UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
UPTOWNER INNS, 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)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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UPTOWNER INNS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 21, 2002
The Annual Meeting of Shareholders of UpTowner Inns, Inc. (the
"company") will be held on Thursday, November 21, 2002, at the Holiday Inn Hotel
& Suites, 800 3rd Avenue, Huntington, West Virginia, at 10:00 a.m., local time,
for the following purposes:
1. To elect four directors to serve until the next Annual Meeting
of Shareholders;
2. To ratify the board of directors' selection of Sullivan, Ware
& Hall, PLLC, as the company's independent auditors for the
June 30, 2003, fiscal year; and
3. To transact such other business as may properly come before
the meeting or any adjournments thereof.
Shareholders who are holders of record on October 30, 2002, may vote at
the meeting.
By Order of the Board of Directors,
Carl E. Midkiff
President, Chief Executive Officer
and Chairman of the Board
Huntington, West Virginia
October 30, 2002
PLEASE VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED,
SELF-ADDRESSED ENVELOPE AS PROMPTLY AS POSSIBLE, EVEN IF YOU PLAN TO ATTEND THE
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, EVEN
THOUGH YOU HAVE PREVIOUSLY SIGNED AND RETURNED YOUR PROXY. YOU MAY REVOKE YOUR
PROXY BEFORE IT IS VOTED AT THE MEETING.
TABLE OF CONTENTS
PAGE NO.
--------
VOTING PROCEDURES AND REVOKING YOUR PROXY................................1
VOTING FOR DIRECTORS.................................................2
VOTING FOR RATIFICATION OF AUDITORS..................................2
REVOKING YOUR PROXY..................................................2
* ELECTION OF DIRECTORS (ITEM 1 ON PROXY CARD).............................2
MEMBERS OF THE BOARD OF DIRECTORS AND
MANAGEMENT NOMINEES TO THE COMPANY'S BOARD...........................3
OTHER NOMINEES.......................................................4
MANAGEMENT...............................................................4
BOARD INFORMATION....................................................4
Number of Meetings...............................................4
Board Committees.................................................5
Board Compensation...............................................6
Certain Relationships and Related Transactions...................6
Board of Directors Report on Executive Compensation..............7
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..............7
EXECUTIVE COMPENSATION AND OTHER INFORMATION.........................7
Summary of Compensation..........................................7
Security Ownership of Certain Beneficial Owners and Management...8
* RATIFICATION OF AUDITORS (ITEM 2 ON PROXY CARD)..........................9
ANNUAL REPORT ON FORM 10-K...............................................10
OTHER INFORMATION........................................................10
SHAREHOLDER PROPOSALS FOR FISCAL 2004....................................11
* MATTERS TO BE VOTED UPON.
ii
UPTOWNER INNS, INC.
741 5TH AVENUE
HUNTINGTON, WEST VIRGINIA 25701
(304) 525-8162
PROXY STATEMENT
UpTowner Inns, Inc.'s board of directors is soliciting proxies to vote
the company's shares at the Annual Meeting of Shareholders. Shareholders will
meet at 10:00 a.m., on Thursday, November 21, 2002, for the purposes stated in
the accompanying Notice of Annual Meeting. On or about November 8, 2002, the
company began mailing this proxy statement to shareholders of record as of
October 31, 2002. Shareholders as of October 31, 2002, may vote at the meeting.
Please read this proxy statement carefully. You will find more
information about the company in the company's Form 10-K on file with the
Securities and Exchange Commission and available on the Commission's website at
www.sec.gov.
The company will pay for the cost of preparing, assembling, printing
and mailing of the proxy material and for the board of directors' solicitation
of proxies, and employees of the company may follow up on this written
solicitation by telephone or other methods of communication. Directors, officers
and employees of the company may solicit proxies personally, by telephone and
telecopier. We will arrange with custodians, nominees and fiduciaries to forward
proxy material to the beneficial owners of stock and upon request, the company
will reimburse them for reasonable forwarding expenses.
As of June 30, 2002, the company had 100,000,000 authorized shares of
common stock with 1,568,011 shares issued and outstanding.
VOTING PROCEDURES AND REVOKING YOUR PROXY
If you complete, sign and return the enclosed proxy card, the persons
named in the proxy card will vote your shares as you direct. If you sign and
return the proxy card without indicating how you want to vote, the proxies will
vote your shares "FOR" the election of the four nominees as directors and "FOR"
the ratification of the selection Sullivan, Ware & Hall, PLLC, as independent
auditors. A quorum for the meeting is present if at least a majority of the
outstanding shares is present in person or by proxy. Votes withheld and
abstentions will count in determining the presence of a quorum for the
particular matter. Those who fail to return a proxy or attend the meeting will
not count towards determining a quorum.
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VOTING FOR DIRECTORS
Directors are elected by a plurality of the shares voted. You may vote
each share you own for each nominee. Votes withheld from a nominee and broker
non-votes will not be cast for a nominee. Alternatively, you may choose to vote
cumulatively, a process explained below. Cumulative voting is applicable only to
the election of directors.
To vote cumulatively, you multiply the number of shares you own times
the number of nominees, resulting in a cumulative total. You may vote your
cumulative total for one nominee or divide it among all four nominees in any
proportion you choose. The following is an example of how cumulative voting
works. If you own five shares and there are four nominees for director, you have
a cumulative total of 20 votes. You may choose to vote all 20 votes for one
nominee and not vote for the other nominees. Or, you may allocate five votes for
each nominee. Or, you may choose any other allocation of your cumulative total
over all or part of the four nominees. If you vote your shares cumulatively by
proxy, you must indicate how you wish to divide your cumulative total.
Otherwise, the proxies will vote the cumulative total evenly or in a manner to
elect as many of the company's nominees as possible.
VOTING FOR RATIFICATION OF AUDITORS
A favorable vote by a majority of shareholders of the company common
stock represented at the Annual Meeting is required to ratify the selection of
Sullivan, Ware & Hall, PLLC, as independent auditors for the fiscal year to end
June 30, 2003.
REVOKING YOUR PROXY
You may revoke your proxy before it is voted at the Annual Meeting by:
- notifying the company in person;
- giving written notice to the company;
- submitting to the company a subsequently dated proxy; or
- attending the meeting and withdrawing the proxy before it is
voted.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The company's bylaws provide that the board of directors can set the
number of directors. By an Agreement in Lieu of Meeting, dated October 30, 2002,
the company's board of directors amended the company's bylaws to change the
range of the number of directors to serve on the board of directors. The
previous range was from a minimum of five directors to a maximum of eleven
directors. The amendment to the bylaws changes this range to a minimum of four
directors to a maximum of eleven directors due to the resignation of Violet
Midkiff, due to health concerns. The board of directors has set the number of
directors to serve during the fiscal year to end June 30, 2003 at four, which
means that four directors will be elected at the Annual Meeting and will serve a
term expiring at the next Annual Meeting or until a successor is selected.
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MEMBERS OF THE BOARD OF DIRECTORS AND MANAGEMENT NOMINEES TO THE COMPANY'S BOARD
TERM PRINCIPAL OCCUPATION
NAME AGE POSITION WITH THE COMPANY EXPIRES FOR PAST FIVE YEARS
---- --- ------------------------- ------- -------------------
* Hobart A. Adkins 47 Director Since 2001 Secretary 2003 Owner of Quality Exhaust,
of the Board Inc.; President, 31st Street
Enterprises, Inc. (Business
includes auto repair and
exhaust repair)
* Richard Monga 38 Director Since 2001 2003 General Manager of UpTowner
Inns, Inc. (1997-present);
Prior Experience: General
Manager, separate Holiday Inn
property
* Carl E. Midkiff 52 Director Since 1997 2003 President, CEO and Chairman
President, CEO, Chairman of of the Board of UpTowner
the Board Inns, Inc.; Owner and Manager
of Hazmat Environmental
Contractors, Inc.
(1995-2001);
Owner and Manager of Prestige
Properties, Inc.
(2000-present) (Owns and
manages residential rental
properties)
* Charles D. Robinson 48 Director Since 2001; 2003 Insurance Agent and
Treasurer of the Board Vice President of
Insurance Systems, Inc.
* Management Nominee
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OTHER NOMINEES
Any nominations for election to the board of directors, other than
those made by the company, must be made by a shareholder. The nomination must be
in writing and delivered or mailed to the company not less than 10 days nor more
than 60 days prior to the meeting.
A shareholder nomination should include the:
- name and address of the proposed nominee(s);
- principal occupation of proposed nominee(s);
- total shares to be voted for each proposed nominee;
- name and address of the shareholder making the nomination; and
- number of shares owned by the shareholder making the nomination.
MANAGEMENT
The following are the executive officers of the company.
COMPANY AGE AS OF
NAME AND OFFICE HELD OFFICE HELD SINCE EMPLOYEE SINCE OCTOBER 15, 2002
-------------------- ----------------- -------------- ----------------
Carl E. Midkiff, President and 2001 08/01/99 52
Chief Executive Officer
Hobart A. Adkins, Secretary 2001 03/27/01 47
Charles D. Robinson, Treasurer 2001 03/27/01 48
BOARD INFORMATION
NUMBER OF MEETINGS
The board of directors met two times during the fiscal year ended June
30, 2002. All of the company's directors attended 100% of all board and
committee meetings during the fiscal year ended June 30, 2002.
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BOARD COMMITTEES
The board of directors has not established formal committees as the
entire board serves in these capacities. Carl Midkiff performs the audit
committee functions and carries out these functions under a written charter.
This charter was recently adopted and a copy is attached as Appendix A.
REPORT OF CARL MIDKIFF CONCERNING THE AUDIT - Carl Midkiff oversees the
company's financial reporting process. Mr. Midkiff has the primary
responsibility for the financial statements and the reporting process, including
the systems of internal controls. In fulfilling his oversight responsibilities
for fiscal 2002, Mr. Midkiff reviewed the audited financial statements in the
Form 10-K with the company's auditors including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness of
significant judgments and the clarity and disclosures in the financial
statements.
Mr. Midkiff reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, his judgments as to
the quality, not just the acceptability, of the company's accounting principles
and such other matters as are required to be discussed under generally accepted
auditing standards.
In reliance on the reviews and discussions referred to above, Mr.
Midkiff recommended to the board of directors (and the board has approved) that
the audited financial statements be included in the Form 10-K for the fiscal
year ended June 30, 2002, for filing with the SEC. Mr. Midkiff and the board
have also approved the selection of the company's independent auditors.
Based upon the review and discussions referred to above, the board of
directors recommends that the audited financial statements for the fiscal year
ended June 30, 2002, be included in the company's Annual Report on Form 10-K and
filed with the SEC.
October 21, 2002
Hobart A. Adkins
Richard Monga
Carl E. Midkiff
Charles D. Robinson
This report shall not be deemed to be incorporated by reference into
any filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, unless the company specifically incorporates
this report by reference. They will not otherwise be filed under such Acts.
AUDIT FEES - The fees billed by Sullivan, Ware & Hall, PLLC for
professional services rendered for the audit of the annual financial statements
for the fiscal year ended June 30, 2002, and for the reviews of the financial
statements included in the Quarterly Reports on Form 10-Q
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for that fiscal year, were $25,000.00. There were no services rendered regarding
financial information systems design and implementation.
BOARD COMPENSATION
Directors receive $100.00 for each board meeting of the company they
attend. In the fiscal year ended June 30, 2002, the board of directors of the
company received $200.00 each, in the aggregate, for all board of directors'
meetings attended and all fees paid.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The company's President and Chief Executive Officer, Carl Midkiff, and
his mother, Violet Midkiff, also control other companies and partnerships.
During the fiscal year ended June 30, 2002, the company purchased an interest in
one of the corporations and two of the partnerships for a total investment of
$39,891. The business purpose for this purchase was investment. In addition, as
of June 30, 2002, the company has a receivable totaling $5,446 from Prestige
Properties, Inc., a corporation which Mr. Midkiff owns 55%.
Violet Midkiff also resides in one of the company's hotels. The lodging
and meals are provided to her at no cost.
During the fiscal years ended June 30, 2002 and 2001, the company paid
$92,290 and $79,911, respectively, to Insurance Systems, Inc., an insurance
company which is partially owned by Charles D. Robinson, a member of the
company's board of directors. The company obtained this insurance on terms that
were no less favorable than those that could have been obtained from unrelated
third parties.
During the year ended June 30, 2001, the company acquired assets from
an entity called Hazmat Environmental Contractors, Inc., that is controlled by
the company's chief executive officer and stockholder, Carl Midkiff. The assets
consisted of an office building and a warehouse, and were purchased for the
purpose of adding to real estate assets for rental income. The assets acquired
were being actively marketed for sale in fiscal year ended June 30, 2001. The
carrying value is reflected at the lower of cost or market consisting of land
and building of $59,310 and $270,190, respectively. In addition, an investment
was acquired in the amount of $35,000. Liabilities were assumed of $272,935 and
a promissory note issued for $91,565. As of June 30, 2002 and 2001, the balance
of the promissory note was $-0- and $66,546, respectively. During the fiscal
year ended June 30, 2002, the company leased the land and building under a
long-term lease and, therefore, the carrying value is reflected in the
consolidated balance sheet as property and equipment in 2002. The investment was
sold during the fiscal year ended June 30, 2002 and resulted in a gain of $575.
During the year ended June 30, 2001, the company renegotiated a loan
from a former stockholder, George Banker. The refinancing of this debt resulted
in a waiver of
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interest of $60,161 and is reflected in the statement of operations for the year
ended June 30, 2001. As of June 30, 2002 and 2001, the balance of the note
payable was $3,540 and $44,681, respectively.
In addition, the company had a note payable due to an entity that is
controlled by Carl Midkiff, a major stockholder. The balance of the note at June
30, 2002 and 2001 was $-0- and $24,554, respectively. The interest rate on the
note is 9.25% and is no less favorable than that which could have been obtained
by unrelated third parties.
Interest expense relating to the above debt for the years ended June
30, 2002, 2001, and 2000 was $4,342, $3,753 and $4,781, respectively.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Mr. Midkiff's salary is determined annually by the board of directors
based on several objective and subjective factors. The board considers
industry-wide salary information for executives in the hotel industry which is
compiled through surveys conducted by recognized publications in the hotel
industry. Members of the board of directors also subjectively apply their own
familiarity of the local market for business executives to ensure Mr. Midkiff's
annual salary is set at an appropriate level considering the local business
climate, Mr. Midkiff's expertise in the hotel business, the cost to replace Mr.
Midkiff with another executive with equivalent experience and the success of the
company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
company's directors and executive officers, and persons who own more than 10% of
the registered class of the company's equity securities, to make stock ownership
and transaction filings with the Securities and Exchange Commission and to
provide copies to the company. The company is currently reviewing the stock
ownership and transaction filings of its directors and executive officers. The
company is currently aware of non-compliance with the section 16(a) beneficial
ownership reporting requirements and is assisting Mr. Midkiff, Violet Midkiff,
Mr. Adkins, Mr. Robinson and Mr. Monga with making the necessary filings.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF COMPENSATION
The table below reflects information concerning the annual compensation
for services in all capacities to the corporation for the fiscal years ended
June 30, 2002, 2001 and 2000, of those persons who were, as of June 30, 2002,
(a) the chief executive officer, and (b) the four other most highly compensated
executive officers to the extent that such persons' total annual salary and
bonus exceeded $100,000.
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SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION (1)
--------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION
--------------------------- ----------- ------ ----- ------------
Carl E. Midkiff, President 10/25/02 $45,923.18 $38,668.85 $ 0
and Chief Executive Officer 2001 $38,912.04 $51,796.10 $ 0
2000 $26,638.04 $53,635.20 $ 0
(1) Does not include perquisites and other personal benefits, the amount of
which are not shown because the aggregate amount of such compensation
during the years presented did not exceed the lesser of $50,000 or 10% of
total salary and bonus reported for such executive officer. The company
provides Mr. Midkiff with the use of a vehicle.
The company does not maintain any form of stock option, stock
appreciation rights, or other long-term compensation plans. There are no
employment or change in control agreements.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of October 15, 2002,
relating to the beneficial ownership of the common stock by (a) each person or
group known by the company to own beneficially more than 5% of the outstanding
common stock; (b) each of the company's directors; and (c) all directors and
executive officers of the company as a group. Ownership includes direct and
indirect (beneficial) ownership as defined by SEC rules.
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AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
---------------- -------------------- ----------------
Hobart A. Adkins 100 Direct *
Carl E. Midkiff 60,111 Direct 54.8%
807,669 Indirect
Violet Midkiff 462,777 Direct 29.23%
Charles D. Robinson 100 Direct *
All Directors and Executive Officers 867,669 Indirect 55.36%
As a Group
(1) For purposes of this table, beneficial ownership has been determined in
accordance with the provisions of Rule 13d-3 of the Securities Exchange
Act of 1934 under which, in general, a person is deemed to be the
beneficial owner of a security if he has or shares the power to dispose
of or direct the disposition of the security, or if he has the right to
acquire beneficial ownership of the security within 60 days.
(2) Consists of 161,792 shares owned by Violet Midkiff, Carl Midkiff's
mother which Carl Midkiff exercises voting power; 100,985 shares owned
by Violet Midkiff, Wade Midkiff and Lewis Midkiff as joint tenants with
right of survivorship (Wade Midkiff and Lewis Midkiff are the minor
sons of Carl Midkiff and Violet Midkiff is Carl Midkiff's mother);
264,158 shares owned by MMS Limited Partnership of which an entity
owned by Carl Midkiff is general partner and Carl Midkiff is a limited
partner owning 75% of the limited partnership; 40,727 shares owned by
Prestige Property, Inc., a corporation owned by Carl Midkiff and his
immediate family; 200,000 shares owned by the Violet Midkiff
Irrevocable Trust of which Carl Midkiff is the trustee; 10,000 shares
owned by Lewis Midkiff of which Carl Midkiff acts as custodian; 10,000
shares owned by Wade Midkiff of which Carl Midkiff acts as custodian;
10,007 shares owned by the Wade Midkiff Irrevocable Trust of which Carl
Midkiff is the trustee; and 10,000 shares owned by Elizabeth Midkiff
who is Carl Midkiff's wife.
* Less than one percent.
RATIFICATION OF AUDITORS
(ITEM 2 ON PROXY CARD)
Effective June 17, 2002, the company dismissed J.D. Cloud & Co. L.L.P.
("Cloud") as its independent auditors. Cloud had audited the company's financial
statements for fiscal 2001.
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Cloud was not retained to audit the company's financial statements for the
fiscal year ended June 30, 2002. There were no disagreements between the company
and Cloud regarding accounting principles or practices, consolidated financial
statement disclosure or audit scope or procedure. Furthermore, Cloud's reports
on the consolidated financial statements for fiscal 2001 did not contain any
adverse or disclaimer of opinion, nor were they qualified or modified as to
uncertainly, audit scope or accounting principles.
On June 17, 2002 the company signed an engagement letter with Diamond,
Leftwich & Co. PLLC ("Diamond"). On June 24, 2002, Diamond rescinded the
engagement letter. There were no disagreements between the company and Diamond
regarding accounting principles or practices, consolidated financial statement
disclosure or audit scope or procedure.
On July 29, 2002, the company engaged Sullivan, Ware & Hall, PLLC as
its independent certified public accountants to audit the company's financial
statements for the fiscal year ended June 30, 2002. This is the first time the
company has consulted with Sullivan, Ware & Hall, PLLC.
Accordingly, the board of directors has selected the firm of Sullivan,
Ware & Hall, PLLC, to serve as the independent auditors for the fiscal year to
end June 30, 2003. Although the selection of auditors does not require
shareholder ratification, the board of directors has submitted the appointment
of Sullivan, Ware & Hall, PLLC, to the shareholders for ratification. If the
shareholders do not ratify the appointment of Sullivan, Ware & Hall, PLLC, the
board of directors will consider the appointment of other independent auditors.
Sullivan, Ware & Hall, PLLC, advised the company that no member of
that accounting firm has any direct or indirect material interest in the
company. A representative of Sullivan, Ware & Hall, PLLC, will be present at the
Annual Meeting, will have the opportunity to make a statement and will respond
to appropriate questions. The proxies will vote your proxy "FOR" the
ratification of the selection of Sullivan, Ware & Hall, PLLC, unless otherwise
directed.
ANNUAL REPORT ON FORM 10-K
You may obtain a copy of the Annual Report on Form 10-K, as filed with
the Securities and Exchange Commission, by contacting Carl E. Midkiff, President
and Chief Executive Officer, UpTowner Inns, Inc., 741 5th Avenue, Huntington,
West Virginia 25701, (304) 525-8162. The Form 10-K is also available on the
Commission's website at www.sec.gov.
OTHER INFORMATION
If any of the nominees for election as directors is unable to serve due
to death or other unexpected occurrence, your proxies will be voted for a
substitute nominee or nominees designated by the board of the company, or the
board of directors may adopt a resolution to
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reduce the number of directors to be elected. The board of directors is unaware
of any other matters to be considered at the Annual Meeting. If any other
matters properly come before the meeting, persons named in the accompanying
proxy will vote your shares in accordance with the direction of the board of
directors.
SHAREHOLDER PROPOSALS FOR FISCAL 2004
Any shareholder who wishes to have a proposal placed before the Fiscal
2004 Annual Meeting of Shareholders must submit the proposal to the secretary of
the company, at its executive offices, no later than 120 days prior to the
Fiscal 2004 Annual Meeting to have it considered for inclusion in the proxy
statement of that Annual Meeting.
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APPENDIX A
AUDIT COMMITTEE CHARTER
Organization
This charter governs the actions of Carl Midkiff as he
operates to perform the functions of the audit committee. Mr. Midkiff shall
review and reassess the charter at least annually and obtain the approval of the
board of directors. Mr. Midkiff shall at all times be financially literate and
have financial management expertise.
Statement of Policy
Mr. Midkiff shall provide assistance to the board of directors
in fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is Mr. Midkiff's responsibility to maintain free and open
communication between himself, independent auditors, the internal auditors and
management of the company. In discharging his oversight role, Mr. Midkiff is
empowered to investigate any matter brought to his attention with full access to
all books, records, facilities and personnel of the company and the power to
retain outside counsel, or other experts for this purpose.
Responsibilities and Processes
Mr. Midkiff's primary responsibility is to oversee the
company's financial reporting process on behalf of the board and report the
results of his activities to the board. Management is responsible for preparing
the company's financial statements, and the independent auditors are responsible
for auditing those financial statements. Mr. Midkiff, in carrying out his
responsibilities, believes his policies and procedures should remain flexible,
in order to best react to changing conditions and circumstances. Mr. Midkiff
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices, and ethical
behavior.
The following shall be Mr. Midkiff's principal recurring
processes in carrying out his oversight responsibilities. The processes are set
forth as a guide with the understanding that Mr. Midkiff may supplement them as
appropriate.
Mr. Midkiff shall have a clear understanding with management
and the independent auditors that the independent auditors are ultimately
accountable to the board and Mr. Midkiff performing the functions of the audit
committee, as representatives of the company's shareholders. Mr. Midkiff shall
have the ultimate authority and responsibility to evaluate and, where
appropriate, recommend the replacement of the independent auditors. Mr. Midkiff
shall
discuss with the auditors their independence from management and the company
including the matters in the written disclosures required by the Independence
Standards Board and shall consider the compatibility of nonaudit services with
the auditors' independence. Annually, Mr. Midkiff shall review and recommend to
the board the selection of the company's independent auditors, subject to
shareholders' approval.
Mr. Midkiff shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective audits
including the adequacy of staffing and compensation. Also, Mr. Midkiff shall
discuss with management, the internal auditors and the independent auditors the
adequacy and effectiveness of the accounting and financial controls, including
the company's system to monitor and manage business risk, and legal and ethical
compliance programs. Further, Mr. Midkiff shall meet separately with the
internal auditors and the independent auditors, with and without management
present, to discuss the results of their examinations.
Mr. Midkiff shall review the interim financial statements with
management and the independent auditors prior to the filing of the company's
Quarterly Report on Form 10-Q. Also, Mr. Midkiff shall discuss the results of
the quarterly review and any other matters required to be communicated to Mr.
Midkiff by the independent auditors under generally accepted auditing standards.
Mr. Midkiff shall review with management and the independent
auditors the financial statements to be included in the company's Annual Report
on Form 10-K (or the annual report to shareholders if distributed prior to the
filing of Form 10-K), including his judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements. Also,
Mr. Midkiff shall discuss the results of the annual audit and any other matters
required to be communicated to Mr. Midkiff by the independent auditors under
generally accepted standards.
UPTOWNER INNS, INC.
741 5TH AVENUE
HUNTINGTON, WEST VIRGINIA 25701
(304) 525-8162
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 21, 2002
Carl E. Midkiff and Charles D. Robinson, or either one of
them, with full power to act alone and with full power of substitution, are
hereby authorized to represent and to vote stock of the undersigned in UpTowner
Inns, Inc., at the Annual Meeting of Shareholders to be held November 21, 2002,
and any adjournment thereof.
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
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(Except Nominee(s) Written Below)
1. Election of directors for the
terms specified in the proxy
statement: [ ] [ ] [ ]
Hobart A. Adkins
Richard Monga
Carl E. Midkiff
Charles D. Robinson
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*(Except Nominee(s) Written above)
2. Ratify the selection of
Sullivan, Ware & Hall, PLLC
as independent auditors for
fiscal 2003: [ ] [ ] [ ]
3. To transact such other business as
may properly come before the
meeting or any adjournments
thereof: [ ] [ ] [ ]
(CONTINUED AND TO BE SIGNED ON THE NEXT PAGE)
UPTOWNER INNS, INC.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES. IF ANY
SHARES ARE VOTED CUMULATIVELY FOR THE ELECTION OF DIRECTORS, THE PROXIES, UNLESS
OTHERWISE DIRECTED, SHALL HAVE FULL DISCRETION AND AUTHORITY TO CUMULATE THEIR
VOTES AND VOTE FOR LESS THAN ALL SUCH NOMINEES. IF ANY OTHER BUSINESS IS
PRESENTED AT THE ANNUAL MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH
THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSALS.
Date: ______________________, 2002
Number of Persons Who Will Attend
the Annual Meeting on Thursday,
November 21, 2002 starting at 10:00
a.m.: _______
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(Signature of Shareholder)
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(Signature of Shareholder)
[LABEL] When signing as attorney, executor,
Administrator, trustee or guardian,
please Sign full title. If more than
one trustee, all should sign. ALL
JOINT OWNERS MUST SIGN as printed on
label to your left.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.