HUMPHREY HOSPITALITY TRUST, INC.
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 21, 1998
----------------------------------------
The annual meeting of the shareholders (the "Annual Meeting") of Humphrey
Hospitality Trust, Inc. (the "Company") will be held at The Omni Richmond Hotel,
100 South 12th Street, Richmond, VA, 23219, on Thursday, May 21, 1998, 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 1999 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, 1998 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, 1998
<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 21, 1998 (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,
1998.
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
1999 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 per
share (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, 1998
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, 1998, 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 on matters to be considered at a
meeting are present at the Annual Meeting so as to constitute a quorum, in
person or by proxy, directors are elected by a plurality of the votes cast. The
Board of Directors recommends a vote FOR each of the nominees for director.
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 ("Broker Shares") 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 particular director-nominees have the effect of a negative vote
with respect to such nominee because a plurality of the votes cast at a meeting
in which a quorum is present is required for the election of directors. Votes
withheld and Broker Shares that are not voted in the election of directors will
not be included in determining the number of votes cast.
REPORTS OF BENEFICIAL OWNERSHIP
Under United States securities laws, the Company's directors and executive
officers, and persons who own more than 10% of the Common Stock, 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 1997 fiscal year.
1
<PAGE>
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 and owners of more than 10% of the Common Stock
during 1997.
OWNERSHIP OF THE COMPANY'S COMMON STOCK
Security Ownership of Certain Beneficial Owners
The following table sets forth information as of April 1, 1998 regarding
each person known to the Company to be the beneficial owner of more than five
percent (5%) of the 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.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNERSHIP OF CLASS
OWNER ------------------ -----------------
<S> <C>
James I. Humphrey, Jr. 657,373 (1) 15.9% (1)
The Humphrey Companies
12301 Old Columbia Pike
Suite 300
Silver Spring, MD 20904
Mr. James T. Martin 322,547 (2) 9.3%
Odyssey Capital Req.
6 Front Street
Hamilton, HM11 BERMUDA
Equitable Companies, Inc. 321,300 (3) 9.2%
787 Seventh Avenue
New York, NY 10019
Smith Barney Mutual Funds Management, Inc. 191,300 (4) 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 Humphrey Hospitality REIT Trust, a Maryland real
estate investment trust and wholly-owned subsidiary of the Company, is
general partner, held by James I. Humphrey and his affiliates are redeemed
for shares of Common Stock.
(2) Based upon information contained in Schedule 13D/A, dated April 28, 1997,
and filed with the SEC on May 1, 1997.
(3) Based upon information contained in Schedule 13G/A, dated February 10, 1998
and filed with the SEC on February 17, 1998.
(4) Based upon information contained in Schedule 13G dated February 5, 1997 and
filed with the SEC on February 6, 1997.
2
<PAGE>
Security Ownership by Management
The following table sets forth the beneficial ownership of the Common Stock
as of April 1, 1998 by (i) each director and nominee, (ii) each executive
officer named in the Summary Compensation Table 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.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF OWNERSHIP OF CLASS
BENEFICIAL OWNER ----------------------------- -----------------
<S> <C>
James I. Humphrey, Jr. 657,373 (1) 15.9% (3)
The Humphrey Companies
12301 Old Columbia Pike
Suite 300
Silver Spring, MD 20904
George R. Whittemore 92,652 2.7%
10711 Old Squaw Lane
Chesterfield, VA 23832
Jeffrey Zwerdling 59,062 (2) 1.7%
Zwerdling & Oppleman
5020 Monument Avenue
Richmond, VA 23230
Margaret Allen 3,846 *
AGM Financial Services, Inc.
5 Light Street, Suite 910
Baltimore, MD 21202
Dr. Leah T. Robinson 86,165 2.5%
1828 South Woodside Lane
Virginia Beach, VA 23454
Andrew A. Mayer, M.D. 90,552 2.6%
230 Commodore Drive ----------------- -----------
Jupiter, FL 33477
All directors, nominees and 989,650 23.9%
executive officers as a group (7 persons)
</TABLE>
*Represents less than 1% of the outstanding Common Stock.
(1) Represents 657,373 shares of Common Stock issuable to Mr. Humphrey, Humphrey
Associates, Inc., a Maryland corporation ("Humphrey Associates"), Farmville
Lodging Associates, LLC, a Maryland limited liability company ("Farmville
Lodging Associates") or Humphrey-Key Largo Associates, L.P., a Maryland
limited partnership ("Humphrey Key Largo"), upon redemption of their units
of limited partnership in Humphrey Hospitality Limited Partnership, a
Virginia limited partnership (the "Partnership"). Mr. Humphrey is the sole
shareholder of Humphrey Associates and owns a 98% interest in Farmville
Lodging Associates and a 73% interest in Humphrey Key Largo. The redemption
rights are exercisable at any time subject to certain conditions.
(2) Includes 33,087 shares of Common Stock owned by Mr. Zwerdling and 25,975
shares of Common Stock over which Mr. Zwerdling has dispositive power.
(3) Assumes that all Units held by Mr. Humphrey, Humphrey Associates, Farmville
Lodging Associates and Humphrey Key Largo are redeemed for shares of Common
Stock.
3
<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 is elected by the shareholders of the
Company, at each annual meeting, for a term of one year and until their
respective successors are duly elected and qualified. The Board of Directors
currently has set the number of directors constituting the Board of Directors at
six, all of whom will be elected at the Annual Meeting, four of whom are
Independent Directors (as defined herein).
The Company has no nominating committee of its Board of Directors. Nominees
for director are nominated by the entire Board of Directors. Each of the
nominees is currently a director and has served continuously since the year he
or she joined the Board.
If any nominee becomes unavailable or unwilling to serve 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 their willingness to serve as a director of the Company
if elected.
NOMINEES FOR ELECTION AS DIRECTORS
(TERMS EXPIRING 1999)
JAMES I. HUMPHREY, JR. -- Chairman of the Board, President, Secretary, and
member of the Acquisition Committee. Mr. Humphrey, age 56, 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. from 1989 to 1994. He currently serves on the Credit
Assurance Review Committee of the Maryland Housing Fund, 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.
MARGARET ALLEN -- Director and member of the Audit and Acquisition Committees.
Ms. Allen, age 52, is Chief Executive Officer 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. 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 Acquisition and Audit
Committees. Mr. Zwerdling, age 53, is Managing Partner at the law firm of
Zwerdling & Oppleman located in Richmond, Virginia. Mr. Zwerdling specializes in
commercial real estate law and general litigation. He is currently 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 has served
as a Director of the Company since November 1996.
GEORGE R. WHITTEMORE -- Director and member of Audit Committee. Mr. Whittemore,
age 48, 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 was appointed President of Mills
Value Adviser, Inc., a registered investment advisor, in April 1996. In October
1996, he was named a Senior Vice President of Anderson & Strudwick,
Incorporated, which served as underwriter for the Company's four public stock
offerings. Mr. Whittemore is also a consultant to Mills Management II, Inc.,
which is the manager and a member of a privately-held limited liability company
that was formed to, among other things, acquire hotels that are substantially
similar to the hotels to the Company. Mr. Whittemore has served as a Director of
the Company since November 1994.
4
<PAGE>
DR. LEAH T. ROBINSON -- Director. Dr. Robinson, age 66, is a clinical
psychologist in a part-time private practice. Dr. Robinson has served as a
Director of the Company since March 1995.
ANDREW A. MAYER, M.D. -- Director. Dr. Mayer, age 63, 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. 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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
IN FAVOR OF EACH OF THE NOMINEES FOR DIRECTORS
5
<PAGE>
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 the Commonwealth 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, or (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 six directors,
including four Independent Directors. The Board of Directors holds quarterly
meetings during the Company's fiscal year. The Board of Directors held four
meetings during 1997 and each director attended at least 75% of the meetings of
the Board of Directors (and the Committees to which they were assigned).
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
once in 1997.
Acquisition Committee. The Board of Directors has established an
Acquisition Committee, which currently consists of Ms. Allen and Messrs.
Zwerdling 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 four times in 1997.
Compensation of Directors
On May 22, 1997, the Board of Directors unanimously voted to increase the
annual fees paid to them by the Company for serving on the Board of Directors
from $10,000 to $15,000 per year effective for the last two quarters of 1997.
The Board's action was designed to make their fees more comparable to those of
other public companies (including REIT's) that are of a similar size to the
Company. On September 9, 1997, the Board of Directors voted to utilize their
full annual fees, with the exception of the fees received by Mr. Humphrey, to
purchase Common Stock on the open market, and to exercise their reasonable best
efforts to do so within ten days of receipt of such fees.
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Business Relationships Between the Company and Directors
George R. Whittemore, a director, currently serves as a Senior Vice
President of Anderson & Strudwick, Incorporated. Anderson & Strudwick,
Incorporated was the sole underwriter of an underwritten public offering of
Common Stock which was consummated on April 24, 1998.
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. 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"), the lessee of each of the Company's hotels.
Acquisition of Hotels from Affiliates of Mr. Humphrey
The eight initial hotels ("Initial Hotels") were acquired, directly and
indirectly by the Partnership from limited partnerships in which Mr. Humphrey
was a limited partner and one of his affiliates was the general partner. The
Partnership's interests in the Initial Hotels and Solomons Beacon Inn Limited
Partnership (the "Subsidiary Partnership") were acquired in exchange for (i) the
assumption of approximately $13.4 million of outstanding indebtedness of the
sellers of the Initial Hotels, most of which was guaranteed by Mr. Humphrey and
one of his affiliates and secured by the Initial Hotels, (ii) the issuance of an
aggregate 527,866 Units to the Humphrey Affiliates, (iii) the assumption and
repayment of approximately $2.1 million of outstanding indebtedness of the
sellers of the Initial Hotels (in addition to the indebtedness in clause (i)
above) of which approximately $1.2 million was repaid to a Humphrey affiliate,
(iv) the payment of $247,000 in cash to satisfy the obligations of Humphrey
Associates to restore its negative capital account in one of the limited
partnerships selling an Initial Hotel, and (v) the payment of approximately $4.6
million in cash to persons not affiliated with Mr. Humphrey.
The Partnership acquired the Days Inn-Farmville, Virginia hotel in exchange
for (i) 95,484 Units, which are redeemable, subject to certain limitations, for
an aggregate of 95,484 shares of Common Stock and (ii) the assumption of
approximately $1.2 million of debt secured by that Hotel, which was repaid
immediately with the proceeds from the Company's second public stock offering.
The Partnership acquired the Best Western Suites-Key Largo, Florida hotel
pursuant to a purchase agreement that was assigned to the Partnership by
Humphrey Key Largo. Pursuant to the assignment of the purchase agreement,
Humphrey Key Largo received 34,023 Units.
Guarantees by Mr. Humphrey
Mr. Humphrey, jointly and severally with the Company, currently guarantees
the payment of interest and principal on approximately $5.9 million of the
Company's long-term debt. The debt is secured by 19 of the Company's hotels.
Leases
During 1997, the Partnership and the Lessee were parties to percentage
leases with respect to each hotel, with the exception of the Comfort
Suites-Dover, Delaware hotel, which is subject to a fixed lease, collectively
"Leases". Each 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 Leases, the Lessee is
required to pay rent and certain other additional charges and is entitled to all
profits from operations of the hotels after payment of rent, operating expenses
and other expenses. Payments of rent under the Leases have constituted all of
the Partnership's and the Company's revenue since their inception. For the
period January 1, 1997 through December 31, 1997, the Lessee paid an aggregate
of $7,326,193 in rent under the Leases.
Franchise Licenses
The Lessee, which is wholly 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 1997, the Lessee paid franchise fees in the aggregate
amount of approximately $875,104.
7
<PAGE>
Non-Competition Agreement and Option Agreement
Pursuant to the Non-Competition Agreement among Mr. Humphrey, Humphrey
Associates 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, pursuant to the Development Agreement described below. 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
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, pursuant to which Humphrey
Development provided construction supervision and will pay any development costs
in excess of $2,795,910 in exchange for a right to purchase the Comfort Suites
hotel in Dover, Delaware from the Company in January 2002 for $2,795,910.
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 Initial Hotels, the Days Inn hotel in
Farmville, Virginia and the Comfort Suites hotel in Dover, Delaware. 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. Under the terms of the amended Services Agreement,
the services fee cannot exceed $100,000 in any year.
8
<PAGE>
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 fiscal years ended December 31,
1995, 1996 and 1997; and (2) served as the Company's only other executive
officer during the same period. 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
Year Salary Bonus Compansation Awards Options/SARs LTIP Payouts Compensation
------ ---------- ------- -------------- ------------ -------------- -------------- -------------
<S> <C>
James I. Humphrey, Jr. 1997 $12,500 -- -- -- -- -- --
Chairman of the Board, 1996 $17,500
President and Secretary 1995 $20,000
Charles A. Mills, III 1997 $12,500 -- -- -- -- -- --
Former Vice President 1996 $17,500
And former Treasurer 1995 $20,000
</TABLE>
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,
1997, (on October 30, 1996, the Common Shares began trading on The Nasdaq
National 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 fourteen publicly traded REITs that 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.
[GRAPH]
<TABLE>
<CAPTION>
12/29/94 12/31/94 6/30/95 12/31/95 6/30/96 12/31/96 6/30/97 12/31/97
<S> <C>
Humphrey Hospitality Trust, Inc. 100.00 111.18 136.77 159.29 177.96 178.68 217.29 260.52
S&P 550 100.00 101.16 121.60 139.17 153.20 170.98 206.22 228.05
SNL Hotel REITs 100.00 107.12 121.13 141.01 159.21 215.46 239.00 282.49
</TABLE>
9
<PAGE>
SHAREHOLDER PROPOSALS FOR 1999
The Board of Directors will make provision for presentation of appropriate
proposals by shareholders at the 1999 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 1999 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 1999 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
As of the date of this statement, management 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, 1997,
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, 1998
h-hospi-:proxy-b
10
<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, 1998, at the annual
meeting of shareholders to be held on May 21, 1998 or any adjournment thereof.
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name
below)
[ ] Term Expiring 1999 -- FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY to
James I. Humphrey, Jr.; Margaret Allen; Jeffrey Zwerdling, George R. Whittemore; vote for all nominees
Dr. Leah T. Robinson; Andrew A. Mayer, M.D.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.
</TABLE>
<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:-------------- , 1998
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.
