SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUER PURSUANT TO SECTION
12(b)OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
ASSOCIATED GOLF MANAGEMENT, INC.
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(Name of Small Business Registrant as specified in its charter)
NEVADA 84-1351409
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11007 North 56th Street, Suite 204, Temple Terrace, Florida 33617
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(Address of principal executive offices) (Zip Code)
(813) 988-7775
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(Registrant's telephone number, including area code)
Securities registered or to be registered pursuant to Section 12(b)
of the Act:
NONE NONE
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Title of each class to Name of each exchange on which
be so registered each class is to be registered
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE PER SHARE
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(Title of class)
On June 30 1999 the Registrant had outstanding 7,056,059 shares of Common
Stock, par value $.001 per share.
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
FORM 10-SB
INDEX
PART I Page No.
Item 1. Description of Business.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Item 3. Description of Properties.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
Item 5. Directors, Officers, Promoters & Control Persons.
Item 6. Executive Compensation.
Item 7. Certain Relationships and Related Transactions.
Item 8. Description of Securities.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholders Matters.
Item 2. Legal Proceedings.
Item 3. Changes In and Disagreements With Accountants.
Item 4. Recent Sales of Unregistered Securities
Item 5. Indemnification of Directors and Officers
PART F/S
Financial Statements
PART III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
SIGNATURES
<PAGE>
ITEM 1. BUSINESS
COMPANY OVERVIEW
Associated Golf Management, Inc. ("Associated"), together with its
wholly-owned subsidiary, National Senior Tour, Inc. (collectively the
"Company") engages in the development, marketing and management of golf
tournaments for senior professional golfers, and the distribution and sale
of golf-related consumer products. In addition, the Company plans to
design, develop and manage golf courses and operate golf instructional
schools and facilities.
Associated was incorporated under the laws of the State of Nevada
in September, 1996, as "Fairway Enterprises, Inc." ("Fairway"). Fairway
was initially wholly owned by Hanovia Creative Capital Corp. ("Hanovia"), a
corporation formed under the laws of the Province of British Columbia,
Canada in 1984. In October 1996, the shareholders of Hanovia exchanged all
the shares of Hanovia on a one for one basis for shares of Common Stock of
Fairway.
In May, 1997, Fairway acquired all of the issued and outstanding
shares of Fairway Sports, Incorporated, a Florida corporation, ("Fairway
Sports") in exchange for 416,502, shares of Fairway's Common Stock.
On December 14, 1998, Fairway changed its name to Associated Golf
Management, Inc. and incorporated National Senior Tour, Inc. ("National
Senior Tour") in the State of Florida. National Senior Tour is a wholly-
owned subsidiary of the Company that engages in the business of organizing,
marketing, and promoting golf tournaments for professional golfers over the
age of 48. National Senior Tour has held two tournaments during the
current fiscal year and expects to hold additional tournaments in 1999.
See BUSINESS-NATIONAL SENIOR TOUR.
The term "The Company" or "Associated Golf Management" as used
herein includes Associated Golf Management, Inc. and it's subsidiary,
National Senior Tour, unless otherwise indicated. The Company's executive
offices are located at 11007 North 56th Street, Suite 204, Temple Terrace,
Florida 33617. The Company's telephone number is 813-998-7775.
In 1999 the Company initiated a website called "BigGolfStore.com"
("Website") to market and promote the National Senior Tour's tournaments,
the distribution and sale of golf-related consumer products, and the
Company's proposed golf instructional schools ("NST Instructional
Schools"). See BUSINESS-WEBSITES/E-COMMERCE. The Company has not yet
hosted any NST Instructional Schools but plans to sponsor one during the
current fiscal year. See BUSINESS-NST INSTRUCTIONAL GOLF SCHOOLS.
The Company plans to market and promote its tournaments,
golf-related consumer products, and NST Instructional Schools
internationally and has entered into a letter of understanding with a
European marketing company to promote its tournaments, golf-related
products, and NST Instructional Schools in Europe. See BUSINESS-
INTERNATIONAL OPERATIONS.
GOLF INDUSTRY OVERVIEW
Public interest in golf is at an all time high and growing.
Televised golfing events earn excellent exposure for event sponsors and
their products. Additionally, many dedicated club professional working at
the grass roots level have gained the public's interest and have helped to
make golf one of the fastest growing adult participation sports in the
country.
The number of professional golfers turning 48 years of age is at an
all time high due to the aging "Baby Boom" generation. Since its
organization in 1980 beginning with only four tournaments, the Senior PGA
Tour has grown to over forty-two events, including the prestigious U.S.
Seniors Open, the Tradition, The PGA Senior's Championship and The Ford
Senior Players Championship. Its prize money now totaling over $40 million
dollars, the Senior PGA Tour is considered by some to be the sports success
story of the 1980's. Now in the 1990's, senior prize money purses have
grown twice as fast as those of the regular PGA Tour. Along with
increasing donations to charities there has also been a dramatic increase
in television exposure. However, as a result of the aging of the "Baby
Boom" generation, potentially more talented players exist than the
restrictive PGA Senior Tour guidelines can accommodate.
Fields of Senior PGA events are limited to seventy-eight players.
Last year's qualifying school offered only 8 spots for 504 players.
Further, even assuming a player makes it through the qualifying school, if
he doesn't finish within the top 31 on the money list, he can lose his
tournament card. To be exempt from qualifying school, a golfer must have
won a Senior PGA Tour event in the last calendar year. This means that he
must have finished among the top 31 golfers on the money list the previous
year or rank among the top 31 all-time money winners on the combined PGA
and Senior PGA money list.
Since the Senior PGA Tour primarily consisted of players who
acquired significant earnings on the regular tour before turning 50, the
Company believes a need exists in the field for additional senior
professional players and tour events. Today, as expected, there is no
shortage of outstanding senior professionals who might not otherwise
qualify for the Senior PGA Tour. Growing out of this need for an
additional competitive arena for senior professional golfers, and coupled
with the success of the Senior PGA Tour, the Company is holding "National
Senior Tour" golf tournaments to capitalize on this need.
NATIONAL SENIOR TOUR
It is the intention of the Company to develop a first class
professional golf tour for golfers 48 years of age, and older, as an
alternative for seniors who have not qualified for the PGA Senior Tour.
The Company anticipates that tournaments will be held at various golf clubs
throughout the United States and in Europe with the expectation that ex-PGA
touring professionals, accomplished golf professionals, PGA Seniors Tour
players, and world class amateurs will attend and participate in the
tournaments. The Company thereby seeks to provide senior professional
golfers access to a market that had previously been denied to them and
endeavors to provide a unique and lucrative avenue for corporations and
service organizations to reach their customers and audience on local,
national, and international levels.
The Company expects that the aggregate prize purse per tournament
for 1999 will be approximately $100,000.00 in U.S. funds and believes that
the aggregate prize purse per tournament should increase to approximately
$150,000.00 by the year 2001. The Company intends to provide funding for
the prize purses and costs to operate the proposed tournaments from
players' entry fees and corporate sponsorships.
For each tournament, the Company intends to provide all supplies
and equipment which are required for the tournament such as ropes and
stakes, score boards, scoring standards, tents and tournament trailers.
The Company also plans to administer each tournament and to oversee the
setup of the golf course at which the tournament is to be held, to oversee
the roping and course maintenance at such golf course where the tournament
is to be held, and to oversee enforcement of decisions regarding rules and
player relations, entries and standings.
The Company has already held two "National Senior Tour" tournaments
during the current fiscal year under the mark National Senior Tour. The
first of these was held in Beaumont, Texas and was the first "National
Senior Tour" tournament that the Company has held under that mark. In
these tournaments the funding for the prize purse and costs to operate the
tournament was provided by players' entry fees. The Company anticipates
that it will hold an additional ten "National Senior Tour" tournaments
during the 1999 fiscal year.
Fairway Sports, held twenty-one tournaments under the designation
"Senior Series Tour" tournaments since the Company acquired Fairway Sports
approximately two years ago. The "Senior Series Tour" tournaments, which
were discontinued in 1998, were similar in nature to the Company's
"National Senior Tour" tournaments.
The Company has entered into a letter of understanding with Europa
Consulting Ltd. to help the Company promote, organize, set-up and schedule
"National Senior Tour" golf tournaments in Europe. See BUSINESS-
INTERNATIONAL OPERATIONS and CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS-EUROPA CONSULTANCY LTD.
The Company is actively seeking a PGA Senior Tour affiliation
although there can be no assurance that the Company will be successful in
obtaining a PGA Senior Tour license or affiliation. If the Company were to
obtain a PGA affiliation, the Company believes the Company's potential to
obtain sponsors and participants in its "National Senior Tour" tournaments
should increase.
SALES OF GOLF EQUIPMENT AND PRODUCTS
The Company does not manufacture golf equipment and products, but
plans to sell golf equipment and products through its website
"BigGolfStore.com" and its website to be established called
"nationalseniortour.com." The Company plans to obtain licenses and/or other
agreements to market, promote, distribute, and sell such golf equipment and
products worldwide. See BUSINESS-LICENSING. The Company also intends to
sell golf equipment and products at sites where it hosts its "National
Senior Tour" golf tournaments. The Company further expects to market,
promote, distribute and sell golf equipment and products in Europe with the
assistance of Europa Consultancy Ltd. See BUSINESS-INTERNATIONAL
OPERATIONS and CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS-EUROPA
CONSULTANCY LTD.
GOLF COURSE DESIGN, DEVELOPMENT AND MANAGEMENT
The Company, as of the date of this Registration Statement, has not
designed, developed or managed any golf courses.
The Company entered into a letter of intent in January 1999
("Letter of Intent") with Old South Golf Properties, Inc. ("Old South") and
Guettler & Sons Construction, Inc. ("Guettler") to form a joint venture
that, if consummated, would design, develop, and manage five (5) proposed
new golf courses to be located in the Southeastern United States. If
consummated, the joint venture would require that the Company provide
$2,500,000 to fund this joint venture. See BUSINESS-LETTER OF INTENT WITH
OLD SOUTH GOLF PROPERTIES, INC. Under the formal joint venture agreement,
if entered into between the Company, Guettler and Old South, Guettler would
be mainly responsible for construction and development of the properties,
Old South would be mainly responsible for debt financing of the projects
and joint management of the properties, and the Company would be mainly
responsible for equity funding and joint management of the properties.
WEBSITE/E-COMMERCE
In 1999, the Company developed and initiated an internet website
located at www.BigGolfStore.com. The website is in the process of being
expanded and constructed further by the Company.
The Company anticipates that the website, once it is expanded, will
promote the Company's "National Senior Tour" golf tournaments in the United
States, Europe, and internationally. The expanded website will also
promote the sale of an estimated 11,000 products and an estimated 100
travel packages under the terms of merchandise and other agreements the
Company plans to enter into with various prominent businesses.
The Company has received temporary approval from "Amazon.com," a
leading e-commerce industry developer, to participate in the Amazon.com
Associates Program. Amazon.com, if it gives final approval of the
Company's application, would be the Company's provider of golf, fitness and
sport-related books, video, DVD, CD and computer games at the Company's
website "BigGolfStore.com."
The Company has entered into an agreement in May 1999, with On-Site
Computer Solutions ("On-Site")under which On-Site will design a website for
the "National Senior Tour" golf tournaments which is expected to be called
"nationalseniortour.com." The website will showcase and promote "National
Senior Tour" golf tournaments and will provide a venue for e-commerce
merchandising and marketing.
The Company entered into an agreement with "The Golfer's Advantage"
("TGA") in March 1999, under which both the Company and TGA agreed to
engage in the promotion of TGA membership and products through the
Company's website "BigGolfStore.com" and its website to be established
called "nationalseniortour.com." Specifically, the Company and TGA agreed
to jointly develop, produce and market the products known as "The Wedge
System," the "Tucker Short Game Test" and any other future products which
the Company and TGA agree to jointly develop, produce, and market.
INTERNATIONAL OPERATIONS
The Company entered into a Letter of Understanding with Europa
Consultancy Ltd. ("Europa") in January 1999, to promote and set up its
"National Senior Tour" golf tournaments in Europe.
Europa is a United Kingdom based company that works with clients in
the United Kingdom, Europe, United States, Asia, Japan, the Middle East,
the Former Eastern Block, and India. Europa has indicated that, under the
guidance and direction of the Company, it will create, design, and
implement a program to market, operate and manage individual "National
Senior Tour" tournaments and events. Europa has also promised to serve as
an international marketing, advertising, and sales resource for the
Company's website, "BigGolfStore.com".
Europa has indicated that it will attempt to identify six to eight
locations in Europe to serve as sites for "National Senior Tour" golf
tournaments. After identifying these sites, Europa plans to initiate a
formal marketing and sales plan to acquire sponsors and other support.
The Company has not yet scheduled any golf tournaments in Europe.
LICENSING
The Company, as of the date of this Registration Statement, has no
licenses to market, promote, distribute or sell any products, tournaments,
or golf instructional programs other than rights under the agreements
mentioned under the heading BUSINESS- WEBSITES E-COMMERCE. The Company
intends to license and market a wide variety of golf-related branded
consumer products and services worldwide. Further, the Company intends to
license and market a variety of golf-related products which may include,
but may not be limited to, men's and women's sportswear, men's tailored
clothing, neckwear, luggage, socks, headware, belts, small leather goods,
eyewear, furniture, calendars, and various forms of artwork and
commemoratives.
The Company is actively seeking a PGA Senior Tour affiliation and
license although there can be no assurance that the Company will be
successful in obtaining a PGA Senior Tour affiliation or license.
MARKETING
The Company intends to market and promote the "National Senior
Tour" golf tournaments, the "NST Instructional Schools," and any golf
related equipment and products, or golf courses and projects that may be
constructed.
The Company intends to rely heavily on e-commerce through its
existing website and website to be established as well as its "National
Senior Tour" golf tournaments to implement the Company's marketing
objectives.
The Company also intends to utilize direct mailing to solicit
participants and sponsors for its "National Senior Tour" golf tournaments.
The Company's marketing and licensing strategy is to (i) establish
and expand the worldwide sales of the Company's products; (ii) selectively
establish licensed product lines to be marketed and promoted on the
Company's existing website and website to be created; (iii) expand the
number of "National Senior Tour" golf tournaments to be held; (iv) increase
corporate sponsorships for its NST tournaments and/or golf instructional
schools; (v) establish NST Instructional Schools; and (vi) acquire or
establish relationships with certain complementary golf-related businesses,
companies, properties or technologies.
NST INSTRUCTIONAL SCHOOLS
The Company currently plans to sponsor a golf instructional school
known under the name "NST Instructional Schools". The Company believes that
growth in the golf instruction industry is driven by existing golfers'
desire to continually improve their golf games and by new golfers seeking
to learn the game. The "NST Instructional School" is designed to provide
golf practice opportunities, affordable golf instruction and related
recreational activities for golfers. The Company intends to set up and
operate numerous "NST Instructional Schools" in the United States and
Europe.
The target market for the "NST Instructional Schools" are consumers
who wish to seek affordable golf instruction. The Company intends to market
"NST Instructional Schools" principally through: (i) direct response media
advertising; (ii) direct mail programs; (iii) word-of-mouth referrals; (iv)
telemarketing; (v) its website "BigGolfStore.com;" and (vi) its website to
be developed called "national senior tour.com."
The existing "NST Instructional School" faculty has not yet been
determined. The faculty will be comprised of professionals or assistants
selected by the Company. These professionals and assistants will employ a
teaching philosophy that is consistent with Eddie Pearce's approach to
playing the game and Eddie Pearce's approach to teaching.
COMPETITION
The Company's competition varies among its business lines. The
consumer markets for goods and services in which Company's marketing and
licensing operations intend to operate are extremely competitive, with the
Company's products and services competing against a mix of established name
brand consumer products and services, products and services licensed or
endorsed by sports and entertainment celebrities, private-label products
and generic products that have not established a distinct brand identity.
Competition in these products and services is primarily centered on
styling, quality, price, brand recognition and service.
In order for the Company to be competitive in these marketplaces,
the Company must effectively maintain and promote the unique brand image of
its services and its licensed products among consumers and establish strong
marketing relationships with manufacturers and distributors of products
which enhance that brand image. While the Company believes that it will
compete effectively, the Company competes with a number of manufacturers
and marketers of sporting goods, recreational products, apparel and other
consumer products and services, many of which have substantially greater
resources than the Company and many of which have well recognized brand
names and broader and more established distribution networks.
The Company also faces competition from other leisure and
recreational activities, and sales of leisure and recreational products and
services are affected by changes in consumer preferences, which are
difficult to predict.
The National Senior Tour allows a player to participate in events
that are similar to the PGA Senior Tour. In essence, the National Senior
Tour acts as a feeder tour to the Senior PGA Tour. Most National Senior
Tour tournaments are held in cities that do not have golf tournaments or
for that matter any major sporting events. Since the eligibility rules of
the Senior PGA Tour are much more restrictive than those of the National
Senior Tour, the National Senior Tour does not compete directly against the
Senior PGA Tour.
There are several mini-tours around the country with which the
Company does compete. Most of the tournaments are for open fields, which
consist of players of all ages. Only a few of these tours offer
competition for senior professionals like the National Senior Tour. The
golf courses where these tournaments are held are mostly below average and
the administration of the events is less comprehensive than the National
Senior Tour. These mini-tours are the Company's primary competitors.
The Company intends to continue pursuing plans to develop golf
courses in order to develop its operations and establish its portfolio.
There can be no assurance that suitable golf course development
opportunities will be available or that, because of competition from other
purchasers or other reasons, the Company will be able to consummate
developments on satisfactory terms or to obtain necessary financing. In
addition, the acquisition of golf courses may become more expensive in the
future if demand for golf courses increases.
The Company will compete for the purchase, lease and management of
golf courses with several national and regional golf course companies.
Several of the Company's national competitors have larger staffs and
currently have golf courses owned, leased or under management. In
addition, several of the national competitors and certain of the smaller,
regional companies have significantly greater capital resources than the
Company.
Golf courses are also subject to competition for players and
members from other golf courses located in the same geographic areas. The
availability of sufficient acreage often limits the number of competing
courses, particularly in metropolitan areas, and limits the Company's
ability to acquire, develop or construct golf courses in those areas.
SIGNIFICANT CUSTOMERS
During the years ended December 31, 1998 and 1997, no one customer
accounted for a significant portion (10% or more) of the Company's
revenues.
EMPLOYEES
As of the date of this Registration Statement, the Company has four
employees, none of whom have entered into an employment agreement with the
Company. The Company has no collective bargaining agreements covering any
of its employees, has not experienced any material labor disruption and is
unaware of any efforts or plans to organize its employees. The Company
considers relations with its employees to be good.
INTELLECTUAL PROPERTY RIGHTS
The Company's "National Senior Tour," "Biggolfstore" and "NST
Instructional School" brand names are believed by the Company to be
important in the promotion of its business and products. The Company
expects to file trademark registrations to reserve its right to use these
names.
YEAR 2000 COMPLIANCE
BACKGROUND. Some computers, software and other equipment include
programming code in which calendar year data is abbreviated to only two
digits. As a result of this design decision, some of these systems could
fail to operate or fail to produce correct results if "00" is interpreted
to mean 1900, rather then 2000. These problems are widely expected to
increase in frequency and severity as the year "2000" approaches and are
commonly referred to as the "Millennium Bug" or "Year 2000 Problem."
ASSESSMENT. The Year 2000 Problem could affect computers, software
and other equipment used, operated or maintained by the Company.
Accordingly, the Company is reviewing its internal computer programs and
systems to ensure that the programs and systems will be Year 2000
compliant. The Company presently believes that its computer systems will
be Year 2000 complaint in a timely manner. However, while the estimated
cost of these efforts is not expected to be material to the Company's
financial position or any year's results of operations, there can be
assurance to this effect.
INTERNAL INFRASTRUCTURE. The Company believes that it has reviewed
and assessed all of the major computers, software applications, and related
equipment used in connection with its internal operations that would
potentially require modification, upgrade, or replacement to minimize the
possibility of a material disruption to its business. The Company's
internal review of such systems did not identify any material Year 2000
Problem. If the Company had identified an exposure to the "Year 2000
Problem," Management currently estimates the total cost of internal
reprogramming of its software products and the upgrading of purchased
hardware and software would not be material. While this is management's
best current estimate, items outside management's control relating to the
"Year 2000 Problem" may impact the Company. The Company estimates the
total cost to the Company of completing any required modifications,
upgrades, or replacements of these internal systems would not have a
material adverse effect on the Company's business or results of operations.
SYSTEMS OTHER THAN INFORMATION TECHNOLOGY SYSTEMS. In addition to
computers and related systems, the operations of office and facilities
equipment such as fax machines, photocopiers, telephone switches, security
systems, and other common devices may be affected by the Year 2000 Problem.
DISCLAIMER. The discussion of the Company's efforts, and
management's expectations, relating to Year 2000 compliance are
forward-looking statements. The Company's Year 2000 compliance status and
the level of incremental costs associated therewith, if any, could be
adversely impacted by, among other things, the availability and cost of
programming and testing resources, vendors' ability to modify proprietary
software, and unanticipated problems identified in ongoing internal
compliance reviews.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following is a discussion of the financial condition and
results of operations of the Company as of the date of this Registration
Statement. This discussion and analysis should be read in conjunction with
the accompanying audited Consolidated Financial Statements of the Company
including the Notes thereto which are included elsewhere in this Form 10-
SB.
GENERAL
Associated Golf Management develops, markets and operates golfing
events and tournaments and a qualifying school.
1998 v. 1997
REVENUE
For the year ended December 31, 1998, revenue from continuing
operations was $698,672. Total revenue from continuing operations
decreased by $805,974, or 53%, from $1,540,646 for the year ended December
31, 1997. The Company recorded a net loss from continuing operations in
1988 of $2,213,876 compared to a net loss of $3,136,247 in 1997. The
revenues received from National Senior Tour membership dues increased
$88,716 or 233% from $37,937 in 1997 to $126,653 in 1998, respectively.
The increase was due primarily to the implementation of a structured dues
schedule for tournament participation in late 1997 and an increase in
individual dues charged to tournament participants in 1998.
The revenues received from tournament fees decreased by $287,675 or
48%, from $601,825 in 1997 to $314,150 in 1998, respectively. The decrease
was due to a reduction in the number of tournaments held in 1998 as
compared to 1997.
The revenues received from sponsor fees and other tournament
revenues decreased by $607,015 or 70%, from $864,884 in 1997 to $257,869 in
1998. The decrease was due to a reduction in the number of golfing
tournaments and events held in 1998 as compared to 1997.
The effect of inflation on the Company's revenue and operating
results was not significant.
COSTS AND EXPENSES
Total expenses from operations in 1998 decreased 37% to $2,912,548
from $4,640,893 in 1997. Total tournament and events expenses decreased
51% to $2,021,009 in 1998 from $4,155,759 in 1997. Tournament and event
expenses decreased significantly as the Company held fewer tournaments and
events in 1998 as compared to 1997. Selling general and administrative
expenses increased 83% to $872,216 in 1998 from $476,820. Selling general
and administrative expenses increased as a result of the Company's efforts
to redirect the Company's operations in light of the decrease in golfing
tournaments and events in 1998 as compared to 1997. Net interest expenses
increased to $11,000 in 1998 from $0 in 1997. During 1998, the Company's
interest costs related primarily to a note payable to a Company Officer and
Director.
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
REVENUE
The Company's revenues decreased by $141,904 to $124,112 for the
second quarter of 1999, from $266,016 during the same period in 1998.
Revenues received from National Senior Tour membership dues increased
$11,407 or 24.4% from $46,693 in 1998 to $58,110 in 1999, respectively. The
increase was due primarily to the implementation of an increase in
individual dues charged to tournament participants in 1999 and management's
increased emphasis in marketing the National Senior Tour events. Revenues
received from tournament fees decreased by $85,620, or 89.8%, from $
$95,280 in 1998 to $9,660 in 1999, respectively. The decrease was due to a
reduction in the number of golf tournaments held in the quarter ended June
30, 1999 as compared to 1998. The revenues received from sponsor fees and
other revenues decreased by $67,691, or 54.5%, from $124,043 in 1998 to
$56,352 in 1999. The decrease was due to a reduction in the number of golf
tournaments and events held during the quarter ended June 30, 1999 as
compared to 1998.
The Company's revenues decreased by $25,434 to $370,695 for the six
months ended 1999, from $396,129 during the same period in 1998. Revenues
received from the National Senior Tour membership dues decreased $32,963,
or 36.0% from $91,063 in 1998 to $58,100 in 1999, respectively. The
decrease was due to the reduction in the number of golf tournaments held
during the during the six month period ended June 30, 1999 as compared to
the six months ended June 30, 1998. Revenues received from tournament fees
decreased by $68,300, or 45.9%, from $148,500 in 1998 to $80,200 in 1999,
respectively. The decrease was due to the reduction in the number of
tournaments held during the six months ended June 30, 1999 as compared to
1998. Revenues from sponsorship and tournament revenue increased by $75,829
to $232,395 for the six months ended June 30, 1999, from $156,566 during he
same period in 1998. The increase was due to management's increased
emphasis on marketing the current period's golf events and tournaments as
compared to 1998.
The effect of inflation on the Company's revenue and operating
results was not significant.
COSTS AND EXPENSES
The Company's expenses from operations for the second quarter of
1999 decreased $293,446, or 58.2% to $210,318 from $503,764 during the same
period in 1998. Expenses associated with tournaments decreased 93.7% to
$11,921 in 1999 from $188,460 in 1998. The decrease was due to the
Company holding fewer golf tournaments and related events during the three
months ended June 30, 1999 as compared to 1998. Selling, general and
administrative expenses decreased $118,428, or 37.8% to $194,795 in 1999
from $313,223 in 1998. The decrease was due to the reduction in the
Company's operating staff, relocating to less expensive office facilities
and management's implementation of cost cutting policies and procedures in
1999. Depreciation and amortization expense in 1999 was relatively
unchanged as compared to 1998
The Company's expenses from operations for the six months ended
June, 30, 1999 decreased $206,199, or 24.8% to $624,371 from $830,570
during the same period in 1998. Expenses associated with tournaments
decreased 58.9% to $77,406 in 1999 from $188,460 in 1998. The decrease was
due to the Company holding fewer golf tournaments and related events during
the six months ended June 30, 1999 as compared to 1998. Selling, general
and administrative expenses decreased $98,188, or 15.4% to $539,761 in
1999 from $637,949 in 1998. The decrease was due to the reduction in the
Company's operating staff, relocating to less expensive office facilities
and management's implementation of cost cutting policies and procedures in
1999. Depreciation and amortization expense in 1999 was relatively
unchanged as compared to 1998.
ACQUISITIONS
In May 1997, the Company acquired Fairway Sports, Incorporated.
The acquisition was completed primarily in exchange for restricted Common
Stock of the Company. [See NOTE IN THE CONSOLIDATED FINANCIAL
STATEMENTS.]
In May, 1997, the Company completed the acquisition of Fairway
Sports, Incorporated, an inactive corporation with no significant assets or
operations. Effective with the acquisition, all previously outstanding
common and preferred stock of Fairway Sports was exchanged for common stock
of the Company.
LIQUIDITY AND CAPITAL RESOURCES
1998 v. 1997
As of December 31, 1998, the Company had a working capital deficit
of $1,432,912 compared to a deficit of $298,130 at December 31, 1997, an
increase in the deficit of $1,134,782. The decrease in working capital was
substantially due to the decrease in golfing tournaments and related events
in 1998 as compared to 1997 and the significant increase in selling,
general and administrative expenses in 1998 as compared to 1997. In order
to satisfy the liquidity needs of the Company for the following twelve
months, the Company will be primarily dependent upon proceeds from the sale
of the Company's common and preferred stock and cash flow from operations.
Historically, revenues from existing operations have not been adequate to
fund the operations of the Company. If the Company is unable to obtain
adequate funds from the sale of its stock in public offerings, private
placements, or alternative financing arrangements, it may be necessary to
postpone any additional acquisitions and use cash flow for internal growth.
While the Company has raised capital to meet its working capital
and financing needs, additional financing is required in order to complete
the planned improvements necessary to the Company's acquisitions. The
Company is seeking financing in the form of equity and debt in order to
make the necessary improvements and provide working capital. There are no
assurances the Company will be successful in raising the funds required.
The Company has issued shares of its Common Stock from time to time
in the past to satisfy certain obligations, and expects in the future to
also acquire certain services, satisfy indebtedness and/or make
acquisitions utilizing authorized shares of the capital stock of the
Company.
If operations and cash flow can be improved through these efforts,
management believes that the Company's liquidity problems will be resolved
and that the Company can continue to operate. However, no assurance can be
given that management's actions will result in profitable operations and
the resolution of its liquidity problems.
The independent auditors report included in this Registration
Statement on Form 10-SB states that the Company's working capital
deficiency and stockholder's deficit raise substantial doubts about the
Company's ability to continue as a going concern.
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
The Company's balance sheet at June 30, 1999 reflects a working
capital deficit of $1,075,218 as compared to a deficit of $1,432,912 at
December 31, 1998. During the six months ended June 30, 1999, the
Company's working capital deficiency decreased $357,694. This was a result
of the Company exchanging common stock in satisfaction of indebtedness and
a scale down of operations during the first six months of 1999.
The Company generated a negative cash flow from operations of
$277,304 for the six months ended June 30, 1999 and $114,546 for the six
months ended June 30, 1998. Negative cash flow from operating activities
was primarily attributable to the Company's loss from operations of
$253,676 for the six months ended June 30, 1999 and $434,441 for the same
period in 1998.
Cash flow generated from financing activities was $0 during the
six months ended June 30, 1999 and $70,546 for the six months ended June
30, 1998. Net cash from financing activities decreased due to the Company
not selling any securities during the six months ended June 30, 1999 as
compared to 1998.
RECENT ACCOUNTING PRONOUNCEMENTS
During 1997, the Company adopted the disclosure requirements under
Statement of Financial Accounting Standards No. 123 (SFAS No. 123)
Accounting for Stock-Based Compensation. See Note 1 in the Consolidated
Financial Statements of the Company, included in this Report on Form 10-SB,
for the full disclosure. In 1997, the Company was required to adopt
Statement of Financial Accounting Standards No. 121 (SFAS No. 121)
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed, which prescribes accounting and reporting standards
when circumstances indicate that the carrying amount of a long-lived asset
may be not recoverable. SFAS No. 121 had no impact on the Company's
financial statements.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Registration Statement on Form 10-SB contains forward-looking
statements made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. Such statements consist of any statement
other than a recitation of historical facts and can be identified by words
such as "may," "expect," "anticipate," "estimate," "hopes," "believes,"
"continue," "intends," "seeks," "contemplates," "suggests," "envisions" or
the negative thereof or other variations thereon or comparable terminology.
These forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and uncertainties,
including but not limited to, those risks associated with economic
conditions generally and the economy in those areas where the Company has
or expects to have assets and operations, including Europe, Asia, Africa,
North America, South America or Australia; competitive and other factors
affecting the Company's operations, markets, products and services; those
risks associated with the design, management and operation of golf courses;
those risks associated with the ability to obtain sponsorships and
guarantees for funding of the prize money and other costs associated with
the Company's "National Senior Tour" golf tournaments, those risks
associated with the Company's ability to successfully negotiate with
certain project owners, as well as construction vendors and subcontractors,
regarding the completion of existing golf construction projects and the
minimization of costs associated with such completion, risks relating to
estimated contract costs, estimated losses on uncompleted contracts and
estimates regarding the percentage of completion of contracts, risks
relating to the ability of Company, Old South and Guettler to raise the
funds necessary to operate, design, develop, construct, and manage golf
courses, and risks relating to existing litigation, attorney general
investigations, taxes owed, and associated costs arising out of Company's
activities and the matters discussed in this report; risks relating to
changes in interest rates and in the availability, cost and terms of
financing; risks related to the performance of financial markets; risks
related to changes in domestic and foreign laws, regulations and taxes;
risks related to changes in business strategy or development plans; risks
related to the outcomes of the pending lawsuits against the Company and the
associated costs; risks associated with future profitability; and other
factors discussed elsewhere in this report and in documents filed by the
Company with the Securities and Exchange Commission. Many of these factors
are beyond the Company's control. Actual results could differ materially
from these forward-looking statements. In light of these risks and
uncertainties, there can be no assurance that the forward-looking
information contained in this registration on Form 10-SB will, in fact,
occur. The Company does not undertake any obligation to revise these
forward-looking statements to reflect future events or circumstances and
other factors discussed elsewhere in this report and the documents filed by
the Company with the Securities and Exchange Commission.
RISK FACTORS
CURRENCY FLUCTUATIONS
Although substantially all of the Company's contracts are
denominated in United States dollars, fluctuations in the value of foreign
currencies relative to the United States dollar could impact the Company's
results of operations. As the Company expects to obtain significant
revenues from its overseas licensees to be obtained and such revenues are
generated in foreign currencies, fluctuations in the value of these
currencies relative to the United States dollar could adversely affect the
Company's profitability. Royalty payments received by the Company relating
to foreign licensing arrangements will be converted to U.S. dollars based
on the exchange rate at the time of payment.
INFLATION
The Company does not believe that the relatively moderate rates of
inflation experienced in the United States in recent years have had a
significant effect on its revenues or profitability. Although higher rates
of inflation have been experienced in a number of foreign countries in
which the Company plans to do business, the Company does not believe that
such rates have had a material effect on the Company's revenues or
profitability. High inflation in foreign countries where the Company plans
to do business, however, could have a material effect on the Company's
revenues or profitability. There is also no guarantee that moderate rates
of inflation in the United States will continue.
DEPENDENCE ON COLLABORATIVE RELATIONSHIPS AND THIRD PARTIES FOR PRODUCT
DEVELOPMENT AND COMMERCIALIZATION
The Company has established relationships with collaborative
companies. See BUSINESS-WEBSITES/E-COMMERCE. SEE BUSINESS-LETTER OF
INTENT WITH OLD SOUTH GOLF PROPERTIES INC. AND GUETTLER & SONS
CONSTRUCTION, INC. Pursuant to these relationships, the Company's
collaborative companies have specific responsibilities for the costs of
development, promotion, regulatory approval and/or sale of golf courses and
golf related products. The Company will continue to rely on present and
future collaborative companies for the development of golf courses or golf
related products and technologies. There can be no assurance that the
Company will be able to negotiate future such collaborative arrangements on
acceptable terms, if at all, or that current or future collaborative
arrangements will be successful. To the extent that the Company is not
able to establish such arrangements, it could experience increased capital
requirements or be forced to undertake such activities at its own expense.
The amount and timing of resources that any of these collaborative
companies devotes to these activities will generally be based on progress
by the Company in its golf course and golf related product development
efforts. Usually, collaborative arrangements may be terminated by the
collaborative company upon prior notice without cause and there can be no
assurance that any of these collaborative companies will perform its
contractual obligations or that they will not terminate these
relationships. With respect to any products manufactured by third parties,
there can be no assurance that any third-party manufacturer will perform
acceptably or that failures by third parties will not impair the Company's
ability to develop golf courses and deliver products on a timely basis.
UNCERTAINTY OF PROTECTION OF PATENTS, LICENSES, TRADE SECRETS AND
TRADEMARKS
The Company's success depends, in part, on its ability to obtain
rights to use the names "National Senior Tour," "BigGolfStore.com," and
"NST Instructional School" to operate without infringing on the proprietary
rights of others. There can be no assurance that the Company can obtain
registration of these trademarks, or that registrations issued to the
Company will not be infringed upon or designed around by others. The
Company could incur substantial costs in defending itself in litigation
brought by others or prosecuting infringement claims against third parties.
If the outcome of any such litigation is unfavorable to the Company, the
Company's business could be adversely affected.
RISKS REGARDING POTENTIAL FUTURE ACQUISITIONS
The Company's growth strategy includes as a material element the
desire to acquire complementary companies, products or technologies. There
is no assurance that the Company will be able to identify appropriate
companies or technologies to be acquired, or to negotiate satisfactory
terms for such an acquisition. Moreover, because of limited cash
resources, the Company will be unable to acquire any significant companies
or products for cash and the Company's ability to effect acquisitions in
exchange for the Company's capital stock may depend upon the market prices
for the Company's Common Stock. If the Company does complete one or more
acquisitions, a number of risks arise, such as short-term negative effects
on the Company's reported operating results, diversion of management's
attention, unanticipated problems or legal liabilities, and difficulties in
the integration of potentially dissimilar operations. The occurrence of
some or all of these risks could have a material adverse effect on the
Company's business, financial condition and results of operations.
LIMITED PUBLIC MARKET; POSSIBLE VOLATILITY IN STOCK PRICES; PENNY STOCK
RULES
There has, to date, been no active public market for the Company's
Common Stock, and there can be no assurance that an active public market
will develop or be sustained. Although the Company's Common Stock has been
traded on the OTC Bulletin Board, the trading has been sporadic without
significant volume.
Moreover, the over-the-counter markets for securities of very small
companies such as the Company historically have experienced extreme price
and volume fluctuations during certain periods. These broad market
fluctuations and other factors, such as new product developments and trends
in the Company's industry and the investment markets and economic
conditions generally, as well as quarterly variation in the Company's
results of operations, may adversely affect the market price of the
Company's Common Stock. In addition, the Company's Common Stock is subject
to rules adopted by the Securities and Exchange Commission regulating
broker-dealer practices in connection with transactions in "penny stocks."
As a result, many brokers are unwilling to engage in transactions in the
Company's Common Stock because of the added disclosure requirements.
COURSE CONDITIONS
General turf grass conditions must be satisfactory to attract play
on the Company's golf courses to be acquired. Severe weather or other
factors, including disease, could cause unexpected problems with turf grass
conditions at any golf course or at courses located in the same geographic
region. Turf grass conditions at each of the Company's golf courses to be
acquired also depend to a large extent on the quality and quantity of
available water. The availability of sufficient water is affected by
various factors, many of which are not under the Company's control. There
can be no assurance that certain conditions, including weather, government
regulation or environmental concerns, which would adversely affect the
supply of water to a particular golf course, may not arise in the future.
The Company plans to operate golf courses throughout the country
and could experience natural conditions which are beyond its control (such
as periods of extraordinarily dry, wet, hot or cold weather, or unforeseen
natural events such as storms, hurricanes, fires, floods or earthquakes).
These conditions may occur at any time and may have a significant impact on
the condition and availability of one or more golf courses for play and on
the number of customers a golf course can attract. Except for fire
insurance, the Company does not carry insurance against the effect of such
conditions, which the Company believes to be consistent with standard
practice in the industry. However, the occurrence or reoccurrence of any
such conditions may require increased capital expenditures by the Company
to the extent the Company is not insured and could have a material adverse
effect on the Company's financial condition and results of operations. Any
problems with the conditions of gold courses could materially affect the
Company's financial health as the existence of these conditions could
result in the delay, postponement, or cancellation of the Company's
"National Senior Tour" golf tournaments.
LIMITED OPERATING HISTORY; LACK OF PROFITABILITY
The Company commenced its current operations in 1996. Since that
date, the Company has generated minimal revenues and its operations have
not been profitable. There can be no assurances that the Company will be
successful in promoting its concept, in increasing its "National Senior
Tour" participation, or increasing its revenues. Further, there can be no
assurances that the Company will be able to develop profitable operations
in the future. Results of operations in the future will be influenced by
numerous factors including increases in expenses associated with growth,
market acceptance of the Company's concept, competition, the ability of the
Company to control costs and development of its plan of business. There
can be no assurance that revenue growth or profitability on a quarterly or
annual basis can ever be obtained. Additionally, the Company will be
subject to all the risks incident to a developing business with only a
limited history of operations. Prospective investors should consider the
frequency with which relatively newly developed and/or expanding businesses
encounter unforeseen expenses, difficulties, complications and delays, as
well as such other factors as the possibility of competition with larger
companies.
EFFECT OF INTEREST RATE CHANGES
The Company is exposed to the impact of interest rate changes. Such
exposure to market risk is inherent in certain of the Company's financial
instruments which arise from transactions entered into in the normal course
of business.
RELIANCE ON KEY PERSONNEL
The success of the Company is dependent upon the experience and
abilities of its senior management as well as its ability to attract and
retain qualified golf course and golf-product knowledgeable general
managers and superintendents. Key senior management include: Eddie
Pearce, Al Richards, Ferd L. Harrison and Pat Patton. There is significant
competition in the golf course and golf-product management industry for
qualified personnel, and there can be no assurance that the Company will be
able to retain its existing personnel or recruit new personnel to support
its marketing objectives, goals and acquisition plans.
ENVIRONMENTAL REGULATION; LEASES WITH MUNICIPALITIES
Operations at the Company's golf courses to be acquired will
involve the use and storage of various hazardous materials such as
herbicides, pesticides, fertilizers, motor oil and gasoline. Under various
federal, state and local laws, ordinances and regulations, an owner or
operator of real property may become liable for the costs of removing such
hazardous substances that are released on or in its property and for
remediation of its property. Such laws often impose liability regardless
of whether a property owner or operator knew of, or was responsible for,
the release of hazardous materials. In addition, the presence of such
hazardous substances, or the failure to remediate the surrounding soil when
such substances are released, may adversely affect the ability of a
property owner to sell such real estate or to pledge such property as
collateral for a loan.
GOLF PARTICIPATION
The success of efforts to attract and retain members at a private
country club and the number of rounds played at a public golf course have
historically been dependent upon discretionary spending by consumers, which
may be adversely affected by general and regional economic conditions.
Golf participation has increased significantly since 1970. Although the
Company believes that demographic trends indicate that it is well
positioned to grow its business and improve its financial performance, a
decrease in the number of golfers or their rates of participation or in
consumer spending on golf could have an adverse effect on the Company's
financial condition and results of operations.
GOVERNMENTAL REGULATION
The Company's golf course design, management, and construction
activities are subject to various federal, state, local and foreign laws
and regulations designed to protect the environment from waste emissions,
the handling, treatment and disposal of solid and hazardous wastes and the
remediation of contaminates associated with the use and disposal of
hazardous substances. Although the Company believes that it is and has been
in substantial compliance with all such laws, ordinances and regulations
applicable to these operations, there may be environmental liabilities or
conditions associated with such activities of which the Company is not
aware. Accordingly, there can be no assurance that future compliance with
such requirements will not have a material adverse effect on the Company's
financial condition.
The Company is also subject to the Federal Occupational Safety and
Health Act and other laws and regulations affecting the safety and health
of employees. Further, the Company is subject to the Fair Labor Standards
Act and various state laws governing such matters as minimum wage
requirements, overtime and other working conditions and citizenship
requirements. The Company is also subject to foreign immigration, labor,
safety and environmental laws in those jurisdictions where it performs
services.
ITEM 3. DESCRIPTION OF PROPERTY
The Company's principal executive and administrative offices are
located in Florida, at 11007 North 56th Street, Suite 204, Temple Terrace,
Florida 33617 in leased premises under an agreement for a term scheduled to
expire June 1, 2000. The Company is obligated to pay $9,453.24 in rent per
year and is responsible for all sales and use tax and certain maintenance
costs with respect to Company's use of the leased premises. The Company
considers its executive and administrative offices to be adequate and
suitable for its current needs. The Company does not own or lease any other
real estate. The Company does not own any golf courses as of the date of
this Registration Statement.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding the
beneficial ownership of the Company's Common Stock as of June 9, 1999 by
(i) each person (or group of affiliated persons who to the knowledge of
the Company is the beneficial owner of five percent or more of the
Company's outstanding shares of Common Stock, (ii) each director and each
Named Executive Officer (as defined in Part I Item 6 of this Form 10-SB) of
the Company and (iii) all directors and executive officers of the Company
as a group. Except as otherwise noted, the Company believes that the
persons listed in this table have sole voting and investment power
respecting all shares of Common Stock owned by them. The business address
of each director and Named Executive Officer listed below is the Company's
corporate address, 11007 North 56th Street, Suite 204, Temple Terrace,
Florida 33617.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Owner of Class
-------------- ------------------- ------------------- --------
<S> <C> <C> <C>
Common None - -
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Owner of Class
-------------- ------------------- --------------------- -------
<S> <C> <C> <C>
Common Eddie Pearce (1) 33,334 Common Shares 0.47%
Common Pat Patton 25,000 Common Shares 0.35%
Common Al Richards 100,000 Common Shares 1.41%
Common Ferd L. Harrison 10,000 Common Shares 0.14%
</TABLE>
(1) Does not include 150,000 shares which could be obtained upon
exercise of nonstatutory stock options. See EXECUTIVE
COMPENSATION-STOCK OPTION PLAN.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information as of the date
of this Registration Statement with respect to the directors and executive
officers of the Company. A summary of the background and experience of each
of these individuals is set forth after the table. The executive officers
serve at the discretion of the Company's Board of Directors.
<TABLE>
<CAPTION>
Name Age Position with the Company
------------------------------------------------------------------------
<S> <C> <C>
Eddie Pearce 46 President, Chief Executive Officer, Director
Pat Patton 50 Vice President of Marketing, Secretary, Director
Al Richards 56 National Senior Tour Manager, Treasurer, Director
Ferd L. Harrison 72 Mayoral Liaison, Vice President, Director
</TABLE>
EDDIE PEARCE
Mr. Pearce has been the President, Chief Executive Officer, and a
Director of the Company since January, 1999. Mr. Pearce received an Arnold
Palmer Golf Scholarship and attended Wake Forest University. He also went
to the Tournament Players Division Qualifying School, Myrtle Beach, South
Carolina, the PGA Qualifying School in Houston, Texas, the PGA Business
School in Houston, Texas and received PGA Class A Status. Mr. Pearce was
employed by Nike Tour (1994 to 1996), PGA Tour (1993-he regained privileges
after a ten-year absence), and Tommy Armour Tour and Nike Tour (1992). Mr.
Pearce was an Automotive Dealer Management Consultant and formed his own
company based in Tampa, Florida, from 1986 to 1998. From 1986 to 1998 this
Company consulted with numerous automotive dealerships, including Grant
Ford of St. Petersburg, Jim Simmons Pontiac Buick of Concord, North
Carolina, Washington Motor Company of Abbington, VA, among others.
Personnel were reevaluated and retrained. New employees (the number of
employees ranged from 60 to 300) were hired for Sales and all other aspects
of the dealership. At the various dealerships inventory ranged from one
million to twenty million dollars; the Part's department revenues ranged
from one hundred thousand to five million dollars and the Body shop
revenues from twenty-five thousand per month to one hundred thousand
dollars per month. In 1983, he attended the Ford Motor Company Operation
School to learn how to operate Automobile Dealerships. Mr. Pearce also
worked as a Golf Director at the Orange Tree Golf and Country Club ("Orange
Tree") in Orlando, Florida in 1981 and 1982. At Orange Tree he supervised
the maintenance of the golf course and golf equipment and increased
membership from 140 members to 425 members. Thereafter, he spent two years
in a project with Arvida Corporation, which acquired Orange Tree, in which
he was responsible for golf clubs and property. Mr. Pearce was also a
Touring Golf Professional from 1973 to 1981.
Mr. Pearce's golfing achievements include:
- 1979 placed second, Texas Open
- 1975 placed second, Tallahassee Open
- 1975 placed second, Inverrary Classic, placed second,
Buick Open
- 1974 placed second, Hawaiian Open
- 1974 finished 9th in US Open
- 1972 named to Walker Cup Team
- 1972 Porter Cup Champion
- 1972 College All American
- 1971 College All American
- 1971 Runner-up in US Amateur
- 1971 Atlantic Coast Conference Champion
- 1971 North South Amateur Champion
- 1970 Florida Open Champion
- 1968 Qualified for US Open
- 1968 Qualified for US Amateur
- 1968 USGA Junior Champion
PAT PATTON
Mr. Patton has served as the Vice President of Marketing, Secretary
and a Director of the Company since January, 1999. Mr. Patton holds a
Bachelor's degree from the University of Texas in Business Administration-
Marketing and Management. His graduate school course of study was
International Marketing. Mr. Patton was a member of the part-time business
faculty at Austin Community College Teaching and at St. Edward's University
Teaching. In 1993 he was given an award as an outstanding faculty member
at Austin Community College and in 1998 he was chosen as a national
finalist for an Excellence in Teaching Award presented to Marketing and
Advertising faculty. Mr. Patton has held marketing management positions
with Xerox, Proctor & Gamble and the Upjohn Company. He has also served as
a Sponsorship Coordinator for Liberty Mutual Legends of Golf. At Evergreen
Alliance Golf Ltd. ("EAGL") he was employed as the Director of Marketing.
EAGL is the owner and operator of over 55 golf facilities in 18 states. At
EAGL he coordinated marketing, advertising, public and media relations for
all of EAGL's facilities and implemented marketing research nationally for
EAGL with a specific focus on golf and golf facilities. Mr. Patton was the
Director of Marketing for the National Senior Tour. In this capacity, he
coordinated all marketing, marketing research, advertising, public
relations, sales and media planning for the National Senior Tour.
Mr. Patton is also the Vice President of Europa Consultancy Ltd., a
marketing consulting company that the Company has engaged to promote its
operations in Europe and otherwise internationally. See CERTAIN
RELATIONSHIP AND RELATED TRANSACTIONS-EUROPA CONSULTANCY LTD. Mr. Patton
has also entered into a Memorandum of Understanding with the Company
relating to his service as Marketing Director for the Company's National
Senior Tour. See CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS-MEMORANDUM
OF UNDERSTANDING.
AL RICHARDS
Mr. Richards has served as "National Senior Tour" golf tournament
Manager, Treasurer and a Director of the Company since January, 1999. Mr.
Richards attended Goshen College where he completed 2 years. He spent 32
years in the construction industry as well as in real estate development.
Mr. Richards was involved in five (5) Golf Course Developments in Florida
as a partner or consultant. While he was a consultant for Sand Kastle
Construction, Inc. ("Sand Kastle"), Sand Kastle's annual sales increased
from $300,000 to $20,000,000 in less than 5 years. When Sand Kastle was
sold in 1989, Mr. Richards involvement with Sand Kastle ended. In 1992 he
became a Golf Pro and played in many "Senior Series Tour" golf tournaments
from 1994 to 1996. Mr. Richards served as Senior Tour Rep for Dogleg Right
& Echelon Golf in 1995 and 1996, then became Tour Director of the Senior
Series in 1997, which included being in charge of all Tour Operations. In
1999, Mr. Richards became Tour Director of the National Senior Tour and
Secretary of the Company. As Tour Director, Mr. Richards has been and will
continue to be responsible for management of operations of tour events
including, but not limited to, arranging sites, coordinating schedules,
working with marketing associates, coordinating media on site, MC Pairings,
Party & Awards Banquet, player relations, supervising tee times, scoring,
press releases, operation set-up and dismantling volunteers, as well as
overall public relations for the National Senior Tour.
FERD L. HARRISON
Ferd L. Harrison has served as Mayoral Liason, Vice President and a
Director of the Company since 1999. Mr. Harrison worked for twelve years
in the field of public finance with the following Wall Street Firms: EF
Hutton (1983-1984) as a special consultant; Smith Barney (1984-1985) as a
special consultant, and (1985-1993) as Vice President; CS First Boston
(1993-1995) as a special consultant. He served as Mayor of Scotland Neck,
North Carolina for 38 years and is a past president of the National League
of Cities and served on its Board of Directors from 1975 through 1995.
Mr. Harrison was also president of the North Carolina League of
Municipalities, President of Electricities of North Carolina, and board
member of the North Carolina Eastern Municipal Power Agency. He is a past
president and a member of the North Carolina Community Development Council.
President Reagan appointed Mr. Harrison to a seat on the Advisory
Commission of Federalism 1981-1982, and in 1983 to the Advisory Commission
on Intergovernmental Relations, where he served two terms. He also served
as a member of the Intergovernmental Policy Advisory commission in the
Office of the U.S. Trade Representative. He has served as chairman of the
Region L. Council of Governments in North Carolina and was driving force in
forming the Small Cities Council within the National League of Cities. He
served as national chairman of the Council.
Among his honors and achievements:
N.C. League of Municipalities - Lifetime Honorary Member - one of
23 honored in 75 years.
N.C. Distinguished Citizens Award - Awarded by Governor
Jim Hunt 1982
Ferd L. Harrison Day - City of Los Angeles, 1982
Ferd L. Harrison Day - North Carolina 1982
Ferd L. Harrison Day - Scotland Neck 1998
City and State Magazine - All Pro 1987
Outstanding Civic Leaders of America
Presidential Award - National League of cities 1996
Mr. Harrison is a former employee of the Federal Bureau of
Investigation. After combat in World War II, he worked with a special team
assigned to conduct the War Crime Trials at Dachau. He was a businessman
who served as president of an appliance, electronics, and tire dealership
in Scotland Neck. Presently, he is Secretary/Treasurer of NSP Specialty
Products of Pinehurst, North Carolina, a manufacturer that produces a non-
toxic, epoxy based coating of 100% solids with no volatile organic
compounds.
Mr. Harrison is a graduate of Wake Forest University.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth certain information relating to the
compensation paid by the Company during the last three (3) fiscal years to
the Company's former Chief Executive Officer ("Named Executive Officer").
No other executive officer of the Company received total salary and bonus
in excess of $100,000 during the fiscal year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
----------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
----------------------------------------------------------------------------
Secur-
Other Re- ities All
Annual stricted Under- LTIP Other
Name and Compen- Stock lying Pay- Compen-
Principal Salary Bonus sation Award(s) Options/ outs sation
Position Year ($) ($) ($) ($) SARs (#) ($) ($)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas Taggert, 1998 60,750 0 0 0 0 0 0
CEO, President 1997 201,225 0 0 2,750 0 0 0
1996 0 0 0 0 0 0 0
</TABLE>
MEMORANDUM OF UNDERSTANDING. The Company and its Vice President,
Pat Patton, entered into a Memorandum of Understanding January 1, 1999
("Memorandum of Understanding") regarding Pat Patton's acceptance of the
Director of Marketing position for the Company's "National Senior Tour."
Under the Memorandum of Understanding, Mr. Patton will be paid the
following from the Company:
(1) Direct expense reimbursement Company's guidance and approval;
(2) 20% of all income generated per event, to include, but not be
limited to all sponsorship sales and marketing, contractual revenues
generated, and daily ticket sales to tournaments and events. No money
is to be paid to Mr. Patton if a tournament is cancelled. The
Memorandum of Understanding indicates that an event may be cancelled if
a net $75,000.00 in sponsorships for a particular event is not obtained;
(3) If a particular event generates more than $150,000.00 net
revenues after payment to Mr. Patton of his 20% commission described in
"2" above, then Mr. Patton is entitled to receive an additional $5,000.00
in U.S. funds and 5,000 shares of Common Stock of the Company to be
issued to Pat Patton before the end of the calendar year of that event;
and
(4) If a particular event generates more than $100,000.00 net
revenues after payment commission described in "2" above, then Mr. Patton
is entitled to receive an additional $2,000.00 in U.S. funds.
STOCK OPTION PLAN
On January 4, 1999, the Company's Board of Directors approved a
Stock Option Plan for the Company called "1999 Stock Option and
Incentive Plan" ("Plan"). The Plan is subject to approval by a majority
of the shareholders of Common Stock of the Company, which approval has
not yet been obtained. The stock subject to awards granted under the
Plan shall be shares of the Company's authorized but unissued Common
Stock. The aggregate number of shares which may be issued as awards or
upon exercise of awards under the Plan shall not exceed 1,500,000
shares. The exercise price in the case of any incentive stock option
shall not be less than the fair market value on the date of grant and,
in case of any option granted to an Optionee who is a 10% or more
shareholder of the total combined voting power of the outstanding stock
of the Corporation, shall not be less than 110% of the fair market value
on the date of grant. The exercise price in the case of any
nonstatutory stock option shall not be less than 85% of the fair market
value on the date of grant.
On January 4, 1999, the Company granted a nonstatutory stock option
for 150,000 to the Company's President and CEO, Eddie Pearce.
On January 4, 1999, the Company granted nonstatutory stock options
for an aggregate of 300,000 shares to certain consultants of the
Company.
As of the date of this Registration Statement, no shares have been
purchased by the recipients of these nonstatutory stock options.
Management of the Company contemplates that incentive stock options
will be issued under the Plan during 1999.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PROMISSORY NOTE. In 1998, Al Richards, an Officer and Director of
the Company advanced $200,000 to the Company for working capital
purposes. The advance is represented by an unsecured promissory note.
As of the date of this Registration Statement, the note's principal,
plus accrued interest has not been paid, and as a result, the Company is
in default under the terms of the note.
MEMORANDUM OF UNDERSTANDING. The Company and Pat Patton entered
into a Memorandum of Understanding on January 1, 1999 regarding Pat
Patton's acceptance of the Director of Marketing for the Company's
"National Senior Tour." See EXECUTIVE COMPENSATION-MEMORANDUM OF
UNDERSTANDING.
EUROPA CONSULTANCY LTD. The Company entered into a Letter of
Understanding with Europa Consultancy Ltd. in January 1999, to promote
and help organize its "National Senior Tour" golf tournament
internationally and in Europe. Pat Patton who is the Vice President of
Marketing, Secretary and a Director of the Company, is also a Vice
President of Europa Consultancy Ltd. See BUSINESS-INTERNATIONAL OPERATIONS.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company has 15,000,000 authorized shares of Common Stock, $.001
par value per share, of which 7,056,059 shares were issued and
outstanding as of June 9, 1999. All shares of Common Stock outstanding
are, and the shares offered hereby when paid for and issued will be,
legally issued, fully paid and non-assessable. Holders of the Common
Stock are entitled to one vote per share with respect to all matters
that are required by law to be submitted to vote of shareholders.
Holders of the Common Stock are not entitled to cumulative voting. The
Common Stock has no redemption, preemptive or sinking fund rights.
Holders of the Common Stock are entitled to dividends when, as and if
declared by the Board of Directors form funds legally available
therefore. Future dividend policy will be determined by the Board of
Directors of the Company in light of financial needs and earnings, if
any, of the Company in light of financial need and earnings, if any, of
the Company and other relevant factors. In the event of liquidation,
dissolution or winding up the Company, holders of Common Stock are
entitled to share proportionately all the remaining assets of the
Company, after satisfaction of the liabilities of the Company.
PREFERRED STOCK
The Company is authorized to issue 10,000,000 shares of preferred
stock, par value $.001 per share, issuable in such series and bearing
such voting, dividend, conversion, liquidation and other rights and
preferences as the Board of Directors may determine without further
action by the Company's shareholders. As of the date hereof, there are
no shares of Preferred Stock issued and outstanding.
TRANSFER AGENT
The transfer agent for the Company's Common Stock is Pacific Stock
Transfer Co., 3690 S. Eastern Avenue, Suite 218, Las Vegas, Nevada
89109.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
The Company's Common Stock is currently quoted on the OTC Bulletin
Board under the symbol "AGMX." On December 11, 1997 the Board of
Governors of the National Association of Securities Dealers, Inc.
("NASD") approved a series of changes for the OTC Bulletin Board which
affect the Company. The principal changes include: (i) a rule that only
those companies that report their current financial information to the
Securities and Exchange Commission, banking or insurance regulators will
be included for quotation on the OTC Bulletin Board, (ii) that brokers
must review current financial statements on a company they are
recommending before they recommend a transaction in an OTC security, and
(iii) that prior to the initial purchase of an OTC security, every
investor must receive a standard disclosure statement prepared by the
NASD emphasizing the differences between the OTC securities and other
market-listed securities, such as those traded on the NASDAQ Stock
Market, Inc. This Registration Statement is being filed on Form 10-SB
with the Securities and Exchange Commission to register the Company's
Common Stock under Section 12(g) of the Securities Exchange Act of 1934,
as amended, which, if declared effective by the Securities and Exchange
Commission, will require the Company to make current financial filings
with the Securities and Exchange Commission, thus qualifying the Company
under the proposed rule change. In the event the Company's proposed
Registration Statement is not declared effective, the Company's
securities would not remain eligible for quotation on the OTC Bulletin
Board, which would materially and adversely affect the liquidity in the
Company's Common Stock.
PRICE RANGE OF COMMON STOCK
On May 22, 1997 the Company's Common Stock began trading on the OTC
Bulletin Board under the symbol FWAE. It now trades on the OTC Bulletin
Board under the symbol AGMX. Prior to such date, there had been no
market for the Company's Common Stock; hereafter, there has been a
limited trading market. While a limited public market currently exists,
there can be no assurances that this market will be sustained or that if
sustained, such market will operate in a stable manner. The following
table sets forth for the periods indicated the high and low closing
prices of the Company's Common Stock as reported on the OTC Bulletin
Board. The following quotations are over-the-market quotations and,
accordingly, reflect inter-dealer prices, without retail mark-up, mark-
down or commission and may not represent actual transactions.
<TABLE>
<CAPTION>
COMMON STOCK(1)
1999 1998 1997
QUARTER TRADE TRADE TRADE
-----------------------------------------------------------------
High Low High Low High Low
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st Quarter 3.25 1.50 12.00 5.0625 - -
2nd Quarter 1.875 1.125 13.50 3.00 9.00 9.00
3rd Quarter 18.00 4.50 15.75 8.375
4th Quarter 1.50 .375 13.125 6
</TABLE>
(1) In November, 1998, the Company effected a reverse stock split
of one (1) share for every three (3) shares of Common Stock
outstanding as of November 18, 1998, and the closing prices in this table
on and after such date reflect such reverse split.
NO DIVIDENDS ANTICIPATED TO BE PAID
The Company has not paid any cash dividends on its Common Stock
since its inception and does not anticipate paying cash dividends in the
foreseeable future. The future payment of dividends is directly
dependent upon future earnings of the Company, its financial
requirements and other factors to be determined by the Company's Board
of Directors, in its sole discretion. For the foreseeable future, it is
anticipated that any earnings which may be generated from the Company's
operations will be used to finance the growth of the Company, and that
cash dividends will not be paid to Common Stockholders.
CONTROL OF THE COMPANY; POSSIBLE ISSUANCES OF PREFERRED STOCK
Due to the widely dispersed ownership of the issued and outstanding
shares of Common Stock of the Company, the Company's officers and
directors may be able to influence the election of all of the Company's
directors and thereby control the operations of the Company. In
addition, the Board of Directors has the authority to issue up to
10,000,000 shares of preferred stock and to fix the dividend,
liquidation, conversion, redemption and other rights, preferences and
limitation of such shares without any further vote or action of the
shareholders. Accordingly, the Board of Directors is empowered, without
shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could adversely
affect the voting power or the rights of the holders of the Company's
Common Stock. In the event of issuance, the preferred stock could be
utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company. Although the
Company has no present intention to issue any additional shares of its
preferred stock, there can be no assurance that the Company will do so
in the future. See Part 1, Item 8. "DESCRIPTION OF SECURITIES."
ITEM 2. LEGAL PROCEEDINGS
ALABAMA EASTER SEAL SOCIETY, INC. V. FAIRWAY SPORTS, INC. (Case No.
CV-98-3388 in the Fifteenth Judicial Circuit Court of Alabama). On
March 24, 1999, Judge Tracy McCooey entered a default judgment in the
amount of $10,000.00 against Fairway Sports, Inc. in the action. A
hearing to determine damages was set for May 21, 1999.
IMPERIAL PALACE CASINO, INC. D/B/A IMPERIAL PALACE HOTEL & CASINO
V. FAIRWAY SPORTS, INC. AND TOM TAGGART (Case No. A398252 in the
District Court for Clark County, Nevada). The Company and the Plaintiff
reached a settlement whereby the Company would pay Plaintiff a total of
$23,000.00. The Company has already paid Plaintiff $10,000.00 and
plans pay Plaintiff an additional $13,000.00 by September 25, 1999.
SALEM LEASING CORP. V. FAIRWAY SPORTS, INC. (Case No. 99 CVD 3258
in the General Court of Justice District Court Division, Forsyth County,
North Carolina). Plaintiff alleges that on March 4, 1997, Plaintiff and
Defendant entered into a Vehicle Lease and Service Agreement("Vehicle
Lease") pursuant to which Defendant leased motor vehicles from
Plaintiff. According to Plaintiff, the Defendant is obligated under the
Vehicle Lease to purchase the vehicles in the event of a breach or
default by Defendant under the Vehicle Lease. Plaintiff alleges that,
as of April 16, 1999, Defendant is in arrears in the amount of
$23,155.48. Plaintiff also claims that Defendant has failed to honor
its purchase obligation and that an additional $28,108.04 is owed to
Plaintiff. Plaintiff further seeks attorney's fees as it alleges that
the Vehicle Lease provides for the recovery of reasonable attorney's
fees incurred in enforcing Plaintiff's rights under the Vehicle Lease.
Plaintiff's total claim, therefore, amounts to $51,263.52 plus interest,
costs, and attorney's fees.
The Company believes it has a valid defense to this claim as the
vehicle leased under the Vehicle Lease referenced in the Plaintiff's
Complaint has been returned to the Plaintiff.
PRINCE CONTRACTING CO., INC. V. FAIRWAY SPORTS, INC. (Case No. 99
01488 in the Thirteenth Judicial Circuit in and for Hillsborough County,
Florida). On March 17, 1999, Plaintiff served a complaint on Defendant
alleging that on or about August 18, 1998, Plaintiff and Defendant
entered into a construction contract and escrow agreement for site
development of Lexington Oaks Golf Course in Pasco County, Florida.
Plaintiff claims that Defendant breached the contract by failing to pay
Plaintiff for the labor, services, and material furnished under the
construction contract and breached the escrow agreement by failing to
fund the escrow account. Plaintiff's Complaint demands damages, costs,
attorney's fees, and interest in general terms as it does not demand a
specific dollar figure.
The Company believes Plaintiff has been paid in full.
ATTORNEY GENERAL. The Attorney General of the State of Florida has
made inquiries of the Company concerning the operations of Fairway
Sports, Inc.. The Florida Attorney General has required that the
Company provide it with a variety of information related to the
tournament operations of Fairway Sports. The Company has cooperated with
and believes it has fully responded to the Florida Attorney General in
this inquiry.
INTERNAL REVENUE SERVICE. Fairway Sports, Inc. owes approximately
$77,500.00 in unpaid taxes to the Internal Revenue Service. The Company
has proposed a payment plan whereby the Company would pay the full
amount of the taxes owed. The IRS has not yet entered in a settlement
with the Company respecting the proposed payment plan. Pending
execution of a settlement agreement with the Internal Revenue Service,
the Company is making payments under the proposed payment plan of
$1,500.00 per month through November 31, 1999 and is scheduled to make a
final payment on December 31, 1999 of an additional $70,000.00.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
IRWIN H. LEVINE & ASSOC., P.A., TAXES-ACCOUNTING SERVICES, 1747 Van
Buren Street, Suite 950, Hollywood, Florida 33020 had been the Company's
accountant during its years of operation until recently when the Company
engaged a new accountant, STEFANOU & COMPANY, LLP of McLean, Virginia.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In May 1997, the Company issued an aggregate of 416,502 shares of
Common Stock in connection with the acquisition of Fairway Sports, Inc.
in a private transaction exempt from registration under Section 4(2) of
the Act.
During 1997, the Company issued an aggregate of 1,084,085 shares of
the Company's Common Stock for an aggregate of $2,838,422 in a private
offering exempt from registration under Section 4(2) of the Act.
During 1997, the Company issued an aggregate of 2,750,000 shares of
Common Stock to consultants and employees for services in transactions
exempt from registration pursuant to Rule 701 of the Act.
In May 1998, the Company issued a total of 1,823,055 shares of
Common Stock for an aggregate of $70,546.00 in a private offering exempt
from registration under Regulation D of the Act.
In December, 1998, the Company sold a total of 4,000,000 shares of
its Common Stock for an aggregate of $1,000,000 in a private offering
exempt from registration under Regulation D of the Act.
In 1998, the Company issued an aggregate of 225,000 shares of
Common Stock in transactions exempt from registration pursuant to Rule
701 of the Act.
During the six month period ended June 30, 1999, the Company issued
an aggregate of 229,169 shares of Common Stock in transactions exempt
from registration under Rule 701 of the Act, and an aggregate of 143,333
shares of Common Stock in connection with conversions of debt exempt
from registration under Section 4(2) of the Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that the Company will indemnify its
directors and executive officers and may indemnify its other officers,
employees and agents to the fullest extent not prohibited by Nevada law.
The Company is also empowered under its Bylaws to enter into
indemnification agreements with its directors and officers and to
purchase insurance on behalf of any person it is required or permitted
to indemnify.
In addition, the Company's Articles provide that the Company's
directors will not be personally liable to the Company or any of its
stockholders for damages for breach of the director's fiduciary duty as
a director or officer involving any act or omission of any such director
or officer. Each director will continue to be subject to liability for
breach of the director's fiduciary duties to the Company for acts or
omissions that involve intentional misconduct, fraud or a knowing
violation of law, or the payment of dividends in violation of Nevada
corporate law. This provision also does not affect a director's
responsibilities under any other laws, such as the federal securities
laws.
There is no pending litigation or proceeding involving a director
or officer of the Company as to which indemnification is being sought,
nor is the Company aware of any pending or threatened litigation that
may result in claims for indemnification by any director or officer.
PART III
ITEMS 1 AND 2
INDEX TO AND DESCRIPTION OF EXHIBITS
EXHIBIT
2.1 Articles of Incorporation of Associated Golf Management, Inc., as
amended.
2.2 By-laws of Associated Golf Management, Inc., as amended.
6.1 Office Lease dated May 26, 1999 between Sherwood Forest of Temple
Terrace, Inc., and Associated Golf Management, Inc.
6.2 Preliminary Approval of Application by Associated Golf Management,
Inc. to Amazon.com Associates Program.
6.3 Agreement between Associated Golf Management, Inc. and The Golfer's
Advantage dated March 5, 1999.
6.4 Letter of Understanding between Associated Golf Management, Inc.
and Europa Consultancy Ltd. dated January 1, 1999.
6.5 Agreement between Associated Golf Management, Inc. and On-Site
Computer Solutions dated May 20, 1999.
6.6 Associated Golf Management, Inc. 1999 Stock Option and Incentive
Plan.
6.7 Memorandum of Understanding between Pat Patton and National Senior
Tour dated January 1, 1999.
6.8 Promissory Note Payable by Fairway Sports, Inc. to Al Richards
dated June 24, 1998.
27 Financial Data Schedule
<PAGE>
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
ASSOCIATED GOLF MANAGEMENT, INC.
August 10, 1999 By: /s/ Eddie Pearce
---------------------------
Eddie Pearce, President and
Chief Executive Officer
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1998 AND 1997
FORMING A PART OF ANNUAL REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934
ASSOCIATED GOLF MANAGEMENT, INC.
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
Index to Financial Statements
----------------------------------------------------------------------
Page
Report of Independent Certified Public Accountants F-3
Consolidated Balance Sheet at December 31, 1998 and 1997 F-4
Consolidated Statements of Operations for the two years
ended December 31, 1998 and 1997 F-6
Consolidated Statements of Deficiency in Stockholders' Equity
for the two years ended December 31, 1998 and 1997 F-7
Consolidated Statements of Cash Flows for the two
years ended December 31, 1998 and 1997 F-8
Notes to Conslidated Financial Statements F-9
INTERIM FINANCIAL STATEMENTS (UNAUDITED):
Consolidated Balance Sheet as of June 30, 1999 and
December 31, 1998 F-17
Consolidated Statement of Operations for the three
months ended June 30, 1999 and 1998 F-19
Consolidated Statement of Cash Flows for the six
months ended June 30, 1999 and 1998 F-20
Notes to consolidated financial statements at June 30, 1999 F-21
<PAGE>
STEFANOU & COMPANY, LLP
Certified Public Accountants
1360 Beverly Road
Suite 305
McLean, VA 22101-3621
703-448-9200
703-448-3515 (fax)
Philadelphia, PA
-----------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Associated Golf Management, Inc.
Temple Terrace, Florida
We have audited the accompanying consolidated balance sheet of
Associated Golf Management, Inc. and subsidiaries as of December 31, 1998
and 1997 and the related consolidated statements of operations, deficiency
in stockholders' equity, and cash flows for the two years then ended.
These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based upon our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Associated Golf
Management, Inc. and subsidiaries as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for the two years ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note J,
the Company is experiencing difficulty in generating sufficient cash flow
to meet its obligations and sustain its operations, which raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note J.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Stefanou & Company, LLP
STEFANOU & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
McLean, Virginia
May 22, 1999
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 402,000 $ 44,810
---------- ----------
Total current assets 402,000 44,810
PROPERTY AND EQUIPMENT-AT COST:
Furniture and equipment 41,120 41,120
---------- ----------
41,120 41,120
Less accumulated depreciation 16,448 8,224
---------- ----------
24,672 32,896
OTHER ASSETS:
Organization costs, less accumulated
amortization of $223 in 1998 and $124 in 1997 272 371
---------- ----------
272 371
---------- ----------
$ 426,944 $ 78,077
========== ==========
See accompanying notes to consolidated financial statements
F-4
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998 AND 1997
</TABLE>
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
Current maturities of long-term debt
(NOTES C, G & H) $ 200,000 $ -
Accounts payable and accrued expenses 1,634,912 342,940
---------- ----------
Total current liabilities 1,834,912 342,940
COMMITMENTS AND CONTINGENCIES (NOTE F)
DEFICIENCY IN STOCKHOLDERS' EQUITY (NOTE E)
Preferred stock, par value, $.001 per
share; 10,000,000 shares authorized;
none used at December 31 1998 and 1997 - -
Common stock, par value, $.001 per share;
15,000,000 shares authorized; 6,683,557
issued at December 31, 1998; 6,002,515
shares issued at December 31, 1997 6,684 6,003
Additional paid-in-capital 3,937,368 2,867,278
Accumulated deficit (5,352,020) (3,138,144)
---------- ----------
(1,407,968) (264,863)
---------- ----------
$ 426,944 $ 78,077
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Dues $ 126,653 $ 37,937
Tournament fees 314,150 601,825
Sponsor fees and other tournament revenue 257,869 864,884
----------- -----------
698,672 1,504,646
Cost and expenses:
Tournaments 2,021,009 4,155,750
Selling, general and administrative 872,216 476,820
Depreciation and amortization 8,323 8,323
Interest 11,000 -
----------- -----------
2,912,548 4,640,893
----------- -----------
Operating loss (2,213,876) (3,136,247)
Income (taxes) benefit - -
----------- -----------
Net income $(2,213,876) $(3,136,247)
=========== ===========
Loss per common share (basic and
assuming dilution) $ (.34) $ (1.29)
=========== ===========
Weighted average common shares outstanding 6,532,084 2,438,842
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
F-6
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF DEFICIENCY IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Common Stock Additional Accumulated
Shares Amount Paid-in- Deficit Total
Capital
---------- ------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance at
January 1, 1997 1,751,928 $1,752 $ 29,940 $ (1,897) $ 29,795
Shares issued in
connection with
acquisition of
Fairway Sports, Inc. 416,502 417 - - 417
Shares issued in
connection with
private placement,
net of costs 1,084,085 1,084 2,837,338 - 2,838,422
Shares issued to
consultants and
employees in
exchange for
services 2,750,000 2,750 - - 2,750
Net loss - - - (3,136,247) (3,136,247)
--------- ------ ---------- ----------- -----------
Balance at
December 31, 1997 6,002,515 6,003 2,867,278 (3,138,144) (264,863)
Sale of stock in
connection with
private placement,
net of costs 5,823,055 5,823 1,064,723 - 1,070,546
Shares issued to
consultants and
employees in ex-
change for services 225,100 225 - - 225
Reverse stock split (5,367,115) (5,367) 5,367 - -
Net loss - - - (2,213,876) (2,213,876)
--------- ------ ---------- ----------- -----------
Balance at
December 31, 1998 6,683,557 $6,684 $3,937,368 $(5,352,020) $(1,407,968)
========= ====== ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
F-7
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Increase (decrease) in cash
and equivalents
Cash flows from operating activities $(2,213,876) $(3,136,247)
Net loss for the year
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 8,323 8,323
Increase (decrease) in:
Accounts payable and accrued expenses 1,291,972 342,940
----------- -----------
Net cash provided by operating activities (913,581) (2,784,984)
Cash flows used in investing activities
Capital expenditures, net of disposals - (41,120)
----------- -----------
Net cash used in investing activities - (41,120)
----------- -----------
Cash flows provided (used) in
financing activities:
Proceeds from issuance of notes payable
and other 200,855 -
Proceeds from issuance of common stock, net 1,070,546 2,838,422
----------- -----------
Net cash, provided (used) in financing
activities 1,271,401 2,838,422
----------- -----------
Net (decrease) increase in cash and
equivalents 357,820 12,318
Cash and equivalents at beginning of year 44,180 32,492
----------- -----------
Cash and equivalents at end of year $ 402,000 $ 44,810
=========== ===========
Supplemental Disclosures of Cash
Flow Information
Cash paid during the year for interest $ 0 $ 0
=========== ===========
Common stock issued for services $ 225 $ 2,750
Acquisition:
Assets acquired $ - $ 417
Accumulated deficit - -
Liabilities assumed - -
Common stock issued - (417)
----------- -----------
Net cash paid for acquisition $ - $ -
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
F-8
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 and 1997
NOTE A-SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation
of the accompanying consolidated financial statements follows.
BUSINESS AND BASIS OF PRESENTATION
The Company was incorporated under the laws of the State of Nevada under
the name Fairway Enterprises, Inc. (Company) in September, 1996. The
Company was a wholly-owned subsidiary of Hanovia Creative Capital Corp., a
Company formed under the laws of British Columbia, Canada in 1984.
In October, 1996, the shareholders exchanged all of the outstanding shares
of common stock of Hanovia on a one for one basis for shares of common
stock in the Company.
In May, 1997 the Company completed an acquisition of Fairway Sports,
Incorporated (Fairway Sports), an inactive corporation with no significant
assets or operations. The Company was subsequently named Associated Golf
Management, Inc. Effective with the acquisition, all previously
outstanding common stock of Fairway Sports was exchanged for common stock
of the Company, resulting in the previous security holders of Fairway
Sports owning approximately 30% of the voting stock of the Company. The
exchange ratio was one (1) share of Fairway Sports common stock in exchange
for one (1) share of the Company's common stock, ten (10) shares of Fairway
Sports Series A preferred stock in exchange for one (1) share of the
Company's common stock and five (5) shares of Fairway Sports Series B
preferred stock in exchange for one (1) share of the Company's common
stock.
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Significant intercompany transactions have been
eliminated.
The Company develops, markets and operates golfing events, tournaments and
a qualifying school. The activities are conducted primarily in the
southeast and Midwestern parts of the United States.
REVENUE RECOGNITION
The Company follows a policy of recognizing sales at the time the services
are rendered.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated depreciation
and amortization. For financial statement purposes, depreciation and
amortization are provided using the straight-line method over their
estimated useful. The straight line method of depreciation is also used
for tax purposes.
ADVERTISING
The Company follows the policy of charging the costs of advertising to
expenses incurred.
F-9
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997 AND 1997
NOTE A-SUMMARY OF ACCOUNTING POLICIES (continued)
INCOME TAXES
Income taxes are provided based on the liability method for financial
reporting purposes in accordance with the provisions of Statements of
Financial Standards No. 109, "Accounting for Income Taxes".
Under this method deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be removed or
settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in the consolidated statements of operations in the
period that includes the enactment date.
CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, the Company considers all
highly liquid debt instruments purchased with a maturity date of three
months or less to be cash equivalents.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company has adopted Statement of Financial Accounting Standards No. 121
(SFAS 121). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. SFAS No. 121 also
requires assets to be disposed of be reported at the lower of the carrying
amount or the fair value less costs to sell.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly actual results could differ from those estimates.
CONCENTRATIONS OF CREDIT RISK
Financial instruments and related items which potentially subject the
Company to concentrations of credit risk consist primarily of cash, cash
equivalents and trade receivables. The Company places its cash and
temporary cash investments with high credit quality institutions. At
times, such investments may be in excess of the FDIC insurance limit. The
Company's customers are not concentrated geographically and it periodically
reviews its trade receivables in determining its allowance for doubtful
accounts.
STOCK BASED COMPENSATION
The Company accounts for stock transactions in accordance with APB Opinion
25, "Accounting for Stock Issued to Employees." In accordance with
statement of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation," the Company has adopted the proforma disclosure
requirements.
F-10
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE A-SUMMARY OF ACCOUNTING POLICIES (continued)
LIQUIDITY
As shown in the accompanying financial statements, the Company incurred a
net loss of $2,213,876 during the year ended December 31, 1998 and
$3,136,247 during the year ended December 31, 1997. The Company's current
assets exceeded its current liabilities by $1,432,912 as of December 31,
1998.
COMPREHENSIVE INCOME
The Company does not have any items of comprehensive income in any of the
periods presented.
NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS
131") in the year ended December 31, 1998. SFAS establishes standards for
reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be
presented in interim financial reports issued to stockholders. SFAS 131
also establishes standards for related disclosures about products and
services and geographic areas. Operating segments are identified as
components of an enterprise about which separate discrete financial
information is available for evaluation by the chief operating decision
maker, or decision making group, in making decisions how to allocate
resources and assess performance. The information disclosed herein,
materially represents all of the financial information related to the
Company's principal operating segment.
EARNINGS PER SHARE
The Company has adopted Statement of Financial Accounting Standard No. 128,
"Earnings Per Share," specifying the computation, presentation and
disclosure requirements of earnings per share information. Basic earnings
per share has been calculated based upon the weighted average number of
common shares outstanding. Stock options and warrant's have been excluded
as common stock equivalents in the diluted earnings per share because they
are either antidilutive, or their effect is not material. There is no
effect on earnings per share information for the year ended December 31,
1998 relating to the adoption of this standard.
NOTE B-BUSINESS COMBINATION
In May, 1997, the Company purchased, in an exchange for common stock,
Fairway Sports Incorporated (Fairway Sports) in a transaction accounted for
using the purchase method of accounting. The total purchase price and
carrying value of net assets acquired of Fairway Sports were as follows:
Net assets acquired $ 417
Net liabilities -
------
$ 417
======
As Fairway Sports was an inactive corporation with no significant
operations, the Company recorded the carryover historical basis of net
tangible assets acquired. The results of operations subsequent to the date
of acquisition are included in the Company's consolidated operations.
F-11
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE C-LONG-TERM DEBT
Long-term debt at December 31, 1998 and 1997 consists of the following:
1998 1997
-------- --------
Note payable to officer with interest
at 10.5% per annum;
unsecured $200,000 -
Less current portion 200,000 -
-------- --------
$ - $ -
======== ========
$ - $ -
Aggregate maturities of long-term debt as of December 31, 1998 and 1997 are
as follows:
Year Amount
---- --------
1999 $200,000
2000 -
2001 -
2002 -
2003 and after -
--------
$200,000
========
NOTE D-INCOME TAXES
Financial Accounting Standard No. 109 requires the recognition of deferred
tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statement or tax returns.
Under this method, deferred tax liabilities and assets are determined based
on the difference between financial statements and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax
purposes are insignificant.
At December 31, 1998, the Company has available for federal income tax
purposes a net operating loss carryforward of $5,300,000, expiring the year
2014, that may be used to offset future taxable income. The Company has
provided a valuation reserve against the full amount of the net operating
loss benefit, since in the opinion of management based upon the earnings
history of the Company, it is more likely than not that the benefits will
not be realized. Due to significant changes in the Company's ownership,
the Company's future use of its existing net operating losses may
be limited.
Components of deferred tax assets as of December 31, 1998 are as follows:
Non current:
Net operating loss carryforward $1,800,000
Valuation allowance 1,800,000
----------
Net deferred tax asset $ -
==========
NOTE E-CAPITAL STOCK
The Company was incorporated under the laws of the state of Nevada in
September, 1996 under the name Fairway Enterprises, Inc. (See Note A).
F-12
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE E-CAPITAL STOCK (continued)
On January 1, 1997 the Company's authorized stock was 15,000,000 shares of
common stock, par value $.001 per share and 10,000,000 shares of preferred
stock, par value $.001 per share. On that date, the Company had
outstanding 1,751,928 shares of common stock and no shares of preferred
stock.
In May, 1997, the Company issued 416,502 shares of common stock in
connection with the acquisition of Fairway Sports, Inc. (See Note B)
In 1997, the Company issued 1,084,085 shares of the Company's common stock
in exchange for $2,838,422, net of offering costs.
In 1998, the Company issued 5,823,055 shares of the Company's common stock
in exchange for $1,070,546, net of offering costs.
In November, 1998 the Company adopted, by unanimous consent of its Board of
Directors, a resolution authorizing a reverse stock split of one (1) share
for every three (3) shares of common stock outstanding as of November 18,
1998. The financial statements give effect to the reverse stock split.
Share amounts presented in the consolidated balance sheets and consolidate
statements of stockholders' equity reflect the actual share amounts
outstanding for each period presented.
In 1997 and 1998, the Company has also issued common stock in exchange for
services rendered by certain employees and consultants of the Company.
NOTE F-COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company leases office space on a year-to-year basis in Temple Terrace,
Florida.
CONSULTING AGREEMENTS
The Company has consulting agreements with outside contractors, certain of
whom are also Company stockholders. directors and officers. The Agreements
are generally for a term of 12 months from inception and renewable
automatically from year to year unless either the Company or Consultant
terminates such engagement by written notice.
LITIGATION
In 1998, the Alabama Easter Seal Society, Inc. filed a complaint against
Fairway Sports, Inc. in the 15th Judicial Court of Alabama. The complaint
seeks payment of services provided the Company in connection with a golf
outing held in Montgomery, Alabama. In March, 1999 the Court entered a
default judgement against the Company in the amount of $10,000 plus
damages. The Company acknowledges that it is indebted to the Plaintiff for
services rendered, however disputes the amount owed. Management believes
the ultimate outcome of this matter will not have a material adverse effect
on the Company's consolidated financial position.
F-13
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE F-COMMITMENTS AND CONTINGENCIES (continued)
In December, 1998, the Imperial Palace Casino filed a complaint against
Fairway Sports, Inc. in the District Court for Clark County, Nevada. The
complaint seeks payment for services rendered in connection with a golf
outing. In May, 1999 the Company and the Plaintiff reached a settlement of
the dispute. Under settlement, the Company agreed to pay the Plaintiff
$23,000.
In March, 1999, Prince Contracting Co., Inc. filed a complaint against
Fairway Sports, Inc., a wholly-owned subsidiary of the Company, in the 13th
Judicial Circuit in and for Hillsborough County, Florida. The complaint
seeks payment for labor, services and materials furnished under a
construction contract and breach of an escrow agreement. The amount of the
claim has not been specified by the Plaintiff. The Company believes it has
meritorious defenses to the Plaintiff's claims and intends to vigorously
defend itself against its claims.
In May, 1999, Salem Leasing Company filed a complaint against Fairway
Sports, Inc., a wholly-owned subsidiary of the Company, in the General
Court of Justice District Division for Forsyth County, North Carolina. The
complaint seeks payment under remaining term of an agreement to lease
certain personal property in the amount of $51,263, plus interests, costs
and attorney's fees. The Company acknowledges that it is indebted to the
Plaintiff, however disputes the amount owed. Management believes the
ultimate outcome of this matter will not have a material adverse
effect on the Company's consolidate financial position.
The Attorney General of the State of Florida has made inquiries with the
Company concerning the operations of Fairway Sports, Inc., in 1998 and
1999. The Florida Attorney General has required that the Company provide
it with a variety of information related to the tournament operations of
Fairway Sports. The Company has cooperated with and believes it has fully
responded to the Florida Attorney General in this inquiry.
The Company is involved in various claims arising in the ordinary course of
business. In the opinion of management, the outcome of such current legal
proceedings, claims and litigation could have a material effect on annual
operating results or cash flow when resolved in a future period. However,
in the opinion of management there matters will not materially affect the
Company's consolidated financial position.
JOINT VENTURE
Subsequent to the date of the accompanying financial statements, the
Company entered into a letter of intent to form a joint venture with a
developer of golf courses. Subject to certain conditions, the joint
venture would design, develop and manage five (5) new golf courses in the
southeastern United Sates. If consummated, the letter of intent
requires the Company to provide $2,500,000 to the joint venture.
The Company currently does not have the funds available to meet this
potential obligation.
F-14
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE G-RELATED PARTY TRANSACTIONS
In 1998, an Officer and Director of the Company advanced $200,000 to the
Company for working capital purposes. The advance is represented by an
unsecured note (see Note C). As of the date of these financial statements,
the note's principal, plus accrued interest has not been paid, and as a
result, the Company is in default under the terms of the note.
NOTE H-EARNINGS PER SHARE
The following table presents the computation of basis and diluted loss per
share:
1998 1997
----------- -----------
Net (loss) available for common shareholders $(2,213,876) $(3,136,247)
Basic and fully diluted loss per share $ (.34) $ (1.29)
Weighted average common shares outstanding 6,532,084 2,428,842
=========== ===========
Net loss per share is based upon the weighted average of shares of common
stock outstanding. In November, 1998, a one (1) for three (3) reverse
stock split of the Company's common stock was effected (See Note E).
Accordingly, all historical weighted average share and per share amounts
have been restated to reflect the reverse stock split.
NOTE I-SUBSEQUENT EVENTS
Subsequent to the date of the accompanying financial statements, the
Company issued options to purchase Company common stock to certain
employees, directors and consultants as partial consideration for services
being rendered to the Company. The terms of the options are as follows:
Exercise Price Per Share Number Outstanding Date of Expiration
------------------------ ------------------ ------------------
$1.25 450,000 January, 2002
Subsequent to the date of the accompanying financial statements, the
Company entered into a marketing agreement with an entity controlled by one
of the Company's Directors and Officers. The purpose of the Agreement is
to market and promote the National Senior Series Golf Tour in North America
and Europe.
Subsequent to the date of the accompanying financial statements, the
Company entered into an agreement with a Company Director to provide
consulting and marketing services to the Company. The Director shall be
compensated in the form of Company restricted common stock. In addition,
the Director was granted an option to purchase Company common stock at
$2.00 per share, which shall fully vest in July, 2000.
F-15
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE J-GOING CONCERN MATTERS
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements during the years ended December 31, 1998 and 1997, the Company
incurred losses of $2,213,876 and $3,136,247, respectively. These factors
among others may indicate that the Company will be unable to continue as a
going concern for a reasonable period of time.
The Company's existence is dependent upon management's ability to develop
profitable operations and resolve its liquidity problems. Management
anticipates the Company will attain profitable status and improve its
liquidity through the continued developing and marketing of its services
and additional equity investment in the Company. The financial statements
do not include any adjustments that might result should the Company be
unable to continue as a going concern.
In order to improve the Company's liquidity, subsequent to the date of
these financial statements the Company's management has undertaken the
following actions:
- Obtained a $75,000 loan from a Company shareholder. The
loan is unsecured, incurs interest at 10% per annum and is payable
on demand.
- Issued restricted common stock in exchange for unpaid debts of
approximately $500,000.
- Implemented procedures to reduce Company overhead, general
and administrative costs.
- Initiated plans for 10 National Senior Tour Golf Tournaments
in 1999.
- Implemented a marketing program to expand its tournament and
event corporate sponsorship.
In addition, the Company is actively pursuing additional equity financing
through discussions with investment bankers. There can be no assurance the
Company will be successful in its effort to secure additional equity
financing.
If operations and cash flows continue to improve through these efforts,
management believes that the Company can continue to operate. However, no
assurance can be given that Management's actions will result in profitable
operations and the resolution of its liquidity problems.
F-16
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS June 30, December 31,
1999 1998
-------- --------
<S> <C> <C>
Current assets:
Cash and equivalents $124,694 $402,000
Inventory, at cost 85,000 -
-------- --------
Total current assets 209,694 402,000
Property, machinery and equipment, at cost 17,740 24,672
Other assets:
Note receivable and other 30,000 272
-------- --------
$257,434 $426,944
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-17
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS - CONTINUED
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
June 30, December 31,
1999 1998
---------- ----------
<S> <C> <C>
Current Liabilities:
Current maturities of long term debt $ 200,000 $ 200,000
Accounts payable and accrued liabilities 1,084,912 1,634,912
---------- ----------
Total current liabilities 1,284,912 1,834,912
Deficiency in Stockholders' Equity:
Preferred stock, par value, $.001 per share;
10,000,000 shares authorized; none issued - -
Common stock, par value, $.001 per share;
15,000,000 shares authorized; 6,683,557
issued at December 31, 1998; 7,056,059
issued at June 30, 1999 7,056 6,684
Additional paid in capital 4,571,163 3,937,368
Accumulated deficit (5,605,697) (5,352,020)
---------- ----------
(1,027,478) (1,407,968)
---------- ----------
$ 257,434 $ 426,944
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
F-18
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Dues $ 58,100 $ 46,693 $ 58,100 $ 91,063
Tournament Fees 9,660 95,280 80,200 148,500
Sponsorship and tournament
revenue 56,352 124,043 232,395 156,566
--------- --------- --------- ---------
124,112 266,016 370,695 396,129
--------- --------- --------- ---------
EXPENSES:
Tournaments 11,921 188,460 77,406 188,460
Selling, General and
Administrative 194,795 313,223 539,761 637,949
Depreciation & Amortization 3,602 2,081 7,204 4,161
--------- --------- --------- ---------
210,318 503,764 624,371 830,570
Gain (Loss) Before Income (86,206) (237,748) (253,676) (434,441)
Income Tax Expense - - - -
--------- --------- --------- ---------
NET (LOSS) GAIN $ (86,206) $(237,748) $(253,676) $(434,441)
========= ========= ========= =========
Loss per common share
(basic and assuming
dilution) $ (.01) $ (.06) $ (.03) $ (.11)
========= ========= ========= =========
Weighted average common
shares outstanding 7,058,788 4,137,885 7,410,753 4,025,335
</TABLE>
The accompanying notes are an integral part of these statements.
F-19
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
--------- ---------
<S> <C> <C>
Increase (decrease) in cash
Cash flows from operating activities
Net loss $(253,676) $(434,441)
Adjustments to reconcile net (loss) earnings to
net cash provided by operating activities:
Depreciation and amortization 7,204 4,161
Common stock issued in connection for
services rendered 134,166
Changes in assets and liabilities
Inventory and prepaid expenses (85,000)
Other assets (30,000)
Accounts payable and accrued liabilities (50,000) 315,734
--------- ---------
Net cash provided by (used in)
operating activities (277,306) (114,546)
Cash flows from financing activities
Proceeds from issuance of stock - 70,546
--------- ---------
Net cash provided by (used in)
financing activities - 70,546
Net increase (decrease) in cash (277,306) (44,000)
Cash at beginning of period 402,000 44,810
--------- ---------
Cash at end of period $ 124,694 $ 810
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ - $ -
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Common stock issued in exchange for services $ 134,166 $ -
Common stock issued in exchange for debts 500,000 -
</TABLE>
The accompanying notes are an integral part of these statements.
F-20
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
NOTE A - SUMMARY OF ACCOUNTING POLICIES
GENERAL
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to SEC Form 10-QSB, and
therefore, do not include all the information necessary for a fair
presentation of financial position, results of operations and cash flows
in conformity with generally accepted accounting principles.
In the opinion of the Company, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six month period ended June 30, 1999
are not necessarily indicative of the results that may be expected for the
year ended December 31, 1999. The unaudited condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1998.
Amounts for the six months ended June 30, 1998 have been reclassified to
conform with the June 30, 1999 presentation.
CONSOLIDATED STATEMENTS
The consolidated financial statements include the accounts of Associated
Golf Management, Inc. and its wholly owned subsidiaries. Significant
intercompany transactions have been eliminated in consolidation.
F-21
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT INDEX
Number Description of Exhibit Page
(11) Computation of Earnings per Common
and Common Share Equivalents E-1
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC.
COMPUTATION OF LOSS EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARES
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Shares outstanding at beginning of period 6,002,515 1,751,928
Weighted average of common shares issued
during the period 529,569 686,914
Weighted average of common shares outstanding
during the period (adjusted for 1 for 3
reverse stock split in 1998) 6,532,084 2,438,842
Stock options and warrants outstanding-not
included as they have no dilative effect - -
--------- ---------
Shares used in computing earnings per
common share 6,532,084 2,438,842
Loss per common share ($2,213,876/6,532,084) $ (.34)
=========
Loss per common share ($3,136,247/2,438,842) $ (1.29)
=========
E-1
</TABLE>
ARTICLES OF INCORPORATION
OF
FAIRWAY ENTERPRISES. INC.
KNOW ALL MEN BY THESE PRESENTS, that we the undersigned, do hereby
associate into a corporation under and pursuant to the provisions and by
virtue of the laws of the State of Nevada, as provided in the Corporation
Act of 1925, and all acts amendatory and supplemental thereto, and for that
purpose do hereby make, subscribe, acknowledge, certify and set forth as
follows:
FIRST: That the name of the corporation shall be:
FAIRWAY ENTERPRISES, INC.
SECOND: The corporation may maintain offices, agencies and places of
business in any state in the United States and in foreign countries without
restriction as to place; and the corporation may keep such books, papers
and records of the corporation as are not required by law to be kept
within the State of Nevada, and as the Directors may find convenient, in
such offices, agencies and places of business.
THIRD: The nature of the business to be transacted and the objects
and purposes to be promoted and carried on by the corporation shall be as
follows:
a) The provisions in the clauses contained in this Article are to be
construed both as purposes and powers and shall, except when otherwise
expressed in this Article be in no wise limited or restricted by reference
to or inference from the terms of any clause of this, or of any other
Article of these Articles, but each of the purposes and powers specified in
this Article shall be regarded as independent purposes and powers, and the
specification herein contained of particular powers is not intended to be
and shall not be held to be in limitation of the general powers herein
contained, or in limitation of the powers granted to corporations under the
laws of the State of Nevada, but is intended to be, and shall be held to
be, in furtherance thereof.
b) To perform services of every kind and nature authorized by law for
any person, firm, association or corporation. To enter into, make, perform
and carry out contracts of every kind and character with any person, firm,
association or corporation.
c) To engage in and conduct every type of building and/or contracting
and/or mining work in the State of Nevada and in every state and territory
of the United States, and/or in any foreign country, including. but not
limited to the construction of all types of buildings, highways, mining
developments, irrigation works, naval and military installations, docks,
piers, airports, ranching and farming projects, and also to engage in every
type and manner of activity incidental thereto; and in connection with or
independently of the above, to own, lease and rent and/or in any manner
deal with and trade in every type and manner of motor vehicles, machinery,
equipment, merchandise and supplies, and to manage, operate and conduct
every type and manner of business in which such may be employed; to enter
into every kind and manner of contract and agreement concerning such work;
to give and post bond for the faithful performance thereof; and without
limitation, except as may be imposed by law; to do every act and thing
necessary and/or required in the carrying on, operating and conducting of a
general contracting business; to engage in the transformation of passengers
and commodities both intrastate and interstate, and within the State of
Nevada, and in any other state and territory in the United States and/or in
any foreign country; to build, rent lease, buy, sell, own, operate and
manage machine ships, foundries, garages, service stations, depots, hotels,
restaurants, taxi cabs, stages, bus lines, freight lines, passenger and
transportation lines, railroads and steamships, and airlines.
d) To manufacture, purchase, sell and deal in, export and import
personal property of all kinds other than and in addition to goods, wares
and merchandise hereinbefore set forth and described, and to pledge,
hypothecate, or to otherwise encumber the same in any manner whatsoever, or
to borrow thereon, in such ways and to such extent as may be prescribed or
required by the laws of any state of the United States or any other
country.
e) To mortgage, pledge, hypothecate and trade in all manner of goods,
wares, merchandise, commodities and products, including machinery and
mechanical appliances of every description.
f) To acquire by purchase, lease or otherwise, the good will,
business, property, assets, franchises and rights, in whole or in part of
any person, firm, association or corporation; and to assume all or any of
the liabilities thereof and to pay for the same in cash, with the stock of
this corporation or its debentures, or bonds, or otherwise, and to hold,
maintain, operate and conduct, as well as in any manner to dispose of, the
whole or any part of the property so acquired, but always in accordance
with, and subject to, the laws of the State of Nevada.
g) To borrow money and contract debts when necessary for the
transaction of the business of the corporation, for the exercise of its
corporate rights, privileges or franchises, or for any other purposes of
its incorporation; also to issue bonds, promissory notes, bills of
exchange, debentures and other obligations and also evidences of
indebtedness, payable at specified time or times, or payable upon the
happening of a specified event or events, and when necessary to secure the
same by mortgage, pledge or otherwise, for money borrowed or goods
purchased or for payment of property bought or acquired or for any other
lawful obligation; also to issue, sell and dispose of certificates of
investment or participation certificates, upon such terms and under such
conditions as are or may be prescribed by the laws of the State of Nevada,
or by the by-laws of the corporation.
h) To loan the funds of the corporation upon notes, bonds, mortgages,
deeds or trust, debentures or other securities, or property, real, personal
or mixed, or otherwise.
i) To receive, collect and dispose of principal and interest,
dividends, income, increment and profits upon or from all or any notes,
stocks, bonds, deeds of trust, debentures, securities, obligations and
other property held, owned or possessed by the corporation, or any other
person, firm or corporation as escrow or trustee or for the use and benefit
of the corporation and to exercise in respect of all such stocks, bonds,
mortgages, deeds or trust, notes, debentures, obligations, securities and
all other property and any and all bonds, any and all rights of individual
ownership thereof.
j) To purchase, acquire and to hold, use, operate, introduce, sell,
assign or otherwise dispose of, hire, let or license, any patents, patent
rights, licenses, trademarks, trade names, privileges, formulas, secret
processes, and any and all inventions, improvements and processes used in
connection with or secured under letters patent and grants of the United
States of America or any other country or government, and which may appear
likely to be advantageous or useful to the corporation, and to use,
exercise, develop, and grant licenses in respect of and to turn to account,
manufacture, build and construct under such patents, licenses, processes
and the like, inventions and improvements with the view of working and
developing the same and effectuating the foregoing objects or any part
thereof.
k) To act as agent, attorney in fact, trustee, or in any other
representative capacity for other persons, firms or corporations.
l) To guarantee, purchase, hold, sell, transfer, assign, mortgage,
pledge or otherwise dispose of the shares of the capital stock, or of any
bonds, securities or evidences of indebtedness, created by any other
corporation or corporations of the State of Nevada, or of any other state
or government, and while owner of such stocks to exercise all rights,
powers and privileges of ownership, including the right to vote thereon.
m) To purchase, hold, sell, transfer and re-issue shares of its own
stock, but always in accordance with, and as permitted by, the laws of the
State of Nevada, and the by-laws of the corporation.
n) To enter into, make and perform contracts of every kind with any
person, firm, association or corporation, public, private or municipal; or
anybody, politic, and with any state of with the government of the United
States or any dependency thereof, as well as any foreign government; and in
general to carry on and conduct and engage in any business in connection
with the foregoing, either as manufacturer, dealer, principal, agent, or
otherwise permitted to corporations organized under the laws of Nevada.
o) To establish, maintain, operate, conduct any carry on in the State
of Nevada and in any or all of the several states, territories, possessions
and dependencies of the United States, the District of Columbia, and in any
foreign country, its business or any part or parts thereof, and as many
other businesses, stores, plants, factories, mills, warehouses, offices,
and agencies as may be necessary or deemed expedient for the corporation
and its business, as well as for the extension, expansion and exploitation
of the affairs, operation and benefit of the corporation.
p) To elect not to be taxed as a corporation, but as a Subchapter S
Corporation under the United States Internal Revenue code.
q) Any generally to do all and everything necessary, suitable,
convenient or proper for the accomplishment of any of the purposes or the
attainment of any of the objects or the furtherance of any of the powers
hereinbefore set forth, either alone or in association with other
corporations, firms, or individuals, and to do every other act or thing
incidental or pertaining to or growing out of the aforesaid purposes or
powers, and/or any of them, provided the same be not inconsistent with the
laws of the State of Nevada; and also to exercise any and all of the powers
conferred upon corporations by the laws of the State of Nevada which now
exist or which may be hereafter conferred upon or granted to corporations
by the laws of the said State of Nevada.
r) In furtherance and not in limitation of the powers conferred by the
laws of the State of Nevada, the Board of Directors is expressly authorized
from time t time to determine whether and to what extent and at what times
and places and under what conditions and regulations the books and accounts
of this corporation, or any of them other than the stock ledger, shall be
open to inspection of the stockholders, and no stockholder shall have the
rights to inspect any account or book or document of the corporation,
except as conferred by law or authorized by Resolution of the Directors or
of the Stockholders.
FOURTH: This corporation is authorized to issue Twenty-five Million
(25,000,000) shares of stock as follows: Fifteen Million (15,000,000)
common shares at one tenth of one cent ($.001) par value and Ten Million
preferred shares at one tenth of one cent ($.001) par value rights and
privileges to be set by the Board of Directors and no other class of stock
shall be authorized. All or part of the shares of the capital stock may be
issued by the corporation from time to time and for such consideration as
maybe determined upon and fixed by the Board of Directors as provided by
law.
FIFTH: The initial members of the Governing Board shall be known as
Directors and the number thereof shall be One. A different number of
Directors may be fixed by the By-laws, provided, that the number may be
increased or decreased within the limit above specified from time to time
pursuant to the By-laws.
The names of the First Board, consisting of one (1) Directors, shall
be as follows:
NAMES: David Wages
ADDRESS: 500 East College Pkwy. #U384 Carson City,
Nevada 89706
SIXTH: The capital stock, after the value thereof has been paid in,
shall be subject to no further assessment to pay debts of the corporation.
SEVENTH: The name of the incorporators signing these Articles of
Incorporation is as follows:
NAMES: David Wages
ADDRESS: 500 East College Pkwy. #U384 Carson City,
Nevada 89706
EIGHTH: This corporation is to have perpetual existence.
NINTH: In furtherance, and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized:
Subject to the By-laws, if any, adopted by the
stockholders, to make, alter or amend the By-laws of
the corporation;
To fix the amount to be reserved as working capital
over and above its capital stock paid in; to authorize
and cause to be executed mortgages and liens upon the
real and personal property of this corporation;
From time to time, to determine whether, and to what
extend, and at what times and places, and under what
conditions and regulations, the accounts and books of
this corporation (other than the original or duplicate
stock ledger), or any of them, shall be open to
inspection of stockholders, and no stockholder shall
have any right of inspecting any account, book or
document of this corporation except as conferred by
statute, unless authorized by a Resolution of the
stockholders or directors; By Resolution, or
Resolutions, passed by a majority of the whole board,
to designate one or more committees, each committee to
consist of two or more of the directors of the
corporation, which, to the extent provided in said
Resolution, or Resolutions, or in the By-laws of the
corporation, shall have, and may exercise the powers of
the Board of Directors in the management of the
business affairs of the corporation, and may have power
to authorize the seal of the corporation to be affixed
to all papers which may require it. Such committee, or
committees, shall have such name, or names, as may be
stated in the By-laws of the corporation, or as may be
determined by Resolution adopted by the Board of
Directors;
Pursuant to the affirmative vote of the stockholders,
of at least a majority of the stock issued and
outstanding, having voting power, given at a
stockholders' meeting duly called for that purpose, or
when authorized by the written consent of the holders
of at least a majority of the voting stock issued and
outstanding, the Board of Directors shall have power
and authority, at any meeting, to sell, lease or
exchange all of the property and assets of this
corporation, including its good will and its corporate
franchises, upon such terms and conditions as its Board
of Directors deem expedient and for the best interests
of the corporation.
This corporation may, in its By-laws, confer powers upon its Directors
in addition to the foregoing, and in addition to the powers and authorities
expressly conferred upon them by statute.
TENTH: Both Stockholders and Directors shall have power, if the By-
laws so provide, to hold their meetings, and to have one or more offices
within or without the State of Nevada, and to keep the books of this
corporation (subject to the requirements of the statutes) outside the State
of Nevada at such places as may from time to time be designated by the
Board of Directors.
ELEVENTH: This corporation reserves the right to amend, alter, change
or repeal any provision contained in these Articles of Incorporation, in
the manner now or hereafter prescribed by statute or by these Articles of
Incorporation, and all rights conferred upon stockholders herein are
granted subject to this reservation.
TWELFTH: B & B Services whose address is 500 Boulder Drive Carson
City, Nevada 89706 will be the Resident Agent of the corporation
I, B & B Services, hereby accept appointment as Resident Agent for the
above named corporation.
Dated this 16th day of September, 1996.
/s/ Beverly Thompson
We, THE UNDERSIGNED, being the original incorporators hereinbefore
named for the purpose of forming a corporation to do business both within
and without the State of Nevada, and in pursuance of the Corporation Laws
of the State of Nevada, being Chapter 177 of the Laws of 1925, and the acts
amendatory thereof and supplemental thereto, do make and file this
Certificate, hereby declaring and certifying that the facts herein stated
are true.
/s/ David Wages
State of Nevada )
Carson City )
On this 16th day of September, 1996, in Carson City, Nevada, before me the
undersigned, a Notary Public in and for Carson City, State of Nevada
personally appeared:
David Wages
Known to me to be the person whose name is subscribed to the foregoing
document and acknowledged to me that he executed the same.
/s/ Beverly Thompson
Notary Public
BEVERLY THOMSON
NOTARY PUBLIC, NEVADA
CARSON CITY
My Appt. Exp. March 1, 1998
(Notary Seal)
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
THOMAS TAGGART certifies that
1. He is both President and Secretary of FAIRWAY
ENTERPRISES, INC., incorporated September 19, 1996.
2. The FIRST Article of the Articles of Incorporation
of this corporation is amended to read as follows:
FIRST: The name of the corporation shall be:
ASSOCIATED GOLF MANAGEMENT, INC.
3. The foregoing Amendment of Articles of
Incorporation have been duly approved by the Board
of Directors, November 25, 1998.
4. Approval of the majority of stockholders after
issuance was obtained January 4, 1999.
I further declare under penalty of perjury under the laws of the State
of Nevada that the matters set forth in this Certificate are true and
correct of my own knowledge.
Date: January 8, 1999
/s/ Thomas Taggart
--------------------------
THOMAS TAGGART, President
/s/ Thomas Taggart
--------------------------
THOMAS TAGGART, Secretary
-Known to me-
State of Florida
Co. Hillsborough
5th January, 1999
________________
(Notary Seal)
FAIRWAY ENTERPRISES, INC.
BY-LAWS
ARTICLE I MEETINGS OF SHAREHOLDERS
1. Shareholders' Meetings shall be held in the office of the
corporation, at Carson City, NV. or at such other place or places as the
Directors shall, from time to time, determine.
2. The annual meeting of the Share Holders of this corporation
shall be held at 11:00 a.m., on the 19th day of September of each year
beginning in ____, at which time there shall be elected by the Share
Holders of the corporation a Board of Directors for the ensuing year, and
the Share Holders shall transact such other business as shall properly come
before them. If the day fixed for the annual meeting shall be a legal
holiday such meeting shall be held on the next succeeding business day.
3. A notice signed by any Officer of the corporation or by any
person designated by the Board of Directors, which sets forth the place of
the annual meeting, shall be personally delivered to each of the Share
Holders of record, or mailed postage prepaid, at the address as appears on
the sock book of the corporation, or if no such address appears in the
stock book of the corporation, to his last known address, at least ten (10)
days prior to the annual meeting.
Whenever any notice whatever is required to be given under any article
of these By-Laws, a waiver thereof in writing, signed by the person or
persons entitled to the notice, whether before or after the time of the
meeting of the Share Holders, shall be deemed equivalent to proper notice.
4. A majority of the shares issued and outstanding, either in
person or by proxy, shall constitute a quorum for the transaction of
business at any meeting of the Share Holders.
5. If a quorum is not present at the annual meeting, the Share
Holders present, in person or by proxy, may adjourn to such future time as
shall be agreed upon by them, and notice of such adjournment shall be
mailed, postage prepaid, to each shareholder of record at least ten (10)
days before such date to which the meeting was adjourned; but if a quorum
is present, they may adjourn from day to day as they see fit, and no notice
of such adjournment need be given.
6. Special meetings of the Share Holders may be called at anytime
by the President; by all of the Directors provided there are no more than
three, or if more than three, by any three Directors; or by the holder of a
majority share of the capital sock of the corporation. The Secretary shall
send a notice of such called meeting to each shareholder of record at least
ten (10) days before such meeting, and such notice shall state the time and
place of the meeting, and the object thereof. No business shall be
transacted at a special meeting except as stated in the notice to the Share
Holders, unless by unanimous consent of all Share Holders present, either
in person or by proxy, all such shares being represented at the meeting.
7. Each shareholder shall be entitled to on vote for each share of
stock in his own name on the books of the corporation, whether represented
in person or by proxy.
8. At all meetings of Share Holders, a shareholder may vote by
proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting
9. The following order of business shall be observed at all
meetings of the shareholders so far as is practicable:
a. Call the roll;
b. Reading, correcting, and approving of the
minutes of the previous netting;
c. Reports of officers;
d. Reports of Committees;
e. Election of Directors;
f. Unfinished business; and
g. New business.
10. Unless otherwise provided by law, any action required to be
taken at a meeting of the Share Holders, or any other action which may be
taken at a meeting of the Share Holders, may be taken without a meeting if
a consent in writing, setting forth the action to be taken, shall be signed
by all of the Share Holders entitled to vote with respect to the subject
matter thereof.
ARTICLE II STOCK
1. Certificates of stock shall be in a form adopted by the Board
of Directors and shall be signed by the President and the Secretary of the
corporation.
2. All certificates shall be consecutively numbered; the name of
the person owning the shares represented thereby, with the number of such
shares and the date of issue shall be entered on the company's books.
3. All certificates of stock transferred by endorsement thereon
shall be surrendered by cancellation and new certificates issued to the
purchaser or assignee.
4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be
entered on the transfer book of the corporation.
5. The corporation shall be entitled to treat the holder of record
of any share as the holder in fact thereof, and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such
share on the part of any other person whether or not it shall have express
or other notice thereof, except as expressly provided by the laws of this
state.
ARTICLE III DIRECTORS
1. A Board of Directors, consisting of at least one (1) person
shall be chosen annually by the Share Holders at their meeting to manage
the affairs of the corporation. The Directors' term of office shall be one
(1) year, and Directors may be reelected for successive annual terms.
2. Vacancies on the Board of Directors by reason of death,
resignation or other causes shall be filled by the remaining Director or
Directors choosing a Director or Directors to fill the unexpired term.
3. Regular meetings of the Board of Directors shall be held at
1:00 p.m., on the 19th day of September of each year beginning in ____ at
the office of the company at Carson City, NV, or at such other time or
place as the Board of Directors shall by resolution appoint; special
meetings may be called by the President or any Director giving ten (10)
days notice to each Director. Special meetings may also be called by
execution of the appropriate waiver of notice and called when executed by a
majority of the Directors of the company. A majority of the Directors
shall constitute a quorum.
4. The Directors shall have the general management and control of
the business and affairs of the corporation and shall exercise all the
powers that may be exercised or performed by the corporation, under the
statutes, the Articles of Incorporation, and the By-Laws. Such management
will be by equal vote of each member of the board of Directors with each
Board member having an equal vote.
5. The act of the majority of the Directors present at a meeting
at which a quorum is present shall be the act of the Directors.
6. A resolution, in writing, signed by all or a majority of the
members of the board of Directors, shall constitute action by the Board of
Directors to effect therein expressed, with the same force and effect as
though such resolution had been passed at a duly convened meeting; and it
shall be the duty of the Secretary to record every such resolution in the
Minute Book of the corporation under its proper date.
7. Any or all of the Directors may be removed for cause by vote of
the Share Holders or by action of the Board. Directors may be removed
without cause only by vote of the Share Holders.
8. A Director may resign at any time by giving written notice to
the Board, the President or the Secretary of the corporation. Unless
otherwise specified in the notice, the resignation shall take effect upon
receipt thereof by the Board or such Officer, and the acceptance of the
resignation shall not be necessary to make it effective.
9. A Director of the corporation who is present at a meeting of
the Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
ARTICLE IV OFFICERS
1. The Officers of this company shall consist of: a President, one
or more Vice Presidents, Secretary, Treasurer, and such other officers as
shall, from time to time, be elected or appointed by the Board of
Directors.
2. The PRESIDENT shall preside at all meetings of the Directors
and the Share Holders and shall have general charge and control over the
affairs of the corporation subject to the Board of Directors. He shall sign
or countersign all certificates, contracts and other instruments of the
corporation as authorized by the Board of Directors and shall perform all
such other duties as are incident to his office or are required by him by
the Board of Directors.
3. The VICE PRESIDENT shall exercise the functions of the
President during the absence or disability of the President and shall have
such powers and such duties as may be assigned to him, from time to time,
by the Board of Directors.
4. The SECRETARY shall issue notices for all meetings as required
by the By-Laws, shall keep a record of the minutes of the proceedings of
the meetings of the Share Holders and Directors, shall have charge of the
corporate books, and shall make such reports and perform such other duties
as are incident to his office, or properly required of him by the Board of
Directors. He shall be responsible that the corporation complies with
Section 78.105 of the Nevada Revised Statutes and supplies to the Nevada
Resident Agent or Registered Office in Nevada, any and all amendments to the
corporation's Articles of Incorporation and any and all amendments or
changes to the By-Laws of the corporation. In compliance with Section
78.105, he will also supply to the Nevada Resident Agent or Registered
Office in Nevada, and maintain, a current statement setting out the name
of the custodian of the stock ledger or duplicate stock ledger, and the
present and complete Post Office address, including street and number,
if any, where such stock ledger or duplicate stock ledger is kept.
5. The TREASURER shall have the custody of all monies and
securities of the corporation and shall keep regular books of account. He
shall disburse the funds of the corporation in payment of the just demands
against the corporation, or as may be ordered by the Board of Directors,
making proper vouchers for such disbursements and shall render to the Board
of Directors, from time to time, as may be required of him, an account of
all his transactions as Treasurer and of the financial condition of the
corporation. He shall perform all duties incident to his office or which
are properly required of him by the Board of Directors.
6. The RESIDENT AGENT shall be in charge of the corporation's
registered office in the State of Nevada, upon whom process against the
corporation may be served and shall perform all duties required of him by
statute.
7. The salaries of all Officers shall be fixed by the Board of
Directors and may be changed, from time to time, by a majority vote of the
Board.
8. Each of such Officers shall serve for a term of one (1) year or
until their successors are chosen and qualified. Officers may be re-
elected or appointed for successive annual terms.
9. The Board of Directors may appoint such other Officers and
Agents, as it shall deem necessary or expedient, who shall hold their
offices for such terms and shall exercise such powers and perform such
duties as shall be determined, from time to time, by the Board of
Directors.
10. Any Officer or Agent elected or appointed by the Directors may
be removed by the Directors whenever in their judgment the best interests
of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
11. A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Directors for the
unexpired portion of the term.
ARTICLE V INDEMNIFICATION OF OFFICERS AND DIRECTORS
The corporation shall indemnify any and all of its Directors and
Officers, and its former Directors and Officers, or any person who may have
served at the corporation's request as a Director or Officer of another
corporation in which it owns shares of capital stock or of which it is a
creditor, against expenses actually and necessarily incurred by them in
connection with the defense of any action, suit or proceeding in which
they, or any of them, are made parties, or a party, by reason of being or
having been Director(s) or Officer(s) of the corporation, or of such other
corporation, except, in relation to matters as to which any such Director
or Officer or former Director or Officer or person shall be adjudged in
such action, suit or proceeding to be liable for negligence or misconduct
in the performance of duty. Such indemnification shall not be deemed
exclusive of any other rights to which those indemnified may be entitled,
under By-Law, agreement, vote of Share Holders or otherwise.
ARTICLE VI DIVIDENDS
The Directors may, from time to time, declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law.
ARTICLE VII WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to
be given to any shareholder or Director of the corporation under the
provisions of these By-Laws or under the provisions of the Articles of
Incorporation, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
ARTICLE VIII AMENDMENTS
1. Any of these By-Laws may be amended by a majority vote of the
Share Holders at any annual meeting or at any special meeting called for
that purpose.
2. The Board of Directors may amend the By-Laws or adopt
additional By-Laws, but shall not alter or repeal any By-laws adopted by
the Share Holders of the company.
CERTIFIED TO BE THE BY-LAWS OF:
FAIRWAY ENTERPRISES, INC.
BY: Anthony Watson
-----------------------
Secretary
OFFICE LEASE
THIS LEASE is made this ___ day of ___, ___, by and between SHERWOOD
FOREST OF TEMPLE TERRACE, INC. (herein called "Landlord") and ASSOCIATED
GOLF MANAGEMENT, INC. (herein called "Tenant"), which Parties in
consideration of their mutual covenants herein set forth do hereby agree as
herein specified.
SECTION 1. DEMISED PREMISES. In consideration of the rent
hereafter agreed to be paid by Tenant to Landlord, and in consideration of
the covenants of the respective parties hereto to be performed by them at
the time and in the manner hereinafter provided, Landlord does hereby lease
and let unto Tenant, and Tenant does hereby lease from Landlord, those
certain premises (herein called the "demised premises") situate in the
SHERWOOD FOREST SHOPPING CENTER & OFFICES (herein called the "Center"), in
HilLsborough County, Florida. The boundaries and location of the demised
premises within the center are indicated in red on the site plan of the
center, labeled Schedule "A" attached hereto and made a part hereof. For
purposes of this lease, where applicable, the area of the demised premises
is 706 square feet, including all outside walls and one-half thickness of
party walls.
SECTION 2. TERM OF LEASE AND OPTION. This lease shall be month to
month for up to a term of 1 year. The "lease commencement date" shall be
June 1, 1999. The "possession date" shall be N/A.
Provided that the lease is still in full force and effect and that the
Tenant is not in default under any of the. terms or conditions of this
lease, Tenant shall have (1) option to extend the term of this lease (the
option "periods"), each option for a period of (1) year(s) following the
initial lease term, or the then applicable option period. Tenant shall
exercise such option(s) to extend by written notice to Landlord at least
sixty (60) days prior to the expiration of the initial lease term or the
then applicable option period.
SECTION 3. RENTAL. Tenant covenants and agrees that it will pay to
Landlord for the use of the demised premises rental without setoff,
deduction or demand, except as expressly authorized under the terms of
Section 12 and 13 of this Lease, as follows:
A. Base Rent. "Base rent" at the rate of $9,453.24 per annum,
payable in equal monthly installments of $787.77 per month, in advance, on
the first day of each month during the term of this lease. Base rent
subject to annual CPI adjustment @ 3%.
B. Sales and Use Tax. Tenant shall also pay any and all sales tax
levied upon the use and occupancy of the demised premises which may be now
or hereafter imposed by any lawful authority.
C. Definition of Lease Year. The term "lease year" as used in this
lease shall refer to each twelve (12) month period starting on June 1,
1999, and each consecutive anniversary of such date thereafter.
D. Default on Money Payments. If Tenant fails to pay as and when
due the proper amount of base rent, sales and use tax and any other amounts
which may be due Landlord under this Lease by the sixth day of the month,
Tenant shall pay to Landlord a service charge of $5.00 per day ($30.00
minimum) in order to defray the expenses of handling such late payment. In
addition, if any checks are returned for any reason whatsoever, or if
payment thereon is refused, Tenant shall pay Landlord a fee of $20.00 for
each such dishonored check to defray Landlord's administrative cost in
<PAGE>
connection therewith.
SECTION 4. USE OF DEMISED PREMISES. It is understood and agreed
between the parties hereto and Tenant covenants that during the continuance
of this Lease the premises shall be used and occupied only as a business
office and for no other purpose or purposes, without the prior written
consent of Landlord. Tenant agrees to operate its business within the
demised premises for such use during the entire term of this Lease, and to
conduct its business at all times in a business-like and reputable manner.
Landlord shall have the right to prescribe such reasonable rules governing
the conduct of business and use of the common area in the Center as
Landlord in its sole discretion shall deem necessary in order to promote a
first class commercial environment for the benefit of customers, other
tenants, and clients of the Center and as to Landlord's relationship with
such parties and Tenant consents and agrees to obey all such rules and
regulations and to require all persons in the Premises to comply with such
rules and regulations. No auction, fire, liquidation or bankruptcy sale
may be conducted in the demised premises without the previous written
consent of Landlord. Tenant shall not make any use of the Premises that
shall cause an increase in Landlord's insurance.
The use and occupation by Tenant of the demised premises shall include
the nonexclusive use in common with others of the common areas, employees'
parking areas, service roads, loading facilities, sidewalks and visitor car
parking areas designated from time to time by Landlord subject, however, to
the terms and conditions of this agreement and to reasonable rules and
regulations for the use thereof prescribed from time to time by Landlord.
Landlord expressly reserves the right at Landlord's sole discretion to
change or relocate any portion of the common areas, parking areas, service
roads, driveways, and sidewalks at any time or times.
SECTION 5. CARE OF PREMISES. Tenant shall not perform any acts or
carry on any practices within the demised premises and common areas which
may injure the building or be a nuisance or menace to other tenants in the
Center and shall keep the demised premises under its control clean and free
from all vermin, rubbish and debris at all times, and shall store all trash
and garbage within the demised premises or at Landlord's designated place
therefor and arrange for the regular pick-up of such trash and garbage at
Tenant's expense. Tenant shall not burn any trash or garbage of any kind
within the Center. Tenant shall not keep or display any signs on or
otherwise obstruct the walkways or areaways adjacent to the demised
premises without the written consent of Landlord.
SECTION 6. MAINTENANCE AND ALTERATIONS. Landlord shall keep the
foundation, outer walls, roof and buried conduits of the demised premises
in good repair and Landlord shall pay for all repairs to such portions of
the premises except such repairs that may be occasioned by the negligence
of Tenant or Tenant's agent or employees. If any repairs to the
structural portion of the premises (or to the building in which the
premises shall be located) should be required as a result of the negligence
of Tenant or Tenant's agent or employees, then Tenant shall pay all
expenses incurred by Landlord as a result of such repairs. Tenant shall
keep the inside of the demised premises, including all plumbing, wiring,
piping, fixtures, bulbs, flooring, carpeting, equipment, mechanical and
electrical, and appurtenances, all plate glass, and the exterior doors,
windows, and window frames of the demised premises in a clean and good
order, condition and repair, and shall also keep the premises in a clean,
sanitary and safe condition in accordance with law and in accordance with
all rules and
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regulations of governmental and quasi-governmental agencies (including
insurance boards) having jurisdiction over the Center. Tenant shall not
make any permanent alterations or improvements to the demised premises
without first obtaining Landlord's Consent to the design, materials, size
and location thereof, and Landlord's consent, at Landlord's sole option,
may also be conditioned upon the posting of a payment and performance bond.
If Tenant desires to make any permanent improvement(s) or alteration(s),
Landlord, upon approval of the plans and specifications therefor, may elect
to make such improvements for Tenant at Tenant's expense in order to ensure
the structural and architectural integrity and quality of construction work
in the Center. In any such event, Tenant shall deposit with Landlord such
sum of money as may be necessary to make, construct, or install such work.
All alterations, additions, improvements and such fixtures other than trade
fixtures which as a matter of law have become a part of the realty which
may be made or installed by either of the parties hereto upon the premises
and which in any manner are attached to the floors, walls or ceilings shall
upon the expiration or termination of this Lease become the property of
Landlord without any payment by Landlord therefor, provided that Landlord
may at its option require Tenant to remove from the premises at Tenant's
expense all or any portion or item heretofore specified at the expiration
of this Lease. Any personal and/or real property tax which may be imposed
by the proper taxing authorities upon any improvements made or requested by
Tenant shall be paid by Tenant. Tenant shall not install any lighting
fixtures (inside or outside of the demised premises), shades, awnings,
sliding doors in or on, alter the structure of or obstruct any portion of
the demised premises in any manner without first having obtained Landlord's
prior written consent therefor. Tenant agrees to remove all signs and
personal insignia which may be displayed in or about the demised premises
and pay Landlord for the repair of any damage caused to the demised
premises by Tenant's removal of such items. Anything in this Lease to the
contrary notwithstanding, Tenant shall not remove any furniture,
equipment, fixtures, personal property, or other improvements
from the demised premises without Landlord's prior written consent if
Tenant is in default under any of Tenant's covenants or obligations under
this Lease.
SECTION 7. ADVERTISING MEDIA. Tenant agrees not to use any
advertising media in the demised premises that shall be deemed reasonably
objectionable to Landlord or other tenants, including, but not limited to,
such media as signs (except as permitted in Section 19), loud speakers,
flashing lights, phonographs or radio broadcasts in a manner to be heard or
seen outside of the demised premises.
SECTION 8. INDEMNITY - LIABILITY INSURANCE. The Landlord shall not
be liable for any damage or injury to any person or property whether it be
the person or property of the Tenant, the Tenant's employees, agents,
guests, invitees or otherwise by reason of Tenant's occupancy of the leased
premises or because of fire, flood, windstorm, Acts of God, or for another
reason. The lessee agrees to indemnify and save harmless the Landlord from
and against any and all loss, damage, claim, demand, liability or expense
by reason of damage to person or property which may arise or be claimed to
have arisen as a result of the occupancy or use of said leased premises by
the Tenant or by reason thereof or in connection therewith or in any way
arising on account of any injury or damage caused to any person or property
on or in the leased premises providing however, that Tenant shall not
indemnify as to the loss or damage due to fault of Landlord.
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In addition to such indemnification, Tenant shall at its expense throughout
the duration of this Lease procure and continue in force general liability
insurance covering any and all injury to persons in or upon the demised
premises, including all damage from signs, glass, awnings, fixtures or
other appurtenances now or hereafter erected on the demised premises, and
insuring the indemnity agreement contained in this Section. Such
insurance shall be in the amount of not less than Five Hundred
Thousand Dollars ($500,000.00) for injury to one person in one accident,
occurrence or casualty, and not less than One Million Dollars
($1,000,000.00) aggregate; or in lieu of the foregoing a combined single
limit of not less than $1,000,000,000. Tenant shall also carry property
damage insurance in an amount of not less than $100,000.00 for damage to
property on any one occurrence. Any insurance policies required hereunder
shall name Landlord as an additional insured, and Tenant shall furnish
Landlord evidence in the form of a certificate of insurance within ten (10)
days from the date Tenant shall receive written notice from Landlord as to
the commencement of this Lease unless otherwise sooner requested by
Landlord.
Tenant may procure and maintain all insurance which it deems necessary for
its protection against loss or damage to any of its personal property,
leasehold improvements and trade fixtures on the demised premises.
SECTION 9. ASSIGNMENT OR SUBLETTING. Tenant shall not have the
right at any time to mortgage or assign this Lease by operation of law or
otherwise, or sublet the Premises or any part thereof, without the prior
written consent of Landlord. Landlord's consent to any sublease shall be
conditioned, inter alia, upon the requirements that the sublease shall
state (i) that it is subject to all of the provisions of this Agreement,
and (ii) that the sublessee's rights shall not survive the earlier
termination of this lease, whether by voluntary cancellation between
Landlord and Tenant, or otherwise.
SECTION 10. LANDLORD'S ACCESS TO DEMISED PREMISES. Landlord shall
have the right to enter upon the demised premises at all reasonable hours
for the purpose of exhibiting the premises to mortgagees or prospective
purchasers or lenders, and inspecting same or for making repairs to the
demised premises or to any property owned or controlled by Landlord
therein. If Landlord determines that certain repairs to the demised
premises should be made as required under this Lease, then Landlord may
demand that Tenant make same forthwith, and if Tenant refuses or neglects
to commence such repairs and complete the same with reasonable dispatch
(but in no event later than thirty (30) days) after written notice by
Landlord, Landlord may make or cause such repairs to be made and Landlord
shall not be responsible to Tenant for any loss or damage that may be
suffered by Tenant's property found to the demised premises or business
conducted therein by reason thereof, and if Landlord makes or causes such
repairs to be made, Tenant agrees that it will forthwith on demand pay to
Landlord the cost thereof with interest thereon at the maximum rate then
permitted to be charged by private parties by the laws of the State of
Florida. Landlord may, during the ninety (90) day period prior to the
expiration of this Lease or at any time subsequent to the termination of
this Lease, if terminated prior to the normal expiration date hereof, have
access and entry to the demised premises during reasonable business hours
for purposes of exhibiting the demised premises to other prospective
tenants. In conjunction therewith, Landlord may place a sign in Tenant's
windows indicating the availability of the demised premises for purposes of
leasing or renting same.
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SECTION 11. UTILITIES. Landlord shall pay all charges (whether
determined by separate meter of otherwise) for electricity and water
consumed upon the Premises, and for all sewer, garbage disposal and pick-up
services furnished to the Premises. No additional charges shall be made
against Tenant for such electricity, water, sewer and garbage disposal
services provided Tenant uses such services only for employees and other
normal uses. If Tenant shall use any machinery or equipment that shall
increase the consumption of such utilities or services, then Tenant shall
pay the portion of such charges that would represent such additional use.
Tenant shall pay all charges for utilities and services except as expressly
provided herein, including, without limitation, telephone and fuels other
than electricity, if any, furnished to the premises (whether determined by
separate meter or otherwise.)
In no event shall Landlord be liable for the quality, quantity,
failure or interruption of such services to the demised premises.
SECTION 12. EMINENT DOMAIN. If the whole of the demised premises
(or such part thereof as shall render the remainder of the premises
untenantable) shall be taken by any public authority under the power of
eminent domain, then the term of this Lease shall cease on the day
possession is required by the condemning authority. If only a portion of
the premises is taken, and if such taking does not render the remainder of
the premises untenantable, then this Lease shall not terminate, and from
that day onward, Tenant shall continue in the possession of the remainder
of the demised premises under the terms herein provided, except that the
rent due from Tenant shall be reduced in proportion to the amount of the
demised premises taken. Landlord shall, within a reasonable time after
such taking, at its own cost and expense, make repairs necessary due to the
partial taking in order to allow the Tenant the continued usage of the
remainder of the demised premises, provided, however, Landlord shall not be
required to expend any amounts in excess of the severance damages
paid by the condemning authority in connection with such taking.
The parties agree that Tenant shall not be entitled to any damages by
reason of the taking of its leasehold interest or any part thereof, but
Tenant shall be entitled to prove and collect for its damages to fixtures
and any leasehold improvements made by it, to the extent that such
improvements shall not have been improvements that are replacements or
substitutions of improvements theretofore installed by Landlord.
SECTION 13. FIRE DAMAGE AND FIRE INSURANCE. If the demised
premises shall be partially damaged by fire or other casualty, the damages
shall, within a reasonable time thereafter be repaired by and at the
expense of Landlord to the extent insurance proceeds are paid to Landlord
as a result of such casualty damage. Such repair shall be made promptly
except that no penalty shall accrue for reasonable delay which may arise by
reason of adjustment of insurance on the part of Landlord and/or Tenant,
and for reasonable delay on account of "labor or materials difficulties" or
any other cause beyond Landlord's control.
If the demised premises are totally damaged or are rendered wholly
Untenantable by fire or other casualty, the rent due under Section 3 hereof
shall abate until the substantial completion of any restoration or
rebuilding. Landlord shall, subject to the terms hereof, within a
reasonable time restore or rebuild the demised premises to its condition
existing prior to the casualty; provided, however, that Landlord's
obligation to repair and restore
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the premises shall be limited to the insurance proceeds made available to
Landlord as a result of such casualty and Tenant shall pay for any amounts
incurred by Landlord in excess of such insurance proceeds; provided
further, however, that if the demised premises are totally damaged or
rendered wholly untenantable by Fire or other casualty, then Landlord shall
have the right and option to terminate this Lease within thirty (30) days
of the date of such casualty by giving written notice to the Tenant, and
any rent paid pursuant to Section 3 hereof or other payments which may be
due Landlord under this Lease shall be prorated as of the effective date of
such termination and any advance payments on account of rent received by
Landlord from Tenant shall be proportionately refunded to Tenant.
If the demised premises are damaged by fire caused by the Tenant, the
Tenant shall pay any amount not covered by insurance.
Tenant shall, at Tenant's sole expense, procure and maintain insurance
naming both Landlord and Tenant as insured parties against loss by fire,
flood, windstorm and other casualties for the full replacement value of all
of Tenant's improvements, fixtures and personal property on the premises.
SECTION 14. bankruptcy - INSOLVENCY. Tenant agrees that if the
leasehold created hereby shall be taken upon execution, attachment or any
other process of law, or if Tenant shall be adjudged a bankrupt or
insolvent, or if any receiver or trustee be appointed for Tenant's business
and property, or if Tenant makes any assignment of Tenant's property for
the benefit of creditors, or if Tenant shall file a voluntary petition in
bankruptcy or apply for reorganization or any extension agreement with its
creditors under the Bankruptcy Code or any other law in force or hereafter
enacted and any such execution, attachment order, assignment, or action be
not vacated or set aside within thirty (30) days thereafter, then Landlord
may, if it so elects, upon ten (10) days written notice to Tenant,
terminate this Lease, or Landlord at Landlord's option shall have the right
to pursue such other remedies as may be allowed at law or in equity against
Tenant and any and all other parties who may be liable.
SECTION 15. DEFAULT. If Tenant shall default in the observance of
any of the covenants on its part to be performed hereunder other than the
payment of monies due hereunder, or if Tenant vacates or abandons the
demised premises, or if by operation of law any interest of Tenant shall
pass to another, then Landlord may give written notice to Tenant in the
manner hereafter provided for giving notices, and if Tenant thereafter
fails to cure any such default within ten (10) days after the date on which
such notice was given or as otherwise provided in this Lease, or if the
default involves some act or omission (other than the payment of money)
which cannot be cured within ten (10) days, and the cure thereof is not
undertaken promptly within such period and thereafter expeditiously
completed, then Landlord shall have the right, at its option, to cancel and
terminate this Lease and remove all persons and property therefrom by
summary proceedings and/or Landlord may declare all ascertainable rents and
charges due under this lease to be immediately due and payable, and
thereupon all such rents and fixed charges due to the end of the term or
any renewal term, if applicable, shall be accelerated or Landlord may elect
to take and repossess the demised premises and relet same for Tenant's
account, holding Tenant liable in damages for all expenses incurred by
Landlord in any such reletting and for any difference between the amount of
rents received from such reletting and those due and payable under the
terms of this Lease. Landlord may also pursue such other remedies as may
be allowed by law or in equity, and all
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such rights and remedies, whether expressly stated above or whether
available at law or in equity, shall be deemed separate and cumulative and
no one remedy shall be deemed to be exclusive of any such other remedy.
It is expressly understood and agreed that Tenant shall not be deemed
to have committed a default or breach of any of the provisions of this
lease (other than the payment of monies which are due pursuant to this
Lease), unless written notice of such default shall first have been given
to Tenant and the default shall not have been cured within the period of
time set forth above.
Notwithstanding anything to the contrary herein, it is agreed that
wherever it is provided in this Section that this lease shall automatically
terminate, same shall be deemed and construed to mean that such termination
shall be at the option or election of Landlord only, and that such
termination and cancellation shall not take effect unless Landlord so
elects. In addition to all other rights Landlord may have hereunder or
granted by law, in the event Landlord relets the premises, Landlord may let
the entire premises or portions thereof for such period of time and such
rentals and such use and upon such covenants and conditions as Landlord may
elect, applying the rentals or avails of such letting to the payment of
Landlord's expenses in dispossessing Tenant, the costs and expenses of
making repairs in the demised premises which may be necessary in order to
enable Landlord to relet same, to the payment of any brokerage commissions,
and to other necessary expenses of Landlord incurred in connection with
such reletting, and the balance, if any, shall be applied by the Landlord
on account of the payments due or payable by Tenant hereunder with the
right reserved to Landlord to bring such actions or proceedings for
the recovery of any deficits remaining unpaid as it may deem advisable,
without being obligated to, wait until the end of the term hereof for a
final determination of Tenant's account, and the commencement or
maintenance of any one or more actions shall not bar or preclude subsequent
actions for further accruals pursuant to the provisions of this Section.
Any balance remaining, however, after full payment and liquidation of
Landlord's accounts as aforesaid, shall be paid to Tenant from time to
time, with the right reserved to Landlord at any time to give notice in
writing to Tenant of Landlord's election to cancel and terminate this lease
and all of Tenant's obligations hereunder, and upon the giving of such
notice and the simultaneous payment by Landlord to Tenant of any credit
balances in Tenant's favor that may at the time be owing, it shall
constitute a final and effective cancellation and termination of this lease
and the obligations thereof on the part of either party to the other.
In addition to the rents and other sums agreed to be paid by Tenant
under this lease, Tenant shall pay to Landlord all expenses incurred by
Landlord in enforcing or interpreting its rights hereunder, including,
without limitation, all court costs, all attorney's fees (whether incurred
out of court, at trial, on appeal or in bankruptcy proceedings), and all
collection costs and fees charged by third parties.
SECTION 16. WAIVER. One or more waivers of any covenant or
condition by Landlord shall not be construed as a waiver of a subsequent or
continuing breach of the same covenant or condition and the consent or
approval of Landlord to or of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to waive or render unnecessary
Landlord's consent or approval to or of any subsequent or similar act by
Tenant.
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SECTION 17. ESTOPPEL CERTIFICATE. ATTORNMENT AND SUBORDINATION.
A. Within ten (10) days after the request by Landlord, Tenant shall
deliver to Landlord a written and acknowledged statement certifying that
Tenant has accepted possession of the demised premises, that this Lease is
unmodified and in full force and effect (or if there have been
modifications, that the same are in full force and effect as modified and
stating the modifications), and the dates to which the Base Rent and other
charges or deposits have been paid. It is intended that any such statement
delivered pursuant to this Section may be relied upon by any prospective
purchaser or mortgagee of the realty comprising the center.
B. Upon request of Landlord, Tenant shall, in the event any
proceedings are brought for the foreclosure of or in the event of exercise
of the power of sale under any mortgage executed by Landlord covering the
demised premises, attorn to the purchaser upon any such foreclosure or sale
and recognize such purchaser as Landlord under this Lease.
C. Upon request of Landlord, Tenant covenants that it shall, in
writing, within ten (10) days of its receipt of such request, furnish any
documents required by landlord or its Lender to subordinate Tenant's rights
hereunder to any subsequent ground lease(s) or to the lien of any future
mortgage or mortgages by Landlord, or the lien resulting from any other
method of financing or refinancing, now or hereafter in force against the
land and/or buildings of which the demised premises are a part or against
any buildings hereafter placed upon the land of which the demised premises
are a part or against any buildings hereafter placed upon the land of which
the demised premises are a part, and to all advances made or thereafter to
be made upon the security thereof.
D. Tenant, upon request of any party in interest, shall execute
promptly such instruments or certificates to carry out or confirm its
obligations under Paragraphs A, B and C above. Tenant hereby irrevocably
appoints Landlord as attorney-in-fact for Tenant with full power and
authority to execute and deliver in the name of Tenant such instruments or
certificates.
E. This lease shall not be recorded without the prior written
consent of Landlord. Upon the request of Landlord, Tenant shall execute a
short form of this lease which may be recorded at Landlord's sole
discretion.
SECTION 18. NON-LIABILITY OF LANDLORD. Landlord shall not be
responsible or liable to Tenant for any loss or damage that may be
occasioned by or through the acts or omissions of persons occupying
adjoining premises or any part of the premises adjacent to or connected
with the demised premises hereby leased or any part of the building of
which the demised premises are a part or for any loss or damage resulting
to Tenant or its property from such activities, including, but not being
limited to, bursting, stopped-up or leaking water, gas, air conditioning
pipes and ducts, sewer or steam pipes, unless same is due to the gross
negligence of Landlord or of Landlord's agents, servants or employees.
SECTION 19. SIGNS. Landlord shall place tenant's name as agreed on
glass by main entry door, on changeable copy board, and on door to tenant's
premises.
SECTION 20. COVENANT AGAINST LIENS. Tenant shall have no power or
authority to create any lien or permit any lien to attach
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to Tenant's leasehold or to the estate, reversion or other estate of
Landlord in the premises herein demised or on the building or other
improvements of which the demised premises are a part. All material men,
contractors, artisans, mechanics and laborers and other persons contracting
with Tenant with respect to the demised premises or any part thereof, or
any such party who may avail himself of any lien against the realty
(whether same shall proceed in law or in equity) are hereby charged with
notice that they shall look solely to Tenant to secure payment of any
amounts due for work done or material furnished to Tenant at the demised
premises, or for any other purpose during the term of this lease. Tenant
shall indemnify Landlord against any loss or expenses incurred as a result
of the assertion of any such lien, and Tenant covenants and agrees to
transfer any claimed or asserted lien to a bond or such other security as
may be permitted by law within ten (10) days of the assertion of any such
lien or claim of lien. Failure of Tenant to clear same within the time
aforementioned shall constitute a default under this lease. Tenant shall
advise all persons furnishing designs, labor, materials or service to the
premises in connection with Tenant's improvement thereof of the provisions
of this Section.
SECTION 21. PLATE GLASS. Tenant shall replace at Tenant's sole
expense any and all plate glass damaged or broken from any cause whatsoever
in and about the demised premises, except in case of and to the extent of
damage or breakage due to fire or due to any other casualty against which
Landlord shall be able to collect on its insurance thereon, or except where
such breakage is caused by the act of Landlord or its agents.
SECTION 22. OBSERVANCE OF LAWS AND ORDINANCES. Tenant agrees to
obey, comply with and follow promptly at its expense during the term hereof
all laws, rules, orders, directives, ordinances and regulations of any and
all governmental authorities or agencies and of all municipal departments,
bureaus, boards, and officials having proper jurisdiction as to the Center
or as to Tenant's business due to its use or occupancy of the demised
premises. Tenant, however, shall not be required to make any exterior or
structural repairs unless made necessary by the act or work performed by
Tenant or Tenant's agents and employees, in which event Tenant shall pay
Landlord for the cost of all such structural and exterior repairs at its
sole expense. Such work shall be first approved in writing by Landlord and
Landlord's approval may be conditioned upon the requirement of appropriate
payment and performance bonds. Landlord may also elect to perform such
work on Tenant's behalf and at Tenant's sole expense in order to ensure the
structural and architectural integrity of the Center.
Tenant will not do or suffer to be done, or keep or suffer to be kept,
anything in, upon or about the premises which will violate Landlord's
policies of hazard or liability insurance or which will prevent Landlord
from procuring such policies from companies acceptable to Landlord. If
anything done, omitted to be done or suffered by Tenant to be kept in, upon
or about the premises shall cause the rate of fire or other insurance on
the premises or on other property of Landlord or of others within the
Center to be increased beyond the minimum rate from time to time applicable
to the premises or to any such property for the use or uses made thereof,
Tenant will pay, as additional rental, the amount of any such increases
within ten (10) days after Landlord's demand therefor.
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SECTION 23. DEFINITIONS.
COMMON AREA MAINTENANCE COSTS as used in this section is hereby
defined to mean all costs and expenses of every kind and nature paid or
incurred by Landlord or its designees in connection with the following:
(i) the management, operation, replacement, maintenance,
repair, redecorating, refurbishing, conforming with rules
and regulations of authorities having jurisdiction and the
Fire Insurance Rating Organization and Board of Fire
Underwriters; utilities and other services and all other
costs and expenses of every kind and nature, foreseeable or
unforeseeable, required or desired, suggested or recommended
for the operation, maintenance or otherwise with respect
to the Common Areas in a manner deemed by Landlord in
Landlord's sole discretion, to be appropriate for the best
interest of the Center, as conclusively determined by Landlord
in accordance with Landlord's method of accounting and
allocated to any year on the accrual method of accounting,
including the supply by Landlord of electricity and other
utilities to the Common Areas; reserves for the replacement
of all or any part of the Common Areas (calculated on such
life as Landlord's accountants shall determine); and the
salaries and other compensation of any manager, secretary,
security and any other personnel who implement the aforesaid
management, maintenance, security, operation, replacement,
etc., of the Common Areas and related costs including
worker's compensation insurance and the cost of office space,
supplies, uniforms and equipment;
(ii) the maintenance, repair and replacement (except to the
extent of Landlord's receipt of the proceeds of insurance
therefor) of all portions of the Center, buildings and
improvements and the sprinkler system other than as set
forth in subparagraph (i) above, and other than such
maintenance, repair and replacement as Landlord may perform
at another tenant's expense on the interior of any tenant's
premises; and
(iii) the maintenance of all Insurance (including but not
limited to fire, broad form extended coverage, rent, war risk,
liability, products liability, flood, etc.) carried by and
in the discretion of Landlord or its designees covering the
Center, buildings and improvements, the Common Areas and
every other facility or property used or required or deemed
necessary in connection with any of them.
IMPOSITIONS as used in this section is hereby defined to mean all
impositions, taxes, assessments (special or otherwise), water and sewer
rents and other governmental levies and charges of any and every kind,
nature and sort whatsoever, ordinary and extraordinary, foreseen and
unforeseen, and all substitutes therefor, including all taxes whatsoever
(except any inheritance, estate, succession, transfer or gift tax imposed
upon Landlord or any income tax specifically payable by Landlord as a
separate tax paying entity without regard to Landlord's income source as
arising from or out of the Center), attributable in any manner to the
Center, or the rents receivable therefrom, or any part thereof or any use
thereon or any facility located therein or used in conjunction therewith,
including land intended for future development, or any charge or other
payment required to be paid to any governmental authority, whether or not
any of the foregoing
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shall be a so-called "real estate tax."
COMMON AREAS as used in this section is hereby defined to mean all
portions of the Center, whether owned or ground leased by Landlord or made
available for use by other owners or ground lessors of parcels within the
Center, by lease, easement agreement, or otherwise, which have, at the time
in question been designated and improved for common use by or for the
benefit of more than one (1) occupant of the Center, but excluding all
portions of the Center which are used or designated to be used solely by
one (1) occupant. Any portion of the Center so included within Common
Areas shall be excluded therefrom when designated by Landlord for a
non-common use, and any portion thereof not heretofore included within
Common Areas shall be included when so designated and improved for common
use.
CENTER as used in this section is hereby defined to mean (i) the
parcel(s) of land and improvements as generally depicted on Schedule A,
whether owned in fee or ground leased by Landlord or made available for use
by any reciprocal operating easement agreement (hereinafter referred to as
"ROE Agreement"); and (ii) any other parcel(s) of land, together with the
improvements thereon, and any easement or right of way any time designated
by Landlord to be part of the Center; and (iii) any plant or other
facility, serving any portion of the Center, whether or not such plant or
facility shall be located in the Center or on any other parcel(s) of land,
including the facilities connecting any such plant or facility to the
Center. Schedule "A" sets forth the general layout of the Center but shall
not be deemed a warranty, representation or agreement by Landlord that the
configuration of the Center will be exactly as indicated on Schedule "A"
except as may be otherwise expressly provided herein.
Landlord reserves the right to add to or to sever the ownership of or
title to any portion(s) of the Center at any time.
All of the land and improvements set forth in (i) through (iii) above
shall remain a part of the Center only so long as such designation remains
unrevoked by Landlord or until such time as any portions thereof are taken
by right of eminent domain, whichever shall first occur.
GROSS LEASABLE AREA as used in this section is hereby defined as the
number of square feet of floor space on all floors of premises occupied
exclusively by Tenant (as stated in the first page of this lease) or the
number of square feet of floor space on all floors occupied by all
occupants of the Center measured to the exterior faces of exterior walls
and to the center lines of party walls or to lease lines established by
Landlord, as the context so requires.
SECTION 24. DEFAULT BY LANDLORD. Landlord shall in no event be
charged with default in the performance of any of its obligations
hereunder unless and until Landlord shall have failed to perform such
obligations within thirty (30) days (or within such additional time as is
reasonably required to correct any such default) after notice to Landlord
by Tenant properly specifying wherein Landlord has failed to perform any
such obligations.
SECTION 25. THIS SECTION INTENTIONALLY LEFT BLANK.
SECTION 26. CONSUMER PRICE INDEX ADJUSTMENTS. Where the contents
of this Lease shall require that any amounts due shall be adjusted based on
fluctuations of the purchasing power of the US dollar, then such adjustment
shall be made in accordance with the
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terms of this Section, PROVIDED ALWAYS that, notwithstanding such
adjustment, the minimum amount to be paid by Tenant to Landlord under this
Lease shall not be LESS THAN the specific amounts required to be paid under
this Lease without reflecting such adjustment.
Where such adjustment shall require the application of the Consumer
Price Index, such Index shall mean the Bureau of Labor Statistics Consumer
Price Index revised, under the 1967 average equal to 100 (herein called
"CPI") for the United States, which Index is currently identified as the
"Index of Change in Prices of Goods and Services Purchased by Urban Wage
Earner and Clerical Worker Families to Maintain their Level of Living".)
It is understood that the above Index is now being published monthly by the
Bureau of Labor Statistics of the United States Department of Labor.
Should such Index be published at other intervals so that the monthly
average cannot be determined as contemplated herein, then such standard
shall be arrived at from the Index or Indexes published by the Bureau most
closely approximating the said monthly intervals. Should said Bureau of
Labor Statistics change the manner of computing said Index, and should the
Bureau furnish a conversion factor designed to adjust the new Index to the
one previously in use, then the adjustment to the new Index shall be made
on the basis of such conversion factor. Should the Publication of such
Index be discontinued by said Bureau of Labor Statistics, then such other
Index as may be published by such Bureau most nearly approaching said
discontinued Index shall be used in making the adjustment herein provided.
Should said Bureau discontinue the publication of an Index approximating
the Index herein contemplated, then such Index as may be published by
another United States governmental agency as most nearly approximates the
Index herein first above referred to shall govern and be substituted as the
Index to be used, subject to the application of an appropriate conversion
on the factor to be furnished by said governmental agency. If the
governmental agency will not furnish such conversion factor, then the
parties shall agree upon a conversion factor or a new Index and, in
the event agreement cannot be reached as to such factor or such new Index,
then the parties hereto agree to submit to arbitrators, one chosen by
Tenant, the other by Landlord and a third by the designated arbitrators in
order to choose an Index approximating as nearly as can be the Index
hereinabove first contemplated. The CPI adjustment shall be made by
multiplying the amount(s) specified in this Lease subject to such
adjustment by a fraction, of which the denominator shall be the CPI for the
month in which this Lease shall have been executed, and the numerator of
which is the CPI for the last month of each lease year prior to the first
month of any lease year for which such CPI adjustment shall be required,
Landlord shall submit to Tenant computational schedule reflecting the
adjustment pursuant to this aforementioned formula within fifteen (15) days
after said Index shall be available.
The adjustment so computed shall, subject to the terms of this
Section, be applicable for the entire lease year until the next lease
year's adjustment, if any, and such adjustments which may be in arrears
shall be paid by Tenant to Landlord with the next due date of the payment
due under this Lease requiring such adjustment and for every month
thereafter under this Lease for which such adjustment shall be applicable.
SECTION 27. QUIET ENJOYMENT. Landlord agrees that if Tenant shall
pay the Rent and other charges herein provided, and shall perform all of
the covenants and agreements herein stipulated to be Performed on Tenant's
part, Tenant shall at all times during the term of this lease have. the
peaceable and quiet enjoyment and
12
<PAGE>
possession of the demised premises subject to all the terms of this lease,
without any hindrance from Landlord or any persons lawfully claiming
through Landlord, except as to such portion of the demised premises as
shall be taken under the power of eminent domain.
SECTION 28. HOLDING OVER. If Tenant shall remain in Possession of
all or any part of the demised premises after the expiration of the term of
this lease, then Tenant shall be deemed a Tenant of the demised premises
from month-to-month, cancelable Upon thirty (30) days written notice,
subject to all of the terms and provisions hereof, except only as to the
terms of this lease; Provided, however, that the base rent payable pursuant
to Section 3(A) hereof during such period as Tenant shall continue to hold
the demised premises, or any part thereof, shall be an amount equal to
twice the base rent in effect for the last lease year prior to the
expiration of this lease in addition to all other charges specified in this
lease.
SECTION 29. LIEN UPON TENANT'S PROPERTY. All property, furniture,
furnishings, equipment and fixtures of the Tenant situated upon the
demised premises during the term of this lease shall be and are hereby
bound for the payment of the Base Rent and other charges specified herein
and for the fulfillment of all covenants of this lease, and a lien is
hereby created thereon in favor of Landlord for the full and prompt payment
of such amounts and fulfillment of said covenants. The lien hereby created
shall be in addition to any statutory Landlord's lien.
SECTION 30. SURRENDER OF DEMISED PREMISES. Tenant shall deliver
and surrender to Landlord possession of the demised premises upon
expiration of this lease, or its earlier termination as herein provided,
broom clean, and in as good condition and repair as the same shall be at
the commencement of the term of this lease, or may have been put by
Landlord during the continuance thereof, ordinary wear and tear and damage
by fire or the elements, excepted. Tenant shall, at its expense, remove
all property of Tenant and all alterations, additions, signs and
improvements as to which Landlord shall have made this election
hereinbefore provided, and Tenant shall pay for the repair of all damage to
the demised premises caused by such removal. Any property not so removed
at the expiration of the term hereof and as to which Landlord shall have
not made said election, shall be deemed to have been abandoned by
Tenant and may be retained or disposed of by Landlord, as Landlord shall
desire, and any of the costs therefor charged to Tenant. Tenant's
obligation to observe or perform this covenant shall survive the expiration
or termination of this lease.
SECTION 31. RELATIONSHIP OF PARTIES. Nothing contained in this
lease shall be deemed or construed by the parties hereto or by any third
party to create the relationship of principal and agent or of partnership
or of joint venture or of any association whatsoever between Landlord and
Tenant, it being expressly understood and agreed that neither the
computation of rent nor any other provisions contained in this lease nor
any act or acts of the parties hereto shall be deemed to create any
relationship between Landlord and Tenant other than the relationship of
Landlord and Tenant.
SECTION 32. BROKERAGE. SECTION DELETED
13
<PAGE>
SECTION 33. NOTICES. Any notice, request, demand, approval, consent
or other communication which Landlord or Tenant may be required or
permitted to give to the other party shall be in writing and shall be
mailed to the other party at the address specified on the signature page
hereof, or to the demised premises if such communication is to Tenant, or
to such other address as either party shall have designated by notice to
the other, and the time of the rendition of such shall be when same is
deposited in an official United States Post Office, postage prepaid.
SECTION 34. TITLE OF SECTIONS. The titles of the sections
throughout this lease are for convenience and reference only and the words
contained therein shall in no way be held to explain, modify, amplify or
aid in the interpretation, construction or meaning of the provisions of
this instrument.
SECTION 35. SECURITY DEPOSIT. Tenant, contemporaneously with the
execution of this lease, has deposited with Landlord the sum of Seven
Hundred eighty-seven and 77/100 Dollars ($787.77), receipt of which is
hereby acknowledged by Landlord as security for the full and faithful
performance by Tenant of all the terms, covenants and conditions of this
lease upon Tenant's part to be performed, which sum shall be returned to
tenant after the time fixed as the expiration of the term hereof, provided
Tenant has fully and faith fully carried out all of the terms, covenants
and conditions on Tenant's part to be performed. Landlord shall have the
right, but not the obligation, to apply any part of the deposit to cure any
default of Tenant, and if Landlord does so, Tenant shall, upon demand,
deposit with Landlord the amount so applied so that Landlord shall have the
full deposit on hand at all times during the term of this lease, Tenant's
failure to pay to Landlord a sufficient amount to restore the security to
the original sum deposited within five (5) days after receipt of demand
therefor shall constitute a default under the lease. No interest shall be
paid by Landlord to Tenant on such security deposit. Should Tenant comply
with all of the terms, covenants and conditions of this lease and promptly
pay all of the rental due hereunder as it falls due and all other sums
payable by Tenant to Landlord hereunder, the deposit shall be returned in
full to Tenant at the end of the term of this lease or at the earlier
termination of this lease.
In the event of a sale of the building or a lease of the land on which
it stands (subject to this lease), Landlord shall have the right to
transfer the security to the vendee or lessee and Landlord shall be
considered released by Tenant from liability for the return of such
security and Tenant shall look to the new Landlord or lessee solely for the
return of the security and it is agreed that this shall apply to every
transfer or assignment made of the security to a new Landlord. The
security deposit under this lease shall not be mortgaged, assigned or
encumbered by the Tenant without the written consent of Landlord and may be
commingled with other funds of Landlord.
SECTION 36. BINDING EFFECT. Except as herein otherwise expressly
provided, the terms and provisions hereof shall be binding upon and shall
inure to the benefit of the heirs, executors, administrators, successors
and assigns of Landlord and
14
<PAGE>
the permitted assigns of Tenant. Each term and each provision of this
lease to be performed by Tenant shall be construed to be both an
independent covenant and a condition. The reference contained to
successors and assigns of Tenant is not intended to constitute a consent to
assignment by Landlord, but has reference only to those instances in which
Landlord may have given consent to a particular assignment.
SECTION 37. INVALIDITY OF PARTICULAR PROVISION. If any term or
provision of this lease or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder
of this lease or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each term and provision of
this lease shall be valid and enforced to the fullest extent permitted by
law.
SECTION 38. MORTGAGEE PROTECTION CLAUSE. Tenant agrees that in the
event of any default by Landlord in any of the terms and conditions of this
lease, that Tenant shall notify any mortgagee holding a mortgage on the
Demised Premises (provided any such mortgagee furnishes Tenant notice in
writing of (1) any such mortgagee's lien on the Demised Premises, and (2)
any such mortgagee's address for such notice purposes of any such default
by Landlord, and any such mortgagee shall have a period of thirty (30) days
after receipt of such notice from Tenant to cure any default. When,
however, the nature of the default of Landlord is such that it cannot be
cured within said thirty (30) days, any such mortgagee shall have such
additional time as may be reasonably required to cure any such default,
provided any such mortgagee (1) shall have commenced to cure any such
default within said thirty (30) day period, and (2) shall diligently
continue such steps until such default is cured. No alleged default by
Landlord shall be deemed perfected until the expiration of the time(s)
given to the mortgagee under the provisions of this section.
SECTION 39. PERSONAL LIABILITY "Landlord" means the owner or the
mortgagee in possession for the time being of the fee simple title to the
premises so that in the event of any sale of the premises. Landlord shall
be and hereby is entirely released and discharged from any and all further
liability and obligations of Landlord hereunder except those that may have
theretofore accrued.
Notwithstanding anything to the contrary provided in this lease, if
Landlord or any successor in interest of Landlord, shall be an individual,
joint venture, corporation, tenancy in common, firm or partnership, general
or limited, or if Landlord shall be a mortgagee in possession (for the
purposes of this paragraph collectively referred to as "Landlord"), it is
specifically understood and agreed, such agreement being a primary
consideration for the execution of this lease by Landlord, that there shall
be absolutely no personal liability on the part of the Landlord, its
successors or assigns, with respect to any of the terms, covenants and
conditions of this lease, and that Tenant shall look solely to the equity
of Landlord in the premises for the covenants and conditions of this lease
to be performed by Landlord.
Tenant agrees that it shall look solely to the estate and property of
the Landlord in the land and building comprising the Center of which the
demised premises are a part for the collection of any judgment (or any
other judicial process) requiring the payment of money by Landlord in the
event of any default or breach by Landlord with respect to any of the
terms, covenants and conditions of this Lease to be observed and performed
by Landlord and no other property or estates of Landlord shall be subject
to
15
<PAGE>
levy, execution or other enforcement procedures for the satisfaction
of Tenant's remedies.
SECTION 40. TAX INCREASE. SECTION DELETED
SECTION 41. RADON DISCLOSURE & HAZARDOUS MATERIAL. Radon is a
naturally occurring radioactive gas that, when it has accumulated in a
building in sufficient quantities, may present health risks to persons who
are exposed to it over time. Levels of radon that exceed federal and state
guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county public
health unit. The undersigned Tenant acknowledges having read the foregoing
notification and further acknowledges that they have executed this Lease
fully aware of the aforementioned conditions.
Tenant shall not cause or permit any Hazardous Material (as
hereinafter defined) to be brought upon, kept or used in or about the
Premises or the Shopping Center without the prior written consent of
Landlord, which consent may be granted or withheld in Landlord's sole
discretion. If Landlord should grant its consent, Tenant shall at all
times promptly comply at Tenant's sole cost and expense, if any, with all
federal, state and local laws, ordinances and regulations relating to
generation, manufacture, storage, disposal or transportation of any
Hazardous Material. For the purpose of this Lease, "Hazardous Material"
shall include, but not be limited to, oil, flammable explosives,
polychlorobiphenyls (PCB's"), asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated or
polluting materials, substances or wastes, including without limitation,
all "Hazardous Substances" or similar terms under any federal, state or
local laws, ordinances or regulations. If Tenant breaches the obligations
set forth in this Section, or if the presence of Hazardous Materials
otherwise occurs for which Tenant is legally liable for damage resulting
therefrom, then Tenant shall indemnify, defend at Tenant's expense with
counsel reasonably acceptable to Landlord, and hold Landlord harmless from
any and all claims, judgments, damages, penalties, fines, cost, liabilities
or losses (including without limitation, diminution in value of the Center
or any part thereof, damages for the loss or restriction on use of rentable
or useable space in the Center, sums paid in settlement of claims, and any
attorney's fees, consultant fees and expert fees) which arise during or
after the Lease Term as a result of such contamination. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any
cleanup, remedial, removal or restoration work required by any federal,
state or local governmental agency or political subdivision because of
Hazardous Material present in, on or under the Premises of the Center.
Without limiting the foregoing, if the presence of any Hazardous
Material caused or permitted by Tenant result in any contamination of the
Premises or the Shopping Center, Tenant shall promptly take all actions, at
its sole expense, as are necessary to return the premises and/or Center to
the condition existing prior to the introduction of any such Hazardous
Material; provided that Landlord's approval of such actions shall first
be obtained.
16
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Tenant shall comply with all government and/or accrediting
organizations for permits and/or certifications for the proper and
appropriate use, storage, transport and disposal of medical, infectious,
hazardous and radioactive materials and wastes.
SECTION 42. PAYMENTS BY LANDLORD ON BEHALF OF TENANT. If
Tenant fails to pay any taxes, assessments, or any other payments required
to be paid by Tenant hereunder (other than amounts payable as base rents),
Landlord may, on behalf of Tenant, make any such payment or payments, and
Tenant covenants thereupon to reimburse and pay Landlord any amount so paid
and expended (with interest thereon at the maximum legal contract rate from
the date of the payment so made until paid by Tenant) on the date on which
the next installment of rent shall be payable.
SECTION 43. CONSTRUCTION. This agreement has been executed in the
State of Florida and shall be construed in accordance with the laws
thereof.
SECTION 44. NON-SMOKING FACILITY. Tenant covenants and agrees
that during the term hereof--or any extension or renewal hereof--it, its
employees, its agents, its invitees and/or customers will not utilize
(smoke) any cigarettes, cigars, pipes, or related tobacco products as it is
the intent of the Landlord to create an entire non-smoking facility. To
the extent that some other tenant currently smokes in their premises, it is
because the Landlord has no authority under existing lease to affect that
type situation. Upon expiration of existing lease, the Landlord will
extend the smoking prohibition to those premises also.
The tenant acknowledges that his acceptance of this restriction of
use is a substantial, material inducement for the Landlord to enter into
this agreement.
SECTION 45 ENTIRE AGREEMENT. This Lease and the Schedules attached
hereto and by reference made a part hereof constitute the entire agreement
between the parties hereto and no portion thereof may be altered, modified
or amended in any manner whatsoever unless same shall be in writing and
signed by the parties hereto.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the date first above written.
Signed, sealed and delivered in the presence of:
/s/ Kalyn A Hay SHERWOOD FOREST OF TEMPLE TERRACE, INC.
/S/ Paula Carlton By: /s/ Sherrill M. Tomasino
Landlord
ASSOCIATED GOLF MANAGEMENT, INC.
By: /s/ Eddie Pearce
Tenant
STATE OF FLORIDA )
COUNTY OF HILLSBOROUGH )
I HEREBY CERTIFY that on this date before me, an officer duly
qualified to take acknowledgments, personally appeared Sherrill M.
Tomasino, individually, to me known to be the person described in and who
executed the foregoing guaranty to Lease Agreement and acknowledged before
me that they executed the same.
WITNESS my hand and official seal in the County and State last
aforesaid this 18th day of May, 1999.
/s/ Paula R. Eldon
NOTARY PUBLIC - STATE OF FLORIDA
My Commission Expires: 9/17/02
STATE OF FLORIDA )
COUNTY OF HILLSBOROUGH )
I HEREBY CERTIFY that on this date before me, an officer duly
qualified to take acknowledgments, personally appeared Eddie Pearce,
individually, to me known to be the person described in and who executed
the foregoing guaranty to Lease Agreement and acknowledged before me that
they executed the same.
WITNESS my hand and official seal in the County and State last
aforesaid this 26th day of May, 1999.
/s/ Paula R. Eldon
NOTARY PUBLIC - STATE OF FLORIDA
My Commission Expires: 9/17/02
Mailing Address for Landlord: Mailing Address for Tenant:
Sherwood Forest of Temple Associated Golf Mang., Inc.
Terrace, Inc. 11007 N. 56th Street, Ste. 204
1O935-B N. 56th Street Temple Terrace, FL 33617
Temple Terrace, FL 33617
18
Startup
- ------------------------
To: "Will" <[email protected]>
Subject: Amazon.com: Thank you for your application
Thank you for applying to the Amazon.com Associates Program. Your
application has been temporarily approved. We will contact you by email
after we have visited your Web site and given your application final
approval.
AGREEMENT BETWEEN
ASSOCIATED GOLF MANAGEMENT, INC.
& THE GOLFER'S ADVANTAGE
THIS AGREEMENT is made this 5th day of March, 1999, by and among
ASSOCIATED GOLF MANAGEMENT, INC. (hereafter referred to as "AGMX") and THE
GOLFER'S ADVANTAGE (hereinafter referred to as "TGA").
WHEREAS, AGMX and TGA desire to form a Business Agreement in the State
of Florida:
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto, intending to be bound
hereby, agree as follows:
1. The parties hereby agree to engage in the promotion of TGA
membership and products through AGMX websites.
2. Any property, personal or corporate, purchased by either party
after the date of this agreement shall remain the property of the
purchasing party unless agreed to by the other party in writing.
3. The parties contemplate and understand that AGMX and TGA are
separate and independent corporations. It is the intent of the parties
that AGMX and TGA remain separate and distinct corporations from each
other. As such AGMX and TGA will maintain separate bank accounts for their
respective businesses.
4. Any action taken or statement made by TGA or in representation
of TGA's products shall be solely the decision of TGA, and therefore, TGA
shall be responsible for any grievance negligence action, or any other
action resulting from any work performed by, services provided by,
accounting practices of, or business actions of TGA.
Similarly, any action taken or statement made by AGMX or in
representation of AGMX's services shall be solely the decision of AGMX, and
herefore, AGMX shall be responsible for any grievance, negligence action,
or any other action resulting from any work performed by, services provided
by, accounting practices of, or business actions of AGMX.
5. AGMX shall not hold itself out or make any statements that
would lead any individual, business or entity to believe that the actions
of AGMX are binding upon or lead to any potential liability of TGA.
Similarly, TGA shall not hold itself out or make any statements
that would lead any individual, business or entity to believe that the
actions of TGA are binding upon or lead to any potential liability of AGMX.
1
<PAGE>
6. Pursuant to this Agreement. TGA shall receive the rights to
use all web-sites and links to AGMX and its affiliates to promote TGA
membership and products. Such web-sites can be found on, but are not not
be limited to: Yahoo.com; Amazon.Com.; and Braodcast.com.
7. AGMX and TGA agree to jointly develop, product and market the
products known as "The Wedge System", the "Tucker Short Game Test" and
other future products.
8. TGA shall be solely responsible for warranting all golf-related
products produced by them according to their warranty agreements. TGA
agrees to hold harmless AGMX for any claim against TGA's warranties.
9. AGMX and TGA shall maintain separate accounting for their
individual corporations and there shall be no responsibility of TGA for any
accounting decisions or accounting actions taken by AGMX.
Similarly, there shall be no responsibility of AGMX for any accounting
decisions or accounting actions taken by TGA.
10. TGA agrees to pay AGMX twenty percent (20%); of any gross
revenue generated by TGA membership purchased through AGMX or AGMX
affiliated web-sites. For the purposes of this section, "gross revenues"
shall mean income generated by the sale of memberships to TGA after a two
and a half percent (2-1/2%) processing fee. Gross revenues shall also mean
revenue generated before tax.
11. AGMX agrees to pay TGA twenty percent (20%) of any gross
revenue generated by the purchase of AGMX products by TGA members, TGA non-
members or any other TGA related contact. For the purposes of this
section, "gross revenues" shall mean income generated by the sale of
memberships to TGA after a two and a half percent (2-1/2%) processing fee.
Gross revenues shall also mean revenue generated before tax.
12. If any debts are owed by AGMX either prior to or after the date
of this contract, they shall remain the sole responsibility of AGMX. If
any debts are owed by TGA either prior to or after the date of this
contract, they shall remain the sole responsibility of TGA.
13. This Agreement and Business relationship shall exist commencing
on execution of this Agreement by all parties, and shall continue unless
terminated earlier as hereinafter provided.
14. This Agreement may be terminated at any time by agreement of
the parties, in which event the parties shall proceed with reasonable
promptness to liquidate the profits obtained by virtue of this Agreement.
The assets of the business shall be used and distributed in the following
order: (a) To pay or provide for the payment of all commonly incurred
liabilities and obligations; (b) As income to the parties in accordance
with this Agreement.
15. All controversies arising under or in connection with, or
relating to any alleged breach of, this agreement shall be settled by
arbitration in accordance with the rules then obtaining of the American
Arbitration Association, and judgment upon any aware rendered may
2
<PAGE>
be entered in any court having jurisdiction. This section can be waived by
consent of both parties in writing.
16. This agreement shall be binding upon and inure to the benefit of
the parties hereto solely. This agreement is not assignable to any other
party unless consented thereto in writing by both parties.
17. This agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, negotiations and
understandings of any nature with respect to the subject matter hereto. No
amendment, waiver or discharge of any of the provisions of this agreement
shall be effective against any party unless that party shall have consented
thereto in writing.
18. This agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, AGMX AND TGA have caused this agreement to be duly
executed the day and year set out below.
/s/ Edward Pearce 3/5/99
- --------------------------------- ------------
Edward Pearce, President Date
Associated Golf Management, Inc.
/s/ Edward Robinson 3/5/99
- --------------------------------- -----------
Edward Robinson, President
The Golfer's Advantage
EUROPA LOGO
Mr. Eddie Pearce
President
National Senior Tour
Suite 204
Temple Terrace, Florida 33617-2953
Dear Mr. Pearce
Europa Consultancy is a UK based Management Consultancy working with
clients in UK, Europe, USA, Asia, Japan, Middle East, Former Eastern Block,
India, and beyond.
Europa specializes in:
- - strategy
- - sales and marketing
- - market research
- - advertising and media acquisition
- - public relations
- - innovation and technology
- - human resource and organization development
Under this Letter of Understanding Europa will provide Associated Golf
Management, Inc., the National Senior Tour, and BigGolfStore.com with all
of the above services pertinent to the development and management of an
International Senior Golf Tour. Under the guidance and direction of your
office, Europa will create, design, and implement a program to marketing,
operate, and manage individual tournaments and events. Additionally,
Europa will serve as an international marketing, advertising, and sales
resource for BigGolfStore.com.
Specifically, Europa will attempt to identify 6-8 locations in Europe to
serve as sites for NST events. After identification, Europa will initiate
a formal marketing and sales plan to acquire sponsors and other support.
Europa understands that it will receive a percentage (%) of funds raised as
its compensation. It operational resources are required by NST in the
management of the Tour and local events, then Europa will receive a
separate compensation to be agreed upon.
EUROPA
60 CHURCHHILL SQUARE, KINGS HILL
WEST MALLING, KENT, ME19 4DU ENGLAND
PHONE-+01732-873100 / FAX-+01732-873200 / [email protected]
<PAGE>
EUROPA / ASSOCIATED GOLF MANAGEMENT, INC. PAGE 2
Europa will make available to Associated Golf Management, Inc., the
National Senior Tour, and BigGolfStore.com its offices and other resources.
Europa will serve as the International office and point of contact as
necessary and as dictated by your office.
The above is meant to be a starting point for formal agreements and
arrangements between Europa and your overall organization.
The above is understood and agreed to:
/s/ Eddie Pearce /s/ Pat Patton
EDDIE PEARCE PAT PATTON
ASSOCIATED GOLF MANAGEMENT EUROPA CONSULTANCY LTD.
DATE: 1/1/99 DATE: 1/1/99
EUROPA
60 CHURCHHILL SQUARE, KINGS HILL
WEST MALLING, KENT, ME19 4DU ENGLAND
PHONE-+01732-873100 / FAX-+01732-873200 / [email protected]
ON-SITE
COMPUTER
SOLUTIONS 2116 Hancock Drive
Austin, TX 78756
www.osws.com
----------------------------------------
May 19,1999
National Senior Tour
nationalseniortour.com
Project Definition:
Design national / International presence for the
National Senior Golf Tour exhibiting multiple
Satellite sites for each tournament. The web site
will showcase the tour stops in each city while
providing a venue for E-Commerce merchandising &
marketing.
Need Analysis:
- Graphic development for tour presence / Image
- Production forum for the inclusion of future
tournament stops
- E-Commerce vehicle & shopping cart
Costs:
Graphic Design 50 hours
Production 50 hours
E-Commerce 30 hours
Technical Direction 20 hours
Quality Assurance 15 hours
Account Management 20 hours
$23,475
Approval to proceed
/s/ Eddie Pearce May 20, 1999
---------------- ---------------
Signature Date
All estimates area valid for a period of three months from
client authorization. A 50% down payment is due upon
authorization for production commencement. On-Site Computer
Solutions reserves the right to charge a 5% monthly late-
payment Interest for all dues not collected after 30 days
from billing. On-Site Computer Solutions reserves all
rights to work completed until receipt of payment in full.
If termination of this agreement is ever desired, the client
will be billed for all time incurred up to the date of
termination at a rate of $125 an hour. On-Site computer
solutions must receive written notice of termination.
-------------------------------------------------------
NETWORK SOLUTIONS / WEB SOLUTIONS / MARKETING SOLUTIONS
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF ASSOCIATED GOLF MANAGEMENT, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<PERIOD-END> JUN-30-1999 DEC-31-1998 DEC-31-1997
<CASH> 124,694 402,000 44,810
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<PP&E> 41,120 41,120 41,120
<DEPRECIATION> 23,380 16,448 8,224
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0 0 0
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<TOTAL-LIABILITY-AND-EQUITY> 257,434 426,944 78,077
<SALES> 370,695 698,672 1,504,646
<TOTAL-REVENUES> 370,695 698,672 1,504,646
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<INTEREST-EXPENSE> 0 11,000 0
<INCOME-PRETAX> (253,676) (2,213,876) (3,136,247)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (253,676) (2,213,876) (3,136,247)
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<NET-INCOME> (253,676) (2,213,876) (3,136,247)
<EPS-BASIC> (.03) (.34) (1.29)
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</TABLE>
ASSOCIATED GOLF MANAGEMENT, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC
1999 STOCK OPTION AND INCENTIVE PLAN
PAGE
I. PURPOSE................................................. 1
II. DEFINITIONS............................................. 1
III. EFFECTIVE DATE.......................................... 3
IV. ADMINISTRATION.......................................... 3
V. PARTICIPATION........................................... 4
5.1 Eligibility....................................... 4
5.2 Ten Percent Shareholders.......................... 4
5.3 Stock Ownership................................... 4
5.4 Outstanding Stock................................. 4
VI STOCK SUBJECT TO THE PLAN............................... 5
VII. OPTIONS................................................. 5
7.1 Stock Option Agreements........................... 5
7.2 Number of Shares.................................. 5
7.3 Exercise Price.................................... 5
7.4 Medium and Time of Payment........................ 5
7.5 Term and Transferability of Options............... 5
7.6 Modification, Extension, and Renewal of Options .. 6
7.7 Limitation on Grant of Incentive Stock Options.... 6
7.8 Other Provisions.................................. 6
7.9 Specific Awards Approved by the Shareholders...... 6
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS
AND BENEFICIARIES....................................... 6
8.1 Employee Status................................... 6
8.2 No Employment Contract............................ 6
8.3 No Transferability................................ 6
8.4 Plan Not Funded................................... 7
8.5 Adjustments upon Recapitalizations and
Corporate Changes................................. 7
8.6 Termination of Employment......................... 7
8.7 Death of Participant.............................. 8
8.8 Disability of Participant......................... 8
8.9 Retirement of Participant......................... 8
8.10 Rights as a Stockholder........................... 8
8.11 Deferral of Payments.............................. 8
8.12 Acceleration of Awards............................ 8
i
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IX. MISCELLANEOUS........................................... 9
9.1 Termination, Suspension and Amendment............. 9
9.2 No Fractional Shares.............................. 9
9.3 Tax Withholding................................... 9
9.4 Restrictions of Elections Made by Participants.... 9
9.5 Limitations on the Corporation's Obligations...... 10
9.6 Compliance with Laws.............................. 10
9.7 Governing Law..................................... 10
9.8 Securities Law Requirements....................... 10
9.9 Execution......................................... 11
ii
<PAGE>
ASSOCIATED GOLF MANAGEMENT, INC
1999 STOCK OPTION AND INCENTIVE PLAN
I. PURPOSE
The Plan is intended to provide incentive to key employees and
directors of, and key consultants, vendors, customers, and others expected
to provide significant services to, the Corporation, to encourage
proprietary interest in the Corporation, to encourage such key employees to
remain in the employ of the Corporation and its Subsidiaries, to attract
new employees with outstanding qualifications, and to afford additional
incentive to consultants, vendors, customers, and others to increase their
efforts in providing significant services to the Corporation.
II. DEFINITIONS.
2.1 "Award" shall mean an Option, which may be designated an
Incentive Stock Option or a Nonstatutory Stock Option, in each case as
granted pursuant to the Plan.
2.2 "Award Agreement"' shall mean any written agreement, contract.
or other instrument or document evidencing an Award.
2.3 "Beneficiary" shall mean the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive the
benefits specified under the Plan in the event of a Participant's death.
2.4 "Board" shall mean the Board of Directors of the Corporation.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.6 "Committee" shall mean the committee, if any, appointed by the
Board in accordance with Section 4 of the Plan, or the Board if no
Committee has been appointed.
2.7 "Common Stock"' shall mean the Common Stock, $.001 par value,
of the Corporation.
2.8 "Corporation" shall mean Associated Golf Management, Inc., a
Nevada corporation, and its Subsidiaries.
2.9 "Disability" shall mean the condition of a Participant who is
unable to perform his or her substantial and material job duties due to
injury or sickness or such other condition as the Board or Committee may
determine in its sole discretion and/or engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12 months.
2.10 "Effective Date"' shall mean the date that the Plan was
adopted by the shareholders of the Company.
2.11 "Eligible Employee"' shall mean an individual who is employed
(within the meaning of Code Section 3401 and the regulations thereunder) by
the Corporation. Additionally for purposes of this Plan, a Participant who
is a director or a consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary shall be deemed to
be an Eligible Employee, and service as a director, consultant. vendor,
customer, or other provider of significant services to the
1
<PAGE>
Corporation or a Subsidiary shall be deemed to be employment, except that
no Incentive Stock Option may be granted to a non-employee director or
non-employee consultant, vendor, customer, or other provider of significant
services to the Corporation or a Subsidiary.
2.12 "Event" shall mean any of the following:
(a) Any person or entity (or group of affiliated persons or
entities) acquires in one or more transactions, whether before or after the
effective date of the Plan, ownership of more than 50% of the outstanding
shares of stock entitled to vote in the election of directors of the
Corporation; or
(b) The dissolution or liquidation of the Corporation or a
reorganization, merger or consolidation of the Corporation with one or more
entities, as a result of which the Corporation is not the surviving entity,
or a sale of all or substantially all of the assets of the Corporation as
an entirety to another entity.
For purposes of this definition, ownership does not include
ownership (i) by a person owning such shares merely of record (such as a
member of a securities exchange, a nominee or a securities depository
system), (ii) by a person as a bona fide pledgee of shares prior to a
default and determination to exercise powers as an owner of the shares,
(iii) by a person who is not required to file statements on Schedule 13D by
virtue of Rule l3d-1(b, or (iv) by a person who owns or holds shares as an
underwriter acquired in connection with an underwritten offering pending
and for purposes of resale.
2.13 "Exchange Act" shall mean the Securities Exchange Act of 1934.
as amended from time to time.
2.14 "Exercise Price" shall mean the price per Share of Common
Stock, determined by the Board or the Committee, at which an Award may be
exercised.
2.15 "Fair Market Value" shall mean the value of one Share of
Common Stock, determined as follows:
(i) If the Shares are traded on an exchange, the price
at which Shares traded at the close of business on the date of valuation;
or
(ii) If the Shares are traded over-the-counter on the
NASDAQ System, the closing price if one is available, or the mean between
the bid and asked prices on said System at the close of business on the
date of valuation; or
(iii) If neither (i) nor (ii) above applies, the fair
market value as determined by the Board or the Committee in good faith.
Such
determination shall be conclusive and binding on all persons.
2.16 "Incentive Stock Option" shall mean an option described in
Section 422A(b) of the Code.
2.17 "Nonstatutory Stock Option" shall mean an option not described
in Section 422(b), 422A(b), 423(b) or 424(b) of the Code.
2.18 "Option" shall mean either an Incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to the Plan.
2.19 "Participant" shall mean Eligible Employee who has received an
Award under the Plan.
2
<PAGE>
2.20 "Plan" shall mean the Associated Golf Management, Inc. 1999
Stock Option and Incentive Plan, as it may be amended from time to time.
2.21 "Purchase Price" shall mean the Exercise Price times the
number of Shares with respect to which an Award is exercised.
2.22 "Restricted Stock Awards" shall mean any Award of shares of
Common Stock that may be subject to certain restrictions and to a risk of
forfeiture.
2.23 "Retirement" shall mean the voluntary termination of
employment by an Employee upon the attainment of age 65 and the completion
of not less than 20 years of service with the Corporation or a Subsidiary.
2.24 "Rule l6b" shall mean Rule 16b of the Securities and Exchange
Act of 1934.
2.25 "Share" shall mean one share of Common Stock, adjusted in
accordance with Section 8.5 of the Plan (if applicable).
2.26 "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
2.27 "Stock Appreciation Right" shall mean the right granted to a
Participant to be paid an amount measured by the appreciation in the Fair
Market Value of the Common Stock from the date of grant to the date of
exercise of the right, with payment to be made in cash, Common Stock, or
property as specified in the Award or determined by the Board or the
Committee.
2.28 "Stock Option Agreements" shall mean an Award Agreement
granting Options under the Plan.
2.29 "Stock Purchase Agreement" shall mean an agreement to exercise
Options under the Plan.
2.30 "Subsidiary" shall mean any corporation at least 50% of the
total combined voting power of which is owned by the Corporation or by
another Subsidiary.
2.31 "Tax Date" shall have the meaning set forth in Section 9.3
hereof.
III. EFFECTIVE DATE
The Plan was adopted by the Board January 4, 1999, subject to the approval
by the Corporation's shareholders. The Plan is being submitted for
shareholder approval pursuant to a shareholder's action without a meeting
in which holders of a majority of the shares of Common Stock must approve
of the adoption of the Plan pursuant to the Corporations Bylaws and Nevada
Corporate Law. The effective date of the Plan shall be January 14, 1999
(the "Effective Date"), provided that the Plan receives shareholder
approval.
IV. ADMINISTRATION
The Plan shall be administered by the Board in compliance with Rule
16b-3, or by a Committee appointed by the Board, which Committee shall be
constituted to permit the Plan to comply with Rule 16b-3, and which shall
consist of not less than two members. The Board shall appoint one of the
members of the Committee, if there be one, as Chairman of the Committee. If
a Committee has been appointed, the Committee shall hold meetings at such
times and places as it may determine. Acts of a
3
<PAGE>
majority of the Committee at which a quorum is present, or acts reduced to
or approved in writing by a majority of the members of the Committee, shall
be the valid acts of the Committee. The Board, or the Committee if there be
one, shall from time to time at its discretion select the Eligible
Employees and consultants who are to be granted Awards, determine the
number of Shares to be applicable to such Award, and designate any Options
as Incentive Stock Options or Nonstatutory Stock Options, except that no
Incentive Stock Option may be granted to a non-employee director or a non-
employee consultant. A member of the Board or a Committee member shall in
no event participate in any determination relating to Awards held by or to
be granted to such Board or Committee member; however, a member of the
Board or a Committee member shall be entitled to receive Awards which are
duly approved in accordance with the provisions of Rule 16b-3. The
interpretation and construction by the Board, or by the Committee if there
be one, of any provision of the Plan or of any Award granted thereunder
shall be final. No member of the Board or of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan
or any Award granted thereunder. In addition to any right of
indemnification provided by the Articles of Incorporation or Bylaws of the
Corporation, such person shall be indemnified and held harmless by the
Corporation from any loss, cost, liability or expense that may be imposed
or reasonably incurred by him in connection with any claim, suit, action or
proceeding to which he may be a party by reason of any action or omission
under the Plan.
V. PARTICIPATION
5.1 Eligibility. Subject to the terms and conditions of Section 5.2
below, the Participants shall be such persons as the shareholders may
approve or as the Board or the Committee may select from among the
following classes of persons: (i) Employees of the Corporation or of a
Subsidiary (who nay be officers, whether or not they are directors); and
(ii) Consultants, vendors, customers, and others expected to provide
significant services to the Corporation or a Subsidiary.
For purposes of this Plan, a Participant who is a director or a
consultant, vendor, customer, or other provider of significant services to
the Corporation or a Subsidiary shall be deemed to be an Eligible Employee,
and service as a director, consultant, vendor, customer, or other provider
or significant services to the Corporation or a Subsidiary shall be deemed
to be employment, except that no Incentive Stock Option may be granted to a
nonemployee director or non-employee consultant vendor, customer, or other
provider of significant services to the Corporation or a Subsidiary, and
except that no Nonstatutory Stock Option may be granted to a non-employee
director or non-employee consultant vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary other than upon a
vote of a majority of disinterested directors finding that the value of the
services rendered or to be rendered to the Corporation or a Subsidiary by
such nor-employee director or non-employee consultant, vendor, customer,
or other provider of services is at least equal to the value of the Awards
granted.
5.2 Ten-Percent Shareholders. An Eligible Employee who owns more
than 10% of the total combined voting power of all classes of outstanding
stock of the Corporation, its parent or any of its Subsidiaries shall not
be eligible to receive an Award for an Incentive Stock Option unless (i)
the Exercise Price of the Shares subject to such Award is at least 110% of
the Fair Market Value of such Shares on the date of grant; and (ii) such
Award by its terms is not exercisable after the expiration of 5 years from
the date of grant.
5.3 Stock Ownership. For purposes of Section 5.2 above, in
determining stock ownership an Eligible Employee shall be considered as
owning the stock owned, directly or indirectly, by or for his brothers,
sisters, spouses, ancestors, and lineal descendants. Stock owned, directly
or indirectly, by or for a corporation, partnership, estate, or trust shall
be considered as being owned proportionately by or for its shareholders,
partners, or beneficiaries. Stock with respect to which such Eligible
Employee holds an Award shall not be counted.
4
<PAGE>
5.4 Outstanding Stock. For purposes of Section 5.2 above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant of the Award to the Participant. "Outstanding
stock" shall not include shares authorized for issue under outstanding
Options or Purchase Rights held by the Participant or by any other person.
VI. STOCK SUBJECT TO THE PLAN
The stock subject to Awards granted under the Plan shall be Shares
of the Corporation's authorized but unissued or reacquired Common Stock.
The aggregate number of Shares which may be issued as Awards or upon
exercise of Awards under the Plan shall not exceed 1,500,000 shares. The
number of Shares subject to unexercised Options (plus the number of Shares
previously issued under the Plan) shall not at any time exceed the number
of Shares available for issuance under the Plan. In the event that any
unexercised Option, or any portion thereof, for any reason expires or is
terminated, the unexercised or unvested Shares allocable to such Option may
again be made subject to any Award. Any Shares withheld by the Corporation
pursuant to Section 9.3 shall not be deemed to be issued. The number of
withheld Shares shall be deducted from the applicable Award and shall not
entitle the Participant to receive additional Shares. The limitations
established by this Article VI shall be subject to adjustment in the manner
provided in Section 8.5 hereof upon the occurrence of an event specified
therein.
VII. OPTIONS
7.1 Stock Option Agreements. Options shall be evidenced by written
Stock Option Agreements in such form as the Board or the Committee shall
from time to time determine. Such agreements shall comply with and be
subject to the terms and conditions set forth below.
7.2 Type and Number of Shares. Each Option shall state the type of
Award and the number of Shares to which it pertains and shall provide for
the adjustment thereof in accordance with the provisions of Section 8.5
hereof.
7.3 Exercise Price. Each Option shall state the Exercise Price
thereof. The Exercise Price in the case of any Incentive Stock Option shall
not be less than the Fair Market Value on the date of grant and, in the
case of any Option granted to an Optionee described in Section 5.2 hereof,
shall not be less than 110% of the Fair Market Value on the date of grant.
The Exercise Price in the case of any Nonstatutory Stock Option shall not
be less than 85% of the Fair Market Value on the date of grant.
7.4 Medium and Time of Payment. The Purchase Price shall be payable
in full in United States dollars upon the exercise of the Option; provided.
however, that if the applicable Stock Option Agreement so provides the
Purchase Price may be paid (i) by the surrender of Shares in good form for
transfer, owned by the Participant and having a Fair Market Value on the
date of exercise equal to the Purchase Price, or in any combination of cash
and Shares, as long as the sum of the cash so paid and the Fair Market
Value of the Shares so surrendered equal the Purchase Price, (ii) by
cancellation of indebtedness owed by the Corporation to the Participant,
(iii) with a full recourse promissory note executed by the Participant, or
(iv) any combination of the foregoing. The interest rate and other terms
and conditions of such note shall be determined by the Board of Directors.
The Board of Directors may require that the Participant pledge his or her
shares to the Corporation for the purpose of securing the payment of such
note. In no event shall the stock certificate(s) representing such Shares
be released to the Participant until such note is paid in full.
7.5 Term and Nontransferability of Options. Each Option shall state
the time or times which all or part thereof becomes exercisable. No Option
shall be exercisable after the expiration of five years from the date it
was granted. During the lifetime of the Participant, the Option shall be
5
<PAGE>
exercisable only by the Participant and shall not be assignable or
transferable. In the event of the Participant's death, the Option shall not
be transferable by the Participant other than by will or the laws of
descent and distribution.
7.6 Modification, Extension, and Renewal of Option. Within the
limitations of the Plan, the Board of Directors may modify, extend or renew
outstanding Options or accept the cancellation of outstanding Options (to
the extent not previously exercised) for the granting of new Options in
substitution therefor. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Participant, alter or impair any
rights or obligations under any Option previously granted.
7.7 Limitation on Grant of Incentive Stock Options. In the case of
Incentive Stock Options granted hereunder, the aggregate Fair Market Value
(determined as of the date of the grant thereof) of the Shares with respect
to which Incentive Stock Options become exercisable by any Participant for
the first time during any calendar year (under this Plan and all other
Plans maintained by the Corporation, its parent, or its Subsidiaries) shall
not exceed $100,000. The Board or Committee may, however, with the
Participant's consent authorize an amendment to the Incentive Stock Option
which renders it a Nonstatutory Stock Option.
7.8 Other Provisions. The Stock Option Agreements authorized under
the Plan may contain such other provisions not inconsistent with the terms
of the Plan (including, without limitation, restrictions upon the exercise
of the Option) as the Board of Directors shall deem advisable.
7.9 Specific Awards Approved by the Shareholders. Subject to
shareholder approval and pursuant to the Board of Director's approval
January 4, 1999, the individuals whose names are set forth in Exhibit "A,"
a copy of which is attached hereto and incorporated herein by this
reference, shall be deemed granted Nonstatutory Stock Options as of the
Effective Date, in the amounts and for the exercise price specified by the
Board of Directors, all in accordance with the provisions set forth in this
Article VII of the Plan. The provisions of this Section 7.9 shall not be
amended more than once every six months, other than to comply with changes
in the Internal Revenue Code, the Employee Retirement Income Security Act,
or the rules thereunder, and are intended to be construed in accordance
with the pertaining to "formula awards" under Paragraph (c)(2)(ii) of Rule
16b-3.
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS, AND BENEFICIARIES
8.1 Employee Status. Status as an Eligible Employee shall not be
construed as a commitment that any Award will be made under the Plan to an
Eligible Employee or to Eligible Employees generally.
8.2 No Employment Contract. Nothing contained in the Plan (or in
the Award Agreements or in any other documents related to the Plan or to
Awards) shall confer upon any Eligible Employee or any Participant any
right to continue in the employ of the Corporation or constitute any
contract or agreement of employment, or interfere in any way with the right
of the Corporation to reduce such person's compensation or to terminate the
employment of such Eligible Employee or Participant with or without cause,
but nothing contained in the Plan or any document related thereto shall
affect any other contractual right of any Eligible Employee or Participant.
Nothing contained in the Plan (or in the Award Agreements or in any other
documents related to the Plan or the Awards) shall confer upon any director
of the Corporation any right to continue as a director of the Corporation.
8.3 No Transferability. Awards may be exercised only by, and
amounts payable or shares issuable pursuant to an Award shall be paid only
to or registered only in the name of, the Participant or, in the event of
the Participant's death, to the Participant's Beneficiary or, in the event
of the Participant's Disability, to the Participant's Personal
Representative or, if there is none, to the
6
<PAGE>
Participant. Other than by will or the laws of descent and distribution, no
right or benefit under the Plan or any Award, including, without
limitation, any Option or share of Restricted Stock that has not vested,
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment pledge, encumbrance, or charge and any such attempted action
shall be void and no such right or benefit shall be, in any manner, liable
for, or subject to, debts, contract, liabilities, engagements, or torts of
any Eligible Employee, Participant, or Beneficiary, in any case except as
may otherwise be expressly required by applicable law. The Board or the
Committee shall disregard any attempt at transfer, assignment, or other
alienation prohibited by the preceding sentence and shall pay or deliver
such cash or shares of Common Stock in accordance with the provisions of
the Plan. Notwithstanding the foregoing, the Board or the Committee may
authorize exercise by or transfers or payments to a third party in a
specific case or more generally; provided, however, with respect to any
option or similar right (including any Stock Appreciation Right), such
discretion may only be exercised to the extent that applicable
rules under Section 16 of the Exchange Act would so permit without
disqualifying the Plan from certain benefits thereunder.
8.4 Plan Not Funded. No Participant, Beneficiary. or other person
shall have any right, title, or interest in any fund or in any specific
asset (including shares of Common Stock) of the Corporation by reason of
any Award granted hereunder. There shall be no funding of any benefits
which may become payable hereunder. Neither the provisions of the Plan (or
of any documents related hereto), nor the creation or adoption of the Plan,
nor any action taken pursuant to the provisions of the Plan shall create.
or be construed to create, a trust of any kind or a fiduciary relationship
between the Corporation and any Participant, Beneficiary. or other person.
To the extent that a Participant, a Beneficiary, or other Person acquires a
right to receive an Award hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Corporation. Awards
payable under the Plan shall be paid in shares of Common Stock or from the
general assets or the Corporation, and no special or separate fund or
deposit shall be established and to segregation of assets or shares shall
be made to assure payment of such Awards.
8.5 Adjustment Upon Recapitalizations and Corporate Changes. If the
outstanding shares of Common Stock are changed into or exchanged for cash
or a different number or kind of shares or securities of the Corporation,
or if the outstanding shares of the Common Stock are increased, decreased,
exchanged for, or otherwise changed, or if additional shares or new or
different shares or securities are distributed with respect to the
outstanding shares of the Common Stock, through a reorganization or merger
in which the Corporation is the surviving entity or through a combination,
consolidation, recapitalization, reclassification, stock split, stock
dividend, reverse stock split, stock consolidation, or other capital change
or adjustment, an appropriate adjustment shall be made in the number and
kind of shares of other consideration that is subject to or may be
delivered under the Plan and pursuant to outstanding Awards. A
corresponding adjustment to the consideration payable with respect to
Awards granted prior to any such change and to the price, if any, to be
paid in connection with Restricted Stock Awards shall also be made
as appropriate. Corresponding adjustments shall be made with respect to
Stock Appreciation Rights related to Options to which they are related. In
addition, the Board or the Committee may grant such additional rights in
the foregoing circumstances as the Board or the Committee deems to be in
the best interest of any Participant and the Corporation in order to
preserve for the Participant the benefits of an Award.
8.6 Termination of Employment, Except by Death, Disability, or
Retirement. If a Participant ceases to be an Employee for any reason other
than his or her death, Disability or Retirement, such Participant shall
have the right, subject to the restrictions of Section 8.3 above, to
exercise any Award at any time within three months after termination of
employment, but only to the extent that, at the date of termination of
employment, the Participant's right to exercise such Award had accrued
pursuant to the terms of the applicable agreement and had not previously
been exercised; provided, however, that if the Participant was terminated
for cause (as defined in the applicable agreement). any Award not exercised
in full prior to such termination shall be canceled. For this purpose, the
employment relationship shall be treated as continuing intact while the
Participant is on
7
<PAGE>
military leave, sick leave, or other bora fide leave of absence (to be
determined in the sole discretion of the Board or the Committee). The
foregoing notwithstanding, in the case of an Incentive Stock Option,
employment shall not be deemed to continue beyond the 90th day after the
Participant's reemployment rights are guaranteed by statute or by contract.
8.7 Death of Participant. If a Participant dies while an Employee,
or after ceasing to be an Employee but during the period while he or she
could have exercised the Award under this Section 8.7, and has not fully
exercised the Award, then the Award may be exercised in full at any time
within 12 months after the Participant's death (but not later than the date
of termination fixed in the applicable agreement), by the executors or
administrators of his or her estate or by any person or persons who have
acquired the Award directly from the Participant by bequest or inheritance,
but only to the extent that, at the date of death, the Participant's right
to exercise such Award had accrued and had not been forfeited pursuant to
the terms of the applicable agreement and had not previously been
exercised.
8.8 Disability of Participant. If a Participant ceases to be an
Employee by reason of disability. such Participant shall have the right to
exercise the Award at any time within 12 months after termination of
employment (but not later than the termination date fixed in the applicable
Agreement), but only to the extent that, at the date of termination of
employment, the Participant's right to exercise such Award had accrued
pursuant to the terms of the applicable Award Agreement and had not
previously been exercised.
8.9 Retirement of Participant. If a Participant ceases to be an
Employee by reason of Retirement, such Participant shall have the right to
exercise the Award at any time within three months after termination of
employment (but not later than the termination date fixed in the applicable
Award Agreement), but only to the extent that, at the date of termination
of employment, the Participant's right to exercise such Award had accrued
pursuant to the terms of the applicable Award Agreement and had not
previously been exercised.
8.10 Rights as a Stockholder. A Participant, or a transferee of a
Participant, shall have ro rights as a stockholder with respect to any
Shares covered by his or her Award until the date of the issuance of a
stock certificate for such Shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities, or other
property), distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as provided in Section
8.5 hereof.
8.11 Deferral of Payments. The Board or the Committee may approve
the deferral of any payments that may become due under the Plan. Such
deferrals shall be subject to any conditions, restrictions, or requirements
as the Board or the Committee may determine.
8.12 Acceleration of Awards. Immediately prior to the
occurrence of an Event, (i) each Option and Stock Appreciation Right under
the Plan shall become exercisable in full; (ii) Restricted Stock delivered
under the Plan shall immediately vest free of restrictions; and (iii) each
other Award outstanding under the Plan shall be fully vested or
exercisable, unless, prior to the Event, the Board or the Committee
otherwise determines that there shall be no such acceleration or vesting of
an Award or otherwise determines those Awards which shall be accelerated
or vested and to the extent to which they shall be accelerated or vested,
or that an Award shall terminate, or unless in connection with such Event
the Board provides (A) for the assumption of such Awards theretofore
granted; or (B) for the substitution for such Awards of new awards covering
securities or obligations (or any combination thereof) of a successor
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to number and kind of shares and prices; or (C) for the
payment of the fair market value of the then outstanding Awards. In
addition, the Board or the Committee may grant such additional rights in
the foregoing circumstances as the Board or the Committee deems to be in
the best interest of the Participant and the Corporation in order to
preserve for the Participant the benefits of an Award. For purposes of
this Section 8.12 only, Board shall mean the Board of Directors of the
Corporation as
8
<PAGE>
constituted immediately prior to the Event. In addition, the Board may in
its sole discretion accelerate the exercisability or vesting of any or all
Awards outstanding under the Plan in circumstances under which the Board or
the Committee determines such acceleration appropriate.
IX. MISCELLANEOUS
9.1 Termination, Suspension, and Amendment. The Board or the
Committee may, at any time, suspend, amend, modify, or terminate the Plan
(or any part thereof) and may, with the consent of a Participant, authorize
such modifications of the terms and conditions of such Participant's Award
as it shall deem advisable; provided that, except as permitted under the
provisions of Section 8.5 hereof, no amendment or modification of the Plan
may be adopted without approval by a majority of the outstanding shares of
Common Stock pursuant to a shareholder's action taken without a meeting or
by a majority of the shares of the 0-urn' Stock represented (in person or
by proxy) at a meeting of stockholders at which a quorum is present and
entitled to vote thereat, if such amendment or modification would:
(i) materially increase the benefits accruing to Participants
under the Plan or materially increase the aggregate number of shares which
may be delivered pursuant to Awards granted under the Plan if such action
would require of the Company's shareholders pursuant to Rule 16b-3 under
the Exchange Act or any successor provision; or
(ii) materially modify the requirements of eligibility for
participation in the Plan.
Neither adaption of the Plan nor the provisions hereof shall limit the
authority of the Board to adopt other Plans or to authorize other payments
of compensation and benefits under applicable law. No Awards under the
Plan may be granted or amended during any suspension of the Plan or after
its termination. The amendment, suspension or termination of the Plan
shall not without the consent of the Participant, alter or impair any
rights or obligations pertaining to any Awards granted under the Plan prior
to such amendment, suspension, or termination.
9.2 No Fractional Shares. No Award or installment thereof shall be
exercisable except in respect of whole shares, and fractional share
interests shall be disregarded.
9.3 Tax Withholding. As required by law, federal. state, or local
taxes that are subject to the withholding of tax at the source shall be
withheld by the Corporation as necessary to satisfy such requirements. The
Corporation is entitled to require deduction from other compensation
payable to each Participant or, in the alternative: (i) the Corporation may
require the Participant to advance such sums; or (ii if a Participant
elects, the Corporation may withhold (or require the return of) Shares
having the Fair Market Value equal to the sums required to be withheld. If
the Participant elects to advance such sums directly, written notice of
that election shall be delivered prior to such exercise and, whether
pursuant to such election or pursuant to a requirement imposed by the
Corporation, payment in cash or by check of such sums for taxes shall be
delivered within 10 days after the exercise date. If the Participant
elects to have the Corporation withhold Shares (or be entitled to the
return of Shares) having a Fair Market Value equal to the suns required to
be withheld, the value of the Shares to be withheld (or returned) will be
equal to the Fair Market Value on the date the amount of tax to be withheld
(or subject to return) is to be determined (the "Tax Date").
9.4 Restrictions on Elections Made by Participants. Elections by
Participants to have Shares withheld (or subject to return) for this
purpose will be subject to the following restrictions: (1) the election
must be made prior to the Tax Date; (ii) the election must be irrevocable;
(iii) the election will be subject to the Board's disapproval; and (iv) if
the Participant is an "officer" within the meaning of Section 16 of the
Exchange Act, the election shall be subject to such additional restrictions
as
9
<PAGE>
the Board or the Committee may impose in an effort to secure the benefits
of any regulations thereunder.
9.5 Limitations on the Corporation's obligations. The Corporation
shall not be obligated to issue shares and/or distribute cash to the
Participant upon any Award exercise until such payment has been received or
Shares have been withheld, unless withholding (or offset against a cash
payment) as of or prior to the exercise date is sufficient to cover all
such sums due or which may be due with respect to such exercise. In
addition, the Board or the Committee may grant to a Participant a cash
bonus in any amount required by federal, state, or local tax law to be
withheld with respect to an Award.
9.6 Compliance with Laws. The Plan, the granting of Awards under
the Plan, the Stock Option Agreements and Stock Purchase Agreements and the
delivery of Options, Shares, and Awards (and/or the payment of money or
Common Stock) pursuant thereto and the extension of any loans hereunder are
subject to such additional requirements as the Board or the Committee may
impose to assure or facilitate compliance with all applicable federal and
state laws, rules and regulations (including, without limitation,
securities laws and margin requirements) and to such approvals by any
regulatory or governmental agency which may be necessary or advisable in
connection therewith. In connection with the administration of the Plan or
the grant of any Award, the Board or the Committee may impose such further
limitations or conditions as in its opinion may be required or advisable to
satisfy, or secure the benefits of, applicable regulatory requirements
(including those rules promulgated under Section 16 of the Exchange Act or
those rules that facilitate exemption from or compliance with the
Securities Act or the Exchange Act), the requirements of any stock exchange
upon which such shares or shares of the same class are then listed, and any
blue sky or other securities laws applicable to such shares.
9.7 Governing Laws. The Plan and all Awards granted under the Plan
and the documents evidencing Awards shall be governed by, and construed in
accordance with, the laws of the State of Nevada as the Corporation's
principle place of business.
9.8 Securities Law Requirements.
(a) Legality of Issuance. The issuance of any Shares upon the
exercise of any Option and the grant of any Option shall be contingent upon
the following:
(i) the Corporation and the Participant shall have
taken all actions required to register the Shares under the Securities Act
of 1933, as amended (the "Securities Act"), and to qualify the Option and
the Shares under any and all applicable state securities or "blue sky" laws
or regulations, or to perfect an exemption from the respective registration
and qualification requirements thereof;
(ii) any applicable listing requirement of any stock
exchange on which the Common Stock is listed shall have been satisfied; and
(iii) any other applicable provision of state or
Federal law shall have been satisfied.
(b) Restrictions on Transfer. Regardless of whether the
offering and sale of Shares under the Plan has been registered under the
Securities Act or has been registered or qualified under the securities
laws of any state, the Corporation may impose restrictions on the sale,
pledge, or other transfer of such Shares (including the placement of
appropriate legends on stock certificates) if, in the judgment of the
Corporation and its counsel, such restrictions are necessary or desirable
in order to achieve compliance with the provisions of the Securities Act,
the securities laws of any state, or any other law. In the event that the
sale of Shares under the Plan is not registered under the Securities Act
10
<PAGE>
but an exemption is available which required an investment representation
or other representation, each Participant shall be required to represent
that such Shares are being acquired for investment, and not with a view to
the sale or distribution thereof, and to make such other representations as
are deemed necessary or appropriate by the Corporation and its counsel.
Any determination by the Corporation and its counsel in connection with any
of the matters set forth in this Section 9.6(b) shall be conclusive and
binding on all persons. Stock certificates evidencing Shares acquired
under the Plan pursuant to an unregistered transaction shall bear the
following restrictive legend and such other restrictive legends as are
required or deemed advisable under the provisions of any applicable law:
THESE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
AND HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS FROM SUCH
REGISTRATION REQUIREMENTS. THESE SHARES OR ANY INTEREST
HEREIN MAY NOT, BE OFFERED. SOLD OR TRANSFERRED UNLESS
REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.
(c) Registration or Qualification of Securities. The
Corporation may, but shall not be obligated to register or qualify the
issuance of Awards and/or the sale of Shares under the Securities Act or
any other applicable law. The Corporation shall not be obligated to take
any affirmative action in order to cause the issuance of Awards or the sale
of Shares under the Plan to comply with any law.
(d) Exchange of Certificates. If, in the opinion of the
Corporation and its COUNSEL, any legend placed on a stock certificate
representing shares issued under the Plan is no longer required, the holder
of such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of Shares but lacking such legend.
9.9 Execution. To record the adoption of the Plan in the form set
forth above by the Board effective as of March 24, 1999, the Corporation
has caused this Plan to be executed in the name and on behalf of the
Corporation where provided below by an officer of the Corporation thereunto
duly authorized.
ASSOCIATE GOLF MANAGEMENT, INC.
By: /s/ Eddie Pearce
---------------------------
Eddie Pearce, President
ATTEST:
/s/ Steve DeCesare
- ----------------------------
Steve DeCesare, Secretary
11
<PAGE>
EXHIBIT "A"
ASSOCIATED GOLF MANAGEMENT, INC
1999 STOCK OPTION AND INCENTIVE PLAN
SCHEDULE OF NONSTATUTORY STOCK OPTION AWARDS
POSITION WITH NUMBER OF EXERCISE
NAME THE COMPANY SHARES PRICE
---- ------------- --------- --------
Eddie Pearce President/director 150,000 Close 1/14/99
Steve DeCesare Treasurer/director 150,000 Close 1/14/99
All Nonstatutory Stock Options granted as set forth in the above schedule
vest on the effective date of grant.
EXHIBIT "A"-1
TO: MR. EDDIE PEARCE
NATIONAL SENIOR TOUR
FROM: PAT PATTON
SUBJECT: DIRECTOR OF MARKETING
MEMO OF UNDERSTANDING
NUMBER OF PAGES, INCLUDING COVER: 3
-------------------------------------------------------- 01/01/99
As per our telephone conversations, this document will serve as a memo of
understanding regarding the position of Director of Marketing for the
National Senior Tour (Tour). Furthermore, it is with sincere appreciation
and excitement that I accept the position and responsibilities of this
vital role.
Under your guidance and direction I will serve the National Senior Tour as
the Director of Marketing. I understand that this role will be both
domestic and International in scope, but will be initially targeting 12 +
professional golfing events in the US market during 1999. Previous Tour
locations and new venues will be selected for the 1999 series. I will
remain flexible regarding responsibilities and will be available to serve
the Tour in the most beneficial manner possible. It is understood and
agreed to that responsibilities will include the following:
Provide sponsorship development for all events (local)
Provide sponsorship development for the Tour (national)
Provide sponsorship development for the Tour (international)
Provide training and orientation for all events
Coordinate advertising and media placement - international
Coordinate public relations - international
Coordinate marketing and advertising research - international
Coordinate overall sales efforts - international
Coordinate all contractual agreements as related to marketing
Create, design, and implement International Marketing Plans
NATIONAL SENIOR TOUR
2112 BALTUSROL DR.
AUSTIN, TEXAS 78747-1202 USA
PHONE - + (512)472-1095 / FAX - + (512)2824838 / E-MAIL - [email protected]
<PAGE>
Memo of Understanding
Unlimited Ltd. will serve as the international Marketing, Marketing
Research, Advertising, Media, Public Relations, and E-commerce agency of
record for Associated Golf Management, Inc. The National Senior Tour, The
International Senior Tour, biggolfstore.com, and other entities as so
designated.
As part of the overall responsibilities, I fully understand that the most
critical aspect will be the raising of funding for each tournament event.
It Is also my understanding that I will have the full support of the Tour,
Tour staff, facilities, and previous relationships to accomplish our goals
on an event by event basis. A target of $75,000 net in sponsorships per
event must be raised, and it is understood that the Tour may opt to cancel
an event if the $75,000 net amount in sponsorships is not obtained. For
clarification, it is understood that this $75,000 includes sponsorships,
daily ticket sales, advertising, and other Incomes with the exception of
entry fees.
The following compensation program for the Director of Marketing position
will be in effect with the date of this memo:
Direct expense reimbursement under your guidance and approval
20% of all income generated per event, to include but not be
limited to:
- All sponsorship sales and marketing
- Contractual revenues generated
- Daily ticket sales to tournament and events
No money will be paid if tournament is cancelled
Bonus Incentives - (per event)
- $150,000 net revenues raised after 20% commission -
(Total = $187,500 before commissions paid)
- $5,000 paid directly to the Director of Marketing
- 5,000 shares of stock in Associated Golf
NATIONAL SENIOR TOUR
2112 BALTUSROL DR.
AUSTIN, TEXAS 78747-1202 USA
PHONE - + (512)472-1095 / FAX - + (512)2824838 / E-MAIL - [email protected]
<PAGE>
Management, Inc. to be issued to the Director of
Marketing before the end of the calendar year of
that event
- $100,000 net revenues raised after 20% commission -
(Total = $125,000 before commissions paid)
- $2,000 paid directly to the Director of Marketing
All expense reimbursement and commission compensations will be paid
within 10 working days after submission to Tour offices.
The above listed details are intended to be the foundation for additional
information and verifications as necessary to ensure the success of the
Tour. Additions, addendums, and clarifications will be added with the
approval of all parties.
Memo of Understanding
The aforementioned responsibilities, compensations, and clarifications are
understood and agreed to:
/s/ Eddie Pearce /s/ Pat Patton
- ---------------------- -------------------
Eddie Pearce Pat Patton
Commissioner Director of Marketing
National Senior Tour National Senior Tour
01/01/99 01/01/99
- -------- --------
Date Date
NATIONAL SENIOR TOUR
2112 BALTUSROL DR.
AUSTIN, TEXAS 78747-1202 USA
PHONE - + (512)472-1095 / FAX - + (512)2824838 / E-MAIL - [email protected]
This agreement is made this 24th day of June, 1998, by and between Fairway
Sports Inc., a corporation organized and existing under the laws of the
state of Florida ("Florida") and Merilyn A. Richards and Allen J. Richards.
Therefore:
1. Fairway Sports Inc. and Merilyn and Allen agree that Fairway Sports
Inc. will receive $200,000 dollars for 90 days.
2. Fairway Sports Inc. will pay an annual percentage rate of 10.5%.
3. Merilyn and Allan will receive 4% interest in ownership of Lexington
Oaks Golf Club which is located in Pasco County on Highway 54.
4. Fairway Sports Inc. also agrees to pay Merilyn and Allen any
additional increase for income tax due to this transaction, all income tax
penalties, and any stock sales charges due to this transaction.
5. For consideration of the $200,000 dollars Fairway Sports Inc. agrees
to issue 5000 shares of stock to Merilyn and Allen.
In witness whereof, the proper officers of Fairway Sports Inc. and Merilyn
Richards and Allen Richards have executed this agreement under seal on this
day and year first written above.
Fairway Sports Inc.
1111 N. Westshore Blvd.
Tampa, Florida 33607
By /s/ Eddie Pearce Witnessth /s/ Tom Taggart
- -------------------------- ---------------
Eddie Pearce, President Tom Taggart
1-800-877-3977
By /s/ Merilyn A. Richards Witnessth /s/ Tom Taggart
- --------------------------- ---------------
Merilyn A. Richards Tom Taggart
By /s/ Allen J. Richards Witnessth /s/ Tom Taggart
- --------------------------- ---------------
Allen J. Richards Tom Taggart
