<PAGE>
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:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
JAMESON INNS, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Filing Fee Required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
JAMESON INNS, INC.
8 PERIMETER CENTER EAST, SUITE 8050
ATLANTA, GEORGIA 30346-1603
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 21, 1997
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 21, 1997, at 11:00 a.m., local time, for the following
purposes:
1. To elect two directors to Class I for a three-year term;
2. To consider and act upon a proposal to ratify the appointment of Ernst
& Young LLP as independent auditors of the Company for 1997; and
3. 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 5, 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,
/s/ Steven A. Curlee
Steven A. Curlee
Secretary
Atlanta, Georgia
May 15, 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>
JAMESON INNS, INC.
8 PERIMETER CENTER EAST, SUITE 8050
ATLANTA, GEORGIA 30346-1603
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 21, 1997
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 21, 1997, 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 May 15, 1997, to stockholders of record on May 5, 1997.
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
two nominees for directors named below and (2) 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 5, 1997 (the "Record
Date"), will be entitled to vote at the Annual Meeting. As of the Record Date,
there were issued and outstanding 9,703,002 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 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 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.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
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 I directors,
currently consisting of Dr. Robert D. Hisrich and Mr. Thomas J. Kearns, will
expire at the Annual Meeting. The accompanying proxy solicits your vote for two
Class I directors. The term of the Class I directors elected at the 1997 annual
meeting will expire at the annual meeting of stockholders to be held in 2000.
The Board of Directors has nominated Dr. Robert D. Hisrich for re-election
and Mr. Thomas J. O'Haren for election as Class I directors. 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 Dr. Hisrich and Mr. O'Haren. Should Dr. Hisrich and Mr. O'Haren
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 Dr. Hisrich or Mr. O'Haren will be unavailable or unable to
serve.
The Board of Directors recommends a vote "FOR" the following nominees for
directors.
NOMINEES FOR DIRECTORS
CLASS I
(TERM EXPIRES 2000)
ROBERT D. HISRICH, Ph. D., 52, 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, 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. O'HAREN, 63, has been employed for the past 26 years in sales and
marketing for Cigna Financial Advisors, Inc., a company engaged in the insurance
business. Mr. O'Haren serves that company both as a regional vice president and
as a consultant. He is active in the insurance industry, including serving as an
adjunct professor of leadership at The American College, the degree-granting
college of the insurance industry, as a member of The American College
Leadership Institute and as chairman of the board of trustees of the GAMA
Foundation, a research foundation for the insurance industry. Mr. O'Haren has a
B.S. degree in finance from Pennsylvania State University, received his
Chartered Life Underwriter designation in 1966 and his designation as a
Chartered Financial Consultant in 1983.
-2-
<PAGE>
DIRECTORS CONTINUING IN OFFICE
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 a B.S. degree from
Washington & Lee University and an M.B.A. degree from Emory University.
CLASS III
(TERM EXPIRES 1999)
THOMAS W. KITCHIN, 54, 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.
COMPENSATION OF DIRECTORS
Each director other than Mr. Kitchin receives from the Company an annual
fee of $10,000, $500 for each Board of Directors or Board Committee meeting
attended 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 the
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. If elected as a director, Mr. O'Haren will receive a Director Option to
purchase 25,000 shares of Common Stock at an exercise price per share equal to
the fair market value of a share of Common Stock at the close of business on the
last day preceding the date he is elected.
-3-
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1996, the Board of Directors held four 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 11 times during 1996 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 1996,
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, which met one time in 1996, 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.
In 1996, the Compensation Committee was composed of Dr. Hisrich, Mr.
Lawrence and Mr. Kearns. During 1996, the Compensation Committee did not meet,
but did act by written consent regarding restricted stock grant awards. During
1997 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 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
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP as independent auditors of the Company for the
fiscal year ending December 31, 1997. Ernst & Young LLP have been independent
auditors 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.
-4-
<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 auditors for 1997.
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 5, 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 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>
<CAPTION>
SHARES OF
COMMON STOCK
NAME OF OWNER OR BENEFICIALLY PERCENTAGE
IDENTITY OF GROUP OWNED/1/ OF CLASS
- ----------------- ------------ ----------
<S> <C> <C>
Thomas W. Kitchin 722,170/2/ 7.4%
8 Perimeter Center East, Suite 8050
Atlanta, Georgia 30346-1603
Robert D. Hisrich 25,900/3/ *
Thomas J. Kearns 5,000 *
Michael E. Lawrence 25,000/3/ *
Thomas J. O'Haren 1,000/4/ *
All directors and executive 901,682/5/ 9.1%
officers as a group
(8 persons)
</TABLE>
______________
* Less than one percent (1%)
/1/ The total number includes shares issued and outstanding as of May 5, 1997,
plus shares which the owner shown above has the right to acquire within 60 days
after May 5, 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 May 5, 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
-5-
<PAGE>
vested stock options, 37,500 shares of restricted Common Stock and 140,000
shares owned jointly with Mr. Kitchin's spouse.
/3/ Includes 25,000 shares issuable upon the exercise of currently vested stock
options.
/4/ If elected as a director, Mr. O'Haren will automatically be granted fully
vested Director Options to acquire 25,000 shares of Common Stock (see Proposal I
- -- "Compensation of Directors," above).
/5/ Includes 227,750 shares issuable upon the exercise of currently vested
stock options and 50,625 shares of restricted Common Stock.
EXECUTIVE OFFICERS
The executive officers of the Company are:
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
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
</TABLE>
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, 44, 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, 45, 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, 29, 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
-6-
<PAGE>
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.
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 years
ended December 31, 1994, 1995 and 1996. No other executive officer of the
Company had an annual salary and bonus in excess of $100,000 during any such
year. No information is given as to any person for any fiscal year during which
such person was not an executive officer of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
------------------- ----------------------
Securities Underlying
Name and Salary Options/SARs Restricted
Principal Position Year ($) (#) Stock
------------------ ---- ------ --------------------- ----------
<S> <C> <C> <C> <C>
Thomas W. Kitchin, Chairman, 1996 $ 62,598/1/ -- 37,500/4/
President and Chief 1995 43,363/1/ 25,000/2/ --
Executive Officer 1994 100,000/1/ 200,000/3/ --
</TABLE>
_______________
/1/ Mr. Kitchin holds positions with Jameson Operating Company, Jameson
Construction Company, Jameson Development Company, LLC 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 to the
Company 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.
/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 Jameson 1993 Stock
Incentive Plan. These stock appreciation rights were cancelled effective March
31, 1996.
/4/ Consists of shares of restricted Common Stock granted under the Jameson
1996 Stock Incentive Plan. Such shares vest 10 years after the date of grant,
assuming continuous employment with the Company through the date of vesting.
-7-
<PAGE>
Long-Term Incentive Plan -- Awards in Last Fiscal Year
The following table sets forth certain information concerning each award
made to the named executive during the fiscal year ended December 31, 1996,
under the Jameson 1996 Stock Incentive Plan.
<TABLE>
<CAPTION>
Number of Shares Period until
Name Awarded (#)/1/ Maturation
______ _______________ __________
<S> <C> <C>
Thomas W. Kitchin 37,500 10 Years
</TABLE>
__________________
/1/ Shares of restricted Common Stock granted to Mr. Kitchin under the Jameson
1996 Stock Incentive Plan vest 10 years from the date of grant, assuming Mr.
Kitchin's continuous employment by the Company through the date of vesting.
Option Exercises in Last Fiscal Year;
Aggregate Fiscal Year-End Values of Options
The named executive officer did not exercise any options during 1996. The
following table sets forth the values as of December 31, 1996, of all options
held by the named executive officer during 1996.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised in-the-money
Name Options at Fiscal Year-End Options at Fiscal Year-End
- ---- -------------------------- ---------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas W. Kitchin 50,000 25,000 $300,000 $150,000
</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.
-8-
<PAGE>
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.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, consisting of Dr. Hisrich and Messrs. Lawrence
and Kearns, did not meet during 1996. Thomas W. Kitchin, the Company's
President, Chief Executive Officer, Chairman of the Board and a director, made
recommendations to the directors constituting the Stock Plan Committee under the
Jameson 1996 Stock Incentive Plan regarding which officers of the Company should
be granted shares of restricted Common Stock and how many shares to be included
in each grant. All other decisions regarding the compensation of executive
officers were in practice made by Thomas W. Kitchin. Compensation paid to
executive officers during 1996 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," Thomas W.
Kitchin, the Company's President, Chief Executive Officer, Chairman of the Board
and a director made recommendations to the directors constituting the Stock Plan
Committee under the Jameson 1996 Stock Incentive Plan regarding which employees
should be granted shares of restricted Common Stock and how many shares to be
included in each grant. All other decisions regarding the compensation of
executive officers was determined in practice during 1996 by Mr. Kitchin.
-9-
<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 Market 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, 1996, with the
cumulative total return on the Nasdaq Market - U.S. Index and the Standard &
Poors Hotel-Motel Index.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
COMPARISON OF TWO YEAR CUMULATIVE RETURNS AMONG
NASDAQ MARKET - U.S. INDEX AND S & P HOTEL-MOTEL INDEX
01/94 12/94 12/95 12/96
- --------------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
JAMESON INNS $100 $84 $114 $185
NASDAQ STOCK MARKET-US $100 $98 $138 $170
S & P HOTEL-MOTEL $100 $89 $105 $125
</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.
-10-
<PAGE>
CERTAIN TRANSACTIONS
THE LEASE
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
terminates June 30, 2005, provides for payment of Base Rent and, if required
under the formula set forth under the Lease, Percentage Rent. Under the Lease,
the Company is required to pay real and personal property taxes, general
liability and casualty insurance premiums, the cost of maintaining structural
elements, including underground utilities and the cost of refurbishment of the
Inns, including replacement and repair of furniture, fixtures and equipment used
in connection with the operation of the Inns. The Operator is required to pay
liability insurance premiums, utility costs and all other costs and expenses
incurred in the operation of the Inns. In 1996, Base Rent charged to the
Operator by the Company totalled $5,469,288 and Percentage Rent totalled
$3,906,813.
TURNKEY CONSTRUCTION CONTRACTS
Until September 30, 1996, all new Inns and expansions of existing Inns were
constructed by Jameson Construction Company ("JCC"), a subsidiary of Kitchin
Investments, Inc. ("KI"), which is wholly owned by Thomas W. Kitchin. As of
September 30, 1996, JCC assigned all of its construction contracts to Jameson
Development Company, L.L.C., a company wholly owned by Thomas W. Kitchin and his
spouse ("JDC"). JDC was formed in 1996 to act as the successor to JCC with the
same management and employees as JCC. (JCC and JDC are each referred to as the
"Contractor, " as the context requires.) It is anticipated that the Contractor
will act as general contractor for new Inns built by the Company as well as
expansions of existing Inns. All Inns and Inn expansions are constructed by the
Contractor on a turnkey basis pursuant to construction agreements with the
Company. 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 an aggregate of $18.9 million for turnkey construction of
new Inns, expansions and renovations during the year ended December 31, 1996.
Under the construction agreements, 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.
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 1996, such allocations of salary, office overhead and other
general and administrative costs to the Company totalled approximately $194,000.
-11-
<PAGE>
LOAN GUARANTEE FEES
Prior to consummation of the Company's initial public offering of Common
Stock, 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.
Following consummation in April 1996 of the Company's public offering of an
additional 3,000,000 shares of Common Stock, and application of the proceeds
therefrom to repay 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 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.
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, EXCLUDING EXHIBITS, FOR
THE YEAR ENDED DECEMBER 31, 1996, 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.
/s/ Steven A. Curlee
------------------------------
Steven A. Curlee, Secretary of
Jameson Inns, Inc.
-12-
<PAGE>
LOGO
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 21, 1997, at 11:00 a.m., local time, and at any and
all adjournments or postponements thereof, as indicated below:
1. Election of Directors for term expiring in 2000.
[_] FOR nominee Robert D. Hisrich [_] WITHHOLD AUTHORITY to vote for
nominee Robert D. Hisrich
[_] FOR nominee Thomas J. O'Haren [_] WITHHOLD AUTHORITY to vote for
nominee Thomas J. O'Haren
- --------------------------------------------------------------------------------
2. Proposal to ratify the appointment of Ernst & Young, LLP as the Company's
independent auditors for 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFICATIONS ARE
MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR AND FOR THE
PROPOSAL UNDER NUMBER 2 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>
LOGO
(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: _____________________, 1997
----------------------------------
Signature(s)
----------------------------------
Signature(s)
IMPORTANT: Please date this Proxy
and sign exactly as your name ap-
pears to the left. If shares are
held by joint tenants, both
should sign. When signing as at-
torney, executor, administrator,
trustee or guardian, please give
title as such. If a corporation,
please sign in full corporate
name by president or other autho-
rized officer. If a partnership,
please sign in partnership name
by authorized person.
