SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Cruise America, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
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<PAGE>
[CRUISE AMERICA LOGO]
- --------------------------------------------------------------------------------
CRUISE AMERICA, INC. 11 West Hampton Avenue
Mesa, Arizona 85210
Office of the Chairman
August 21, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Cruise America, Inc., on October 16, 1997, at 9:00 a.m., at the Company's
headquarters at 11 West Hampton Avenue, Mesa, Arizona. Only shareholders of
record at the close of business on August 19, 1997 will be entitled to vote at
the meeting or any adjournments thereof.
The meeting will be held for the following purposes: (i) to vote on the
election of the Board of Directors; (ii) to consider and vote upon a proposal
to approve and ratify the Incentive Compensation Plan, as set forth in Appendix
A to the accompanying Proxy Statement; and (iii) to ratify the appointment of
our independent auditors.
The Notice of the Annual Meeting and Proxy Statement, which you are urged
to give your prompt attention, follows this page. As an owner of Cruise
America, Inc. stock, your vote is important. The recommendations of your Board
of Directors are provided for your assistance and guidance. The Directors have
devoted considerable thought to the matters to be brought before the meeting,
and we feel that such recommendations are in the best interest of Cruise
America, Inc. and its shareholders.
Your Board of Directors joins me in urging you to sign and mail the
enclosed proxy card in the postpaid envelope provided, regardless of whether
you plan to attend the meeting. Your prompt response will also help us avoid
the expense of writing to you again.
If you find that you will be attending the meeting after mailing your
signed proxy, you may, of course, revoke your proxy at the meeting and cast
your vote in person.
Thank you for your cooperation.
Sincerely yours,
/s/ ROBERT A. SMALLEY
------------------------
ROBERT A. SMALLEY
<PAGE>
[CRUISE AMERICA LOGO]
CRUISE AMERICA, INC.
11 West Hampton Avenue
Mesa, Arizona 85210
(602) 464-7300
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 16, 1997
To the Shareholders of
Cruise America, Inc.
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Cruise America, Inc., a Florida corporation (the
"Corporation"), will be held on October 16, 1997, at 9:00 a.m., at the
Corporation's headquarters at 11 West Hampton Avenue, Mesa, Arizona, for the
following purposes:
(1) To elect six (6) persons to the Corporation's Board of Directors, to
hold office until the next annual meeting of shareholders and until
their respective successors are duly elected and qualified.
(2) To consider and vote upon a proposal to approve and ratify the
Incentive Compensation Plan, as set forth in Appendix A hereto.
(3) To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of the Corporation for the 1998 fiscal year.
Only shareholders of record at the close of business on August 19, 1997
will be entitled to vote in person or by proxy at the Annual Meeting or any
adjournments thereof.
CRUISE AMERICA, INC.
By Order of the Board of
Directors
/S/ ERIC R. BENSEN
----------------------------------
ERIC R. BENSEN, Secretary
August 21, 1997
WE URGE YOU TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE, REGARDLESS OF WHETHER YOU EXPECT TO ATTEND THE ANNUAL MEETING IN
PERSON. IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY AND
VOTE IN PERSON IF YOU SO DESIRE.
<PAGE>
CRUISE AMERICA, INC.
11 West Hampton Avenue
Mesa, Arizona 85210
(602) 464-7300
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 16, 1997
Solicitation--Revocation of Proxy
This Proxy Statement is furnished in connection with the solication by the
Board of Directors of CRUISE AMERICA, INC., a Florida corporation (the
"Corporation"), of proxies to be voted at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held October 16, 1997 and at any adjournments
thereof. Shares represented by proxies that are properly executed and returned
to the Board of Directors shall be voted in favor of the election of the
Directors nominated herein and in favor of each proposal described herein,
unless a contrary specification is made on such proxy. If a shareholder giving
a proxy specifies a choice with respect to any matter to be acted upon, the
proxy will be voted in accordance with said specifications. Any shareholder
giving a proxy may revoke it by notice to the proxy holder or the Corporation
at any time prior to the voting thereof. The Corporation's Annual Report to
Shareholders for the fiscal year ended April 30, 1997 accompanies this Proxy
Statement, but does not form a part hereof. This Proxy Statement and the
accompanying proxy are being distributed to shareholders beginning on or about
August 21, 1997.
Voting Securities
Only holders of Common Stock of record at the close of business on August
19, 1997, the record date fixed by the Board of Directors for determining the
shareholders entitled to notice of, and to vote at, the Annual Meeting, will be
entitled to vote at the Annual Meeting or at any adjournments thereof. As of
June 30, 1997 there were 5,753,200 shares of Common Stock outstanding. Each
share of Common Stock entitles the holder to one vote on all matters brought
before the Annual Meeting, and the shares of Common Stock have no cumulative
voting rights. The quorum necessary to conduct business at the Annual Meeting
consists of a majority of the outstanding shares of Common Stock. To be
elected, nominees for Director must receive a plurality of the votes cast by
holders of shares of Common Stock present or represented at the Annual Meeting.
The approval of the Incentive Compensation Plan and the ratification of the
appointment of KPMG Peat Marwick LLP as independent auditors will also require
the affirmative vote of a plurality of votes cast by the shares of Common Stock
present or represented at the Annual Meeting. Abstentions are considered as
shares present and entitled to vote for purposes of determining the presence of
a quorum and for purposes of determining the outcome of any matter submitted to
the shareholders for a vote, but are not counted as votes "for" or "against"
any matter. The Corporation will treat shares referred to as "broker or nominee
non-votes" (shares held by brokers or nominees as to which instructions have
not been received from the beneficial owners or persons entitled to vote and
the broker or nominee does not have discretionary voting power on a particular
matter) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the outcome
of any matter as to which the proxies reflect broker or nominee
1
<PAGE>
non-votes, shares represented by such proxies will be treated as not present
and not entitled to vote on that subject matter and therefore would not be
considered by the Corporation when counting votes cast on the matter (even
though those shares are considered entitled to vote for quorum purposes and may
be entitled to vote on other matters). If less than a majority of the
outstanding shares of Common Stock are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual Meeting without
further notice.
The following table sets forth, as of June 30, 1997, the beneficial
ownership of the Corporation's Common Stock by (i) each person known to the
Corporation to be the beneficial owner of more than 5% of the outstanding
shares of Common Stock, (ii) each of the named executive officers (defined
below) and (iii) all Directors and executive officers of the Corporation as a
group. Except as indicated below, (i) the address of each beneficial owner set
forth below is c/o the Corporation, 11 West Hampton Avenue, Mesa, Arizona
85210, and (ii) each person has sole dispositive and voting power with respect
to the shares of Common Stock indicated.
<TABLE>
<CAPTION>
Number of Shares Percent
Name and Address of Common Stock of Class
- ---------------- ---------------- --------
<S> <C> <C>
Robert A. Smalley(1)(2)(4)(5)(8) ........................................ 946,184 16.2%
Randall S. Smalley(1)(2)(4)(5)(8) ....................................... 363,984 6.2%
Robert A. Smalley, Jr.(1)(2)(3)(4)(5)(8) ................................ 344,956 5.9%
Sally Smalley DiLucente(1)(2)(4) ........................................ 317,085 5.5%
Eric R. Bensen(5) ....................................................... 77,220 1.3%
Interstate Properties(6) ................................................ 765,600 13.2%
Gruber & McBaine Capital Management, Inc.(7) ............................ 498,700 8.7%
First Wilshire Securities Management, Inc.(9) ........................... 363,330 6.3%
Dimensional Fund Advisors, Inc.(10) ..................................... 292,200 5.1%
All Executive Officers and Directors as a group (six persons,............
including four persons named above)(1)(2)(3)(5) ........................ 1,793,916 29.3%
- ---------
</TABLE>
(1) Includes 40,782, 12,477, 7,400 and 7,871 shares held by the spouses of
Robert A. Smalley, Randall S. Smalley, Robert A. Smalley, Jr. and Sally
Smalley DiLucente, respectively.
(2) Does not include 42,786 shares held as co-trustee for the grandchildren of
Robert A. Smalley.
(3) Includes 10,000 shares held in trust for the children of Randall S.
Smalley.
(4) Robert A. Smalley is the father of Robert A. Smalley, Jr., Randall S.
Smalley and Sally Smalley DiLucente. The beneficial ownership of shares of
Common Stock of each of these persons and the trusts they control does not
include the shares of Common Stock beneficially owned by the others.
(5) Includes immediately exercisable options to purchase 80,000 shares of
common stock for each of Robert A. Smalley, Robert A. Smalley, Jr.,
Randall S. Smalley and 76,100 shares for Eric R. Bensen and 376,100 for
all executive officers and directors as a group.
(6) Information taken from the Form 4 dated February 23, 1994 of Interstate
Properties, a New Jersey partnership and Russell B. Wight, Jr. and the
Form 4 of Steven Roth dated February 24, 1994. The Form 4 list shared
voting and dispositive power of 501,500 shares and sole voting and
dispositive
2
<PAGE>
power of 225,100 shares held by Mr. Wight. In addition, Steven Roth, a
general partner of Interstate, owns 39,000, which are included in the table
above. The address of Interstate Properties is Glenpoint Centre West, 500
Frank W. Burr Boulevard, Teaneck, New Jersey 07666.
(7) Information taken from the Schedule 13D dated June 6, 1996 of Gruber &
McBaine Capital Management, Inc. a California corporation, Jon D. Gruber,
J. Patterson McBaine, Laqunitas Partners, L.P., a California limited
partnership, GMJ Investments, L.P., a California limited partnership,
Gruber McBaine Capital Management International and Thomas O. Lloyd-Butler
(collectively, the "Reporting Persons"). The Schedule 13D lists sole
voting and dispositive power of 107,000 shares and shared voting and
dispositive power of 391,700 shares. The address of Gruber & McBaine
Capital Management, Inc. is 50 Osgood Place, San Francisco, California
94113.
(8) Includes 2,600, 13,900 and 20,400 shares held in trust for the
children/grandchildren of Robert A. Smalley, Randall S. Smalley and Robert
A. Smalley, Jr., respectively.
(9) Information taken from the Schedule 13G dated July 8, 1997 of First
Wilshire Securities Management, Inc. The Schedule 13G lists sole voting
and dispositive power of 42,830 shares and shared dispositive power of
320,500 shares. The address of First Wilshire Securities Management, Inc.
is 600 South Lake St., Suite 100, Pasadena, California 91106-3955.
(10) Information taken from the Schedule 13G dated February 5, 1997 of
Dimensional Fund Advisors, Inc., a Delaware Corporation. The Schedule 13G
lists sole voting power of 210,400 shares and sole dispositive power of
292,200 shares. The address of Dimensional Fund Advisors, Inc. is 1299
Ocean Drive, 11th Floor, Santa Monica, California 94113.
3
<PAGE>
Election of Directors
Six Directors are to be elected to hold office until the next Annual
Meeting or until their respective successors are duly elected and qualified.
Unless a proxy specifies that it is not to be voted for a Director, the shares
covered by the proxy will be voted for the nominees listed below. In the event
any nominee shall decline or be unable to serve, it is intended that the
proxies will be voted for a nominee designated by the Board of Directors. The
Board of Directors knows of no reason to anticipate that this will occur. The
following table sets forth as of June 30, 1997 certain information concerning
the nominees for Director, all of whom are presently serving as Directors:
<TABLE>
<CAPTION>
Shares of
Served as Common Stock
Director Beneficially Principal Occupation
Name and Age Since Owned (%) for the Past 5 Years
------------ ----- --------- --------------------
<S> <C> <C> <C>
Robert A. Smalley, 73(1) ........ 1972 946,184 (16.2) Chairman of the Board of the Corpora-
tion. President and Chief Executive
Officer from 1972 to March 1992.
Formerly President and Director,
Hertz Corporation.
Randall S. Smalley, 47(1) ....... 1972 368,984 (6.2) President and Chief Executive Officer
of the Corporation since March 1992.
Vice President--Rental Division and
Secretary from 1972 to March 1992.
Robert A. Smalley, Jr., 48(1) ... 1972 344,956 (5.9) Executive Vice President, Chief Operat-
ing Officer and Assistant Secretary of
the Corporation since March 1992.
Vice President--Sales Division from
1972 to March 1992.
Eric R. Bensen, 42(1) ........... 1989 77,220 (1.3) Chief Financial Officer and Secretary of
the Corporation since March 1992.
Vice President--Finance and Assis-
tant Secretary from 1984 to March
1992. Formerly with the accounting
firm of KPMG Peat Marwick.
Fred A. Mudgett, 76(2) .......... 1983 30,526 * Consultant to the car rental industry.
Previously, President of Fred A.
Mudgett and Associates, Inc. (consult-
ing firm), and Group Vice President,
Hertz Corporation.
Dr. Edward R. Annis, 84(2) ...... 1983 31,046 * Physician, Spokesman for the medical
profession and served as president of
the American Medical Association,
World Medical Association, and Inter-
national College of Surgeons.
</TABLE>
- ---------
* Less than one percent
(1) See Footnotes 1, 2, 3, 4, 5 and 8 to the table set forth under the caption
"Voting Securities" above.
(2) Includes immediately exercisable options to purchase 30,000 shares of
common stock held by each of Fred A. Mudgett and Dr. Edward R. Annis.
4
<PAGE>
Committees and Meetings of the Board of Directors
The Board of Directors has established standing Audit and Finance,
Compensation, Executive and Nominating Committees. The Directors who served
upon and the functions performed by the various committees during fiscal 1997
were as follows:
Messrs. Randall S. Smalley, Fred A. Mudgett and Dr. Edward R. Annis served
as members of the Audit and Finance Committee. The Audit and Finance Committee
(a) meets with the independent public accountants to review the plan and
results of the audit including review of the management letter; (b) reviews and
approves nonaudit services of the independent public accountants; (c)
recommends to the Board of Directors the engagement of independent auditors for
the next fiscal year; (d) meets with financial executives of the Corporation to
review accounting and financial policies; (e) reviews the application of new
accounting rules; and (f) reviews various other matters, such as the adequacy
of internal controls.
Messrs. Robert A. Smalley, Robert A. Smalley, Jr., Fred A. Mudgett and Dr.
Edward R. Annis served as members of the Compensation Committee. The
Compensation Committee has been designated to administer the Corporation's 1987
Stock Option Plan, and also reviews, examines and makes recommendations to the
Board of Directors regarding (a) compensation of senior officers of the
Corporation and certain of its subsidiaries; (b) salary ranges, incentive
programs, guidelines for merit and promotional increases for the Corporation
and its subsidiaries; (c) insurance and other fringe benefits; and (d)
management proposals regarding any of the foregoing areas.
Messrs. Robert A. Smalley, Robert A. Smalley, Jr., Randall S. Smalley and
Eric R. Bensen served as members of the Executive Committee. The Executive
Committee has been established to act when the full Board of Directors is
unavailable.
Messrs. Robert A. Smalley, Robert A. Smalley, Jr., and Randall S. Smalley
served as members of the Nominating Committee. The Nominating Committee (a)
recommends candidates to fill any vacancies or increase in the Board of
Directors or Executive Committee; (b) makes recommendations with respect to the
composition of the management slate of Directors to be proposed to the
shareholders at the Annual Meeting; (c) annually recommends to the Board of
Directors candidates to serve on the Executive Committee and candidates to be
designated Chairman and Vice Chairman of the Executive Committee; and (d)
reviews shareholder suggestions of nominees and makes recommendations to the
Board of Directors regarding these suggestions.
The Board of Directors met four times during fiscal 1997. During fiscal
1997, the Audit and Finance, Compensation and Nominating Committees held the
following number of formal meetings: Audit and Finance, four; Compensation,
four; and Nominating, one. Each Director attended 75% or more of the fiscal
1997 Board and Committee meetings held during the period that they served.
The Corporation's Directors who are not officers of the Corporation
receive a payment of $2,500 per meeting plus reasonable expenses for attendance
at Directors' meetings.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation for the past three fiscal
years of the Chief Executive Officer and the Corporation's other executive
officers whose total annual salary and bonus exceeded $100,000 (the "named
executive officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term
---------------------------------------- Compensation
Fiscal Other Annual Option
Name and Principal Position Year Salary Bonus Compensation(1) Awards(#)
- ---------------------------------------- -------- ---------- ------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Robert A. Smalley 1997 $118,801 -- 20,000
Chairman of the Board 1996 108,810 -- --
1995 105,726 -- --
Randall S. Smalley 1997 263,313 -- 20,000
President and Chief Executive Officer 1996 233,847 -- --
1995 227,220 -- --
Robert A. Smalley, Jr. 1997 248,730 -- 20,000
Executive Vice President and 1996 233,847 -- --
Chief Operating Officer 1995 227,220 -- --
Eric R. Bensen 1997 179,394 -- 20,000
Chief Financial Officer 1996 165,089 -- --
1995 160,497 -- --
</TABLE>
- ---------
(1) The Corporation has concluded that the amount of personal benefits
furnished to the named executive officers do not meet the disclosure
thresholds established under SEC regulations. Accordingly, none of such
personal benefits is included in this table.
Compensation Committee Report on Executive Compensation
The objectives of the Corporation's compensation program are to enhance
the profitability of the Corporation, and thus shareholder value, by aligning
compensation with business goals and performance and attracting, retaining and
rewarding executive officers who contribute to the long-term success of the
Corporation. In furtherance of these goals, the Corporation's compensation
program for executive officers includes base salary, an annual bonus and stock
option awards.
Base Compensation: The salaries paid to the named executive officers
during the fiscal year 1997 were determined pursuant to their respective
employment agreements, which were entered into in 1989 and amended in October
1994. See "Employment Agreements." The Corporation's approach to base
compensation is to offer competitive salaries in comparison to market practices
for positions involving similar responsibility and experience. Increases in
base compensation are based on the competence and performance of the
Corporation's executives and takes into account the performance of the
Corporation.
Bonus Compensation: The Corporation has a policy of paying discretionary
bonuses to executive officers based on performance of the individual and
performance of the Corporation. A balance is made
6
<PAGE>
between overall corporate performance and performance of the specific areas of
the Corporation under an executive's direct control. This balance supports the
accomplishment of overall objectives and rewards individual contributions.
During the fiscal year ended April 30, 1997, no bonuses were paid.
Stock Option Program: The objective of stock option awards is to motivate
grantees to maximize long-term growth and profitability of the Corporation.
Grantees can recognize value from options granted only if the Corporation's
stock price increases after the date on which such options are granted, since
the exercise price of options granted must at least equal the fair market value
of the Corporation's stock on the date of grant. The award of options thus
aligns the long-range interests of the grantees with those of shareholders.
Grants of options to the Corporation's executive officers and other key
employees are made pursuant to the 1987 Stock Option Plan. Grants of options
are generally considered annually. The number of options granted to a
participant is generally based on such person's level of responsibility and
contributions to the Corporation's performance. The Compensation Committee
approves the size and conditions of grants to the executive officers of the
Corporation. On October 15, 1996, options to purchase 20,000 shares of Common
Stock were issued to each of the named executive officers at an exercise price
of $5.50, the market value of the Company's Stock on the sale of issuance.
Compensation Committee
Robert A. Smalley
Robert A. Smalley Jr.
Fred A. Mudgett
Dr. Edward R. Annis
Employment Agreements
In October 1994, the Company amended the employment agreements of each of
Robert A. Smalley, Robert A. Smalley, Jr., Randall S. Smalley and Eric R.
Bensen. The term of each of the employment agreements currently expires on
April 30, 2000 and will automatically be extended for additional one-year
periods unless the Corporation or the executive gives written notice to the
other at least 90 days prior to the date two years prior to the then scheduled
expiration date. Pursuant to such employment agreements, Messrs. Robert A.
Smalley, Robert A. Smalley, Jr., Randall S. Smalley and Eric R. Bensen will
receive during fiscal 1998 annual salaries of $125,000, $260,000, $285,000, and
$190,000, respectively, plus such bonuses or increases as the Board of
Directors may determine. Each employment agreement generally provides that (i)
if the executive's employment is terminated by the Corporation for any reason
other than death, Disability (as defined) or Cause (as defined), or by the
executive for Good Reason (generally defined as the diminution of the
executive's duties or other breach by the Corporation of the agreement), the
executive will receive, in addition to any base salary, bonus and other
compensation accrued through the date of termination, a lump sum equal to the
product of the executive's then-existing base salary and most recent annual
bonus times a fraction, the numerator of which is the number of days remaining
until the then scheduled expiration date and the denominator of which is 365,
and (ii) if the executive's employment is terminated as a result of his
Disability, the executive will receive in monthly installments for a period of
one year 50% of his base salary in effect on the date of termination. Each
employment agreement also prohibits the executive from directly or indirectly
competing with the Corporation during the term of the agreement and for a
period of one year after termination of his employment, other than a
termination by the executive for Good Reason or a termination by the
Corporation without Cause.
7
<PAGE>
The employment agreements also provide for the executive's continued
employment for a period of three years following a Change in Control (as
defined) of the Corporation, and that, following a Change in Control, if the
executive's employment is terminated by the Corporation for any reason other
than death, Disability or Cause, or by the executive for Good Reason, the
executive will receive, in addition to the base salary, bonus and other
compensation accrued through the date of termination, a lump sum cash payment
equal to three times the executive's then-existing base salary and most recent
annual bonus. All of the Corporation's payments to the executives will be
reduced to the extent necessary to avoid the payments being nondeductible
pursuant to Section 280G of the Internal Revenue Code.
Redemption Agreement
During 1984, the Corporation entered into a redemption agreement with
Robert A. Smalley, the Corporation's Chairman, which provides that upon his
death and at the request of his personal representative, the Corporation will
purchase up to $1,000,000 of Common Stock of the Corporation from his estate at
the average bid price for the 60-day period prior to his death. The Corporation
has funded its obligation by purchasing a term insurance policy on the life of
Robert A. Smalley in the amount of $1,000,000. The policy premium has been paid
for by the Corporation and the related expenses incurred during the year ended
April 30, 1997 were approximately $40,000.
Option Grants During Fiscal Year
The following table sets forth certain information concerning grants of
stock options made during the year ended April 30, 1997 to the named executive
officers.
<TABLE>
<CAPTION>
Individual Option Grants in Fiscal 1997
--------------------------------------------------------
Potential Realizable
% of Total Value at
Options Assumed Annual
Number of Granted to Exercise Rates of
Options Employees in Price Expiration Appreciation
Name Granted(1) Fiscal 1997 Per Share Date For Option Term
- -------------------------- ----------- -------------- ----------- ------------ ---------------------
5% 10%
--------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Smalley ........ 20,000 25% $5.50 10/15/06 $69,200 $175,400
Randall S. Smalley ....... 20,000 25% $5.50 10/15/06 $69,200 $175,400
Robert A. Smalley, Jr. ... 20,000 25% $5.50 10/15/06 $69,200 $175,400
Eric R. Bensen ........... 20,000 25% $5.50 10/15/06 $69,200 $175,400
</TABLE>
- ---------
(1) Each stock option is a non-qualified stock option granted pursuant to the
Corporation's 1987 Stock Option Plan, has an exercise price equal to the
market price of a share of Common Stock on the date of grant and vested
50% immediately upon grant and 50% on May 1, 1997.
8
<PAGE>
Aggregate Options Exercised and Fiscal Year-End Option Values
The following table sets forth certain information concerning options
exercised by the named executive officers during the year ended April 30, 1997
and unexercised stock options held by the named executive officers as of April
30, 1997.
<TABLE>
<CAPTION>
Number of
Unexercised Value of Unexercised
Shares Options at 1997 In-the-Money Options at
Acquired Fiscal Year-End 1997 Fiscal Year-End(1)
on Value Exercisable (E) Exerciseable (E)
Name Exercise Realized Unexercisable (U) Unexercisable (U)
- ---- -------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
Randall S. Smalley ............ -- -- 70,000 (E) $ 105,000 (E)
10,000 (U) $ -- (U)
Randall S. Smalley ............ -- -- 70,000 (E) $ 105,000 (E)
10,000 (U) $ -- (U)
Robert A. Smalley, Jr. ...... -- -- 70,000 (E) $ 105,000 (E)
-- -- 10,000 (U) $ -- (U)
Eric R. Bensen ............... 3,900 $10,938 66,100 (E) $ 98,175 (E)
10,000 (U) $ -- (U)
</TABLE>
- ---------
(1) Based on the closing price of the Common Stock on April 30, 1997, which was
$4.75.
Compensation Committee Interlocks and Insider Participation
During fiscal 1997, the Compensation Committee was comprised of Robert A.
Smalley, Robert A. Smalley, Jr., Fred A. Mudgett and Dr. Edward R. Annis.
Messrs. Robert A. Smalley and Robert A. Smalley, Jr. were also executive
officers of the Corporation during fiscal 1997. Messrs. Robert A. Smalley and
Robert A. Smalley, Jr. participated in Compensation Committee deliberations
concerning executive officer compensation, other than deliberations directly
related to their own compensation.
9
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the Corporation's cumulative total
shareholder return on Common Stock with (i) the cumulative total return of the
Russell 2000 Index and (ii) the cumulative total return of five companies
involved in Recreational vehicle manufacturing or sales (the "Peer Group") over
the period from May 1, 1992 to April 30, 1997. The companies in the Peer Group
are Coachmen Industries, Inc., Holiday RV Superstores, Inc., Rexhall
Industries, Inc., Thor Industries, Inc. and Winnebago Industries, Inc., The
graph assumes an initial investment of $100 and reinvestment of dividends.
4/92 4/93 4/94 4/95 4/96 4/97
---- ---- ---- ---- ---- ----
Cruise America, Inc. 100 91 63 76 121 84
Peer Group 100 141 200 174 190 192
Russell 2000 100 116 133 143 189 190
10
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PROPOSAL TO APPROVE AND RATIFY THE INCENTIVE COMPENSATION PLAN
Background and Purpose. In June 1997, the Board of Directors approved and
adopted the Incentive Compensation Plan (the "Plan") and recommended that it be
submitted to the Company's shareholders for their approval at the Annual
Meeting. The terms of the Plan provide for grants of stock options, stock
appreciation rights ("SARs"), restricted stock, deferred stock, other
stock-related awards and performance awards that may be settled in cash, stock
or other property (collectively, the "Awards"). The Plan is intended to
supersede the Corporation's 1987 Stock Option Plan (the "1987 Plan"), which
will be terminated upon approval of the Plan. The purpose of the Plan is to
advance the interests of the Corporation by providing additional incentive in
attracting, motivating and retaining qualified executives and other employees,
officers, directors and independent contractors (collectively, the
"Participants") by enabling Participants to acquire or increase a proprietary
interest in the Corporation in order to strengthen the mutuality of interests
between Participants and the Corporation's shareholders, and providing
Participants with annual and long term performance incentives to expend their
maximum efforts in the creation of shareholder value.
Approval of the Plan by the Corporation's shareholders is one way to
provide an exemption from the "short-swing profit" recovery provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with respect to certain transactions involving officers and directors of
the Corporation under the Plan. The Plan is being presented to the shareholders
for approval to comply with the rules of the American Stock Exchange and
Section 162(m) of the Internal Revenue Code ("Section 162(m)"), and to give the
present shareholders the opportunity to vote on the Plan.
The following is a summary of certain principal features of the Plan. This
summary is qualified in its entirety by reference to the complete text of the
Plan, which is attached to this Proxy Statement as Appendix A. Shareholders are
urged to read the actual text of the Plan in its entirety.
Administration. The Plan is required to administered by a committee
designated by the Board of Directors consisting of at least two directors (the
"Committee"), each of whom, to the extent required by law, must be a
"disinterested person" as defined under Rule 16b-3 under the Exchange Act and
an "outside director" for purposes of Section 162(m). The Compensation
Committee of the Board of Directors has been appointed as the Committee for the
Plan. Subject to the terms of the Plan, the Committee is authorized to select
eligible persons to receive Awards, determine the type and number of Awards to
be granted and the number of shares of Common Stock to which Awards will
relate, specify times at which Awards will be exercisable or settleable
(including performance conditions that may be required as a condition thereof),
set other terms and conditions of Awards, prescribe forms of Award agreements,
interpret and specify rules and regulations relating to the Plan, and make all
other decisions and determinations as the Committee may deem necessary or
advisable for the administration of the Plan.
Shares Available for Awards; Limitations and Adjustments. Under the Plan,
the total number of shares of Common Stock that may be subject to the granting
of Awards will be equal to: (i) 500,000 shares, plus (ii) the number of shares
with respect to Awards previously granted under the Plan that terminate without
being exercised or expire, are forfeited or canceled, and the number of shares
of Common Stock that are surrendered in payment of any Awards or any tax
withholding requirements. The Plan also imposes individual limitations on the
amount of certain Awards in part to comply with Section 162(m). Under these
limitations, during any fiscal year the number of options, shares of restricted
stock or other stock-based Awards granted to any one Participant may not exceed
100,000 for each type of Award. The Committee is authorized to adjust the
limitations described above and to adjust outstanding Awards (including the
exercise prices of options and other affected terms of Awards) in the event
that a dividend
11
<PAGE>
or other distribution (whether in cash, shares of Common Stock or other
property), recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange or other
similar corporate transaction or event affects the Common Stock so that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants. The Committee is also authorized to adjust performance
conditions and other terms of Awards in response to these kinds of events or in
response to changes in applicable laws, regulations or accounting principles.
Eligibility. The persons eligible to receive Awards under the Plan are the
officers, directors, employees and independent contractors of the Corporation
and any subsidiary. Only employees of the Corporation will be eligible to
receive Awards of incentive stock options, and no independent contractor will
be eligible to receive any Awards other than stock options. An employee on
leave of absence may be considered as still in the employ of the Corporation or
a subsidiary for purposes of eligibility for participation in the Plan. As of
July 31, 1997, all full-time employees (approximately 360 persons) were
eligible to participate in the Plan.
Stock Options and SARs. The Committee is authorized to grant stock
options, including both incentive stock options ("ISOs"), which can result in
potentially favorable tax treatment to the Participant, and non-qualified stock
options, and SARs entitling the Participant to receive the amount by which the
fair market value of a share of Common Stock on the date of exercise (or
defined "change in control price" following a change in control) exceeds the
grant price of the SAR. The exercise price per share subject to an option and
the grant price of an SAR are determined by the Committee, but must not be less
than the fair market value of a share of Common Stock on the date of grant,
except to the extent of in-the-money awards or cash obligations surrendered by
the Participant at the time of grant. For purposes of the Plan, the term "fair
market value" means the fair market value of Common Stock, Awards or other
property as determined by the Committee or under procedures established by the
Committee. Unless otherwise determined by the Committee, the fair market value
of Common Stock as of any given date shall be the closing sales price per share
of the Common Stock as reported on the principal stock exchange or market on
which the Common Stock is traded on the date as of which such value is
determined or, if there is no sale on that date, then on the last previous day
on which a sale is reported. The maximum term of each option or SAR, the times
at which each option or SAR will be exercisable, and provisions requiring
forfeiture of unexercised options or SARs at or following termination of
employment generally are fixed by the Committee, except that no option or SAR
may have a term exceeding ten years. Options may be exercised by payment of the
exercise price in cash, shares, outstanding Awards or other property having a
fair market value equal to the exercise price, as the Committee may determine
from time to time. Methods of exercise and settlement and other terms of the
SARs are determined by the Committee. SARs granted under the Plan may include
"limited SARs" exercisable for a stated period of time following a change in
control of the Company, as discussed below.
Restricted and Deferred Stock. The Committee is authorized to grant
restricted stock and deferred stock. Restricted stock is a grant of shares of
Common Stock which may not be sold or disposed of, and which may be forfeited
in the event of certain terminations of employment, prior to the end of a
restricted period specified by the Committee. A Participant granted restricted
stock generally has all of the rights of a shareholder of the Company, unless
otherwise determined by the Committee. An Award of deferred stock confers upon
a Participant the right to receive shares of Common Stock at the end of a
specified deferral period, subject to possible forfeiture of the Award in the
event of certain terminations of employment prior to the end of a specified
restricted period. Prior to settlement, an Award of deferred stock carries no
voting or dividend rights or other rights associated with share ownership,
although dividend equivalents may be granted, as discussed below.
12
<PAGE>
Dividend Equivalents. The Committee is authorized to grant dividend
equivalents conferring on Participants the right to receive, currently or on a
deferred basis, cash, shares of Common Stock, other Awards or other property
equal in value to dividends paid on a specific number of shares of Com-mon
Stock, or other periodic payments. Dividend equivalents may be granted alone or
in connection with another Award, may be paid currently or on a deferred basis
and, if deferred, may be deemed to have been reinvested in additional shares of
Common Stock, Awards or otherwise as specified by the Committee.
Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is
authorized to grant shares of Common Stock as a bonus free of restrictions, or
to grant shares of Common Stock or other Awards in lieu of Company obligations
to pay cash under the Plan or other plans or compensatory arrangements, subject
to such terms as the Committee may specify.
Other Stock-Based Awards. The Committee is authorized to grant Awards that
are denominated or payable in, valued by reference to, or otherwise based on or
related to shares of Common Stock. Such Awards might include convertible or
exchangeable debt securities, other rights convertible or exchangeable into
shares of Common Stock, purchase rights for shares of Common Stock, Awards with
value and payment contingent upon performance of the Corporation or any other
factors designated by the Committee, and Awards valued by reference to the book
value of shares of Common Stock or the value of securities of or the
performance of specified subsidiaries or business units. The Committee
determines the terms and conditions of such Awards.
Performance Awards and Annual Incentive Awards. The right of a Participant
to exercise or receive a grant or settlement of an Award, and the timing
thereof, may be subject to such performance conditions (including subjective
individual goals) as may be specified by the Committee. Performance Awards
granted to persons whom the Committee expects will, for the year in which a
deduction arises, be "covered employees" (as defined below) will, if and to the
extent intended by the Committee, be subject to provisions that should qualify
such Awards as "performance-based compensation" not subject to the limitation
on tax deductibility by the Company under Section 162(m). For purposes of
Section 162(m), the term "covered employee" means the Company's chief executive
officer and each other person whose compensation is required to be disclosed in
the Company's filings with the SEC by reason of that person being among the
four highest compensated officers of the Company as of the end of a taxable
year. Subject to the requirements of the Plan, the Committee will determine
performance Award terms, including the required levels of performance with
respect to specified business criteria, the corresponding amounts payable upon
achievement of such levels of performance, termination and forfeiture
provisions and the form of settlement.
Other Terms of Awards. Awards may be settled in the form of cash, shares
of Common Stock, other Awards or other property, in the discretion of the
Committee. The Committee may require or permit Participants to defer the
settlement of all or part of an Award in accordance with such terms and
conditions as the Committee may establish, including payment or crediting of
interest or dividend equivalents on deferred amounts, and the crediting of
earnings, gains and losses based on deemed investment of deferred amounts in
specified investment vehicles. The Committee is authorized to place cash,
shares of Common Stock or other property in trusts or make other arrangements
to provide for payment of the Corporation's obligations under the Plan. The
Committee may condition any payment relating to an Award on the withholding of
taxes and may provide that a portion of any shares of Common Stock or other
property to be distributed will be withheld (or previously acquired shares of
Common Stock or other property be surrendered by the Participant) to satisfy
withholding and other tax obligations. Awards granted under the Plan generally
may not be pledged or otherwise encumbered and are not transferable
13
<PAGE>
except by will or by the laws of descent and distribution, or to a designated
beneficiary upon the Participant's death, except that the Committee may, in its
discretion, permit transfers for estate planning or other purposes subject to
any applicable restrictions under Rule 16b-3.
Awards under the Plan are generally granted without a requirement that the
Participant pay consideration in the form of cash or property for the grant (as
distinguished from the exercise), except to the extent required by law. The
Committee may, however, grant Awards in exchange for other Awards under the
Plan, awards under other Corporation plans, or other rights to payment from the
Company, and may grant Awards in addition to and in tandem with such other
Awards, rights or other awards.
Acceleration of Vesting; Change in Control. The Committee may, in its
discretion, accelerate the exercisability, the lapsing of restrictions or the
expiration of deferral or vesting periods of any Award, and such accelerated
exercisability, lapse, expiration and vesting shall occur automatically in the
case of a "change in control" of the Corporation, as defined in the Plan
(including the cash settlement of SARs and "limited SARs" which may be
exercisable in the event of a change in control). In addition, the Committee
may provide in an Award agreement that the performance goals relating to any
performance based Award will be deemed to have been met upon the occurrence of
any "change in control." Upon the occurrence of a change in control, stock
options and limited SARs (and other SARs which so provide) may be cashed out
based on a defined "change in control price," which will be the higher of (i)
the cash and fair market value of property that is the highest price per share
paid (including extraordinary dividends) in any reorganization, merger,
consolidation, liquidation, dissolution or sale of substantially all assets of
the Corporation, or (ii) the highest fair market value per share (generally
based on market prices) at any time during the 60 days before and 60 days after
a change in control. For purposes of the Plan, the term "change in control"
generally means (a) any of the transactions referenced in clause (i) of the
previous sentence, (b) an acquisition by any person, entity or group of 25% or
more of the outstanding Common Stock or 25% or more of the voting power of the
Corporation's outstanding voting securities, or (c) a change in the composition
of the Board such that the persons constituting the current Board, and
subsequent directors approved by the current Board (or approved by such
subsequent directors), cease to constitute at least a majority of the Board.
Amendment and Termination. The Board of Directors may amend, alter,
suspend, discontinue or terminate the Plan or the Committee's authority to
grant Awards without further shareholder approval, except stockholder approval
must be obtained for any amendment or alteration that is material or if such
approval is required by law or regulation or under the rules of any stock
exchange or quotation system on which shares of Common Stock are then listed or
quoted. Thus, shareholder approval may not necessarily be required for every
amendment to the Plan which might increase the cost of the Plan or alter the
eligibility of persons to receive Awards. Shareholder approval will not be
deemed to be required under laws or regulations, such as those relating to
ISOs, that condition favorable treatment of Participants on such approval,
although the Board may, in its discretion, seek stockholder approval in any
circumstance in which it deems such approval advisable. Unless earlier
terminated by the Board, the Plan will terminate at such time as no shares of
Common Stock remain available for issuance under the Plan and the Company has
no further rights or obligations with respect to outstanding Awards under the
Plan.
Securities Act Registration. The Corporation intends to register the
shares of Common Stock available for Awards under the Plan pursuant to a
Registration Statement on Form S-8 filed with the SEC.
Federal Income Tax Consequences of Awards of Options. The following is a
brief description of the federal income tax consequences generally arising with
respect to Awards of options under the Plan.
The grant of an option gives rise to no tax consequences for the
Participant or the Corporation. The exercise of an option has different tax
consequences depending on whether the option is an ISO or a
14
<PAGE>
non-qualified option. On exercising an ISO, the Participant recognizes no
income for regular income tax purposes, but the option spread is taken into
account in computing liability for the alternative minimum tax. On exercising a
non-qualified option, the Participant recognizes ordinary income equal to the
excess, on the date of exercise, of the fair market value of the Common Stock
acquired on exercise of the option and the exercise price. If, however, the
Participant is an officer or director of the Corporation or any other person to
whom the short-swing profit recovery provisions of Section 16(b) of the
Exchange Act applies, the Participant generally will not recognize ordinary
income, and the amount of ordinary income will not be determined until the
earlier of the expiration of the six month period after exercise of the option
and the first day on which a sale at a profit of the shares of Common Stock
acquired on exercise of the option would not subject the Participant to suit
under those provisions. Such a Participant, however, may elect to recognize
ordinary income on the date of exercise of the option.
The disposition of shares of Common Stock acquired on exercise of an
option may have different tax consequences depending on whether the option is
an ISO or a non-qualified option. On a disposition of shares of Common Stock
acquired on exercise of an ISO before the Participant has held those shares for
at least two years from the date the option was granted and at least one year
from the date the option was exercised (the "ISO holding periods"), the
Participant recognizes ordinary income equal to the lesser of (i) the excess of
the fair market value of the shares on the date of exercise of the ISO over the
exercise price and (ii) the excess of the amount realized on the disposition of
those shares over the exercise price. On a disposition of shares of Common
Stock acquired on the exercise of a non-qualified option or on exercise of an
ISO when the ISO holding periods have been met, the Participant will recognize
capital gain or loss equal to the difference between the sales price and the
Participant's tax basis in the shares of Common Stock. That gain or loss will
be long-term if the shares of Common Stock have been held for more than one
year as of the date of disposition. The Participant's tax basis in the shares
of Common Stock generally will be equal to the exercise price of the option
plus the amount of any ordinary income recognized in connection with the
option.
The Corporation generally will be entitled to a tax deduction equal to the
amount that the Participant recognizes as ordinary income in connection with an
option. The Corporation is not entitled to a tax deduction relating to any
amount that constitutes a capital gain for a Participant. Accordingly, the
Corporation will not be entitled to any tax deduction with respect to an ISO if
the Participant holds the shares of Common Stock for the ISO holding periods
prior to disposing of the shares.
Section 162(m) generally disallows a public company's tax deduction for
compensation in excess of $1 million paid in any taxable year to the Company's
chief executive officer or any of its other four highest compensated officers
(a "covered employee"). Compensation that qualifies as "performance-based
compensation", however, is excluded from the deductibility cap and therefore
remains fully deductible by the Corporation. As discussed above, the
Corporation intends that options and certain other Awards granted to employees
whom the Committee expects to be covered employees at the time a deduction
arises in connection with the Awards qualify as "performance-based
compensation" so that deductions with respect to options and such other Awards
will not be subject to the limitation under Section 162(m). Future changes in
Section 162(m) or the regulations thereunder may adversely affect the ability
of the Corporation to ensure that options or other Awards under the Plan will
qualify as "performance based compensation" so that deductions are not limited
by Section 162(m).
Section 280G of the Code provides special rules in the case of golden
parachute payments. Those rules could apply if, on a change in control of the
Corporation, the acceleration of options or other Awards held by a Participant
that is an officer, director or highly-compensated individual with respect to
the Corporation, and any other compensation paid to the Participant that is
contingent on a change in
15
<PAGE>
control of the Corporation or a substantial portion of the Corporation's assets
and have a present value of at least three times the Participant's average
annual compensation from the Corporation over the prior five years (the
"average compensation"). In that event, the contingent compensation that
exceeds the Participant's average compensation, adjusted to take account of any
portion thereof shown to be reasonable compensation, is not deductible by the
Corporation and is subject to a nondeductible 20% excise tax, in addition to
regular income tax, in the hands of the Participant.
The foregoing discussion, which is general in nature and is not intended
to be a complete description of the federal income tax consequences of the
Plan, is intended for the information of shareholders considering how to vote
at the Annual Meeting and not as tax guidance to Participants in the Plan. This
discussion does not address the effects of other federal taxes or taxes imposed
under state, local or foreign tax laws. Participants in the Plan should consult
a tax adviser as to the tax consequences of participation.
New Plan Benefits. The Corporation believes that Awards granted under the
Plan will be granted primarily to those persons who possess a capacity to
contribute significantly to the successful performance of the Corporation.
Because persons to whom Awards may be made are to be determined from time to
time by the Committee in its discretion, it is impossible at this time to
indicate the precise number, names or positions of persons who will hereafter
receive Awards or the nature and terms of such Awards. No Awards had been
granted under the Plan through the date of this Proxy Statement.
16
<PAGE>
The following table sets forth certain regarding options granted under the
1987 Plan during the fiscal year ended April 30, 1997 to the persons and groups
indicated:
<TABLE>
<CAPTION>
Number of Options Exercise Price Value of Options at
Name and Position Granted Per Share April 30, 1997(1)
----------------- ------- --------- -----------------
<S> <C> <C> <C>
Robert A. Smalley ..................... 20,000 $5.50 $ --
Chairman of the Board
Randall S. Smalley ..................... 20,000 5.50 --
President and Chief Executive
Officer
Robert A. Smalley, Jr. ............... 20,000 5.50 --
Chief Operating Officer
Eric R. Bensen ........................ 20,000 5.50 --
Chief Financial Officer
Edward Annis ........................... 5,000 5.50 --
Director
Fred A. Mudgett ........................ 5,000 5.50 --
Director
All current executive officers as a
group (4 persons) ..................... 80,000 5.50 --
All current directors who are not
executive officers as a group
(2 persons) ........................... 10,000 5.50 --
All employees as a group, other than
executive officers (363 persons) ...... -- -- --
</TABLE>
- ---------
(1) The closing sale price of the Common Stock on April 30, 1997 was $4.75 per
share. On April 30, 1997, the closing sale price of the Common Stock did
not exceed the option exercise price and accordingly, such options were
not in-the-money on such date.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE PROPOSAL TO APPROVE AND RATIFY THE INCENTIVE
COMPENSATION PLAN.
APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit and Finance
Committee, has selected KPMG Peat Marwick LLP, independent certified public
accountants, to serve as the Corporation's independent auditors for the fiscal
year ending April 30, 1997. The Board recommends ratification of this
appointment by the shareholders. This firm has served as the Corporation's
auditors for the last twelve years. The Corporation has been advised that a
representative of the firm will be present at the Annual Meeting to make a
statement if they so desire to do so and to be available to respond to
appropriate questions from shareholders.
The Board of Directors recommends a vote FOR the ratification of the
appointment of KPMG Peat Marwick LLP, as the Corporation's independent auditors
for fiscal 1998.
17
<PAGE>
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Corporation. In
addition to solicitation by mail, proxies may be solicited by telephone,
telegraph or personal interview. Banks, brokerage houses and other
institutions, nominees and fiduciaries will be requested to forward soliciting
material to beneficial owners and to obtain authorization for the execution of
proxies. The Corporation will reimburse such banks, brokerage houses and other
institutions, nominees and fiduciaries for their expenses in forwarding such
material, upon request. Directors, executive officers and regular employees of
the Corporation may also solicit proxies without additional remuneration.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
10 percent of the Common Stock to file with the Securities and Exchange
Commission the ("SEC") initial reports of ownership and reports of changes in
ownership of Common Stock. Officers, directors and greater than 10 percent
shareholders are required by SEC regulation to furnish the Corporation with
copies of all Section 16(c) forms they file.
To the Corporation's knowledge, based solely on review of the copies of
such reports furnished to the Corporation and representations that no other
reports were required, during the fiscal year ended April 30, 1996, all Section
16(a) filing requirements applicable to its officers, directors and greater
than 10 percent shareholders were complied with.
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OTHER MATTERS
Management does not know of any matters to be presented at the Annual
Meeting other than those set forth herein. If any other matters properly come
before the Annual Meeting, it is intended that the proxy holders will vote
thereon at their discretion and in accordance with their best judgment.
Proposals of shareholders intended to be presented at the 1998 Annual Meeting
must be received at the principal executive offices of the Corporation, 11 West
Hampton Avenue, Mesa, Arizona 85210, Attention: Corporate Secretary no later
than June 18, 1998. The Corporation's Amended and Restated Bylaws provide that:
(i) no person (other than a person nominated by or on behalf of the Board of
Directors) shall be eligible for election as a director at any shareholders
meeting unless a written request that such person's name be placed in
nomination, together with certain other information including the written
consent of the nominee to serve as a director, is received by the Secretary of
the Corporation not later than 120 days prior to the date one year from the
date of the immediately preceding annual meeting; and (ii) no shareholder
proposal shall be eligible for consideration at any annual meeting unless a
written request of the shareholder's intent to bring such business before the
annual meeting is received by the Secretary of the Corporation not later than
120 days prior to the date one year from the date of the immediately preceding
annual meeting.
Sincerely yours,
/s/ ROBERT A. SMALLEY
-------------------------------
ROBERT A. SMALLEY,
Chairman
19
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APPENDIX A
CRUISE AMERICA, INC.
Incentive Compensation Plan
1. Purpose. The purpose of this Incentive Compensation Plan (the "Plan")
is to assist Cruise America, Inc. (the "Company") and its subsidiaries in
attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, Directors and independent contractors enabling such
persons to acquire or increase a proprietary interest in the Company in order
to strengthen the mutuality of interests between such persons and the Company's
stockholders, and providing such persons with annual and long term performance
incentives to expend their maximum efforts in the creation of shareholder
value. The Plan is also intended to qualify certain compensation awarded under
the Plan for tax deductibility under Section 162(m) of the Code (as hereafter
defined) to the extent deemed appropriate by the Committee (or any successor
committee) of the Board of Directors of the Company.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.
(a) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, Deferred Stock, Stock granted as a bonus or in lieu of another award,
Dividend Equivalent or Other Stock-Based Award or Performance Award,
together with any other right or interest granted to a Participant under the
Plan.
(b) "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section
10(b) hereof. If, upon a Participant's death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary
means the person, persons, trust or trusts entitled by will or the laws of
descent and distribution to receive such benefits.
(c) "Beneficial Owner", "Beneficially Owning" and "Beneficial Ownership"
shall have the meanings ascribed to such terms in Rule 13d-3 under the
Exchange Act and any successor to such Rule.
(d) "Board" means the Company's Board of Directors.
(e) "Change in Control" means Change in Control as defined with related
terms in Section 9 of the Plan.
(f) "Change in Control Price" means the amount calculated in accordance
with Section 9(c) of the Plan.
(g) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, including regulations thereunder and successor provisions and
regulations thereto.
(h) "Committee" means a committee designated by the Board to administer
the Plan; provided, however, that the Committee shall consist solely of at
least two directors, each of whom shall be (i) a "non-employee director"
within the meaning of Rule 16b-3 under the Exchange Act, unless
administration of the Plan by "non-employee directors" is not then required
in order for exemptions under Rule 16b-3 to apply to transactions under the
Plan, and (ii) an "outside director" within the meaning of Section 162(m) of
the Code, unless administration of the Plan by "outside directors" is not
then required in order to qualify for tax deductibility under Section 162(m)
of the Code.
A-1
<PAGE>
(i) "Corporate Transaction" means a Corporate Transaction as defined in
Section 9(b)(i) of the Plan.
(j) "Covered Employee" means an Eligible Person who is a Covered Employee
as specified in Section 8(d) of the Plan.
(k) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the
end of a specified deferral period.
(l) "Director" means a member of the Board.
(m) "Disability" means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(n) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g) hereof, to receive cash, Stock, other Awards or other property
equal in value to dividends paid with respect to a specified number of
shares of Stock, or other periodic payments.
(o) "Effective Date" means the effective date of the Plan, which shall be
the date of its adoption by the Board.
(p) "Eligible Person" means each Executive Officer of the Company (as
defined under the Exchange Act) and other officers, Directors and employees
of the Company or of any Subsidiary, and independent contractors with the
Company or any Subsidiary. The foregoing notwithstanding, (i) only employees
of the Company or any Subsidiary shall be an Eligible Persons for purposes
of receiving any Incentive Stock Options and (ii) no independent contractor
shall be an Eligible Person for purposes of receiving any Awards other than
Options under Section 6(b) of the Plan. An employee on leave of absence may
be considered as still in the employ of the Company or a Subsidiary for
purposes of eligibility for participation in the Plan.
(q) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions and
rules thereto.
(r) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.
(s) "Fair Market Value" means the fair market value of Stock, Awards or
other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as
of any given date shall be the closing sale price per share reported on a
consolidated basis for stock listed on the principal stock exchange or
market on which Stock is traded on the date as of which such value is being
determined or, if there is no sale on that date, then on the last previous
day on which a sale was reported.
(t) "Incentive Stock Option" or "ISO" means any Option intended to be
designated as an incentive stock option within the meaning of Section 422 of
the Code or any successor provision thereto.
(u) "Incumbent Board" means the Incumbent Board as defined in Section
9(b)(ii) of the Plan.
(v) "Limited SAR" means a right granted to a Participant under Section
6(c) hereof.
(w) "Non-Employee Director" shall mean a member of the Board who is not
an employee of the Company or any subsidiary.
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(x) "Option" means a right granted to a Participant under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
(y) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h) hereof.
(z) "Parent Corporation" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if each of the
corporations in the chain (other than the Company) owns stock possessing 50%
or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.
(aa) "Participant" means a person who has been granted an Award under the
Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(bb) "Performance Award" means a right, granted to a Eligible Person
under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.
(cc) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
and shall include a "group" as defined in Section 13(d) thereof.
(dd) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk
of forfeiture.
(ee) "Retire" or "Retirement" means termination of service as a Director
after having attained at least age 62 and having served as a Director for at
least 5 years, other than by reason of death, Disability or the Director's
willful misconduct or negligence.
(ff) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act
(gg) "Stock" means the Company's Common Stock, and such other securities
as may be substituted (or resubstituted) for Stock pursuant to Section 10(c)
hereof.
(hh) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
(ii) "Subsidiary" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the
total combined voting power of the then outstanding securities or interests
of such corporation or other entity entitled to vote generally in the
election of directors or in which the Company has the right to receive 50%
or more of the distribution of profits or 50% or more of the assets on
liquidation or dissolution.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee; provided, however, that except as otherwise expressly provided in
this Plan or in order to comply with Code Section 162(m) or Rule 16b-3 under
the Exchange Act, the Board may exercise any power or authority granted to
the Committee under this Plan. The Committee or the Board shall have full
and final authority, in each case subject to and consistent with the
provisions of the Plan, to select Eligible Persons to become Participants,
grant Awards, determine the type, number and other terms and conditions of,
and all other matters relating to, Awards, prescribe Award agreements (which
need not be identical for each Participant) and rules and regulations for
the administration of the Plan, construe and interpret the Plan and Award
agreements and correct defects, supply omissions or
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reconcile inconsistencies therein, and to make all other decisions and
determinations as the Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any discretion granted to
the Committee or the Board under the Plan or pursuant to any Award, the
Committee or the Board shall not be required to follow past practices, act
in a manner consistent with past practices, or treat any Eligible Person in
a manner consistent with the treatment of other Eligible Persons.
(b) Manner of Exercise of Committee Authority. The Committee, and not the
Board, shall exercise sole and exclusive discretion on any matter relating
to a Participant then subject to Section 16 of the Exchange Act with respect
to the Company to the extent necessary in order that transactions by such
Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee or the Board shall be final, conclusive and binding
on all persons, including the Company, its subsidiaries, Participants,
Beneficiaries, transferees under Section 10(b) hereof or other persons
claiming rights from or through a Participant, and stockholders. The express
grant of any specific power to the Committee or the Board, and the taking of
any action by the Committee or the Board, shall not be construed as limiting
any power or authority of the Committee or the Board. The Committee or the
Board may delegate to officers or managers of the Company or any subsidiary,
or committees thereof, the authority, subject to such terms as the Committee
or the Board shall determine, (i) to perform administrative functions, (ii)
with respect to Participants not subject to Section 16 of the Exchange Act,
to perform such other functions as the Committee or the Board may determine,
and (iii) with respect to Participants subject to Section 16, to perform
such other functions of the Committee or the Board as the Committee or the
Board may determine to the extent performance of such functions will not
result in the loss of an exemption under Rule 16b-3 otherwise available for
transactions by such persons, in each case to the extent permitted under
applicable law and subject to the requirements set forth in Section 8(d).
The Committee or the Board may appoint agents to assist it in administering
the Plan.
(c) Limitation of Liability. The Committee and the Board, and each member
thereof, shall be entitled to, in good faith, rely or act upon any report or
other information furnished to him or her by any executive officer, other
officer or employee of the Company or a Subsidiary, the Company's
independent auditors, consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and the Board, and any
officer or employee of the Company or a subsidiary acting at the direction
or on behalf of the Committee or the Board, shall not be personally liable
for any action or determination taken or made in good faith with respect to
the Plan, and shall, to the extent permitted by law, be fully indemnified
and protected by the Company with respect to any such action or
determination.
4. Stock Subject to Plan.
(a) Limitation on Overall Number of Shares Subject to Awards. Subject to
adjustment as provided in Section 10(c) hereof, the total number of shares
of Stock reserved and available for delivery in connection with Awards under
the Plan shall be the sum of (i) Five Hundred Thousand (500,000), plus (ii)
the number of shares with respect to Awards previously granted under the
Plan that terminate without being exercised, expire, are forfeited or
canceled, and the number of shares of Stock that are surrendered in payment
of any Awards or any tax withholding with regard thereto. Any shares of
Stock delivered under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. Subject to adjustment as
provided in Section 10(c) hereof, in no event shall the aggregate number of
shares of Stock which may be issued pursuant to ISOs exceed Two Hundred
Fifty Thousand (250,000) shares.
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(b) Application of Limitations. The limitation contained in Section 4(a)
shall apply not only to Awards that are settleable by the delivery of shares
of Stock but also to Awards relating to shares of Stock but settleable only
in cash (such as cash-only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and
make adjustments if the number of shares of Stock actually delivered differs
from the number of shares previously counted in connection with an Award.
5. Eligibility; Per-Person Award Limitations. Awards may be granted under
the Plan only to Eligible Persons. In each fiscal year during any part of which
the Plan is in effect, an Eligible Person may not be granted Awards relating to
more than 100,000 shares of Stock, subject to adjustment as provided in Section
10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 6(h) and
8(b).
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee or the Board may impose on any
Award or the exercise thereof, at the date of grant or thereafter (subject
to Section 10(e)), such additional terms and conditions, not inconsistent
with the provisions of the Plan, as the Committee or the Board shall
determine, including terms requiring forfeiture of Awards in the event of
termination of employment by the Participant and terms permitting a
Participant to make elections relating to his or her Award. The Committee or
the Board shall retain full power and discretion to accelerate, waive or
modify, at any time, any term or condition of an Award that is not mandatory
under the Plan. Except in cases in which the Committee or the Board is
authorized to require other forms of consideration under the Plan, or to the
extent other forms of consideration must be paid to satisfy the requirements
of Florida law, no consideration other than services may be required for the
grant (but not the exercise) of any Award.
(b) Options. The Committee and the Board each is authorized to grant
Options to Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee or the Board,
provided that such exercise price shall not, in the case of Incentive
Stock Options, be less than 100% of the Fair Market Value of the Stock
on the date of grant of the Option and shall not, in any event, be less
than the par value of a share of Stock on the date of grant of such
Option. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more
than 10% of the combined voting power of all classes of stock of the
Company or any Parent Corporation and an Incentive Stock Option is
granted to such employee, the option price of such Incentive Stock
Option (to the extent required by the Code at the time of grant) shall
be no less than 110% of the Fair Market Value of the Stock on the date
such Incentive Stock Option is granted.
(ii) Time and Method of Exercise. The Committee or the Board shall
determine the time or times at which or the circumstances under which
an Option may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements),
the time or times at which Options shall cease to be or become
exercisable following termination of employment or upon other
conditions, the methods by which such exercise price may be paid or
deemed to be paid (including in the discretion of the Committee or the
Board a cashless exercise procedure), the form of such payment,
including, without limitation, cash, Stock, other Awards or awards
granted under other plans of the Company or any subsidiary, or other
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property (including notes or other contractual obligations of
Participants to make payment on a deferred basis), and the methods by or
forms in which Stock will be delivered or deemed to be delivered to
Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Section 422 of the Code.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to ISOs (including any SAR in tandem therewith) shall be
interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify either the
Plan or any ISO under Section 422 of the Code, unless the Participant
has first requested the change that will result in such
disqualification. Thus, if and to the extent required to comply with
Section 422 of the Code, Options granted as Incentive Stock Options
shall be subject to the following special terms and conditions:
(A) the Option shall not be exercisable more than ten years after
the date such Incentive Stock Option is granted; provided, however,
that if a Participant owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company or
any Parent Corporation and the Incentive Stock Option is granted to
such Participant, the term of the Incentive Stock Option shall be
(to the extent required by the Code at the time of the grant) for no
more than five years from the date of grant; and
(B) The aggregate Fair Market Value (determined as of the date
the Incentive Stock Option is granted) of the shares of stock with
respect to which Incentive Stock Options granted under the Plan and
all other option plans of the Company or its Parent Corporation
during any calendar year exercisable for the first time by the
Participant during any calendar year shall not (to the extent
required by the Code at the time of the grant) exceed $100,000.
(c) Stock Appreciation Rights. The Committee and the Board each is
authorized to grant SAR's to Participants on the following terms and
conditions:
(i) Right to Payment. A SAR shall confer on the Participant to whom
it is granted a right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one share of stock on the date of exercise
(or, in the case of a "Limited SAR" that may be exercised only in the
event of a Change in Control, the Fair Market Value determined by
reference to the Change in Control Price, as defined under Section 9(c)
hereof), over (B) the grant price of the SAR as determined by the
Committee or the Board. The grant price of an SAR shall not be less
than the Fair Market Value of a share of Stock on the date of grant
except as provided under Section 7(a) hereof.
(ii) Other Terms. The Committee or the Board shall determine at the
date of grant or thereafter, the time or times at which and the
circumstances under which a SAR may be exercised in whole or in part
(including based on achievement of performance goals and/or future
service requirements), the time or times at which SARs shall cease to
be or become exercisable following termination of employment or upon
other conditions, the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which Stock
will be delivered or deemed to be delivered to Participants, whether or
not a SAR shall be in tandem or in combination with any other Award,
and any other terms and conditions of any SAR. Limited SARs that may
only be exercised in connection with a Change in Control or other event
as specified by the Committee or the Board, may be granted on such
terms, not inconsistent with this Section 6(c), as the Committee or the
Board may determine. SARs and Limited SARs may be either freestanding
or in tandem with other Awards.
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(d) Restricted Stock. The Committee and the Board each is authorized to
grant Restricted Stock to Participants on the following terms and
conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee or the Board may impose, which
restrictions may lapse separately or in combination at such times,
under such circumstances (including based on achievement of performance
goals and/or future service requirements), in such installments or
otherwise, as the Committee or the Board may determine at the date of
grant or thereafter. Except to the extent restricted under the terms of
the Plan and any Award agreement relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and the
right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee or the
Board). During the restricted period applicable to the Restricted
Stock, subject to Section 10(b) below, the Restricted Stock may not be
sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee or
the Board at the time of the Award, upon termination of a Participant's
employment during the applicable restriction period, the Participant's
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Company; provided that the Committee or
the Board may provide, by rule or regulation or in any Award agreement,
or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock shall be waived in
whole or in part in the event of terminations resulting from specified
causes, and the Committee or the Board may in other cases waive in
whole or in part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee or the Board shall
determine. If certificates representing Restricted Stock are registered
in the name of the Participant, the Committee or the Board may require
that such certificates bear an appropriate legend referring to the
terms, conditions and restrictions applicable to such Restricted Stock,
that the Company retain physical possession of the certificates, and
that the Participant deliver a stock power to the Company, endorsed in
blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of
Restricted Stock, the Committee or the Board may require that any cash
dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise
determined by the Committee or the Board, Stock distributed in
connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect
to which such Stock or other property has been distributed.
(e) Deferred Stock. The Committee and the Board each is authorized to
grant Deferred Stock to Participants, which are rights to receive Stock,
cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of Deferred
Stock shall occur upon expiration of the deferral period specified for
such Deferred Stock by the Committee or the Board (or, if permitted by
the Committee or the Board, as elected by the Participant). In
addition, Deferred Stock shall be subject to such restrictions (which
may include a risk of
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forfeiture) as the Committee or the Board may impose, if any, which
restrictions may lapse at the expiration of the deferral period or at
earlier specified times (including based on achievement of performance
goals and/or future service requirements), separately or in combination,
in installments or otherwise, as the Committee or the Board may
determine. Deferred Stock may be satisfied by delivery of Stock, cash
equal to the Fair Market Value of the specified number of shares of
Stock covered by the Deferred Stock, or a combination thereof, as
determined by the Committee or the Board at the date of grant or
thereafter. Prior to satisfaction of an Award of Deferred Stock, an
Award of Deferred Stock carries no voting or dividend or other rights
associated with share ownership.
(ii) Forfeiture. Except as otherwise determined by the Committee or
the Board, upon termination of a Participant's employment during the
applicable deferral period thereof to which forfeiture conditions apply
(as provided in the Award agreement evidencing the Deferred Stock), the
Participant's Deferred Stock that is at that time subject to deferral
(other than a deferral at the election of the Participant) shall be
forfeited; provided that the Committee or the Board may provide, by
rule or regulation or in any Award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to
Deferred Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee or the
Board may in other cases waive in whole or in part the forfeiture of
Deferred Stock.
(iii) Dividend Equivalents. Unless otherwise determined by the
Committee or the Board at date of grant, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of Deferred
Stock shall be either (A) paid with respect to such Deferred Stock at
the dividend payment date in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the amount of such dividends, or
(B) deferred with respect to such Deferred Stock and the amount or
value thereof automatically deemed reinvested in additional Deferred
Stock, other Awards or other investment vehicles, as the Committee or
the Board shall determine or permit the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee and the
Board each is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of Company obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
provided that, in the case of Participants subject to Section 16 of the
Exchange Act, the amount of such grants remains within the discretion of the
Committee to the extent necessary to ensure that acquisitions of Stock or
other Awards are exempt from liability under Section 16(b) of the Exchange
Act. Stock or Awards granted hereunder shall be subject to such other terms
as shall be determined by the Committee or the Board.
(g) Dividend Equivalents. The Committee and the Board each is authorized
to grant Dividend Equivalents to a Participant entitling the Participant to
receive cash, Stock, other Awards, or other property equal in value to
dividends paid with respect to a specified number of shares of Stock, or
other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or
the Board may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Stock,
Awards, or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee or the Board may
specify.
(h) Other Stock-Based Awards. The Committee and the Board each is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated
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or payable in, valued in whole or in part by reference to, or otherwise
based on, or related to, Stock, as deemed by the Committee or the Board to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee or the Board, and Awards valued by reference to
the book value of Stock or the value of securities of or the performance of
specified subsidiaries or business units. The Committee or the Board shall
determine the terms and conditions of such Awards. Stock delivered pursuant
to an Award in the nature of a purchase right granted under this Section
6(h) shall be purchased for such consideration, paid for at such times, by
such methods, and in such forms, including, without limitation, cash, Stock,
other Awards or other property, as the Committee or the Board shall
determine. Cash awards, as an element of or supplement to any other Award
under the Plan, may also be granted pursuant to this Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee or the Board,
be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under
another plan of the Company, any subsidiary, or any business entity to be
acquired by the Company or a subsidiary, or any other right of a Participant
to receive payment from the Company or any subsidiary. Such additional,
tandem, and substitute or exchange Awards may be granted at any time. If an
Award is granted in substitution or exchange for another Award or award, the
Committee or the Board shall require the surrender of such other Award or
award in consideration for the grant of the new Award. In addition, Awards
may be granted in lieu of cash compensation, including in lieu of cash
amounts payable under other plans of the Company or any subsidiary, in which
the value of Stock subject to the Award is equivalent in value to the cash
compensation (for example, Deferred Stock or Restricted Stock), or in which
the exercise price, grant price or purchase price of the Award in the nature
of a right that may be exercised is equal to the Fair Market Value of the
underlying Stock minus the value of the cash compensation surrendered (for
example, Options granted with an exercise price "discounted" by the amount
of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee or the Board; provided that in no event
shall the term of any Option or SAR exceed a period of ten years (or such
shorter term as may be required in respect of an ISO under Section 422 of
the Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made by
the Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee or the
Board shall determine, including, without limitation, cash, Stock, other
Awards or other property, and may be made in a single payment or transfer,
in installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or the Board or upon
occurrence of one or more specified events (in addition to a Change in
Control). Installment or deferred payments may be required by the Committee
or the Board (subject to Section 10(e) of the Plan) or permitted at the
election of the Participant on terms and conditions established by the
Committee or the Board. Payments may include, without limitation, provisions
for the payment or crediting of a reasonable interest rate on installment or
deferred payments or the grant or crediting of Dividend Equivalents or other
amounts in respect of installment or deferred payments denominated in Stock.
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(d) Exemptions from Section 16(b) Liability. It is the intent of the
Company that this Plan comply in all respects with applicable provisions
of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that
neither the grant of any Awards to nor other transaction by a Participant
who is subject to Section 16 of the Exchange Act is subject to liability
under Section 16(b) thereof (except for transactions acknowledged in
writing to be non-exempt by such Participant). Accordingly, if any
provision of this Plan or any Award agreement does not comply with the
requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any
such transaction, such provision will be construed or deemed amended to
the extent necessary to conform to the applicable requirements of Rule
16b-3 or Rule 16a-1(c)(3) so that such Participant shall avoid liability
under Section 16(b). In addition, the purchase price of any Award
conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the
Award then required in order to comply with Rule 16b-3.
8. Performance Awards.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee
or the Board. The Committee or the Board may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the
amounts payable under any Award subject to performance conditions, except as
limited under Section 8(b) hereof in the case of a Performance Award
intended to qualify under Code Section 162(m). If and to the extent required
under Code Section 162(m), any power or authority relating to a Performance
Award intended to qualify under Code Section 162(m), shall be exercised by
the Committee and not the Board.
(b) Performance Awards Granted to Designated Covered Employees. If and to
the extent that the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely
to be a Covered Employee should qualify as "performance-based compensation"
for purposes of Code Section 162(m), the grant, exercise and/or settlement
of such Performance Award shall be contingent upon achievement of
preestablished performance goals and other terms set forth in this Section
8(b).
(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each of such
criteria, as specified by the Committee consistent with this Section
8(b). Performance goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder
including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance
goals being "substantially uncertain." The Committee may determine that
such Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, exercise
and/or settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or to
different Participants.
(ii) Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or specified
subsidiaries or business units of the Company (except with respect to
the total stockholder return and earnings per share criteria), shall be
used exclusively by the Committee in establishing performance goals for
such Performance Awards: (1) total stockholder return; (2) such total
stockholder return as compared to total return (on a comparable basis)
of a publicly available index such as, but not limited to, the Standard
& Poor's 500
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Stock Index or the Nasdaq Composite Index; (3) net income; (4) pretax
earnings; (5) earnings before interest expense, taxes, depreciation and
amortization; (6) pretax operating earnings after interest expense and
before bonuses, service fees, and extraordinary or special items; (7)
operating margin; (8) earnings per share; (9) return on equity; (10)
return on capital; (11) return on investment; (12) operating earnings;
(13) working capital or inventory; and (14) ratio of debt to
stockholders' equity.
(iii) Performance Period; Timing For Establishing Performance
Goals. Achievement of performance goals in respect of such Performance
Awards shall be measured over a performance period of up to ten years,
as specified by the Committee. Performance goals shall be established
not later than 90 days after the beginning of any performance period
applicable to such Performance Awards, or at such other date as may be
required or permitted for "performance-based compensation" under Code
Section 162(m).
(iv) Settlement of Performance Awards; Other Terms. Settlement of
such Performance Awards shall be in cash, Stock, other Awards or other
property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards. The Committee shall specify
the circumstances in which such Performance Awards shall be paid or
forfeited in the event of termination of employment by the Participant
prior to the end of a performance period or settlement of Performance
Awards.
(c) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool
or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b), shall
be made in writing in the case of any Award intended to qualify under Code
Section 162(m). The Committee may not delegate any responsibility relating
to such Performance Awards if and to the extent required to comply with Code
Section 162(m).
(d) Status of Section 8(b) Awards Under Code Section 162(m). It is the
intent of the Company that Performance Awards under Section 8(b) hereof
granted to persons who are designated by the Committee as likely to be
Covered Employees within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute "qualified
performance-based compensation" within the meaning of Code Section 162(m)
and regulations thereunder. Accordingly, the terms of Section 8, including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the
term Covered Employee as used herein shall mean only a person designated by
the Committee, at the time of grant of Performance Awards, as likely to be a
Covered Employee with respect to that fiscal year. If any provision of the
Plan or any agreement relating to such Performance Awards does not comply or
is inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.
9. Change in Control.
(a) Effect of "Change in Control." If and to the extent provided in the
Award, in the event of a "Change in Control," as defined in Section 9(b),
the following provisions shall apply:
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(i) Any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested as of
the time of the Change in Control, subject only to applicable
restrictions set forth in Section 10(a) hereof;
(ii) Limited SARs (and other SARs if so provided by their terms)
shall become exercisable for amounts, in cash, determined by reference
to the Change in Control Price;
(iii) The restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan shall
lapse and such Awards shall be deemed fully vested as of the time of
the Change in Control, except to the extent of any waiver by the
Participant and subject to applicable restrictions set forth in Section
10(a) hereof; and
(iv) With respect to any such outstanding Award subject to
achievement of performance goals and conditions under the Plan, such
performance goals and other conditions will be deemed to be met if and
to the extent so provided by the Committee in the Award agreement
relating to such Award.
(b) Definition of Change in Control. A "Change in Control" shall be
deemed to have occurred upon:
(i) An acquisition by any Person of Beneficial Ownership of the
shares of Common Stock of the Company then outstanding (the "Company
Common Stock Outstanding") or the voting securities of the Company then
outstanding entitled to vote generally in the election of directors
(the "Company Voting Securities Outstanding") if such acquisition of
Beneficial Ownership results in the Person's Beneficially Owning 25% or
more of the Company Common Stock outstanding or 25% or more of the
combined voting power of the Company Voting Securities Outstanding; or
(ii) Approval by the shareholders of the Company of a reorganization,
merger, consolidation or other form of corporate transaction or series
of transactions, in each case, with respect to which persons who were
the shareholders of the Company immediately prior to such
reorganization, merger or consolidation or other transaction do not,
immediately thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, or a liquidation or dissolution of the Company or the sale
of all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale (any such event being referred to as a
"Corporate Transaction") is subsequently abandoned); or
(iii) A change in the composition of the Board such that individuals
who, as of the date hereof, constitute the Board (as of the date hereof
the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Securities Exchange Act) shall be, for purposes
of this Agreement, considered as though such person were a member of
the Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii) of
this Section 9(b), any acquisition or consummation of a Corporate
Transaction unanimously approved by the Incumbent Board shall not constitute
a Change in Control for purposes of the Plan.
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(c) Definition of "Change in Control Price." The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of
cash and fair market value of property that is the highest price per share
paid (including extraordinary dividends) in any Corporate Transaction
triggering the Change in Control under Section 9(b)(i) hereof or any
liquidation of shares following a sale of substantially all of the assets
of the Company, or (ii) the highest Fair Market Value per share at any
time during the 60-day period preceding and the 60-day period following
the Change in Control. 10
10. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may, to the
extent deemed necessary or advisable by the Committee or the Board, postpone
the issuance or delivery of Stock or payment of other benefits under any
Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or
automated quotation system upon which the Stock or other Company securities
are listed or quoted, or compliance with any other obligation of the
Company, as the Committee or the Board, may consider appropriate, and may
require any Participant to make such representations, furnish such
information and comply with or be subject to such other conditions as it may
consider appropriate in connection with the issuance or delivery of Stock or
payment of other benefits in compliance with applicable laws, rules, and
regulations, listing requirements, or other obligations. The foregoing
notwithstanding, in connection with a Change in Control, the Company shall
take or cause to be taken no action, and shall undertake or permit to arise
no legal or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of benefits
under any Award or the imposition of any other conditions on such issuance,
delivery or payment, to the extent that such postponement or other condition
would represent a greater burden on a Participant than existed on the 90th
day preceding the Change in Control.
(b) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan, including any Award or right which
constitutes a derivative security as generally defined in Rule 16a-1(c)
under the Exchange Act, shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Company or a Subsidiary), or
assigned or transferred by such Participant otherwise than by will or the
laws of descent and distribution or to a Beneficiary upon the death of a
Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or
his or her guardian or legal representative, except that Awards and other
rights (other than ISOs and SARs in tandem therewith) may be transferred to
one or more Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent such transfers and
exercises are permitted by the Committee or the Board pursuant to the
express terms of an Award agreement (subject to any terms and conditions
which the Committee or the Board may impose thereon, and further subject to
any prohibitions or restrictions on such transfers pursuant to Rule 16b-3).
A Beneficiary, transferee, or other person claiming any rights under the
Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award agreement applicable to such
Participant, except as otherwise determined by the Committee or the Board,
and to any additional terms and conditions deemed necessary or appropriate
by the Committee or the Board.
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(c) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Stock such that a
substitution or adjustment is determined by the Committee or the Board to be
appropriate in order to prevent dilution or enlargement of the rights of
Participants under the Plan, then the Committee or the Board shall, in such
manner as it may deem equitable, substitute or adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by
which annual per-person Award limitations are measured under Section 5
hereof, (iii) the number and kind of shares of Stock subject to or
deliverable in respect of outstanding Awards and (iv) the exercise price,
grant price or purchase price relating to any Award and/or make provision
for payment of cash or other property in respect of any outstanding Award.
In addition, the Committee (and the Board if and only to the extent such
authority is not required to be exercised by the Committee to comply with
Code Section 162(m)) is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including Performance
Awards and performance goals) in recognition of unusual or nonrecurring
events (including, without limitation, events described in the preceding
sentence, as well as acquisitions and dispositions of businesses and assets)
affecting the Company, any Subsidiary or any business unit, or the financial
statements of the Company or any Subsidiary, or in response to changes in
applicable laws, regulations, accounting principles, tax rates and
regulations or business conditions or in view of the Committee's assessment
of the business strategy of the Company, any Subsidiary or business unit
thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other
circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof to Participants designated by the Committee as Covered
Employees and intended to qualify as "performance-based compensation" under
Code Section 162(m) and the regulations thereunder to otherwise fail to
qualify as "performance-based compensation" under Code Section 162(m) and
regulations thereunder.
(d) Taxes. The Company and any Subsidiary is authorized to withhold from
any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to take
such other action as the Committee or the Board may deem advisable to enable
the Company and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This
authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations, either on a mandatory or elective basis in
the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan, or the Committee's authority to grant
Awards under the Plan without the consent of stockholders or Participants,
except that any amendment or alteration to the Plan shall be subject to the
approval of the Company's stockholders not later than the annual meeting
next following such Board action if such stockholder approval is required by
any federal or state law or regulation (including, without limitation, Rule
16b-3 or Code Section 162(m)) or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted,
and the Board may otherwise, in its discretion, determine to submit other
such changes to the Plan to stockholders for
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approval; provided that, without the consent of an affected Participant, no
such Board action may materially and adversely affect the rights of such
Participant under any previously granted and outstanding Award. The
Committee or the Board may waive any conditions or rights under, or amend,
alter, suspend, discontinue or terminate any Award theretofore granted and
any Award agreement relating thereto, except as otherwise provided in the
Plan; provided that, without the consent of an affected Participant, no such
Committee or the Board action may materially and adversely affect the rights
of such Participant under such Award. Notwithstanding anything in the Plan
to the contrary, if any right under this Plan would cause a transaction to
be ineligible for pooling of interest accounting that would, but for the
right hereunder, be eligible for such accounting treatment, the Committee or
the Board may modify or adjust the right so that pooling of interest
accounting shall be available, including the substitution of Stock having a
Fair Market Value equal to the cash otherwise payable hereunder for the
right which caused the transaction to be ineligible for pooling of interest
accounting.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person
or Participant the right to continue as an Eligible Person or Participant or
in the employ of the Company or a Subsidiary; (ii) interfering in any way
with the right of the Company or a Subsidiary to terminate any Eligible
Person's or Participant's employment at any time, (iii) giving an Eligible
Person or Participant any claim to be granted any Award under the Plan or to
be treated uniformly with other Participants and employees, or (iv)
conferring on a Participant any of the rights of a stockholder of the
Company unless and until the Participant is duly issued or transferred
shares of Stock in accordance with the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred compensation.
With respect to any payments not yet made to a Participant or obligation to
deliver Stock pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Participant any rights that are greater than those
of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other
Awards or other property, or make other arrangements to meet the Company's
obligations under the Plan. Such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant. The
trustee of such trusts may be authorized to dispose of trust assets and
reinvest the proceeds in alternative investments, subject to such terms and
conditions as the Committee or the Board may specify and in accordance with
applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board or
a committee thereof to adopt such other incentive arrangements as it may
deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee or the Board, in the event of a
forfeiture of an Award with respect to which a Participant paid cash or
other consideration, the Participant shall be repaid the amount of such cash
or other consideration. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee or the Board
shall determine whether cash, other Awards or other property shall be issued
or paid in lieu of such fractional shares or whether such fractional shares
or any rights thereto shall be forfeited or otherwise eliminated.
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(j) Governing Law. The validity, construction and effect of the Plan, any
rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of Florida without
giving effect to principles of conflicts of laws, and applicable federal
law.
(k) Plan Effective Date and Stockholder Approval; Termination of Plan.
The Plan shall become effective on the Effective Date, subject to subsequent
approval within 12 months of its adoption by the Board by stockholders of
the Company eligible to vote in the election of directors, by a vote
sufficient to meet the requirements of Code Sections 162(m) and 422, Rule
16b-3 under the Exchange Act, applicable stock exchange requirements, and
other laws, regulations, and obligations of the Company applicable to the
Plan. Awards may be granted subject to stockholder approval, but may not be
exercised or otherwise settled in the event stockholder approval is not
obtained. The Plan shall terminate at such time as no shares of Common Stock
remain available for issuance under the Plan and the Company has no further
rights or obligations with respect to outstanding Awards under the Plan.
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CRUISE AMERICA, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF CRUISE AMERICA, INC.
The undersigned hereby appoints Randall S. Smalley and Eric R. Bensen, and
each of them, proxies for the undersigned, with full power of substitution to
vote all shares of Cruise America, Inc. Common Stock which the undersigned may
be entitled to vote at the Annual Meeting of Shareholders of Cruise America,
Inc., In Mesa, Arizona on Thursday, October 16, 1997 at 9:00 A.M. or at any
adjournment thereof, upon such matters set forth below and described in the
accompanying Proxy Statement and upon such other business as may properly come
before the meeting or any adjournment thereof.
Please mark this Proxy as indicated on reverse to vote on any item. If you
wish to vote in accordance with the Board of Directors recommendations, please
sign on the reverse side; no boxes need to be checked.
(Continued and to be signed on the other side)
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^ FOLD AND DETACH HERE ^
<PAGE>
<TABLE>
<S> <C> <C>
Where no voting instructions are given, the shares represented by this Proxy will be VOTED FOR Items No. 1,2 and 3.
Please Mark
your vote as
indicated in [X]
this example
1. ELECTION OF DIRECTORS Nominees: Robert A. Smalley, Robert A. Smalley, Jr., Randall S. Smalley,
VOTE FOR all nom- VOTE WITHHELD Fred A. Mudgett, Dr. Edward Annis and Eric R. Bensen
inees listed to right from all nominees
except vote with- listed to right
held from those
whose names are
crossed out
[ ] [ ]
2. APPROVAL AND RATIFICATION OF COMPANY'S 3. RATIFICATION OF REAPPOINTMENT OF AUDITORS
INCENTIVE COMPENSATION PLAN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
-------| Receipt is hereby acknowledged of the Notice of Annual
| Meeting and Proxy Statement.
|
| Dated:__________________________________________________, 1997
______________________________________________________________
______________________________________________________________
(Signature of Shareholder(s)
IMPORTANT: Please sign exactly as your name or names
appear on this Proxy. When shares are held jointly, both
holders should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND title as such. If the signer is a corporation, execute in full
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. corporate name by authorized officer.
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^ FOLD AND DETACH HERE ^
CRUISE
AMERICA
[LOGO]
</TABLE>
