<PAGE> 1
SCHEDULE 14A
(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
[X] Definitive Proxy Statement permitted by Rule 14a-6
(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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
(2)Aggregate number of securities to which transaction applies: N/A
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
(4)Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] 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
(2)Form, Schedule or Registration Statement No.: N/A
(3)Filing party: N/A
(4)Date filed: N/A
<PAGE> 2
THOUSAND TRAILS, INC.
2711 LBJ FREEWAY, SUITE 200
DALLAS, TEXAS 75234
NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD DECEMBER 10, 1998
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 December 10, 1998, 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, 1999.
(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 26, 1998, 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 28, 1998
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> 3
THOUSAND TRAILS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS OF THOUSAND TRAILS, INC.
TO BE HELD DECEMBER 10, 1998
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 December 10, 1998, 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 28, 1998.
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, 1999.
(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
26, 1998, 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 7,511,708 shares
of common stock, par value $.01 per share (the "Common Stock"). The Company did
not have any other shares of capital stock outstanding.
<PAGE> 4
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.
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 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 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, 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 the close of business on
December 9, 1998.
Page 2
<PAGE> 5
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 3
<PAGE> 6
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 20, 1998. 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................................................ 3,715,388(1) 48.1%(1)
c/o Carl Marks Management Co., LP
135 East 57th Street
New York, New York 10022
Carl Marks Management Co., LP................................. 3,359,246(1) 43.6%(1)
135 East 57th Street
New York, New York 10022
Carl Marks Strategic Investments, LP.......................... 2,668,765(1) 34.6%(1)
c/o Carl Marks Management Co., LP
135 East 57th Street
New York, New York 10022
Carl Marks Strategic Investments II, LP....................... 690,481(1) 9.2%(1)
c/o Carl Marks Management Co., LP
135 East 57th Street
New York, New York 10022
Peter M. Collery.............................................. 1,308,498(2) 17.4%(2)
c/o Siegler & Collery & Co.
712 Fifth Avenue
New York, NY 10019
Robert C. Ruocco.............................................. 3,676,231(1) 47.7%(1)
c/o Carl Marks Management Co., LP
135 East 57th Street
New York, New York 10022
SC Fundamental Inc............................................ 946,508(2) 12.6%(2)
712 Fifth Avenue
New York, NY 10019
</TABLE>
(continued)
Page 4
<PAGE> 7
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
------------------------------------ ------------------ ------------------
<S> <C> <C>
SC Fundamental Value BVI, Inc................................. 361,990(2) 5.2%(2)
712 Fifth Avenue
New York, NY 10019
William J. Shaw............................................... 990,406(3) 12.1%(3)
Thousand Trails, Inc.
2711 LBJ Freeway, Suite 200
Dallas, TX 75234
Gary N. Siegler............................................... 1,308,498(2) 17.4%(2)
c/o Siegler & Collery & Co.
712 Fifth Avenue
New York, NY 10019
The SC Fundamental Value Fund, L.P.......................... 946,508(2) 12.6%(2)
712 Fifth Avenue
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, LP ("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.,
LP ("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, LP ("CM Strategic II") owns 690,481 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
25,000 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, 10,000
shares at a price of $1.08 per share, and 5,000 shares at a price of
$3.71 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 690,481 shares, (iii) CM Management - sole voting and investment
power over 3,359,246 shares, (iv) Mr. Boas - sole voting and investment
power over 36,569 shares and shared voting and investment power over
3,678,819 shares, and (v) Mr. Ruocco - shared voting and investment power
over 3,676,231 shares.
(continued)
Page 5
<PAGE> 8
The following table shows the beneficial ownership of the shares of Common
Stock described in this footnote:
<TABLE>
<CAPTION>
CM CM CM MR.
STRATEGIC STRATEGIC II MANAGEMENT MR. BOAS 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........ 690,481 690,481 690,481 690,481
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............... 25,000
Shares held in trust over which Mr. Boas
is a Co-Trustee........................ 2,588
--------- ------- --------- --------- ---------
Total...................... 2,668,765 690,481 3,359,246 3,715,388 3,676,231
========= ======= ========= ========= =========
Percentage of outstanding shares........ 34.6% 9.2% 43.6% 48.1% 47.7%
</TABLE>
- --------------------
(2) The ownership of these shares of Common Stock includes multiple
beneficial ownership of the same shares. SC Fundamental Value Fund, LP, 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, (ii) 5,500
shares held by Mr. Shaw as custodian for his grandchildren, and (iii)
290,411 shares held by the William J. Shaw Family Partnership, LP
("FLP"), a limited partnership. Mr. Shaw controls the sole general
partner of FLP, and trusts for the benefit of Mr. Shaw and his children
and grandchildren are the limited partners. Mr. Shaw disclaims beneficial
ownership of the shares held by FLP except to the extent of his
partnership interests therein.
Page 6
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of October 20, 1998, 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............................. 3,715,388(1)(2) 48.1%
William F. Dawson.......................... 40,000(2) *
R. Gerald Gelinas.......................... 74,740(2)(3) *
Walter B. Jaccard.......................... 60,000(2) *
William P. Kovacs.......................... 75,000(2) *
Donald R. Leopold.......................... 15,000(2) *
H. Sean Mathis............................. 25,000(2) *
Douglas K. Nelson.......................... 25,000(2) *
William J. Shaw............................ 990,406(2)(4) 12.1%
All directors and executive officers as a
group (9 individuals)................... 5,020,534(2) 58.1%
</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, 25,000; Mr. Dawson, 40,000; Mr. Gelinas,
50,000; Mr. Jaccard, 60,000; Mr. Kovacs, 25,000; Mr. Leopold, 15,000; Mr.
Mathis, 25,000; Mr. Nelson, 25,000; Mr. Shaw, 664,495; and all directors
and executive officers as a group, 929,495.
(3) Includes 2,400 shares held by Mr. Gelinas' spouse.
(4) See footnote number 3 to the preceding table for a description of Mr.
Shaws' beneficial ownership of Common Stock.
* Less than 1%.
Page 7
<PAGE> 10
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 43 None December 1991 Audit, Marketing, and Nominating
William P. Kovacs 52 None December 1991 Audit, Compensation, and Special
Donald R. Leopold 49 None Director 1995 Compensation and Marketing
H. Sean Mathis 51 None December 1991 Audit, Compensation, Nominating,
and Special
Douglas K. Nelson 55 None December 1991 Marketing, Nominating, and
Special
William J. Shaw 55 Chairman of the Board, May 1995 None
Chief Executive Officer,
President, and acting
Chief Financial Officer
</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, (iv) a director of Vertientes Camaguey
Sugar Company, a holding company, since November 1994, and (v) a director of
Seneca Foods, Inc., a processor of vegetables and juices, since September 1998.
Mr. Boas also served as a director of Herman's Sporting Goods, Inc., from March
1993 to March 1996; and a director of Pratt & Lambert
Page 8
<PAGE> 11
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.
Kovacs has served as a director of the Company. Since June 1998, Mr. Kovacs has
been an attorney with the law firm of Shefsky & Froelich Ltd. From January 1997
to May 1998, Mr. Kovacs was 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. Mr.
Mathis is a Managing Director of Des Voeux Financial, a private financial
advisory firm. 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 1996 to September 1997, Mr. Mathis was Chairman of the
Board of Universal Gym Equipment Inc. ("Universal"), a privately owned company.
In July 1997, Universal filed for protection under the federal bankruptcy laws.
From 1991 to 1993, Mr. Mathis was President of RCL Acquisition Corporation, the
predecessor firm of HMG. From 1993 to 1995, Mr. Mathis was President and a
director of RCL Capital Corporation, which was merged into DISC Graphics in
November 1995. From May 1988 to October 1993, Mr. Mathis was a director and the
Chief Operating Officer of Ameriscribe Corporation ("Ameriscribe"), 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 1992, as part of a restructuring program, 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
Page 9
<PAGE> 12
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. Since July 1995, Mr. Shaw has also been
Chairman of the Board and the 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"). Since July 1998, Mr. Shaw has also been acting
Chief Financial Officer of the Company. Mr. Shaw also has been a director of
Anchor Glass Container Corporation, a producer of glass containers, since May
1998. 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.
BOARD OF DIRECTORS
MEETINGS. During the fiscal year ended June 30, 1998, the Board of
Directors held one regularly scheduled meeting and four 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, 1998, 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, 1998,
the Compensation Committee held two meetings.
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, 1998, the Marketing Committee did not meet.
Page 10
<PAGE> 13
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 1999 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, 1998, 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 certain financing
alternatives and other transactions involving the capital structure of the
Company. During the fiscal year ended June 30, 1998, the Special Committee held
two meetings.
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 55 Chairman of the Board, President, Chief
Executive Officer, and acting Chief
Financial Officer
R. Gerald Gelinas 52 Vice President of Sales and Marketing
Walter B. Jaccard 45 Vice President, General Counsel,
and Secretary
</TABLE>
William J. Shaw is also a director of the Company and his business
experience is described above.
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
Page 11
<PAGE> 14
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
served as a director of Trails from February 1992 until its merger into the
Company.
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended June 30,
1998, 1997, and 1996, 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 during these years, and to the most highly compensated officer of a
subsidiary of the Company, who is not considered an executive officer for
reporting purposes.
Page 12
<PAGE> 15
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 ($) ($) ($) OPTIONS (#)(1) ($)(2)
- ------------------ ---- ------- ------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
William F. Dawson, CEO 1998 169,750 30,000 -0- -0- 3,339
of Resort Parks 1997 169,750 15,000 -0- 5,000 3,806
International, Inc. 1996 169,750 40,000(3) -0- 35,000 2,783
R. Gerald Gelinas 1998 133,500 30,000 -0- -0- 1,654
Vice President of 1997 130,000 30,000 -0- 30,000 1,174
Sales and Marketing 1996 107,600(4) 30,000 -0- 20,000 -0-
Walter B. Jaccard, 1998 143,500 25,000 -0- -0- 2,690
Vice President, 1997 140,000 10,000 -0- 30,000 2,796
General Counsel, and 1996 140,000 15,000 -0- 30,000 2,869
Secretary
William J. Shaw, 1998 256,250 178,425 -0- -0- 1,374
Chairman of the Board, 1997 250,000 -0- -0- 664,495 321,143(5)
President, and CEO 1996 250,000 -0- -0- -0- 952,927(5)
Harry J. White, Jr.(6) 1998 126,770 15,000 -0- -0- 2,569
former VP, CFO, CAO, 1997 124,032 30,000 -0- 30,000 2,777
and Treasurer 1996 124,032 30,000 -0- 40,000 3,127
</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 and Non-Qualified Plan for fiscal 1998, 1997, and 1996, as follows:
Mr. Dawson, $3,339, $3,806, and $2,783; Mr. Gelinas, $1,654, $1,174, and
0, Mr. Jaccard, $2,690, $2,796, and $2,869; Mr. Shaw, $1,374, $3,481,
and $0, and Mr. White, $2,569 , $2,777, and $3,127. 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 and Other Arrangements"
below.
(3) An additional bonus earned in fiscal 1995 was paid to Mr. Dawson in
August 1995.
(4) Mr. Gelinas became the Company's Vice President of Sales and Marketing
in September 1995.
(5) Amounts include a portion of 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 and
Other Arrangements" below.
(6) Mr. White resigned from the Company on June 29, 1998.
Page 13
<PAGE> 16
EMPLOYMENT CONTRACTS AND OTHER ARRANGEMENTS.
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. In June 1996,
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 also has an ongoing arrangement with Mr. Shaw under which
the Company pays all of the expenses Mr. Shaw incurs in operating and
maintaining a private airplane that he uses for business travel on behalf of
the Company. During the three months that this arrangement was in effect in
fiscal 1998, the Company paid $31,778 of such expenses.
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 was not less than $124,032 per year, and he could receive a
discretionary bonus of up to $30,000 per year. Mr. White resigned from the
Company effective June 29, 1998.
Page 14
<PAGE> 17
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 violate the restrictions in Article IX of the Company's Restated
Certificate of Incorporation, which are designed to prevent an "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 violate these restrictions, generally the term of the
options will be extended with respect to that portion of the options which
would violate the restrictions in order to ensure that Mr. Shaw will have at
least a 90-day period after the restrictions cease within which to exercise
such options. However, solely with respect to that portion of the options
intended to be incentive stock options, the restrictions on exercise 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
Page 15
<PAGE> 18
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.
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. In November 1997, the
Company granted the non-employee directors Non-Qualified Options covering
20,000 shares with an exercise price of $3.71 per share. To date, options for
202,500 shares are outstanding under the 1991 Employee Plan, all of which are
vested, and options for 54,999 shares have been exercised. The options have a
term of 10 years from the date of grant.
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
Page 16
<PAGE> 19
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
key employees ISOs covering 95,000 shares at an exercise price of $0.59 per
share. In September 1996, the Company granted key employees ISOs covering
175,000 shares with an exercise price of $0.80 per share. To date, options for
208,500 shares are outstanding under the 1993 Employee Plan, all of which are
vested, and options for 61,500 shares have been exercised. The options have a
term of 10 years from the date of grant.
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. In November 1997, the non-employee directors of the Company
were granted Non-Qualified Options covering 5,000 shares with an exercise price
of $3.71 per share. To date, options for 50,000 shares are outstanding under
the Director Plan, all of which are vested, and none have been exercised. The
options have a term of 10 years from the date of grant.
The Director Plan was designed to be a "formula plan," pursuant to
which each non-employee director would automatically receive a grant of
Non-qualified Options to purchase 5,000 shares of Common Stock on the day
immediately after each annual meeting of the stockholders at which directors
are elected, beginning with the annual meeting held in December 1993. If on any
such day, the number of shares of Common Stock remaining available for issuance
under the Director Plan was insufficient for the grant of the total number of
Non-qualified Options to which all participants would otherwise be entitled,
each participant would receive Non-qualified Options to purchase a
proportionate number of the available number of remaining shares. The exercise
price of each Non-qualified Option is required to equal the fair market value
of such Option on the date of grant as determined under the Director Plan.
Generally, the Director Plan specifies that such fair market value will be the
average trading price
Page 17
<PAGE> 20
of the Common Stock during the period beginning 45 days before the date of
grant and ending 15 days before the date of grant.
AGGREGATE OPTION EXERCISES IN FISCAL 1998 AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning Options
to purchase Common Stock held by the five individuals named in the Summary
Compensation Table. No Options were exercised by the named individuals in the
fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME FISCAL YEAR-END (#) FISCAL YEAR-END ($)
- -----------------------------------------------------------------------------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William F. Dawson 36,667 3,333 140,728 12,792
R. Gerald Gelinas 43,333 6,667 166,312 25,588
Walter B. Jaccard 55,000 5,000 211,090 19,190
William J. Shaw(1) 664,495 -0- 2,550,332 -0-
Harry J. White, Jr.(2) 65,000 5,000 249,470 19,190
</TABLE>
- ---------------------------
(1) Mr. Shaw is generally not permitted to exercise the options to the
extent such exercise would violate the restrictions in Article IX of the
Company's Restated Certificate of Incorporation, which are designed to
prevent an "ownership change" for federal tax purposes (see "Stock
Option Agreement" above).
(2) Mr. White exercised all of his vested options after he resigned from the
Company on June 29, 1998.
LONG TERM INCENTIVE PLANS
As of June 30, 1998, the Company had two long-term incentive plans.
The first of these, the Employees Savings Trust (the "401(k) Plan"), 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 $131,000 for the year ended June 30, 1998, and has
committed to make matching contributions for the calendar year ended December
31, 1998, in an amount equal to 45% of the voluntary contributions made by each
participant, up to 4% of the participant's annual compensation (or a maximum of
1.8% of the participant's annual compensation). Employer contributions are
subject to a seven-year vesting schedule.
Page 18
<PAGE> 21
Effective April 23, 1998, the Company established the Non-Qualified
Deferred Compensation Plan (the "Non-Qualified Plan") for the purpose of
establishing a deferred compensation plan for certain "highly compensated"
employees of the Company. An eligible employee participating in this 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
insignificant matching contributions for the period from plan inception through
June 30, 1998, and has committed to make matching contributions for the
calendar year ended December 31, 1998, in an amount equal to 45% of the
combined voluntary contributions made by each participant to the Non-Qualified
Plan and 401(k) Plan, up to 4% of the participant's annual compensation (or a
maximum of 1.8% of the participants annual compensation). Employer
contributions are fully vested at the time the contributions are made.
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, 1998, 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 $2,000 5,000
William P. Kovacs 24,000 1,500 5,000
Donald R. Leopold 24,000 1,500 5,000
H. Sean Mathis 24,000 2,000 5,000
Douglas K. Nelson 24,000 1,500 5,000
William J. Shaw(1) -0- -0- -0-
</TABLE>
- -------------------
(1) Mr. Shaw did not receive additional compensation for serving as a
director of the Company.
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.
Overall Policy. The Compensation Committee's compensation policies are
intended to (i) provide incentives for certain executive officer performance
that results in continuing
Page 19
<PAGE> 22
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 (other than Mr. Shaw) 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 such
executive officers if the aggregate annual compensation of the officer is less
than $175,000. Pursuant to such delegated authority, the base salaries of
Messrs. Gelinas, Jaccard, and White were increased by 5 percent over the fiscal
1997 level, effective January 1, 1998; and the base salary of Mr. Dawson was
continued at the same level as in fiscal 1997.
Mr. Jaccard receives a discretionary annual bonus 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
marketing objectives for the year. Mr. Dawson receives a discretionary annual
bonus based upon achievement of the Company's objectives for Resort Parks
International, Inc. for the year. Prior to his resignation at the end of fiscal
1998, Mr. White received a discretionary annual bonus based upon achievement of
the Company's overall objectives for the year. These individuals received
bonuses in fiscal 1998 based upon the successful achievement of their
respective goals.
The Compensation Committee may increase the annual base salaries of
the executive officers of the Company and the principal officers of its
operating subsidiaries during fiscal 1999. In addition, such persons may
receive a discretionary bonus in fiscal 1999 based upon the achievement of
objectives related to the performance of the Company.
Compensation of Chief Executive Officer. The annual compensation of
the Company's Chief Executive Officer consists of a fixed base salary and a
performance-based annual bonus. In fiscal 1998, the Compensation Committee
increased Mr. Shaw's base salary to $262,500, effective January 1, 1998, which
was an increase of 5 percent over the fiscal 1997 level.
In fiscal 1998, the Compensation Committee and full Board of Directors
approved a performance-based annual bonus for Mr. Shaw. The amount of this
annual bonus is determined as follows: if the actual net income of the Company,
as adjusted, for a fiscal year equals or exceeds the net income projected in
the Company's budget, as adjusted, for such fiscal year, Mr. Shaw will receive
an annual bonus equal to 25% of his annual base salary at the end of such
fiscal year, plus 7.5% of the amount by which the actual net income of the
Company, as adjusted, for such fiscal year exceeds the net income projected in
the Company's budget, as adjusted, for such fiscal year; provided, however,
that the amount of the annual bonus cannot exceed 100% of Mr. Shaw's annual
base salary at the end of such fiscal year. For purposes of computing this
bonus, the actual and budgeted net income of the Company is adjusted to
eliminate the effect of gains on asset sales, restructuring expenses,
nonrecurring income and expenses, gain on debt repurchases, the net deferral of
sales revenue and expense, and income taxes. In addition, the bonus is computed
before accrual of the bonus on the financial records of the Company. For fiscal
1998, Mr. Shaw earned an annual bonus of $178,425 under this formula.
Page 20
<PAGE> 23
The Compensation Committee may increase Mr. Shaw's annual base salary
during fiscal 1999. In addition, Mr. Shaw may earn an annual bonus for fiscal
1999 based on the performance of the Company, which will be computed using the
formula described in the preceding paragraph.
Respectfully submitted,
William P. Kovacs
Donald R. Leopold
H. Sean Mathis
Douglas K. Nelson
Page 21
<PAGE> 24
PERFORMANCE GRAPH
The following Performance Graph compares the Company's cumulative
total Stockholder return on the Common Stock for the period from June 30, 1993
to June 30, 1998 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, AND BROAD MARKET
<TABLE>
<CAPTION>
Fiscal year ending June 30,
---------------------------------------------------------------------
Company 1993 1994 1995 1996 1997 1998
- ------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Thousand Trails, Inc. 100.00 87.50 25.00 28.13 106.25 184.38
Industry Index 100.00 89.14 121.31 143.66 162.20 202.74
Broad Market Index 100.00 109.66 128.61 161.89 195.02 258.52
</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 Coin
Merchandising, American Skiing Co., American Wagering, Inc., Anchor Gaming,
Inc., Argosy Gaming Company, Aztar Corporation, Bally Total Fitness Holding
Corporation, Boyd Gaming Corporation, Cedar Fair, LP, Century Casinos, Inc.,
Circus Circus Enterprises, Inc., Crown Group, Inc., Divot Golf Corporation,
Dover Downs Entertainment, Inc., Family Golf Centers, Inc., Gametech
International, Inc., Golden Bear Golf, Inc., Grand Casinos, Inc., Imax
Corporation, Inland Entertainment Corporation, Interactive Entertainment, Inc.,
Interlott Tech., Inc., Isle of Capris Casinos, Jackpot Enterprises, Inc., Lady
Luck Gaming Corporation, Malibu Entertainment Worldwide, Inc., MGM Grand, Inc.,
Millennium Sports Management, Mirage Resorts, Inc., Multimedia Games, Inc.,
N-Vision, Inc., Netlive Communication, Inc., Players International, Inc.,
Premier Parks, Inc., President Casinos, Inc., Quintel Communications, Inc.,
Renaissance Entertainment Corporation, Rio Hotel and Casino, Inc., Sands
Regent, Inc., Santa Fe Gaming Corporation, Senior Tour Players Development,
Inc., Skyline Multimedia Entertainment, Inc., Sports Club Company, Inc., Vail
Resorts, Inc., Visual Edge Systems, Inc., and Walt Disney Holding Company.
During the year ended June 30, 1998, the following companies were added to the
Peer Group: American Coin
Page 22
<PAGE> 25
Merchandising, American Skiing Co., Crown Group, Inc., Divot Golf Corporation,
Gametech International, Inc., Inland Entertainment Corporation, Isle of Capris
Casinos, MGM Grand, Inc., Millennium Sports Management, Premier Parks, Inc.,
and Quintel Communications, Inc. During the year ended June 30, 1998, the
following companies were deleted from the Peer Group: Brassie Golf Corporation,
Casino America, Inc., Chartwell Leisure, Inc., Cinema Ride, Inc., Crown Casino
Corporation, Global Outdoors, Inc., Great Bay Casino, Inc., Jillian's
Entertainment Corporation, Master Glazier's Karate, Inc., Quintel
Entertainment, Inc., Showboat, Inc., Skylands Park Management, Inc.,
Ticketmaster Group, Inc., and UC Television Network, Inc. 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. 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.
In 1991, the Company and Trails contributed $500,000 and $300,000,
respectively, to the Indemnification Trusts. In fiscal 1998, these trusts were
partially terminated, and a portion of the trust assets was distributed to the
Company. NACO also contributed $200,000 to a trust that was established to
reimburse NACO directors and certain officers for any indemnifiable damages and
expenses that they might incur and to advance defense funds to them. This trust
was terminated in fiscal 1998 and the trust assets were distributed to the
Company.
Page 23
<PAGE> 26
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, 1999, subject to the Stockholders ratifying such
selection at the Annual Meeting. Arthur Andersen has audited the accounts of
the Company each year since the fiscal period ended June 30, 1992.
Representatives of Arthur Andersen will be present at the Annual Meeting and
may make a statement 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 1998 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 24
<PAGE> 27
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 fiscal year
ended June 30, 1998, the Company believes that all Section 16(a) filing
requirements applicable to its directors, executive officers, and greater than
10% shareholders were complied with, except for one report covering a grant of
options to Mr. Boas during such fiscal year which was filed late.
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING
The Company's 1999 annual meeting of Stockholders is scheduled to be
held on November 18, 1999. 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 June 15, 1999. Notice of
business proposed to be brought before the annual meeting must be given to the
Secretary of the Company in writing in the form provided in the Company's
Bylaws not less than 60 or more than 90 days prior to the date of such annual
meeting, but if less than 60 days notice of the date of such annual meeting is
given to the Stockholders, notice of proposed business must be given not later
than the tenth day following the day on which the notice of the date of the
annual meeting is mailed.
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.
Page 25
<PAGE> 28
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, 1998, which the Company has
filed with the SEC. UPON REQUEST TO WALTER B. JACCARD, THE SECRETARY OF THE
COMPANY, AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES, THE COMPANY WILL SEND
WITHOUT CHARGE TO ANY STOCKHOLDER AN ADDITIONAL COPY OF THE ANNUAL REPORT ON
FORM 10-K, WHICH INCLUDES THE COMPANY'S FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES. Exhibits to the Form 10-K will be provided, if requested,
upon payment of the reasonable costs of copying.
By Order of the Board of Directors
/s/WALTER B. JACCARD
WALTER B. JACCARD
Vice President, General Counsel, and Secretary
Dallas, Texas
October 28, 1998
Page 26
<PAGE> 29
APPENDIX
PROXY
THOUSAND TRAILS, INC.
2711 LBJ FREEWAY, SUITE 200
DALLAS, TEXAS 75234
TELEPHONE NO. (972) 243-2228
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William J. Shaw and Walter B. Jaccard, as
Proxyholders, each with the power to appoint his substitute, and hereby
authorizes either of them to represent and vote, as designated below, all the
shares of the common stock of Thousand Trails, Inc. (the "Company"), held of
record by the undersigned on October 26, 1998, at the annual meeting of
stockholders to be held on December 10, 1998, and any adjournment thereof.
The board of directors of the Company (the "Board of Directors")
recommends a vote "FOR" the following proposals.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below (except [ ] WITHHOLD AUTHORITY to
as marked to the contrary below) vote for all nominees
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Nominees:
ANDREW M. BOAS o WILLIAM P. KOVACS o DONALD R. LEOPOLD o H. SEAN MATHIS o
DOUGLAS K. NELSON o WILLIAM J. SHAW
2. RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
<TABLE>
<S> <C> <C>
[ ] FOR ratification of the [ ] AGAINST ratification of the [ ] ABSTAIN from voting for
nominee listed below nominee listed below ratification of the
nominee listed below
</TABLE>
Nominee:
ARTHUR ANDERSEN LLP
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 above 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 sign and date below. 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.
DATED: ______________________________, 1998
-------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE, AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
Page 27
