SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
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by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
RESORTQUEST INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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and 0-11.
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[RESORTQUEST INTERNATIONAL LOGO]
March 30, 2001
Dear Shareholder,
On behalf of our entire Board of Directors, I cordially invite you to attend
our Annual Meeting of Shareholders on Thursday, May 10, 2001. At the meeting, we
will review ResortQuest's performance for fiscal year 2000 and our expectations
for the future.
A notice of the meeting and Proxy Statement follow. You will also find
enclosed your proxy voting card and the 2000 Annual Report. I would like to take
this opportunity to remind you that your vote is important. Please take a moment
now to complete, sign and date the enclosed proxy voting card and return it in
the postage-paid envelope we have provided.
Thank you for your ongoing support of and continuing interest in
ResortQuest. I look forward to seeing you on May 10th and addressing your
questions and comments.
Sincerely,
/s/ David L. Levine
David L. Levine
Chairman, President and
Chief Executive Officer
530 OAK COURT DRIVE, SUITE 360 - MEMPHIS, TN 38117 - 901-762-0600
[RESORTQUEST INTERNATIONAL LOGO]
March 30, 2001
NOTICE OF THE 2001
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of ResortQuest International, Inc. will
be held on Thursday, May 10, 2001, at 9:00 a.m., at The Peabody Hotel, 149 Union
Avenue, Memphis, TN 38103, to consider and take action on the following matters:
1. The election of seven directors to serve until the next annual meeting
of shareholders;
2. The ratification of the appointment of Arthur Andersen LLP as our
independent public accountants for fiscal year 2001; and
3. The transaction of any other business that is properly raised at the
meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "IN FAVOR OF" THE TWO PROPOSALS.
By Order of the Board of
Directors,
/s/ David L. Levine
David L. Levine
Chairman, President and
Chief Executive Officer
530 OAK COURT DRIVE, SUITE 360 - MEMPHIS, TN 38117 - 901-762-0600
TABLE OF CONTENTS ______________________________________________________________
PAGE
--------
Annual Meeting Information.................................. 1
What am I voting on?...................................... 1
How does the Board of Directors recommend I vote on the
proposals?................................................ 1
Who is entitled to vote?.................................. 1
What is the difference between holding shares as a
shareholder of record and as a
beneficial owner?......................................... 1
How can I vote my shares in person at the meeting?........ 2
How can I vote my shares without attending the meeting?... 2
Can I change my vote?..................................... 2
How are votes counted?.................................... 2
What does it mean if I receive more than one proxy or
voting instruction card?.................................. 3
What is a quorum?......................................... 3
What vote is required to approve each item?............... 3
Who will count the vote?.................................. 3
What is the deadline for shareholder proposals for next
year's Annual Meeting?.................................... 3
How much did this proxy solicitation cost?................ 3
Securities Ownership of Management and Principal
Stockholders................................................ 4
Item 1 -- Election of Directors............................. 6
Nominees.................................................... 6
Board Committees and Meeting Attendance..................... 9
Audit Committee........................................... 9
Compensation Committee.................................... 10
Executive Committee....................................... 10
Compensation of Directors................................... 10
Report of the Audit Committee of The Board of Directors..... 11
Fees Paid to Independent Auditors........................... 11
Audit Fees................................................ 11
Financial Information Systems Design and Implementation
Fees...................................................... 11
All Other Fees............................................ 11
Report of the Compensation Committee of the Board of
Directors................................................... 12
General................................................... 12
The Executive Compensation Plan........................... 12
CEO Compensation.......................................... 13
Policy on Deductibility of Compensation................... 13
Compensation Committee Interlocks and Insider
Participation............................................... 13
i
PAGE
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Corporate Performance....................................... 14
Compensation of Executive Officers.......................... 15
Summary of Compensation................................... 15
Option Grants in Fiscal 2000 and Fiscal Year-End Option
Values.................................................... 16
Employment Agreements and Covenants Not to Compete........ 17
Indemnification Agreements................................ 18
Incentive Plan............................................ 18
Savings and Retirement Plan............................... 19
Certain Relationships and Related Transactions.............. 19
Leases of Facilities...................................... 19
Management Agreements..................................... 20
Other Transactions........................................ 21
Item 2 -- Ratification of Appointment of Independent Public
Accountants............................................... 24
Item 3 -- Other Matters..................................... 24
Appendix A -- ResortQuest International, Inc. Board of
Directors Audit Committee Charter......................... A-1
ii
RESORTQUEST INTERNATIONAL, INC.
530 Oak Court Drive, Suite 360
Memphis, Tennessee 38117
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PROXY STATEMENT
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ANNUAL MEETING INFORMATION _____________________________________________________
This proxy statement contains information related to the Annual Meeting of
Shareholders of ResortQuest International, Inc. to be held on Thursday, May 10,
2001 beginning at 9:00 a.m., at The Peabody Hotel, 149 Union Avenue, Memphis, TN
38103, and at any postponements or adjournments thereof. This proxy statement
was prepared under the direction of ResortQuest's Board of Directors to solicit
your proxy for use at the Annual Meeting. The approximate date of mailing this
proxy statement is March 30, 2001.
WHAT AM I VOTING ON? _____________________________________
You will be asked to elect nominees to serve on the Board of Directors and
to ratify the appointment of our independent accountants for the 2001 fiscal
year. The Board of Directors is not aware of any other matters to be presented
for action at the meeting.
HOW DOES THE BOARD OF DIRECTORS
RECOMMEND I VOTE ON THE PROPOSALS? _______________________
The Board recommends a vote FOR each of the nominees for election to the
Board and FOR the appointment of Arthur Andersen LLP as our independent public
accountants for the 2001 fiscal year.
WHO IS ENTITLED TO VOTE? _________________________________
ResortQuest's outstanding Common Stock consists of Restricted Common Stock
and non-restricted Common Stock (together, the "Common Stock"). Shareholders
owning our Common Stock on March 21, 2001 are entitled to vote at the Annual
Meeting, or any postponement or adjournment of the meeting. These shares include
(1) shares held directly in your name as the shareholder of record and
(2) shares held for you as the beneficial owner through a stockbroker, bank or
other nominee. Each holder of Restricted Common Stock has one-half vote per
share on all matters to be voted on. Each holder of non-restricted Common Stock
has one vote per share on all matters to be voted on. On March 21, 2001, there
were 19,110,266 shares of Common Stock outstanding, consisting of 2,735,830
shares of Restricted Common Stock and 16,374,436 shares of non-restricted Common
Stock.
WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A
SHAREHOLDER OF RECORD AND AS A BENEFICIAL OWNER? _________
Many ResortQuest shareholders hold their shares through a stockbroker, bank
or other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned
beneficially.
SHAREHOLDER OF RECORD. If your shares are registered directly in your name
with our transfer agent, American Stock Transfer & Trust Company, you are
considered, with respect to those shares, the shareholder of record, and these
proxy materials are being sent directly to you
by ResortQuest. As the shareholder of record, you have the right to grant your
voting proxy directly to ResortQuest or to vote in person at the Annual Meeting.
ResortQuest has enclosed a proxy card for you to use.
BENEFICIAL OWNER. If your shares are held in a stock brokerage account or
by a bank or other nominee, you are considered the beneficial owner of shares
held in street name, and these proxy materials are being forwarded to you by
your broker or nominee which is considered, with respect to those shares, the
shareholder of record. As the beneficial owner, you have the right to direct
your broker how to vote and are also invited to attend the Annual Meeting.
However, since you are not the shareholder of record, you may not vote these
shares in person at the Annual Meeting unless you obtain a signed proxy from the
record holder giving you the right to vote the shares. Your broker or nominee
has enclosed or provided a voting instruction card for you to use in directing
the broker or nominee how to vote your shares.
HOW CAN I VOTE MY SHARES IN PERSON AT THE MEETING? _______
Shares held directly in your name as the shareholder of record may be voted
in person at the Annual Meeting. If you choose to do so, please bring the
enclosed proxy card or proof of identification. Even if you currently plan to
attend the Annual Meeting, we recommend that you also submit your proxy as
described below so that your vote will be counted if you later decide not to
attend the meeting. Shares held in street name may be voted in person by you
only if you obtain a signed proxy from the record holder giving you the right to
vote the shares.
HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE MEETING? __
Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may direct your vote without attending the
Annual Meeting. You may do this by signing your proxy card or, for shares held
in street name, the voting instruction card included by your broker or nominee
and mailing it in the accompanying enclosed, pre-addressed envelope. If you
provide specific voting instructions, your shares will be voted as you instruct.
If you sign but do not provide instructions, your shares will be voted as
described below in "How are votes counted?"
CAN I CHANGE MY VOTE? ____________________________________
You may change your proxy instructions at any time prior to the vote at the
Annual Meeting. For shares held directly in your name, you may accomplish this
by granting a new proxy bearing a later date (which automatically revokes the
earlier proxy) or by attending the Annual Meeting and voting in person.
Attendance at the meeting will not cause your previously granted proxy to be
revoked unless you specifically so request. For shares held beneficially by you,
you may accomplish this by submitting new voting instructions to your broker or
nominee.
HOW ARE VOTES COUNTED? ___________________________________
In the election of directors, you may vote "FOR" all of the nominees or your
vote may be "WITHHELD" with respect to one or more of the nominees. For the
other proposal, you may vote "FOR," "AGAINST" or "ABSTAIN." If you "ABSTAIN," it
has the same effect as a vote "AGAINST." If you sign your proxy card or broker
voting instruction card with no further instructions, your shares will be voted
in accordance with the recommendations of the Board ("FOR" all of the nominees
to the Board, "FOR" the ratification of Arthur Andersen LLP as independent
public accountants for the 2001 fiscal year and, in the discretion of the proxy
holders, on any other matters that properly come before the meeting).
2
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY
OR VOTING INSTRUCTION CARD? ______________________________
It means your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting instruction
cards you receive.
WHAT IS A QUORUM? ________________________________________
A "quorum" is the presence at the meeting, in person or by proxy, of the
holders of a number of shares entitling them to exercise a majority of the
voting power of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting. There must be a quorum for the meeting to be held. Abstentions
are counted for purposes of determining the presence or absence of a quorum, but
are not considered a vote cast under Delaware law. Shares held by brokers in
street name and for which the beneficial owners have withheld the discretion to
vote from brokers are called "broker non-votes." They are counted to determine
if a quorum is present, but are not considered a vote cast under Delaware law.
Broker non-votes will not affect the outcome of a vote on a particular matter.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM? ______________
The director nominees will be elected by a plurality of the votes cast at
the Annual Meeting. All other matters to be considered at the meeting require
the affirmative vote of a majority of the votes cast at the meeting to be
approved.
WHO WILL COUNT THE VOTE? _________________________________
American Stock Transfer & Trust Company will tabulate the votes cast by
proxy or in person at the Annual Meeting.
WHAT IS THE DEADLINE FOR SHAREHOLDER
PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING? ________________
Shareholders may submit proposals on matters appropriate for shareholder
action at future annual meetings by following the rules of the Securities and
Exchange Commission. Proposals intended for inclusion in next year's proxy
statement and proxy card must be received by ResortQuest not later than
November 30, 2001. If we do not receive notice of any other matter that a
shareholder wishes to raise at the Annual Meeting in 2002 by February 19, 2002
and a matter is raised at that meeting, the proxies will have discretionary
authority to vote on the matter. All proposals and notifications should be
addressed to ResortQuest's Secretary, ResortQuest International, Inc., 530 Oak
Court Drive, Suite 360, Memphis, Tennessee 38117.
HOW MUCH DID THIS PROXY SOLICITATION COST? _______________
We have engaged D. F. King & Co., Inc. to assist us in the distribution of
proxy materials and the solicitation of votes. We will pay D.F. King & Co. a fee
of $5,000 plus expenses for these services. We also reimburse banks, brokerage
firms and other institutions, nominees, custodians and fiduciaries for their
reasonable expenses for sending proxy materials to beneficial owners and
obtaining their voting instructions. Certain directors, officers and regular
employees of ResortQuest and its subsidiaries may solicit proxies personally or
by telephone or facsimile without additional compensation.
3
SECURITIES OWNERSHIP OF MANAGEMENT
AND PRINCIPAL STOCKHOLDERS _____________________________________________________
The following table shows the number of shares of Common Stock beneficially
owned by each person known to ResortQuest to beneficially own more than 5% of
the Common Stock, by the directors and the Named Executive Officers listed in
the Summary Compensation Table on page 15, and by the directors and all
ResortQuest executive officers as a group. Unless otherwise indicated, the
persons listed have an address c/o ResortQuest's executive offices and have sole
voting and investment power with respect to their shares. The table shows
ownership as of January 8, 2001.
4
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SECURITIES OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
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SHARES OF COMMON
STOCK BENEFICIALLY PERCENTAGE
NAME OWNED OWNED
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Dimensional Fund Advisors, Inc.(1) 1,190,500 6.1
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Par Capital Management, Inc. (2) 1,712,600 8.8
PAR Investment Partners, L.P.
Par Group, L.P.
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David L. Levine(3)(4) 144,334 *
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James S. Olin(3) 65,549 *
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W. Michael Murphy(3)(5) 98,867 *
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Frederick L. Farmer(3) 85,584 *
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J. Mitchell Collins 5,000 *
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William W. Abbott, Jr. (3) 160,091 *
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Elan J. Blutinger(3)(6) 708,455 3.6
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Joshua M. Freeman(3)(7) 987,685 5.1
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Heidi Houston (8)(9) 253,667 1.3
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Colin V. Reed(3) 20,000 *
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Michael D. Rose(3) 108,455 *
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David C. Sullivan(3)(10) 360,956 1.9
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Joseph V. Vittoria(3) 60,000 *
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Theodore L. Weise(3) 61,000 *
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All directors and executive officers as a group (15) 3,126,643 16.1
including those persons listed above
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* Less than 1.0%
(1) The address of the shareholder is 1299 Ocean Avenue, 11th Floor, Santa
Monica, CA 90401. Information is based solely on our review of the
Schedule 13G, as filed by the shareholder with the Securities and Exchange
Commission on February 2, 2001.
(2) The address for the group is One Financial Center, Suite 1600, Boston, MA
02111. Information is based solely on our review of the Schedule 13G, as
filed by the shareholder with the Securities and Exchange Commission on
February 14, 2001. Members of the group share both voting and dispositive
power.
(3) Includes the following number of shares that the named individual has the
right to acquire as of March 9, 2001 (60 days after January 8, 2001) through
the exercise of stock options: 84,334 shares for Mr. Levine, 36,535 shares
for Mr. Olin, 56,667 shares for Mr. Murphy, 55,834 shares for Mr. Farmer,
88,500 shares for Mr. Sullivan, 10,000 shares for Mr. Reed and 20,000 shares
for each of Messrs. Abbott, Blutinger, Freeman, Rose, Vittoria and Weise.
(4) Includes 15,000 shares held in trust for the benefit of his minor children.
(5) Includes 200 shares owned by his spouse.
(6) Includes 41,667 shares which may be acquired upon the exercise of
exercisable options held by Alpine Consolidated II, LLC, of which
Mr. Blutinger is a Managing Director.
(7) Includes 33,000 shares held by the Carl M. Freeman Foundation, Inc. (the
"Freeman Foundation"), of which Mr. Freeman is a trustee and over which he
shares voting and investment power. Mr. Freeman disclaims beneficial
ownership of these shares.
(8) Includes 2,500 shares held in trust for the benefit of her minor children.
(9) Ms. Houston resigned as a member of the Board on December 8, 2000.
(10) Includes 2,754 shares attributed to Mr. Sullivan's account in the
ResortQuest Savings and Retirement Plan. Participants have voting power over
shares purchased with their own contributions.
5
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ITEM 1 -- ELECTION OF DIRECTORS
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NOMINEES _______________________________________________________________________
Seven directors will be elected at the Annual Meeting. Directors will serve
until the next annual meeting or until their earlier resignation or removal. All
of the nominees have served as directors since the last annual meeting, except
for Colin V. Reed, who was elected a director by the Board of Directors on
August 1, 2000. Directors Joshua M. Freeman and Michael D. Rose are not standing
for re-election. Hedi Houston resigned as a member of the Board in December
2000.
The Compensation Committee of the Board, which considers nominees for
election to the Board, recommended that the size of the Board of Directors be
reduced from ten members to eight members. The Board of Directors approved the
recommendation in March 2001 and believes that a smaller Board will facilitate
communication among the directors and increase the efficiency of the Board.
Subsequent to the Board's action, Mr. Freeman advised ResortQuest in late
March 2001 that he would not stand for re-election. Accordingly, seven directors
will be elected at the Annual Meeting. The Board knows of no reason why any
nominee may be unable to serve as a director. If any nominee listed below is not
available for election, proxies will be voted for such other person as the Board
of Directors may nominate. The proxies cannot be voted for more than seven
nominees.
The nominees and their biographies are as follows:
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WILLIAM W. ABBOTT, JR.
DIRECTOR SINCE NOVEMBER 1998
AGE 55
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Mr. Abbott is a consultant to ResortQuest. He previously served as Vice
Chairman of Abbott Resorts, Inc. from March 1997 to November 1998. He served as
President and Chairman of the Board of Abbott Resorts from 1976 to March 1997.
Abbott Resorts, the largest provider of beach vacation property rentals,
management services and real estate sales in Florida, is a ResortQuest
subsidiary.
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ELAN J. BLUTINGER
DIRECTOR SINCE SEPTEMBER 1997
AGE 45
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Mr. Blutinger is a founding partner of Alpine Consolidated LLC, a merchant
bank specializing in the consolidation of fragmented industries. He is also
Managing Director of Alpine Europe LLC. He was a director and co-founder of
Travel Services International, Inc. until its acquisition in 2000. From 1987
until its acquisition in 1995, Mr. Blutinger was the Chief Executive Officer of
Shoppers Express, which became "OnCart" in 1997, an electronic retailing
service. From 1983 until its acquisition in 1986 by IDI, he was Chief Executive
Officer of DSI, a wholesale software distributor. Mr. Blutinger is also a
director of Online Travel Corp., a publicly traded travel company in the United
Kingdom.
6
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DAVID L. LEVINE
DIRECTOR SINCE MAY 1998
AGE 53
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In May 2000, Mr. Levine became Chairman, President and Chief Executive
Officer of ResortQuest. He served as President and Chief Executive Officer of
ResortQuest from December 1999 to May 2000 and as President and Chief Operating
Officer from May 1998 until December 1999. Mr. Levine was President and Chief
Operating Officer of Equity Inns, Inc., a real estate investment trust that
specializes in hotel acquisitions, from June 1994 to April 1998. Mr. Levine was
also President and Chief Operations Officer of Trust Management Inc., which
operated Equity Inns' properties, from June 1994 until November 1996. Prior to
that, he was President of North American Hospitality, Inc., a hotel management
and consulting company, which he formed in 1985.
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COLIN V. REED
DIRECTOR SINCE AUGUST 2000
AGE 52
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Mr. Reed has been a member of the three-executive Office of the President of
Harrah's Entertainment, Inc. since May 1999, a director of Harrah's since
December 1998 and the Chief Financial Officer of Harrah's since April 1997. He
was Executive Vice President of Harrah's from September 1995 to May 1999 and has
served in several other management positions with Harrah's since 1987. He is
currently a member of the Executive Committee of the Harrah's Board. Mr. Reed
also serves as director and Chairman of the Board of JCC Holding Company. JCC
Holding Company filed a voluntary petition for reorganization under Chapter 11
of the United States Bankruptcy Code on January 4, 2001.
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DAVID C. SULLIVAN
DIRECTOR SINCE MAY 1998
AGE 61
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Mr. Sullivan is a consultant to ResortQuest. He served as Chairman of
ResortQuest from December 1999 to May 2000. From May 1998 to December 1999, he
was the Chairman and Chief Executive Officer of ResortQuest. From April 1995 to
December 1997, Mr. Sullivan was the Executive Vice President and Chief Operating
Officer, and a director, of Promus Hotel Corporation, a publicly traded hotel
franchisor, manager and owner of hotels whose brands include Hampton Inn,
Homewood Suites and Embassy Suites. Mr. Sullivan is also a director of Winston
Hotels, Inc. and John Q. Hammons Hotels, Inc.
7
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JOSEPH V. VITTORIA
DIRECTOR SINCE MAY 1998
AGE 65
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Mr. Vittoria has been Chairman of Puradyn Filter Technologies, Inc. since
February 2000. He was the Chairman and Chief Executive Officer of Travel
Services International, Inc., a leading single source distributor of specialized
leisure travel services, from July 1997 until its acquisition in 2000. From
September 1987 to February 1997, Mr. Vittoria was the Chairman and Chief
Executive Officer of Avis, Inc., a multinational auto rental company.
Mr. Vittoria serves on the Board of Directors of Transmedia Asia Pacific, Inc.
and Sirius Satellite Radio Inc.
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THEODORE L. WEISE
DIRECTOR SINCE MAY 1998
AGE 56
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From February 1998 to February 2000, Mr. Weise served as the President and
Chief Executive Officer of Federal Express Corporation, the world's largest
express transportation company. He was previously Executive Vice President and
Chief Operating Officer of Federal Express Corporation from February 1996 to
February 1998. From August 1991 to February 1996 he served as Senior Vice
President of Air Operations of Federal Express Corporation. Mr. Weise is also a
director of Federal Express Corporation.
8
BOARD COMMITTEES AND MEETING ATTENDANCE ________________________________________
The Board of Directors has three committees, the Audit, Compensation and
Executive committees. Committees report their actions to the full Board at its
next regular meeting. A description of the duties of each committee follows the
table below.
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COMMITTEE MEMBERSHIP AND MEETINGS HELD
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NAME AUDIT COMPENSATION EXECUTIVE
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William W. Abbott, Jr. X X
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Elan J. Blutinger X* X
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Joshua M. Freeman X
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David L. Levine X*
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Michael D. Rose X* X X
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Joseph V. Vittoria X
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Theodore L. Weise X X X
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Number of meetings in fiscal 2000** 5 4 1
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X Member
* Chairperson
** The Board held five meetings and took a number of other actions by written
consent in 2000. All members attended at least 75% of the aggregate of all
meetings of the Board of Directors and committees of the Board.
AUDIT COMMITTEE __________________________________________
- - Examines the activities of our independent auditors to determine whether these
activities are reasonably designed to assure the soundness of accounting and
financial procedures.
- - Reviews our accounting policies and the objectivity of our financial
reporting.
- - Considers annually the qualifications of our independent auditors, the scope
of their audit and the independent auditors' fees and makes recommendations to
the Board as to their selection.
- - Meets independently with our internal auditing staff, our independent auditors
and our senior management.
- - Reviews the general scope of our accounting, financial reporting, annual audit
and internal audit programs, as well as the results of the annual audit and
review of interim financial statements, auditor independence issues and the
adequacy of the Audit Committee charter.
- - The Audit Committee operates under a written charter adopted by the Board of
Directors, a copy of which is attached as Appendix A to this proxy statement.
9
COMPENSATION COMMITTEE ___________________________________
- - Establishes executive compensation policies and programs.
- - Recommends to the Board base salaries and target bonus levels for executive
officers.
- - Approves the awards and payments to be made to employees of ResortQuest and
its subsidiaries under its long-term compensation plans.
- - Makes recommendations to the Board of Directors concerning outside director
compensation.
- - Reviews the qualifications of persons eligible to stand for election as
directors and makes recommendations to the Board on this matter.
- - Considers as nominees for director qualified persons recommended by directors,
management and shareholders. Written recommendations for director nominees
should be delivered to the Secretary, ResortQuest International, Inc., 530 Oak
Court Drive, Suite 360, Memphis, TN 38117. ResortQuest's bylaws do not permit
shareholders to nominate candidates from the floor at an annual meeting
without notifying the Secretary at least 60 but not more than 90 days prior to
the date of the annual meeting. Notification must include certain information
detailed in the bylaws. If you intend to nominate a candidate from the floor
at an annual meeting, please contact the Secretary.
EXECUTIVE COMMITTEE ______________________________________
- - Has the full power of the Board between meetings of the Board, except that it
cannot amend ResortQuest's bylaws, recommend any action that requires the
approval of shareholders or any other action not permitted to be delegated to
a committee under Delaware law.
COMPENSATION OF DIRECTORS ______________________________________________________
Employee directors receive no additional compensation for serving on the
Board of Directors or its committees. Non-employee directors receive $3,000 for
attendance at each Board meeting and $1,500 for attendance at each committee
meeting.
Under ResortQuest's Amended and Restated 1998 Long-Term Incentive Plan (the
"Incentive Plan"), each non-employee director also receives an option to acquire
10,000 shares of Common Stock upon the non-employee director's initial election
as a director and an annual option to acquire 5,000 shares at each annual
meeting at which the non-employee director is re-elected or continues to serve.
These options will have an exercise price equal to the fair market value of a
share of Common Stock on the date the options are issued.
10
REPORT OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS _________________________________________________________
The ResortQuest's Board of Directors has adopted a written charter for the
Audit Committee of the Board of Directors. A copy of that charter is attached to
and incorporated in this proxy statement as Appendix A. All of the Audit
Committee members are independent, as independence is defined in Sections
303.01(B)(2)(a) and (3) of the New York Stock Exchange's listing standards, as
applicable.
The Audit Committee has reviewed and discussed ResortQuest's audited
financial statements for fiscal 2000 with management. The Audit Committee has
discussed with the independent auditors the matters required to be discussed by
SAS 61 (Codification of Statements on Auditing Standards, AU 380), as amended or
supplemented. The Audit Committee has received the written disclosures and the
letter from the independent auditors required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), as modified or supplemented, and has
discussed with the independent auditors the independent auditor's independence.
Based on the review and discussions referred to in the preceding paragraph,
the Audit Committee recommended to the Board of Directors that the audited
financial statements be included in ResortQuest's Annual Report on Form 10-K for
the 2000 fiscal year for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
MICHAEL D. ROSE, CHAIRMAN
JOSEPH V. VITTORIA
JOSHUA M. FREEMAN
THEODORE L. WEISE
FEES PAID TO INDEPENDENT AUDITORS ______________________________________________
AUDIT FEES _______________________________________________
For fiscal 2000, the aggregate professional fees for the annual audit and
interim quarterly reviews performed by ResortQuest's independent public
accountants were $199,284.
FINANCIAL INFORMATION SYSTEMS
DESIGN AND IMPLEMENTATION FEES ___________________________
For fiscal 2000, the aggregate fees for the system design and software and
hardware implementation performed by ResortQuest's independent public
accountants were $138,306.
ALL OTHER FEES ___________________________________________
For fiscal 2000, all other fees of ResortQuest's independent public
accountants amounted to $684,327.
The Audit Committee of the Board of Directors has considered whether the
provision of non-audit services is consistent with maintaining the auditor's
independence.
11
REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS _________________________________________________________
GENERAL __________________________________________________
The Compensation Committee of the Board of Directors for the fiscal year
ended December 31, 2000 was comprised entirely of non-employee directors,
Messrs. Blutinger, Abbott, Rose and Weise. The Compensation Committee is
responsible for establishing and administering ResortQuest's executive
compensation programs.
THE EXECUTIVE COMPENSATION PLAN __________________________
The Compensation Committee's compensation philosophy is designed to support
ResortQuest's primary objective of creating value for shareholders. The
Compensation Committee believes that the following compensation strategies for
ResortQuest's executive officers, including the Chief Executive Officer (the
"CEO"), achieve this objective:
- - Attract and retain talented executives--ResortQuest provides core compensation
in the form of base salary and benefit programs that are comparable to those
of similarly sized companies in the resort/ leisure/ hospitality industry. The
base salary target is generally based on industry survey results. For higher
levels of responsibility, the base salary component is intended to be a
diminishing portion of the executive's potential total compensation.
- - Emphasize pay for performance--ResortQuest's incentive plan establishes a
significant relationship between current ResortQuest performance and incentive
compensation, on a sliding scale basis, with substantial rewards possible for
exceptional results and no reward for results below plan. One of the principal
factors considered in the incentive plan is the relationship of ResortQuest's
earnings per share to stated performance objectives.
- - Encourage management stock ownership--The Compensation Committee firmly
believes that long-term shareholder value will be significantly enhanced by
management stock ownership. As a result, ResortQuest's stock option program
strongly encourages stock ownership by executive officers.
ResortQuest generally establishes base salary ranges by considering
compensation levels in similarly sized companies in the
resort/leisure/hospitality industry. In 2000, ResortQuest retained the services
of a compensation consultant to review its executive compensation practices and
base salary. As a result of the compensation study conducted, ResortQuest
adjusted certain executive salaries upward to reflect comparable positions of
responsibility in comparable companies. The base salary targets are generally
established based upon industry survey results in light of ResortQuest's
strategic goals compared to other publicly owned, growth-oriented companies.
ResortQuest's current philosophy is to pay base salaries sufficient to attract
and retain executives with broad, proven track records of performance.
The base salary and performance of each executive officer is reviewed
periodically (at least annually) by his or her immediate supervisor (or the
Compensation Committee in the case of the Chairman, President and CEO) resulting
in salary actions as appropriate. An executive officer's level of responsibility
is the primary factor used in determining base salary. Individual performance
and industry information are also considered in determining any salary
adjustment. The Compensation Committee reviews and approves all executive
officer salary adjustments as recommended by the CEO. The Committee reviews the
performance of the CEO and establishes his base salary.
In addition to compensation through base salaries, the Compensation
Committee has the authority to issue performance-based bonuses. Incentive
bonuses will be paid only to the extent that ResortQuest meets performance
objectives.
12
Bonus awards are based on the Compensation Committee's determination of the
individual's position and level of responsibility and the individual's impact on
ResortQuest's financial success. Bonus payments may, at the discretion of the
Compensation Committee, be made in cash or stock options. Bonus payments were
made in connection with performance in 2000.
The Compensation Committee is also responsible for the approval of option
grants for employees, the number of shares subject to such options and the terms
and conditions of such options, consistent with the Incentive Plan. In addition
to year-end performance bonuses, determinations of option grants may be made
during the year, either in connection with new acquisitions, additional equity
offerings, or the addition of new key personnel, as appropriate in furtherance
of ResortQuest's objectives. Such objectives may include recognition of past
qualitative performance and incentives to continue the growth and profits of our
business.
CEO COMPENSATION _________________________________________
Mr. Levine has served as Chief Executive Officer of ResortQuest since
December 7, 1999. In establishing Mr. Levine's base salary, the Compensation
Committee considered the factors discussed above, including the level of CEO
compensation in other publicly owned/growth oriented and similar sized companies
in comparable industries. Mr. Levine's base salary and the grant in
December 2000 of 40,000 stock options was based on ResortQuest performance in
2000 and Mr. Levine's demonstrated ability to grow ResortQuest through
acquisitions, expanding internal growth opportunities and ResortQuest's increase
in net income over the prior year.
The Compensation Committee believes the additional stock option grant
reflected ResortQuest's need to retain a talented senior executive with the
background, experience and leadership skills to help ResortQuest integrate the
operations of its recently acquired operating companies and pursue ResortQuest's
focus on internal growth.
POLICY ON DEDUCTIBILITY OF COMPENSATION __________________
Section 162(m) of the Internal Revenue Code generally limits the tax
deduction to public companies for compensation over $1 million paid to a
corporation's chief executive officer and the four next most highly compensated
executive officers, except to the extent that any such excess compensation is
paid pursuant to a performance-based or stock option plan that has been approved
by stockholders. The Compensation Committee will study the potential impact of
Section 162(m) and will, to the extent it deems appropriate, take reasonable
steps to minimize or eliminate any potential impact of Section 162(m) on
ResortQuest, while at the same time preserving the objective of providing
appropriate incentive awards. The Compensation Committee believes that there are
no current executive compensation programs or outstanding awards that would be
impacted by Section 162(m).
COMPENSATION COMMITTEE
ELAN J. BLUTINGER, CHAIRMAN
WILLIAM W. ABBOTT, JR.
MICHAEL D. ROSE
THEODORE L. WEISE
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION ____________________________________
During 2000, the Compensation Committee was composed of Messrs. Blutinger,
Abbott, Rose, and Weise. Neither of Messrs. Abbott, Rose or Weise is or has been
an officer or employee of ResortQuest or it subsidiaries. Mr. Blutinger was an
officer of ResortQuest prior to our initial public offering in May 1998.
13
CORPORATE PERFORMANCE __________________________________________________________
The line graph shown below shows a comparison of the cumulative total
shareholder return on the Common Stock as compared to the cumulative total
return of two indexes: the S&P 500 Index and the Russell 2000 Index. The Graph
covers the period from May 20, 1998, the date on which ResortQuest Common Stock
commenced trading on the New York Stock Exchange, to December 31, 2000.
The performance illustrated assumes that $100 was invested in ResortQuest
Common Stock at its closing price on May 20, 1998 and each index on May 20,
1998. The returns reflected in the graph for ResortQuest, the S&P 500 Index and
the Russell 2000 Index were 33.0%, 11.7% and (11.9%), respectively, for the
seven-month period ended December 31, 1998, (71.8%), 21.0% and 21.3%,
respectively, for the twelve-month period ended December 31, 1999, and 48.5%,
(9.1)%, and (2.9)%, respectively, for the twelve-month period ended
December 31, 2000.
The closing prices of ResortQuest Common Stock on May 20, 1998,
December 31, 1999 and December 31, 2000 were $15.50, $4.13 and $6.13,
respectively. The price of ResortQuest Common Stock in ResortQuest's initial
public offering was $11.00 per share.
We do not believe we can reasonably identify a peer group on an industry or
line of business basis, or a published industry or line of business index for
comparison to ResortQuest. As a result, we have used the Russell 2000 Index for
comparison purposes because it represents growth companies with market
capitalizations similar to ResortQuest.
COMPARISON OF CUMULATIVE TOTAL RETURNS*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DOLLARS
May 20, 1998 1998 1999 2000
RESORTQUEST INT $100.00 $132.96 $37.49 $55.67
S & P 500 $100.00 $111.71 $135.21 $122.91
RUSSELL 2000 $100.00 $88.14 $106.88 $103.85
14
COMPENSATION OF EXECUTIVE OFFICERS _____________________________________________
SUMMARY OF COMPENSATION __________________________________
The following table shows cash and other compensation paid or accrued during
the 2000 fiscal year to ResortQuest's Chief Executive Officer and each of the
four other most highly compensated executive officers (the "Named Executive
Officers").
- ----------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------
SECURITIES
OTHER UNDERLYING ALL
NAME AND PRINCIPAL FISCAL ANNUAL OPTIONS LTIP OTHER
POSITION YEAR(1) SALARY(2) BONUS COMPENSATION GRANTED PAYOUTS COMPENSATION
- ----------------------------------------------------------------------------------------------------------------------
David L. Levine 2000 $275,000 $302,500 $ -- 40,000 $ -- $ --
Chairman, President and 1999 $195,625 $ -- $ -- 140,500 $ -- $ --
Chief Executive Officer 1998 $ 99,792 $ 99,792 $ -- 75,000 $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------
James S. Olin 2000 $240,000 $158,400 $ -- 110,000 $ -- $ --
Executive Vice President
And Chief Operating
Officer
- ----------------------------------------------------------------------------------------------------------------------
Frederick L. Farmer 2000 $200,000 $110,000 $ -- 55,000 $ -- $ --
Executive Vice President 1999 $139,583 $ -- $ -- 25,000 $ -- $ --
and Chief Information 1998 $ 76,763 $ 38,381 $ -- 75,000 $ -- $ --
Officer
- ----------------------------------------------------------------------------------------------------------------------
W. Michael Murphy 2000 $210,000 $115,500 $ -- 65,000 $ -- $ --
Senior Vice President and 1999 $167,500 $ -- $ -- 45,000 $ -- $ --
Chief Development Officer 1998 $ 92,115 $ 76,058(3) $ -- 45,000 $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------
J. Mitchell Collins 2000 $143,979 $ 99,000 $ -- 75,000 $ -- $ --
Senior Vice President and
Chief Financial Officer
(4)
- ----------------------------------------------------------------------------------------------------------------------
(1) Mr. Levine, Mr. Farmer and Mr. Murphy commenced employment with ResortQuest
upon consummation of our initial public offering (May 26, 1998). Prior to
January 4, 2000, Mr. Olin had been employed since September 30, 1998 with
ResortQuest as senior manager of a number of ResortQuest's subsidiaries in
Florida and Alabama. Mr. Collins was newly employed with ResortQuest on
March 13, 2000.
(2) Annual salaries for 1998 were as follows: $162,500 for Mr. Levine; $125,000
for Mr. Farmer; and $150,000 for Mr. Murphy.
(3) Includes payment in the amount of $30,000 for consulting services rendered
prior to ResortQuest's initial public offering in 1998.
(4) The annual salary for 2000 for Mr. Collins was $180,000.
15
OPTION GRANTS IN FISCAL 2000
AND FISCAL YEAR-END OPTION VALUES ________________________
The table below presents additional information concerning option awards for
each of the Named Executive Officers shown in the Summary Compensation table.
None of the Named Executive Officers exercised any stock options in 2000. The
options granted in 1998 become exercisable at the rate of 25% per year. The
options granted after May 11, 1999 become exercisable at the rate of 33 1/3% per
year.
- -----------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN FISCAL 2000
- -----------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM(2)
- -----------------------------------------------------------------------------------------------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR
OPTIONS IN FISCAL BASE PRICE EXPIRATION
NAME GRANTED 2000 PER SHARE DATE 0% 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
David L. Levine 40,000 6.7% $ 7.00 12/06/05 $ -- $ 77,359 $ 170,943
- -----------------------------------------------------------------------------------------------------------------------
James S. Olin 75,000 12.5% $ 4.19 1/03/05 $ -- $ 86,770 $ 191,738
35,000 5.8% $ 7.00 12/06/05 $ -- $ 67,689 $ 149,575
- -----------------------------------------------------------------------------------------------------------------------
Frederick L. Farmer 30,000 5.0% $ 4.19 1/03/05 $ -- $ 34,708 $ 76,695
25,000 4.2% $ 7.00 12/06/05 $ -- $ 48,349 $ 106,839
- -----------------------------------------------------------------------------------------------------------------------
W. Michael Murphy 50,000 8.3% $ 4.19 1/03/05 $ -- $ 57,846 $ 127,826
15,000 2.5% $ 7.00 12/06/05 $ -- $ 29,010 $ 64,104
- -----------------------------------------------------------------------------------------------------------------------
J. Mitchell Collins 50,000 8.3% $ 4.56 3/12/05 $ -- $ 62,163 $ 137,365
25,000 4.2% $ 7.00 12/06/05 $ -- $ 48,349 $ 106,839
- -----------------------------------------------------------------------------------------------------------------------
All Shareholders(3) N/A N/A N/A N/A $ -- $28,193,048 $62,299,263
- -----------------------------------------------------------------------------------------------------------------------
All Optionees 598,900 100.0% $ 5.37(4) Various $ -- $ 889,225 $ 1,964,954
- -----------------------------------------------------------------------------------------------------------------------
All optionees gain as a N/A N/A N/A N/A -- 3.2% 3.2%
percentage of all
stockholders gain
- -----------------------------------------------------------------------------------------------------------------------
(1) Options to purchase Common Stock expiring on January 3, 2005, March 12, 2005
and December 6, 2005 were granted under ResortQuest's Amended and Restated
1998 Long-Term Incentive Plan on January 4, 2000, March 13, 2000 and
December 7, 2000, respectively.
(2) The dollar amounts under these columns are the result of calculations at
zero percent, five percent and ten percent rates set by the Securities and
Exchange Commission and therefore are not intended to forecast possible
future appreciation, if any, of our stock price. In the above table, we did
not use an alternative formula for a grant valuation, as we are not aware of
any formula, which will determine with reasonable accuracy a present value
based on future unknown or volatile factors.
(3) These amounts represent the appreciated value which holders of Common Stock
would receive at the hypothetical five and ten percent rates based on the
market value of Common Stock outstanding at or near the option grant dates.
(4) Represents the weighted average price of options granted to all optionees.
16
EMPLOYMENT AGREEMENTS AND COVENANTS
NOT TO COMPETE ___________________________________________
ResortQuest is a party to employment agreements with each of the Named
Executive Officers. The employment agreements, as amended, for Messrs. Levine,
Olin, Farmer, Murphy and Collins provide for annual base salaries of $325,000,
$275,000, $220,000, $220,000 and $190,000, respectively. Each of the agreements
for Messrs. Levine, Farmer and Murphy were for an initial term of three years.
Pursuant to amendments to each of their agreements, the initial term for their
employment agreements will expire on December 15, 2002 for Mr. Levine and
October 1, 2002 for Messrs. Farmer and Murphy. The initial term under the
employment agreements of Messrs. Olin and Collins, will expire on October 1,
2002. Unless terminated or not renewed by ResortQuest or the employee, the term
of each employment agreement will continue after the initial term on a
year-to-year basis on the same terms and conditions existing at the time of
renewal.
Each employment agreement for the Named Executive Officers contains a
covenant not to compete (the "Covenant") with ResortQuest for a period of two
years immediately following termination of employment. Under the Covenant, the
employee generally is prohibited from:
- - engaging in any hotel management or non-commercial property management, rental
or sales business in direct competition with ResortQuest within defined
geographic areas in which ResortQuest or its subsidiaries does business;
- - enticing a managerial employee of ResortQuest away from ResortQuest;
- - calling upon any person or entity which is, or has been, within one year prior
to the date of termination, a customer of ResortQuest; or
- - calling upon a prospective acquisition candidate, which the employee knew was
approached or analyzed by ResortQuest, for the purpose of acquiring the
entity.
The Covenant may be enforced by injunctions or restraining orders and shall
be construed in accordance with the changing location of ResortQuest.
Each of these employment agreements provides that, in the event of a
termination of employment by ResortQuest without cause during the term of the
agreement, the employee will be entitled to receive from ResortQuest an amount
equal to his or her then current salary for the remainder of the term of the
agreement or for one year, whichever is greater.
Each employment agreement for the Named Executive Officers provides that in
the event of a change in control of ResortQuest (as defined in the agreement)
during the term of the agreement, if the employee is not given at least five
days' notice of such change in control and the successor's intent to be bound by
such employment agreement, the employee may elect to terminate his or her
employment and receive:
- - in one lump sum three times the employee's annual base salary over the time
remaining under the agreement's term or for one year, whichever amount is
greater;
- - all compensation earned and benefits due through the termination date;
- - continued participation in all health and welfare plans at ResortQuest's
expense for the employee and eligible dependents for up to 36 months after the
termination date; and
- - outplacement services at ResortQuest's expense for up to one year.
If the employee's employment by ResortQuest is terminated within one year
after a change of control by the employee for good reason (as defined in the
employment agreement) or by ResortQuest without good cause, the employee will
receive the payments and benefits described immediately above, except the lump
sum payment will be equal to three times the employee's base salary. Mr. Levine
is entitled to receive these payments and benefits if
17
he elects to terminate his employment for any reason within one year after a
change of control.
If the employee's employment is terminated by ResortQuest without good cause
during the 180 days prior to the effective date of a change of control, the
employee will receive:
- - in one lump sum a payment equal to the employee's annual base salary in effect
at the time of employee's termination for whatever time period is remaining in
the term of the employment agreement at the time of the employee's
termination, less any amounts previously paid at the time of termination and
plus an amount equal to the employee's annual base salary;
- - continued participation in all health and welfare plans at ResortQuest's
expense for the employee and eligible dependents for up to36 months after the
termination date; and
- - outplacement services at ResortQuest's expense for up to one year.
The employment agreements also state, that in the event of a termination
without cause by ResortQuest or a change in control, the employee may elect to
waive the right to receive severance compensation and, in such event, the
Covenant will not apply.
In the event the employee gives notice to ResortQuest at least five days
prior to a change in control, the employee may elect to terminate his or her
employment agreement and receive in one lump sum two times the amount he or she
would receive pursuant to a termination without cause. In such an event, the
Covenant would apply for two years from the effective date of termination,
unless the employee elects to waive the right to receive severance compensation.
INDEMNIFICATION AGREEMENTS _______________________________
ResortQuest has entered into indemnification agreements with each of its
directors and executive officers. The indemnification agreements require, among
other things, that ResortQuest indemnify its directors and executive officers to
the fullest extent permitted by law, and advance to the directors and executive
officers all related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. ResortQuest must also
indemnify and advance all expenses incurred by directors and executive officers
seeking to enforce their rights under ResortQuest directors' and officers'
liability insurance. Although the form of indemnification agreement offers
substantially the same scope of coverage afforded by provisions in ResortQuest's
Articles of Incorporation and Bylaws, it provides greater assurance to directors
and executive officers that indemnification will be available, because, as a
contract, it cannot be modified unilaterally in the future by the Board of
Directors or by shareholders to eliminate the rights it provides.
INCENTIVE PLAN ___________________________________________
In March 1998, the Board of Directors and ResortQuest's shareholders
approved the 1998 Long-Term Incentive Plan, which was later amended and restated
effective May 13, 1999. The purpose of the Incentive Plan is to provide
officers, employees, directors who are also employees, consultants and
independent contractors of ResortQuest or any of its subsidiaries, with
additional incentives by increasing their ownership interests in ResortQuest.
Individual awards under the Incentive Plan may take the form of one or more of:
(i) either incentive stock options or non-qualified stock options; (ii) stock
appreciation rights; (iii) restricted or deferred stock; (iv) dividend
equivalents; and (v) other awards not otherwise provided for, the value of which
is based in whole or in part upon the value of ResortQuest Common Stock.
The number of shares available for use in connection with the Incentive Plan
may not exceed 15% of the aggregate number of shares of Common Stock outstanding
prior to the date of grant. As of March 21, 2001, 2,866,540 shares were reserved
for use in connection with the
18
Incentive Plan, of which 2,674,388 shares had been granted and were outstanding.
Shares of Common Stock which are attributable to awards, which have expired,
terminated or been canceled or forfeited, are available for issuance or use in
connection with future awards. All options have been granted with exercise
prices at least equal to the fair market value at the time of grant.
The Incentive Plan will remain in effect until terminated by the Board of
Directors. The Incentive Plan may be amended by the Board of Directors without
the consent of ResortQuest's shareholders, except that any amendment, although
effective when made, will be subject to shareholder approval if required by any
Federal or state law or regulation or by the rules of any stock exchange or
automated quotation system on which the Common Stock may then be listed or
quoted.
SAVINGS AND RETIREMENT PLAN ______________________________
ResortQuest established the Savings and Retirement Plan, a 401 (k) Plan,
effective April 1, 1999. Similar plans existing at certain of our operating
subsidiaries (each, an "Operating Company") have either been suspended or rolled
into the Savings and Retirement Plan. All employees of ResortQuest, meeting
certain minimum eligibility requirements, are eligible to participate in the
Savings and Retirement Plan. The Savings and Retirement Plan provides that each
participant may contribute up to 20% of his or her pre-tax gross compensation
(but not greater than a statutorily prescribed annual limit). The percentage
elected by certain highly compensated participants may be required to be lower.
The Savings and Retirement Plan permits, but does not require, additional
contributions to the Savings and Retirement Plan by ResortQuest. All amounts
contributed by employee participants in conformance with the Savings and
Retirement Plan requirements and earnings on such contributions are fully vested
at all times. For the year ended December 31, 2000, ResortQuest made an
aggregate matching contribution to the Savings and Retirement Plan of
$1,191,894, based on a match of 50% of employee contributions, up to a maximum
of 6% of compensation. The Board of Directors will determine on an annual basis
whether a matching contribution will be made and, if so, at what level of
contribution.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS _________________________________
LEASES OF FACILITIES _____________________________________
ABBOTT RESORTS. Abbott Resorts, one of our Operating Companies, leases
9,350 square feet of office space in Destin, Florida for the main office for its
property management and real estate brokerage activities from SAVA Properties, a
Florida general partnership which is 25.5% owned by William Abbott, Jr. The
lease expires September 29, 2018. The aggregate annual rent paid by Abbott
Resorts is $118,932. Abbott Resorts leases approximately 3,700 square feet of
indoor and outdoor space in Santa Rosa Beach, Florida for its rental property
management and real estate sales activities in the Santa Rosa and Grayton Beach,
Florida areas from VAGAS Properties, a Florida general partnership which is 20%
owned by William Abbott, Jr. The lease expires September 29, 2018. The aggregate
annual rent payment is approximately $50,000.
Abbott Resorts leases 1,665 square feet of office space in Fort Walton
Beach, Florida for real estate sales activities. This property is leased on a
month-to-month basis from A&A Properties ("AAP"), a sub S corporation which is
50% owned by William Abbott, Jr. The monthly rent paid by Abbott Resorts is
$1,802. As part of such lease, Abbott Resorts also leases a two-bedroom
apartment at such site, which is subleased to unaffiliated third parties. Abbott
Resorts also leases 2,000 square feet of office space in Destin, Florida from
AAP for use as its personnel office. The lease agreement expires
19
August 31, 2001 and provides for aggregate annual rent of $23,320.
ASTON HOTELS & RESORTS. Approximately 950 square feet of office space,
which is part of a space leased by Aston Hotels & Resorts, an Operating Company,
is used by a former stockholder and the previous corporate secretary of Aston
Hotels & Resorts. Previously, Andre S. Tatibouet, President of Aston Hotels &
Resorts and a former member of ResortQuest's Board and beneficial owner of
greater than five percent of our Common Stock, had agreed to assume
responsibility on behalf of the former stockholder for the approximately $36,000
annual rent allocable for this space. In July 2000, the former stockholder
agreed to assume responsibility for payment of the monthly rent directly to
Aston Hotels & Resorts.
Aston Hotels & Resorts leases on a month-to-month basis approximately 618
square feet of office space in a hotel owned by Mr. Tatibouet. The monthly lease
amount is $754.
AST Development, Inc. ("AST Development"), an entity controlled by
Mr. Tatibouet, utilized in 2000 approximately 125 square feet of office space
leased by Aston Hotels & Resorts. AST Development was charged approximately
$6,100 for use of this space in 2000.
COASTAL RESORTS. Coastal Resorts Realty and Coastal Resorts Management,
both Operating Companies, lease office space and facilities under three separate
lease agreements from Carl M. Freeman Associates, Inc. ("CMFA"). Joshua M.
Freeman is the Chairman and majority shareholder of CMFA. The rent paid to CMFA
under these leases was $183,829 in 2000.
MANAGEMENT AGREEMENTS ____________________________________
ABBOTT RESORTS. Abbott Resorts manages vacation condominiums owned or
co-owned by Mr. Abbott pursuant to Abbott Resorts' standard management
agreement. Abbott Resorts received aggregate property management fees related to
these properties of approximately $667,678 in 2000.
ASTON HOTELS & RESORTS. Aston Hotels & Resorts manages two hotels owned by
Mr. Tatibouet. The aggregate management and other fees charged by Aston
Hotels & Resorts for the management of these properties was $768,900 in 2000.
The management agreements for these hotels terminate on December 31, 2003. In
addition, prior to our acquisition of Aston Hotels & Resorts, Aston Hotels &
Resorts was a party to a lease and management agreement for a hotel dated
February 21, 1991. Aston Hotels & Resorts transferred this lease and management
agreement to AST Holdings, Inc. ("AST Holdings") and simultaneously entered into
a management agreement with AST Holdings to manage the property. AST Holdings is
owned by Mr. Tatibouet. The lease for this hotel terminated on December 31,
2000. Negotiations are underway for Aston Hotels & Resorts to continue managing
the hotel for the hotel's owner under a management agreement that does not
involve AST Holdings. The aggregate management and other fees charged by Aston
Hotels & Resorts during 2000 for the management of this property was $338,648.
20
OTHER TRANSACTIONS _______________________________________
ABBOTT RESORTS. ResortQuest and Mr. Abbott entered into an agreement with
respect to the payment of commissions on certain properties which were listed
for sale or whose sale was pending as of the date of ResortQuest's acquisition
of Abbott Resorts. Pursuant to such agreement, ResortQuest has agreed to pay
upon closing of the applicable transaction to which the applicable listing
and/or selling fee relates in the aggregate, up to $1,403,827 in listing and/or
selling commissions on such properties. ResortQuest paid Mr. Abbott
approximately $68,162 in commissions in 2000.
In connection with the acquisition of Abbott Resorts, Mr. Abbott entered
into a three-year consulting agreement with ResortQuest. For all services
rendered by Mr. Abbott pursuant to the consulting agreement, ResortQuest has
agreed to compensate Mr. Abbott as follows:
- - to pay a consulting fee of $125,000 per year;
- - to pay premiums for coverage for Mr. Abbott and his immediate family under
such health, hospitalization, disability, dental, life and other insurance
plans that ResortQuest may have in effect from time to time;
- - to reimburse Mr. Abbott for all business travel and other out-of-pocket
expenses reasonably incurred by him in the performance of his duties; and
- - to pay for a full membership in the Tops'l Beach and Racquet Club (the current
cost for which is $1,200 per year).
The consulting agreement expires on September 29, 2001. The consulting agreement
is terminable by ResortQuest or Mr. Abbott, with cause on ten (10) days written
notice and or without cause on thirty (30) days written notice.
ASTON HOTELS & RESORTS. Since July 22, 1997, Aston Hotels & Resorts has
provided consulting and administrative services to AST International, LLC ("AST
International") and its subsidiaries, entities controlled by Mr. Tatibouet. AST
International and its subsidiaries have been billed $41,776 by Aston Hotels &
Resorts for its services in 2000. Aston Hotels & Resorts also charged Aston
International, AST Development and Mr. Tatibouet $23,530, $6,428 and $20,015,
respectively, for expenditures on their behalf in 2000.
At December 31, 1999, Mr. Tatibouet owed Aston Hotels & Resorts, either
directly or through entities controlled by him (including properties managed by
Aston Hotels & Resorts), an aggregate amount of approximately $4.9 million. Of
this amount, $4.0 million represented cash advances made prior to our
acquisition of Aston Hotel & Resorts that were formalized in a promissory note
(the "Original Note") executed at the time of the acquisition. Interest was
payable semi-annually under the Original Note at the prime rate less 0.5%, with
a minimum of 6% and maximum of 10% with principal to be paid on May 25, 2008.
The remaining balance included interest charges and certain fees and
reimbursements payable under the management agreements described above.
On February 16, 2000, ResortQuest agreed with Mr. Tatibouet to the formation
of two separate notes (the "New Notes") and a new security agreement to provide
additional collateral. One note for $4 million (the "A Note") replaced the
Original Note. A second note in the amount of $1,080,428 (the "B Note")
represented interest due on the A Note and advances to and unpaid fees earned
from entities managed for or related to Mr. Tatibouet and was executed
February 16, 2000. Both the A Note and the B Note are fully collateralized by
certain real estate held by Mr. Tatibouet.
The New Notes bear interest at prime rate, less 0.5%, with a minimum of 6%
and a maximum of 10%. The B Note, plus accrued interest, is due and payable in
two equal installments on December 31, 2000 and July 31, 2001. Payments under
the A Note are interest only, due and payable every January and July 1st. The A
Note is due and payable on May 25, 2008. At December 31, 2000, Mr. Tatibouet
owed Aston Hotels & Resorts approximately $5.1 million plus accrued interest.
This amount included the New Notes and certain fees and
21
disbursements payable under the management agreements discussed above. On
January 2, 2001, Mr. Tatibouet made payment of the accrued interest on the New
Notes through December 31, 2000. On January 19, 2001, Mr. Tatibouet made payment
of the principal due at December 31, 2000 under the "B Note."
Aston Hotels & Resorts has entered into a 20-year royalty free license
agreement with AST Brands, LLC, an entity primarily owned by Mr. Tatibouet, for
use of the name, Aston Hotels & Resorts as well as other service marks,
tradenames, trademarks and logos. At December 31, 2000, approximately seventeen
years remained on the license agreement.
On May 26, 2000, Aston Hotels & Resorts instituted legal proceedings in the
Circuit Court for the First Circuit of Hawaii against Mr. Tatibouet. This action
arises out of a document styled "Cooperation Agreement" that was signed by
Mr. Tatibouet, purporting to act on behalf of Aston Hotels & Resorts, on the one
hand, with Cendant Global Services B.V. and Aston Hotels & Resorts
International, Inc., an independent entity not affiliated with ResortQuest or
Aston Hotels & Resorts, on the other hand. The Cooperation Agreement contains
several provisions that are detrimental to Aston Hotels & Resorts, including
provisions purporting to transfer certain intellectual property and limit
certain intellectual property rights held by Aston Hotels & Resorts. Aston
Hotels & Resorts seeks monetary damages for breach of fiduciary duty, fraud and
negligent misrepresentation. By order of the Circuit Court, the claims asserted
by Aston Hotels & Resorts in the lawsuit have been consolidated with an
arbitration demand, filed with the American Arbitration Association by
Mr. Tatibouet, in which he alleges various breaches of his employment agreement
with Aston Hotels & Resorts.
Also on May 26, 2000, ResortQuest and Aston Hotels & Resorts brought action
in the Circuit Court for the First Circuit of Hawaii against Cendant
Corporation, Aston Hotels & Resorts International, Inc. and Cendant Global
Services B.V. ("Defendants"). It is the position of ResortQuest and Aston
Hotels & Resorts that the Cooperation Agreement is voidable because (i) it was
entered in breach of a prior agreement between ResortQuest and the parent
company of Cendant Global Services B.V. and Aston Hotels & Resorts
International, Inc., Cendant Corporation, and (ii) it was entered into by an
interested director and officer of Aston Hotels & Resorts who was engaging in
self-dealing. Accordingly, ResortQuest and Aston Hotels & Resorts seek damages
for breach of contract against Cendant, and the equitable remedies of rescission
and replevin.
COASTAL RESORTS. Pursuant to an exclusive listing agreement with Sea Colony
Development Corporation, a wholly-owned subsidiary of CMFA, dated January 1,
1997, Coastal Resorts Realty received a real estate sales commission of 6.5% of
the full purchase price of each new home sold at the Sea Colony condominium
community in Bethany Beach, Delaware. Under the agreement, Coastal Resorts
Realty was also required to develop a marketing plan, at its own expense, to
promote home sales in the Sea Colony community. This agreement terminated on
September 30, 2000. Mr. Freeman is the president and sole stockholder of Sea
Colony Development.
Pursuant to an exclusive listing agreement with Bear Trap Farms ("BTF")
dated March 1, 2000, Coastal Resorts Realty receives real estate sales
commissions of 6.0% of the full purchase price of each new home sold at the
Village of Bear Trap Dunes golf resort community in Ocean View, Delaware. Under
the agreement, Coastal Resorts Realty also was required to develop a marketing
plan, at its own expense, to promote home sales in the BTF community. This
agreement terminates on May 26, 2001. Mr. Freeman is president and sole
stockholder of BTF.
Sea Colony Development and BTF paid Coastal Resorts Realty an aggregate of
$1,511,405 under their agreements in 2000.
Coastal Resorts Management has a management agreement with CMF
Fitness, Inc., dated June 1, 1996, to manage the Sea Colony Fitness Center for
$5,833 a month. CMF Fitness is a wholly owned subsidiary of CMFA. CMF Fitness
paid Coastal Resorts Management
22
$69,996 in 2000, under the agreement. The agreement terminates on the earlier of
(i) December 31 of the year in which the last new home in the Sea Colony
development is sold or (ii) December 31, 2005.
Pursuant to an agreement with Sea Colony Water Company, L.L.C., dated
January 1, 1997, Coastal Resorts Management was appointed exclusive agent for
and manager of the Sea Colony Water Plant. Sea Colony Water is a wholly owned
subsidiary of CMFA. Under the terms of the agreement, Coastal Resorts Management
is entitled to retain all revenue collected by the water plant, less costs and
expenses and certain payments to Sea Colony Water. Coastal Resorts Management
received net revenues of $244,540 in 2000 from its management of the water
plant. This agreement terminates on December 31, 2001 or upon the sale of the
water plant.
CMFA appointed Coastal Resorts Management as its sole and exclusive agent
for the management of a commercial propery known as The Sea Colony Marketplace
in Bethany Beach, Delaware. Both agreements were terminated as of May 2000. Both
agreements provided for payment to Coastal Resorts Management of a management
fee equal to 5% of gross receipts from the operation of the respective
properties. Amounts paid by CMFA to Coastal Resorts Management under these
agreements in 2000 equaled $10,496.
Pursuant to an agreement dated January 1, 1998, CMFA appointed Coastal
Resorts Management as its exclusive agent for the management of a private
thoroughfare running through the Sea Colony West condominium complex. Payments
to Coastal Resorts Management equal 20% of total budget expenditures for
management of the road under a budget prepared by Coastal Resorts Management and
approved by CMFA. CMFA paid Coastal Resorts Management $11,148 under the
agreement in 2000. This agreement expired in December 2000, but has been
extended through December 31, 2001.
Pursuant to an agreement, dated as of January 1, 1998, between CMFA and
Coastal Resorts Management, CMFA appointed Coastal Resorts Management as CMFA's
exclusive agent, for the period from January 1, 1998 to December 31, 2000, for
the collection of ground rents owed to CMFA by condominium unit homeowners in
the Sea Colony condominium development in Bethany Beach, Delaware. The agreement
provides for CMFA to pay Coastal Resorts Management an administration fee equal
to 3% of net ground rents collected under the agreement. In 2000, CMFA paid
Coastal Resorts Management $31,941 under this agreement. In December 2000, this
agreement was extended until December 31, 2001, with the terms and conditions
under the original agreement applying.
RESORTQUEST. ResortQuest and David Sullivan, a director and former Chairman
and Chief Executive Officer, entered into a Consulting Agreement in May 2000,
for a term of approximately 26 months. Under the agreement, ResortQuest pays
consulting fees of $12,500 per month.
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ITEM 2 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
- ----------------------------------------------------------------------------
The Board of Directors appointed Arthur Andersen LLP as independent public
accountants to audit and report on ResortQuest's consolidated financial
statements for the 2001 fiscal year and recommends that the shareholders ratify
the appointment. Arthur Andersen has served as our independent public
accountants since ResortQuest was formed in September 1997. If the shareholders
do not ratify the appointment of Arthur Andersen, the Audit Committee and the
Board of Directors will consider the appointment of other independent public
accountants. One or more representatives of Arthur Andersen will be present at
the Annual Meeting. They will have the opportunity to respond to appropriate
questions and to make a statement if they wish to do so.
----------------------------------------------------------------------------
ITEM 3 -- OTHER MATTERS
- ----------------------------------------------------------------------------
The Board of Directors is not aware of any other matter to be presented for
action at the Annual Meeting. If any other matter requiring a vote of the
shareholders should arise, the proxies (or their substitutes) will vote in
accordance with their best judgment.
24
APPENDIX A
RESORTQUEST INTERNATIONAL, INCORPORATED
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD DIRECTORS
AS ADOPTED BY BOARD OF DIRECTORS
ON MAY 11, 2000
I. PURPOSES AND RESPONSIBILITIES
A. The Audit Committee has been created to implement and to support the
oversight function of the Board or Directors (the "Board") to ensure
quality financial reporting, accounting policies, internal controls and
independent and objective outside auditors.
B. The Audit Committee has responsibility to:
1. oversee and ensure the integrity of the audit process, financial
reporting and internal accounting controls of the Company;
2. oversee the work of the Company's financial management
("Management"), internal audit process (the "Internal Auditors") and
independent audit process (the "Outside Auditors") in these areas;
3. ensure that Management properly develops and adheres to a sound
system of internal accounting and financial controls and that the
Internal Auditors and the Outside Auditors objectively assess the
Company's financial reporting, accounting practices and internal
controls; and
4. provide an open avenue of communication between the Outside Auditors,
the Internal Auditors and the Board.
C. The Audit Committee will adopt policies and procedures for carrying out
its responsibilities. Such policies and procedures should be flexible so
the Audit Committee may react to changing conditions and ensure that the
Company's internal controls and accounting and financial reporting
practices meet all legal requirements and are of the highest quality.
II. MEMBERSHIP OF THE COMMITTEE
A. The Audit Committee will consist of three or more directors as determined
annually by the Board and appointed in accordance with the Company's
bylaws.
B. Each member of the Audit Committee must:
1. not have a relationship with the Company that would interfere with
the exercise of his or her independence from Management and the
Company;
2. be financially literate, as that qualification is interpreted by the
Board in its business judgment from time to time, or must become
financially literate within a reasonable period of time after his or
her appointment to the Audit Committee;
3. not be or have been during the three years preceding his or her
appointment to the Audit Committee an employee or non-employee
executive officer of the Company or any of its Affiliates (as defined
in the paragraph 303.02 of the New York Stock Exchange, Inc.'s NYSE
Listed Company Manual [the "NYSE Definitions"]);
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4. not be or have been during the three years preceding his or her
appointment to the Audit Committee a partner, controlling shareholder
or executive officer of an organization that has a material business
relationship with the Company unless the Board determines in its
business judgment that the business relationship does not interfere
with the Director's exercise of independent judgment;
5. not have or have had within the three years preceding his or her
election to the Audit Committee a direct business relationship with
the Company unless the Board determines in its business judgment that
the relationship does not interfere with the Director's exercise of
independent judgment;
6. not be employed as an executive of another corporation for which any
of the Company's executive officers serve as a member of the other
corporation's compensation committee; and
7. not be an Immediate Family (as defined in the NYSE Definitions)
member of an individual who is or had been during the three years
preceding his or her appointment to the Audit Committee an executive
officer of the Company or its Affiliates.
C. At least one member of the Audit Committee must have accounting or
related financial management expertise, as the Board interprets such
qualification in its business judgment from time to time.
D. The Board will determine a director's eligibility to serve on the Audit
Committee. The Board may elect one director to the Audit Committee who is
no longer an employee or non-employee executive of the Company or any of
its Affiliates or an Immediate Family member of an executive officer of
the Company or any of its Affiliates, but who has been so with the three
years prior to the date of his or her appointment to the Audit Committee,
under exceptional and limited circumstances if the Board determines in
its business judgment that such director's membership on the Audit
Committee is required by the best interests of the Company and its
shareholders and the nature of the relationship and reasons for the
determination are disclosed in the Company's next annual proxy statement.
III. MEETINGS OF THE AUDIT COMMITTEE
A. The Audit Committee will meet as often as it deems appropriate to
discharge its responsibilities, but shall meet at least two times each
year. The Audit Committee may ask members of Management, the Outside
Auditors, the Internal Auditors or others to attend any of its meetings
and to provide any information it may deem appropriate. Meetings may be
telephonic.
B. To the extent it deems necessary in its business judgment, the Audit
Committee will meet with Management, the Outside Auditors and the
Internal Auditors, either with all or one or more of such group being
present at any meeting, to discuss matters for which the Audit Committee
has responsibility.
IV. SPECIFIC RESPONSIBILITIES OF THE AUDIT COMMITTEE
A. SELECTION AND OVERSIGHT OF THE OUTSIDE AUDITORS
1. The Outside Auditors are ultimately accountable to the Board and the
Audit Committee. The Board and Audit Committee shall select and,
where appropriate, replace the Outside Auditors.
A-2
2. The Audit Committee will approve the terms of the engagement and
compensation of the Outside Auditors.
3. The Audit Committee will, as it deems necessary in its business
judgment, evaluate the Outside Auditors and their impact on the
accounting practices, internal controls and financial reporting of
the Company.
4. The Audit Committee shall be responsible for ensuring that the
Outside Auditors submit to it on a periodic basis a formal written
statement delineating all relationships between the Outside Auditors
and the Company, including the disclosures regarding the Outside
Auditors' independence required by the Independence Board Standard
No. 1, as in effect from time to time.
5. The Audit Committee shall be responsible for actively engaging in a
dialogue with the Outside Auditors with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the Outside Auditors and for recommending that the
Board take appropriate action in response to the Outside Auditors'
report to satisfy itself of the Outside Auditors' independence.
B. APPOINTMENT AND OVERSIGHT OF INTERNAL AUDITORS.
1. The Audit Committee will periodically evaluate the internal audit
process and proposed changes, as it deems necessary in its business
judgement.
2. The Audit Committee will, as it deems necessary in its business
judgment, evaluate the Internal Auditors and their impact on the
accounting practices, internal controls and financial reporting of
the Company.
C. OVERSIGHT END REVIEW OF ACCOUNTING PRINCIPLES AND PRACTICES AND INTERNAL
CONTROLS.
The Audit Committee will, as it deems necessary in its business judgment,
exercise oversight of, and review and discuss with Management, the
Outside Auditors and the internal Auditors:
1. the quality, appropriateness and acceptability of the Company's
accounting principles used in its financial reporting, the clarity of
the financial disclosures made, changes in the Company's accounting
principles or practices, the application of particular accounting
principles and disclosure practices by Management to new transactions
or events;
2. potential major changes in accepted accounting principles generally
accepted in the United States and the effect of those changes on the
Company's financial statements;
3. changes in accounting principles and financial reporting policies
proposed to be implemented by the Company;
4. significant litigation, contingencies and claims against the Company
and material accounting issues that require disclosure in the
Company's financial statements;
5. information regarding any "second" opinions sought by management from
an independent auditor with respect to the accounting treatment of a
particular event or transaction;
6. Management's compliance with the Company's processes, procedures and
internal controls;
7. the adequacy and effectiveness of the Company's internal accounting
and financial controls and the recommendations of Management, the
Outside Auditors and Internal Auditors for the improvement of
accounting practices and internal controls; and
8. disagreements between Management and the Outside Auditors or the
Internal Auditors regarding the application of any accounting
principles or any other matter.
A-3
D. OVERSIGHT AND MONITORING OF THE COMPANY'S FINANCIAL STATEMENTS AND
AUDITS.
The Audit Committee will, as it deems necessary in its business judgment:
1. review with the Outside Auditors, the Internal Auditors and
Management the audit function generally, the scope of proposed audits
of the Company's financial statements and the audit procedures to be
used in those audits;
2. review the audit efforts with the Outside Auditors, the Internal
Auditors and Management to ensure effective use of audit resources;
3. review information regarding internal audits;
4. review with the Outside Auditors and Management each set of audited
financial statements and the notes to those financial statements and,
with respect to the Company's audited financial statements for the
preceding fiscal year, to recommend whether those audited financial
statements should be included in the Company's annual report on
Form 10-K relating to that fiscal year; and
5. discuss with the Outside Auditors any serious difficulties or
disputes with Management encountered during the course of the audit,
including any adjustments to the financial statements recommended by
the Outside Auditors and rejected by Management.
E. COMMUNICATIONS WITH THE OUTSIDE AUDITORS.
The Audit Committee will, as it deems necessary in its business judgment,
communicate with the Outside Auditors:
1. to obtain information concerning accounting principles adopted by the
Company, internal controls of the Company, Management, the Company's
financial, accounting and internal auditing personnel and the impact
of each on the quality and reliability of the Company's financial
reporting;
2. obtain the information required to be disclosed to the Company by
generally accepted auditing standards in connection with the conduct
of an audit, including topics covered by SAS 54, 60, 61 and 82;
3. require the Outside Auditors to review the financial information
included in the Company's Quarterly Reports on Form 10-Q in
accordance with Rule 10-01(d) of Regulation S-X of the Securities and
Exchange Commission (the "Commission") prior to the Company filing
such reports with the Commission and to provide to the Company for
inclusion in the Company's Quarterly Reports on Form 10-Q any reports
of the Outside Auditors required by Rule 10-01(d); and
4. Any significant or unusual activity impacting the quarterly or annual
financial statements before those financials are filed with the SEC.
F. COMMUNICATIONS WITH THE INTERNAL AUDITORS.
The Audit Committee will, as it deems necessary in its business judgment,
communicate with the Internal Auditors to obtain information concerning
accounting principles adopted by the Company, internal controls of the
Company, Management, the Company's financial and accounting personnel and
the impact of each on the quality and reliability of the Company's
financial statements.
G. COMMUNICATIONS WITH MANAGEMENT.
The Audit Committee will, as it deems necessary in its business judgment,
communicate with Management to obtain information concerning accounting
principles adopted by the Company,
A-4
internal controls of the Company, the Outside Auditors, the Company's
financial, accounting and internal auditing personnel and the impact of
each on the quality and reliability of the Company's financial
statements.
H. AUDIT COMMITTEE REPORTS.
1. The Audit Committee will prepare annually a report for inclusion in
the Company's proxy statement relating to its annual shareholders
meeting. In that report, the Audit Committee will state whether it
has: (a) reviewed and discussed the audited financial statements with
Management; (b) discussed with the Outside Auditors the matters
required to be discussed by Statement on Auditing Standards No. 61,
as that statement may be modified or supplemented from time to time;
(c) received from the Outside Auditors the written disclosures and
the letter required by Independence Standard Board Standard No. 1, as
that standard may be modified or supplemented from time to time, and
has discussed with the Outside Auditors, the Outside Auditors'
independence; and (d) based on the review and discussions referred to
in clauses (a), (b) and (c) above, recommended to the Board that the
audited financial statements be included in the Company's annual
report on Form 10-K for the last fiscal year for filing with the
Commission.
2. To the extent such information is not included in the annual report
of the Audit Committee to be included in the Company's proxy
statement relating to its annual shareholders meeting, the Audit
Committee will also report at least annually to the Board on
significant results of its activities and compliance with this
Charter.
I. ADDITIONAL RESPONSIBILITIES.
The Audit Committee will:
1. As it deems necessary in its business judgment, conduct or authorize
investigations into any matters within the Audit Committee's scope of
responsibilities. The Audit Committee shall be empowered to retain
independent counsel and other professionals to assist in the conduct
of any investigation.
2. Review annually with the full Board of Directors the adequacy of the
Audit Committee Charters.
A-5
RESORTQUEST INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David L. Levine, James S. Olin and J.
Mitchell Collins, or any of them individually and each of them with full
power of substitution to represent them and to vote as designated on the
reverse side all of the shares of Common Stock of ResortQuest International,
Inc., which the undersigned is entitled to vote, at the Annual Meeting of
Stockholders to be held on Thursday, May 10, 2001 at the Peabody Hotel, 149
Union Avenue, Memphis, TN 38103, and at any postponements or adjournments
thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
RESORTQUEST INTERNATIONAL, INC.
MAY 10, 2001
Please Detach and Mail in the Envelope Provided
Please mark your
A /X/ votes as in this
example.
FOR ALL WITHHOLD
NOMINEES AUTHORITY
LISTED AT TO VOTE FOR
RIGHT (except THE NOMINEES
as marked to LISTED AT FOR AGAINST ABSTAIN
the contrary) RIGHT NOMINEES: 2. APPOINTMENT OF
William W. Abbott, Jr. ACCOUNTANTS / / / / / /
Elan J. Blutinger Approval of the
David L. Levine appointment of
1. ELECTION / / / / Collin V. Reed Arthur Andersen LLP
OF David C. Sullivan as the Company's independent
DIRECTORS Joseph V. Vittoria public accountants for the
Theodore L. Weise 2001 fiscal year.
(INSTRUCTIONS: To withhold authority to
vote for any individual nominee, strike 3. VOTE ON OTHER MATTERS In their
a line through the nominee's name listed discretion, the Proxies are
at right.) authorized to vote upon matters not
known to the Board of Directors as
of the date of the accompanying proxy
statement.
UNLESS OTHERWISE SPECIFIED IN THE
SQUARES PROVIDED, THE PROXIES SHALL
VOTE FOR THE ELECTION OF THE NOMINEES
LISTED ABOVE AND FOR THE APPROVAL OF
THE APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS.
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
_____________________________________________ ___________________________________________ Date: ______________________, 2001
Signature Signature, If Held Jointly
NOTE: Signatures should be identical with the name typed on the Proxy. Joint owners should each sign personally. Persons signing
as attorney, executor, administrator, trustee or guardian should give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If partnership, please sign in partnership name by authorized person.