the adoption of the Director Plan in exchange for
their surrender and the cancellation of stock options previously
granted to each of them under the 1993 Jameson Stock Incentive Plan.
Directors Options vest immediately at the time of grant and have a per
share exercise price equal to the fair market value of a share of
Common Stock at the close of business on the last business day
preceding the day of grant. The Director Options granted to Dr.
Hisrich, Mr. Lawrence and Mr. Kearns have an exercise price of $7.25
per share.
<PAGE>
Meetings and Committees of the Board of Directors
During 1995, the Board of Directors held seven meetings. All of
the directors then serving were present in person or by telephone at
each meeting. In addition, the Board of Directors took action six
times during 1995 by unanimous written consent. No director attended
fewer than 75 percent of the aggregate of: (1) the total number of
meetings of the Board of Directors held during the period in which the
respective director was a director during 1995, or (2) the total
number of meetings held by all committees of the Board of Directors on
which the respective director served. The Board of Directors did not
have an Audit Committee or Compensation Committee prior to
consummation of its initial public offering in February 1994. The
Board of Directors appointed a standing Audit Committee and a standing
Compensation Committee in April 1994.
The Audit Committee is composed of Dr. Hisrich and Mr. Lawrence.
The Audit Committee annually considers the qualifications of the
independent auditor of the Company and makes recommendations to the
Board of Directors on the engagement of the independent auditor. The
Audit Committee also reviews (a) any transactions between the Company
and its officers, directors and principal stockholders, (b) the plans
for and results of audits of the Company, and (c) the results of any
internal audits, compliance with any of the Company's written policies
and procedures and the adequacy of the Company's system of internal
accounting controls.
The Compensation Committee is composed of Dr. Hisrich, Mr.
Lawrence and Mr. Kearns. During 1995, the Compensation Committee held
one meeting to act on the recommendations of the Board of Directors
regarding stock option awards and the repricing of previously granted
stock options. During 1996 and in future years, the Compensation
Committee will review the compensation of officers of the Company and
make recommendations to the Board of Directors regarding such
compensation, will review the Company's executive compensation
policies and practices, and administer the Jameson 1993 Stock
Incentive Plan and the Jameson 1996 Stock Incentive Plan. The
Compensation Committee will also review the determinations by Kitchin
Investments, Inc. under the Cost Reimbursement Agreement (see "Certain
Transactions - Cost Reimbursement Agreement," below) as to the
percentage of time each executive officer of the Company devoted to
<PAGE>
the Company's business during the relevant period.
The Company does not have a standing Nominating Committee. The
Company's Bylaws provide that nominations of candidates for election
as directors of the Company may be made by or at the direction of the
Board of Directors or by any stockholder entitled to vote at the
meeting at which directors are to be elected who complies with the
advance notice procedures set forth therein. These procedures require
any stockholder who intends to make a nomination for director to
deliver notice of such nomination to the Secretary of the Company not
later than the date on which stockholder proposals must be received by
the Secretary of the Company for inclusion in the Company's proxy
statement under the rules of the Securities and Exchange Commission.
The notice must contain all information specified by the Board of
Directors. If the chairman of the meeting determines that a person is
not nominated in accordance with the nomination procedure, such
nomination will be disregarded.
PROPOSAL TWO
APPROVAL OF THE JAMESON 1996 INCENTIVE STOCK PLAN
The Board of Directors of the Company has adopted the Jameson
1996 Incentive Stock Plan (the "1996 Stock Plan") and has ordered it
to be submitted to the Company's stockholders for their consideration
and approval at the Annual Meeting. The Board of Directors of the
Company believes the approval of the 1996 Stock Plan is in the best
interests of the Company and its stockholders, as such plan will
assist in attracting and retaining qualified administrative and
management personnel of the Company, Jameson Operating Company,
Jameson Construction Company and Jameson Development Company
(collectively, the "Companies") and will furnish incentives to such
persons to use their maximum efforts to enhance the Company's long-
term growth. A copy of the 1996 Stock Plan is attached to this Proxy
Statement as Appendix A, and the following summary is qualified in its
entirety by reference to Appendix A.
<PAGE>
The affirmative vote of a majority of votes present or
represented at the Annual Meeting and entitled to vote is required for
the approval of the 1996 Stock Plan.
Summary Description of the 1996 Stock Plan
A total of 500,000 shares of Common Stock have been reserved for
issuance under the 1996 Stock Plan. The 1996 Stock Plan provides for
the award of shares of Common Stock to key administrative and
management employees of the Companies. The 1996 Stock Plan will be
administered by the Compensation Committee of the Board of Directors.
As to those officers and key employees of the Company who are subject
to the limitations of Section 16(b) of the Securities Exchange Act of
1934, as amended, the 1996 Stock Plan will be administered by a
Special Stock Plan Committee (the "Special Committee") consisting of
at least two disinterested members of the Board of Directors. As used
in this description and in the 1996 Stock Plan, the term "Committee"
refers to either the Compensation Committee or the Special Committee,
as the context requires.
Eligibility for a award of shares of Common Stock under the 1996
Stock Plan is limited to employees of the Companies in positions of
responsibility whose business decisions, in the judgment of the
Committee, have a significant effect upon the performance of the
Companies and to such other key employees as the Committee may
designate. The number of persons in the class of eligible employees
of the Companies is 21. Recommendations for awards of shares under
the 1996 Stock Plan will be made to the Committee by management of the
Companies.
Awards of shares under the 1996 Stock Plan vest only on the tenth
anniversary of the date of the award and only if the award recipient
has been in the continuous employment of the Companies from the date
of the award until such tenth anniversary. In the event of the death
or disability of an award recipient, however, any unvested awards to
the recipient will vest immediately if the recipient was in the
continuous employment of the Companies from the date of the respective
award(s) until the date of the award recipient's death. For purposes
of the 1996 Stock Plan, a person is disabled if he or she is unable to
engage in any substantial, gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than six months. Except in the case of
death or disability, or as may otherwise be determined by the
Committee, upon the termination of an award recipient's employment by
the Companies, unvested awards to such recipient and the shares
represented thereby will be automatically forfeited.
Until vested, neither an award of shares nor the shares of Common
Stock represented by such award may be assigned, transferred, pledged,
hypothecated, sold or otherwise disposed of, in whole or in part,
voluntarily or involuntarily, except by will or the laws of descent
and distribution; any such assignment, transfer, pledge,
hypothecation, sale or other disposition will be void and of no
effect.
In addition to the restrictions on vesting and transferability
described above, awards of shares under the 1996 Stock Plan may be
subject to such additional restrictions as the Committee may impose,
including without limitation, forfeiture restrictions and restrictions
on transferability, voting and dividend rights. The 1996 Stock Plan
is not subject to the provisions of the Employee Retirement Income
Security Act of 1974.
Subject to certain restrictions, the Plan may be amended or
terminated by the Board of Directors at any time, but no such action
may reduce the number of shares of Common Stock previously awarded to
any recipient or adversely change the vesting provisions of any award
made prior to such action.
The following table sets forth certain information with respect
to the shares of Common Stock awarded under the 1996 Stock Plan as of
May 30, 1996, assuming approval of the 1996 Stock Plan by the Company
stockholders.
<PAGE>
<TABLE>
<CAPTION>
New Plan Benefits
1996 Stock Plan
Number of Shares
Name and Position Dollar Value Underlying Awards
<S> <C> <C>
Thomas W. Kitchin,
Chairman of the Board,
Chief Executive Officer,
President $367,969 37,500
All Executive Officers as
a group $496,758 50,625
Non-Executive Directors as
a group (1) 0 0
Non-Executive Officer
Employees as a group $110,342 11,245
- --------------------------
(1) Not eligible to receive awards under the 1996 Stock Plan.
</TABLE>
Federal Income Tax Consequences
A recipient of an award of shares under the 1996 Stock Plan will
not realize income for federal income tax purposes, and the Company
will not be entitled to any deduction, on the award of such shares.
Instead, unless the recipient makes an "83(b) election," on the date
such shares first become transferrable or not subject to a substantial
risk of forfeiture the recipient will realize ordinary income for
federal income tax purposes and the Company will be entitled to a
deduction in the amount equal to the fair market value of the shares
awarded. A recipient may make an election under Section 83(b) of the
Internal Revenue Code of 1986, as amended, within 30 days after the
award of shares under the 1996 Stock Plan to include the fair market
value of such shares on the date of award in his gross income in his
taxable year which includes the date of award. If a recipient makes
an "83(b) election," in the year of the award he will realize ordinary
income and the Company will be entitled to a deduction in the amount
of the value of such shares, the recipient will have a tax basis in
such shares equal to such fair market value and any amount realized by
the recipient on a disposition of such shares in excess of his tax
basis will constitute capital gains. If a recipient makes an "83(b)
election" and then forfeits the shares awarded, he will not be
entitled to a deduction or to file an amended income tax return in
respect to the income realized in the year of award by reason of the
"83(b) election."
The Board of Directors believes that this proposal is in the best
interests of the Company and its stockholders and recommends a vote
"FOR" ratification of the approval of the 1996 Stock Plan.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
Upon the recommendation of the Audit Committee, the Board of
Directors has appointed Ernst & Young LLP as the independent auditor
of the Company for the fiscal year ending December 31, 1996. Ernst &
Young LLP has been the independent auditor of the Company since the
Company's inception in 1988. A proposal will be presented at the
Annual Meeting asking the stockholders to ratify the appointment of
Ernst & Young LLP as the Company's independent auditor. If the
stockholders do not ratify the appointment of Ernst & Young LLP, the
Board of Directors will reconsider the appointment.
<PAGE>
This proposal will be approved if the number of votes cast for
the proposal at the Annual Meeting exceeds the number of votes cast
against the proposal. The Board of Directors recommends a vote "FOR"
the ratification of Ernst & Young LLP as independent auditor for 1996.
A representative of Ernst & Young LLP is expected to be present
at the Annual Meeting and therefore is expected to be available to
respond to appropriate questions. If a representative of Ernst &
Young LLP is present at the meeting, he or she will be given the
opportunity to make a statement, if he or she desires to do so, and
respond to appropriate questions.
PRINCIPAL STOCKHOLDERS AND
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of May 28,
1996, regarding the ownership of the Company's Common Stock by (a) all
persons known by the Company to be beneficial owners of more than five
percent of such stock, (b) each director and nominee for director of
the Company, (c) each of the executive officers of the Company named
in the Summary Compensation Table below, and (d) all executive
officers and directors of the Company as a group. Unless otherwise
noted, the persons named below have sole voting and investment power
with respect to such shares.
<TABLE>
Name of Owner or Shares of Common Stock Percentage
Identity of Group Beneficially Owned (1) of Class
- ------------------- ---------------------- ----------
<S> <C> <C>
Thomas W. Kitchin
8 Perimeter Center East
Suite 8050
Atlanta, Georgia 30346-1603 719,670 (2) 9.9%
Robert D. Hisrich 25,900 (3) *
Thomas J. Kearns 30,000 (3) *
Michael E. Lawrence 25,000 (3) *
All directors and executive
officers as a group
(7 persons) 874,070 (4) 11.7%
- ----------------------------
* Less than one percent (1%)
(1) The total number includes shares issued and outstanding as of May
28, 1996, plus shares which the owner shown above has the right to
acquire within 60 days after May 28, 1996. For purposes of
calculating the percent of the class outstanding held by each owner
shown above with a right to acquire additional shares, the total
number of shares excludes the shares which all other persons have the
right to acquire within 60 days after May 28, 1996, pursuant to the
exercise of outstanding stock options.
(2) Includes 46,938 shares owned by Kitchin Children's Trust, the
beneficiaries of which are members of the family of Mr. Kitchin and of
which Mr. Kitchin serves as trustee, 50,000 shares issuable upon the
exercise of currently vested stock options and 140,000 shares owned
jointly with Mr. Kitchin's spouse.
<PAGE>
(3) Includes 25,000 shares issuable upon the exercise of currently
vested stock options.
(4) Includes 193,750 shares issuable upon the exercise of currently
vested stock options.
</TABLE>
EXECUTIVE OFFICERS
The executive officers of the Company are:
Name Position
- ---- ------------
Thomas W. Kitchin President, Chief Executive Officer, Director,
Chairman of the Board of Directors
William D. Walker Vice President
Steven A. Curlee General Counsel, Secretary
Craig R. Kitchin Chief Financial Officer, Treasurer
Set forth below is certain information concerning the Company's
executive officers except for Mr. Thomas W. Kitchin. Information
concerning Mr. Kitchin is set forth above under the heading "Proposal
One - Election of Director - Nominee for Director."
William D. Walker, 43, is Vice President of the Company. He has
been an officer of the Company since its inception in 1988 and served
as a director from 1988 through October 29, 1993. Prior to joining
the Company, he worked in various financial management positions for
twelve years. Mr. Walker received a B.B.A. degree in finance from
Texas Tech University in 1975.
Steven A. Curlee, 44, became General Counsel and Secretary of the
Company in January 1993. From April 1985 to July 1992, he was general
counsel for Geodyne Resources, Inc. of Tulsa, Oklahoma, a public oil
and gas company primarily involved in the formation of large public
limited partnerships for the acquisition of producing oil and gas
properties for investors. Prior thereto, he was engaged in the
private practice of law in Tulsa, Oklahoma for five years. From 1976
to 1980, Mr. Curlee served on active duty in the U.S. Navy as a Judge
Advocate. He continues to serve in the Navy Reserves, having attained
the rank of Commander. Mr. Curlee received a B.A. degree in political
science and his J.D. from the University of Arkansas. He received a
Masters of Law in Taxation degree from Georgetown University. Mr.
Curlee is admitted to practice law in Arkansas, the District of
Columbia, Oklahoma, Texas and Georgia.
Craig R. Kitchin, 28, became Chief Financial Officer of the
Company in February 1994. He joined the Company as its Controller and
Treasurer on June 15, 1992, upon receiving his M.B.A degree from the
University of Chicago with concentrations in accounting and finance.
Before attending the University of Chicago, he was a financial analyst
with FMC Corporation in Santa Clara, California, from 1989 to 1990,
where his primary responsibilities included budgeting and forecasting
overhead expenses. Mr. Kitchin graduated from Santa Clara University
with a degree in finance in 1989. Craig Kitchin is the son of Thomas
W. Kitchin, the President of the Company.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect
to the compensation of Thomas W. Kitchin, the Company's President and
Chief Executive Officer, for services in all capacities to the Company
during the fiscal year ended December 31, 1995. No other executive
officer of the Company had an annual salary and bonus in excess of
$100,000 during such year. No information is given as to any person
for any fiscal year during which such person was not an executive
officer of the Company.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term
Compensation Awards
------------------- -------------------
Name and
Principal Position Year Salary($) Securities Under-
lying Options/SARs
(#)
- ------------------ ---- --------- -------------------
<S> <C> <C> <C>
Thomas W. Kitchin, 1994 $ 43,363 25,000
Chairman, Presi-
dent and Chief 1995 $100,000 250,000
Executive Officer
- ------------------
(1) Mr. Kitchin holds positions with Jameson Operating Company,
Jameson Construction Company and Kitchin Investments, Inc. ("KI"), as
well as with the Company, and receives compensation from each such
entity. The amount set forth in the table represents an allocation by
KI of Mr. Kitchin's total compensation from all such entities based on
records of actual time spent by Mr. Kitchin related to the Company.
In 1994 Mr. Kitchin spent substantial amounts of time devoted to the
Company's initial public offering of 2,600,000 shares of Common Stock.
Compensation which Mr. Kitchin receives from other entities is not
reported in the table. See "Certain Transactions - Cost Reimbursement
Agreement."
(2) Consists of options to purchase 25,000 shares of Common Stock at
$7.25 per share granted under the Jameson 1993 Stock Incentive Plan
(the "1993 Stock Plan").
(3) Consists of 150,000 free standing stock appreciation rights
granted under Mr. Kitchin's employment agreement (see " Employment
Agreement," below) and options to purchase 50,000 shares of Common
Stock under the 1993 Stock Plan. The exercise price of all such
options was reduced to $7.25 per share during fiscal 1995 (see " -
Report on Repricing of Options", below). At its meeting on May 4,
1995, the Board of Directors approved an amendment to Mr. Kitchin's
employment agreement providing that the SARs previously granted to him
would be based on a stock price of $7.25 per share rather than the
original price of $9.00 per share. Based on the determination by
Mr. Kitchin and the Company that such an amendment was not in the
Company's best interest, such amendment was rescinded in December
1995. Effective March 31, 1996, by mutual agreement of the Board of
Directors and Mr. Kitchin, all of the SARs were cancelled.
</TABLE>
Option Grants In Last Fiscal Year
The following table sets forth certain information as of December
31, 1995, with respect to stock options granted to the named executive
officer of the Company during 1995.
<TABLE>
Individual Grants
- -----------------------------------------------------------
<S> <C>
Name: Thomas W. Kitchin
Number of securities
Underlying Options
Granted (#): 25,000 (2)
% of Total Options
Granted to Employees
in Fiscal Year: 10% (3)
Base Price ($/Share) $7.25
Expiration Date May 3, 2005
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option Term (1)
5%($) $180,161
10%($) $394,237
- --------------
(1) Potential realizable value illustrates the value that might be
realized upon exercise of the stock appreciation rights immediately
prior to expiration of their term (ten years from the date of grant),
<PAGE>
assuming that the Common Stock appreciates in value from the date of
grant to the end of the option term at the rates of 5% and 10%,
respectively, compounded annually. Assuming a 5% appreciation rate,
the price of the Common Stock would be $14.46 at the end of the ten-
year period. Assuming a 10% appreciation rate, the price of the
Common Stock would be $23.02 at the end of the ten-year period.
(2) All options granted to Mr. Kitchin were granted under the 1993
Stock Plan. One-third of such options vested on May 4, 1995, one-
third vested on May 4, 1996, and the remainder vest on May 4, 1997.
(3) Based on the total number of shares underlying options which were
granted during 1995 and remained outstanding at December 31, 1995.
Options which were forfeited upon the termination during 1995 of the
employment of the respective grantees are not included as options
granted during 1995 for purposes of calculating this percentage.
</TABLE>
Option and SAR Exercises in Last Fiscal Year;
Aggregate Fiscal Year-End Values of Options and SARs
The named executive officer did not exercise any options or SARs
during 1995. The following table sets forth the values as of December
31, 1995, of all options and SARs held by the named executive officer
during 1995.
<TABLE>
<S> <C>
Name: Thomas W. Kitchin
Number of Unexercised
Options/SARs at
Fiscal Year End
Exercisable: 25,000
Unexercisable: 250,000
Value of Unexercised
in-the-money Options/SARs
at Fiscal Year End
Exercisable: $40,625
Unexercisable: $81,250
</TABLE>
Report on Repricing of Options
The Board of Directors, including the Compensation Committee, met
May 4, 1995, to discuss stock option awards to the officers and key
employees of the Company. The Directors discussed the stock options
previously granted to employees for which the exercise price of the
options was to be determined as they vested based on the amount of
dividends paid over the prior four calendar quarters. The Directors
concluded that the formula for determining the exercise price was
overly complex and potentially confusing to employees and thus was
ineffective in providing an incentive to employees. The Directors
concluded that in order to provide effective incentive to the key
employees and encourage long term employment, the exercise price for
previously granted options having higher exercise prices should be
repriced using the more customary fixed price option pricing mechanism
and, accordingly, the Board repriced such options to $7.25, the
current market price at May 4, 1995. The Board also granted
additional options to each employee equal to 50% of the number
previously granted to provide further incentives for employees'
service to the Company. The Board also established a shorter vesting
schedule for all options granted before or at the meeting, with one-
third of all options then outstanding to vest immediately, one-third
to vest on May 4, 1996, and the balance to vest on May 4, 1997.
This report was made by Thomas W. Kitchin, Dr. Robert D. Hisrich,
Thomas J. Kearns and Michael E. Lawrence.
The following table sets forth certain information concerning the
repricing in 1995 of options previously granted to Mr. Kitchin.
<PAGE>
<TABLE>
<S> <C>
Name: Thomas W. Kitchin
Date: May 4, 1995
Number of Options Repriced: 50,000 options (2)
Market Price of Common Stock
at Time of Repricing: $7.25
Exercise Price at Time of Repricing: (2)
New Exercise Price: $7.25
Length of Original Option
Term remaining at Date of
Repricing (1): 8.5 years
- ----------------------
(1) Five percent of all of the options granted to Mr. Kitchin in 1994
and repriced in 1995 vested January 15, 1995. The remaining options
were to vest 25% on January 15, 1996, 35% on January 15, 1997 and 35%
on January 15, 1998. The option exercise prices varied from $5.50 to
$11.00 per share, the actual exercise price being dependent on the
amount of dividends paid to common shareholders for the preceding four
quarters. On May 4, 1995, such vesting schedule was amended to
provide that, as of May 4, 1995, one-third of all of the options were
immediately vested, one-third would vest on May 4, 1996, and the
remaining one-third would vest on May 4, 1997.
(2) All options were granted to Mr. Kitchin as performance options
under the 1993 Stock Plan. Options to acquire 2,500 shares vested
January 15, 1995, and had an exercise price of $9.50 per share. The
exercise prices of the remaining options was to be determined as
described in footnote 1 above.
</TABLE>
Employment Agreement
In connection with consummation in early 1994 of the Company's
initial public offering of 2,600,000 shares of Common Stock (the
"IPO"), the Company entered into an employment agreement with Thomas
W. Kitchin as Chief Executive Officer and President of the Company.
Under the agreement, the Board of Directors sets the maximum amount of
annual salary for which the Company reimburses KI under the Cost
Reimbursement Agreement between the Company and KI based on the amount
of time Mr. Kitchin devotes to the Company's business. See "Certain
Transactions - Cost Reimbursement Agreement." In addition, the
agreement granted Mr. Kitchin stock appreciation rights ("SARs") based
on 150,000 shares of Common Stock which entitled Mr. Kitchin to
receive the difference between the market value of such shares as of
the exercise date and $9.00 per share, the price of the Common Stock
in the IPO. With the mutual consent of Mr. Kitchin and the Board of
Directors, such SARs were cancelled effective March 31, 1996.
Subject to certain penalties for early termination set forth
below, the employment agreement can be terminated by Mr. Kitchin upon
giving 60 days' notice. If Mr. Kitchin terminates the employment
agreement before February 3, 1997, the Company will have the right to
purchase all or part of the shares of Common Stock then owned by Mr.
Kitchin. The purchase price of each share of Common Stock owned would
be the lesser of 70% of the then market value of such stock, or $6.30
(70% of the IPO price per share of the Common Stock). At its option,
the Company may pay the purchase price for such shares in cash in full
upon exercise of its purchase rights or, alternatively, by payment of
one-third of the purchase price in cash at the time of purchase and
delivery of a promissory note for the balance which will bear interest
at then market rates, be payable in three equal semi-annual
installments during the 18 months following the purchase date and be
collateralized by a pledge of the purchased stock.
The Company may terminate the agreement at any time. If the
Company terminates Mr. Kitchin's employment without cause, however,
and elects to continue the non-compete provisions of the agreement
described below, the Company must pay Mr. Kitchin an amount equal to
300% of his annual compensation by the Company in equal monthly
installments over the 24-month term of the non-compete provisions.
Pursuant to such provisions, Mr. Kitchin is prohibited from owning,
operating or managing, directly or indirectly, any hotel property
during the term of his employment, or, for two years following such
employment, any hotel property within a 20-mile radius of any hotel
property owned by the Company.
<PAGE>
Report on Executive Compensation
The Compensation Committee, consisting of Dr. Hisrich and Messrs.
Lawrence and Kearns, met once during 1995 with the Board of Directors
to approve the repricing of previously granted stock options and to
award additional stock options to the executive officers of the
Company. See " - Option Grants during Last Fiscal Year" and " -
Report on Repricing of Options," above. Thomas W. Kitchin, the
Company's President, Chief Executive Officer, Chairman of the Board
and a director, made recommendations to the Compensation Committee
regarding which employees should be granted new stock options and how
many shares to be included in each option. All other decisions
regarding the compensation of executive officers were in practice made
by Thomas W. Kitchin. Compensation paid to executive officers during
1995 was based on the performance of the Company in meeting the
corporate goals for expansion, business development, financial
achievement and other matters. The responsibility of each executive
officer in meeting corporate goals was considered in establishing
executive compensation. Compensation for Mr. Kitchin was also based
on the provisions of his employment agreement which is discussed
above.
This report is made by Thomas W. Kitchin.
Insider Participation in Compensation Decisions
As noted above under "- Report on Executive Compensation," the
Compensation Committee met to approve the repricing of previously
granted stock options and to award additional stock options to the
executive officers of the Company. Thomas W. Kitchin, the Company's
President, Chief Executive Officer, Chairman of the Board and a
director made recommendations to the Compensation Committee regarding
which employees should be granted new stock options and how many
shares to be included in each option. All other decisions regarding
the compensation of executive officers was determined in practice
during 1995 by Mr. Kitchin.
<PAGE>
Shareholder Return Performance Graph
The Company's Common Stock was first registered under the
Securities Exchange Act of 1934 and was listed for trading on the
Nasdaq National Marketing System on January 27, 1994. The following
graph compares the percentage change in the cumulative total
stockholder return on the Company's Common Stock during the period
which commenced January 27, 1994, and ended December 31, 1995, with
the cumulative total return on the Nasdaq Market - U.S. Index and the
Standard & Poors Hotel-Motel Index.
<TABLE>
<CAPTION>
Comparison of 23 Month Cumulative Total Return*
Among Jameson Inns, Inc., The NASDAQ Stock Market - US Index
and the S&P Hotel-Motel Index
Stock Measured Month/Year Dollars
<S> <C> <C>
Jameson Inns, Inc. 1/94 $100
12/94 $ 84
12/95 $114
NASDAQ Stock Market 1/94 $100
- US Index 12/94 $ 98
12/95 $138
S&P Hotel-Motel 1/94 $100
12/94 $ 89
12/95 $105
* $100 invested on 01/27/94 in stock or on 12/31/93 in index -
including reinvestment of dividends. Fiscal year ending December 31.
</TABLE>
The above performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this
Proxy Statement into any filing under the Securities Act of 1933 or
the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
CERTAIN TRANSACTIONS
The Lease and Lease Amendment
All of the Company's operating hotel properties ("Inns") are
leased, and future Inns will be leased, to Jameson Operating Company
(the "Operator") pursuant to a master lease (the "Lease") entered into
February 3, 1994, in conjunction with the consummation of the IPO.
Thomas W. Kitchin, President, Chief Executive Officer and Chairman of
the Company, is the 9.9% beneficial owner of the Operator and Steven
A. Curlee, General Counsel and Secretary of the Company beneficially
owns the remaining 90.1% of the Operator. The Lease, which had an
initial term of 10 years prior to the amendment discussed below,
provides for payment of Base Rent and, if required under the formula
set forth under the Lease, Percentage Rent. Prior to such amendment,
<PAGE>
the Lease required the Company to pay real and personal property
taxes, casualty insurance premiums and the cost of maintaining
structural elements, including underground utilities; the Operator was
required to pay liability insurance premiums, utility costs and all
other costs and expenses incurred in the operation of the Inns,
including replacement and repair of furniture, fixtures and equipment
used in connection with the operation of the Inns.
Effective July 1, 1995, the Lease was amended to:
a. Increase the Base Rent from $240 per room per month to
$264 per room per month;
b. Change the formula on which Percentage Rent is
calculated from 39% of the first $20.00 of average daily per room
rental revenues plus 63% of the next $5.00 of average daily per
room rental revenues plus 73% of the next $5.00 of average daily
per room rental revenues plus 93% of the next $4.00 of average
daily per room rental revenues plus 75% of all additional daily
per room rental revenues to:
39% of the first $20.00 of average daily per room
rental revenues; plus
65% of all additional average daily per room rental
revenues;
provided, however that total rent for any calendar year is not to
exceed 47% of the total room rental revenues for that year.
c. Change the basis on which the $20.00 amount referred to
above will be adjusted for each calendar year beginning January
1, 1996, from 55% of the annual change in the Consumer Price
Index to 100% of such annual change;
d. Transfer the obligation to replace or refurbish the
furniture, fixtures and equipment in the Inns to the Company;
e. Clarify that the Company will obtain and pay for
general liability and casualty insurance coverage; and
f. Extend the term of the Lease from December 31, 2003, to
June 30, 2005.
These amendments were proposed by the Operator and unanimously
approved by the Company's independent directors. These amendments
were proposed by the Operator because of the cost and expense
obligations imposed on it by the original terms of the Lease,
particularly in light of the rapid increase in both the number of Inns
subject to the Lease and the average daily rental rates and the
increased administrative, financial and management costs resulting
therefrom. The amendments were unanimously approved by the
independent directors of the Company at the regular board meeting held
November 2, 1995. In 1995, Base Rent totalled $3,553,252 and
Percentage Rent totalled $2,788,977.
Turnkey Construction Contracts
New Inns are being constructed, and it is anticipated that any
additional Inns developed by the Company will be constructed, by
Jameson Construction Company (the "Contractor") on a turnkey basis
pursuant to construction agreements with the Company. The Contractor
is a subsidiary of Kitchin Investments, Inc. ("KI"), which is wholly
owned by Thomas W. Kitchin. The Contractor also performs all of the
construction work for expansion and renovations of existing Inns and
constructed fitness centers for Inns constructed prior to their
becoming a standard feature of new Inns. The Company paid the
Contractor $16,800,000 for turnkey construction of new Inn
construction, expansions, fitness centers or renovations during the
year ended December 31, 1995. If the contract price for a new Inn or
group of Inns or an Inn expansion exceeds the Contractor's costs plus
10%, the Contractor is required to refund the excess amount to the
Company. The contract price as well as the other terms of each
construction agreement submitted by the Contractor are subject to
approval by the Company's independent directors.
<PAGE>
Cost Reimbursement Agreement
The officers and employees of the Company are also employees of
KI, a corporation owned 100% by Thomas W. Kitchin. Rather than
duplicate payroll functions, the Company entered into the Cost
Reimbursement Agreement with KI providing that the Company will
reimburse KI, on an actual cost basis, for the employee compensation
and overhead costs attributable to the Company. The officers and
employees of the Company receive their salaries, hourly wages and
fringe benefits entirely from KI, which also pays the Company's office
overhead and other general and administrative costs. Under the Cost
Reimbursement Agreement, the Company determines for each officer and
employee the amount the Company would pay in salary and benefits if
such person devoted 100% of his or her time to Company business. KI
then determines, subject to review by the Company, the actual
percentage of the person's time devoted to the Company's business and
applies that percentage to the Company-established compensation
amount. The resulting amount is the amount the Company reimburses KI,
with respect to the officer's or employee's compensation. Office
overhead and other general and administrative costs are also allocated
to and borne by the Company based primarily on the amount of time
spent by these officers and employees on Company business. In 1995,
such allocations of salary, office overhead and other general and
administrative costs to the Company totalled approximately $138,000.
Loan Guarantee Fees
Prior to consummation of the IPO, in connection with development
of certain Inns developed by the Company and certain affiliated
partnerships formed for that purpose, Thomas W. Kitchin personally
guaranteed mortgage and construction indebtedness on such Inns. As of
December 31, 1995, Mr. Kitchin continued to guarantee $0.9 million of
the Company's indebtedness. Following consummation in April 1996 of
the Company's public offering of 3,000,000 shares of Common Stock, and
application of the proceeds therefrom to pay Company indebtedness,
Mr. Kitchin was released entirely from guarantees of the Company's
indebtedness.
OTHER MATTERS
Matters Which May Come Before the Annual Meeting
The Board of Directors knows of no matters other than those
described in this Proxy Statement which will be brought before the
Annual Meeting for a vote of the stockholders. If any other matter
properly comes before the Annual Meeting for a stockholder's vote, the
persons named in the accompanying proxy will vote thereon in
accordance with their best judgment. The Company's Bylaws require
that for business to be properly brought before a meeting of
stockholders by a stockholder, notice must be received by the
Secretary of the Company not later than the date on which stockholder
proposals must be received by the Company for inclusion in the
Company's proxy statement under the rules of the Securities and
Exchange Commission (see below). The notice must contain a brief
description of the business proposed to be brought before the meeting.
Inclusion in Proxy Statement of Stockholder Proposals
To be considered for inclusion in the Company's proxy statement
and accompanying proxy for the Company's 1997 Annual Meeting of
Stockholders, proposals of stockholders intended to be presented at
such meeting must be received at the principal executive offices of
the Company, 8 Perimeter Center East, Suite 8050, Atlanta, Georgia
30346-1603, not later than March 1, 1997, and must otherwise conform
to the rules of the Securities and Exchange Commission.
<PAGE>
Annual Report
A copy of the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, as filed with the Securities and Exchange
Commission, will be furnished without charge to stockholders upon
written request to: Steven A. Curlee, Secretary, Jameson Inns, Inc.,
8 Perimeter Center East, Suite 8050, Atlanta Georgia 30346-1603.
Steven A. Curlee,
Secretary of
Jameson Inns, Inc.
<PAGE>
APPENDIX A
JAMESON 1996 INCENTIVE STOCK PLAN
1. Purpose. The purpose of the Jameson 1996
Incentive Stock Plan (the "Plan") is to encourage the key
administrative and management personnel of Jameson Inns, Inc., Jameson
Construction Company, Jameson Development Company and Jameson
Operating Company (collectively, the "Company") to continue in the
employ of the Company and to furnish incentives to such persons by
providing such persons opportunities to acquire shares of the $0.10
par value common stock of the Company ("Common Stock") on terms as
herein provided.
2. Shares Reserved under this Plan. There is hereby
reserved for issuance under this Plan an aggregate of Five Hundred
Thousand (500,000) shares of Common Stock, which may be newly-issued
or treasury shares. If there is a forfeiture or cancellation of any
shares of Common Stock awarded under this Plan, all of such forfeited
or cancelled shares may again be used for new awards of Common Stock
under this Plan; provided, however, that in no event may the number of
shares of Common Stock issued under this Plan exceed the total number
of shares reserved for issuance hereunder.
3. Administration. This Plan shall be administered
by the Compensation Committee (the "Committee") of the Board of
Directors. The Committee shall be appointed by and serve at the
pleasure of the Board of Directors. A majority of the Committee
members shall constitute a quorum, and the act of a majority of the
members present at any meeting at which a quorum is present, and any
act approved in writing by a majority of the members without a
meeting, shall be the act of the Committee. Any such act shall be
final and binding upon all persons. The Committee shall have full
power to construe and interpret this Plan and to adopt such rules,
regulations, guidelines, subplans, procedures and the like for
carrying out this Plan as it may deem necessary, proper and in the
best interests of the Company.
Notwithstanding the foregoing paragraph, this Plan
shall be administered, as to those officers and key employees of the
Company who are otherwise eligible to receive awards of shares of
Common Stock pursuant to Section 4 hereof and who are subject to the
limitations of Section 16(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") ("Insiders"), by a Special Stock Plan
Committee (the "Special Committee") consisting of not less than two
members of the Board of Directors each of whom shall be a
"disinterested person" within the meaning of applicable rules and
regulations promulgated by the Securities and Exchange Commission (the
"SEC"). The Special Committee shall be appointed, governed,
indemnified and authorized as is the Committee hereinabove described.
However, the Special Committee shall have absolute discretion as to
all matters concerning Insiders. The term "Committee," as used
herein, shall refer to the Compensation Committee or the Special Stock
Plan Committee as the context requires.
4. Eligibility. Eligibility for an award of shares
of Common Stock under the provisions of this Plan (an "Award") shall
be limited to employees of the Company in positions of responsibility
whose business decisions, in the judgment of the Committee, have a
significant effect upon the performance of the Company and to such
other key employees as the Committee may from time to time designate.
5. Common Stock Awards. Those employees of the
Company who receive Awards under this Plan ("Participants") shall be
awarded such number of shares of Common Stock as are determined by the
Committee. Recommendations for the grant of Awards under this Plan
shall be made by management to the Committee. The Committee has the
full and exclusive power to determine which employees of the Company
shall receive Options; provided, however, that, subject to the
limitations of this Plan, the Committee may delegate to management the
authority to determine (a) which of those Company employees who are
not Insiders are eligible for Awards hereunder, and (b) the number of
shares of Common Stock to be awarded.
6. Vesting. Except as otherwise provided in this
Section 6, an Award shall mature and vest only on the tenth
anniversary of the date of the Award and only if the Participant who
received the Award has been in the continuous employment of the
Company from the date of the Award until such tenth anniversary. In
the event of a Participant's death during employment with the Company,
<PAGE>
all unvested Awards made to such Participant shall become fully vested
and may pass by will or the laws of descent and distribution if such
Participant was in the continuous employment of the Company from the
date(s) of such Award(s) until the date of such Participant's death.
In the event of a Participant's disability during employment with the
Company, all unvested Awards made to such Participant shall become
fully vested if such Participant was in the continuous employment of
the Company from the date(s) of such Award(s) until the date of such
Participant's disability. For purposes of this Plan, an individual is
disabled if he or she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less
than six months.
7. Terms and Conditions of Awards. Awards made
pursuant to this Plan shall be evidenced by Award Agreements in such
form as the Committee shall, from time to time, approve, which Award
Agreements shall comply with and be subject to the following terms and
conditions:
a. Number of Shares: Each such Award
Agreement shall state the number of shares of Common
Stock (subject to adjustment as provided herein) to
which it pertains.
b. Restrictions: In addition to the
restrictions required under Section 6 of this Plan,
Common Stock covered by an Award shall be subject to
such restrictions on transferability and other
restrictions as the Committee may impose (including,
without limitation, the forfeiture thereof, limitations
on the right to vote such Common Stock or the right to
receive dividends thereon), which restrictions may
lapse separately or in combination at such time, in
such installments or otherwise, as the Committee shall
determine at the time of grant or thereafter.
c. Forfeiture: Except as otherwise determined
by the Committee at the time of grant or thereafter,
upon termination of employment (as determined under
criteria established by the Committee) during the
applicable forfeiture restriction period, Common Stock
that is at that time subject to forfeiture restrictions
shall be forfeited and reacquired by the Corporation;
provided, however, that the Committee may provide, by
rule or regulation or in any Award Agreement, that
forfeiture restrictions on Common Stock shall be waived
in whole or in part in the event of terminations
resulting from specified causes, and the Committee may
in other cases waive in whole or in part forfeiture
restrictions on Common Stock.
d. Certificates for Shares: Common Stock
awarded under this Plan may be evidenced in such manner
as the Committee shall determine, including, without
limitation, issuance of certificates representing
shares of Common Stock. Any certificates representing
shares of Common Stock subject to the restrictions
imposed by this Plan or the Committee shall be
registered in the name of the Participant and shall
bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Common
Stock.
e. Nontransferability: Neither an Award nor
the shares of Common Stock represented thereby may be
assigned, transferred, pledged, hypothecated, sold or
otherwise disposed of, in whole or in part, voluntarily
or involuntarily, except by will or the laws of descent
and distribution, any such assignment, transfer,
pledge, hypothecation, sale or other disposition being
void and of no effect.
8. Other Provisions; Securities Registration. An
Award under this Plan may be subject to such other provisions as
counsel to the Company deems appropriate, including, without
limitation, provisions imposing restrictions on resale or other
disposition of such shares and such provisions as may be appropriate
to comply with federal or state securities laws and stock exchange
requirements. The Company shall not be required to issue or deliver
any certificate for Common Stock awarded under this Plan prior to the
admission of such shares to listing on any stock exchange on which
Common Stock at that time may be listed. If, at any time during the
period after an Award under this Plan and the issuance of the
certificate(s) for such shares, the Company shall be advised by its
counsel that the shares deliverable upon vesting are required to be
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities law, or that delivery of
such shares must be accompanied or preceded by a prospectus meeting
the requirements of the Securities Act, the Company will use its best
<PAGE>
efforts to effect such registration or provide such prospectus not
later than a reasonable time following an Award under this Plan, but
delivery of a certificate for such shares by the Company may be
deferred until such registration is effected or such prospectus is
available.
All certificates for Common Stock delivered under the
terms of this Plan shall be subject to such stop-transfer orders and
other restrictions as counsel to the Company may deem advisable under
federal or state securities laws, rules and regulations thereunder,
and the rules of any stock exchange on which Common Stock may be
listed. The Company may cause a legend or legends to be placed on any
such certificates to make appropriate reference to such restrictions
or any other restrictions or limitations that may be applicable to
such shares.
9. Effective Date and Term of Plan. This Plan shall
become effective as of May 30, 1996, the date of its approval by the
Board of Directors of the Company, subject to the approval of this
Plan by the affirmative vote of holders of a majority of shares of
Common Stock present in person or represented by proxy at a meeting of
stockholders of the Company or by written consent of the holders of a
majority of the such shares entitled to vote on this matter. Any
Awards granted under this Plan prior to such approval of stockholders
shall be effective when made (unless otherwise specified by the
Committee at the time of grant) but shall be conditioned upon and
subject to such approval of the Plan by stockholders. No shares of
Common Stock shall be awarded under this Plan more than ten (10) years
after the date of its approval by the stockholders of the Company.
10. Amendment of the Plan. The Board may amend this
Plan from time to time or terminate this Plan at any time, but no such
action shall reduce the number of shares of Common Stock awarded to
any Participant or adversely change the vesting provisions thereof
without the Participant's consent. However, notwithstanding the
foregoing, no amendment may (i) materially increase the benefits
accruing to Participants; (ii) materially increase the total number of
shares which may be issued under this Plan; or (iii) materially modify
the requirements as to eligibility for participation in this Plan, and
this Plan may not be amended more frequently than once every six
months, other than to comport with changes in the Internal Revenue
Code of 1986, as amended (the "Code"), or the rules thereunder or
result in this Plan losing its status as a protected plan under Rule
16b-3, as amended from time to time, or any successor to such Rule,
promulgated by the SEC under Section 16 of the Exchange Act.
11. Government Regulations. The Company's obligation
to deliver shares of Common Stock awarded under this Plan is subject
to the requirements of any governmental authority with jurisdiction
over the authorization, issuance or sale of such shares.
12. Notice; Time. Any notice required or permitted to
be given under this Plan shall be sufficient if in writing and if sent
by certified or registered mail, return receipt requested or delivered
in person, in the case of the Company, to the office of the President
of the Company, and otherwise, to the recipient at the last known
address of such recipient on file with the Company. All periods of
time shall begin or end on the day such notice is personally delivered
to any recipient or on the third day after such notice is deposited in
the United States mail in compliance with the preceding provisions of
this Section. Such date of personal delivery or third day following
deposit shall be the date of receipt for purposes of this Plan; in
computing the period of days, the date of receipt shall be included.
13. Unfunded Plan. Insofar as it provides for the
vesting of Awards in the future, this Plan shall be unfunded.
Although bookkeeping accounts may be established with respect to
Participants who are entitled to Common Stock under this Plan, any
such accounts shall be used merely as a bookkeeping convenience. The
Company shall not be required to segregate any assets that may at any
time be represented by Common Stock the entitlement to which may vest
in a Participant under this Plan, and this Plan shall not be construed
as providing for such segregation. Neither the Company nor the Board
shall be deemed to be a trustee of any Common Stock which has been
awarded or the entitlement to which may vest in an Participant under
this Plan. Any liability of the Company to a Participant with respect
to an Award shall be based solely upon any contractual obligations
that may be created by this Plan; no such obligation of the Company
shall be deemed to be secured by any pledge or other encumbrance on
any property of the Company. Neither the Company nor the Board shall
<PAGE>
be required to give any security or bond for the performance of any
obligation that may be created by this Plan.
14. General Provisions.
a. Governing Law. The validity,
interpretation, construction and effect of this Plan
and any rules and regulations relating to this Plan, to
the extent not otherwise governed by the Code, the
Securities Act of 1933, as amended, or the Exchange
Act, shall be governed by the laws of the State of
Georgia (without regard to the conflicts of law rules
thereof).
b. Separability. If any provision of this
Plan is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, or would disqualify
this Plan or any Award under any law deemed applicable
by the Company, such provision shall be construed or
deemed amended to conform to applicable laws or if it
cannot be construed or deemed amended without, in the
determination of the Company, materially altering the
intent of this Plan, it shall be deleted and the
remainder of this Plan shall remain in full force and
effect; provided, however, that, unless otherwise
determined by the Company, the provisions shall not be
construed or deemed amended or deleted with respect to
any Participant whose rights and obligations under this
Plan are not subject to the law of such jurisdiction or
the law deemed applicable by the Company.
The undersigned, being the duly elected Secretary of
Jameson Inns, Inc., does hereby certify that the Jameson 1996 Stock
Incentive Plan was duly approved and adopted by the Board of Directors
of Jameson Inns, Inc., on May 30, 1996, and by the stockholders of
Jameson Inns, Inc., on June ---, 1996.
Steven A. Curlee, Secretary of
Jameson Inns, Inc.
<PAGE>
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PROXY
JAMESON INNS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas W. Kitchin and
Craig R. Kitchin, or either of them, with full power of substitution,
as Proxies of the undersigned, with all powers that the undersigned
would possess if personally present to cast all votes that the
undersigned would be entitled to vote at the Annual Meeting of
Stockholders of Jameson Inns, Inc. (the "Company") to be held at
Corporate Sports Unlimited Farm, Hurricane Shoals Road, Lawrenceville,
Georgia 30243, on Saturday, June 29, 1996, at 11:00 a.m., local time,
and at any and all adjournments or postponements thereof, as indicated
below:
1. Election of Director.
-- FOR the following nominee (except as marked to the
contrary below) for term expiring in 1999:
Thomas W. Kitchin
-- WITHHOLD AUTHORITY to vote for the nominee above.
2. Proposal to approve the Jameson 1996 Incentive Stock
Option Plan described in the accompanying Proxy
Statement.
-- FOR -- AGAINST -- ABSTAIN
3. Proposal to ratify the appointment of Ernst & Young as
the Company's independent auditor for 1996.
-- FOR -- AGAINST -- ABSTAIN
This Proxy will be voted as directed herein by the
undersigned stockholder. If no specifications are made, this Proxy
will be voted FOR the nominee for director and FOR the proposals under
numbers 2 and 3 above. If any other business should properly be
brought before the meeting, the persons named as proxies will vote on
such business in accordance with their best judgment.
(Continued and to be signed on the reverse side)
<PAGE>
(Continued from other side)
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN THE
UNITED STATES.
Dated: , 1996
------------------------
Signature(s)
-------------------------
Signature(s)
IMPORTANT: Please date this Proxy and sign exactly as your name
appears to the left. If shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give title as such. If a corporation, please sign in
full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
**********************************************************************
