UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 11, 2000
Ridgewood Hotels, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-14019 58-1656330
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
2859 Paces Ferry Road, Suite 700, Atlanta, Georgia 30339
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770)434-3670
Item 1. Changes in Control of Registrant.
As more fully described below, pursuant to an Agreement, dated
January 10, 2000, and a Management Agreement, dated January 10,
2000, each between Fountainhead Development Corp., Inc., a
Georgia Corporation ("Buyer"), and the Registrant (together, the
"Management Agreement"), the Registrant issued to Buyer 1,000,000
shares of Common Stock. In connection with the Management
Agreement, the number of directors constituting the full Board of
Directors of the Registrant was increased from three to seven,
and four new directors (the "Buyer Designees") were appointed by
the directors of the Registrant to fill the vacancies on the
Registrant's Board of Directors, such appointments to be
effective ten days after an Information Statement pursuant to
Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1
thereunder is delivered to stockholders of the Registrant and
filed with the Securities and Exchange Commission (the
"Commission") (the "Appointment Effective Date").
Following the execution of the Management Agreement, the
Reporting Person entered into a Common Stock Purchase Agreement
by and among Fountainhead Development Corp., Inc. and N. Russell
Walden dated January 11, 2000 (the "Walden Agreement") and
another of the principal stockholders of the Registrant, ADT
Security Services, Inc. ("ADT"), entered into a Stock Purchase
Agreement (the "ADT Agreement"), respectively, each dated as of
January 11, 2000, with Buyer. Pursuant to the terms of the
Walden Agreement, the Reporting Person sold to Buyer, subject to
certain terms and conditions, 650,000 shares of Common Stock (the
"Walden Shares"), and pursuant to the ADT Agreement, ADT sold to
Buyer, subject to certain terms and conditions, 450,000 shares of
Preferred Stock, of the Registrant (the "ADT Shares"). Through
the issuance of the Common Stock pursuant to the Management
Agreement and the acquisitions of the Walden Shares and the ADT
Shares, Buyer has obtained beneficial ownership of approximately
79% of the Common Stock. As of January 14, 2000 (the "Record
Date"), the Registrant had 2,513,480 shares of Common Stock
issued and outstanding that were held of record by approximately
190 persons. Each share of Common Stock is entitled to one vote.
As of the Record Date, the Registrant had 450,000 shares of
Preferred Stock issued and outstanding, and Buyer owned of record
all such issued and outstanding shares of Preferred Stock.
Shares of Preferred Stock of the Registrant are entitled to vote
only as permitted by the Certificate of Designations, Preferences
and Rights of Series A Convertible Preferred Stock of Ridgewood
Properties, Inc. ("Certificate of Designations") and as required
by the Delaware General Corporation Law ("DGCL"). Pursuant to
the Certificate of Designations, shares of Preferred Stock,
voting as a single class, are entitled to elect one director to
serve on the Board of Directors of the Registrant for so long as
a minimum of 50,000 shares of preferred stock are outstanding.
Shares of Preferred Stock become entitled to vote on all matters
presented to stockholders of the Registrant, together with and
not separate from the shares of Common Stock, in the event that,
and for so long as, the Registrant has failed to pay, in full,
two quarterly dividends, whether or not consecutive, payable on
the Preferred Stock. Due to the failure of the Registrant to pay
dividends for the quarters ended April 30, 1999, July 31, 1999
and October 31, 1999, Buyer, as the holder of all the issued and
outstanding Preferred Stock, has and will have for so long as the
Registrant fails to cure such dividend defaults, the right to
vote on all matters presented to the stockholders of the
Registrant for consideration. The ADT Shares are subject to
certain rights of ADT to require Buyer to return the Preferred
Stock to ADT in the event that ADT is required by a court order,
in litigation pending in the Court of Chancery in Delaware
involving ADT, the Registrant and the directors of the
Registrant, to return the Preferred Stock to the Registrant. In
such case, Buyer has the obligation to purchase any Common Stock
that may be issued to ADT as a result of such a court order.
On January 10, 2000, the Registrant entered into the Management
Agreement with Buyer, pursuant to which Buyer retained the
Registrant to perform management services at Chateau Elan Winery
and Resort, one of Buyer's properties, for a period of five
years. In consideration of Buyer's agreement to enter into the
Management Agreement and a payment of $10,000 by Buyer to the
Registrant, the Registrant issued to Buyer 1,000,000 shares of
Common Stock. In the Management Agreement, Buyer agreed to pay
the Registrant a base management fee equal to 2% of the gross
revenues of the properties being managed, plus an annual
incentive management fee to be determined each year based on the
profitability of the properties being managed during that year.
The Management Agreement has a term of five years but is
terminable upon the transfer by Buyer of all or a material
portion of the properties covered by the Management Agreement.
If the Management Agreement is terminated upon such a transfer or
upon the occurrence of an event of default by Buyer, Buyer shall
pay to the Registrant a portion of the projected fees owed to the
Registrant under the Agreement, with adjustments based on the
term of the Management Agreement remaining. In such event, Buyer
may elect to surrender to the Registrant shares of Common Stock
in lieu of a cash payment.
In connection with the Management Agreement, the number of
directors constituting the full Board of Directors of the
Registrant was increased from three to seven members, effective
on January 6, 2000. Further, the Buyer Designees were appointed
by the directors of the Registrant to fill the resulting
vacancies on the Registrant's Board of Directors, effective as of
the Appointment Effective Date. The four Buyer Designees are
Donald E. Panoz, Nancy C. Panoz, Sheldon E. Misher and Henk H.
Evers. The Reporting Person, Luther A. Henderson and Michael M.
Earley, currently directors of the Registrant, are presently
continuing to serve in that capacity (the "Continuing
Directors").
Upon the Appointment Effective Date, the Buyer Designees will
constitute a majority of the Registrant's directors. The
Continuing Directors and the Buyer Designees will hold office as
directors for a term of one year or until their successors are
elected and qualified.
Walden Agreement. Pursuant to the Walden Agreement, Buyer
purchased from the Reporting Person 650,000 shares of Common
Stock. The consideration paid by Buyer for the Walden Shares was
$1,300,000, or $2.00 per share. To fund the acquisition of the
Walden Shares, Buyer used its own funds for an initial cash
payment of $780,000 and issued two promissory notes to the
Reporting Person, each in the principal amount of $260,000,
representing the balance of the purchase price of the Walden
Shares. These notes become due and payable in full on January
11, 2001 and January 11, 2002, respectively. Each note bears
interest at a rate of 6% per year, which interest is payable
quarterly, commencing March 31, 2000. Pursuant to the Walden
Agreement, Buyer has an option to purchase up to 65,000
additional shares of Common Stock from the Reporting Person,
which option remains in effect for 15 months from the date of the
Walden Agreement. In the event the Reporting Person wishes to
sell any of the Common Stock owned by him and subject to Buyer's
option, Buyer has a right of first refusal to purchase such
shares at a purchase price of $2.00 per share.
ADT Agreement. Pursuant to the ADT Agreement, Buyer purchased
from ADT 450,000 shares of Preferred Stock. The consideration
paid by Buyer for the ADT Shares was approximately $1,650,000.
Each share of Preferred Stock is convertible into three shares of
Common Stock. To fund the acquisition of the ADT Shares, Buyer
used working capital and paid the purchase price in cash. The
ADT Shares are subject to certain rights of ADT to require Buyer
to return the ADT Shares to ADT in the event ADT is required by a
court order, in litigation pending in the Court of Chancery in
Delaware involving ADT, the Registrant and the directors of the
Registrant, to return the ADT Shares to the Registrant. In such
case, Buyer is obligated to purchase any Common Stock issued to
ADT as a result of such court order.
Effective as of January 11, 2000, the Reporting Person was
replaced as President and Chief Executive Officer of the
Registrant. Donald E. Panoz was appointed to serve as Chairman
of the Board and Chief Executive Officer of the Registrant, Nancy
C. Panoz was appointed to serve as Vice Chairman and Henk H.
Evers was appointed to serve as President and Chief Operating
Officer, in each case effective January 11, 2000. Mr. and Mrs.
Panoz are directors and executive officers of Buyer and
collectively may be deemed to be the beneficial owners of all of
the voting stock of Fountainhead Holdings, Ltd. ("Holdings"), the
owner of all of the voting stock of Buyer. Mr. Evers serves as
Chief Executive Officer and President of Buyer.
Item 7. Financial Statements and Exhibits.
(c) Exhibits. The following is a list of the Exhibits attached
hereto:
Exhibit #1: Management Agreement dated January 10, 2000
Exhibit #2: Agreement dated January 10, 2000
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
RIDGEWOOD HOTELS, INC.
By: /s/ Henk H. Evers
Henk H. Evers
President
Dated as of January 21, 2000