SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |X|
Filed by a party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
JAMESON INNS, INC.
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(Name of Registrant as Specified In Its Charter)
Not Applicable
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PRELIMINARY COPY CONFIDENTIAL - For use of the Securities and
Exchange Commission only
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
Special Meeting of Stockholders of Jameson Inns, Inc. (the "Company") to be held
in the offices of the Company at 8 Perimeter Center East, Suite 8050, Atlanta,
Georgia 30346-1603, on Monday, February 2, 1998, at 10A.M., local time, and at
any and all adjournments or postponements thereof, as indicated below:
Proposal to approve an amendment to the Company's Amended and Restated
Articles of Incorporation (the "Articles") to amend and restate the
Articles to provide for (a) an increase in the number of authorized
shares of Common Stock from 20,000,000 to 40,000,000, (b) an increase
in the number of authorized shares of Preferred Stock from 100,000 to
10,000,000, (c) a revision of the restrictions on ownership and
transfer of the Company's capital stock to include the Preferred
Stock, and (d) the correction of certain typographical and other
technical errors as discussed in the accompanying Proxy Statement.
|_| FOR |_| AGAINST |_| ABSTAIN
(Continued and to be signed on the reverse side)
<PAGE>
(Continued from other side)
This Proxy will be voted as directed herein by the undersigned
stockholder. If no specifications are made, this Proxy will be voted FOR the
above proposal. 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.
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
Dated: , 1998
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- -------------------------------------
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.
<PAGE>
Preliminary Copy
JAMESON INNS, INC.
8 Perimeter Center East, Suite 8050
Atlanta, Georgia 30346-1603
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held February 2, 1998
To the Stockholders of JAMESON INNS, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
Jameson Inns, Inc., a Georgia corporation (the "Company"), will be held in the
offices of the Company at 8 Perimeter Center East, Suite 8050, Atlanta, Georgia
30346-1603, on Monday, February 2, 1998, at 10:00 a.m., local time, for the
following purposes:
1. To consider and act upon a proposal to approve an amendment to
the Company's Amended and Restated Articles of Incorporation
(the "Articles") to amend and restate the Articles to provide
for (a) an increase in the number of authorized shares of
Common Stock, par value $.10 per share, from 20,000,000 shares
to 40,000,000 shares, (b) an increase in the number of
authorized shares of Preferred Stock, par value $1.00 per
share, from 100,000 shares to 10,000,000 shares, (c) a
revision of the restrictions on ownership and transfer of the
Company's capital stock to include the Preferred Stock, and
(d) the correction of certain typographical and other
technical errors; and
2. 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 December 15,
1997, 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
December ___, 1997
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>
Preliminary Copy
Jameson Inns, Inc.
8 Perimeter Center East, Suite 8050
Atlanta, Georgia 30346-1603
PROXY STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS
To Be Held February 2, 1998
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 Special Meeting of Stockholders of the
Company to be held on February 2, 1998, or at any adjournment thereof (the
"Special Meeting"), for the purposes set forth in the accompanying Notice of
Special Meeting. This Proxy Statement and accompanying proxy were first
forwarded on or about December __, 1997, to stockholders of record on December
15, 1997.
If the accompanying proxy is properly executed and returned, the shares
represented by the proxy will be voted at the Special 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" the approval of the
amendment to the Company's Amended and Restated Articles of Incorporation (the
"Articles"). 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 Special Meeting, or by attending
the Special 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 Special 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. The Company will use the services of Corporate Investor
Communications, Inc. ("CIC"), a professional soliciting organization, to assist
in obtaining in person or by proxy the largest number of stockholders possible.
The Company estimates its expenses for such services will not exceed $5,000 plus
customary out-of-pocket expenses. The Company has agreed to indemnify CIC
against certain liabilities in connection with the proxy solicitation.
STOCKHOLDERS ENTITLED TO VOTE
Stockholders of record at the close of business on December 15, 1997
(the "Record Date"), will be entitled to vote at the Special Meeting. As of the
Record Date, there were issued and outstanding 9,773,348 shares of Common Stock,
par value $.10 per share ("Common Stock"), of the Company. Each share of Common
Stock is entitled to one vote. 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
<PAGE>
the Special Meeting will constitute a quorum for the transaction of business.
Abstentions from voting and broker non-votes will be counted for purposes of
determining whether a quorum has been reached. As provided in the Company's
Articles, the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required to approve the amendment to the Company's
Articles. Based on the Company's understanding of Georgia state law
requirements, abstentions from voting and broker non-votes will not be
considered "votes cast." Broker non-votes will have no effect on the outcome of
the proposed amendment. Votes will be tabulated by an inspector of elections
appointed by the Board of Directors of the Company. Stockholders of the Company
will not be entitled to dissenters' appraisal rights with respect to the
amendment to the Company's Articles.
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S
AMENDED AND RESTATED ARTICLES OF INCORPORATION
The Board of Directors has determined that the number of shares of the
Company's Common Stock and the number of shares of the Company's Preferred
Stock, par value $1.00 per share ("Preferred Stock") presently available for
issuance is not sufficient to provide for future contingencies and needs of the
Company, such as possible future financings, stock splits, business
acquisitions, business combinations, stock distributions, or other corporate
purposes. The authorized capital stock of the Company presently consists of
20,000,000 shares of Common Stock and 100,000 shares of Preferred Stock. The
number of shares of Common Stock outstanding as of the Record Date was
9,773,348. Allowing for the number of shares of Common Stock outstanding or
reserved for future issuance, only 8,500,463 authorized shares of Common Stock
remain freely available for issuance. No shares of Preferred Stock were
outstanding as of the Record Date.
The Board of Directors has approved and recommends that the
stockholders approve and adopt a proposal to amend the Articles (the "Proposed
Amendment") to amend and restate the Articles to provide for (a) an increase in
the number of authorized shares of Common Stock from 20,000,000 shares to
40,000,000 shares, (b) an increase in the number of authorized shares of
Preferred Stock from 100,000 shares to 10,000,000 shares, (c) a revision of the
restrictions on ownership and transfer of the Company's capital stock to include
the Preferred Stock, and (d) the correction of certain typographical and other
technical errors.
Background and Reasons for Increasing Authorized Shares of Common Stock
The Board of Directors believes that the Proposed Amendment will
provide several long-term advantages to the Company and its stockholders. The
passage of the Proposed Amendment would enable the Company to pursue
acquisitions or enter into transactions which the Board of Directors believes
provide the potential for growth and profit. If additional authorized shares of
Common Stock are available, transactions dependent upon the issuance of
additional shares will be less likely to be undermined by delays and
uncertainties occasioned by the need to obtain stockholder authorization to
provide the shares necessary to consummate such transactions. The ability to
issue shares of Common Stock, as the Board of Directors determines from time to
time to be in the Company's best interests, will also permit the Company to
avoid the extra expenses which would be incurred in holding special meetings of
stockholders solely to approve an increase in the number of shares of Common
Stock which the Company has the authority to issue.
The Company explores potential acquisitions on a regular basis and may
issue shares of Common Stock in connection therewith. While the currently
authorized shares of Common Stock are sufficient to provide for the Company's
immediate needs, an increase in such authorized shares available for issuance
would give the Company greater flexibility to respond to future developments and
allow Common Stock to be issued without the expense and delay of a special
meeting of stockholders. As of the date on which this Proxy Statement is being
mailed, there are no definite proposals in place with respect to any material
transaction involving the issuance of Common Stock. If there are any potential
business combination transactions which require stockholder approval, such
approval will be sought at the appropriate time.
In addition, in early 1997, the Company filed a Registration Statement
on Form S-3 (the "Shelf Registration") with the Securities and Exchange
Commission to register shares of Common Stock, warrants to purchase Common Stock
and shares or fractional shares of Preferred Stock, with an aggregate public
offering price of up to $100,000,000 (collectively, the "Offered Securities").
Under the Shelf Registration the Offered Securities may be offered separately or
together on a delayed or continuous basis in the future in separate series, in
amounts, at prices and on terms to be determined at the time of offering and set
forth in one or more prospectus supplements. There are currently no plans or
arrangements relating to the issuance of any of the additional shares of Common
Stock proposed to be authorized; however, at any time, one or more potential
transactions may be under consideration for which the additional shares of
Common Stock may be issued and offered for sale under the Shelf Registration.
Such shares of Common Stock would be available for issuance without further
action by the stockholders, unless required by the Company's Articles or Bylaws,
by the rules of any stock exchange on which the Common Stock may be listed or by
applicable law. Without an increase in authorized shares of Common Stock, the
Company may have to rely on debt, seek alternative financing means, or forego
the investment opportunity altogether.
<PAGE>
The availability of authorized but unissued shares of Common Stock
could, under certain circumstances, have an anti-takeover effect. Although the
Board of Directors has no present intention of doing so, the issuance of new
shares of Common Stock could be used to dilute certain rights of a person
seeking to obtain control of the Company should the Board of Directors consider
the action of such person not to be in the best interest of the stockholders of
the Company. The Company is not aware of any pending or proposed effort to
obtain control of the Company or to change the Company's management.
In the event additional shares of Common Stock are issued by the
Company, existing holders of shares of Common Stock would have no preemptive
rights under the Company's Articles or otherwise to purchase any of such shares.
It is possible that shares of Common Stock may be issued at a time and under
circumstances that may dilute the voting power of existing stockholders,
increase or decrease earnings per share and increase or decrease the book value
per share of shares presently held.
Background and Reasons for Increasing Authorized Shares of Preferred Stock
The Board of Directors has also determined that the number of shares of
Preferred Stock presently available for issuance is not sufficient to provide
for future contingencies and needs of the Company. In the future, if the Company
were to offer for sale shares of Preferred Stock under the Shelf Registration,
the number of shares of Preferred Stock presently authorized under the Company's
Articles would be insufficient to cover any desired amounts to be sold.
Accordingly, the Proposed Amendment is necessary in order to provide flexibility
for the Company in the event it desires to offer Preferred Stock for sale under
the Shelf Registration for the raising of additional capital or for other
corporate purposes. At the present time, there are no agreements, understandings
or arrangements for the issuance of shares of Preferred Stock except as
described below.
If the Proposed Amendment passes, the Company intends to offer for sale
shares of Preferred Stock under the Shelf Registration in an aggregate public
offering price of up to $30,000,000, although there can be no assurance that
such offering will occur or be successful. Under the Company's Articles, the
Board of Directors is empowered to designate and issue from time to time one or
more classes or series of Preferred Stock without stockholder approval; however,
until November 1998, no Preferred Stock may be issued except with the consent of
a majority of the Company's independent Directors. The Board of Directors may
affix and determine the relative rights, preferences and privileges of each
class or series of Preferred Stock so issued. Because the Board of Directors has
the power to establish the preferences and rights of each class or series of
Preferred Stock, it may afford the holders in any series or class of Preferred
Stock preferences, powers and rights, voting or otherwise, senior to the rights
of holders of Common Stock. The specific number of shares, designation, any
distribution, dividend, liquidation, redemption, conversion, voting and other
rights and any initial public offering price of the shares of Preferred Stock
will be set forth in the applicable prospectus supplement to the Shelf
Registration. The proposed preferences and rights of the class of Preferred
Stock to be issued under the Shelf Registration are set forth below under
"Description of Capital Stock--Series A Preferred Stock."
While the currently authorized shares of Preferred Stock are sufficient
to provide for the Company's immediate needs, an increase in the number of
authorized shares available for issuance would give the Company greater
flexibility to respond to future developments and allow Preferred Stock to be
issued without the expense and delay of an additional special meeting of
stockholders. Without an increase in the number of authorized shares of
Preferred Stock, the Company may have to rely on debt, seek alternative
financing means, or forego an investment opportunity altogether.
If the Proposed Amendment is approved, the shares of Preferred Stock
would be available for issuance without further action by the stockholders,
unless required by the Company's Amended and Restated Articles of Incorporation
or Bylaws, by the rules of any stock exchange on which the Company's securities
may be listed or by applicable law. In addition, the availability of authorized
but unissued shares of Preferred Stock could, under certain circumstances, have
an anti-takeover effect. Although the Board of Directors has no present
intention of doing so, the issuance of new shares of Preferred Stock could be
used to dilute certain rights of a person seeking to obtain control of the
Company should the Board of Directors consider the action of such person not to
be in the best interest of the stockholders of the Company. The Company is not
aware of any pending or proposed effort to obtain control of the Company or to
change the Company's management.
<PAGE>
Revision of Stock Ownership and Transfer Restrictions to Include Preferred Stock
To enable the Company to retain its status as a self-administered real
estate investment trust ("REIT") under the Internal Revenue Code of 1986, as
amended (the "Code"), prior to the issuance of any shares of Preferred Stock,
the Company's Articles must be amended to extend the restrictions on ownership
and transfer of outstanding shares now applicable to shares of Common Stock to
shares of Preferred Stock. A summary of the ownership and transfer restrictions
that will be applicable to shares of Preferred Stock if the Proposed Amendment
passes is set forth below under "Description of Capital Stock--Restrictions on
Ownership and Transfer."
Typographical and Technical Corrections to the Articles
The Proposed Amendment will provide for the correction throughout the
Articles of certain typographical and technical errors. The technical revisions
include the updating of the Articles to reflect the address of the Company's
current principal office.
Use of Proceeds
Except as otherwise provided in any applicable prospectus supplement,
the Company intends to use the net proceeds from any sale of the Preferred Stock
for working capital and for general corporate purposes, which may include the
repayment of indebtedness, the financing of capital commitments and possible
future acquisitions associated with the continued expansion of the Company's
business.
Vote Required and Effective Date
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required to approve the Proposed Amendment. If the
stockholders approve the Proposed Amendment, the Proposed Amendment will become
effective upon the filing of Articles of Amendment with the Secretary of State
of Georgia amending the Company's Amended and Restated Articles of
Incorporation, which will occur as soon as reasonably practicable following the
Special Meeting. No changes will be made in the respective rights and privileges
pertaining to the outstanding shares of Common Stock. The Board of Directors
recommends a vote FOR the Proposed Amendment.
DESCRIPTION OF CAPITAL STOCK
Common Stock
The following description of the Common Stock sets forth certain
general terms and provisions of the Common Stock and are in all respects subject
to and qualified in their entirety by reference to the applicable provisions of
the Articles.
The holders of Common Stock are entitled to one vote per share on all
matters voted on by stockholders, including elections of directors, and the
holders of such shares exclusively possess all voting power, except as otherwise
required by law or provided in any resolution adopted by the Board of Directors
with respect to any series of Preferred Stock establishing the powers,
designations, preferences and relative, participating, option or other special
rights of such series. The Articles do not provide for cumulative voting in the
election of directors. Subject to any preferential rights of any outstanding
series of Preferred Stock, the holders of Common Stock are entitled to such
distributions as may be declared from time to time by the Board of Directors
from funds available therefor, and upon liquidation are entitled to receive pro
rata all assets of the Company available for distribution to such holders.
<PAGE>
Series A Preferred Stock
The following description of the Preferred Stock represents the
Company's estimate of the general terms and provisions of a class of Preferred
Stock (the "Series A Preferred Stock") which the Company's may issue if the
Proposed Amendment is approved by the stockholders. The actual terms and
provisions of any Preferred Stock issued by the Company are subject to approval
by the Board of Directors and may differ substantially from those described
below. Moreover, even if the Proposed Amendment is approved and adopted by the
stockholders, there can be no assurance that the Company will issue any shares
of Preferred Stock, whether similar in terms and provisions to the following
description or have other terms and provisions as determined by the Board of
Directors.
Series A Preferred Stock will rank senior to the Common Stock with
respect to the payment of dividends and amounts distributable on liquidation.
Dividends on Series A Preferred Stock will be cumulative from the date of
original issue and will be payable quarterly in arrears in January, April, July
and October at a fixed rate to be determined by the Board of Directors. Shares
of Series A Preferred Stock will be entitled to a liquidation preference equal
to $25 per share, plus accrued and unpaid dividends.
Series A Preferred Stock will not be convertible into or exchangeable
for any other property or securities of the Company, will have no stated
maturity and will not be subject to any sinking fund or mandatory redemption.
Except in certain circumstances relating to preservation of the Company's status
as a REIT and in connection with a change of control of the Company, Series A
Preferred Stock will not be redeemable prior to five years following the date of
its issuance. On and after such date, Series A Preferred Stock will be
redeemable for cash at the option of the Company, in whole or in part, at a
redemption price of $25 per share, plus dividends accrued and unpaid to the
redemption (whether or not declared) without interest.
Upon a change of control of the Company at any time prior to the
expiration of five years following the date of issuance of Series A Preferred
Stock, the Company may redeem all of the outstanding Series A Preferred Stock at
a purchase price equal to the liquidation value of the stock, plus a premium to
be determined by the Board of Directors, plus dividends accrued and unpaid to
the redemption date (whether or not declared) without interest.
The holders of Series A Preferred Stock will generally have no voting
rights except as required by law. However, whenever dividends on any shares of
Series A Preferred Stock are in arrears for six or more quarters (whether
consecutive or not), the holders of such shares (voting separately as a class
with all other series of parity preferred stock upon which like voting rights
have been conferred and are exercisable) will be entitled to vote for the
election of two additional directors of the Company until all dividends
accumulated on such shares of Series A Preferred Stock have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In
addition, certain changes to the terms of the Series A Preferred Stock that
would be materially adverse to the rights of holders of Series A Preferred Stock
cannot be made without the affirmative vote of holders of at least two-thirds of
the outstanding Series A Preferred Stock.
Holders of Series A Preferred Stock will have certain other voting rights under
Georgia law.
Restrictions on Ownership and Transfer
For the Company to continue to qualify as a REIT under the Code after
January 1, 1995, not more than 50% in value of its outstanding stock may be
owned, directly or indirectly, by five or fewer individuals (as defined in the
Code to also include certain entities) during the last half of a taxable year,
and such stock must be beneficially owned by 100 or more persons during at least
335 days of a taxable year of 12 months or during a proportionate part of a
shorter taxable year. These restrictions did not apply to 1994, which was the
first taxable year for which the Company's REIT election was effective. In
addition, certain percentages of the Company's gross income must be from
particular activities. Because the Board of Directors believes it is essential
for the Company to continue to qualify as a REIT, the Board of Directors
adopted, and the stockholders prior to the Company's initial public offering
approved, the ownership limit provision of the Articles restricting the
acquisition of shares of Common Stock (the "Ownership Limit Provision"). If the
Proposed Amendment is adopted these restrictions will be extended to shares of
Preferred Stock as well. The following description summarizes the Ownership
Limit Provision as it will apply to both the Common Stock and the Preferred
Stock if the Proposed Amendment is adopted.
<PAGE>
The Ownership Limit Provision provides that, subject to certain
exceptions specified in the Articles, Mr. Kitchin cannot own, or be deemed to
own by virtue of the attribution provisions of the Code, more than that number
of shares which is equal to 20.75% of the aggregate value of the Company's
outstanding stock or the Related Party Limit (as defined below), American Real
Estate Company Ltd. cannot own, directly or indirectly, more than that number of
shares which is equal to 9% of the aggregate value of the Company's outstanding
stock and no other stockholder may own, or similarly be deemed to own, more than
6.75% of the aggregate value of the Company's outstanding stock.
In addition, since rent from any tenant 10% of which is owned, directly
or constructively, by the Company, including an owner of 10% or more of the
Company, is not qualifying rent for purposes of the gross income tests under the
Code, the Company's Articles include an additional ownership restriction
referred to as the "Related Party Limit." The Related Party Limit provides that
any stockholder who owns, or is deemed to own by virtue of the attribution
provisions of the Code (which differ from the attribution provisions applied to
the Ownership Limit), in excess of a 9.9% interest or voting power in the
capital stock, net assets or profits of an entity from whom the Company derives
gross income cannot own more than 9.9% of the aggregate value of the Company's
outstanding stock.
The Board of Directors has the power to grant a waiver of the Ownership
Limit or the Related Party Limit upon application by a stockholder. As a
condition of such waiver, the Board of Directors may require opinions of counsel
satisfactory to it and/or an undertaking from the applicant with respect to
preserving the REIT status of the Company.
If shares in excess of the Ownership Limit, or shares which would cause
the Company to be beneficially owned by fewer than 100 persons, are issued or
transferred to any person, such issuance or transfer shall be null and void and
the intended transferee will acquire no rights to the stock. Shares owned, or
deemed to be owned, or transferred to a stockholder in excess of the Ownership
Limit or Related Party Limit ("Excess Shares") will be automatically
transferred, pursuant to the Articles, to the Company as trustee of a trust for
the exclusive benefit of the transferee or transferees to whom the shares are
ultimately transferred (without violating the Ownership Limit or Related Party
Limit). While the Excess Shares are held in trust, they will not be entitled to
vote, they will not be considered for purposes of any stockholder vote or the
determination of a quorum for such vote and they will not be entitled to
participate in any distributions made by the Company. The intended
transferee-stockholder may, at any time the Excess Shares are held by the
Company in trust, transfer the Excess Shares at a price not to exceed the price
paid by the intended transferee-stockholder to any individual whose ownership of
such Excess Shares would be permitted under the Ownership Limit, at which time
the Excess Shares would no longer be Excess Shares. In addition, the Company
would have the right, for a period of 90 days during the time the Excess Shares
are held by the Company in trust, to purchase all or any portion of the Excess
Shares from the intended transferee-stockholder at the lesser of the price paid
for the Common Stock or Preferred Stock, as the case may be, by the intended
transferee-stockholder and the closing market price for shares of the respective
class of stock on the date the Company exercises its option to purchase. The
90-day period would commence on the date of the violative transfer of ownership
if the intended transferee-stockholder gives notice of the transfer to the
Company, or, if no notice is given, the date the Board of Directors determines
that a violative transfer of ownership has occurred.
The Ownership Limit will not be automatically removed even if the REIT
provisions of the Code are changed so as to no longer contain any ownership
concentration limitation or if the ownership concentration limitation is
increased. Except as otherwise described above, any change in the Ownership
Limit or Related Party Limit would require an amendment to the Articles.
Amendments to the Articles require the affirmative vote of holders owning a
majority of the outstanding Voting Stock. In addition to preserving the
Company's status as a REIT, the Ownership Limit and Related Party Limit may have
the effect of precluding an acquisition of control of the Company without the
approval of the Board of Directors.
All certificates representing shares of Common Stock and Preferred Stock
will bear a legend referring to the restrictions described above. All persons
who own, directly or by virtue of the attribution provisions of the Code, more
than 5% of the aggregate value of the Company's outstanding stock must file an
affidavit with the Company containing the information specified in the Articles
within 30 days after January 1 of each year. In addition, each stockholder shall
upon demand be required to disclose to the Company in writing such information
with respect to the direct, indirect and constructive ownership of shares as the
Board of Directors deems necessary to comply with the provisions of the Code
applicable to a REIT or to comply with the requirements of any taxing authority
or governmental agency.
<PAGE>
PRINCIPAL STOCKHOLDERS AND
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of December 15,
1997, 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 of the Company, (c) each of the executive officers of
the Company named in the Summary Compensation Table included in the Company's
Proxy Statement for its Annual Meeting held June 21, 1997, individually, 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>
<CAPTION>
Shares of
Common Stock
Name of Owner or Beneficially Percentage
Identity of Group Owned 1 of Class
- ----------------- ------- --------
<S> <C> <C>
Thomas W. Kitchin 722,1702 7.3%
8 Perimeter Center East, Suite 8050
Atlanta, Georgia 30346-1603
Robert D. Hisrich 30,9003 *
Michael E. Lawrence 30,0003 *
Thomas J. O'Haren 50,0003 *
All directors and executive 939,4994 9.4%
officers as a group
(7 persons)
- -------
<FN>
* Less than one percent (1%)
</FN>
<FN>
1 The total number includes shares issued and outstanding as of December 15,
1997, plus shares which the owner shown above has the right to acquire within 60
days after December 15, 1997. 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 December 15, 1997,
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, 75,000 shares issuable upon the exercise of currently vested stock
options, 37,500 shares of restricted Common Stock and 140,000 shares owned
jointly with Mr. Kitchin's spouse.
3 Includes 30,000 shares issuable upon the exercise of currently vested stock
options. 5,000 of such shares are subject to stockholder approval at the
Company's next annual meeting of stockholders.
4 Includes 239,067 shares issuable upon the exercise of currently vested stock
options and 50,625 shares of restricted Common Stock.
</FN>
</TABLE>
<PAGE>
OTHER MATTERS
Matters Which May Come Before the Special Meeting
The Board of Directors knows of no matters other than those described
in this Proxy Statement which will be brought before the Special Meeting for a
vote of the stockholders. If any other matter properly comes before the Special
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 business transacted at the Special Meeting be limited to the
purposes stated in the Notice of Special Meeting.
Inclusion in 1998 Proxy Statement of Stockholder Proposals
To be considered for inclusion in the Company's proxy statement and
accompanying proxy for the Company's 1998 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 2, 1998, and
must otherwise conform to the rules of the Securities and Exchange Commission.
REMINDER: PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD TO ASSURE THAT
ALL OF YOUR SHARES WILL BE VOTED.
Steven A. Curlee, Secretary of
Jameson Inns, Inc.
<PAGE>
