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 Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HUMPHREY HOSPITALITY TRUST, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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>
HUMPHREY HOSPITALITY TRUST, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 1997
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The annual meeting of the shareholders (the "Annual Meeting") of
Humphrey Hospitality Trust, Inc. (the "Company") will be held at the offices of
Anderson & Strudwick, Incorporated, 1108 East Main Street, Richmond, VA 23219,
on Thursday, May 15, 1997, at 10:00 a.m., local time, for the following
purposes:
1. To elect directors to serve on the Board of Directors until
the annual meeting of shareholders in 1998 or until their
successors have been duly elected and qualified; and
2. To transact such other business as may properly come before
the Annual Meeting and any adjournments thereof.
Only shareholders of the Company of record as of the close of business
on April 1, 1997 will be entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof.
There is enclosed, as a part of this Notice, a Proxy Statement which
contains further information regarding the Annual Meeting and the nominees for
election to the Board of Directors.
In order that your shares may be represented at the Annual Meeting, you
are urged to promptly complete, sign, date and return the accompanying Proxy in
the enclosed envelope, whether or not you plan to attend the Annual Meeting. If
you attend the Annual Meeting in person you may, if you wish, vote personally on
all matters brought before the Annual Meeting even if you have previously
returned your Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES I. HUMPHREY, JR.
President and Secretary
Silver Spring, Maryland
April 15, 1997
<PAGE>
HUMPHREY HOSPITALITY TRUST, INC.
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is provided in connection with the solicitation of
proxies by the Board of Directors of Humphrey Hospitality Trust, Inc. (the
"Company") for use at the annual meeting of shareholders to be held on Thursday,
May 15, 1997 (the "Annual Meeting") and any adjournments thereof. The mailing
address of the principal executive offices of the Company is 12301 Old Columbia
Pike, Silver Spring, Maryland, 20904. This Proxy Statement and the Proxy Form,
Notice of Meeting and the Company's annual report, all enclosed herewith, are
first being mailed to the shareholders of the Company on or about April 25,
1997.
The Proxy
The solicitation of proxies is being made by the Company primarily
through the use of the mails. The cost of preparing and mailing this Proxy
Statement and accompanying material, and the cost of any supplementary
solicitations which may be made by mail, telephone, telegraph or personally by
officers and employees of the Company, will be borne by the Company. The
shareholder giving the proxy has the power to revoke it by delivering written
notice of such revocation to the Secretary of the Company before or at the
Annual Meeting or by attending the meeting and voting in person. The proxy will
be voted as specified by the shareholder in the space provided on the Proxy Form
or, if no specification is made, it will be voted in accordance with the terms
thereof. In voting by proxy in regard to the election of the directors to serve
until the 1998 annual meeting of shareholders or until their successors are duly
elected and qualified, shareholders may vote in favor of all nominees, withhold
their votes as to all nominees or withhold their votes as to a specific nominee.
Shareholders may not abstain with respect to the election of directors.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Proxy Statement does not constitute the solicitation of a
proxy, in any jurisdiction, from any person to whom it is unlawful to make such
proxy solicitation in such jurisdiction. The delivery of this Proxy Statement
shall not, under any circumstances, imply that there has not been any change in
the information set forth herein since the date of the Proxy Statement.
Each outstanding share of the Company's Common Stock, $.01 par value
(the "Common Stock"), is entitled to one vote. Cumulative voting is not
permitted. Only shareholders of record at the close of business on April 1, 1997
will be entitled to notice of and to vote at the Annual Meeting and at any
adjournments thereof. At the close of business on April 1, 1997, the Company had
outstanding 3,481,700 shares of Common Stock.
REQUIRED VOTE
Under Virginia law and the Company's Articles of Incorporation and
Bylaws, if a majority of the votes entitled to be cast are present at the Annual
Meeting so as to constitute a quorum, in person or by proxy, directors shall be
elected by a plurality of the votes cast. The Board of Directors recommends a
vote FOR each of the nominees for director.
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No specific provisions of Virginia law, the Company's Articles of
Incorporation or the Company's Bylaws address the issue of abstentions or broker
non-votes. Brokers holding shares for beneficial owners must vote those shares
according to the specific instructions they receive from the owners. If specific
instructions are not received, brokers generally may not vote the shares in
their discretion for the election of directors. Votes "withheld" from
director-nominees have the effect of a negative vote because a plurality of the
votes cast at a meeting in which a quorum is present is required for the
election of directors.
REPORTS OF BENEFICIAL OWNERSHIP
Under United States securities laws, the Company's directors and
executive officers are required to report their ownership of the Common Stock
and any changes in ownership to the Securities and Exchange Commission (the
"SEC"). These persons are also required by SEC regulations to furnish the
Company with copies of these reports. Specific due dates for these reports have
been established, and the Company is required to report in the Proxy Statement
any failure to file such reports by those due dates during the 1996 fiscal year.
Based solely upon its review of the reports furnished to the Company or written
representations from the Company's directors and executive officers, the Company
believes that all of these filing requirements were satisfied by the Company's
directors and executive officers during 1996.
OWNERSHIP OF THE COMPANY'S COMMON STOCK
Security Ownership of Certain Beneficial Owners
The following table sets forth information as of April 1, 1997
regarding each person known to the Company to be the beneficial owner of more
than five percent (5%) of its Common Stock. The Company has no other class of
equity securities outstanding. Unless otherwise indicated, such shares are owned
directly and the indicated person has sole voting and investment power.
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<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL PERCENT
OWNER OWNERSHIP OF CLASS
- --------------------- --------------------------- --------
<S> <C>
James I. Humphrey, Jr. 623,350 (1) 15.2% (2)
The Humphrey Companies
12301 Old Columbia Pike
Suite 300
Silver Spring, MD 20904
Alliance Capital Management L.P. 350,000 (3) 10.1%
787 Seventh Avenue
New York, NY 10019
Mr. James T. Martin 339,000 (4) 9.7%
Odyssey Capital Req.
6 Front Street
Hamilton, HM11 BERMUDA
Smith Barney Mutual Funds Management, Inc. 191,300 (5) 5.5%
388 Greenwich Street
New York, NY 10013
</TABLE>
(1) Assumes that all Units of limited partnership interest ("Units") in Humphrey
Hospitality Limited Partnership, a Virginia limited partnership (the
"Partnership") of which the Company is general partner held by James I.
Humphrey and his affiliates are redeemed for shares of Common Stock.
(2) Based on shares of common stock outstanding of April 01, 1997
(3) Based upon information contained in Schedule 13G dated January 10, 1997, and
filed with the SEC on January 10, 1997.
(4) Based upon information contained in Schedule 13D dated March 14, 1996 and
filed with the SEC on March 14, 1996.
(5) Based upon information contained in Schedule 13G dated February 5, 1997 and
filed with the SEC on February 5, 1997.
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<PAGE>
Security Ownership by Management
The following table sets forth the beneficial ownership of the
Company's Common Stock as of April 1, 1997 by (i) each director and nominee,
(ii) each executive officer and (iii) all directors, nominees and executive
officers as a group. Unless otherwise indicated, such shares are owned directly,
and the indicated person has sole voting and investment power.
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------- ------------------ --------
James I. Humphrey, Jr. 623,350 (1) 15.2% (2)
The Humphrey Companies
12301 Old Columbia Pike
Suite 300
Silver Spring, MD 20904
Charles A. Mills, III 20,625 (3) *
Anderson & Strudwick
1108 E. Main Street
Richmond, VA 23219
George R. Whittemore 89,800 (4) 2.2%
10711 Old Squaw Lane
Chesterfield, VA 23832
Jeffrey Zwerdling 53,510 (5) 1.3%
Zwerdling & Oppleman
5020 Monument Avenue
Richmond, VA 23230
Margaret Allen 2,800 *
AGM Financial Services, Inc.
5 Light Street, Suite 910
Baltimore, MD 21202
Dr. Leah T. Robinson 84,800 (6) 2.1%
1828 South Woodside Lane
Virginia Beach, VA 23454
Andrew A. Mayer, M.D. 91,000 (7) 2.2%
230 Commodore Drive ---------- ----
Jupiter, FL 33477
All directors, nominees and 965,885 23.5%
executive officers as a group (7 persons)
- ------------------
*Represents less than 1% of the outstanding Common Stock.
(1) Assumes that all Units held by James I. Humphrey and his affiliates are
redeemed for shares of Common Stock.
(2) Mr. Humphrey, Humphrey Associates, Inc. and the LLC own 623,350 Units.
Upon exercise of the redemption rights, which are exercisable at any time,
all of such Units are redeemable on a one-for-one basis for shares of
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<PAGE>
common stock or for an equivalent cash value at the sole election of the
Company or if the issuance of shares of stock would result in any person
owning more than 9.9% of the outstanding shares of stock.
(3) Includes 19,550 shares of common stock held by Mills Management
Corporation, a corporation that Mr. Mills controls. Also includes 1,000
shares of common stock owned by Mr. Mills' wife.
(4) Mr. Whittemore reports that he has sole voting and dispositive power with
respect to 89,800 shares of Common Stock.
(5) Mr. Zwerdling reports that he has sole voting and dispositive power with
respect to 53,510 shares of Common Stock.
(6) Dr. Robinson reports that she has sole voting and dispositive power with
respect to 84,800 shares of Common Stock.
(7) Dr. Mayer reports that he has sole voting and dispositive power with
respect to 91,000 shares of Common Stock.
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<PAGE>
1. THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE NOMINEES FOR THE
DIRECTORS
Nominees for Directors
Each of the Company's directors (a "Director") is elected by the
shareholders of the Company at each annual meeting for a term of one year. The
Board of Directors currently has set the number of directors constituting the
Board of Directors at seven, all of whom will be elected at the Annual Meeting,
and four of whom are Independent Directors (as defined herein).
The Company has no nominating committee of its Board of Directors:
Nominees for Directors are nominated by the entire Board of Directors. The
Board of Directors has nominated the Directors; James I. Humphrey, Jr.;
Charles A. Mills, III; George R. Whittemore; Jeffrey M. Zwerdling; Margaret
Allen; Dr. Leah Robinson and Andrew A. Mayer, M.D. to serve as Directors for a
one-year term expiring at the Company's annual meeting in 1998.
If any nominee becomes unavailable or unwilling to serve the Company as
a Director for any reason, the persons named as proxies in the Proxy Form are
expected to consult with management of the Company in voting the shares
represented by them. The Board of Directors has no reason to doubt the
availability of the nominees, and all have indicated his willingness to serve as
a Director of the Company if elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF THE NOMINEES FOR DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
(TERMS EXPIRING 1998)
- --------------------------------------------------------------------------------
JAMES I. HUMPHREY, JR. - Chairman of the Board, President, Secretary, and member
of the Acquisition Committee. Mr. Humphrey, age 55, is President and sole
shareholder of Humphrey Associates, Inc., and has held that position since
1978. Humphrey Associates, Inc., formerly Harkins-Humphrey Associates, Inc.,
is a full-service real estate corporation. Mr. Humphrey also served as President
of Humphrey Hotels, Inc. (the "Operator") from 1989 to 1994. He has served on
the Credit Assurance Review Committee of the Maryland Housing Fund, the
Governor's Housing Task Force in Maryland, the Maryland Housing Policy
Commission and the Maryland International Division Private Sector Advisory
Council. Mr. Humphrey has served as Chairman of the Company since November 1994.
- --------------------------------------------------------------------------------
CHARLES A. MILLS, III - Director, Vice President and Treasurer. Mr. Mills, age
49, is a Senior Vice President and Chairman of Anderson & Strudwick,
Incorporated, which was the underwriter of the Common Shares for all three of
the Company's public stock offerings. Mr. Mills is the largest shareholder
of Anderson & Strudwick and the majority shareholder, Chairman and President
of Mills Value Advisor, Inc., a registered investment advisor. Mr. Mills also
served as a director of Pioneer Federal Savings & Loan from 1985 to 1987 and of
Koger Equity, Incorporated, a real estate investment trust, from 1992 to 1993.
Mr. Mills has served as a Director of the Company since November 1994.
- --------------------------------------------------------------------------------
MARGARET ALLEN - Director and member of the Audit and Acquisition Committees.
Ms. Allen, age 50, is Senior Vice President and 50% owner of AGM Financial
Services, Inc. ("AGM"), which she co-founded in 1990. AGM is a mortgagee
licensed by the Federal Housing Authority (the "FHA"), a division of the United
States Department of Housing and Urban Development. As a licensed mortgagee, AGM
represents borrowers who wish to obtain mortgage insurance from the FHA for
multifamily housing, assisted living facilities and nursing homes. Prior to
1990, Ms. Allen was a Regional Vice President for ABG Financial Services, Inc.,
a FHA licensed mortgagee. Ms.
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<PAGE>
Allen currently serves on the Credit Assurance Review Committee of the Maryland
Department of Housing and Community Development, the Board of Directors of
the Baltimore City Chapter of the Home Builders Association of Maryland and
the Insured Projects Committee of the Mortgage Bankers Association. She has
served on the Maryland Housing Policy Commission and chaired that commission
from 1991-1992. Ms. Allen has served as a Director of the Company since November
1994.
- --------------------------------------------------------------------------------
JEFFREY M. ZWERDLING, ESQ. - Director and member of the Audit Committee. Mr.
Zwerdling, age 53, is Senior Partner at the law firm of Zwerdling and Oppleman
located in Richmond, Virginia. Mr. Zwerdling specializes in commercial real
estate law and general litigation. He is presently Vice President and Director
of The Corporate Center, the owner of a 225,000 square foot office park complex
located in Richmond, Virginia. Mr. Zwerdling is a graduate of Virginia
Commonwealth University and obtained his J.D. degree from William & Mary Law
School. Mr. Zwerdling has served as a Director of the Company since November
1996.
- --------------------------------------------------------------------------------
GEORGE R. WHITTEMORE - Director and member of the Audit and Acquisition
Committees. Mr. Whittemore, age 46, served as a director and the President and
Managing Officer of Pioneer Federal Savings Bank and its parent Pioneer
Financial Corporation from September 1982 until these institutions were acquired
by a merger with Signet Banking Corporation in August 1994. Mr. Whittemore
joined Pioneer Federal Savings Bank in 1975 as Treasurer and was made Executive
Vice President in March 1982. Mr. Whittemore accepted a position as President
of Mills Value Adviser, Inc. as of April 15, 1996. Mills Asset Advisor is an
affiliate of Anderson & Strudwick Inc.. Mr. Whittemore is also Senior Vice
President of Anderson & Strudwick, Incorporated, which served as underwriter
for the Company's three public stock offerings. Mr. Whittemore has served as a
Director of the Company since November 1994.
- --------------------------------------------------------------------------------
DR. LEAH T. ROBINSON - Director, age 65, is a clinical psychologist in a
part-time private practice. She was a member of the faculty of Virginia
Commonwealth University until 1973 when she joined Psychiatric Associates of
Tidewater, remaining with this group until it dissolved in 1989. Dr. Robinson
has served as a Director of the Company since March 1995.
- --------------------------------------------------------------------------------
ANDREW A. MAYER, M.D. - Director, age 62, and retired physician-radiologist.
One of the founding partners of Medical Center Radiologists ("MCR") from 1965
to 1992, Dr. Mayer, served as Director and Treasurer of MCR until 1991. Dr.
Mayer also served as Chief of Radiology at Leigh Memorial Hospital, Norfolk,
Virginia. Prior memberships in medical societies included Norfolk County,
Virginia State and American College of Radiology. Dr. Mayer also served as
Director of Mills Value Fund from July, 1988 to December, 1991, and was
managing partner of several real estate partnerships where he directed property
acquisition and development of residential and commercial entities. Dr. Mayer
has served as a Director of the Company since March 1995.
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<PAGE>
ELECTION OF DIRECTORS
Committees and Meetings of the Board of Directors
Director Meetings. The business of the Company is under the general
management of its Board of Directors as provided by the Company's Bylaws and the
laws of Virginia, the Company's state of incorporation. The Company's Articles
of Incorporation, with limited exceptions, generally require that a majority of
the Company's Board of Directors be comprised of persons who, within the last
two years, have not (i) owned an interest in any of Mr. Humphrey's affiliates,
(ii) been employed by Mr. Humphrey or any of his affiliates, (iii) been an
officer or director of any of Mr. Humphrey's affiliates, (iv) performed services
for the Company, and (v) been a director for more than three Real Estate
Investment Trusts organized by Mr. Humphrey or any of his affiliates. Such
persons making up a majority of the Board of Directors are referred to as
"Independent Directors." There are presently seven directors, including four
Independent Directors. The Board of Directors hold quarterly meetings during the
Company's fiscal year. The Board of Directors held five meetings during 1996 and
each director attended at least 75% of the meetings.
The Company presently has an Audit Committee and an Acquisition
Committee of its Board of Directors. The Company may, from time to time, form
other committees as circumstances warrant. Such committees have authority and
responsibility as delegated by the Board of Directors. The Company does not have
a Compensation Committee.
Audit Committee. The Audit Committee consists of three Independent
Directors, Ms. Allen and Messrs. Mayer and Zwerdling. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants the plans and results of the
audit engagement, approves professional services provided by the independent
public accountants, reviews the independence of the independent public
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls. The Audit Committee met
twice in 1996.
Acquisition Committee. The Board of Directors has established an
Acquisition Committee, which currently consists of Ms. Allen and Messrs.
Whittemore and Humphrey. The Acquisition Committee reviews potential hotel
acquisitions, visits the sites of proposed hotel acquisitions, reviews the terms
of proposed Percentage Leases for proposed hotel acquisitions and makes
recommendations to the Board of Directors with respect to proposed acquisitions.
The Acquisition Committee met twice in 1996.
Compensation of Directors
Each Director of the Company receives, upon being elected and accepting
the position as Director, $10,000 per year which became effective in the fourth
quarter of 1996. Prior to the fourth quarter of 1996, each director received
compensation at the rate of $20,000 per year, payable quarterly. Directors do
not get any additional compensation for serving on any committees of the Board
of Directors. In addition, the Company reimburses directors for their
out-of-pocket expenses incurred in connection with their service on the Board of
Directors. In 1996, Mr. Jeffrey Zwerdling received aproximately $1,522 as
prorated compensation for length of service. Mr. Howell, who resigned his
position on the Board of Directors to devote more time to his business, received
$15,000 as compensation for his service in 1996. The other directors received
$17,500 as compensation.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Business Relationships Between Company and Directors
Mr. Mills, who is the Vice President, Treasurer, and a director of the
Company, is Senior Vice President and Chairman of Anderson & Strudwick,
Incorporated. Anderson & Strudwick was the underwriter of all three of the
Company's public stock offerings and received approximately $1,755,000 in
investment banking fees in connection with these offerings. Anderson & Strudwick
also served as underwriter for $2,460,000 principal amount fixed rate first
mortgage refunding revenue bonds, series 1995 issued by the Industrial
Development Authority of Pulaski County which are served by the Comfort Inn -
Dublin; VA, and receives an ongoing fee equal to .25% of the outstanding
principal of those bonds.
Mr. Whittemore, who is a Director of the Company, is President of Mills
Value Adviser, Inc.. Mills Value Adviser Inc. is an affiliate of Anderson &
Strudwick Inc. Mr. Whittemore is also Senior Vice President of Anderson &
Strudwick, Incorporated, which served as underwriter for the Company's three
public stock offerings.
Certain Transactions with Management
The Company and the Partnership have entered into a number of
transactions with Mr. Humphrey and his affiliates in connection with the
organization of the Company and the acquisition of the nine hotel properties
(the "Hotels") that are currently owned by the Company through the Partnership.
Mr. Humphrey, Chairman of the Board of Directors and the President of the
Company, is the sole shareholder of the Humphrey Hospitality Management, Inc.
(the "Lessee").
Acquisition of Hotels from Affiliates of Mr. Humphrey
The Hotels were acquired, directly and indirectly, by the Partnership
from limited partnerships in which Mr. Humphrey was a limited partner and
Humphrey Associates, Inc. was the general partner. The Partnership's interests
in the Hotels were acquired in exchange for (i) the assumption of approximately
$13.4 million of outstanding indebtedness of the sellers of the Hotels, most of
which was guaranteed by Mr. Humphrey and Humphrey Associates, Inc. and secured
by the Hotels, (ii) the issuance of an aggregate of 623,350 Units to Mr.
Humphrey and Humphrey Associates, Inc., (iii) the assumption and repayment of
approximately $3.33 million of outstanding indebtedness of the sellers of the
Hotels (in addition to the indebtedness in clause (i) above) of which
approximately $1.2 million was repaid to Humphrey Associates, Inc., (iv) the
payment of $247,000 in cash to satisfy the obligations of Humphrey Associates,
Inc. to restore its negative capital account in one of the limited partnerships
selling a Hotel, and (v) the payment of approximately $4.6 million in cash to
persons not affiliated with Mr. Humphrey.
Guarantees by Mr. Humphrey
At December 31, 1996, Mr. Humphrey guaranteed the payment of interest
and principal on approximately $5.8 million of the Company's outstanding
long-term debt. The debt is secured by the hotels located at Solomons, Maryland;
Dahlgren, Virginia; Farmville, Virginia; Elizabethton, Tennessee; Princeton,
West Virginia; Wytheville, Virginia; and Morgantown, West Virginia.
Percentage Leases
During 1996, the Partnership and the Lessee were parties to Percentage
Leases with respect to each hotel property owned by the Partnership. Each
Percentage Lease has a non-cancelable term of ten years, which may be renewed
for an additional term of five years at the Lessee's option, subject to earlier
termination upon the occurrence of defaults thereunder and certain other events
described therein. Pursuant to the terms of the Percentage Leases, the Lessee is
required to pay Base Rent and Percentage Rent on the revenue of the Hotels and
certain other additional charges and is entitled to all profits from the
operations of the Hotels after the payment of rent, operating and other
expenses. Payments of rent under the Percentage Leases constituted all of the
Partnership's and the Company's
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revenue. For the period January 1, 1996 through December 31, 1996, the Lessee
incurred an aggregate of $3,957,401 in rent under the percentage leases.
Franchise Licenses
The Lessee, which is owned by Mr. Humphrey, holds all of the franchise
licenses for the hotels currently owned by the Partnership and is expected to
hold all of the franchise licenses for any subsequently acquired hotel
properties. During 1996, the Lessee paid franchise fees in the aggregate amount
of approximately $420,809.
Non-Competition Agreement and Option Agreement
Pursuant to the Non-Competition Agreement among Mr. Humphrey, Humphrey
Associates, Inc., and the Company, while Mr. Humphrey is an officer or director
of the Company or owns any ownership interest in the Company, and for five years
thereafter, neither Mr. Humphrey nor any affiliate of Mr. Humphrey, will
acquire, develop, own, operate, manage or have any interest in any hotel that is
within 20 miles of a hotel in which the Company or the Partnership has invested.
The Board of Directors, including a majority of the Independent Directors, have
agreed to waive the provisions of the Non-Competition Agreement as they apply to
Humphrey Development, Inc's right to purchase the Comfort Suites hotel in Dover,
Delaware (the "New Development"). The 20 mile prohibition may be waived by the
Company's Independent Directors if they determine that such development,
ownership, management, or operation will not have a material adverse affect on
the operations of one or more of the hotels in which the Company has invested.
In addition, Mr. Humphrey has agreed that neither he nor any of his affiliates
will receive any brokerage commissions or other fees with respect to hotels
purchased by the Company.
Pursuant to the Option Agreement among Mr. Humphrey, Humphrey Associates,
Inc. and the Company, the Company will have an option to acquire any hotels
acquired or developed by Mr. Humphrey or any of his affiliates. At any time
during 12 months after a hotel is acquired by, or after the opening of a hotel
developed by Mr. Humphrey or any of his affiliates, the Company may purchase the
applicable hotel under the option for a price equal to the fair market value of
the hotel, as determined by independent third-party appraisal, but in no event
less than the sum of the following: (i) acquisition or development costs paid to
unaffiliated third parties, (ii) capitalized interest expense, (iii) the amount
of equity investment in the hotel, including the cash investment or advances of
Mr. Humphrey and his affiliates, if any (to the extent not covered in sections
(i) and (ii)), and (iv) a cumulative, non-compounded return on the equity
investment not to exceed the prime rate, as reported by the Wall Street Journal,
Eastern Edition, plus five percent (less any net cash flow received by Mr.
Humphrey or any of his affiliates with respect to such equity investment). The
Company currently anticipates that any such acquired or developed hotel will
have achieved stabilized operating revenue before the Company would consider
purchasing such hotel from Mr. Humphrey or any of his affiliates. All
transactions to acquire additional properties and any and all transactions
between the Company, the Partnership or its subsidiaries and Mr. Humphrey or his
affiliates must be approved by a majority of the Company's Directors, including
a majority of its Independent Directors. In addition, the Option Agreement
provides that in the event the Company acquires a hotel from Mr. Humphrey or any
of his affiliates in connection with the Company's issuance of additional
securities, Mr. Humphrey or any of his affiliates may receive consideration for
such property in additional Units provided that his and his affiliates'
interests in the Partnership shall not exceed 28.54% of the total limited
partnership interest in the Partnership.
Development Agreement
The Company executed an amended development services agreement (the
"Development Agreement") with Humphrey Development, Inc., pursuant to which
Humphrey Development, Inc. provided construction supervision and will pay any
development costs in excess of $2,795,910 in exchange for a right to purchase
the New Development from the Company on the sixth anniversary of its
commencement of operations for $2,795,910.
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Services Agreement
The Company has an agreement with the Lessee to provide accounting and
securities reporting services for the Company. The initial Services Agreement
provided that these services would be provided to the Company for a fixed fee of
$80,000 per year, notwithstanding the size of the Company's portfolio. On
November 6, 1996, the Company amended the Services Agreement to provide for such
services for an initial annual fee of $30,000 per year for as long as the
Company's portfolio includes the Hotels and the New Development. The amended
Services Agreement provides that the fee for such services will increase $10,000
per year (prorated from the time of acquisition) for each additional hotel added
to the Company's portfolio (excluding the New Development). Under the terms of
the amended Services Agreement, the services fee cannot exceed $100,000 in any
year.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the compensation paid or accrued by the
Company for the last fiscal year to those two persons who: (1) served as the
Company's chief executive officer during the 1996 fiscal year; and (2) served as
the Company's only other executive officer during the 1996 fiscal year. The
Company does not pay its executives any salary above and beyond the compensation
that they receive as Directors.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- -----------------------
Awards Payouts
----------------------- ------------
Restricted Securities
Other Annual Stock Underlying All Other
Salary Bonus Compensation Awards Options/SARs LTIP Payouts Compensation
------ ----- ------------ ---------- ------------- ------------ ------------
<S> <C>
James I. Humphrey, Jr. $17,500 ---- ---- ---- ---- ---- ----
Chairman of the Board,
President and Secretary
Charles A. Mills, III $17,500 ---- ---- ---- ---- ---- ----
Vice President and Treasurer
</TABLE>
- ---------------------
-11-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the change in the Company's total
shareholder return on Common Shares for the period November 29, 1994, which was
the first day the Common Shares traded on The Nasdaq Smallcap Market, through
December 31, 1996, (on October 30, 1996, the Common Shares began trading on The
NASDAQ Stock Market) with the changes in the Standard & Poor's 500 Stock Index
(the "S&P 500 Index") and the SNL Securities Hotel REIT Index ("Hotel REIT
Index") for the same period, assuming a base share price of $100 for the Common
Shares and the Hotel REIT Index for comparative purposes. The Hotel REIT Index
is comprised of nine publicly traded REITs which focus on investments in hotel
properties. Total shareholder return equals appreciation in stock price plus
dividends paid and assumes that all dividends are reinvested. The performance
graph is not necessarily indicative of future investment performance.
-12-
<PAGE>
SHAREHOLDER PROPOSALS FOR 1998
The Board of Directors will make provision for presentation of
appropriate proposals by shareholders at the 1998 annual meeting of
shareholders, provided that such proposals are submitted by eligible
shareholders who have complied with the relevant regulations of the SEC.
Shareholder proposals intended to be submitted for presentation at the 1998
annual meeting of shareholders of the Company must be in writing and must be
received by the Company at its executive offices on or before 90 days prior to
the date of the 1998 annual meeting of shareholders of the Company for inclusion
in the Company's proxy statement and the form of proxy relating to such annual
meeting.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Reznick Fedder & Silverman, PC have served as auditors for the Company
and its subsidiaries and will continue to so serve until and unless changed by
action of the Board of Directors. A representative of Reznick Fedder &
Silverman, expected to be present at the Annual Meeting, will have the
opportunity to make a statement if he desires to do so and is expected to be
available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors knows of no other business to be brought before
the Annual Meeting. If any other matters properly come before the Annual
Meeting, the proxies will be voted on such matters in accordance with the
judgment of the persons named as proxies therein, or their substitutes, present
and acting at the meeting.
The Company will furnish to each beneficial owner of Common Stock
entitled to vote at the Annual Meeting, upon written request to James I.
Humphrey, Jr., the Company's Secretary, President and Chairman, at 12301 Old
Columbia Pike, Silver Spring, Maryland, telephone (301) 680-4343, a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996, including the financial statements and financial statement schedules filed
by the Company with the SEC.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES I. HUMPHREY, JR.
Secretary
April 15, 1997
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<PAGE>
PROXY No. of Shares ______
HUMPHREY HOSPITALITY TRUST, INC.
12301 Old Columbia Pike, Silver Spring, MD 20904
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James I. Humphrey, Jr. as proxy with
the power to appoint such person's substitute, and hereby authorizes him to
vote, as designated below, all the shares of common stock of Humphrey
Hospitality Trust, Inc. held of record by the undersigned on April 1, 1997, at
the annual meeting of shareholders to be held on May 15, 1997 or any adjournment
thereof.
1. ELECTION OF DIRECTORS
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name below)
<TABLE>
<S> <C>
[ ] Term Expiring 1998 - FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY to vote for all
James I. Humphrey, Jr.; Charles A. Mills, III; Margaret Allen; nominees
Jeffrey M. Zwerdling; George R. Whittemore; Dr. Leah T. Robinson;
Andrew A. Mayer, M.D.
</TABLE>
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted for the election of all nominees for director.
DATED: ___________________, 1997
Please sign exactly as name appears
in left. When shares are held by
joint tenants, both should sign. If
signing as attorney, as executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign full
corporate name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
------------------------------------
Signature
------------------------------------
Signature (if held jointly)
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope.
