<PAGE>
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SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THOUSAND TRAILS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
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(2) Aggregate number of securities to which transaction applies: N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined): N/A
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(4) Proposed maximum aggregate value of transaction: N/A
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(5) Total fee paid: N/A
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
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(2) Form, Schedule or Registration Statement No.: N/A
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(3) Filing Party: N/A
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(4) Date Filed: N/A
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Notes:
<PAGE>
THOUSAND TRAILS, INC.
2711 LBJ Freeway, Suite 200
DALLAS, TEXAS 75234
NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD NOVEMBER 20, 1997
To the Stockholders of Thousand Trails, Inc.:
You are invited to attend the Annual Meeting of the Stockholders of
Thousand Trails, Inc., a Delaware corporation (the "Company"), which will be
held at the offices of the Company, 2711 LBJ Freeway, Suite 200, Dallas, Texas,
on November 20, 1997, at 10:00 a.m., for the following purposes:
(1) To elect the directors of the Company, who will serve until the election
and qualification of their successors.
(2) To consider and act upon the ratification of Arthur Andersen LLP as the
Company's independent certified public accountants for the fiscal year
ending June 30, 1998.
(3) To transact such other business as may properly come before the meeting or
any adjournment thereof.
The board of directors of the Company has established the close of business
on October 9, 1997, as the record date for the determination of stockholders
entitled to notice of this meeting and to vote thereat and at any adjournment
thereof.
By Order of the Board of Directors
s/Walter B. Jaccard
WALTER B. JACCARD
Vice President, General Counsel, and Secretary
Dallas, Texas
October 13, 1997
If you cannot be present at the annual meeting, PLEASE SIGN, DATE, AND
RETURN THE ACCOMPANYING PROXY CARD in the enclosed stamped and addressed
envelope so that proxyholders may vote your shares at the meeting. If you attend
the meeting in person, you may revoke your proxy and vote your shares in person.
<PAGE>
THOUSAND TRAILS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS OF THOUSAND TRAILS, INC.
TO BE HELD NOVEMBER 20, 1997
INTRODUCTION
The enclosed proxy is solicited by the Board of Directors (the "Board of
Directors") of Thousand Trails, Inc., a Delaware corporation (the "Company"),
for use at the Annual Meeting of the Stockholders of the Company to be held at
10:00 a.m. on November 20, 1997, or any adjournment thereof (the "Annual
Meeting"). The Annual Meeting will be held at the principal executive offices of
the Company at 2711 LBJ Freeway, Suite 200, Dallas, Texas. The telephone number
of the Company's principal executive offices is (972) 243-2228. The Company
mailed this Proxy Statement and the accompanying proxy on or about October 13,
1997.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the stockholders of the Company (the "Stockholders")
will vote upon the following matters:
(1) The election of the directors of the Company, who will serve until the
election and qualification of their successors.
(2) The ratification of Arthur Andersen LLP ("Arthur Andersen") as the
Company's independent certified public accountants for the fiscal year
ending June 30, 1998.
(3) The transaction of such other business as may properly come before the
meeting or any adjournment thereof.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Board of Directors recommends that you vote to:
(1) Elect as directors the nominees named in this proxy statement and the
accompanying proxy.
(2) Ratify Arthur Andersen as the Company's independent certified public
accountants.
RECORD DATE AND VOTING
The Board of Directors established the close of business on October 9,
1997, as the record date for the determination of Stockholders entitled to
notice of the Annual Meeting and to vote thereat and at any adjournment thereof.
On that date, the Company had issued and outstanding 7,386,776 shares of common
stock, par value $.01 per share (the "Common Stock"). The Company did not have
any other shares of capital stock outstanding.
Each Stockholder will be entitled to one vote per share of Common Stock in
connection with the election of each of the six directors, the ratification of
the independent certified public accountants, and each other matter that may be
properly brought before the Annual Meeting. The Stockholders do not possess
cumulative voting rights.
<PAGE>
The presence, in person or by proxy, of the holders of a majority of the
shares of Common Stock issued and outstanding will constitute a quorum at the
meeting. Shares represented at the meeting in person or by proxy but not voted
will nevertheless be counted for purposes of determining the presence of a
quorum. Assuming that a quorum is present or represented at the meeting, the
election of each of the six directors, and the ratification of Arthur Andersen
as the Company's independent certified public accountants, require the
affirmative vote of the holders of a majority of the shares of Common Stock
present or represented at the meeting. With respect to the election of
directors, votes may be cast for a nominee or withheld. Instructions on the
accompanying proxy to withhold authority to vote for one or more of the nominees
will result in such nominee(s) receiving fewer votes. However, the number of
votes otherwise received by such nominee(s) will not be reduced by such action.
Under the rules of the New York and American Stock Exchanges, if a broker
forwards the Proxy Statement and the accompanying material to its customers
before the Annual Meeting, the broker may vote the customers' shares on the
proposals to elect directors and ratify the Company's independent public
accountants if the broker does not receive voting instructions from the
customers prior to the Annual Meeting. With respect to these proposals, an
abstention with respect to shares present or represented at the meeting will
have the same effect as withholding authority with respect to the election of
directors or voting against the matter.
Proxyholders will vote the shares of Common Stock represented by valid
proxies at the meeting in accordance with the directions given. If a Stockholder
signs and returns a proxy card without giving any directions, the proxyholders
will vote the shares for the election of the six nominees for director named in
this Proxy Statement and the accompanying proxy and for the ratification of
Arthur Andersen as the Company's independent certified public accountants. The
Board of Directors does not intend to present, and has no information that
others will present, any other business at the Annual Meeting. However, in their
discretion, the proxy holders are authorized to (a) vote upon such other matters
presented at the meeting that the Board of Directors did not know would be
presented a reasonable time before this solicitation, (b) vote to approve the
minutes of the last annual meeting of Stockholders (which approval will not
amount to ratification of the action taken at that meeting), (c) vote for the
election of such substitute nominees for director as the Board of Directors may
propose if any nominee set forth herein is unavailable to stand for election as
a result of unforeseen circumstances, and (d) vote upon matters incident to the
conduct of the meeting.
A Stockholder has the unconditional right to revoke such Stockholder's
proxy at any time prior to the voting thereof by (i) submitting a later dated
proxy to the Secretary of the Company or someone else who attends the Annual
Meeting, (ii) attending the Annual Meeting and delivering a written notice of
revocation of the proxy to the Secretary of the Company present thereat, or
(iii) delivering a written notice of revocation of the proxy to the principal
executive offices of the Company, which the Company receives on or before
November 19, 1997.
The Company will bear the cost of soliciting the accompanying proxies. The
directors, officers, and other employees of the Company may solicit proxies by
mail, personal interview, telephone, or facsimile transmission. They will
receive no additional compensation therefor. The Company will reimburse banks,
brokerage firms, and other custodians, nominees, and fiduciaries for the
reasonable expenses that they incur when forwarding this Proxy Statement and the
accompany proxy to the beneficial owners of shares of Common Stock.
<PAGE>
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the persons and groups who beneficially own
more than 5% of the Common Stock as of October 1, 1997. The Company compiled
this information from its stock records, the Schedules 13D filed with the
Company, and other information available to the Company. Unless otherwise
indicated, these persons possess sole voting and investment power with respect
to the shares that they beneficially own.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
- ------------------------------------------------- --------------------- -----------------------
<S> <C> <C>
Andrew M. Boas................................... 3,530,833/1/ 46.5%/1/
c/o Carl Marks Management Co., L.P.
135 East 57th Street
New York, New York 10022
Carl Marks Management Co., L.P................... 3,179,691/1/ 41.9%/1/
135 East 57th Street
New York, New York 10022
Carl Marks Strategic Investments, L.P............ 2,668,765/1/ 35.2%/1/
c/o Carl Marks Management Co., L.P.
135 East 57th Street
New York, New York 10022
Carl Marks Strategic Investments II, L.P......... 510,926/1/ 6.9%/1/
c/o Carl Marks Management Co., L.P.
135 East 57th Street
New York, New York 10022
Peter M. Collery................................. 1,308,498/2/ 17.7%/2/
c/o Siegler & Collery & Co.
712 Fifth Avenue
New York, NY 10019
Robert C. Ruocco................................. 3,496,676/1/ 46.1%/1/
c/o Carl Marks Management Co., L.P.
135 East 57th Street
New York, New York 10022
SC Fundamental Inc............................... 946,508/2/ 12.8%/2/
712 Fifth Avenue
New York, NY 10019
SC Fundamental Value BVI, Inc.................... 361,990/2/ 4.9%/2/
712 Fifth Avenue
New York, NY 10019
William J. Shaw.................................. 881,490/3/ 11.0%/3/
Thousand Trails, Inc.
2711 LBJ Freeway, Suite 200
Dallas, TX 75234
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
- ------------------------------------------------- --------------------- -----------------------
<S> <C> <C>
Gary N. Siegler.................................. 1,308,498/2/ 17.7%/2/
c/o Siegler & Collery & Co.
712 Fifth Avenue
New York, NY 10019
The SC Fundamental Value Fund, L.P...............
712 Fifth Avenue 946,508/2/ 12.8%/2/
New York, NY 10019
</TABLE>
- -------------------
/1/ The ownership of these shares of Common Stock includes multiple beneficial
ownership of the same shares. Carl Marks Strategic Investments, L.P. ("CM
Strategic") owns 2,474,244 shares and is deemed to own an additional
194,521 shares because it owns warrants to acquire 194,521 shares at a
price of $4.24 per share. Carl Marks Management Co., L.P. ("CM
Management") is the general partner of CM Strategic. CM Management,
therefore, beneficially owns all of the shares of Common Stock that CM
Strategic beneficially owns. Carl Marks Strategic Investments II, L.P.
("CM Strategic II") owns 510,926 shares of Common Stock. CM Management is
the general partner of CM Strategic II and, therefore, beneficially owns
all of the shares of Common Stock that CM Strategic II beneficially owns.
Messrs. Boas and Ruocco are each a general partner of CM Management.
Messrs. Boas and Ruocco, therefore, beneficially own all of the shares of
Common Stock that CM Management beneficially owns. In addition, Carl Marks
Offshore Management, Inc., an investment management company, exercises
investment discretion over an advisory account that owns 316,985 shares of
Common Stock. Messrs. Boas and Ruocco are executive officers of such
investment management company and therefore beneficially own such shares.
In addition, Mr. Boas (i) owns 11,569 shares of Common Stock, (ii) is
deemed to own an additional 20,000 shares because he owns options to
acquire 5,000 shares at a price of $.79 per share, 5,000 shares at a price
of $.80 per share, and 10,000 shares at a price of $1.08 per share, and
(iii) beneficially owns 2,588 shares because he is a co-trustee of a trust
that owns these shares. CM Strategic, CM Strategic II, CM Management, and
Messrs. Boas and Ruocco disclaim the existence of a group. The reported
voting and investment power over these shares is as follows: (i) CM
Strategic - sole voting and investment power over 2,668,765 shares, (ii)
CM Strategic II - sole voting and investment power over 510,926 shares,
(iii) CM Management - sole voting and investment power over 3,179,691
shares, (iv) Mr. Boas - sole voting and investment power over 31,569
shares and shared voting and investment power over 3,499,264 shares, and
(v) Mr. Ruocco - shared voting and investment power over 3,496,676 shares.
(continued)
<PAGE>
The following table shows the beneficial ownership of the shares of Common Stock
described in this footnote:
<TABLE>
<CAPTION>
CM CM CM
STRATEGIC STRATEGIC II MANAGEMENT MR. BOAS MR. RUOCCO
--------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Shares owned by CM Strategic............ 2,474,244 2,474,244 2,474,244 2,474,244
Warrants owned by CM Strategic.......... 194,521 194,521 194,521 194,521
Shares owned by CM Strategic II......... 510,926 510,926 510,926 510,926
Shares over which an investment
management company affiliated with
Messrs. Boas and Ruocco possesses
investment discretion.................. 316,985 316,985
Shares owned by Mr. Boas................ 11,569
Options owned by Mr. Boas............... 20,000
Shares held in trust over which Mr.
Boas is a Co-Trustee................... 2,588
--------- ------- --------- --------- ---------
Total............................ 2,668,765 510,926 3,179,691 3,530,833 3,496,676
========= ======= ========= ========= =========
Percentage of outstanding shares........ 35.2% 6.9% 41.9% 46.5% 46.1%
</TABLE>
/2/ The ownership of these shares of Common Stock includes multiple beneficial
ownership of the same shares. SC Fundamental Value Fund, L.P., a Delaware
limited partnership (the "Fund") owns 946,508 shares. SC Fundamental Inc.,
a Delaware corporation ("SC Fundamental") is the general partner of the
Fund and, therefore, beneficially owns all of the shares of Common Stock
that the Fund owns. SC Fundamental Value BVI, Inc., a Delaware corporation
("BVI") owns 361,990 shares. Gary N. Siegler is a controlling stockholder
and the president and a director of SC Fundamental and BVI. Peter M.
Collery is also a controlling stockholder and a vice president and director
of SC Fundamental and BVI. Messrs. Siegler and Collery are in a position to
directly and indirectly determine the investment and voting decisions made
by SC Fundamental and BVI and, therefore, are deemed to beneficially own
all of the shares of Common Stock that the Fund and BVI own.
/3/ The shares of Common Stock owned by Mr. Shaw include (i) vested stock
options for 664,495 shares at a price of $0.69 per share, and (ii) 10,000
shares held by Mr. Shaw's children and grandchildren, as to which Mr. Shaw
possesses investment discretion.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of October 1, 1997, by each director and executive officer
of the Company, and all directors and executive officers of the Company as a
group. The Company obtained this information from its directors and executive
officers. Unless otherwise indicated, these individuals possess sole voting and
investment power with respect to the shares that they beneficially own.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME BENEFICIALLY OWNED OUTSTANDING SHARES
- ---- ------------------ ------------------
<S> <C> <C>
Andrew M. Boas...................... 3,530,833/1,2/ 46.5%
William F. Dawson................... 36,667/2/ *
R. Gerald Gelinas................... 68,074/2,3/ *
Walter B. Jaccard................... 65,000/2/ *
William P. Kovacs................... 70,000/2/ *
Donald R. Leopold................... 10,000/2/ *
H. Sean Mathis...................... 20,000/2/ *
Douglas K. Nelson................... 20,000/2/ *
William J. Shaw..................... 881,490/2,4/ 11.0%
Harry J. White, Jr.................. 97,500/2/ 1.3%
All directors and executive
officers as a group (10
individuals)....................... 4,799,564/2/ 56.2%
</TABLE>
- -------------------
/1/ See footnote number 1 to the preceding table for a description of Mr. Boas'
beneficial ownership of Common Stock.
/2/ The shares of Common Stock beneficially owned by the following individuals
include vested stock options for the number of shares following their name:
Mr. Boas, 20,000; Mr. Dawson, 36,667; Mr. Gelinas, 43,334; Mr. Jaccard,
55,000; Mr. Kovacs, 20,000; Mr. Leopold, 10,000; Mr. Mathis, 20,000; Mr.
Nelson, 20,000; Mr. Shaw, 664,495; Mr. White, 65,000; and all directors and
executive officers as a group, 954,496.
/3/ Includes 2,400 shares held by Mr. Gelinas' spouse.
/4/ Includes 10,000 shares held by Mr. Shaw's children and grandchildren, as to
which Mr. Shaw possesses investment discretion.
* Less than 1%.
<PAGE>
PROPOSAL I
THE ELECTION OF DIRECTORS
The Stockholders will vote for the election of all six directors of the
Company, who will serve until the election and qualification of their
successors. If any nominee is unavailable for election as a result of unforeseen
circumstances, the proxyholders will vote for the election of such substitute
nominee as the Board of Directors may propose.
Each of the nominees is a current director of the Company. Each nominee
has furnished to the Company the following information with respect to his
principal occupation or employment, principal business, and directorships of
public companies:
<TABLE>
<CAPTION>
OFFICES AND POSITIONS DIRECTOR BOARD COMMITTEE
NAME AGE WITH THE COMPANY SINCE MEMBERSHIPS
---- --- --------------------- -------- ---------------
<S> <C> <C> <C> <C>
Andrew M. Boas 42 None December Audit, Marketing, and
1991 Nominating
William P. Kovacs 51 None December Audit, Compensation, and
1991 Special
Donald R. Leopold 48 None Director Compensation and Marketing
1995
H. Sean Mathis 50 None December Audit, Compensation,
1991 Nominating, and Special
Douglas K. Nelson 54 None December Marketing, Nominating, and
1991 Special
William J. Shaw 54 Chairman of the Board, May None
Chief Executive Officer, 1995
and President
</TABLE>
Andrew M. Boas became a director of the Company in December 1991. Since
November 1986, Mr. Boas has been a general partner of CM Management, a
registered investment advisor that is the general partner of investment
partnerships specializing in investments in troubled companies. Since May 1994,
he has also been President of Carl Marks Offshore Management, Inc. Mr. Boas also
has been (i) a Managing Director of Carl Marks & Co., Inc., a broker-dealer
firm, since December 1977, (ii) a director of CMCO Inc., an investment banking
firm, since March 1988, (iii) a director of Sport and Health, LLC, an operator
of fitness centers, since October 1993, and (iv) a director of Vertientes
Camaguey Sugar Company, a holding company, since November 1994. Mr. Boas also
served as: a director of American Corp. LTD, an Australian company that invests
in the securities of companies located in the United States, from January 1988
to February 1992; a director of Smith Newcourt, Carl Marks, Inc., a broker-
dealer firm, from March 1988 to June 1990; a director of Herman's Sporting
Goods, Inc., from March 1993 to March 1996; and a director of Pratt & Lambert
United, Inc., a manufacturer of consumer and industrial coatings, from August
1994 to January 1996.
William P. Kovacs became a director of the Company in December 1991, and
served as a director until December 3, 1992. From December 3, 1992 to December
2, 1993, Mr. Kovacs served as an advisory director of the Company at the
pleasure of the Board of Directors. As an advisory director, Mr. Kovacs attended
and participated in meetings of the Board of Directors and committees thereof,
but did not vote on matters presented. Since December 2, 1993, Mr.
<PAGE>
Kovacs has served as a director of the Company. Since January 1997, Mr. Kovacs
has been an attorney with the law firm of Rudnick & Wolf LLP. From March 1996 to
December 1996, Mr. Kovacs was President of MDRC, Inc., a dispute resolution and
consulting firm. From October 1989 to August 1995, Mr. Kovacs was a Vice
President and Assistant Secretary of Kemper Financial Services, Inc., the
investment management subsidiary of Kemper Corp. From June 1981 to September
1989, Mr. Kovacs held various legal positions with the Principal Financial
Group, Des Moines, Iowa. Mr. Kovacs also was a director of United Gas Holding
Company from February 1991 to July 1993, and an officer of 625 Liberty Avenue
Holding Corporation from November 1993 to August 1995.
Donald R. Leopold became a director of the Company in December 1995.
Since September 1991, Mr. Leopold has been a senior partner of Sherbrooke
Associates, Inc., a marketing, strategic planning, and organization development
consulting firm. From May 1994 to September 1995, Sherbrooke Associates, Inc.
performed consulting services for the Company with respect to its sales and
marketing operations, and Mr. Leopold was primarily responsible for the
consulting work performed for the Company. From 1984 to September 1991, Mr.
Leopold was President of Game Plan, Inc., a management consulting firm. He is
also a director of Jullian's Entertainment Corporation.
H. Sean Mathis became a director of the Company in December 1991. Since
July 1996, Mr. Mathis has been Chairman and a director of Universal Gym
Equipment Inc. ("Universal"), a privately owned manufacturer of exercise
equipment. Universal filed for protection under the federal bankruptcy laws in
July 1997. Mr. Mathis is also Chairman of the Board of Allis Chalmers, Inc., an
industrial manufacturer, whose main asset is a net operating loss carryforward.
From July 1991 to August 1993, Mr. Mathis was President of RCL, the predecessor
firm of Allied Digital Technologies Corp., a manufacturing company, and from
August 1993 to the present, served as a director. From August 1993 to November
1995, Mr. Mathis was President and a director of RCL Capital Corporation, which
was merged into DISCGraphics, a manufacturer of packaging materials, in November
1995. From May 1988 to October 1993, Mr. Mathis was a director and the Chief
Operating Officer of Ameriscribe Management Services, Inc., a national provider
of reprographic and related facilities management services. From August 1992 to
May 1994, Mr. Mathis acted as the Federal Court Appointed Trustee for
International Wire News Service Liquidation Corporation, formerly United Press
International ("UPI"). From November 1991 to July 1992, Mr. Mathis was
Vice Chairman and a director of UPI, which was then a news syndication service.
In August 1991, UPI filed for protection under the federal bankruptcy laws.
Douglas K. Nelson became a director of the Company in December 1991. Since
April 1976, Mr. Nelson has been President of Strategic Directions, a management
consulting firm which focuses on businesses in the areas of leisure, sports, and
entertainment. From February 1970 through March 1976, Mr. Nelson was an
associate with McKinsey and Co., Inc., a management consulting firm.
William J. Shaw joined the Company in May 1995 as its President, Chief
Executive Officer, and a director. In July 1995, Mr. Shaw became Chairman of the
Board of Directors and President and Chief Executive Officer of the Company's
two principal operating subsidiaries, Thousand Trails, Inc. ("Trails") (until it
was merged into the Company in July 1996) and National American Corporation
("NACO"). From February 1989 to October 1993, Mr. Shaw was a director and the
President and Chief Executive Officer of Ameriscribe Management Services, Inc.,
a national provider of reprographic and related facilities management services.
Ameriscribe Management Services, Inc. was sold to Pitney Bowes in November 1993.
From 1983 to January 1989, Mr. Shaw was the President and Chief Executive
Officer of Grandy's, a Dallas based chain of fast service restaurants.
<PAGE>
BOARD OF DIRECTORS
MEETINGS. During the fiscal year ended June 30, 1997, the Board of
Directors held one regularly scheduled meeting and 11 special meetings. Each
director attended at least 75% or more of all meetings of: (i) the Board of
Directors held during the periods for which he was a director, and (ii) the
committees to which he was assigned during the periods that he served.
AUDIT COMMITTEE. The Board of Directors has an Audit Committee (the
"Audit Committee"), presently composed of Messrs. Boas, Kovacs, and Mathis.
Pursuant to its charter, the Audit Committee (i) reviews the Company's systems
of internal accounting controls and financial reporting, (ii) reviews the
Company's internal audit function, (iii) approves the selection of the Company's
independent certified public accountants, and (iv) reviews the reports that the
Company's independent certified public accountants render on the Company's
financial statements and other matters. The Audit Committee also performs such
other duties and functions as it or the Board of Directors deem appropriate.
During the fiscal year ended June 30, 1997, the Audit Committee held three
meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Board
of Directors has a Compensation Committee (the "Compensation Committee"),
presently composed of Messrs. Kovacs, Leopold, and Mathis. The Compensation
Committee recommends to the Board of Directors (i) the base salaries and bonuses
of the officers of the Company and (ii) the awards that the Company should make
under its stock plans. During the fiscal year ended June 30, 1997, the
Compensation Committee held three meetings.
From June 30, 1996 to September 12, 1996, Mr. Boas, a director of the
Company, and Mr. Shaw, the President and Chief Executive Officer of the Company,
served as the members of the Compensation Committee. As described under
"Security Ownership," Mr. Boas is deemed to own beneficially 46.5% of the Common
Stock and Mr. Shaw is deemed to own beneficially 11.0% of the Common Stock. Mr.
Boas and certain of his affiliates participated in the private exchange offer
that was part of the restructuring of the Company in July 1996 (the
"Restructuring"). Mr. Boas and Mr. Ruocco are general partners of CM Management.
CM Management is the general partner of each of CM Strategic and CM Strategic
II. CM Strategic exchanged $12,979,000 in principal amount of the Company's
Secured Notes ("Secured Notes") and CM Strategic II exchanged $5,827,000 in
principal amount of Secured Notes. In addition, an investment management
company, of which Messrs. Boas and Ruocco are executive officers, (i) manages a
fund that exchanged $1,680,000 in principal amount of Secured Notes and (ii)
exercises investment discretion over advisory accounts that exchanged $1,373,000
in principal amount of Secured Notes. In addition, (i) Mr. Boas and certain
trusts of which he is a co-trustee exchanged $187,000 in principal amount of
Secured Notes; and (ii) Mr. Ruocco exchanged $10,000 in principal amount of
Secured Notes. In the aggregate, these persons exchanged $22,056,000 principal
amount of Secured Notes for $8,828,400 in cash, $10,847,000 principal amount of
the Company's Senior Subordinated Pay-In-Kind Notes ("PIK Notes"), and 992,070
shares of Common Stock, plus accrued interest. In connection with the
Restructuring, Mr. Shaw was granted options to purchase 664,495 shares of Common
Stock at $0.69 per share. The grant of these options was approved by the Special
Committee of independent directors and by the Stockholders. In connection with
the Restructuring, the Special Committee, composed of Messrs. Kovacs, Mathis,
and Nelson, performed some of the functions usually exercised by the
Compensation Committee.
Certain of Mr. Boas' affiliates also tendered PIK Notes in response to
the Company's Dutch auction tender offer that was completed in June 1997. In the
Dutch auction tender offer, the Company purchased $2,988,489 principal amount of
PIK Notes from CM Strategic and $2,750,300 principal amount of PIK Notes from CM
Strategic II. In the aggregate, the Company purchased $5,738,789 principal
amount of PIK Notes from these persons for $5,164,910, plus an amount for
accrued interest.
<PAGE>
MARKETING COMMITTEE. The Board of Directors has a Marketing Committee
(the "Marketing Committee"), presently composed of Messrs. Boas, Leopold, and
Nelson. The Marketing Committee reviews sales and marketing programs,
direction, and other issues with the Company's senior management. During the
fiscal year ended June 30, 1997, the Marketing Committee did not meet.
NOMINATING COMMITTEE. The Board of Directors has a Nominating Committee
(the "Nominating Committee"), presently composed of Messrs. Boas, Mathis, and
Nelson. The Nominating Committee recommends to the Board of Directors the
individuals to be nominated for director at the annual meeting of Stockholders.
The Nominating Committee will consider nominees for director recommended by any
Stockholder. To make such a recommendation with respect to directors to be
elected at the 1998 annual meeting, a Stockholder should contact the Company at
its principal executive offices on or before the deadline for submitting
Stockholder proposals set forth on the last page of this Proxy Statement. During
the fiscal year ended June 30, 1997, the Nominating Committee held one meeting.
SPECIAL COMMITTEE. The Board of Directors has a Special Committee (the
"Special Committee") of independent directors, presently composed of Messrs.
Kovacs, Mathis, and Nelson. The Special Committee is authorized to review and
make recommendations to the full Board of Directors regarding recapitalization,
reorganization, and financing alternatives for the Company. The Special
Committee approved the Restructuring of the Company that was completed in July
1996. In addition, in connection with the Restructuring, the Special Committee
authorized the grant to Mr. Shaw of an option to purchase Common Stock as
described under "Compensation Committee Interlocks and Insider Participation"
above. The Special Committee also approved the Dutch Auction tender offer for
PIK Notes that was completed in June 1997. During the fiscal year ended June 30,
1997, the Special Committee held seven meetings.
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the current executive officers of the
Company. Although each of these executive officers has an employment agreement
with the Company, they each serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE Offices
------------------- --- ---------------------------------
<S> <C> <C>
William J. Shaw 54 Chairman of the Board, President,
and Chief Executive Officer
Harry J. White, Jr. 43 Vice President, Chief Financial
Officer, Chief Accounting Officer,
and Treasurer
R. Gerald Gelinas 51 Vice President of Sales and
Marketing
Walter B. Jaccard 44 Vice President, General Counsel,
and Secretary
</TABLE>
William J. Shaw is also a director of the Company and his business
experience is described above.
Harry J. White, Jr. joined the Company as Vice President, Chief Financial
Officer, and Chief Accounting Officer in June 1992. At that time, Mr. White also
became a Vice President and the Chief Financial Officer of NACO and Trails. In
September 1992, Mr. White became a director and the Chief Accounting Officer of
NACO and Trails. In June 1995, Mr. White became the Company's Treasurer. From
September 1988 through May 1992, Mr. White was the Chief Financial Officer of
Cosmo World Corporation and its subsidiaries. During this period, Cosmo World
Corporation was a holding company that owned Ben Hogan Company, a manufacturer
of golf equipment, Pebble Beach Company, the owner and operator of golf courses
and hotels in Pebble Beach, California, and other companies that owned
residential and golf course developments. Cosmo World of Nevada, Inc., a
subsidiary of Cosmo World Corporation, filed for protection under the federal
bankruptcy laws in December 1991. From June 1976 through August 1988, Mr. White
practiced public accounting with the firm of Deloitte Haskins & Sells, now known
as Deloitte & Touche. Mr. White is a Certified Public Accountant.
R. Gerald Gelinas joined the Company in September 1995 as Vice President of
Sales and Marketing for the Company, Trails, and NACO. From January 1988 through
June 1995, Mr. Gelinas served as Senior Vice President, Marketing, for Club
Corporation of America ("CCA"), an owner and manager of country clubs and golf
courses. While with CCA, Mr. Gelinas also served as Chairman for two CCA
subsidiaries, Associate Clubs International ("ACI") and Associate Club
Publications ("ACPI"), from January 1992 through June 1995. ACI operates a fee-
based network which provides members with various services including access to
other CCA and non-CCA clubs, hotels, and resorts. ACPI produces and distributes
a bi-monthly magazine to CCA members. From May 1984 through September 1988, Mr.
Gelinas served as Senior Vice President, Marketing, for Ramada, Inc., which owns
and manages hotel facilities.
Walter B. Jaccard has been Vice President, General Counsel, and Secretary
of the Company since December 1992. Mr. Jaccard had previously been Vice
President and General Counsel of Trails since January 1987 and Secretary since
January 1988. He served as Associate General Counsel of Trails from 1983 to
1986. Mr. Jaccard has also been Vice President and Assistant Secretary of NACO
since August 1989, and a director of NACO since February 1992. He also
<PAGE>
served as a director of Trails from February 1992 until its merger into the
Company, and he served as a director of Trails and NACO from May 1991 to June
1991.
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended June 30, 1997,
1996, and 1995, the cash compensation that the Company and its subsidiaries
paid, as well as other compensation paid for these years, to the Company's Chief
Executive Officer, to the three other executive officers of the Company on June
30, 1997, and to the most highly compensated officer of the Company's
subsidiaries, who is not considered an executive officer for reporting purposes.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- --------------
Other Annual Securities All Other
Name and Principal Salary Bonus Compensation Underlying Compensation
Position Year ($) ($) ($)/2/ Options (#)/1/ ($)/2/
- -------------------- ---- -------- ------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William F. Dawson, 1997 169,750 15,000 -0- 5,000 3,806
CEO of Resort 1996 169,750 40,000/3/ -0- 35,000 2,783
Parks International 1995 163,750 78,900 6,000/4/ -0- 4,316
R. Gerald Gelinas 1997 130,000 30,000 -0- 30,000 1,174
Vice President of 1996 107,600/5/ 30,000 -0- 20,000 -0-
Sales and 1995
Marketing
Walter B. Jaccard, 1997 140,000 10,000 -0- 30,000 2,796
Vice President, 1996 140,000 15,000 -0- 30,000 2,869
General Counsel, 1995 140,000 -0- -0- 1,290
and Secretary
William J. Shaw, 1997 250,000 -0- 664,495 321,143/6/
Chairman of the 1996 250,000 -0- -0- 952,927/6/
Board, President, 1995 29,800/7/ -0- -0- -0-
and CEO
Harry J. White, 1997 124,032 30,000 -0- 30,000 2,777
Jr., Vice 1996 124,032 30,000 -0- 40,000 3,127
President, CFO, 1995 124,032 15,000 -0- -0- 36,454/8/
CAO, and
Treasurer
</TABLE>
---------------------
/1/ Awards are grants of stock options pursuant to the Company's 1991
Employee Plan, 1993 Employee Plan, and a Stock Option Agreement, dated
as of August 1, 1996, between the Company and Mr. Shaw.
/2/ Amounts include matching contributions by the Company under its 401(k)
Plan for fiscal 1997, 1996, and 1995, as follows: Mr. Dawson, $3,806,
$2,783, and $4,316; Mr. Gelinas, $1,174; Mr. Jaccard, $2,796, $2,869,
and $1,290; Mr. Shaw, $3,481; and Mr. White, $2,777, $3,127, and
$2,654. The amounts do not include compensation payable to the named
executive officers under their employment agreements upon the
termination of their employment if their employment has not terminated
because no amounts have been paid or accrued therefor. See "Employment
Contracts" below.
/3/ An additional bonus of $20,000 earned during fiscal 1995 was paid to
Mr. Dawson in August 1995.
/4/ Mr. Dawson was paid a car allowance of $500 per month.
/5/ Mr. Gelinas became the Company's Vice President of Sales and Marketing
in September 1995.
<PAGE>
/6/ Amount includes a one-time bonus of $1,270,589 that was paid to Mr.
Shaw under the terms of his employment agreement with the Company. The
Company paid $952,927 of this bonus to Mr. Shaw in July 1996, and it
paid the balance of $317,662 to him in May 1997 when his right to the
additional payment vested. See "Employment Contracts" below.
/7/ Mr. Shaw became the Company's President and Chief Executive Officer in
May 1995.
/8/ During the year ended June 30, 1995, the Company reimbursed Mr. White
$33,800 for moving expenses he incurred during his relocation to
Dallas, Texas.
Employment Contracts.
On May 11, 1995, the Company entered into an employment agreement with
Mr. Shaw. Under this employment agreement, Mr. Shaw's salary is not less than
$250,000 per year. If the Company terminates Mr. Shaw's employment, other than
for cause, the Company must pay Mr. Shaw a severance payment equal to one year
of his base salary.
Mr. Shaw's employment agreement provided that he would receive a one-time
bonus equal to between 4% and 6% of the amount by which the enterprise value of
the Company (including the value of its debt and equity securities) exceeded $75
million at the time he elected to receive the bonus. Prior to consummation of
the Restructuring, Mr. Shaw exercised his right to receive this bonus, which
entitled him to a payment of $1,270,589. The Company paid $952,927 of this bonus
to Mr. Shaw in July 1996, and it paid the balance of $317,662 to him in May 1997
when his right to the additional payment vested. The Company originally obtained
an irrevocable standby letter of credit in the amount of $1.5 million on which
Mr. Shaw could draw all or part of this bonus if the Company failed to pay the
bonus after receiving a request from Mr. Shaw. This letter of credit and a
related cash deposit were released upon the Company's payment of the bonus.
On September 10, 1992, the Company entered into an employment agreement
with Mr. Dawson. Under this employment agreement, as amended, Mr. Dawson's base
salary is not less than $169,750 per year, and he may receive a bonus each year
at the discretion of the Company's Chief Executive Officer. If the Company
terminates Mr. Dawson's employment, other than for cause, it must pay Mr. Dawson
a severance payment equal to six months of his base salary.
On September 14, 1995, the Company entered into an employment agreement
with Mr. Gelinas. Under this employment agreement, Mr. Gelinas' base salary is
not less than $130,000 per year, and he may receive a bonus each year at the
discretion of the Company's Chief Executive Officer. If the Company terminates
Mr. Gelinas' employment, other than for cause, the Company must pay Mr. Gelinas
a severance payment equal to one year of his base salary.
On December 3, 1992, the Company entered into an employment agreement with
Mr. Jaccard. Under this employment agreement, as amended, Mr. Jaccard's base
salary is not less than $140,000 per year, and he may receive a bonus each year
at the discretion of the Company's Chief Executive Officer. If the Company
terminates Mr. Jaccard's employment, other than for cause, it must pay Mr.
Jaccard a severance payment equal to one year of his base salary.
On October 21, 1993, the Company entered into an employment agreement with
Mr. White. Under this employment agreement, as amended, Mr. White's base salary
is not less than $124,032 per year, and he may receive a discretionary bonus of
up to $30,000 per year. If the Company terminates Mr. White's employment, other
than for cause, the Company must pay Mr. White a severance payment equal to one
year of his base salary.
<PAGE>
STOCK OPTION AGREEMENT
At their annual meeting on November 19, 1996, the Stockholders approved the
grant to Mr. Shaw of options to purchase 664,495 shares of Common Stock at $0.69
per share. The options are evidenced by a stock option agreement, dated as of
August 1, 1996 (the "Stock Option Agreement") that was approved by the Special
Committee of independent directors on September 12, 1996. Options to purchase
144,927 shares of Common Stock are intended to be eligible for treatment as
incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended, and the remaining options are non-qualified options for such
purposes. The Company has filed a Registration Statement on Form S-8 with
respect to the shares issuable under the Stock Option Agreement.
The options granted to Mr. Shaw are exercisable immediately, in full or in
part, for a term of ten years, while Mr. Shaw is in the employ of the Company
and for a 90 day period thereafter, except in the event of the termination of
Mr. Shaw's employment due to death or permanent disability, in which case the
options are exercisable for one year thereafter, or for "cause," in which case
the options will terminate immediately. However, Mr. Shaw is not permitted to
exercise the options if, and to the extent that, such exercise would cause an
increase in the amount of "ownership change" for federal tax purposes. In the
event options would otherwise expire at a time Mr. Shaw is not permitted to
exercise all or a portion of the options because to do so would increase the
amount of ownership change (the "Exercise Restriction"), generally the term of
the options will be extended with respect to that portion of the options which
would cause an increase in order to ensure that Mr. Shaw will have at least a
90-day period after the Exercise Restriction ceases within which to exercise
such options. However, solely with respect to that portion of the options
intended to be incentive stock options, the Exercise Restriction will not apply
during the last 90 days of the ten year term, and, if unexercised at the end of
such ten year term, such options will expire. Neither the options, nor any
interest therein, may be assigned or transferred except by will or the laws of
descent and distribution.
The exercise price is payable in cash, except that with the prior approval
of the committees administering the Stock Option Agreement, the exercise price
may instead be paid in whole or in part by the delivery to the Company of a
certificate or certificates representing shares of Common Stock, provided that
the Company is not then prohibited by the terms of any contractual obligation or
legal restriction from purchasing or acquiring such shares of Common Stock.
In connection with the options granted under the Stock Option Agreement,
the Company must withhold federal taxes with respect to any ordinary income that
Mr. Shaw recognizes in connection with such options. The Company may also have
to withhold state and local taxes with respect thereto. Mr. Shaw must pay such
withholding liability to the Company. With the prior consent of the committees
administering the Stock Option Agreement, Mr. Shaw may be allowed to deliver to
the Company shares of Common Stock in the amount of such withholding liability.
STOCK OPTION PLANS
1991 Employee Plan. Effective December 31, 1991, the Company adopted the
1991 Employee Stock Incentive Plan (as amended, the "1991 Employee Plan") to
enable the Company and its subsidiaries to attract, retain, and motivate their
officers, employees, and directors. Awards under the 1991 Employee Plan may take
various forms, including (i) shares of Common Stock, (ii) options to acquire
shares of Common Stock ("Options"), (iii) securities convertible into shares of
Common Stock, (iv) stock appreciation rights, (v) phantom stock, or (vi)
performance units. Options granted under the 1991 Employee Plan may be (i)
incentive stock options ("ISOs"), which have certain tax benefits and
restrictions, or (ii) non-qualified stock options ("Non-qualified Options"),
which do not have any tax benefits and have few restrictions.
<PAGE>
The Compensation Committee or, in certain circumstances, the Board of
Directors may grant awards under the 1991 Employee Plan until December 30, 2001.
The recipient of an award duly granted on or prior to such date may thereafter
exercise or settle it in accordance with its terms, although the Company may not
issue any shares of Common Stock pursuant to any award after December 30, 2011.
The Board of Directors may amend or terminate the 1991 Employee Plan at any
time and in any manner, provided that (i) an amendment or termination may not
affect an award previously granted without the recipient's consent, and (ii) an
amendment will not be effective until the Stockholders approve it if any
national securities exchange or securities association that lists any of the
Company's securities requires stockholder approval or if Rule 16b-3 requires
stockholder approval.
The Company reserved 291,780 shares of Common Stock for issuance under the
1991 Employee Plan. In September 1995, the Company granted key employees ISOs
covering 140,000 shares with an exercise price of $0.625 per share, and in
January 1996, the Company granted certain non-employee directors Non-qualified
Options to purchase 20,000 shares with an exercise price of $0.81 per share. In
September 1996, the Company granted key employees ISOs covering 60,000 shares
and one non-employee director Non-qualified Options covering 5,000 shares, each
with an exercise price of $0.80 per share. In November 1996, the Company granted
certain non-employee directors Non-qualified Options covering 20,000 shares,
each with an exercise price of $1.08 per share. As of October 1, 1997, 245,000
Options were outstanding under the 1991 Employee Plan and none had been
exercised. 105,000 of these Options are fully vested, and 140,000 of these
options are 66 2/3% vested.
1993 Employee Plan. On December 2, 1993, the Company adopted the 1993
Stock Option and Restricted Stock Purchase Plan (as amended, the "1993 Employee
Plan") in order to enable the Company and its subsidiaries to attract, retain,
and motivate their officers and employees. Awards under the 1993 Employee Plan
are restricted to (i) awards of the right to purchase shares of Common Stock
("Stock Awards"), or (ii) awards of Options, which may be either ISOs or Non-
qualified Options. The purchase price for any Stock Awards and the exercise
price for any Non-qualified Options may be less than the fair market value of
the Common Stock on the date of grant. The exercise price of any ISOs may not be
less than the fair market value of the Common Stock on the date of grant.
The Compensation Committee or, in certain circumstances, the Board of
Directors may grant awards under the 1993 Employee Plan until October 20, 2003.
The termination of the 1993 Employee Plan, however, will not alter or impair any
rights or obligations under any award previously granted under the plan.
The Board of Directors may amend or terminate the 1993 Employee Plan at any
time and in any manner, provided that (i) an amendment or termination may not
affect an award previously granted without the recipient's consent, (ii) an
amendment will not be effective until the Stockholders approve it if any
national securities exchange or securities association that lists any of the
Company's securities requires stockholder approval or if Rule 16b-3 requires
stockholder approval, and (iii) the Stockholders must approve any amendment
decreasing the minimum exercise price specified in the plan for any ISO granted
thereunder.
The Company reserved 285,919 shares of Common Stock for issuance under the
1993 Employee Plan. The 1993 Employee Plan, however, limits the number of shares
of Common Stock with respect to which awards can be made in any calendar year to
any one participant to 200,000 shares. In May 1996, the Company granted 95,000
ISOs under the 1993 Employee Plan at an exercise price of $0.59 per share. In
<PAGE>
September 1996, the Company granted key employees ISOs covering 175,000 shares
with an exercise price of $.080 per share. As of October 1, 1997, 266,500
Options were outstanding under the 1993 Employee Plan and 3,500 Options had been
exercised. All of the outstanding Options are fully vested.
Director Plan. On December 2, 1993, the Company adopted the 1993 Director
Stock Option Plan (as amended, the "Director Plan"), which provides for the
grant of Options to non-employee directors of the Company. The Company reserved
50,000 shares of Common Stock for issuance under the Director Plan. In January
1995, the non-employee directors of the Company were granted Non-qualified
Options covering 20,000 shares with an exercise price of $0.79 per share. In
November 1996, the non-employee directors of the Company were granted Non-
qualified Options covering 25,000 shares with an exercise price of $1.08 per
share. Prior to this grant, after approval by the Board of Directors, four of
the non-employee directors had voluntarily terminated Options for 20,000 shares
that were granted in December 1994 with an exercise price of $2.75 per share. As
of October 1, 1997, 45,000 Options were outstanding under the Director Plan and
none had been exercised. All of these Options are fully vested.
The Director Plan is designed to be a "formula plan," pursuant to which
each non-employee director will automatically receive a grant of Non-qualified
Options to purchase 5,000 shares of Common Stock on the day immediately after
each annual meeting of the stockholders at which directors are elected,
beginning with the annual meeting held in December 1993. If on any such day,
the number of shares of Common Stock remaining available for issuance under the
Director Plan is insufficient for the grant of the total number of Non-qualified
Options to which all participants would otherwise be entitled, each participant
will receive Non-qualified Options to purchase a proportionate number of the
available number of remaining shares. The exercise price of each Non-qualified
Option is required to equal the fair market value of such Option on the date of
grant as determined under the Director Plan. Generally, the Director Plan
specifies that such fair market value will be the average trading price of the
Common Stock during the period beginning 45 days before the date of grant and
ending 15 days before the date of grant.
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding Options to
purchase Common Stock granted in fiscal 1997 to the five individuals named in
the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------
Percentage
Number of of Total POTENTIAL REALIZABLE VALUE
Securities Options/ AT ASSUMED ANNUAL RATES OF
underlying SARs STOCK PRICE APPRECIATION
Option/ Granted to Exercise FOR OPTION TERM
SARs Employees Price --------------------------
Granted in Fiscal ($ per Expiration 5% 10%
Name (#)1 Year Share) Date ($) ($)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William F. Dawson 5,000 0.6 0.80 9/11/06 6,516 10,375
R. Gerald Gelinas 30,000 3.3 0.80 9/11/06 39,093 62,250
Walter B. Jaccard 30,000 3.3 0.80 9/11/06 39,093 62,250
William J. Shaw 664,495 73.9 0.69 7/31/06 746,851 1,189,235
Harry J. White, Jr. 30,000 3.3 0.80 9/11/06 39,093 62,250
</TABLE>
- --------------------
/1/ As of October 1, 1997, all of these Options were 100% vested and none of
them had been exercised.
AGGREGATE OPTION EXERCISES IN FISCAL 1997 AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning Options to
purchase Common Stock held by the five individuals named in the Summary
Compensation Table. No Options were exercised by the named individuals in the
fiscal year ended June 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME FISCAL YEAR-END (#) FISCAL YEAR-END ($)
- ----------------------------------------------------------------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William F. Dawson 33,333 6,667 55,167 11,033
R. Gerald Gelinas 36,667 13,333 55,433 22,067
Walter B. Jaccard 50,000 10,000 78,025 16,550
William J. Shaw 664,495 -0- 1,056,547 -0-
Harry J. White, Jr. 60,000 10,000 94,925 16,550
</TABLE>
<PAGE>
LONG TERM INCENTIVE PLANS
As of June 30, 1997, the Company's only long term incentive plan was its
Employees Savings Trust (the "401(k) Plan"), which is a contributory employee
savings plan exempt under Section 401(k) of the Internal Revenue Code. An
eligible employee participating in the 401(k) Plan may contribute up to 10% of
his or her annual salary, subject to certain limitations. In addition, the
Company may make discretionary matching contributions as determined annually by
the Company. The Company made matching contributions totaling $154,000 for the
year ended June 30, 1997, and has committed to make matching contributions for
the year ended June 30, 1998, in an amount equal to 45% of the voluntary
contribution made by each participant, up to 4% of the participant's annual
compensation (a maximum of 1.8% of the participant's annual compensation).
Employer contributions are subject to a seven-year vesting schedule.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a retainer of
$24,000 per year and $500 for each day that they attend a meeting of the Board
of Directors or committee thereof. The Company also reimburses such directors
for their travel and lodging expenses when attending meetings. The following
table summarizes amounts paid to each director during the fiscal year ended June
30, 1997, excluding reimbursements of travel and lodging expenses.
<TABLE>
<CAPTION>
AMOUNT PAID FOR STOCK OPTIONS
NAME ANNUAL RETAINER MEETINGS GRANTED
- ------------------- --------------- --------------- -------------
<S> <C> <C> <C>
Andrew M. Boas $24,000 $2,500 15,000/1/
William P. Kovacs 24,000 2,500 10,000/1/
Donald R. Leopold 24,000 2,500 5,000
H. Sean Mathis 24,000 2,500 10,000/1/
Douglas K. Nelson 24,000 2,500 10,000/1/
William J. Shaw/2/ -0- -0- -0-
</TABLE>
- --------------------
/1/ In November 1996, after approval by the Board of Directors, each of
these non-employee directors voluntarily terminated options for 5,000
shares that were granted in December 1994 with an exercise price of
$2.75 per share and received new options for 5,000 shares with an
exercise price of $1.08 per share.
/2/ Mr. Shaw did not receive additional compensation for serving as a
director of the Company.
<PAGE>
Report of the Compensation Committee
The Company's executive compensation program is administered by the
Compensation Committee. The role of the Compensation Committee is to review and
approve salaries and other compensation of the principal officers of the
Company, including those individuals listed in the compensation tables in this
Proxy Statement. In connection with the Restructuring, the Special Committee
also performed part of the role of the Compensation Committee.
Overall Policy. The Compensation Committee's compensation policies are
intended to (i) provide incentives for certain executive officer performance
that results in continuing improvements in the Company's financial results and
(ii) align the interests of the Company's executives and the holders of its
securities by providing for payment of compensation based on increases in the
value of such securities.
Executive Officers. The annual compensation of the Company's executive
officers and the principal officers of the Company's operating subsidiaries
consists of a fixed base salary and a discretionary bonus. The Compensation
Committee has delegated to the Company's Chief Executive Officer the authority
to determine the salary and bonus of executive officers (other than himself) if
the aggregate annual compensation of such officer is less than $175,000.
Pursuant to such delegated authority, the base salaries of Mr. Jaccard and Mr.
White were continued at the same level as originally approved by the
Compensation Committee when Mr. Jaccard became the Company's General Counsel and
Mr. White joined the Company as Chief Financial Officer, both in 1992; the base
salary of Mr. Gelinas was continued at the same level as originally approved by
the Compensation Committee when Mr. Gelinas joined the Company in 1995; and the
base salary of Mr. Dawson was continued at the same level as in fiscal 1996.
Mr. Jaccard and Mr. White receive discretionary annual bonuses based upon
achievement of the Company's overall objectives for the year. Mr. Gelinas
receives a discretionary annual bonus based upon achievement of the Company's
overall marketing objectives for the year. These individuals received bonuses in
fiscal 1997 based upon the successful achievement of their respective goals.
Mr. Dawson receives a discretionary annual bonus based upon the operating
results of Resort Parks International, Inc. Because Resort Parks International,
Inc. was not successful in meeting its growth objectives in fiscal 1997, Mr.
Dawson's bonus declined as compared with fiscal 1996.
The Compensation Committee does not intend to increase the annual base
salaries of the executive officers of the Company and the principal officers of
its operating subsidiaries for fiscal 1998. However, such persons may receive a
discretionary bonus in fiscal 1998 based upon the achievement of certain
objectives.
1997 Stock Option Grants to Executive Officers. In order to provide an
incentive to the officers and employees of the Company and its operating
subsidiaries and align their interests with those of the Stockholders, stock
options were granted in fiscal 1997 to the executive officers of the Company,
the principal officers of its operating subsidiaries and other employees of the
Company and its subsidiaries. In September 1996, the Company granted options to
purchase an aggregate of 235,000 shares of Common Stock at an exercise price of
$0.80 per share under the 1991 Employee Plan and the 1993 Employee Plan. The
exercise price of these options equaled the market value of the Common Stock on
the date of grant and, therefore, provide value to the officers only with
appreciation in stock prices. These options are 100% vested and have not been
exercised.
Compensation of Chief Executive Officer. Mr. Shaw's employment agreement
with the Company provides that his annual base salary will not be less than
$250,000 per year. The employment agreement was negotiated between Mr. Boas and
Mr. Shaw, and approved by the Compensation Committee and full Board of
Directors. For fiscal 1997, Mr. Shaw's base salary
<PAGE>
remained at $250,000, the level set when the Company entered into the employment
agreement with Mr. Shaw in May 1995.
Mr. Shaw's employment agreement also provided that he would receive a one-
time bonus equal to between 4% and 6% of the amount by which the enterprise
value of the Company (including the value of its debt and equity securities)
exceeded $75 million at the time he elected to receive the bonus. This bonus
was designed to provide value to Mr. Shaw only with appreciation of the
Company's enterprise value. Before approving the agreement with Mr. Shaw, the
Compensation Committee obtained an opinion from an independent employment
compensation consultant that the bonus and the other compensation payable to Mr.
Shaw under the employment agreement was a reasonable compensatory arrangement
for Mr. Shaw given the Company's financial and operating condition and prospects
at the time the Company entered into the employment agreement with Mr. Shaw.
Prior to consummation of the Restructuring, the bonus had accrued to
$1,270,589 and was 75% vested. Consummation of the Restructuring would have
adversely affected the bonus arrangements with Mr. Shaw. In these
circumstances, in June 1996, Mr. Shaw elected to receive his bonus, which was
fixed at the accrued amount. The vested portion of Mr. Shaw's bonus, equaling
$952,927, was paid in July 1996, and the remaining balance of $317,662 was paid
when it vested in May 1997.
In order to retain Mr. Shaw's services and to provide an incentive to Mr.
Shaw, the Special Committee, at a meeting of the full Board of Directors in July
1996, authorized a grant, in the event the Restructuring was consummated and
subject to stockholder approval, of options to purchase shares of Common Stock
representing 9% of the outstanding Common Stock immediately after the
Restructuring at an exercise price equal to the average closing bid quotation
for the Common Stock as quoted through the NASD OTC Bulletin Board and National
Quotation Bureau's Pink Sheets for the ten business days immediately following
the date the Restructuring was consummated, but in any event no less than $0.50
per share or more than $1.00 per share. In furtherance of its grant of the
options, on September 12, 1996, the Special Committee approved the form of the
Stock Option Agreement pursuant to which Mr. Shaw was granted, subject to
Stockholder approval, options to purchase 664,695 shares of Common Stock at
$0.69 per share. Such exercise price is the average closing bid quotation for
the Common Stock as quoted through the NASD OTC Bulletin Board and National
Quotation Bureau's Pink Sheets for the ten business days immediately following
the date the Restructuring was consummated and, in the Special Committee's
judgment, reflects the fair market value of the Common Stock as of the date the
Restructuring was consummated in view of the fact that the Common stock is
lightly traded. The Stockholders approved the Stock Option Agreement at their
annual meeting on November 19, 1996.
Respectfully submitted,
William P. Kovacs
Donald R. Leopold
H. Sean Mathis
Douglas K. Nelson
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph compares the Company's cumulative total
Stockholder return on the Common Stock for the period from July 1, 1992 to June
30, 1997 with the cumulative total return of the NASDAQ market index, and a peer
group of companies selected by the Company for purposes of the comparison and
described more fully below (the "Peer Group"). Dividend reinvestment has been
assumed and, with respect to companies in the Peer Group, the returns of each
such company have been weighted to reflect relative stock market capitalization.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
- ----------------------- FISCAL YEAR ENDING ---------------------------
COMPANY 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
THOUSAND TRAILS, INC. 100 160.00 140.00 40.00 45.00 170.00
INDUSTRY INDEX 100 137.06 122.17 166.27 196.89 222.32
BROAD MARKET 100 122.76 134.61 157.88 198.73 239.40
</TABLE>
Peer Group. The Peer Group selected by the Company for the above
Performance Graph is based on SIC Code 799 - Miscellaneous Amusement &
Recreation Services - that is presently comprised of the following companies:
Alliance Gaming Corporation, American Bingo & Gaming Corporation, American
Wagering, Inc., Anchor Gaming, Inc., Argosy Gaming Company, Aztar Corporation,
Bally Total Fitness Holding Corporation, Boyd Gaming Corporation, Brassie Golf
Corporation, Casino America, Inc., Cedar Fair, L.P., Century Casinos, Inc.,
Chartwell Leisure, Inc., Cinema Ride, Inc., Circus Circus Enterprises, Inc.,
Crown Casino Corporation, Dover Downs Entertainment, Inc., Family Golf Centers,
Inc., Global Outdoors, Inc., Golden Bear Golf, Inc., Grand Casinos, Inc., Great
Bay Casino, Inc., Imax Corporation, Interactive Entertainment, Inc., Interlott
Tech., Inc., Jackpot Enterprises, Inc., Jillian's Entertainment Corporation,
Lady Luck Gaming Corporation, Malibu Entertainment Worldwide, Inc., Master
Glazier's Karate, Inc., Mirage Resorts, Inc., Multimedia Games, Inc., N-Vision,
Inc., Netlive Communication, Inc., Players International, Inc., President
Casinos, Inc., Quintel Entertainment, Inc., Renaissance Entertainment
Corporation, Rio Hotel and Casino, Inc., Sands Regent, Inc., Santa Fe Gaming
Corporation, Senior Tour Players Development, Inc., Showboat, Inc., Skylands
Park Management, Inc., Skyline Multimedia Entertainment, Inc., Sports Club
Company, Inc., Ticketmaster Group, Inc., UC Television Network, Inc., Vail
Resorts, Inc., Visual Edge Systems, Inc., and Walt Disney Holding Company.
During the year ended June 30,
<PAGE>
1997, the following companies were added to the Peer Group: Dover Downs
Entertainment, Inc., Golden Bear Golf, Inc., Great Bay Casino, Inc., Interactive
Entertainment, Inc., Interlott Tech., Inc., Malibu Entertainment Worldwide,
Inc., Netlive Communication, Inc., Ticketmaster Group, Inc., Vail Resorts, Inc.,
and Visual Edge Systems, Inc. During the year ended June 30, 1997, the following
companies were deleted from the Peer Group: BoomTown, Inc., Childrobics, Inc.,
Elsinore Corporation, Encore Marketing International, Inc., Gaming Corporation
of America, Gaming World International, Inc., Golf Enterprises, Inc., Grand
Gaming Corporation, Great American Recreation, Inc., Griffin Gaming &
Entertainment, Inc., International Lottery, Inc., Lone Star Casino Corporation,
Moutasia Entertainment International, Inc., Pratt Hotel Corporation, S-K-I,
Ltd., Sky Games International Ltd, Southshore Corporation, and Stratosphere
Corporation. The companies in the Peer Group provide a broad range of amusement
and recreation services in several industries.
Indemnification
Under its Bylaws, the Company must indemnify its present and former
directors and officers for the damages and expenses that they incur in
connection with threatened or pending actions, suits, or proceedings arising
because of their status as directors and officers, provided that they acted in
good faith and in a manner that they reasonably believed to be in or not opposed
to the best interests of the Company (or with respect to any criminal action or
proceeding, provided that they had no reasonable cause to believe that their
conduct was unlawful). In connection with this indemnification obligation, the
Company has entered into indemnification agreements with its directors and
officers.
The Company must advance funds to these individuals to enable them to
defend any such threatened or pending action, suit, or proceeding. The Company
cannot release such funds, however, until it receives an undertaking by or on
behalf of the requesting individual to repay the amount if a court of competent
jurisdiction ultimately determines that such individual is not entitled to
indemnification. In connection with this obligation, the Company and Trails
established trusts (the "Indemnification Trusts") that will reimburse their
directors and officers for any indemnifiable damages and expenses that they
incur and that will advance to them defense funds. The Company and Trails
contributed $500,000 and $300,000, respectively, to the Indemnification Trusts.
Pursuant to the trust agreements, interest on the trust estates will become part
of the trust estates. The Indemnification Trusts will terminate on the earlier
of (i) the execution by a majority of the beneficiaries of a written instrument
terminating the trusts, (ii) the exhaustion of the entire trust estates, or
(iii) the expiration of ten years from the establishment of the trusts. The
Indemnification Trusts may not terminate, however, if there is pending or
threatened litigation with respect to a claim by a beneficiary against the
Indemnification Trusts, until (i) a final judgment in such proceeding, (ii) the
execution and delivery of a statement by such beneficiary that assertion of a
threatened claim is unlikely, or (iii) the expiration of all applicable statutes
of limitations. The Company possesses a residuary interest in the trust estates
upon termination of the Indemnification Trusts.
NACO also has indemnification obligations to its directors and
officers. In connection therewith, NACO contributed $200,000 to a trust. This
trust will reimburse NACO's directors and certain officers for any indemnifiable
damages and expenses that they incur and will advance defense funds to them.
<PAGE>
PROPOSAL II
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee and the Board of Directors have selected Arthur
Andersen as the Company's independent certified public accountants for the
fiscal year ending June 30, 1998, subject to the Stockholders ratifying such
selection at the Annual Meeting. Arthur Andersen previously audited the accounts
of the Company for fiscal 1997, 1996, 1995, 1994, and 1993, and for the twelve
months ended June 30, 1992. Representatives of Arthur Andersen will be present
at the Annual Meeting and may make a statement thereat if they desire. These
representatives will also be available to respond to appropriate questions from
the Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
Audit services of Arthur Andersen for fiscal 1997 included the examination
of the consolidated financial statements of the Company and its subsidiaries and
services related to filings with the Securities and Exchange Commission (the
"SEC"). The Audit Committee meets with Arthur Andersen on an annual basis at
which time the Audit Committee reviews both audit and nonaudit services
performed by Arthur Andersen for the preceding year as well as the fees charged
by Arthur Andersen for such services. Nonaudit services are approved by the
Audit Committee, which considers, among other things, the possible effect of the
performance of such services on the auditor's independence.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who
beneficially own more than 10% of the shares of Common Stock to file with the
SEC initial reports of Common Stock ownership and reports of changes in
ownership therein. Directors, executive officers, and greater than 10%
shareholders are required by SEC regulation to send the Company copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely upon a
review of the copies of such reports sent to the Company and written
representations that no other reports were required during the year ended June
30, 1997, the Company believes that all Section 16(a) filing requirements
applicable to its directors, executive officers, and greater than 10%
shareholders were complied with.
CERTAIN TRANSACTIONS
RESTRUCTURING
Under the terms of the Restructuring, the Company offered certain holders
of its Secured Notes the opportunity to exchange the Secured Notes held by them
in a private exchange offer for, in each case per $1,000 in principal amount of
Secured Notes, $400 in cash, $492 in principal amount of newly issued PIK Notes,
and 45 shares of Common Stock, plus accrued interest. The Restructuring was
proposed by the Company after discussions with a committee of holders of Secured
Notes (the "Steering Committee"), CM Strategic, and the Company's financial
advisors. The Special Committee was advised by an investment banking firm that
the Restructuring was fair from a financial point of view to the holders of
Common Stock.
Certain significant stockholders of the Company participated in the
exchange offer. Mr. Boas, also a director of the Company, and Robert C. Ruocco
are general partners of CM Management. CM Management is the general partner of
each of CM Strategic and CM Strategic II. Messrs. Boas and Ruocco, CM
Management, CM Strategic, and CM Strategic II are each deemed to beneficially
own greater than 5% of the Common Stock. See "Security Ownership - Security
Ownership of Certain Beneficial Owners." CM Strategic exchanged $12,979,000 in
principal amount of Secured Notes and CM Strategic II exchanged $5,827,000 in
principal amount of Secured Notes. In addition, Messrs. Boas and Ruocco are
executive officers of an investment management company which (i) manages a fund
that exchanged $1,680,000 in principal amount of Secured Notes and (ii)
exercises investment discretion over advisory accounts that exchanged $1,373,000
in principal amount of Secured Notes. In addition, (i) Mr. Boas and certain
trusts of which he is a co-trustee exchanged $187,000 in principal amount of
Secured Notes; and (ii) Mr. Ruocco exchanged $10,000 in principal amount of
Secured Notes. In the aggregate, these persons exchanged $22,056,000 principal
amount of Secured Notes for $8,828,400 in cash, $10,847,000 principal amount of
PIK Notes, and 992,070 shares of Common Stock, plus accrued interest.
SC Fundamental was a member of the Steering Committee. Peter M. Collery and
Gary N. Siegler are controlling stockholders, directors, and executive officers
of SC Fundamental and BVI. SC Fundamental is the general partner of the Fund.
Messrs. Collery and Siegler, SC Fundamental, and the Fund are each deemed to
beneficially own greater than 5% of the Common Stock. See "Security Ownership -
Security Ownership of Certain Beneficial Owners." The Fund exchanged an
aggregate of $14,491,000 in principal amount of Secured Notes. In addition, SC
Fundamental Value Fund BVI Ltd. ("BVI Ltd."), a foreign company of
<PAGE>
which BVI is the managing partner of the investment manager and which is
principally engaged in the business of investing in securities, exchanged an
aggregate of $5,172,000 in principal amount of Secured Notes, and SC Fundamental
Value Fund LP BVI Ltd. ("LP BVI Ltd."), a foreign company of which BVI is the
managing partner of the investment manager and which is principally engaged in
the business of investing in securities, exchanged an aggregate of $1,270,000 in
principal amount of Secured Notes. In the aggregate, these persons exchanged
$20,933,000 principal amount of Secured Notes for $8,373,200 in cash,
$10,299,000 principal amount of PIK Notes, and 941,985 shares of Common Stock,
plus accrued interest.
At the time of the Restructuring, the Company agreed to file a shelf
registration statement with respect to the resale by exchanging Secured
Noteholders of the Common Stock and PIK Notes received by them in the
Restructuring. The Common Stock was registered in October 1996 in connection
with the Company's reincorporation merger, and the PIK Notes were registered in
February 1997.
DUTCH AUCTION TENDER OFFER
On June 25, 1997, the Company purchased $13,378,358 principal amount
of PIK Notes tendered to it in a Dutch auction tender offer (the "Offer"). The
average purchase price for the PIK Notes was $896 per $1,000 of principal
amount. A total of $32,451,928 principal amount of PIK Notes were tendered.
Pursuant to the Offer, a registered holder of PIK Notes could tender its PIK
Notes at from $800 per $1,000 of principal amount to $900 per $1,000 of
principal amount, in integral multiples of $5 of principal amount, plus a
percentage of accrued interest equal to the percentage of principal at which
such Notes were tendered. In the Offer, the Company offered to spend $12 million
to purchase the principal amount of PIK Notes, plus an amount for accrued
interest. The Company purchased all PIK Notes tendered at prices less than $900
per $1,000 of principal amount, and purchased PIK Notes tendered at $900 per
$1,000 of principal amount on a pro rata basis.
Certain significant stockholders of the Company tendered PIK Notes in
response to the Offer. As noted above, Mr. Boas, a director of the Company, CM
Strategic, CM Strategic II, and certain of their affiliates, are each deemed to
beneficially own greater than 5% of the Common Stock. In the Offer, the Company
purchased $2,988,489 principal amount of PIK Notes from CM Strategic and
$2,750,300 principal amount of PIK Notes from CM Strategic II. In the aggregate,
the Company purchased $5,738,789 principal amount of PIK Notes from these
persons for $5,164,910, plus an amount for accrued interest.
As noted above, the Fund and certain of its affiliates are also deemed to
beneficially own greater than 5% of the Common Stock. In the Offer, the Company
purchased $3,021,946 principal amount of PIK Notes from the Fund, $1,345,877
principal amount of PIK Notes from BVI Ltd., and $70,769 in principal amount of
PIK Notes from LP BVI Ltd. In the aggregate, the Company purchased $4,438,592
principal amount of PIK Notes from these persons for $3,994,733, plus an amount
for accrued interest.
The Indenture for the PIK Notes requires that (i) an Affiliate Transaction (as
defined in the Indenture) must be on terms at least as favorable to the Company
as those that could have been obtained in a comparable transaction with an
unaffiliated party; (ii) in the case of an Affiliate Transaction with a value in
excess of $1,000,000, a majority of the independent members of the Board of
Directors approve the transaction as meeting the foregoing standard; and (iii)
in the case of an Affiliate Transaction with a value in excess of $5,000,000,
the Company obtains a favorable opinion as to the fairness of such transaction
to the Company from a financial point of view from a national or regional
independent investment banking firm. The Offer was approved by the Special
Committee, which obtained the investment banking opinion required by the
Indenture. As a consequence, purchases from affiliates of the Company in the
Offer satisfied the provisions of the Indenture related to Affiliate
Transactions.
<PAGE>
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING
The Company's 1998 annual meeting of Stockholders is scheduled to be held
on November 19, 1998. To be considered for inclusion in the Company's proxy
statement for that meeting, Stockholder proposals must be received at the
Company's principal executive offices no later than May 15, 1998.
INCORPORATION BY REFERENCE
With respect to any past or future filings with the SEC into which this
Proxy Statement is incorporated by reference, the material under the headings
"Report of the Compensation Committee" and "Performance Graph" shall
nevertheless not be deemed as filed or so incorporated.
FORM 10-K
The Company is sending to each Stockholder a copy of its Annual Report on
Form 10-K for the fiscal year ended June 30, 1997, which the Company has filed
with the SEC. Upon request, the Company will send to any Stockholder an
additional copy of the Annual Report on Form 10-K. In addition, the Company will
furnish to any Stockholder copies of any exhibits thereto if such Stockholder
reimburses the Company for its costs in furnishing such exhibits.
By Order of the Board of Directors
s/Walter B. Jaccard
WALTER B. JACCARD
Vice President, General Counsel, and Secretary
Dallas, Texas
October 13, 1997
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
THOUSANDS TRAILS, INC.
NOVEMBER 20, 1997
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
- --------------------------------------------------------------------------------
_ |
A [X] PLEASE MARK YOUR | |__
VOTES AS IN THIS
EXAMPLE.
FOR all nominees WITHHOLD
listed to right AUTHORITY
(except as marked to vote for all THE BOARD OF DIRECTORS OF
to the contrary) nominees THOUSAND TRAILS, INC.
1. ELECTION OF RECOMMENDS A VOTE "FOR" THE
DIRECTORS [ ] [ ] FOLLOWING PROPOSALS.
(Instruction: To withhold authority to Nominees: Andrew M. Boas
vote for an individual nominee, strike William P. Kovacs
a line through that nominee's name in Donald R. Leopold
the list at right). H. Sean Mathis
Douglas K. Nelson
William J. Shaw
2. RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the Proxyholders are authorized to (a) vote upon such
other matters presented at the meeting that the Board of Directors did not
know would be presented a reasonable time before this solicitation, (b) vote
to approve the minutes of the last annual meeting of stockholders (which
approval will not amount to ratification of the action taken at that
meeting), (c) vote for the election of such substitute nominees for director
as the Board of Directors may propose if any of the nominees listed herein
are unavailable to stand for election as a result of unforeseen
circumstances, and (d) vote upon matters incident to the conduct of the
meeting.
THE PROXYHOLDERS WILL VOTE THE UNDERSIGNED'S SHARES OF COMMON STOCK IN THE
MANNER DIRECTED HEREIN. IF THE UNDERSIGNED DOES NOT GIVE ANY DIRECTIONS HEREIN,
THE PROXYHOLDERS WILL VOTE SUCH SHARES FOR PROPOSALS 1 AND 2.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature__________________________ Signature if held jointly___________________
DATED: _________________, 1997
NOTE: Please sign exactly as name appears on your certificate as shown in the
label above. When shares are held by joint tenants, both joint tenants should
sign. When signing as attorney, executor, administrator, trustee, or guardian,
please give your full title. If a corporation, an authorized officer should sign
in the name of the corporation. If a partnership, a general partner should sign
in the name of the partnership.
<PAGE>
THOUSAND TRAILS, INC.
2711 LBJ Freeway, Suite 200
Dallas, Texas 75234
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Walter B. Jaccard and Harry J. White, Jr.,
as Proxyholders, each with the power to appoint his substitute, and hereby
authorizes either of them to represent and vote, as designated on the reverse,
all the shares of the common stock of Thousand Trails, Inc., held of record by
the undersigned on October 9, 1997, at the annual meeting of stockholders to be
held on November 20, 1997, and at any adjournment thereof.
IMPORTANT: This Proxy is continued and must be signed on the reverse side.
