**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

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**FORM 10-K**

**(MarkOne)**

ý                                    **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934.  FORTHE FISCAL YEAR ENDED DECEMBER 31, 2001.**

 

o**                                    TRANSITION REPORT PURSUANT TO SECTION 13 OR15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE TRANSITION PERIOD TO**

 

**Commissionfile number 1-14115**

 

**RESORTQUESTINTERNATIONAL, INC.**

 
| **Delaware**                                                     |   | **62-1750352**                           |
|------------------------------------------------------------------|--------|------------------------------------------|
| (State or other  jurisdiction of incorporation or organization)  |   | (I.R.S. Employer  Identification Number) |
|                                                             |   |                                     |
| **530 Oak Court Drive**                                          |   | **38117**                                |
| **Suite 360****Memphis, TN**                                     |   | (Zip Code)                               |
| (Address of  principal executive offices)                        |   |                                     |
|                                                             |   |                                     |
| **(901)762-0600**                                                |
| (Registrant’s  telephone number including area code)        |
| **Securities registered pursuant to  Section 12(b) of the Act:** |

 

| **Title of each class**       |   | **Name of each exchange****on which registered** |
|-------------------------------|--------|--------------------------------------------------|
| Common Stock,  $.01 par value |   | New York Stock  Exchange                         |

**Securitiesregistered pursuant to Section 12(g) of the Act.**

**None**

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**               **Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.

 

YES ý  No o

 

                Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulations S-K is not contained herein, and will not be contained, to the bestof registrant’s knowledge, in the definitive proxy or information statementincorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K.   ý

 

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                Theaggregate market value of the voting stock held by non-affiliates of theregistrant computed by reference to the closing price at which the stock wassold as of March 11, 2002 was approximately $141,400,000.

 

                Thenumber of shares outstanding of each of the registrant’s classes of commonstock as of March 11, 2002 was 19,243,249 shares of common stock, all of oneclass.

 

**DOCUMENTS INCORPORATED BY REFERENCE**

 

Portions of the 2001Annual Report to Shareholders                                                                    PartsI, II and IV

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** **
| **Table of Contents**              |                                                                                       |
|------------------------------------|--------------------------------------------------------------------------------------------|
| **PART I**                         |                                                                                       |   |
|                               |                                                                                       |   |
| ITEM 1.                            | Business                                                                                   | 1 |
|                               | *General*                                                                                  | 1 |
|                               | *Industry Overview*                                                                        | 2 |
|                               | *Business Strategy*                                                                        | 4 |
|                               | *Growth Strategy*                                                                          | 6 |
|                               | *Markets*                                                                                  | 8 |
|                               | *Services Offered*                                                                         | 9 |
|                               | *Marketing*                                                                                | 12 |
|                               | *Technology*                                                                               | 13 |
|                               | *Competition*                                                                              | 14 |
|                               | *Employees*                                                                                | 15 |
|                               | *Factors That  May Affect Future Results*                                                  | 15 |
| ITEM 2.                            | Properties                                                                                 | 24 |
| ITEM 3.                            | Legal Proceedings                                                                          | 24 |
| ITEM  4.                           | Submission  of Matters to a Vote of Security Holders                                       | 24 |
| Executive Officers of  ResortQuest | 25                                                                                         |
|                               |                                                                                       |   |
| **PART II**.                       |                                                                                       |   |
|                               |                                                                                       |   |
| ITEM  5.                           | Market  for ResortQuest’s Common Equity and Related Stockholder Matters               | 26 |
| ITEM 6.                            | Selected Financial  Data                                                                   | 26 |
| ITEM  7.                           | Management’s  Discussion and Analysis of Financial Condition and Result of Operations | 26 |
|                               |                                                                                       |   |
| ITEM  7A.                          | Quantitative  and Qualitative Disclosures about Market Risk                                | 26 |
| ITEM  8.                           | Financial  Statements and Supplementary Data                                               | 26 |
| ITEM  9.                           | Changes  in and Disagreements with Accountants on Accounting and Financial Disclosure      | 26 |
|                               |                                                                                       |   |
| **PART III**                       |                                                                                       |   |
|                               |                                                                                       |   |
| ITEM  10.                     | Directors  and Executive Officers of ResortQuest                                           | 27 |
| ITEM 11.                      | Executive  Compensation                                                                    | 29 |
|                               | *Summary of  Compensation*                                                                 | 29 |
|                               | *Option  Grants in Fiscal 2001 and Fiscal Year-End Option Values*                          | 30 |
| ITEM  12.                     | Security  Ownership of Certain Beneficial Owners and Management                            | 31 |
| ITEM  13.                     | Certain  Relationships and Related Transactions                                            | 32 |
|                               | *Leases of Facilities*                                                                     | 32 |
|                               | *Management Agreements*                                                                    | 33 |
|                               | *Other Transactions*                                                                       | 33 |
|                               |                                                                                       |   |
| **PART IV**                        |                                                                                       |   |
|                               |                                                                                       |   |
| ITEM  14.                     | Exhibits,  Financial Statement Schedules and Reports on Forms 8-K                          | 36 |
|                               |                                                                                       |   |
|                               | *14(a)(1)  Financial Statements*                                                           | 36 |
|                               | *14(a)(2) Financial  Statement Schedules*                                                  | 36 |
|                               | *14(a)(3) Exhibits*                                                                        | 36 |
|                               | *14(b) Reports  on Form 8-K*                                                               | 42 |

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**PARTI**

 

**ITEM1. BUSINESS**

# **I.****                                        ****General**

     ResortQuestInternational, Inc. is the world’s largest provider of vacation condominium andhome rental property management services in premier destination resorts locatedthroughout the continental U.S., Hawaii and Canada.  Since our initial public offering in 1998, we have developed thefirst and only nationwide portfolio of vacation rental properties, andcurrently manage over 20,000 such properties in more than 50 premier beach,Hawaii, mountain and desert resort destinations.

     We are engaged in three business lines that include PropertyManagement, Real Estate Sales, and ResortQuest Technologies.

***    Property Management.***** **Generatingapproximately 85% ($136.6 million) of our 2001 revenues, the management of our over 20,000vacation rental properties is our primarybusiness.  Our rental propertiesare generally second homes or investment properties owned by individuals whoassign us the responsibility of managing, marketing and renting theirproperties.  We retain no ownershipinterest in the properties.

     We bookedover 600,000 reservations for approximately 2.4 million vacationers in2001.  Furthermore, approximately 31% ofour vacationers are return guests.  As aresult, we have compiled an active, growing database of 1.5 million uniqueprior guests.  We earn management feesas a percentage of the rental income from each property.  Management fee percentages vary from marketto market, but average approximately 21% of our gross lodging revenues.  We also charge vacationers and homeownersfees for providing additional services including housekeeping and maintenanceservices, which currently average approximately 11% of our gross lodging revenues.  Furthermore, we generated an additional $4million, or 2.5%, of revenues from food and beverage services in 2001.

     We providevalue-added services to both vacationers and property owners.  For vacationers, we offer the value,convenience and features of a condominium or home while providing many of theamenities and services of a hotel.  Forproperty owners, we offer a comprehensive package of marketing, management andrental services designed to enhance rental income and profitability while providingservices to maintain the property.  Bydeveloping the ResortQuest brand and increasing its association with thedelivery of consistent quality and a wide variety of rental property options inmany popular vacation destinations, we are able to effectively communicate theadvantages of vacation property rentals to consumers and increase thevisibility and popularity of this lodging option.  To increase customer satisfaction, we have changed the businessmodel for this product type by developing a proprietary five-tier unit qualityrating system which segments our property portfolio into one of fivecategories:  Quest Home, Platinum, Gold,Silver, and Bronze.

***     Real EstateSales.***** **In addition to the vacation rental property managementbusiness, we offer real estate brokerage services in over 30 of ourdestinations. Our real estate brokerage service provides us with a competitiveadvantage in identifying and securing properties for our rental managementservices.  The rental customer baserepresents a significant source of future buyers as well.

     During 2001, we sold approximately $900.0million of real estate.  The averagegross sales commission is approximately 6% and is shared with the buying andselling brokers.  This businessgenerated net commission revenues of $15.3 million, or 1.7% of gross real 

 

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estatesold, for year ended 2001, and comprised 9.5% of total revenues for that periodof time.  We maintained over $1.2billion worth of real estate listings at December 31, 2001.

 

     Currently, over 300 ResortQuestBroker/Agents have licenses at over 30 of our resort destinations.  Over the past year, we have opened realestate operations in four new markets — Palm Desert, CA, and Breckenridge, CrestedButte and Telluride, CO.  As we alreadyhave property management operations in these areas, the incremental costsassociated with establishing these new offices is minimal and the cross-sellingopportunities are significantly increased.

***     ResortQuestTechnologies.***** **Our third business line is ResortQuest Technologies, adivision of ResortQuest International, Inc., which is directly responsible forall of our technology initiatives.  Thedivision’s primary concentration is the development and sale of First ResortSoftware, the leading technology solution in the industry, plus the developmentof our web site, www.ResortQuest.com, and related Internet distribution.  In addition, First Resort Software is beingenhanced through an over $10 million upgrade that will significantly expand itsfunctionality in Internet distribution, reservations, customer relationshipmanagement, and property management.  Inaddition to using this software and this division’s technological expertiseinternally, we have sold over 900 licenses of this software to other propertymanagement companies.  Recognizing theimportance of real-time, on-line, bookable inventory to Internet travelaffiliates (e.g., AOL), we were the first to create technology sophisticatedenough to aggregate third-party (non-ResortQuest) inventory from separate anddisparate inventory systems into a single platform and under consistentprotocols.  To date, no other entity hasthe technology to deliver inventory to distribution channels in such aneffective manner due to the high industry fragmentation and expense forcompetitors to try to duplicate the technology.

     Although ResortQuest Technologies onlycontributed $3.0 million or 1.9% of our total 2001 revenues, the divisionoffers us a number of distinct competitive advantages including, (i) providingus with a potentially substantial ancillary revenue stream by enabling us toaggregate non-ResortQuest inventory on our web site (www.ResortQuest.com) andthose of our Internet travel affiliates as we are the only company that canoffer world-wide real-time on-line booking, (ii) in addition to providing“one-stop shopping” for all of a vacationer’s search needs (e.g., availability,real-time booking, dining/entertainment, maps/directions, etc.), we are theonly national provider of vacation rental properties equipped to offer “virtualtours” of its properties on its web site; making the selling process easier andmore efficient, (iii) as the software leader in this industry, ResortQuestTechnologies sets the cutting-edge industry trends that competitors try toemulate, (iv) allows us to identify attractive acquisition candidates, and (v)helps increase our profitability by improving our operations through the use oftechnology.

 

 

## **II.****                                    ****Industry Overview**

***     U.S. Travel andTourism Industry.  ***The United States is the largest market in the worldfor travel and tourism, representing an estimated 20% of total worldwide traveland tourism expenditures. Over the past 15 years, the U.S. travel and tourismmarket has consistently grown at a compound annual rate of more than 6%. In2000, expenditures for tourism in the U.S. reached approximately $560 billion,or approximately 6% of gross domestic product (“GDP”), making the industry oneof the largest sectors in the U.S. economy. Pleasure travel (trips taken for vacation purposes) has consistentlyrepresented approximately 70% of the growing U.S. travel and tourism marketover the last several years.

 

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     Our operations focus on a segment of thepleasure travel area, specifically the leisure segment.  The leisure segment represents all tripstaken for vacation purposes other than those trips to visit family orfriends.  This growth has been, and isexpected to continue, due to two primary factors: (i) the overall growth in theleisure travel and tourism industry and (ii) the increasing number ofvacationers, particularly baby boomers, seeking to rent vacation condominiumsand homes.

***      VacationCondominiums and Homes.***  Industry research has found that theaverage length of vacation in the U.S. is 4.6 nights. However, there is a keyconsumer trend toward shorter and more frequent vacations.  It is estimated that 63% of leisuretravelers plan to take more “mini” (4 nights or less) vacations in the nexttwelve months compared to the trailing twelve months, while 55% planned to takelonger vacations.  Furthermore, 24% ofleisure travelers plan less than one week in advance while 51% have a 7-30 daylead-time in planning vacations.  During2001, we realized an average lead-time of approximately 73 days.

      As the seasonality in many resortdestinations undermines hotel economics, resort destinations often have fewertraditional hotels resulting in condominiums and homes being the predominantlodging option. These destinations, however, offer a comparatively large choiceof condominiums and homes (sometimes both timeshare and privately-owned).  Vacation condominiums and homes generallyprovide substantial value to the customer as they offer families greater spaceand convenience than a resort hotel room, including separate living, sleepingand eating quarters.  Furthermore, withfull kitchens available in most properties, vacationers can also savesubstantially on dining costs.

     Vacationers who wish to stay in acondominium or home in a resort location typically have three choices: (i) buythe condominium/home, (ii) rent the condominium/home, or (iii) purchase atimeshare interest in a condominium/home. The rental option is typically theleast expensive and most flexible alternative for vacationers. Timeshareinterests require the purchase of an ownership interest in a vacation residenceand continuing annual maintenance payments. Conversely, renting a vacation condominium/home frees travelers from thecommitment and expense of timeshare. The vacationer can rent a specificproperty for a specific time period, and suffer no ongoing obligations.

      ***U.S. Vacation Rental Industry.***  Most vacation condominiums and homes are second homes owned byindividuals who cannot or do not want to manage their properties.  The U.S. Census Bureau estimates that thereare approximately 6 million second homes including condominiums and timesharesin the U.S., with the top five states being California, Florida, New York,Texas and Pennsylvania.  Local vacationproperty rental and management companies also contract with homeowners tomanage the properties and rent them to vacationers when the owner is not usingthem. The vacation rental property managers facilitate the rental process byhandling most, if not all aspects of interaction with vacationers, includinggenerating reservations, rental payments and security deposits; operatingcheck-in and check-out locations; and arranging for inspections, maintenanceand for providing housekeeping services. Vacation homeowners are drawn to therental market by the ability to use the income received to defray the cost ofownership.

     Information in this industry is highlyfragmented and difficult to accumulate at a macro-level.  We estimate that the U.S. vacation andrental market for homes and condominiums, excluding timeshare rentals, is over$10 billion annually.  The marketconsists of over 4,000 companies that manage over 600,000 condominiums andhomes, with no company except ResortQuest managing more than 3,500 units, andvirtually all of our competitors focused in a single resort market.

 

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      The growth in the vacation propertyrental industry can be attributed to several factors including (i) the overallgrowth in pleasure travel, (ii) increasing number of vacationers choosing thislodging option for its value and convenience, (iii) additional secondhomeowners who are renting out their properties to defray the costs of homeownership, and (iv) improved product awareness and customer convenience throughlow-cost distribution over the Internet. Several industry observers also believe that the aging baby boomersegment of the population will be largely responsible for the industry’s continuedgrowth for the next 10-15 years.  Thissegment of the population is comprised of 35-64 year-old professionals withhigh discretionary incomes and, according to the U.S. Census Bureau, isexpected to expand to 43% of the total U.S. population by the year 2011.  Members of this segment usually take threeto four leisure trips per year with one or more children.  Furthermore, consumers aged 45 and olderrepresent 79% of all spending on owned vacation homes.  Not only will baby boomers fuel industry growthby traveling more, but also by building and purchasing vacation homes that theywill rent when not using it themselves.

**      *On-Line Travel Industry.*** According to the Travel Industry Association of America (“TIA”), 24.7million people in the U.S. used the Internet to make travel reservations in2000.  This is a 64% increase from1999’s 15.1 million.  A recent study bythe TIA published in its March 2001 Newsline indicated that the on-linetraveler market has grown steadily from 27 million users in 1996 to 90 millionusers in 2000, a compounded annual growth rate (“CAGR”) of approximately35.1%.  In addition, 54% of the peoplewho are on-line planning vacations use the Internet to search for a place tostay, 46% search for things to do, 36% search for dining/entertainment, 59%search for maps and driving directions, 34% search local event calendars and22% search for places to go. ResortQuest’s web site provides “one-stop shopping” for all of thesesearch needs.  Additionally, the Companyis the only international provider of vacation rental properties equipped tooffer online booking for its properties on its web site, thus making theselling process easier and more efficient.

 

## **III.****                                ****Business Strategy**

     Our objective is to enhance our positionas a leading provider of premier condominium and home rentals in destinationresorts by pursuing the following elements of our business strategy:

***    Continue to Build the ResortQuest Brand.**** *Prior to ResortQuest, there was no national brand for vacation condominiumand home rentals, no industry standards for quality and a general lack ofaccess to reliable information regarding rental opportunities forvacationers.  We have increased theinformation available to vacationers, established the only international andnational brand in the fragmented vacation rental industry, and continue toprovide vacationers with high quality condominium and home rentals.  The ResortQuest brand is designed to ensurethat a vacation rental meets customer expectations by providing a basic,standardized level of products and services and by consistently categorizingaccommodations based on quality, appearance and amenities.

***    Capitalize on Technology.**** *We market ourproperties through various media channels and have significant Internetdistribution through ResortQuest.com, our proprietary web site offering “realtime” on-line reservation booking capabilities, and our travel marketingagreement with America Online (AOL Keyword: ResortQuest).  In conjunction with the consummation of ourAOL agreement, we formed ResortQuest Technologies, a division of ResortQuestfocused on Internet alliances and inventory distribution.  Internet Alliances are a new businessopportunity where ResortQuest Technology offers our distribution capability toother companies in non-competitive markets. In addition to detailed property descriptions, virtual tours, interiorand exterior photos and floor plans, and local information available on our website, vacationers can search for properties by date, view activities and eventsby location; 

 

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comparisonshop among similar vacation rental units; check for special discounts andpromotions; and obtain maps and driving directions.  The site also allows foreign travelers to obtain currencyconversion rates.  We also added AXSTechnologies software that provides high speed/high resolution, scroll, pan andzoom imaging for selected properties. During 2001, our web site received approximately 9.5 million visitors, a54% increase over 2000.

***    Offer Vacationers Superior Customer Service.**** *We believe that maintaining superior levels of customerservice is critical to maintaining a reputation for high quality condominiumsand homes and for attracting new customers. Vacationers typically rent vacation condominiums and homes for greaterspace and flexibility, but these customers also frequently desire many of theamenities and services of hotel accommodations.  As a result, we require all of our operations to deliver astandardized, basic level of amenities and services designed to enhance thevacationer’s overall experience.  Wehave established a detailed listing of basic standards relating to convenientlylocated check-in and check-out locations, efficient check-in and check-outprocedures, extended front desk hours, cleanliness of units and access toemergency contact and maintenance personnel. We also strive to offer maximum flexibility to meet the varied needs ofour vacationers and in most markets can arrange for services such as golf teetimes, bicycle rentals, ski lift tickets, grocery delivery or restaurantreservations.  By offering theconvenience and accommodations of a condominium or home while providing many ofthe amenities and services of a hotel, we believe we will continue tostrengthen the loyalty of our existing customers and attract new vacationersinto the vacation condominium and home rental market.

***     Enhance Value for Property Owners.**** *We provide property owners with superior management services by combininglocal management expertise with the marketing power and resources of a leadinginternational brand, which work to increase rental income through increasedoccupancy and rental rates.  Sincesubstantially all of the condominiums and homes managed by us are second homeswith absentee owners, we offer a range of high quality vacation rental andproperty management services designed to meet the broad real estate needs ofthese owners.  In most markets, we willassume broad responsibility for the condominium or home, from marketing andcoordinating all aspects of renting the individual condominium or home tomanaging common areas and homeowners’ associations. In addition, we provideowners with concise, timely and accurate monthly statements and payments forthe rental and management of their condominiums and homes.  Property owners also benefit from ourQuestPerks program, which offers discounts on lodging, air travel and carrentals.  We believe that our reputationfor high quality, comprehensive management services will be a key competitiveadvantage in increasing the number of condominiums and homes under ourmanagement within our existing markets.

 

***     Capitalize on the Experience of SeniorManagement.***  Our seniormanagement team has the breadth of experience necessary to execute our businessplan effectively.

•             **David L.Levine:**  Mr. Levine is the Chairman, President andChief Executive Officer of ResortQuest. Mr. Levine became Chairman in May 2000 and Chief Executive Officer inDecember 1999.  From May 1998 toDecember 1999, Mr. Levine was the President and Chief Operating Officer ofResortQuest.  Mr. Levine was Presidentand Chief Operating Officer of Equity Inns, Inc., a real estate investmenttrust that specializes in hotel acquisitions, from June 1994 to April1998.  Mr. Levine was also President 

 

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and Chief OperationsOfficer of Trust Management Inc., which operated Equity Inns properties fromJune 1994 until November 1996.  Prior tothat, he was President of North American Hospitality, Inc., a hotel managementand consulting company, which he formed in 1985.

•             **James S.Olin:**  Mr. Olin is Executive Vice President andChief Operating Officer of ResortQuest. He was formerly President of Abbott Resorts, Inc., one of ResortQuest’slargest operations, from 1992 to January 2000. During his tenure as President, the Company grew from 900 units to over2,500 units managed, and real estate sales went from approximately $30 millionto over $250 million.  Mr. Olin alsoserved as Vice President for ResortQuest’s Gulf Coast Region.  He has over 14 years of experience in thetravel and tourism industry.

•             **FrederickL. Farmer:**  Mr. Farmer is Executive Vice President andChief Information Officer of ResortQuest and President of ResortQuestTechnologies, a division of ResortQuest. He has more than 22 years of experience working for Fortune 500companies.  Mr. Farmer most recentlyspent 12 years with Marriott International as Senior Vice President, Internet andDesktop Services.  He was responsiblefor positioning Marriott for Internet commerce.

•             **J.Mitchell Collins:**  Mr. Collins is Senior Vice President andChief Financial Officer of ResortQuest. Mr. Collins was previously employed with Arthur Andersen LLP from July1990 to February 2000 where he was head of real estate and hospitality servicesfor Andersen’s Mid-South practice.  Healso served on Andersen’s global real estate and hospitality services team.  In addition, he has over 10 years of relatedfinance, accounting, and systems implementation experience.

•             **W. MichaelMurphy:** Mr. Murphy is Senior Vice President and ChiefDevelopment Officer of ResortQuest.  Mr.Murphy leads the Company’s mergers and acquisitions effort and is in charge ofnew business development. Mr. Murphy has been involved with real estateacquisition businesses and the hospitality industry for more than 27 years.

•             **Paul N.Manteris: **Mr. Manteris is Senior Vice President ofOperations and Homeowner Relations of ResortQuest.  He is the former manager of Training and Special Projects forPremier Resorts, Inc., a hospitality management company operating primarily inthe Western United States and Hawaii. He has over 23 years of experience in thehospitality industry.

 

***    Leverage Local Relationships and Expertise. ***Our local management teams have extensive experience intheir respective resort areas, and many of the individuals are very active intheir local communities.  The managementteams have a valuable understanding of their respective markets and businessesand have developed strong local relationships. These relationships are critical in attracting additional condominiumsand homes for rental and enable us to provide additional concierge-typeservices to our vacationers.  Accordingly,our decentralized management strategy is designed to allow local managers toutilize their knowledge and expertise about the condominiums and homesavailable for rent, the offerings of local competitors and the desires ofvacationers in their areas to provide superior customer service to bothproperty owners and vacationers.

## **IV.****                               ****Growth Strategy**

     We believe we can enhance our position asthe world’s largest provider of vacation condominium and home rentals inpremier destination resorts by growing both internally and by selectivelypricing strategic acquisitions.

 

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### **InternalGrowth**

     The primary elements of our internalgrowth strategy include:

***    Fully Implement Our National Marketing Strategy.**** *We have implemented a multi-faceted national marketing program designedto increase vacationer awareness of the ResortQuest brand, while promoting theunique characteristics of our individual resorts.  This comprehensive marketing program targets consumers and thetravel trade through high-profile advertising, direct mail, e-mail marketing,public relations, promotional programs and *ResortQuest.com. *In order to maximize the online exposure of *ResortQuest.com*and our over 20,000 vacation rental properties, we have agreements with certainInternet portals such as America Online (AOL Keyword: ResortQuest),Expedia.com, Travelocity.com and CondoSaver.com, etc.  Our marketing program is designed to attract new customers aswell as to cross-sell additional services and locations to existing customers,thereby increasing customer loyalty by offering customers similar propertiesand services in our other resorts that meet the vacationer’s expectationsbased, in part, on their previous experiences with us.  We believe our international, national,regional and local integrated marketing efforts will increase customerawareness of the ResortQuest brand, lead to an increased demand for our rentalsand result in higher occupancy and rental rates for our condominium and homeowners.  We also believe that theanticipated increase in rental income for owners will ultimately be acompetitive advantage in attracting new property owners.

***    Increase Market Share Within Existing Markets.**** *A key element of our growth strategy is increasing our selection ofcondominiums and homes in order to expand our market share and strengthen thelocal brands of each of our operations. We intend to continue to attract new property owners by achieving highoccupancy rates through effective national and regional marketing,cross-selling and offering additional incentives to property owners, such asQuestPerks, our travel benefits program for owners of properties wemanage.  In addition, in order to capturea higher portion of the rental business from new condominiums and homes beingbuilt in our markets, we will focus on building and strengthening ourrelationships with both local and national resort developers as well as realestate brokerage companies.

***    Expand Profit Margins.**** *Through theimplementation of a common accounting and payroll system and best managementpractices, we believe there are numerous opportunities to improve our overallprofit margins.  Significant annualpayroll savings have been generated through our conversions to integratedcommon accounting and payroll platforms during 2001.  We continue to improve the efficiency of certain basic servicessuch as reservations, housekeeping and laundry.  We also believe that larger inventories of condominiums and homesin our markets will provide certain economies of scale in advertising, check-inlocations, management, housekeeping and other services.  We have already achieved savings throughcompany-wide contracts for long distance telephone service, credit card feesand insurance.  We believe that enhancedefficiency and economies of scale will reduce overall operating costs and allowus to achieve increased margins by spreading operating and corporate overheadcosts over a larger revenue base.  Inaddition, we have developed unique additional revenue opportunities in certainresort areas, such as assisting property owners in refurbishing theirproperties, offering trip cancellation insurance and charging fees for certainconcierge-type services.

 

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***    Use Additional Marketing Channels.**** *Historically, most vacationers have located vacation condominiums andhomes through referrals, word-of-mouth, limited local advertising and directmailings.  We believe there aresignificant opportunities to continue to expand the use of additional marketingchannels.  We plan to capitalize on ourextensive market presence by increasing the use of other marketing channelssuch as the Internet, travel agents and national print media, which are difficultfor local vacation rental and property management companies to use in acost-effective manner.  Given our sizeand presence in premier destination resorts, we believe we are an attractivepartner to travel agents, tour package operators and other travelproviders.  These relationships shouldcontinue to be a significant source of new customers and, in particular, willbe a valuable marketing channel for off-peak seasons.

### **SelectivelyPursue Strategic Acquisitions**

     Since our initial public offering in May1998 a significant portion of our growth and all of our expansion has beenthrough the completion of strategic acquisitions.  Over the long-term and as the impact of September 11thon the travel and tourism industry recedes, we will continue to selectivelypursue strategic acquisitions in new markets and tuck-in acquisitions throughwhich we can expand our selection of rental inventory in our existingmarkets.  We believe that we provideacquisition candidates with a number of significant benefits, including:

•          affiliation with aninternational brand;

•          the ability tocross-sell to customers of other vacation rental and property managementcompanies within the ResortQuest network;

•         the ability to increaseliquidity as a result of our financial strength as a public company and accessto additional sources of capital; and

•        the ability to increaseprofitability as a result of our centralization of certain administrativefunctions and other economies of scale.

## **V.****                                   ****Markets**

     We currently manage condominiums andhomes in over 50 premier resort areas throughout the U.S. and in Canada.  The table below sets forth the resortlocations at which we manage vacation condominium and home properties and theaggregate number of properties managed in each of the following states andprovinces at December 31, 2001.
| **HAWAII RESORTS**                                                                                                                                                                                                                                                                                                                                                               |                                 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|
| Hawaii: Big Island, Kauai, Maui and Oahu                                                                                                                                                                                                                                                                                                                                         | 5,553                                |
|                                                                                                                                                                                                                                                                                                                                                                             |                                 |
| **MOUNTAIN RESORTS**                                                                                                                                                                                                                                                                                                                                                             |                                 |
| Colorado: Aspen, Breckenridge, Crested Butte, Dillon,  Keystone, Snowmass  Village, Steamboat Springs and Telluride                                                                                                                                                                                                                                                              | 1,823                                |
| British Columbia: Whistler                                                                                                                                                                                                                                                                                                                                                       | 621                                  |
| Utah: The Canyons, Deer Valley and Park City                                                                                                                                                                                                                                                                                                                                     | 355                                  |
| Montana: Big Sky                                                                                                                                                                                                                                                                                                                                                                 | 216                                  |
| Oregon: Mt. Bachelor and Sunriver                                                                                                                                                                                                                                                                                                                                                | 141                                  |
| Idaho: Sun Valley                                                                                                                                                                                                                                                                                                                                                                | 181                                  |
| Tennessee: Gatlinburg and Pigeon Forge                                                                                                                                                                                                                                                                                                                                           | 181                                  |
|                                                                                                                                                                                                                                                                                                                                                                             |                                 |
| **BEACH RESORTS**                                                                                                                                                                                                                                                                                                                                                                |        |
| Florida: Anna Maria Island, Beaches of South Walton,  Bonita Springs,  Bradenton, Captiva Island, Destin, Fort Myers,  Fort Myers Beach, Fort  Walton  Beach, Lido Key, Longboat Key, Marco Island, Naples, Navarre Beach, New Port  Richey, Okaloosa Island, Orlando, Panama City,  Pensacola, Perdido Key, Sanibel Island, Sarasota, Siesta Key,  Vanderbilt  Beach and Venice | 6,078                                |
| Massachusetts: Nantucket                                                                                                                                                                                                                                                                                                                                                         | 1,200                                |
| South Carolina: Hilton Head Island                                                                                                                                                                                                                                                                                                                                               | 647                                  |
| Delaware: Bethany Beach                                                                                                                                                                                                                                                                                                                                                          | 595                                  |
| North Carolina: Outer Banks                                                                                                                                                                                                                                                                                                                                                      | 1,171                                |
| Georgia: St. Simons Island                                                                                                                                                                                                                                                                                                                                                       | 509                                  |
| Alabama: Gulf Shores                                                                                                                                                                                                                                                                                                                                                             | 319                                  |
| Ohio: Lake Erie Islands                                                                                                                                                                                                                                                                                                                                                          | 141                                  |
|                                                                                                                                                                                                                                                                                                                                                                             |                                 |
| **DESERT RESORTS**                                                                                                                                                                                                                                                                                                                                                          |                                 |
| California: Palm Desert and Palm Springs                                                                                                                                                                                                                                                                                                                                         | 199                                  |
| Arizona: Phoenix, Scottsdale and Tucson                                                                                                                                                                                                                                                                                                                                          | 323                                  |
|                                                                                                                                                                                                                                                                                                                                                                             |                                 |
| **TOTAL**                                                                                                                                                                                                                                                                                                                                                                        | 20,253                               |

 

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## **VI.****                                                                               ****Services Offered**

***    Services Offered to Vacationers.**** *We provide services to vacationers during all stages of the rentalprocess from the selection and reservation of a condominium or home through thevacationers’ arrival and duration of their stay.  To make the selection and reservation process as simple andconvenient as possible, *ResortQuest.com,*our on-line,single-source, interactive web site that is accessible through AOL Keywords:ResortQuest and Vacation Rental, provides consumers with instant access to ourinventory of over 20,000 managed vacation rental properties.  Vacationers can check availability andrental rates, view extensive information about each property, includingphotographs and floor plans, take virtual tours of our condominium and home rentalunits and popular attractions in all of our resort locations, obtaininformation about special offers and promotions and make real-time reservationsdirectly on-line.  Vacationers cancustomize their searches of our rental inventory based upon either type ofresort destination, including beach, mountain, Hawaii and desert, or type ofactivity, including golf, skiing, tennis and fishing.  Vacationers also can search for rental units in several differentresort locations simultaneously.

     In addition to on-line access to ourrental properties, we also provide vacationers with catalogs containing colorphotographs and descriptions of available condominiums or homes in most of ourresort locations.  Also, vacationers maychoose to make reservations through our 24-hour toll-free reservations linestaffed by agents who are familiar with the specific condominiums and homes atall of our resort locations.

     Because of the variety of our resortlocations and the diversity of rental prices throughout our rental portfolio,we are able to target a broad range of vacationers, including families, couplesand individuals.  For vacationers, weoffer the convenience and accommodations of a condominium or home, whileproviding many of the amenities and services of a hotel.  Vacation condominium and home rentalsgenerally offer greater space and convenience than resort hotel rooms,including separate living, sleeping and eating quarters.  As a result, vacationers generally have moreprivacy and greater flexibility in a vacation condominium or home.

 

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     Upon the vacationer’s arrival, we offerconveniently located check-in and check-out locations, many of which arelocated on-site at the front desk of our condominium properties.  Off-site check-in locations are typicallycentrally located and easily accessible in their respective resort communities.In most destination resort communities, we maintain multiple convenientlylocated check-in facilities.  Duringtheir stay, vacationers at most locations are offered frequent cleaning andhousekeeping services and access to emergency contact and maintenancepersonnel.  In most locations, we offermore specialized concierge services such as bicycle and ski equipment rentals,ski lift ticket sales, shuttles to ski areas, golf tee times and restaurantreservations.  We typically receive afee for providing these services.

     To help ensure that vacationers’expectations are met, we implemented a comprehensive quality standard program.  As part of this program, each of our resortareas deliver a standardized, basic level of products and services that affectthe overall experience of vacationers. We have established a detailed listing of standards relating to:

 

•        the reservation, check-in andcheck-out processes;

•        the provisions included in eachrental unit;

•        the services and amenitiesprovided during the vacationers’ stay;

•        the maintenance of the groundsand facilities surrounding the rental unit; and

•        the response of employees toproblems raised by vacationers.

     To promote consistency across all of ourlocations, we have evaluated, based on our proprietary rating criteria,substantially all of our vacation condominiums and homes and segmented theminto the following five proprietary accommodation categories:

 
| Quest Home: |   | an exclusive group of  extraordinary accommodations that are so luxurious and unique that they are  in a class of their own;                                                               |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                       |
| Platinum:   |   | exceptional accommodations  marked by unique design that offers superior quality furnishings, luxury  features, designer appointments, and top-of-the-line kitchens, baths and  amenities; |
|        |   |                                                                                                                                                                                       |
| Gold:       |   | upscale, well-appointed  accommodations with a designer touch that includes excellent furnishings,  special features and top-quality kitchens, baths and amenities;                        |
|        |   |                                                                                                                                                                                       |
| Silver:     |   | inviting, pleasing  accommodations that are tastefully decorated and feature quality furnishings  and contemporary kitchens and baths; and                                                 |
|        |   |                                                                                                                                                                                       |
| Bronze:     |   | Comfortable, pleasant  accommodations that provide many of the comforts and conveniences of home.                                                                                          |

 

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     We have developed specific, detailed criteria for each of ouraccommodation categories, based on quality, appearance and features of therental properties including property furnishings, soft goods, flooring,kitchen/appliances, televisions and stereos, bathrooms and décor.  Similarly, we have standardized the use ofproperty location descriptions.  Weperform periodic on-site reviews of each of our rental properties to update ouraccommodation category ratings.

***    Services Offered to Condominium and Home Owners.**** *We provide condominium and home owners a comprehensive set ofhigh-quality vacation rental and property management services by combininglocal management expertise and attention with the marketing resources of aninternational brand.  In most markets,we will assume complete responsibility for rental management of the condominiumor home, including marketing, renting and maintaining the specific property aswell as managing the common areas and homeowners’ associations.  We currently engage in extensive marketingactivities, including our interactive web site, *ResortQuest.com,*that isaccessible through AOL Keywords: ResortQuest and Vacation Rentals*,*printadvertising in high-profile national publications and e-mail marketing, as wellas direct catalog mailings to prior and prospective vacationers and directsolicitations of travel agents and wholesalers.  We also handle all interaction with vacationers, includingaccepting reservations, collecting rental payments and security deposits,operating check-in and check-out locations and offering linen, housekeeping andother services.  Property owners arepaid rental income each month for rental activity in the preceding month andare given a concise, timely and accurate monthly statement which details therental activity and management of their condominiums and homes.

     Property maintenance services areprovided by both our employees and third party independent contractors.  Services are either regularly scheduled, orprovided on an “as needed” basis, depending on the service and resortlocation.  In most markets, we performperiodic inspections and make recommendations to property owners for maintenance,refurbishments and renovations necessary to maintain the quality of theircondominiums and homes.  In several ofour destination resort markets, we provide professional interior design andrefurbishment services to property owners to assist with the upkeep andappearance of their condominiums and homes. We include routine maintenance services, such as replacing light bulbsor broken china, as part of an all-inclusive commission structure in certainlocations. In other markets, we collect fees from property owners formaintenance services through service and maintenance agreements and fees forservice arrangements.

     For owners desiring to sell theirvacation condominium or home, we offer traditional real estate brokerageservices in over 30 resort locations, including listing and showing theproperty.  Also, *ResortQuest.com*providesmultiple location real estate listings for these resort locations. We believethat providing real estate brokerage services gives us a competitive advantagein identifying and securing properties for our rental management services andallows us to meet all of the needs of vacation property owners.

 

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## **VII.****                                                                           ****Marketing**

     ***General.***  The marketing efforts of traditionalvacation rental and property management companies are primarily through word ofmouth, including both vacationers and property owners, print advertisingprimarily in local newspapers and regional magazines and direct mailsolicitations and catalogs sent to prior customers.  Potential customers typically call as a result of a referral orin response to an advertisement or other promotion and are assisted byreservation agents in selecting the appropriate vacation property and makingthe reservation.

     Our marketing strategy is designed to befully integrated both online and off-line from a national, regional, and localperspective.  The number one goal is todrive occupancy rates, followed closely by building awareness of theResortQuest brand name and image, cross-selling our destinations and promoting *ResortQuest.com*.  Since our initial public offering, we havedeveloped a comprehensive, national marketing campaign targeting consumers andthe travel trade through various international and domestic marketing alliances,national cable TV, preferred supplier agreements, Internet affiliates andonline distribution, direct mail, e-mail marketing, public relations,promotional programs and high-profile print advertising in publications such as*Travel& Leisure, Ski, Coastal Living, Golf Magazine, Southern Living*and*ReadersDigest. *We also market toretail travel agents and wholesalers through e-mail, company intranets,advertisements in trade publications and attendance at national and regionaltravel industry trade shows.  Tourpackage operators typically combine transportation to a destination resort withour vacation condominiums and homes and a car rental.  Tour packages are distributed almost exclusively through travelagents and tour operators.

     We believe that our most importantmarketing resource is our proprietary past guest marketing database repository,customer contact center, and web site, *ResortQuest.com*.  For the first time, consumers can use a single source to visitresort destinations throughout the U.S. and in Canada, take virtual tours, viewphotographs and floor plans and make real-time reservations directlyon-line.  Pursuant to our alliance withInterval Travel, visitors to *ResortQuest.com* also can complete theirtravel itinerary by booking economical airline and car rental reservationsonline in real time.

     According to Forrester Research,consumers are adopting online travel faster than any other retail segment ofthe burgeoning e-commerce field.  Onlinetravel is expected to reach nearly $8.9 billion by 2002.  In order to maximize the online exposure of *ResortQuest.com*and our 20,000 plus vacation rental properties, we announced a travel marketingagreement with America Online, Inc. in January 2001 under which ResortQuestbecame a prominent sponsor of a new Vacation Rentals area within the TravelChannels of several America Online brands. Through this agreement, ResortQuest inventory is available to over 32million AOL and related subscribers.

     We believe that a national marketingcampaign increases the effectiveness of our existing operations and those to beacquired in the future, and expands the universe of potential new customers foreach resort location in which we operate.

     We intend to capitalize on our extensivemarket presence and further increase our use of the Internet, travel agents,wholesalers, distribution partners, broadcast and print media.  We believe that our extensive selection ofvacation condominiums and homes make us an attractive partner and new revenuestream while airlines and others have decreased commissions to travel agents,tour package 

 

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operatorsand other travel providers.  Theserelationships should continue to be a significant source of new customers and,in particular, will be valuable marketing and distribution channels foroff-peak seasons.

***    Marketing Database. ***Our marketing database profiles more than1.5 million guests across virtually all of our operations, which provides up tofour full years of consumption data for nearly 1.8 million stays, more than10.4 million room nights and nearly $1.5 billion in revenue.

 

     With a myriad of dataenhancements — including demographic data appends and cross-resort staypatterns — this database supports a full range of one-to-one marketingactivities through e-marketing, direct mail and telemarketing.  Its value was clearly demonstrated againstthe backdrop of the events of September 11, 2001.  While leisure business at most resort properties in 2001 declinedversus 2000 by 20% on average, aggressive and timely direct marketing madepossible by this database held our declines at only 13% in the number ofguests, and only 8% in the number of stays and room-nights.

 

     The ability to quickly rampup targeted direct marketing promotions to past guests resulted in a tremendousincrease in the percentage of repeat guests — from 21% in 2000 to 31% in 2001.

 

     The advantage gained by theavailability of this database was especially evident in our ability to drivebusiness within booking windows that were 24% tighter in 2000 versus 2001 (73days versus 96 days).  As vacation planswere deferred in the aftermath of September 11, 2001, continually mining ourdatabase enabled us to develop targeted offers to targeted past guests drivingbusiness that, in previous years, required a much longer timeframe from bookingto arrival.

 

     This database is utilizedextensively for regular booking pace analyses to identify and quickly respondto soft periods at each of our resort areas. Without this information, the ability to analyze booking pace on astandardized basis across so many diverse destinations would be extremelydifficult.  This database is alsoutilized extensively in sales tracking and analysis enabling us to fine-tunepromotional efforts for greater cost-efficiencies.

 

     Finally,this database is the core component of our long-term e-marketing vision as itlinks guest history (consumption data) to email addresses for precise targetingon a truly one-to-one basis.

## **VIII.****                                                                       ****Technology**

     Through the sale of First Resort Softwareby ResortQuest Technologies, we are the leading provider of integratedmanagement, reservations and accounting software for the vacation rental andproperty management industry.   Weutilize First Resort Software internally and over 900 other vacation rental andproperty management companies have purchased licenses of this software fromus.  This software program was developedto overcome problems encountered by rental property managers in attempting touse software programs developed for the hotel industry.  The First Resort Software allows vacationrental and property management companies to automate and computerize theirreservations, billings, rental management and accounting tasks.  Vacation rental and property managementcompanies can use the software to enter current rates on individualcondominiums and homes and access specific descriptions of those condominiumsand homes for potential customers.  Thesoftware also allows companies to manage owner escrow accounts and generatemonthly revenue reports for property owners and to coordinate maintenance andhousekeeping schedules.  First  

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ResortSoftware also offers additional modules and interfaces, including a work ordermanagement system, activities management system, credit card interface andon-line booking interface through the Internet.  We are developing a JAVA browser-based graphical reservationsapplication that will allow users of its software to completely integrate theirreservations systems with the Internet.

     We intend to rely on the First ResortSoftware products and management expertise of ResortQuest Technologies toenhance our technology strategy.  Webelieve that investment in technology is critical in building aninternationally branded vacation rental and property management company forpremier destination resorts and will provide us with a significant competitiveadvantage in the future.  First ResortSoftware allows us to quickly link our existing and future acquired companies’databases.

 

**IX.****                                                                               ****Competition**

     The vacation rental and propertymanagement industry is highly competitive and has low barriers to entry.  The industry has two distinct customer groups:vacation property renters and vacation property owners.  We believe that the principal competitivefactors in attracting vacation property renters are:

•    market share and visibility;

•    quality, cost and breadth of services andproperties provided; and

•    long-term customer relationships.

Theprincipal competitive factors in attracting vacation property owners are theability to generate higher rental income and to provide comprehensivemanagement services at competitive prices. We compete for vacationers and property owners primarily with over 4,000individual vacation rental and property management companies that typicallyoperate in a limited geographic area. Some of our competitors are affiliated with the owners or operators ofresorts in which such competitors provide their services.  Certain of these smaller competitors mayhave lower overhead cost structures and may be able to provide their servicesat lower rates.

     We also compete for vacationers withlarge hotel and resort companies. Many of these competitors have greaterfinancial resources than we have, enabling them to finance acquisition anddevelopment opportunities, to pay higher prices for the same opportunities orto develop and support their own operations. In addition, many of these companies can offer vacationers services notprovided by vacation rental and property management companies, and they mayhave greater name recognition among vacationers.  These companies might be willing to sacrifice profitability tocapture a greater portion of the market for vacationers or pay higher pricesthan we would for the same acquisition opportunities.  Consequently, we may encounter significant competition in ourefforts to achieve our internal and acquisition growth objectives as well asour operating strategies focused on increasing the profitability of ourexisting and subsequent acquisitions.

 

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## **X.****                                                                                   ****Employees**

     We employed over 5,000 employees during2001.  We rely significantly on temporaryemployees to meet peak season demands. In the course of performing service and maintenance work, we alsoutilize the services of independent contractors.  We believe our relationships with our employees and independentcontractors are good.

 

## **XI.****                                                                               ****FactorsThat May Affect Future Results**

     Our disclosures and analyses in thisreport and in our 2001 Annual Report to Shareholders contain someforward-looking statements. Forward-looking statements give our current expectations or forecasts offuture events.  You can identify thesestatements by the fact that they do not relate strictly to historical orcurrent facts.  They use words such as“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” andother words and terms of similar meaning in connection with any discussion offuture operating or financial performance. In particular, these include statements relating to future actions,future performance or results of current and anticipated services, salesefforts, expenses, and financial results. From time to time, we also may provide oral or written forward-lookingstatements in other materials we release to the public.

 

     Any or all of our forward-lookingstatements in this report, in the 2001 Annual Report to Shareholders and in anyother public statements that we make, may turn out to be wrong.  They can be affected by inaccurateassumptions we might make or by known or unknown risks and uncertainties.  Many factors mentioned in the discussionabove will be important in determining future results.  Consequently, no forward-looking statementcan be guaranteed.  Actual futureresults may vary materially.

 

     We undertake no obligation to publiclyupdate any forward-looking statements, whether as a result of new information,future events or otherwise.  You areadvised, however, to consult any further disclosures we make on relatedsubjects in our Form 10-Q, 8-K and 10-K reports to the Securities and ExchangeCommission (“SEC”).  Also note that weprovide the following cautionary discussion of risks, uncertainties andpossibly inaccurate assumptions relevant to our businesses.  These are factors that we think could causeour actual results to differ materially from expected and historical results.  Other factors besides those listed herecould also adversely affect ResortQuest. This discussion is provided as permitted by the Private SecuritiesLitigation Reform Act of 1995.

 

**     We May Not Be Able To IntegrateSuccessfully Any Future Acquisition.**

 

     We cannot assure you that our managementgroup will be able to continue to manage effectively the combined entities orimplement effectively our operating and growth strategies.  If we are unable to integrate successfullyrecent and future acquisitions, it could have a material adverse effect on ourbusiness and financial results.

 

     Entities that we have acquired offer avariety of different services to property owners and vacationers, applydifferent sales and marketing techniques to attract new customers, usedifferent fee structures and target different customer segments.  In addition, almost 

 

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allof our acquired entities operate in different geographic markets with varyinglevels of competition, development plans and local market dynamics.  These differences increase the risk inherentin successfully completing the integration of our future acquisitions.

 

**     We May Not Be Able To CompleteSuccessfully Our Planned Expansion.**

 

     We intend to continue to expand themarkets we serve and increase the number of properties we manage, in part,through selective strategic acquisitions of additional vacation rental andproperty management companies.  Wecannot assure you that we will be able to identify, acquire or profitablymanage additional businesses or successfully integrate acquired businesses intoour existing operations without substantial costs, delays or other operationalor financial problems.  It is possiblethat competition may increase for companies we might seek to acquire.  In such event, there may be feweracquisition opportunities available to us, as well as higher acquisitionprices.

 

     Acquisitions also involve a number ofspecial risks that could have a material adverse effect on our business andfinancial results.  These risks includethe following:

 

•             failure ofacquired companies to achieve expected financial results;

•             diversion ofmanagement’s attention;

•             failure toretain key personnel;

•             impairmentand amortization of acquired intangible assets; and

•             increasedpotential for customer dissatisfaction or performance problems at a singleacquired company to affect adversely our reputation and brand name.

 

     We may also seek internationalacquisitions that may be subject to additional risks associated with doingbusiness in such countries.  Wecontinually review various strategic acquisition opportunities and have helddiscussions with a number of such acquisition candidates.

 

**     We May Not Be Able To Finance FutureAcquisitions.**

 

     We seek to use shares of our common stockto finance a portion of the consideration for acquisitions.  If our common stock does not maintain asufficient market value, or the owners of businesses we may seek to acquire areotherwise unwilling to accept shares of common stock as part of theconsideration for the sale of their businesses, we may be required to use moreof our cash resources in order to implement our acquisition strategy.  If we have insufficient cash resources, ourability to pursue acquisitions could be limited unless we are able to obtainadditional funds through debt or equity financing.  Our ability to obtain debt financing may be constrained byexisting or future loan covenants, the satisfaction of which may be dependentupon our ability to raise additional equity capital through either offeringsfor cash or the issuance of stock as consideration for acquisitions.  We cannot assure you that our cash resourceswill be sufficient, or that other financing will be available on terms we findacceptable.  If we are unable to obtainsufficient financing, we may be unable to implement fully our acquisitionstrategy.

 

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**     Our Business May Be Negatively AffectedIf We Are Unable To Manage Our Growth Effectively.**

 

     Weplan to continue to grow internally and through selective acquisitions.  We will expend significant time and effortin expanding our existing operations and in identifying, completing andintegrating selective acquisitions.  Wecannot assure you that our systems, procedures and controls will be adequate tosupport our operations as they expand. Any future growth also will impose significant added responsibilities onmembers of senior management, including the need to identify, recruit andintegrate new managers and executives. We cannot assure you that we will be able to identify and retain suchadditional management.  If we are unableto manage our growth efficiently and effectively, or we are unable to attractand retain additional qualified management, it could have a material adverseeffect on our business and financial results.

 

**     Our Stock Price May Be Adversely AffectedBy Market Volatility.**

 

     The following factors, among others, maycause the market price of our common stock to significantly increase ordecrease:

 

•             our failureto meet financial research analysts’ estimates of our earnings;

•             variationsin our annual or quarterly financial results or the financial results of ourcompetitors;

•             changes byfinancial research analysts in their estimates of our earnings;

•             conditionsin the general economy, or the vacation and property rental management orleisure and travel industries in particular;

•             unfavorablepublicity about us or our industry; and

•             significantprice and volume volatility in the stock market in general for reasonsunrelated to us.

 

**     The Number Of Shares Available For SaleCould Cause Our Stock Price To Decline.**

 

     The market price of our common stockcould drop as a result of the sale of substantial amounts of our common stockin the public market, or the perception that such sales could occur.  We had 19,243,249 shares of our common stockoutstanding as of March 11, 2002, of which 2,305,216 were restricted and heldby our affiliates.  The 6,670,000 sharesof our common stock sold in our initial public offering are freely tradableunless held by our affiliates. Simultaneous with the closing of the 12 acquisitions at the initialpublic offering, the stockholders of these acquired entities received 6,119,656shares and our management team and promoters received 3,134,630 shares.  These 9,254,286 shares were not registeredunder the Securities Act of 1933, and therefore, could not be sold unlessregistered under the Securities Act of 1933 or sold pursuant to an exemptionfrom registration.  These shares, unlessheld by our affiliates, may be resold pursuant to the exemption fromregistration provided by Rule 144 under the Securities Act.  Since our initial public offering, we haveissued 3,318,963 shares related to acquisitions and the exercise of employeestock options. All of these shares were registered under the Securities Act.

 

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**     Our Business And Financial Results DependUpon Factors That Affect The Vacation Rental And Property Management Industry.**

 

     Our business and financial results aredependent upon various factors affecting the vacation rental and propertymanagement industry.  Factors such asthe following could have a negative impact on our business and financialresults:

 

•         reduction in the demand for vacation properties,particularly for Hawaii, beach, mountain and desert resort properties;

 

•         adverse changes in travel and vacation patterns;

 

•         adverse changes in the tax treatment of second homes;

 

•         a downturn in the leisure and tourism industry;

 

•         an interruption of airline service;

 

•         increases in gasoline or airfare prices;

 

•         terrorist attacks; and

 

•         adverse weather conditions or natural disasters, such ashurricanes, tidal waves or tornadoes.

 

 

**     Our Operating Results Are HighlySeasonal.**

 

     Our business is highly seasonal.  The financial results of each of ouroperations have been subject to quarterly fluctuations caused primarily by thecombination of seasonal variations and when revenue is recognized in thevacation rental and property management industry.  Peak seasons for our operations depend upon whether the resort isprimarily a summer or winter destination. During 2001, excluding unusual items and other charges of approximately$4.7 million, we derived approximately 28.2% of our revenues and 62.2% of ouroperating income in the first quarter and 30.2% of our revenues and 72.6% ofour operating income in the third quarter. Although the seasonality of our financial results may be partiallymitigated by the geographic diversity of our operations and any futureacquisitions, we expect a significant seasonal factor with respect to ourfinancial results to continue.

 

      Our quarterly financial results may alsobe subject to fluctuations as a result of the timing and cost of acquisitions,the timing of real estate sales, changes in relationships with travelproviders, extreme weather conditions or other factors affecting leisure traveland the vacation rental and property management industry.  Unexpected variations in our quarterlyfinancial results could adversely affect the price of our common stock, whichin turn could adversely affect our acquisition strategy.

 

**     Our Business Depends Upon The Efforts OfThird Parties To Maintain Resort Facilities And To Market Our HawaiianProperties.**

 

     We manage properties that are generallylocated in destination resorts that depend upon third parties to maintainresort amenities such as golf courses and chair lifts.  The failure of third parties to continue tomaintain resort amenities could have a material adverse effect on the rentalvalue of our properties and, consequently, on our business and financialresults.

 

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     We also depend on travel agents, packagetour providers and wholesalers for a substantial portion of our revenues.  During 2001, we derived approximately 24% ofour gross lodging revenues from sales made through travel intermediaries.  Failure of travel intermediaries to continueto recommend or package our vacation properties could result in a materialadverse effect on our business and financial results.

 

**     Our Business Could Be Harmed If TheMarket For Leisure And Vacation Travel Does Not Continue To Grow.**

 

     We cannot assure you that we or the totalmarket for vacation property rentals will continue to experience growth.  Factors affecting our ability to continue toexperience internal growth include our ability to:

 

•             maintainexisting relationships with property owners;

•             expand thenumber of properties under management;

•             increaserental rates and cross-sell among our resort operations; and

•             sustaincontinued demand for our rental inventory.

 

**     Our Operations Are Concentrated In ThreeGeographic Areas.**

 

     We manage properties that aresignificantly concentrated in beach and island resorts located in Florida andHawaii and mountain resorts located in Colorado. The following table sets forththe December 31, 2001 consolidated revenues and percentage of total revenuesderived from each region (dollars in thousands).

 
| **Region** |   |   | **Consolidated****Revenues** |   | **% of Total****Revenues** |   |
|------------|--------|--------|------------------------------|--------|----------------------------|--------|
| Florida    |   | $      | 56,561                       |   | 35.2                       | %      |
| Hawaii     |   | 24,247 |                         | 15.1   |                       |
| Colorado   |   | 21,970 |                         | 13.6   |                       |
| Other(1)   |   | 58,178 |                         | 36.1   |                       |
| Total      |   | $      | 160,956                      |   | 100.0                      | %      |

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     (1) Includes revenues related to the saleand service of First Resort Software.

 

     Adverse events or conditions which affectthese areas in particular, such as economic recession, changes in regionaltravel patterns, extreme weather conditions or natural disasters, would have amore significant adverse effect on our operations, than if our operations weremore geographically diverse.

 

**     Our Business Depends On Attracting AndRetaining Highly Capable Management And Employees.**

 

     Our business substantially depends on theefforts and relationships of David L. Levine, Chairman, President and ChiefExecutive Officer, the other executive officers of ResortQuest and our seniormanagement team in each of the resort areas in which we operate.  Furthermore, we will likely be dependent onthe management team of any businesses acquired in the future.  If any of these persons 

 

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becomesunable or unwilling to continue in his or her role, or if we are unable to attractand retain other qualified employees, it could have a material adverse effecton our business and financial results. Although we have entered into employment agreements with each of ourexecutive officers and many of our local managers, we cannot assure you thatany of these individuals will continue in his or her present capacity for anyparticular period of time.

 

**     The Substantial Amount Of GoodwillResulting From Our Acquisitions Could Adversely Affect Our Financial AndOperating Results.**

 

     Approximately $216.5 million, or 71.2%, of our total assets atDecember 31, 2001 is net goodwill, which represents the excess of the purchaseprice over fair value of identified net assets acquired in business combinationsaccounted for under the purchase method of accounting. Goodwill has beenamortized on a straight-line basis over 40 years, other than that associatedwith the acquisition of First Resort Software, Inc., which has been amortizedover 15 years, representing the approximate remaining useful life of acquiredassets.   We recorded goodwillamortization of $5.7 million in 2001.

 

     The Financial AccountingStandards Board issued SFAS No. 141, “Business Combinations” and No. 142,“Goodwill and Other Intangible Assets” in June 2001.  SFAS No. 141 eliminated the pooling-of-interests method ofaccounting for business combinations and required all transactions initiatedafter June 30, 2001 to be accounted for using the purchase method.  Under SFAS No. 142, goodwill related to ourfuture acquisitions will not be subject to amortization, and goodwill relatedto our historical acquisitions will no longer be amortized beginning on January1, 2002.  Additionally, goodwill issubject to reviews for impairment annually and upon the occurrence of certainevents, and, if impaired, a write-down will be recorded.  Upon adoption of SFAS No. 142 in January2002, the Company recorded an $8.1 million goodwill impairment chargerelated to its Desert operations.

 

     Amortization of our goodwill and recordedimpairment charges may not be deductible for tax purposes.  A reduction in net income resulting from agoodwill impairment charge would currently affect our financial results andcould have a material adverse impact upon the market price of our common stock.

 

**     IfVacation Rental Property Owners Do Not Renew A Significant Number Of PropertyManagement Contracts Our Business Would Be Adversely Affected.**

 

     We provide rental and property managementservices to property owners pursuant to management contracts, which generallyhave one-year terms.  The majority ofsuch contracts contain automatic renewal provisions but also allow propertyowners to terminate the contract at any time. If property owners do not renew a significant number of managementcontracts or we are unable to attract additional property owners, it would havea material adverse effect on our business and financial results.  In addition, although most of our contractsare exclusive, industry standards in certain geographic markets dictate that rentalservices be provided on a non-exclusive basis. Less than 2% of our revenues for 2001 were derived from rental servicesprovided on a non-exclusive basis.  Weare unable to determine the percentage of the national rental services marketthat is provided on a non-exclusive basis.

 

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**     If Homeowners’ Associations TerminateManagement Agreements, We Could Lose Some Of Our Competitive Advantage In TheseMarkets.**

 

     We currently provide management servicesat numerous condominium developments pursuant to contracts with the homeowners’associations.  We frequently providerental management services for a significant percentage of the condominiumswithin these developments.  Providingmanagement services for homeowners’ associations frequently leads theassociations to request that we manage and control the front desk operations,laundry facilities and other related services of the condominiumdevelopments.  Controlling theseservices often gives us a competitive advantage over other vacation rental andproperty management companies in retaining the condominiums we currently manageand in attracting new homeowners.

 

     We cannot assure you that a homeowners’association will not terminate its management agreement with us.  If a homeowners’ association terminates amanagement agreement, we could lose control or management of the front desk andrelated services in that condominium development, thereby eliminating ourcompetitive advantage in that development. If a number of terminations occur, it could have a material adverseeffect on our business and financial results.

 

**     Competition Could Render Our ServicesUncompetitive.**

 

     The vacation rental and propertymanagement industry is highly competitive and has low barriers to entry.  The industry has two distinct customergroups: vacation property renters and vacation property owners.  We compete for vacationers and propertyowners primarily with local vacation rental and property management companieslocated in our markets.  Some of thesecompetitors are affiliated with the owners or operators of resorts where thesecompetitors provide their services. Certain of these competitors may have lower cost structures and mayprovide their services at lower rates.

 

     We also compete for vacationers withlarge hotel and resort companies.  Manyof these competitors are large companies that have greater financial resourcesthan we do, enabling them to finance acquisition and development opportunities,pay higher prices for the same opportunities or develop and support their ownoperations.  In addition, many of thesecompanies can offer vacationers services not provided by vacation rental andproperty management companies, and they may have greater name recognition amongvacationers.  If such companies chose tocompete in the vacation rental and property management industry, they wouldconstitute formidable competition for our business.  Such competition could cause us to lose management contracts,increase expenses or reduce management fees, which could have a materialadverse effect on our business and financial results.

 

**     Existing Management, Directors And TheirAffiliates Own Enough Shares To Exercise Substantial Influence Over MattersRequiring A Vote Of Stockholders.**

 

     Executive management, directors and theiraffiliated entities, as of March 11, 2002, owned shares of common stockrepresenting approximately 10.5% of the total voting power of the common stock.  They would own approximately 12.3% of thevoting power of the common stock if all shares of voting-restricted commonstock, which are entitled to one-half vote per share, were converted intounrestricted common stock.  Thesepersons, if acting together, will likely be able to exercise substantialinfluence over the election of the directors and the disposition of any mattersubmitted to a vote of stockholders.

 

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**     Any Adverse Change In The Real EstateMarket Could Adversely Affect Our Financial And Operating Results.**

 

     We derived approximately 9.5% of ourconsolidated revenues for 2001 from net real estate brokerage commissions.  Any factors that adversely affect realestate sales, such as a downturn in general economic conditions or changes ininterest rates, the tax treatment of second homes or property values, couldhave a material adverse effect on our business and financial results.

 

**     We Are Subject To Governmental RegulationOf The Vacation Rental And Property Management Industry.**

 

     Our operations are subject to variousfederal, state, local and foreign laws and regulations, including licensingrequirements applicable to real estate operations and the sale of alcoholicbeverages, laws and regulations relating to consumer protection and localordinances.  Many states have adoptedspecific laws and regulations which regulate our activities, such as:

 

•             anti-fraudlaws;

•             real estateand travel services provider license requirements;

•             environmentallaws;

•             telemarketinglaws;

•             labor laws;and

•             the FairHousing Act.

 

     We believe that we are in materialcompliance with all federal, state, local and foreign laws and regulations towhich we are currently subject. However, we cannot assure you that the cost of qualifying under applicableregulations in all jurisdictions in which we desire to conduct business willnot be significant or that we are actually in compliance with all applicablefederal, state, local and foreign laws and regulations.  Compliance with or violation of any currentor future laws or regulations could require us to make material expenditures orotherwise have a material adverse effect on our business and financial results.

 

**     Transactions Between Our Operations AndTheir Affiliates May Result In Conflicts Of Interest.**

 

     Several lease agreements, managementcontracts and other agreements with the former owners of many of the entitiesthat we have acquired and entities controlled by them continued after theacquisitions were consummated.  We havealso entered into certain similar agreements that became effective upon suchacquisitions.  In addition, we may enterinto similar agreements in the future. Other than a loan agreement with the former principal stockholder ofAston Hotels & Resorts, an entity acquired in conjunction with our initialpublic offering, we believe existing agreements with related persons are, andthat all future agreements will be, on terms no less favorable to us than wecould obtain from unrelated third parties. Conflicts of interests may arise between us and these related persons.

 

     At December 31, 2001, the formerprincipal stockholder of Aston Hotel & Resorts owed us approximately $4.1million plus 

 

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accruedinterest, either directly or through entities controlled by him, includingproperties managed by us.  This amountis fully collateralized by certain real estate owned by the former principalstockholder.

 

**     Delaware Law, Our Charter Documents AndStockholder Rights Plan Contain Provisions That May Have An Anti-TakeoverEffect.**

 

     We are subject to Section 203 of theDelaware General Corporation Law, which generally prohibits us from engaging ina broad range of business combinations with an interested stockholder for aperiod of three years after such a person first becomes an interestedstockholder.  Interested stockholdersinclude our affiliates, associates and anyone who owns 15% or more of ouroutstanding voting stock.  Theprovisions of Section 203 could delay or prevent a change of control ofResortQuest.

 

     Provisions of our certificate ofincorporation could make it more difficult for a third party to acquire controlof ResortQuest, even if such change in control would be beneficial tostockholders.  The directors are allowedto issue preferred stock without stockholder approval.  Such issuances could make it more difficultfor a third party to acquire ResortQuest. Our bylaws contain provisions that may have an anti-takeover effect,such as the requirement that we must receive notice of nomination of directorsnot less than 60 nor more than 90 days prior to the date of the annual meeting.

 

     On February 25, 1999, our board ofdirectors adopted a stockholder rights plan designed to protect ourstockholders in the event of takeover action that would deny them the fullvalue of their investment.  Under thisplan, a dividend distribution of one right for each share of common stock wasdeclared to holders of record at the close of business on March 15, 1999.  The rights will also attach to common stockissued after March 15, 1999.  The rightswill become exercisable only in the event, with certain exceptions, anacquiring party accumulates 15% or more of our voting stock, or if a partyannounces an offer to acquire 15% or more of our voting stock.  The rights will expire on March 15,2009.  Each right will entitle theholder to buy one one-hundredth of a share of a new series of preferred stockat a price of $87.00.  In addition, uponthe occurrence of certain events, holders of the rights will be entitled topurchase either our stock or shares in an “acquiring entity” at half of marketvalue.  We generally will be entitled toredeem the rights at $0.01 per right at any time until the date on which a 15%position in our voting stock is acquired by any person or group.

 

     The rights plan is designed to preventthe use of coercive and/or abusive takeover techniques and to encourage anypotential acquiror to negotiate directly with our board of directors for the benefitof all stockholders.  In addition, therights plan is intended to provide increased assurance that a potentialacquiror would pay an appropriate control premium in connection with anyacquisition of ResortQuest. Nevertheless, the rights plan could be utilized, under certaincircumstances, as a method of discouraging, delaying or preventing a change ofcontrol.

 

     **New Business Opportunities Driven by Technology MayNot Materialize**.

 

     This business opportunity is dependent onour ability to drive demand for the Alliance Partners.  Since our revenue is based entirely ondelivering incremental reservations, a failure in our ability to market theseproperties or a general failure to generate new demand would result in norevenue from which to take our commission and lead Alliance Partners abandoningthe program.

 

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**ITEM2.  PROPERTIES**

 

     We have201****propertiesin over 50 locations in 17 states in the U.S. and one province in Canada.  These properties consist principally ofoffices and maintenance, laundry and storage facilities.  We own 42 of these facilities and lease theremaining 159 properties.  We considerall of our owned and leased properties to be suitable and adequate for theconduct of its business.

 

**ITEM3.  LEGAL PROCEEDINGS**

 

     On May 26, 2000, HotelCorp. of the Pacific, Inc. (“Hotel Corp.”), a subsidary of ResortQuest doingbusiness as Aston Hotels & Resorts, instituted legal proceedings in theCircuit Court for the First Circuit of Hawaii against Andre S. Tatibouet, thepresident of Hotel Corp. This action arises out of a document styled“Cooperation Agreement” that was signed by Mr. Tatibouet, purporting to act onbehalf of Hotel Corp., on the one hand, with Cendant Global Services B.V. andAston Hotels & Resorts International, Inc., on the other hand.  The Cooperation Agreement contains severalprovisions that are detrimental to Hotel Corp., including provisions purportingto transfer certain intellectual property and limit certain intellectualproperty rights held by Hotel Corp. Hotel Corp. seeks monetary damages forbreach of fiduciary duty, fraud, and negligent misrepresentation.  By order of the Circuit Court, the claimsasserted by Hotel Corp. in the lawsuit have been consolidated with anarbitration demand, filed with the American Arbitration Association by Mr.Tatibouet, in which he alleges various breaches of his employment agreementwith Hotel Corp.   The abritrationhearing took place in September 2001, where Mr. Tatibouet claimed damages ofapproximately $17.5 million and ResortQuest claimed damages ofapproximately $4.7 million.  Theparties are engaged in post-hearing briefings, and a decision from the panel isexpected in March 2002.

 

     Also on May 26, 2000,ResortQuest International and Hotel Corp. brought action in the Ciruit Courtfor the First Circuit of Hawaii against Cendant Corporation, Aston Hotels &Resorts International, Inc. and Cendant Global Services B.V. (“Defendants”). Itis the position of ResortQuest and Hotel Corp. that the Cooperation Agreementis voidable because (i) it was entered in breach of a prior agreement betweenResortQuest, and the parent company of Cendant Global Services B.V. and AstonHotels & Resorts International, Inc., Cendant Corporation, and (ii) it wasentered into by an interested director and officer of Hotel Corp. who wasengaging in self-dealing. Accordingly, ResortQuest and Hotel Corp. seek damagesfor breach of contract against Cendant, and the equitable remedies of rescissionand replevin.  We believe that we havemeritorious claims and will prevail in each matter.

 

     We are also involved invarious legal actions arising in the ordinary course of our business.  We do not believe that any of the remainingactions will have a material adverse effect on our business, financialcondition or results of operations.

 

**ITEM4.  SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS**

 

     Notapplicable.

 

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**EXECUTIVE OFFICERS OF RESORTQUEST**

 

     As of March 27, 2002, the followingexecutive officers of ResortQuest hold the offices indicated until theirsuccessors are chosen and qualified after the next annual meeting ofshareholders:

 
| David L. Levine     |   | 54 |   | Chairman, President and Chief Executive Officer                                                  |
|---------------------|--------|----|--------|--------------------------------------------------------------------------------------------------|
| James S. Olin       |   | 43 |   | Executive Vice President and Chief Operating Officer                                             |
| Frederick L. Farmer |   | 52 |   | Executive Vice President, Chief Information Officer  and

President of  ResortQuest Technologies |
| J. Mitchell Collins |   | 33 |   | Senior Vice President and Chief Financial Officer                                                |
| Paul N. Manteris    |   | 61 |   | Senior Vice President, Operations and Homeowner

Relations                                       |
| W. Michael Murphy   |   | 56 |   | Senior Vice President and Chief Business Development

Officer                                    |

 

**     David L. Levine:** Mr. Levine is the Chairman, President and Chief Executive Officer ofResortQuest.  Mr. Levine became Chairmanin May 2000 and Chief Executive Officer in December 1999.  From May 1998 to December 1999, Mr. Levinewas the President and Chief Operating Officer of ResortQuest.  Mr. Levine was President and Chief OperatingOfficer of Equity Inns, Inc., a real estate investment trust that specializesin hotel acquisitions, from June 1994 to April 1998.  Mr. Levine was also President and Chief Operations Officer ofTrust Management Inc., which operated Equity Inns properties from June 1994until November 1996.  Prior to that, hewas President of North American Hospitality, Inc., a hotel management andconsulting company, which he formed in 1985.

**     James S. Olin:** Mr. Olin is Executive Vice President and Chief Operating Officer ofResortQuest.  He was formerly Presidentof Abbott Resorts, one of ResortQuest’s largest operations, from 1992 toJanuary 2000.  During his tenure asPresident, the Company grew from 900 units to over 2,500 units managed, andreal estate sales went from approximately $30 million to over $250million.  Mr. Olin also served as VicePresident for ResortQuest’s Gulf Coast Region. He has over 14 years of experience in the travel and tourism industry.

**     Frederick L. Farmer:**  Mr. Farmer is Executive Vice President and Chief InformationOfficer of ResortQuest and President of ResortQuest Technologies, a division ofResortQuest.  He has more than 22 yearsof experience working for Fortune 500 companies.  Mr.  Farmer most recentlyspent 12 years with Marriott International as Senior Vice President, Internetand Desktop Services.  He wasresponsible for positioning Marriott for Internet commerce.

**     J. Mitchell Collins:** Mr. Collins is Senior Vice President and Chief Financial Officer ofResortQuest.  Mr. Collins was previouslyemployed with Arthur Andersen LLP from July 1990 to February 2000 where he washead of real estate and hospitality services for Andersen’s Mid-South practice.  He also served on Andersen’s global realestate and hospitality services team. In addition, he has over 10 years of related finance, accounting, andsystems implementation experience.

**     W. Michael Murphy:** Mr. Murphy is Senior Vice President and Chief Development Officerof ResortQuest.  Mr. Murphy leads theCompany’s mergers and acquisitions effort and is in charge of new businessdevelopment. Mr. Murphy has been involved with real estate acquisitionbusinesses and the hospitality industry for more than 27 years.

 

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**     Paul N. Manteris:** Mr. Manteris is Senior Vice President of Operations and HomeownerRelations of ResortQuest.  He is theformer manager of Training and Special Projects for Premier Resorts, Inc., ahospitality management company operating primarily in the Western United Statesand Hawaii. He has over 23 years of experience in the hospitality industry.

 

 

**PART II**

 

 

**ITEM 5.  MARKET FOR RESORTQUEST’S COMMON EQUITY AND RELATED STOCKHOLDERMATTERS**

 

**    **Theprincipal market for our Common Stock is the New York Stock Exchange.  Information required by this item concerningquarterly sales price data is incorporated by reference from the table *Stock Price*onpage 46 of the 2001 Annual Report to Shareholders.

 

 

**ITEM6.  SELECTED FINANCIAL DATA**

 

     Financialinformation required by this item is incorporated by reference from the *SelectedFinancial Data*on page 47 of the 2001 Annual Report to Shareholders.

 

 

**ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS**

 

    Information required by this item is incorporated by reference from *Management’sDiscussion and Analysis of Financial Condition and Results of Operations*onpages 13 through 27 of the 2001 Annual Report to Shareholders.

 

 

**ITEM7A.  QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK**

 

    Information required by this item is incorporated by reference from thediscussion under the heading *Quantitativeand Qualitative Disclosures About Market Risk*in *Management’s Discussion and Analysis of FinancialCondition and Results of Operations* on page 25 of the 2001 AnnualReport to Shareholders.

 

 

**ITEM8.  FINANCIAL STATEMENTS ANDSUPPLEMENTARY DATA**

 

    Information required by this item is incorporated by reference from the *Report ofIndependent Public Accountants* found on page 44, from theconsolidated financial statements and supplementary data on pages 28 through 48of the 2001 Annual Report to Shareholders.

 

 

**ITEM9.  CHANGES IN AND DISAGREEMENTS WITHACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

 

**    **Not applicable.

 

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**PARTIII**

 

**ITEM10.  DIRECTORS AND EXECUTIVE OFFICERS OFRESORTQUEST**

 

As of March 27, 2002, thefollowing were directors of ResortQuest:

 

***William W. Abbott, Jr.***

***Director since November 1998***

***Age 56***

 

Mr. Abbott is aconsultant to ResortQuest.  Hepreviously served as Vice Chairman of Abbott Resorts, Inc. from March 1997 toNovember 1998.  He served as Presidentand Chairman of the Board of Abbott Resorts from 1976 to March 1997.  Abbott Resorts, the largest provider ofbeach vacation property rentals, management services and real estate sales inFlorida, is a ResortQuest subsidiary.

 

***Elan J. Blutinger***

***Director since September 1997***

***Age 46***

 

Mr. Blutinger is a founding partner ofAlpine Consolidated LLC, a merchant bank specializing in the consolidation offragmented industries.  He is alsoManaging Director of Alpine Europe LLC. He was a co-founder and director of Travel Services International, Inc.until its acquisition in 2000.  From1987 until its acquisition in 1995, Mr. Blutinger was the Chief ExecutiveOfficer of Shoppers Express, which became “OnCart” in 1997, an electronicretailing service.  From 1983 until itsacquisition in 1986 by IDI, Mr. Blutinger was Chief Executive Officer of DSI, awholesale software distributor.  Mr.Blutinger is also a director of Online Travel Corp., a publicly traded companyin the United Kingdom.

 

***David L. Levine***

***Director since May 1998***

***Age 54***

 

In May 2000, Mr. Levine became Chairman,President and Chief Executive Officer of ResortQuest.  He served as President and Chief Executive Officer of ResortQuestfrom December 1999 to May 2000 and as President and Chief Operating Officerfrom May 1998 until December 1999.  Mr.Levine was President and Chief Operating Officer of Equity Inns, Inc., a realestate investment trust that specializes in hotel acquisitions, from June 1994to April 1998.  Mr. Levine was alsoPresident and Chief Operations Officer of Trust Management Inc., which operatedEquity Inns’ properties, from June 1994 until November 1996.  Prior to that, he was President of NorthAmerican Hospitality, Inc., a hotel management and consulting company, which heformed in 1985.

 

***Colin V. Reed***

***Director since August 2000***

***Age 54***

 

In May 2001, Mr. Reed became President andChief Executive Officer of Gaylord Entertainment Company.  Mr. Reed had been a member of thethree-executive Office of the President of Harrah’s Entertainment, Inc. fromMay 1999 to May 2001.  Mr. Reed was a 

 

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director of Harrah’s from December 1998 toMay 2000 and the Chief Financial Officer of Harrah’s from April 1997 to May2001.  He was Executive Vice Presidentof Harrah’s from September 1995 to May 1999 and has served in several othermanagement positions with Harrah’s and its predecessor, Holiday Corporation,since 1977.  He was a member of theExecutive Committee of the Harrah’s Board. Mr. Reed also served as director and Chairman of the Board of JCCHolding Company.  JCC Holding Companyfiled a voluntary petition for reorganization under Chapter 11 of the UnitedStates Bankruptcy Code on January 4, 2001.

 

***David C. Sullivan***

***Director since May 1998***

***Age 62***

 

Mr. Sullivan is a consultant toResortQuest.  He served as Chairman ofResortQuest from December 1999 to May 2000. From May 1998 to December 1999, he was the Chairman and Chief ExecutiveOfficer of ResortQuest. From April 1995 to December 1997, Mr. Sullivan was theExecutive Vice President and Chief Operating Officer, and a director, of PromusHotel Corporation, a publicly traded hotel franchisor, manager and owner ofhotels whose brands include Hampton Inn, Homewood Suites and EmbassySuites.  Mr. Sullivan is also a directorof Winston Hotels, Inc. and John Q. Hammons Hotels, Inc.

 

***Joseph V. Vittoria***

***Director since May 1998***

***Age 66***

 

Mr. Vittoria has been the Chairman ofPuradyn Filter Technologies, Inc. since February 2000.  He was the Chairman and Chief ExecutiveOfficer of Travel Services International, Inc., a leading single sourcedistributor of specialized leisure travel services, from July 1997 until itsacquisition by Airtours PLC in March 2000. From September 1987 to February 1997, Mr. Vittoria was the Chairman andChief Executive Officer of Avis, Inc., a multinational auto rentalcompany.  Mr. Vittoria serves on theBoard of Directors of Transmedia Asia Pacific, Inc. and Sirius Satellite RadioInc.

 

***Theodore L. Weise***

***Director since May 1998***

***Age 57***

 

Mr. Weise is a consultant to Federal ExpressCorporation.  From February 1998 toFebruary 2000, Mr. Weise served as the President and Chief Executive Officer ofFederal Express Corporation, the world’s largest express transportationcompany.  He was previously ExecutiveVice President and Chief Operating Officer of Federal Express Corporation fromFebruary 1996 to February 1998.  FromAugust 1991 to February 1996 he served as Senior Vice President of AirOperations of Federal Express Corporation. Mr. Weise is also a director of Federal Express Corporation.

 

The remainder of the response to this itemis contained in the discussion entitled *Executive Officers of ResortQuest*in PartI of this report.

 

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**ITEM 11.  EXECUTIVECOMPENSATION**

 

**I.          Summary of Compensation**

 

The following table shows cash and othercompensation paid or accrued during each of the three most recent fiscal yearsto ResortQuest’s Chief Executive Officer and each of the four other most highlycompensated executive officers (the “Named Executive Officers”).

 

**Summary Compensation Table**

 
| **Name and Principal       Position** |   | **Fiscal Year(1)** |   | **Salary** |    | **Bonus** |   | **Other Annual Compensation** |   | **Securities Underlying Options Granted** |   | **LTIP Payouts** |    | **All Other Compensation** |   |
|----------------------------------------------------------------|--------|--------------------|--------|------------|---------|-----------|--------|-------------------------------|--------|-------------------------------------------|--------|------------------|---------|----------------------------|--------|
| David L.Levine                                                 |   | 2001               |   | $          | 325,000 |      | $      | 81,250                        |   | $                                         | — |             | 39,000  |                       |   |   |   |   |
| Chairman, President  and                                       |   | 2000               |   | $          | 275,000 |      | $      | 302,500                       |   | $                                         | — |             | 40,000  |                       | $      | — |   | $ | — |   |
| Chief Executive  Officer                                       |   | 1999               |   | $          | 195,625 |      | $      | —                        |   | $                                         | — |             | 140,500 |                       | $      | — |   | $ | — |   |
|                                                           |   |               |   |       |    |      |   |                          |   |                                      |   |             |    |                       |   |
| James. S. Olin                                                 |   | 2001               |   | $          | 275,000 |      | $      | 45,000                        |   | $                                         | — |             | 21,000  |                       |   |   |   |   |
| Executive Vice  President and                                  |   | 2000               |   | $          | 240,000 |      | $      | 158,400                       |   | $                                         | — |             | 110,000 |                       | $      | — |   | $ | — |   |
| Chief Operating  Officer                                       |   |               |   |       |    |      |   |                          |   |                                      |   |             |    |                       |   |
|                                                           |   |               |   |       |    |      |   |                          |   |                                      |   |             |    |                       |   |
| Frederick L. Farmer                                            |   | 2001               |   | $          | 220,000 |      | $      | 35,000                        |   | $                                         | — |             | 21,000  |                       |   |   |   |   |
| Executive Vice  President and                                  |   | 2000               |   | $          | 200,000 |      | $      | 110,000                       |   | $                                         | — |             | 55,000  |                       | $      | — |   | $ | — |   |
| Chief Information  Officer                                     |   | 1999               |   | $          | 139,583 |      | $      | —                        |   | $                                         | — |             | 25,000  |                       | $      | — |   | $ | — |   |
|                                                           |   |               |   |       |    |      |   |                          |   |                                      |   |             |    |                       |   |
| W. Michael Murphy                                              |   | 2001               |   | $          | 220,000 |      | $      | 45,000                        |   | $                                         | — |             | 16,333  |                       |   |   |   |   |
| Senior Vice President  and                                     |   | 2000               |   | $          | 210,000 |      | $      | 115,500                       |   | $                                         | — |             | 65,000  |                       | $      | — |   | $ | — |   |
| Chief Develop-ment  Officer                                    |   | 1999               |   | $          | 167,500 |      | $      | —                        |   | $                                         | — |             | 45,000  |                       | $      | — |   | $ | — |   |
|                                                           |   |               |   |       |    |      |   |                          |   |                                      |   |             |    |                       |   |
| J. Mitchell Collins                                            |   | 2001               |   | $          | 190,000 |      | $      | 45,000                        |   | $                                         | — |             | 16,333  |                       |   |   |   |   |
| Senior Vice President  and                                     |   | 2000               |   | $          | 143,979 |      | $      | 99,000                        |   | $                                         | — |             | 75,000  |                       | $      | — |   | $ | — |   |
| Chief Financial Officer  (2)                                   |   |               |   |       |    |      |   |                          |   |                                      |   |             |    |                       |   |

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(1)                    Mr. Levine, Mr. Farmer and Mr. Murphy commencedemployment 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 aregional vice president for a number of ResortQuest’s subsidiaries in Floridaand Alabama.  Mr. Collins becameemployed with ResortQuest on March 13, 2000.

(2)                    Theannual salary for 2000 for Mr. Collins was $180,000.

 

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**II.         Option Grants in Fiscal 2001 andFiscal Year-End Option Values**

 

The table below presents additionalinformation concerning option awards for each of the Named Executive Officersshown in the Summary Compensation table. None of the Named Executive Officersexercised any stock options in 2001. The options granted in fiscal 2001 become exercisable at the rate of 331/3% per year.

 

**OptionGrants in Fiscal 2001**

** **
|                                                         |   | **Individual  Grants (1)**                  |       |                                                 |       |
|--------------------------------------------------------------|--------|---------------------------------------------|------------|------------------------------------------------------|------------|
|                                                         |   | **Number of Securities Underlying Options** |       | **Percent of Total Options Granted to Employees in** |       | **Exercise or Base Price Per** |   | **Expiration** |   | **Potential Realizable  Value at Assumed Annual**

**Rates of Stock Price  Appreciation for**

**Option Term (2)** |   |
| **Name**                                                     |   | **Granted**                                 | ** ** | **Fiscal 2001**                                      | ** ** | **Share** | ** ** | **Date** | ** ** | **0%** |   | **5%** |   | **10%** |   |
| David L. Levine                                              |   | 39,000                                      |       | 16.1                                                 | %          | $ | 4.94 |   | 12/3/06 |   | $ | — |   | $ | 53,201 |   | $ | 117,561 |   |
| James S. Olin                                                |   | 21,000                                      |       | 8.7                                                  | %          | $ | 4.94 |   | 12/3/06 |   | $ | — |   | $ | 28,647 |   | $ | 63,302 |   |
| Frederick L. Farmer                                          |   | 21,000                                      |       | 8.7                                                  | %          | $ | 4.94 |   | 12/3/06 |   | $ | — |   | $ | 28,647 |   | $ | 63,302 |   |
| W. Michael Murphy                                            |   | 16,333                                      |       | 6.8                                                  | %          | $ | 4.94 |   | 12/3/06 |   | $ | — |   | $ | 22,281 |   | $ | 49,234 |   |
| J. Mitchell Collins                                          |   | 16,333                                      |       | 6.8                                                  | %          | $ | 4.94 |   | 12/3/06 |   | $ | — |   | $ | 22,281 |   | $ | 49,234 |   |
| All Shareholders (3)                                         |   | N/A                                         |       | N/A                                                  |       | N/A |   | N/A |   | $ | — |   | $ | 26,250,490 |   | $ | 58,006,717 |   |
| All Optionees                                                |   | 241,499                                     |       | 100                                                  | %          | $ | 6.46 | (4) | Various |   | $ | — |   | $ | 430,851 |   | $ | 952,069 |   |
| All optionees gain as  a percentage of all stockholders gain |   | N/A                                         |       | N/A                                                  |       | N/A |   | N/A |   |   |   | 1.6 | % | 1.6 | %  |
|                                                         |   |                                        |       |                                                 |       |   |   |   |   |   |   |   |   |   |   |

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(1)          Options to purchaseCommon Stock expiring on April 1, 2006, May 9, 2006, June 17, 2006, June 25,2006, July 7, 2006, October 3, 2006, October 13, 2006 and December 3, 2006 weregranted under ResortQuest’s Amended and Restated 1998 Long-Term Incentive Planon April 2, 2001, May 10, 2001, June 18, 2001, June 26, 2001, July 8, 2001,October 4, 2001, October 14, 2001 and December 4, 2001.

(2)          The dollar amountsunder these columns are the result of calculations at zero percent, fivepercent and ten percent rates set by the Securities and Exchange Commission andtherefore are not intended to forecast possible future appreciation, if any, ofour stock price.  In the above table, wedid not use an alternative formula for a grant valuation, as we are not awareof any formula, which will determine with reasonable accuracy a present valuebased on future unknown or volatile factors.

(3)          These amountsrepresent the appreciated value which holders of Common Stock would receive atthe hypothetical zero, five and ten percent rates based on the market value ofCommon Stock outstanding at or near the option grant dates.

(4)   Represents the weighted average price ofoptions granted to all optionees.

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**ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND**

**MANAGEMENT**

 

     The following table shows the number of shares of Common Stockbeneficially owned by each person known to ResortQuest to beneficially own morethan 5% of the Common Stock, by the directors and executive officers ofResortQuest, and by the directors and all ResortQuest executive officers as agroup.  Unless otherwise indicated, thepersons listed have an address c/o ResortQuest’s executive offices and havesole voting and investment power with respect to their shares.  The table shows ownership as of January 1, 2002.

**Security Ownership of Management andPrincipal Stockholders**

 
| **Name**                                                                                   |   | **Shares of  Common Stock Beneficially Owned** |   | **Percentage  Owned** |   |
|--------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|-----------------------|--------|
| Par Capital Management, Inc. (1)  PAR Investment Partners, L.P.  Par Group, L.P.           |   | 1,781,200                                      |   | 9.3                   |   |
| Dimensional Fund Advisors, Inc. (2)                                                        |   | 1,194,100                                      |   | 6.2                   |   |
| David L. Levine  (3)(4)                                                                    |   | 226,250                                        |   | *                     |   |
| James S. Olin  (3)                                                                         |   | 110,849                                        |   | *                     |   |
| W. Michael  Murphy (3)(5)                                                                  |   | 148,033                                        |   | *                     |   |
| Frederick L.  Farmer (3)                                                                   |   | 131,000                                        |   | *                     |   |
| J. Mitchell  Collins(3)                                                                    |   | 30,000                                         |   | *                     |   |
| William W.  Abbott, Jr. (3)                                                                |   | 165,091                                        |   | *                     |   |
| Elan J.  Blutinger (3)(6)                                                                  |   | 841,872                                        |   | 4.4                   |   |
| Joshua M.  Freeman (3)(7)(8)                                                               |   | 943,685                                        |   | 4.9                   |   |
| Colin V. Reed  (3)                                                                         |   | 25,000                                         |   | *                     |   |
| David C.  Sullivan (3)(9)                                                                  |   | 429,440                                        |   | 2.2                   |   |
| Joseph V.  Vittoria (6)                                                                    |   | 65,000                                         |   | *                     |   |
| Theodore L.  Weise (6)                                                                     |   | 66,000                                         |   | *                     |   |
| All directors  and executive officers as a group (12 persons including those listed above) |   | 3,182,220                                      |   | 16.5                  |   |

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*                                         Less than 1.0%

(1)                                  The address for the group is OneFinancial Center, Suite 1600, Boston, MA 02111.  Information is based solely on our review of the Schedule 13G/A,as filed by the shareholder with the Securities and Exchange Commission onFebruary 14, 2002.  Members of thegroup share both voting and dispositive power.

(2)                                  The address of the shareholder is 1299Ocean Avenue, 11th Floor, Santa Monica, CA 90401.  Information is based solely on our review ofthe Schedule 13G, as filed by the shareholder with the Securities and ExchangeCommission on January 30, 2002.

(3)                                  Includes the following number of sharesthat the named individual has the right to acquire as of March 11, 2002 (70days after January 1, 2002) through the exercise of stock options:  163,250 shares for Mr. Levine, 80,635 sharesfor Mr. Olin, 105,833 shares for Mr. Murphy, 101,250 shares for Mr. Farmer,25,000 shares for Mr. Collins, 162,000 shares for Mr. Sullivan, 15,000 sharesfor Mr. Reed, 20,000 shares for Mr. Freeman and 25,000 shares for each ofMessrs. Abbott, Blutinger, Vittoria and Weise.

(4)                                  Includes 15,000 shares held in trust forthe benefit of his minor children.

(5)                                  Includes 200 shares owned by his spouse.

(6)                                  Includes 41,667 shares that may beacquired upon the exercisable options held by Alpine Consolidated II, LLC, ofwhich Mr. Blutinger is a Managing Director.

(7)                                  Includes 33,000 shares held by the CarlM. Freeman Foundation, Inc. (the “Freeman Foundation”), of which Mr. Freeman isa trustee and over which he shares voting and investment power.  Mr. Freeman disclaims beneficial ownershipof these shares.

(8)                                  Mr. Freeman was a director of the Companyuntil May 2001.

(9)                                  Includes 2,754 shares attributed to Mr.Sullivan’s account in the ResortQuest Savings and Retirement Plan.  Participants have voting power over sharespurchased with their own contributions.

 

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**ITEM13.  CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS**

 

**I.         ****Leases of Facilities**

 

**     *Abbott Resorts.***  Abbott Resorts, one of oursubsidiaries, leases 9,350 square feet of office space in Destin, Florida forthe main office for its property management and real estate brokerageactivities from SAVA Properties, a Florida general partnership which is 25.5%owned by William Abbott, Jr.  The leaseexpires September 29, 2018.  The aggregateannual rent paid by Abbott Resorts is $118,932.  Abbott Resorts leases approximately 3,700 square feet of indoorand outdoor space in Santa Rosa, Florida for its rental property management andreal estate sales activities in the Santa Rosa and Grayton Beach, Florida areasfrom VAGAS Properties, a Florida general partnership which is 20% owned byWilliam Abbott, Jr.  The lease expiresSeptember 29, 2018.  The aggregateannual rent payment is approximately $50,000. Abbott Resorts leases 1,665 square feet of office space in Fort WaltonBeach, Florida for real estate sales activities.  This property is leased on a month-to-month basis from A&APartnership (“AAP”), a sub S corporation which is 50% owned by William Abbott,Jr.  The monthly rent paid by AbbottResorts is $1,802.  As part of suchlease, Abbott Resorts also leases a two-bedroom apartment at such site, whichis 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 expired August 31, 2001 and Abbott Resorts iscurrently leasing month to month providing monthly rent of $1,943.

 

***     Aston Hotels & Resorts®Hawaii.*** Approximately 950 square feet of office space, which is part of a spaceleased by Aston Hotels & Resorts® Hawaii, an Operating Company, is used by a formerstockholder and the previous corporate secretary of Aston Hotels & Resorts®Hawaii.  Previously, Andre S. Tatibouet,former President of Aston Hotels & Resorts, former member of ResortQuest’sBoard and former beneficial owner of greater than five percent of our CommonStock, had agreed to assume responsibility on behalf of the former stockholderfor the approximately $36,000 annual rent allocable for this space.  In July 2000, the former stockholder agreedto assume responsibility for payment of the monthly rent directly to AstonHotels & Resorts® Hawaii. Aston Hotels & Resorts® Hawaii leases on a month-to-monthbasis approximately 858 square feet of office space in a hotel owned by Mr.Tatibouet.  The monthly lease amount is$1,439.  AST Development, Inc. (“ASTDevelopment”) an entity controlled by Mr. Tatibouet, utilized in 

 

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2001 approximately 125 square feet of officespace leased by Aston Hotels & Resorts® Hawaii.  AST Development was charged approximately$5,875 for use of this space in 2001.

 

***     Coastal Resorts.***  Coastal Resorts Realty and Coastal ResortsManagement, both Operating Companies, lease office space and facilities underfour separate lease agreements from Carl M. Freeman Associates, Inc.(“CMFA”).  Joshua M. Freeman is theChairman and majority shareholder of CMFA. The rent paid by CMFA under these leases was $201,861 in 2001.

 

**II.         Management Agreements**

 

***Abbott Resorts.***  Abbott Resorts manages vacation condominiums owned or co-owned byMr. Abbott pursuant to Abbott Resorts’ standard management agreement.  Abbott Resorts received aggregate propertymanagement fees related to these properties of approximately $700,283 in 2001.

 

***Aston Hotels & Resorts® Hawaii.***  Aston Hotels & Resorts®Hawaii manages two hotels owned by Mr. Tatibouet.  The aggregate management and other fees charged by Aston Hotels& Resorts® Hawaii for the management of these properties was$748,000 in 2001.  The managementagreements for these hotels terminate on December 31, 2003.  Aston Hotels & Resorts®Hawaii also manages a resort rental program under an agreement with AstonWaikki, LLC.  Aston Waikki, LLC is ownedby Mr. Tatibouet and is the lessee of all units in the resort rental programunder a lease with an unrelated third party owner.  The aggregate management and other fees charged by Aston Hotels& Resorts® Hawaii for management of this resort rental programduring 2001 was $422,000.  In addition,prior to our acquisition of Aston Hotels & Resorts, Aston Hotels &Resorts® Hawaii was a party to a lease and management agreement fora hotel dated February 21, 1991.  AstonHotels & Resorts® Hawaii transferred the lease and managementagreement to AST Holdings, Inc. (“AST Holdings”) and simultaneously enteredinto a management agreement with AST Holdings to manage the property.  AST Holdings is owned by Mr. Tatibouet.  The lease and AST Holding’s involvement inthis hotel terminated on December 31, 2000. Since December 31, 2000, Aston Hotels & Resorts® Hawaiihas continued to manage the hotel for the hotel’s owner under a managementagreement that does not involve AST Holdings.

 

**III.        Other Transactions**

 

***Abbott Resorts.***  ResortQuest and Mr.Abbott entered into an agreement with respect to the payment of commissions oncertain properties which were listed for sale or whose sale was pending as ofthe date of ResortQuest’s acquisitionof Abbott Resorts.  Pursuant to suchagreement, ResortQuest has agreed topay upon closing of the applicable transaction to which the applicable listingand/or selling fee relates in the aggregate, up to $1,403,827 in listing and/orselling commissions on such properties. ResortQuest paid Mr. Abbott approximately $35,984 in commissions in2001.  In connection with theacquisition of Abbott Resorts, Mr. Abbott entered into a three-year consultingagreement with ResortQuest.  For all services rendered by Mr. Abbottpursuant to the consulting agreement, ResortQuesthas agreed to compensate Mr. Abbott as follows:  to pay a consulting fee of $125,000 peryear;

to pay premiums for coverage for Mr. Abbottand his immediate family under such health, hospitalization, disability,dental, life and other insurance plans that ResortQuest may have in effect fromtime to time; to reimburse Mr. Abbott for all business travel and otherout-of-pocket expenses reasonably incurred by him in the performance of hisduties; and to pay for a full membership in the Tops’l 

 

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Beach and Racquet Club (the current cost forwhich is $1,260 per year).  Theconsulting agreement will expire on April 1, 2003.  The consulting agreement is terminable by ResortQuest or Mr. Abbott, with cause on ten (10) days writtennotice and or without cause thirty (30) days written notice.

 

***Aston Hotels & Resorts® Hawaii.***  Since July 22, 1997, Aston Hotels &Resorts® Hawaii has provided consulting and administrative servicesto AST International, LLC (“AST International”) and its subsidiaries, and toAST Holdings, Inc., entities controlled by Mr. Tatibouet.  AST International and its subsidiaries havebeen billed $28,313 by Aston Hotels & Resorts® Hawaii for itsservices in 2001.  Aston Hotels &Resorts® Hawaii also charged Aston International and AST Holdings,Inc. $258 and $95, respectively, for expenditures on their behalf in 2001.  At December 31, 1999, Mr. Tatibouet owedAston Hotels & Resorts® Hawaii, either directly or throughentities controlled by him (including properties managed by Aston Hotels &Resorts® Hawaii), an aggregate amount of approximately$4,120,966.  Of this amount, $4.0million represented cash advances made prior to our acquisition of Aston Hotel& Resorts® Hawaii that were formalized in a promissory note (the“Original Note”) executed at the time of the acquisition.  Interest was payable semi-annually under theNote at the prime rate less 0.5%, with a minimum of 6% and maximum of 10% withprincipal to be paid on May 25, 2008. The remainder included interest due and certain fees and reimbursementspayable under the management agreements described above.  On February 16, 2000, ResortQuest agreedwith Mr. Tatibouet to the formation of two separate notes (the “New Notes”) anda new security agreement to provide additional collateral.  One note for $4 million (the “A Note”)replaced the Original Note.  A secondnote in the amount of $1,080,428 (the “B Note”) represented interest due on theA Note and advances to and unpaid fees earned from entities managed for orrelated to Mr. Tatibouet and was executed February 20, 2000.  Both the A Note and the B Note are fullycollateralized 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, was due and payable in twoequal 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, 2001, Mr.Tatibouet owed Aston Hotels & Resorts® Hawaii approximately $4.2million plus accrued interest.  Thisamount included the New Notes and certain fees and disbursements payable underthe management agreements discussed above. On January 21, 2002, Mr. Tatibouet made payment of the accrued intereston the New Notes through December 31, 2001. On January 19, 2001 and on July 23, 2001, Mr. Tatibouet made payment ofthe principal due at December 31, 2000 and June 30, 2001, respectively, underthe “B Note.”  Aston Hotels &Resorts® Hawaii has entered into a 20-year royalty free licenseagreement with AST Brands, LLC, an entity previously primarily owned by Mr.Tatibouet, for use of the name Aston Hotels & Resorts® Hawaii aswell as other service marks, tradenames, trademarks and logos.  At December 31, 2001, approximately sixteenyears remained on the license agreement. On May 26, 2000, Hotel Corporation of the Pacific, Inc., a subsidiary ofResortQuest International doing business as Aston Hotels & Resorts®Hawaii (“Hotel Corp.”), instituted legal proceedings in the Circuit Court forthe First Circuit of Hawaii against Andre S. Tatibouet, the president of HotelCorp.  This action arises out of adocument styled “Cooperation Agreement” that was signed by Andre S. Tatibouet,purporting to act on behalf of Hotel Corp., on the one hand, with CendantGlobal Services B.V. and Aston Hotels & Resorts International, Inc., on theother hand.  The Cooperation Agreementcontains several provisions that are detrimental to Hotel Corp., includingprovisions purporting to transfer certain intellectual property and limitcertain intellectual property rights held by Hotel Corp.  Hotel Corp. seeks monetary damages forbreach of fiduciary duty, fraud and negligent misrepresentation.  By order of the Circuit Court, the claimsasserted by Hotel Corp. in the lawsuit have been consolidated with anarbitration demand, filed with the American Arbitration Association by Mr.Tatibouet, in 

 

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which he alleges various breaches of hisemployment agreement with Hotel Corp. The arbitration hearing took place in September 2001, where Mr.Tatibouet claimed damages of approximately $17.5 million and ResortQuestclaimed damages of approximately $4.7 million. Also on May 26, 2000, ResortQuest International and Hotel Corp. broughtaction in the Circuit Court for the First Circuit of Hawaii against CendantCorporation, Aston Hotels & Resorts International, Inc. and Cendant GlobalServices B.V. (“Defendants).  It is theposition of ResortQuest and Hotel Corp. that the Cooperation Agreement isvoidable because (i) it was entered in breach of a prior agreement betweenResortQuest and the parent company of Cendant Clobal Services B.V. and AstonHotels & Resorts International, Inc., Cendant Corporation, and (ii) it wasentered into by an interested director and officer of Hotel Corp. who wasengaging in self-dealing.  Accordingly,ResortQuest and Hotel Corp. seek damages for breach of contract against Cendant,and the equitable remedies of recission and replevin.  We believe that we have meritorious claims and will prevail ineach matter.

 

***Coastal Resorts.***  Pursuant to an exclusive listing agreement with Bear Trap Farms(“BTF”) dated March 1, 2000, Coastal Resorts Realty receives real estate salescommissions of 6% of the full purchase price of each new home sold at theVillage of Bear Trap Dunes golf resort community in Ocean View, Delaware.  Under the agreement, Coastal Resorts Realtyalso was required to develop a marketing plan, at its own expense, to promotehome sales in the BTF community. This agreement terminated on May 26,2001.  Mr. Freeman is president and solestockholder of BTF.  BTF paid CoastalResorts Realty an aggregate of $1,439,855 under the agreement in 2001.  Coastal Resorts Management has a managementagreement with CMF Fitness, Inc., dated June 1, 1996, to manage the Sea ColonyFitness Center for $5,833 a month.  CMFFitness is a wholly owned subsidiary of CMFA. CMF Fitness paid Coastal Resorts Management $47,980 in 2001, under theagreement.  The agreement terminated onSeptember 8, 2001.  Pursuant to anagreement with Sea Colony Water Company, L.L.C., dated January 1, 1997, CoastalResorts Management was appointed exclusive agent for and manager of the SeaColony Water Plant.  Sea Colony Water isa wholly owned subsidiary of CMFA. Under the terms of the agreement, Coastal Resorts Management is entitledto retain all revenue collected by the water plant, less costs and expenses andcertain payments to Sea Colony Water. Coastal Resorts Management received net revenues of $130,470 in 2001from its management of the water plant. This agreement terminated on August 24, 2001.  Pursuant to an agreement dated January 1, 1998, CMFA appointed CoastalResorts Management as its exclusive agent for the management of a privatethoroughfare running through the Sea Colony West condominium complex.  Payments to Coastal Resorts Management equal20% of total budget expenditures for management of the road under a budgetprepared by Coastal Resorts Management and approved by CMFA.  CMFA paid Coastal Resorts Management $11,148under the agreement in 2001.  Thisagreement expired in December 2000, but has been extended on a month to monthbasis.  Pursuant to an agreement, datedas of January 1, 1998, between CMFA and Coastal Resorts Management, CMFA hasappointed Coastal Resorts Management as CMFA’s exclusive agent, for the periodfrom January 1, 1998 to December 31, 2000, for the collection of ground rents owedto CMFA by condominium unit homeowners in the Sea Colony condominiumdevelopment in Bethany Beach, Delaware. The agreement provides for CMFA to pay Coastal Resorts Management anadministration fee equal to 3% of net ground rents collected under the agreement.  In 2001, CMFA paid Coastal ResortsManagement $37,804 under this agreement. In December 31, 2001, this agreement was extended until December 31,2002, with the terms and conditions under the original agreement applying.  ResortQuest.  ResortQuest and David Sullivan, a director and former Chairmanand 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 permonth.

 

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**PART IV**

 

**ITEM14.  EXHIBITS, FINANCIAL STATEMENTSCHEDULES AND REPORTS ON FORM 8-K**

 

 

**14(a)(1)Financial Statements**

 

     *ResortQuestInternational, Inc.*** **Thefollowing consolidated financial statements, related notes and report ofindependent public accountants from the 2001 Annual Report to Shareholders areincorporated by reference into Item 8 of Part II of this report.

 
|                                                                                      |   | **Pages in  the 2001 Annual Report to Shareholders** |   |
|-------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|
| Consolidated  Balance Sheets                                                              |   | 28                                                   |   |
| Consolidated  Statements of Income                                                        |   | 29                                                   |   |
| Consolidated  Statements of Changes in Stockholders’ Equity and Comprehensive Income |   | 30                                                   |   |
| Consolidated  Statements of Cash Flows                                                    |   | 31                                                   |   |
| Notes  to Consolidated Financial Statements                                               |   | 32                                                   |   |
| Report  of Independent Public Accountants                                                 |   | 44                                                   |   |
| Quarterly  Results of Operations                                                          |   | 45                                                   |   |
| Selected  Financial Data                                                                  |   | 47                                                   |   |

 

**14(a)(2) Financial Statement Schedules**

 

     Schedulesare omitted because they are not required or the information is given elsewherein the financial statements.  The financialstatements of unconsolidated subsidiaries are omitted because they are notapplicable.

 

**14(a)(3) Exhibits**

 

*     These exhibits are available upon requestat a charge of ten cents per page. Requests should be directed to Secretary,**ResortQuest International, Inc., 530 Oak Court Drive,Suite 360, Memphis, TN 38117*

 

2.1                                             —        Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., HCP Acquisition Corp., and Hotel Corporation ofthe Pacific, Inc. and André S. Tatibouet *(previously filed on March 12, 1998 as an exhibit tothe Company’s Registration Statement on Form S-1 (File No. 333-47867) andincorporated herein by reference).*

 

2.2                                             —        Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., B&B Acquisition Corp., Brindley AcquisitionCorp., B&B On The Beach, Inc., Brindley and Brindley Realty andDevelopment, Inc., Douglas R. Brindley and Betty Shotton Brindley *(previouslyfiled on March 12, 1998 as an exhibit to the Company’s Registration Statementon Form S-1 (File No. 333-47867) and incorporated herein by reference).*

 

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2.3                                 —            Agreement and Plan of Organization, dated as ofMarch 11, 1998, by and among Vacation Properties International, Inc., CoastalRealty Acquisition LLC, Coastal Management Acquisition Corp. and CoastalResorts Realty LLC, Coastal Resorts Management, Inc., Joshua M. Freeman, T.Michael McNally and CMF Coastal Resorts, L.L.C. *(previously filed on March 12, 1998 asan exhibit to the Company’s Registration Statement on Form S-1 (File No.333-47867) and incorporated herein by reference).*

 

2.4                                 —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc. and Collection of Fine Properties, Inc., TenMile Holdings, Ltd., Luis Alonso, Domingo R. Moreira, Brenda M. Lopez Ibanezand Ana Maria Moreira *(previously filed on March 12, 1998 as an exhibit tothe Company’s Registration Statement on Form S-1 (File No. 333-47867) andincorporated herein by reference).*

 

2.5                                 —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc. and Houston and O’Leary Company and Heidi O’LearyHouston *(previouslyfiled on March 12, 1998 as an exhibit to the Company’s Registration Statementon Form S-1 (File No. 333-47867) and incorporated herein by reference).*

 

2.6                                 —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., Jupiter Acquisition Corp. and Jupiter PropertyManagement at Park City, Inc. and Jon R. Brinton *(previously filed on March 12, 1998 asan exhibit to the Company’s Registration Statement on Form S-1 (File No. 333-47867)and incorporated herein by reference).*

 

2.7                                 —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., Maui Acquisition Corp. and Maui Condominium andHome Realty, Inc., Daniel C. Blair and Paul T. Dobson *(previously filed on March 12, 1998 asan exhibit to the Company’s Registration Statement on Form S-1 (File No.333-47867) and incorporated herein by reference).*

 

2.8                                 —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., Maury Acquisition Corp. and The Maury People,Inc. and Sharon Benson Doucette *(previously filed on March 12, 1998 as an exhibit tothe Company’s Registration Statement on Form S-1 (File No. 333-47867) and incorporatedherein by reference).*

 

2.9                                 —            Agreement and Plan of Organization, dated as ofMarch 11, 1998, by and among Vacation Properties International, Inc., PriscillaAcquisition Corp., Realty Consultants Acquisition Corp., RealtyConsultants, Inc., and Howey Acquisition, Inc., Charles O. Howey and Dolores C.Howey *(previouslyfiled on March 12, 1998 as an exhibit to the Company’s Registration Statementon Form S-1 (File No. 333-47867) and incorporated herein by reference).*

 

2.10                           —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., RPM Acquisition Corp. and Resort PropertyManagement, Inc., Daniel L. Meehan,KimberlieC. Meehan and 

 

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Nancy Hess *(previouslyfiled on March 12, 1998 as an exhibit to the Company’s Registration Statementon Form S-1 (File No. 333-47867) and incorporated herein by reference).*

 

2.11                           —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., Telluride Acquisition Corp., and TellurideResort Accommodations, Inc. and Steven A. Schein, Michael E. Gardner, ParkBrady, Daniel Shaw, Carolyn S. Shaw, Virginia C. Gordon, Joyce Allred, RonaldD. Allred, A.J. Wells, Forrest Faulconer, Thomas McNamara, Donald J. Peterson,Nancy McNamara, Charles E. Cobb, Jr., Sue M. Cobb, Stephen A. Martori, AnthonyF. Martori, Arthur John Martori and Alan Mishkin *(previously filed on March 12, 1998 asan exhibit to the Company’s Registration Statement on Form S-1 (File No.333-47867) and incorporated herein by reference).*

 

2.12                           —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., Trupp Acquisition Corp., Management AcquisitionCorp. and Trupp-Hodnett Enterprises, Inc., THE Management Company, Hans F.Trupp, Roy K. Hodnett, Pat Hodnett Cooper and Austin Trupp *(previously filed on March 12, 1998 asan exhibit to the Company’s Registration Statement on Form S-1 (File No. 333-47867)and incorporated herein by reference).*

 

2.13                           —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., Whistler Holding Corp. and Whistler ChaletsLtd. and J. Patrick McCurdy *(previously filed on March 12, 1998 as an exhibit tothe Company’s Registration Statement on Form S-1 (File No. 333-47867) andincorporated herein by reference).*

 

2.14                           —            Agreementand Plan of Organization, dated as of March 11, 1998, by and among VacationProperties International, Inc., FRS AcquisitionCorp., First Resort Software, Inc., Thomas A. Leddy, Evan H.Gull and Daniel Patrick Curry *(previously filed on March 12, 1998 as an exhibit tothe Company’s Registration Statement on Form S-1 (File No. 333-47867) and incorporatedherein by reference).*

 

2.15                                       —        StockPurchase Agreement dated September 11, 1998 by and among ResortQuestInternational, Inc., Abbott Realty Services, Inc., Tops’L Sales Group, Inc.,William W. Abbott, Jr., Stephen J. Abbott, James R. Steiner, Charles H. VanDriver, Sue C. Van Driver and Angus G. Andrews, *(previously filed on October 16, 1998as an exhibit to the Company’s Registration Statement on Form S-1 (File No.333-56703) and incorporated herein by reference).*

 

3.1                                             —        Certificateof Incorporation, as amended *(previously filed on March 12, 1998 as an exhibit tothe Company’s Registration Statement on Form S-1 (File No. 333-47867) andincorporated herein by reference).*

 

3.2                                             —        Bylawsof the Company, Amended as of February 10, 1999 *(previously filed on March 30, 1999 asan exhibit to the Company’s Annual Report on Form 10-K for the period endedDecember 31, 1999 (File No. 001-14115) and incorporated herein by reference).*

 

3.3                                             —        Certificateof Amendment of Certificate of Incorporation of Company, dated April 23, 1998(changing the name of 

 

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the Company from VacationProperties International, Inc. to ResortQuest International, Inc.) *(previouslyfiled on April 27, 1998 as an exhibit to Amendment No. 1 to the Company’sRegistration Statement on Form S-1 (File No. 333-47867) and incorporated hereinby reference).*

 

3.4                                             —        Certificateof Amendment of Certificate of Incorporation of the Company, dated May 11, 1998*(previouslyfiled on May 12, 1998 as an exhibit to Amendment No.  3 to the Company’s Registration Statement on Form S-1 (File No.333-47867) and incorporated herein by reference).*

 

4.1                                             —        SpecimenCommon Stock Certificate (*previously filed on April 27, 1998 as an exhibit toAmendment No. 1 to the Company’s Registration Statement on Form S-1 (File No.333-47867) and incorporated herein by reference).*

 

4.2                                             —        Formof Registration Rights Agreements between the Company and each of AlpineConsolidated II, LLC, Capstone Partners, LLC, John Przywara, David Marshall,Douglas W. Comfort, Robert G. Falcone, Wayne Heller, Dwain Wall, Stephen J.Garchik, John Shaw, David Sullivan, Jeffery M. Jarvis, Frederick L. Farmer, W.Michael Murphy, Jules S. Sowder, John K. Lines, Brian S. Sullivan, John D.Sullivan, the Sullivan Grandchildren’s Trust, the David L. Levine IrrevocableChildren’s Trust Under Agreement dated April 27, 1998 f/b/o Whitney MonicaLevine, the David L. Levine Irrevocable Children’s Trust Under Agreement datedApril 27, 1998 f/b/o Ross Michael Levine, the David L. Levine IrrevocableChildren’s Trust Under Agreement dated April 27, 1998 f/b/o Keith PhillipLevine and the David L. Levine Revocable Trust Under Agreement dated April 27,1998 *(previouslyfiled on May 26, 1998 an exhibit to the Company’s Current Report on Form 8-K(File No. 001-14115) and incorporated herein by reference).*

 

4.3                                             —        RightsAgreement, dated as of February 25, 1999 between ResortQuest International,Inc. and American Stock Transfer & Trust Company, as Rights Agent *(previouslyfiled on March 30, 1999 as an exhibit to the Company’s Annual Report on Form10-K for the period ended December 31, 1999 (File No. 001-14115) andincorporated herein by reference).*

 

4.4                                             —        Summaryof Plan Description for the ResortQuest Savings and Retirement Plan *(previouslyfiled as exhibit 4.1 to the Company’s Registration Statement on Form S-8 filedon May 21, 1999).*

 

10.1                                       —        Formof Employment Agreement between the Company and W. Michael Murphy *(previouslyfiled on April 27, 1998 as an exhibit to Amendment No. 1 to the Company’sRegistration Statement on Form S-1 (File No. 333-47867) and incorporated hereinby reference).**

 

10.2                                       —        Formof Employment Agreement between the Company and David L. Levine *(previouslyfiled on April 27, 1998 as*

 

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*anexhibit to Amendment No. 1 to the Company’s Registration Statement on Form S-1(File No. 333-47867) and incorporated herein by reference).**

 

10.3                                     —        Formof Employment Agreement between the Company and Frederick L. Farmer *(previouslyfiled on April 27, 1998 as an exhibit to Amendment No. 1 to the Company’sRegistration Statement on Form S-1 (File No. 333-47867) and incorporated hereinby reference).**

 

10.4                                     —        Formof Employment Agreement between the Company and André S. Tatibouet *(previouslyfiled on March 12, 1998 as an exhibit to the Company’s Registration Statementon Form S-1 (File No. 333-47867) and incorporated herein by reference).**

 

10.5                                       —        Formof Officer and Director Indemnification Agreement *(previously filed on April 27, 1998 asan exhibit to Amendment No. 1 to the Company’s Registration Statement on FormS-1 (File No. 333-47867) and incorporated herein by reference).**

 

10.6                                       —        PromissoryNote *(previouslyfiled on March 12, 1998 as an exhibit to the Company’s Registration Statementon Form S-1 (File No. 333-47867) and incorporated herein by reference).*

 

10.7                                       —        ConsultingAgreement dated September 10, 1998 by and among Abbott Realty Services, Inc.and William W. Abbott, Jr. *(previously filed on March 30, 1999 as an exhibit tothe Company’s Annual Report on Form 10-K for the period ended December 31, 1999(File No. 001-14115) and incorporated herein by reference).**

 

10.8                                       —        Formof Officer and Director Indemnification Agreement, as amended *(previouslyfiled on March 30, 1999 as an exhibit to the Company’s Annual Report on Form10-K for the period ended December 31, 1999 (File No. 001-14115) andincorporated herein by reference).**

 

10.9                                       —        Formof Section 401(k) Profit Sharing Plan Adoption Agreement  *(previously filed on March 30, 1999 as an exhibit tothe Company’s Annual Report on Form 10-K for the period ended December 31, 1999(File No. 001-14115) and incorporated herein by reference).**

 

10.10                                 —        NotePurchase and Guarantee Agreement, dated as of June 1, 1999*(previously filed on July 16, 1999 asexhibit 10.31 to the Company’s Form S-4 Registration Statement (File No.333-83059) and incorporated herein by reference).*

 

10.11                                 —        Amendedand Restated 1998 Long-Term Incentive Plan of the Company *(previously filed on April 6, 1999 asan exhibit to the Company’s Proxy Statement (File No. 001-14115) andincorporated herein by reference).**

 

10.12                                 —        EmploymentAgreement between the Company and J. Mitchell Collins, dated as of March 13,2000 *(previouslyfiled on March 30, 2000 as an exhibit to the Company’s Annual Report on Form10-K for the year ended December 31, 1999 (File No 001-14115) and incorporatedherein by reference).**

 

10.13                                 —        EmploymentAgreement between the Company and Paul Manteris, dated as of January 3, 2000 *(previouslyfiled on March 30, 2000 as an exhibit to the Company’s Annual Report on Form10-K for the year ended December 31, 1999 (File No 001-14115) and incorporatedherein by reference).**

 

40

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10.14                                 —        EmploymentAgreement between the Company and James Olin, dated as of January 4, 2000 *(previouslyfiled on March 30, 2000 as an exhibit to the Company’s Annual Report on Form10-K for the year ended December 31, 1999 (File No 001-14115) and incorporatedherein by reference).**

 

10.15                                 —        Formof First Amendment to Employment Agreement between the Company and each ofDavid C. Sullivan, David L. Levine, Frederick L. Farmer and W. Michael Murphy,dated as of July 29, 1999 *(previously filed on March 30, 2000 as an exhibit to theCompany’s Annual Report on Form 10-K for the year ended December 31, 1999 (FileNo 001-14115) and incorporated herein by reference).**

 

10.16                                 —        SecondAmendment to Employment Agreement between the Company and David L. Levine,dated as of December 15, 1999 *(previously filed on March 30, 2000 as an exhibit tothe Company’s Annual Report on Form 10-K for the year ended December 31, 1999(File No 001-14115) and incorporated herein by reference).**

 

10.17                                 —        Formof Amendment to Employment Agreement between the Company and each of James S.Olin, Frederick L. Farmer, J. Mitchell Collins, W. Michael Murphy and PaulManteris, dated as of August 3, 2001 *(previously filed as an Exhibit to the Company’s Form10-Q filed on November 14, 2001 (File No. 001-14115) and incorporated herein byreference)*.*

 

10.18                                 —        ThirdAmendment to Employment Agreement between the Company and David L. Levine,dated as of August 3, 2001 *(previously filed as an Exhibit to the Company’s Form10-Q filed on November 14, 2001 (File No. 001-14115) and incorporated herein byreference)*.*

 

10.19                                 —        Amendedand Restated Credit Agreement, dated as of January 22, 2001, by and among theCompany, the guarantors party thereto, the lenders described therein, Citibank,N.A., as administrative agent for the lenders, Bank of America, N.A., asdocumentation agent, Crédit Lyonnais New York Branch, as syndication agent andSalomon Smith Barney Inc., as arranger *(previously filed on April 2, 2001 as an Exhibit tothe Company’s Annual Report on Form 10-K for the year ended December 31, 2000(File No. 001-14115) and incorporated herein by reference)*.*

 

10.20                                 —        FirstAmendment to Amended and Restated Credit Agreement, dated as of October 30,2001, by and among, Citibank, N.A., as administrative agent for the Lenders, Bankof America, N.A., as documentation agent and Credit Lyonnais New York Branch,as syndication agent, and is made with reference to that certain Amended andRestated Credit Agreement dated as of January 22, 2001, by and among theBorrower, the Guarantors, the Lenders (as defined therein), the DocumentationAgent, the Syndication Agent and the Agent *(previously filed as an Exhibit to the Company’s Form10-Q filed on November 14, 2001 (File No. 001-14115) and incorporated herein byreference)*.*

 

10.21                                 —        Amendedand Restated Intercreditor and Collateral Agency Agreement, dated as of January22, 2001, by and among Citibank, N.A., as collateral agent, the noteholdersdescribed therein, Citibank, N.A., as agent for the lenders, the lendersdescribed therein and the additional creditors described therein *(previouslyfiled on April 2, 2001 as an Exhibit to the Company’s Annual Report on Form10-K for the year ended December 31, 2000 (File No. 001-14115) and incorporatedherein by reference)*.*

 

41

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10.22                                 —        Secondmodification agreement, dated as of October 30, 2001, by and among the Company,the guarantors party thereto, and Teachers Insurance and Annuity Association,as the Noteholders *(previously filed as an Exhibit to the Company’s Form10-Q filed on November 14, 2001 (File No. 001-14115) and incorporated herein byreference)*.*

 

13                                                —        The2001 Annual Report to Shareholders, which, except for those portions expresslyincorporated herein by reference, is furnished solely for the information ofthe Commission and is not to be deemed “filed.”

 

21                                                —        Subsidiariesof the Company

 

23                                                —        Consentof Arthur Andersen LLP.

 

99.1                                       —        Letterfrom the Company to the SEC with respect to representations received fromArthur Andersen LLP.

 

*  Indicatesmanagement contract or compensatory plan, contract or arrangement.

 

**14(b) Reports on Form 8-K**

 

                The Company did not file a report on Form 8-K during2001.

 

42

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**SIGNATURES**

 

     Pursuant to the requirements of Section13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 
|   | **RESORTQUEST INTERNATIONAL, INC.**                               |
|--------|-------------------------------------------------------------------|
|   |
|   | By: /s/ David L. Levine                                           |
|   | David L. Levine, Chairman, President and Chief  Executive Officer |
|   |
|        |                                                                   |  |

 

Dated: March 27, 2002

 

     Pursuant to the requirements of theSecurities Exchange Act of 1934, this report has been signed below by thefollowing persons on behalf of the Registrant and in the capacities and on thedates indicated.

 
| **Signature**               |   | **Title**                                                                                       |   | **Date**       |   |
|-----------------------------|--------|-------------------------------------------------------------------------------------------------|--------|----------------|--------|
| /s/  David L. Levine        |   | Chairman and Chief Executive Officer, Director  (Principal Executive Officer)                   |   | March 27, 2002 |   |
| (David  L. Levine)          |   |                                                                                            |   |           |   |
|                        |   |                                                                                            |   |           |   |
| /s/  J. Mitchell Collins    |   | Senior Vice President and Chief Financial Officer  (Principal Financial and Accounting Officer) |   | March 27, 2002 |   |
| (J.  Mitchell Collins)      |   |                                                                                            |   |           |   |
|                        |   |                                                                                            |   |           |   |
| /s/  William W. Abbott, Jr. |   | Director                                                                                        |   | March 27, 2002 |   |
| (William  W. Abbott, Jr.)   |   |                                                                                            |   |           |   |
|                        |   |                                                                                            |   |           |   |
| /s/  Elan J. Blutinger      |   | Director                                                                                        |   | March 27, 2002 |   |
| (Elan  J. Blutinger)        |   |                                                                                            |   |           |   |
|                        |   |                                                                                            |   |           |   |
| /s/  Colin V. Reed          |   | Director                                                                                        |   | March 27, 2002 |   |
| (Colin  V. Reed)            |   |                                                                                            |   |           |   |
|                        |   |                                                                                            |   |           |   |
| /s/  David C. Sullivan      |   | Director                                                                                        |   | March 27, 2002 |   |
| (David  C. Sullivan)        |   |                                                                                            |   |           |   |
|                        |   |                                                                                            |   |           |   |
| /s/  Joseph V. Vittoria     |   | Director                                                                                        |   | March 27, 2002 |   |
| (Joseph  V. Vittoria)       |   |                                                                                            |   |           |   |
|                        |   |                                                                                            |   |           |   |
| /s/  Theodore L. Weise      |   | Director                                                                                        |   | March 27, 2002 |   |
| (Theodore  L. Weise)        |   |                                                                                            |   |           |   |