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
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BLUEGREEN CORPORATION
(Name of Registrant as Specified In Its Charter)
BLUEGREEN CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
|_| 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:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
|_| 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: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
(032796DTI)
<PAGE>
[LOGO]
4960 Blue Lake Drive
Boca Raton, Florida 33431
Tel: (561) 912-8000 Fax: (561) 912-8100
June 26, 1998
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Bluegreen Corporation (the "Company") which will be held at the Hotel
Inter-Continental New York at 111 East 48th Street (between Park Avenue and
Lexington Avenue), New York, New York on Tuesday, July 28, 1998 at 10:00 a.m.,
local time.
The accompanying Notice of the Annual Meeting and Proxy Statement describe
the formal business to be transacted at the meeting and contain certain
information about the Company and its officers and Directors. Following the
meeting we will also report on the operations of the Company. Directors and
executive officers of the Company will be present to respond to any questions
that you may have.
Please sign, date and return the enclosed proxy card promptly. If you
attend the meeting, and we sincerely hope you will, you may vote in person even
if you have previously mailed a proxy card.
Thank you for your attention and continued interest in our Company. We look
forward to seeing you at the meeting.
Very truly yours,
/s/ GEORGE F. DONOVAN
George F. Donovan
President and Chief Executive Officer
<PAGE>
BLUEGREEN CORPORATION
4960 Blue Lake Drive
Boca Raton, Florida 33431
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 28, 1998
The Annual Meeting of the Shareholders of Bluegreen Corporation will be
held at the Hotel Inter-Continental New York at 111 East 48th Street (between
Park Avenue and Lexington Avenue), New York, New York on Tuesday, July 28, 1998
at 10:00 a.m., local time, to consider and act on the following matters:
(1) To fix the number of Directors for the ensuing year at seven;
(2) To elect seven Directors;
(3) To approve the Company's 1998 Non-Employee Directors Stock Option
Plan;
(4) To approve an amendment to the Company's 1995 Stock Incentive Plan;
(5) To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending March 28, 1999; and
(6) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The close of business on June 12, 1998 has been fixed as the record date
for determining the shareholders entitled to notice of, and to vote at, the
annual meeting.
THE PRESENCE OF A QUORUM IS IMPORTANT. THEREFORE, YOU ARE URGED TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY BY MAIL WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON, BUT WILL
ENSURE THAT YOUR VOTE IS COUNTED IF YOU ARE UNABLE TO ATTEND THE MEETING.
By order of the Board of Directors,
/s/ PATRICK E. RONDEAU
Patrick E. Rondeau
Clerk
June 26, 1998
<PAGE>
BLUEGREEN CORPORATION
4960 Blue Lake Drive
Boca Raton, Florida 33431
(561) 912-8000
----------------------------
Annual Meeting of Shareholders
July 28, 1998
----------------------------
PROXY STATEMENT
----------------------------
Information Concerning Solicitation
This Proxy Statement is furnished to the holders of common stock of
Bluegreen Corporation (the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Shareholders (the "Annual Meeting") to be held at the Hotel Inter-Continental
New York at 111 East 48th Street (between Park Avenue and Lexington Avenue), New
York, New York on Tuesday, July 28, 1998 at 10:00 a.m., local time, and at any
adjournment thereof. If the enclosed proxy is signed and returned and is not
revoked, it will be voted at the Annual Meeting in accordance with the
instructions of the shareholder(s) who execute it. If no instructions are given,
the proxy will be voted FOR the election of the nominees for Director and FOR
the other proposals set forth in the Notice of Annual Meeting described herein.
The proxy of any shareholder may be revoked by such shareholder in writing
addressed to Patrick E. Rondeau, the Clerk of the Company, at the above address
or in person at any time before it is voted. Submission of a later dated proxy
will revoke an earlier dated proxy.
All costs of solicitation will be borne by the Company. The solicitation is
to be principally conducted by mail and may be supplemented by telephone and
personal contacts by Directors, executive officers and regular employees of the
Company, without additional remuneration. Arrangements will be made with
brokerage houses, banks and custodians, nominees and other fiduciaries to
forward solicitation materials to the beneficial owners of shares held of
record. The Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred in connection with the distribution of proxy
materials.
It is anticipated that this Proxy Statement and the enclosed proxy,
together with the Company's annual report to shareholders, will first be mailed
to shareholders on or about June 26, 1998.
Outstanding Voting Securities
The Board of Directors has fixed the close of business on June 12, 1998 as
the record date for determining the shareholders entitled to receive notice of,
and to vote at, the Annual Meeting. The number of shares of common stock of the
Company ("Common Stock") outstanding and entitled to vote on that date was
20,408,388, with each share being entitled to one vote. A majority of the issued
and outstanding shares as of the record date will constitute a quorum for the
transaction of business at the Annual Meeting.
<PAGE>
The affirmative vote of the holders of a plurality of the votes cast at the
Annual Meeting is required for the election of Directors. Approval of other
matters that are before the meeting will require the affirmative vote of holders
of a majority of the Common Stock present or represented at the Annual Meeting.
Shares voted to abstain or to withhold as to a particular matter and shares
as to which a nominee (such as a broker holding shares in street name for a
beneficial owner) has no voting authority in respect of such matter, will be
deemed represented for both quorum and voting purposes. Such shares will be the
equivalent of negative votes. Votes will be tabulated by the Company's transfer
agent subject to the supervision of persons designated by the Board of Directors
as inspectors.
Shareholder Proposals for Next Annual Meeting
Proposals of shareholders of the Company intended to be presented at the
1999 Annual Meeting of Shareholders must be received by the Company not later
than February 26, 1999 to be included in the Company's proxy materials relating
to the 1999 Annual Meeting. Other requirements for inclusion are set forth in
Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
Proposals 1 and 2 - Fixing of Number of Directors at Seven and Election of Named
Directors
The By-Laws of the Company provide that there shall be a Board of not less
than three Directors, the exact number to be fixed at annual meetings by the
shareholders or any special meeting in lieu thereof, subject to change from time
to time by the Directors. It is recommended that the shareholders vote to fix
the number of Directors for the coming year at seven.
Unless contrary instructions are received, the enclosed proxy will be voted
for fixing the number of Directors at seven and for the election of the seven
nominees listed herein. Each of the nominees is currently serving as a Director
of the Company, was elected by the shareholders at the 1997 Annual Meeting and
has consented to serve, if re-elected, for the term described herein. Although
the Board of Directors does not contemplate that any nominee will be unavailable
for election, in the event that vacancies occur unexpectedly, the enclosed
proxy, unless authority has been withheld as to such nominee, will be voted for
such substituted nominees, if any, as may be designated by the Board. If
elected, the nominees listed below will serve until the next annual meeting (or
special meeting in lieu thereof) and until their successors are duly elected and
qualified.
The principal occupations and business experience of the nominees for
Director for the preceding five years along with any directorships of other
publicly-owned or registered investment companies are as follows:
Joseph C. Abeles, a private investor, has been a Director of the Company
since 1987. Mr. Abeles has been a Director of Intermagnetics General Corporation
since 1986. He has also served as a Director of Igene Biotechnology, Inc. and
Ultralife Batteries, Inc. since 1991.
George F. Donovan joined the Company as a Director in 1991 and was
appointed President and Chief Operating Officer in October 1993. He became Chief
Executive Officer in December 1993. Mr. Donovan has served as an officer of a
number of other recreational real estate corporations, including Leisure
Management International, of which he was President from 1991 to 1993, and
Fairfield Communities, Inc., of which he was President from April 1979 to
December 1985.
2
<PAGE>
Ralph A. Foote has been a Director of the Company since 1987. Since 1955 he
has been a senior partner of Conley & Foote, a Middlebury, Vermont law firm
which serves as legal counsel to the Company with respect to various matters.
Frederick M. Myers has been a Director of the Company since 1990 and has
served as Chairman of the Board since 1997. Since 1964 he has been a senior
partner of Cain, Hibbard, Myers & Cook, a Pittsfield, Massachusetts law firm
which serves as legal counsel to the Company with respect to various matters.
J. Larry Rutherford was elected to the Board of Directors in April 1997.
Since 1990, he has been President and Chief Executive Officer of Atlantic Gulf
Communities, a publicly traded real estate development company. In 1992, Mr.
Rutherford was named as a defendant in a three-count Information filed by the
State Attorney for Broward County, Florida. The charges in the Information,
which include a charge of vehicular homicide, relate to an April 1991 traffic
accident in which a passenger was killed. Following review of the circumstances
surrounding this accident and the charges, the Board determined that the
pendency of this proceeding likely will not adversely affect Mr. Rutherford's
ability to perform his duties as a Director of the Company.
Stuart A. Shikiar has been a Director since 1994. Mr. Shikiar is an
investment advisor and has served as President of Shikiar Asset Management, Inc.
since November 1994. From 1993 to 1994, Mr. Shikiar was a general partner of
Omega Advisors, a private investment partnership. From 1985 to 1993, Mr. Shikiar
served as a Managing Director for Prudential Securities Investment Management,
Inc. Mr. Shikiar has been a Director of Ultralife Batteries, Inc. since 1991 and
Intermagnetics General Corporation since 1995.
Bradford T. Whitmore has been a Director of the Company since 1990. Mr.
Whitmore has been a general partner of Grace Brothers, Ltd., an investment
partnership and securities broker-dealer, since 1986. He has been a trustee of
Aerospace Creditors Liquidating Trust since 1993.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of May 1, 1998 by (a) each Director,
(b) each of the executive officers listed in the Summary Compensation Table
below, (c) all current Directors and executive officers as a group and (d) all
persons known to be the beneficial owners of more than five percent of the
Company's outstanding Common Stock. A nominal amount of Common Stock held by
certain executive officers under the Company's 401(k) profit sharing plan has
been excluded from the table. Unless otherwise noted, each stockholder has sole
voting and investment power with respect to the shares of Common Stock listed.
3
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Options Issuable Upon
Exercisable Conversion of Total Shares Percent
Director Common Within 60 Debentures Beneficially of Shares
Name Age Since Stock Days and Notes (1) Owned Outstanding(2)
---- --- ----- ----- ---- ------------- ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph C. Abeles(3) 83 1987 364,553 79,048 442,065 885,666 4.3%
John F. Chiste 42 -- -- -- -- -- --
George F. Donovan 59 1991 84,187 274,033 -- 358,220 1.7%
Ralph A. Foote 75 1987 7,870 102,897 -- 110,767 *
L. Nicolas Gray 51 -- -- 6,300 -- 6,300 *
Daniel C. Koscher 41 -- 1,218 98,949 -- 100,167 *
Frederick M. Myers(4) 75 1990 34,398 90,973 -- 125,371 *
Patrick E. Rondeau 51 -- 11,339 84,273 -- 95,612 *
J. Larry Rutherford 52 1997 -- -- -- -- --
Stuart A. Shikiar(5) 52 1994 721,182 32,038 80,145 833,365 4.1%
Bradford T. Whitmore(6) 41 1990 758,146 85,011 -- 843,157 4.1%
All Directors and
executive officers as
a group (15 persons) -- -- 1,991,713 896,109 522,210 3,410,032 15.7%
Best Investments
International Inc.
P.O. Box N-3242, IDB House
East Bay Street
Nassau, Bahamas(7) -- -- 1,629,858 -- 166,617 1,796,475 8.8%
Grace Brothers, Ltd.
1560 Sherman Avenue
Suite 900
Evanston, Illinois 60201 -- -- 1,676,766 -- 1,782,244 3,459,010 15.7%
(7)
Friess Associates of Delaware, Inc.
3908 Kennett Pike -- -- 1,206,000 -- -- 1,206,000 5.9%
Greenville, Delaware 19807(7)
</TABLE>
- ---------------------
* Less than 1%.
(1) The conversion prices of $8.24 per share and $3.92 per share (the
conversion prices on May 1, 1998) are used to determine the shares of
Common Stock into which the Company's 8.25% convertible subordinated
debentures due 2012 (the "Debentures") and the Company's 8.00% convertible
subordinated notes payable due 2002 (the "Convertible Notes") are
convertible, respectively.
(2) The denominator used to calculate the percent of shares outstanding
includes shares issuable upon conversion of any Debentures and Notes held
by the applicable stockholder or group and upon exercise of any options
that are exercisable within 60 days and held by the applicable stockholder
or group, plus 20,317,042 shares outstanding on May 1, 1998.
(3) Includes 11,574 shares and 36,407 shares issuable upon the conversion of
$300,000 aggregate principal amount of Debentures held by Mr. Abeles' wife
and 16,018 shares issuable upon the conversion of $132,000 aggregate
principal amount of Debentures held by family trusts for which he disclaims
beneficial ownership.
(4) Includes 34,398 shares of Common Stock held by Mr. Myers' wife for which he
disclaims beneficial ownership.
(5) Includes 3,034 shares of Common Stock issuable upon the conversion of
$25,000 aggregate principal amount of Debentures held by a family trust for
which Mr. Shikiar disclaims beneficial ownership. Also includes 534,706
shares of Common Stock and 15,169 shares issuable upon the conversion of
$125,000 aggregate principal amount of Debentures over which Mr. Shikiar
exercises voting and investment power.
4
<PAGE>
(6) Mr. Whitmore is a general partner of Grace Brothers, Ltd. Mr. Whitmore
exercises shared voting and investment power with respect to shares held by
Grace Brothers, Ltd and disclaims beneficial ownership of such shares
except to the extent of his proportionate interest therein.
(7) Based on the most recent (as of May 1, 1998) Form 13F, 13G or 13D (as
applicable) filed with the Securities and Exchange Commission.
Board of Directors and its Committees
The Board of Directors of the Company held ten meetings during the fiscal
year ended March 29, 1998. Each Director attended all of the meetings of the
Board of Directors and of all committees of the Board of Directors on which he
served during fiscal 1998, except for Mr. Shikiar and Mr. Whitmore who were
unable to attend two and one Board of Director meetings, respectively.
Directors of the Company who are employees of the Company do not receive
fees or retainers for serving as Directors. For fiscal 1998, each non-management
Director received an annual retainer of $17,500, an $800 fee for each Board
meeting attended and reimbursement of reasonable out-of-pocket travel expenses
to attend Board of Director meetings. The chairman of the board also receives an
additional annual fee of $15,000. In addition, the Company's non-management
Directors are entitled to receive a stock option covering 15,000 shares of
Common Stock under the Company's 1998 Non-Employee Directors Stock Option Plan
on the first business day after the first trading day after each annual meeting
of the Company's shareholders or any special meeting held in lieu thereof. The
exercise price is equal to the closing market price of the Company's common
stock on the New York Stock Exchange on the date of grant.
Audit Committee
The Audit Committee, which met twice during fiscal 1998, consists of
Messrs. Foote, Myers, and Whitmore, each of whom attended both meetings during
fiscal 1998. The Committee's responsibilities include: (a) recommending to the
full board the selection of the Company's independent auditors, (b) discussing
the arrangements for the proposed scope and the results of the annual audit with
management and the independent auditors, (c) reviewing the scope of non-audit
professional services provided by the independent auditors, (d) obtaining from
both management and the independent auditors their observations on the Company's
system of internal accounting controls and (e) reviewing the overall activities
and recommendations of the Company's internal auditors.
Nominating Committee
The Nominating Committee, which met once during fiscal 1998, consists of
Messrs. Abeles, Donovan, Rutherford and Shikiar, each of whom attended the
meeting. The Committee is responsible for the selection of potential candidates
for membership on the Board of Directors and the periodic review of compensation
of Directors. The committee will consider nominees recommended by shareholders.
Recommendations should be submitted in writing to: Nominating Committee,
Bluegreen Corporation, 4960 Blue Lake Drive, Boca Raton, Florida 33431.
Compensation Committee
The Compensation Committee met three times during fiscal 1998. Each member
of the Compensation Committee attended all meetings of the Committee during
fiscal 1998. The committee: (a) monitors
5
<PAGE>
compensation arrangements for management employees for consistency with
corporate objectives and shareholders' interests, (b) approves incentive
distributions and grants of stock options to officers, employees and independent
contractors of the Company and its subsidiaries and (c) advises management on
matters pertaining to management development and corporate organizational
planning.
Compensation Committee Interlocks and Insider Participation
During fiscal 1998, Messrs. Abeles, Foote, Shikiar and Whitmore served as
members of the Compensation Committee of the Board of Directors. Mr. Whitmore is
a general partner of Grace Brothers, Ltd., an investment partnership and
broker-dealer. In March 1997, Grace Brothers, Ltd. extended a short-term loan to
the Company in the amount of $1.5 million, which loan was repaid in May 1997.
The interest rate charged on such loan was prime plus 1%. In September, 1997,
the Company borrowed an aggregate $6,000,000 from Mr. Abeles and Grace Brothers,
Ltd. pursuant to a Note Purchase Agreement, which amount was used to fund a
portion of the purchase price in connection with the Company's acquisition of
Resort Development International Group, Inc. and Resort Title Agency, Inc.
(collectively, "RDI"). Pursuant to the Note Agreement, the Company executed 8%
convertible notes in the aggregate principal amount of $6,000,000 (the
"Convertible Notes"). The Convertible Notes have a maturity date of September
11, 2002, and the outstanding balances of the Convertible Notes are convertible
into the Company's Common Stock at a conversion price of $3.92 per share. The
Convertible Notes bear interest at 8.0%. In December 1997, Mr. Shikiar acquired
$200,000 of Convertible Notes from Mr. Abeles in a private transaction. The
Convertible Notes are subordinated to the Company's 10 1/2% Senior Secured notes
due 2008, (the "Senior Notes") in the aggregate principal amount of $110
million, to the same extent the Debentures are subordinated to the Senior Notes;
the Convertible Notes are not contractually subordinated to any other
indebtedness of the Company.
Compensation Committee Report on Executive Compensation
General
The Compensation Committee of the Board of Directors is composed of four
outside (non-management) Directors of the Company and, as indicated above, the
Compensation Committee's duties include reviewing and making recommendations to
the Board generally with respect to the compensation of the Company's executive
officers. The Board of Directors reviews these recommendations and approves all
executive compensation action.
Compensation Principles
The Company's executive compensation program is designed to align
compensation with the Company's business strategy, values and management
initiatives. The program:
o Integrates compensation programs with the Company's annual and long-term
strategic planning and measurement processes.
o Reinforces strategic performance objectives through the use of incentive
compensation programs.
o Rewards executives for long-term strategic management and the enhancement
of shareholder value by delivering appropriate ownership interest in the
Company.
6
<PAGE>
o Seeks to attract and retain quality talent, which is critical to both the
short-term and long-term success of the Company.
In March, 1998, the Company entered into employment agreements with each of
its senior executive officers. See "Employment Agreements" for further details.
The three components of the Company's compensation program for executive
officers are (i) base compensation, (ii) annual bonus plan and (iii) incentive
stock options.
Base Compensation
The Committee has evaluated and determined appropriate ranges of pay for
all categories of management to facilitate a Company-wide systematic salary
structure with appropriate internal alignment. In determining appropriate pay
ranges, the Committee annually examines market compensation levels for
executives who are currently employed in similar positions in public companies
with comparable revenues, net income and market capitalization. This market
information is used as a frame of reference for annual salary adjustments and
starting salaries. The Compensation Committee determined to grant salary
increases ranging from 9% to 23% for the executive officers named in the
"Summary Compensation Table" during fiscal 1998. This decision reflects the
committee's recognition of the executive officers' contributions to the
Company's performance during fiscal 1998 as well as the committee's assessment
that the executive officers' base salaries after the current year increases were
comparable to companies involved in similar operations and of similar size.
Annual Bonus Plan
The objectives of the annual bonus plan are to motivate and reward the
accomplishment of corporate annual objectives, reinforce strong performance with
differentiation in individual awards based on contributions to business results
and provide a fully competitive compensation package with the objective of
attracting, rewarding and retaining individuals of the highest quality. As a
pay-for-performance plan, year-end cash bonus awards are paid upon the
achievement of performance goals established for the fiscal year. Participants
are measured on two performance components: (1) corporate financial performance
(specific measurements are defined each year and threshold, target and maximum
performance levels are established to reflect the Company's objectives) and/or
(2) key individual performance which contributes to critical results for the
management position. A weighting is established for each component taking into
account the relative importance of each based on each executive officer's
position. Appropriate performance objectives are established by the Compensation
Committee for each fiscal year in support of the Company's strategic plan.
Incentive Stock Options
Stock options align the interests of employees and shareholders by
providing value to the employee when the stock price increases. All options are
granted at 100% of the fair market value of the Common Stock on the date of
grant except incentive options issued to employees who own more than 10% of the
Company's Common Stock, in which case the option price may not be less than 110%
of the market value of the Common Stock on the date of grant. Incentive stock
options were granted to five executive officers during fiscal 1998. See "Option
Grants in Last Fiscal Year".
7
<PAGE>
Section 162(m) of the Interval Revenue Code of 1986, as amended (the
"Code"), limits an employer's income tax deduction for compensation paid to
certain key executives of a public company to $1,000,000 per executive per year.
The Company has no executives whose salaries currently approach this level and,
accordingly, has not addressed what approach it will take with respect to
section 162(m), except to the extent the 1995 Stock Incentive Plan contains
standard limits and provisions on awards which are extended to enable such
awards to be exempt from the section 162(m) deduction limits.
Compensation of Chief Executive Officer
During 1998, the base salary of Mr. George F. Donovan, President and Chief
Executive Officer, was increased approximately 16.7% to $350,000. As detailed
below in the "Summary Compensation Table", Mr. Donovan was awarded an annual
bonus of $200,000 and stock options entitling him to purchase 146,775 shares of
the Company's Common Stock, vesting over a five year period for fiscal 1998.
Additionally, the Company has purchased term life insurance for Mr. Donovan's
benefit, at a premium cost during 1998 of $56,808. This compares to the award of
an annual bonus of $86,000 and stock options entitling him to purchase 30,000
shares of the Company's Common Stock vesting over a five year period for 1997.
The increase in Mr. Donovan's annual bonus and option awards was due to certain
pre-determined strategic goals and financial performance objectives being
successfully accomplished during fiscal 1998. The Committee concluded that Mr.
Donovan's total 1998 compensation is competitive and aligned in the mid-range of
total compensation for other chief executives of publicly held companies in
similar businesses and of similar size. Furthermore, the Committee believes that
total 1998 compensation reflects its confidence in Mr. Donovan's ability to lead
the Company to execute the Company's strategic plans, including the continued
development and expansion of the Resorts Division. The Committee's knowledge of
Mr. Donovan's successful background, including his service as the chief
executive officer of another publicly-held real estate company, together with
its observations of Mr. Donovan's performance during his tenure with the
Company, served equally to assure the Committee of his ability to lead the
Company as its chief executive.
Compensation Committee
Joseph C. Abeles
Ralph A. Foote
Stuart A. Shikiar
Bradford T. Whitmore
8
<PAGE>
Executive Compensation
Summary Compensation Table
The following table sets forth compensation for the past three fiscal years
for the Company's Chief Executive Officer and the other four most highly
compensated executive officers (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
----------------------------- ---------------
Securities All Other
Fiscal Underlying Compensation
Name and Principal Position Year Salary ($) Bonus ($) (1) Options (#) (2) ($)(3)
--------------------------- ---- ---------- ------------- --------------- ------
<S> <C> <C> <C> <C> <C>
George F. Donovan 1998 $350,000 $200,000 146,775 $60,772
President and Chief 1997 $300,000 $ 86,000 30,000 $59,183
Executive Officer 1996 $300,000 $139,129 52,500 $39,120
Patrick E. Rondeau 1998 $175,000 $100,000 59,362 $20,431
Senior Vice President, 1997 $160,000 $ 38,000 15,000 $17,666
Director of Corporate 1996 $160,000 $ 61,475 26,250 $ --
Legal Affairs and and Clerk
Daniel C. Koscher 1998 $175,000 $100,000 73,500 $13,973
Senior Vice President, Land 1997 $150,000 $ 38,000 15,000 $ 8,369
Division 1996 $150,000 $ 61,475 26,250 $ 1,751
L. Nicolas Gray 1998 $160,000 $115,000 73,500 $22,920
Senior Vice President, Resorts 1997 $130,000 $ 38,000 15,750 $20,582
Division 1996 $120,000 $ 39,076 -- $24,245
John F. Chiste (4) 1998 $113,846 $ 75,000 59,362 $ --
Treasurer and Chief Financial 1997 $ -- $ -- -- $ --
Officer 1996 $ -- $ -- -- $ --
</TABLE>
- ---------------------
(1) Amounts represent bonuses earned for each fiscal year and paid during the
subsequent fiscal year.
(2) Figures for 1998 and 1997 represent incentive stock options granted under
the Company's 1995 Stock Incentive. Figures for 1996 represent incentive
stock options granted under the Company's Second Amended and Restated 1985
Stock Option Plan. Incentive stock options for 1996 have been adjusted to
reflect Common Stock dividends.
(3) Other compensation for 1998 includes contributions to the Company's Section
401(k) Retirement Savings Plan for the benefit of each Named Executive
Officer (Mr. Donovan - $3,964; Mr. Rondeau - $3,868; Mr Koscher - $3,916
and Mr. Gray - $3,961) and dollar amounts of premiums paid on life
insurance policies for the benefit of the Named Executive Officer (Mr.
Donovan - $56,808; Mr. Rondeau - $16,563; Mr Koscher - $10,057 and Mr. Gray
- $18,959).
(4) Mr. Chiste became the Company's treasurer and chief financial officer on
July 1, 1997.
9
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning stock options
granted to the Named Executive Officers during fiscal 1998.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Number of Total Price
Securities Options Appreciation for
Underlying Granted to Exercise Option Term (2)
Options Employees Price Expiration -----------------------
Granted (#) (1) in Fiscal Year ($ Per Share) Date 5% 10%
--------------- -------------- ------------- ---- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
George F. Donovan 75,000 $3.13 7/31/07 $147,422 $373,594
71,775 4.88 2/24/08 220,089 557,746
----------------- --------- ---------
146,775 16% $367,511 $931,339
Patrick E. Rondeau 30,000 $3.13 7/31/07 $ 58,969 $149,438
29,362 4.88 2/24/08 90,035 228,165
----------------- --------- ---------
59,362 6% $149,004 $377,602
Daniel C. Koscher 30,000 $3.13 7/31/07 $ 58,969 $149,438
43,500 4.88 2/24/08 133,387 338,028
----------------- --------- ---------
73,500 8% $192,356 $487,465
L. Nicolas Gray 30,000 $3.13 7/31/07 $ 58,969 $149,438
43,500 4.88 2/24/08 133,387 338,028
----------------- --------- ---------
73,500 8% $192,356 $487,465
John F. Chiste 30,000 $2.75 7/1/07 $ 51,893 $131,505
29,362 4.88 2/24/08 90,035 228,165
----------------- --------- ---------
59,362 6% $141,927 $359,670
</TABLE>
- ---------------
(1) These options become exercisable in five equal annual installments
commencing one year from the respective dates of grant.
(2) As required by the rules promulgated by the Securities and Exchange
Commission, potential realizable values are based on the prescribed
assumption that the Company's Common Stock will appreciate in value from
the date of grant to the end of the option term at rates (compounded
annually) of 5% and 10%, respectively, and therefore are not intended to
forecast possible future appreciation, if any, in the price of the
Company's Common Stock.
Fiscal Year End Option Values
During fiscal 1998, none of the Named Executive Officers exercised stock
options issued by the Company. The following table sets forth information
regarding the number and unrealized value of unexercised options, adjusted to
give effect to Common Stock dividends, and held by the Named Executive Officers
as of March 29, 1998. Unrealized value is computed by multiplying the number of
shares purchasable by the amount by which the closing market price of the
Company's Common Stock on the New York Stock Exchange on March 27, 1998 exceeds
the exercise price.
10
<PAGE>
Number of
Securities Underlying
Unexercised Value of Unexercised
Options at In-the-Money Options at
Name Year End (#) Fiscal Year End ($)
---- ------------ -------------------
Exerciseable (E) vs. Exerciseable (E) vs.
Unexerciseable (U) Unexerciseable (U)
------------------ ------------------
George F. Donovan 268,033 E $1,248,071 E
274,599 U $1,157,878 U
Patrick E. Rondeau 81,273 E $ 474,793 E
100,342 U $ 416,005 U
Daniel C. Koscher 95,949 E $ 558,967 E
114,480 U $ 461,954 U
L. Nicolas Gray 6,300 E $ 22,712 E
82,950 U $ 325,442 U
John F. Chiste -- E $ -- E
59,362 U $ 256,677 U
Employment Agreements
In March, 1998, the Company entered into employment agreements with each of
George F. Donovan, John F. Chiste, L. Nicolas Gray, Daniel C. Koscher and
Patrick E. Rondeau. Each employment agreement is for a three year period (six
years in the case of Mr. Donovan) (subject to extension) and provides that the
employee will receive a base salary ($375,000 for Mr. Donovan and $175,000 for
each of Messrs. Chiste, Gray, Koscher and Rondeau) and certain other benefits
and will be eligible to receive a cash bonus as determined by the Board of
Directors. Under the employment agreements, if the Company terminates any
employee without cause, the Company will pay the employee his base salary for
the 12 months (24 months in the case of Mr. Donovan) following such termination
(which shall be reduced by the amount of any compensation the employee receives
from subsequent employment during such period). A termination of the employee
without cause shall be deemed to occur upon, among other things, a significant
decrease of the employee's position, duties or responsibilities, the failure by
the Company to obtain the assumption of the employment agreement by any
successor to the Company's business, or the sale of all or substantially all of
the business or assets of the Company or the Company's liquidation. Upon any
termination by the Company for cause (as defined in the employment agreements)
or by the employee, the employee shall be entitled only to amounts then due to
him. In the event the employee is disabled, the employee's employment shall be
terminated and the employee shall be entitled to receive his base salary for 12
months (24 months in the case of Mr. Donovan) following such termination.
Pursuant to his employment agreement, each employee agrees, for 12 months (24
months in the case of Mr. Donovan) following his termination, not to compete
with the Company, disclose confidential information about the Company, or
solicit the Company's current or former employees. In addition, Mr. Donovan's
employment agreement provides that the aggregate of $219,328 of indebtedness
owing by Mr. Donovan to the Company will be forgiven on a pro rata basis (20%
per year) over the five year period commencing on April 1, 1998.
11
<PAGE>
Performance Graph
The following graph assumes an investment of $100 on March 29, 1993 and
thereafter compares the yearly percentage change in cumulative total return to
shareholders of the Company with an industry peer group (consisting of Atlantic
Gulf Communities, Avatar Holdings, Fairfield Communities, ILX Resorts, Signature
Resorts, Silverleaf Resorts and Vistana) and a broad market index (the S&P 500).
The graph shows performance on a total return (dividend reinvestment) basis. The
graph lines connect fiscal year-end dates and do not reflect fluctuations
between those dates.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
STARTING
BASIS
DESCRIPTION 1993 1994 1995 1996 1997 1998
- ------------------ -------- ------- ------- ------- ------- -------
BLUEGREEN CORP ($) $100.00 $ 93.94 $ 98.89 $130.77 $ 92.31 $265.38
S & P 500 ($) $100.00 $101.47 $117.27 $154.92 $185.63 $274.73
PEER GROUP $100.00 $119.05 $119.45 $127.66 $151.23 $240.91
The Compensation Committee Report on Executive Compensation and the
Performance Graph above shall not be deemed "soliciting material" or
incorporated by reference into any of the Company's filings with the Securities
and Exchange Commission by implication or by any reference in any such filing to
this Proxy Statement.
Certain Relationships and Other Transactions
Frederick M. Myers, a Director of the Company, is a senior partner of the
Pittsfield, Massachusetts law firm of Cain, Hibbard, Myers & Cook, which
rendered services to the Company during fiscal 1998. The total amount paid to
Cain, Hibbard, Myers & Cook by the Company for services rendered during fiscal
1998 was approximately $35,369. It is anticipated that Cain, Hibbard, Myers &
Cook will continue to perform certain legal services for the Company during
fiscal 1999.
In connection with George F. Donovan's appointment as the Company's Chief
Executive Officer and his relocation, on November 15, 1993, the Board of
Directors authorized a $130,000 loan which accrued interest at the prime lending
rate through June 1, 1996. The loan has been interest-free from June 2, 1996 to
date. The Board also approved a $33,209 equity advance against the sale of Mr.
Donovan's former residence and the payment of $28,000 to Mr. Donovan's current
residential community for an equity membership. The equity membership is fully
refundable by the residential community in the event Mr.
12
<PAGE>
Donovan's home is sold. Mr. Donovan's March 1998 employment agreement provides
that the total indebtedness of $191,209 plus accrued interest of $28,119 will be
forgiven on a pro rata basis (20% per year) over a five-year period commencing
April 1, 1998.
Bradford T. Whitmore, a director of the Company, is a general partner of
Grace Brothers, Ltd., an investment partnership and broker-dealer. In March,
1997, Grace Brothers, Ltd. extended a short-term loan to the Company in the
amount of $1.5 million which loan was repaid in May, 1997. The interest rate
charged under the agreement was prime plus 1%.
On September 11, 1997, the Company borrowed an aggregate of $6,000,000 from
Joseph C. Abeles, a director of the Company, and Grace Brothers, Ltd., an entity
with a 15.7% beneficial ownership interest in the Company and an affiliate of
Bradford T. Whitmore, a director of the Company, and issued the Convertible
Notes. The proceeds from the issuance were used to fund a portion of the
purchase price of RDI. The Convertible Notes are convertible into shares of the
Company's common stock at a conversion price of $3.92 per share. In December
1997, Stuart A. Shikiar, a Director of the Company, acquired $200,000 of
Convertible Notes from Mr. Abeles in a private transaction. In March 1998, the
holders of the Convertible Notes agreed to subordinate such notes to the
Company's obligations under the Senior Notes.
Any existing loans to the Company's officers and employees other than in
the ordinary course of business have been approved, and any such future loans
will be approved, by a majority of disinterested, non-management Directors. It
is also the Company's policy that any transaction with an employee, officer,
Director or principal shareholder, or affiliate of any of them, involving in
excess of $1,000 (other than in the ordinary course of the Company's business)
shall be approved by a majority vote of disinterested Directors, and any such
transaction will be on terms no less favorable to the Company than those which
could reasonably be obtained from an independent third party.
Proposal 3 - Approval of 1998 Non-Employee Directors Stock Option Plan
The Company's 1998 Non-Employee Directors Stock Option Plan (the "Directors
Plan") was adopted by the Board of Directors on June 4, 1998. The Directors Plan
provides for the grant of nonqualified stock options to purchase shares of
Common Stock to non-employee Directors (each an "Outside Director"). The
Company's 1988 Outside Directors Stock Option Plan (the "1988 Plan") covering
the Company's Outside Directors expired by its terms on April 22, 1998, and no
further option grants may be made under such plan after that date. The Board of
Directors believes that approval of the Directors Plan is in the best interest
of the Company because it will provide the Company with sufficient equity-based
incentives to attract and retain qualified Outside Directors. The Board
recommends a vote FOR the proposal to approve the Directors Plan.
For information with respect to the number of options granted to incumbent
Directors under the 1988 Plan, see the table under "Proposal 1 and 2 - Fixing
the Number of Directors at Seven and Election of Named Directors". The following
summary of the Directors Plan does not purport to be complete and is qualified
in its entirety by reference to the full text of the Plan, which is attached as
Appendix A to this Proxy Statement.
Administration. The Directors Plan provides that it is to be administered
by the Board of Directors (of which a majority of the Directors acting will be
Outside Directors), provided that the Board may, at its discretion, delegate any
and all of its powers under the Directors Plan. The Board has delegated the
administration of the Directors Plan to the Board's Compensation Committee (the
"Committee"), which consists of four Outside Directors.
Shares Subject to the Directors Plan. The aggregate number of shares of the
Company's Common Stock ("Shares") reserved for issuance under the Directors Plan
is 500,000. If any corporate transaction occurs that causes a change in the
capitalization of the Company, the Committee is authorized to make such
adjustments to the number and class of Shares delivered and the number and class
and/or price of Shares subject to outstanding awards granted under the Directors
Plan, as it deems appropriate and equitable to prevent dilution or enlargement
of participant's rights. If any option terminates or expires for any reason or
the Company reacquires any shares issued under the Directors Plan, the
applicable shares will again be available for issuance.
13
<PAGE>
Stock Options. Under the Directors Plan, each year each Outside Director
will automatically be granted a stock option covering 15,000 shares of the
Common Stock on the first business day after the first trading day after the
annual meeting of the Company's shareholders or any special meeting held in lieu
thereof. In the event that the total number of shares available for grant under
the Directors Plan shall not be sufficient to grant each Outside Director 15,000
shares of Common Stock on a particular grant date, the shares available for
grant shall be allocated proportionately among the Outside Directors then in
office.
The option price per share of each option granted under the Directors Plan
is equal to the closing sale price of the Common Stock as reported on the
principal stock exchange on which the shares are traded on the date on which the
stock option is granted.
Options granted under the Directors Plan will vest (become exercisable) in
three equal annual installments. However, if there is a change in the control of
the Company prior to the vesting date, all options will be immediately
exercisable. A "change of control" is deemed to take place if (i) any person or
group becomes the beneficial owner of 25% or more of the total votes that may be
cast in any election of Directors, (ii) there is a change in Board composition
such that at any time a majority of the Board have been members for less than 24
months, (iii) the Company merges or consolidates without the transaction having
been approved by three-fourths of the Board or in circumstances where at least
two-thirds of the board of the surviving entity were not Directors of the
Company or (iv) the Company sells a majority of its assets. If an option holder
ceases to serve as a Director of the Company prior to the vesting date for any
reason other than death, disability or a change of control of the Company, all
of the option holder's rights in the option will terminate. Unless earlier
terminated, options granted under the Directors Plan will terminate five years
after the option holder ceases to be a Director of the Company or, if earlier,
ten years after the date of grant.
During the optionee's lifetime an option will be exercisable only by the
optionee and will not be transferable except by will or by the laws of descent
and distribution. After the option holder's death, his or her executor,
administrator, heirs or legatees may exercise the option.
Amendment and Termination. The Directors Plan authorizes the Board of
Directors to discontinue, suspend or amend the Directors Plan, except that no
action of the Board may, without the shareholders' approval, increase the
maximum number of shares to be offered for sale under options, reduce the
purchase price at which shares may be offered pursuant to options (except in
connection with corporate recapitalizations), modify the eligibility
requirements of the Directors Plan or extend the expiration date of the
Directors Plan; nor may any action of the Board of Directors or the shareholders
alter or impair an optionee's rights under an option previously granted, without
the optionee's consent. The Directors Plan provides that the provisions thereof
with respect to the nature, amount, terms and timing of awards may not be
amended more than once every six months, other than to comply with changes in
the Code, ERISA, or the rules thereunder. The Directors Plan will terminate on
June 4, 2003.
14
<PAGE>
In considering this proposal, shareholders should recognize the fact that,
if the Directors Plan is approved, the Outside Directors will be entitled to
additional benefits (in the form of additional shares of stock available under
the Directors Plan) not currently available to them. Consequently, the interest
of the Board in recommending the adoption of the Directors Plan may diverge from
the interests of the shareholders. The federal income tax consequences to the
Company and participants in the Plan are the same as the consequences of the
grant of nonqualified stock options under the 1995 Incentive Plan discussed
below.
Proposal 4 - Approval of Amendment to the 1995 Stock Incentive Plan
On June 4, 1998, the Board of Directors unanimously voted to amend the 1995
Stock Incentive Plan (the "1995 Incentive Plan") to increase the total number of
shares issuable under the Plan from 1,000,000 to 3,000,000 (subject to further
adjustment for stock dividends, stock splits and other changes in
capitalization). The 1995 Incentive Plan, which was originally adopted by the
Board of Directors on May 31, 1995, provides for the grant of stock options
(both nonqualified and incentive), restricted stock, unrestricted stock,
performance shares, loans and cash and other awards to employees (including
executive officers) and other individuals (including consultants and independent
contractors) performing services for the Company and its subsidiaries and other
entities in which the Company or any of its subsidiaries has a substantial
equity interest. As of May 1, 1998, there were 969,999 stock options outstanding
under the 1995 Incentive Plan. Any award many be granted alone or in conjunction
with other awards under the Plan. For information with respect to the number of
options granted to named executive officers, see the table under "Proposal 1 and
2 - Fixing the Number of Directors at Seven and Election of Named Directors".
The Board of Directors believes that approval of the amendment to the 1995
Incentive Plan is in the best interest of the Company because it will provide
the Company with sufficient equity and equity-based incentives to compensate
adequately the executive officers, employees and independent contractors of the
Company and its subsidiaries and thereby aid the Company in attracting,
retaining and motivating qualified personnel and the Board recommends a vote FOR
the proposal to approve the amendment to the 1995 Incentive Plan. The following
summary of the 1995 Incentive Plan does not purport to be complete and is
qualified in its entirety by reference to the full text thereof, which is
attached as Appendix B to this Proxy Statement.
Administration. The Board has delegated the administration of the 1995
Incentive Plan to the Compensation Committee of the Board of Directors (the
"Committee"), which has complete discretion to select, from among eligible
participants, the individuals to receive grants under the 1995 Incentive Plan
and to establish the terms of the grants. The Committee is comprised solely of
Directors qualified to administer the 1995 Incentive Plan pursuant to Rule
16b-3(c)(2) of the Exchange Act.
Shares Subject to the 1995 Incentive Plan. If amended, the aggregate number
of shares of the Company's Common Stock ("Shares") reserved for issuance under
the 1995 Incentive Plan will increase 2,985,000. If any corporate transaction
occurs that causes a change in the capitalization of the Company, the Committee
is authorized to make such adjustments to the number and class of Shares
delivered and the number and class and/or price of Shares subject to outstanding
awards granted under the 1995 Incentive Plan, as it deems appropriate and
equitable to prevent dilution or enlargement of participant's rights. If any
option or award terminates or expires for any reason or the Company reacquires
any shares issued under the 1995 Incentive Plan, the applicable shares will
again be available for issuance.
15
<PAGE>
Amendment and Termination. In no event may any option or other award under
the 1995 Incentive Plan be granted on or after May 31, 2005. The Board may
amend, modify or terminate the 1995 Incentive Plan at any time, provided that no
amendment shall be effective unless and until it is approved by the stockholders
of the Company where failure to obtain such approval would adversely affect the
compliance of the plan with Rule 16b-3 under the Exchange Act or the amendment
would increase the total number of shares reserved for issuance under the plan,
decrease the options price of any nonqualified stock option to less than 50% of
fair market value on the date of grant of the option, change the class of
persons who may be eligible to participate in the plan, or extend the
termination date of the plan beyond ten years, and no amendment, termination or
modification shall adversely affect in a material manner any right of a
participant with respect to any outstanding award without the consent of the
participant.
Stock Options. The Committee may grant incentive stock options intended to
meet the requirements of Section 422 of the Code ("ISOs"), nonqualified stock
options or a combination thereof under the 1995 Incentive Plan. ISOs may only be
granted to employees of the Company or its subsidiaries. The exercise price for
nonqualified stock options issued under the 1995 Incentive Plan must be at least
50% of the fair market value of the underlying stock at the time of grant and
the exercise price for ISOs under the 1995 Incentive Plan cannot be less than
100% of the fair market value of the underlying stock at the time of grant,
provided that the exercise price of any option granted to any employee who owns
10% or more of the capital stock of the Company or any subsidiary cannot be less
than 110% of such fair market value. On June 2, 1998, the closing sale price of
the Common Stock on the New York Stock Exchange was $8.50 per share. Options
granted under the 1995 Incentive Plan will expire ten years after the grant
date. The Committee will establish other terms for options including the
schedule for vesting or exercisability of options, terms for payment of the
option price and periods for exercise following the optionholder's termination
of employment. Each option granted shall be evidenced by an instrument in such
form as the Committee shall approve. No incentive stock option may be granted
under the 1995 Incentive Plan that is first exercisable in any year if and to
the extent that the aggregate fair market value, at the time of grant, of all
incentive stock options granted to the employees which are first exercisable in
such year exceeds $100,000. Options are not transferable by the participant,
except by will or by the laws of descent and distribution. During a
participant's lifetime, options are exercisable only by the participant.
Restricted and Unrestricted Stock. Grants of restricted stock involve the
issuance of Shares to the recipient subject to transfer restrictions and the
Company's right to repurchase the Shares at a price determined by the Committee
if certain conditions (such as continuation of employment) are not satisfied by
the recipient. As the conditions are satisfied, the repurchase restrictions
"lapse" and the recipient is then free to hold or sell the Shares free of the
restrictions. Grants of unrestricted stock involve the issuance of Shares, free
of any transfer or repurchase restrictions. The Committee shall have discretion
to determine the number of shares to be granted, whether or not they will be
restricted (and, if so, the terms of the restrictions) and the amount and form
of the consideration to be paid for the shares granted, provided that the
purchase price shall in no event be less than the par value of the Common Stock.
Performance Shares. Grants of performance shares involve setting
performance goals and the Company's agreement to pay a specified amount
determined by the Committee (which may be paid in the form of cash, shares,
other securities of the Company or other forms of payment, or a combination
thereof, all as determined by the Committee) to the recipient if the performance
goals are fully satisfied. The performance goals may be individual, group,
divisional or Company-wide goals. Each performance share grant shall be subject
to such terms and conditions, including but not limited to the award period, the
performance objectives to be obtained and any restriction upon the payment
issued in respect of the grant, as the Committee shall determine. The award may
be converted into a specified number of Shares at the
16
<PAGE>
time the goals are established, with the payoff, after satisfaction of the
goals, being made in the number of Shares or their current value at that time.
The Committee shall have the power to determine the maximum value of each
performance share (and the amount to be paid if performance objectives are met
in part or if the participant's employment is terminated prior to the end of the
award period). The Committee shall also have authority to adjust performance
measures and the value of performance shares if it subsequently determines they
are not appropriate in the circumstances. All rights with respect to performance
shares shall be available only during a participant's (and his or her
beneficiary's) rights in the event of retirement, death or other termination of
employment.
Other Awards. The 1995 Incentive Plan authorizes the making of loans in
connection with the purchase of shares under an award or the payment of any
applicable tax in respect of income recognized as a result of the award. The
Committee shall have full authority to decide the terms of any such loan,
provided that no loan may have a term more than ten years. In addition, the 1995
Incentive Plan authorizes the grant of other types of awards that are consistent
with the terms of the 1995 Incentive Plan.
The Indenture pursuant to which the Company's Debentures were issued
provides for an adjustment to the price at which the Debentures may be converted
into Common Stock in certain circumstances. In particular, the Indenture
provides (subject to certain exceptions) for certain weighted-average
anti-dilution adjustments to the conversion price if, among other things, (a)
the Company issues shares for less than the current market price (as defined in
the Indenture) on the date the Company fixes the offering price of such shares
or (b) the Company issues any securities exercisable for or convertible into
shares for an exercise or conversion price less than the current market price
per share on the date of issuance of such securities. The issuance of stock or
grant of options under the 1995 Incentive Plan could, depending the terms of the
applicable award, result in an adjustment to the conversion price of the
Debentures.
Awards to Employees Covered by Section 162(m) of the Code. Section 162(m)
of the Code generally limits the income tax deduction for compensation paid by
an employer which is a publicly held corporation to certain key executives to
$1,000,000 per executive per year. The deduction limitation of Section 162(m)
does not apply, however, to certain performance-based compensation arrangements,
including plans providing for stock options having an exercise price of not less
than 100% of fair market value, which establish specific performance goals
and/or limits on the amount of awards, which are administered by a committee
composed exclusively of "outside" directors, and which are disclosed to and
approved by the stockholders of the public company. The 1995 Incentive Plan
includes provisions and limits on awards which are intended to enable such
awards to be exempt from the deduction limitation of Section 162(m) of the Code.
Grant Information. To date, no restricted or unrestricted stock or
performance shares have been granted under the 1995 Incentive Plan. The
following table sets forth the number of outstanding options granted during
fiscal 1998 under the 1995 Incentive Plan to the specified individuals and
groups:
Name Number of Options
- ---- -----------------
George F. Donovan 146,775
Patrick E. Rondeau 59,362
Daniel C. Koscher 73,500
L. Nicolas Gray 73,500
John F. Chiste 59,362
All current executive officers as a group (9 persons) 462,499
All employees who were not executive officers as a group 462,500
17
<PAGE>
Federal Income Tax Consequences under the Directors Plan and the 1995 Incentive
Plan
The following is a brief description of the federal income tax consequences
related to options awarded under the Directors Plan and the 1995 Incentive Plan.
Consequences to the Optionholder. There are no federal income tax
consequences to the optionholder solely by reason of the grant of ISOs or
nonqualified options under the 1995 Incentive Plan or the Directors Plan. The
exercise of an ISO is not a taxable event for regular federal income tax
purposes if certain requirements are satisfied, including the restriction
providing that the optionholder generally must exercise the option no later than
three months following termination of his employment. However, the exercise of
an ISO may give rise to an alternative minimum tax liability (see discussion
below).
Upon the exercise of a nonqualified option, the optionholder will generally
recognize ordinary income in an amount equal to the excess of fair market value
of the Shares at the time of exercise over the amount paid as the exercise
price. The ordinary income recognized in connection with the exercise by an
optionholder of a nonqualified option will be subject to both income and
employment tax withholding. The optionholder's tax basis in the Shares acquired
pursuant to the exercise of an option will be the amount paid upon exercise
plus, in the case of a nonqualified option, the amount of ordinary income
recognized by the optionholder upon exercise.
If any optionholder disposes of Shares acquired upon the exercise of an ISO
in a taxable transaction, and such disposition occurs more than two years from
the date on which the option is granted and more than one year after the date on
which the Shares are transferred to the optionholder pursuant to the exercise of
the ISO (a "qualifying disposition"), the optionholder will recognize long-term
capital gain or loss equal to the difference between the amount realized upon
such disposition and the optionholder's adjusted basis in such Shares (generally
the exercise price). In the case of Shares acquired under the 1995 Incentive
Plan for less than 100% of the fair market value at the time the option was
granted, any disposition of such Shares in a qualifying disposition will result
in the optionholder being required to include as ordinary income (and not as
gain) in his or her gross income the excess of fair market value of such Shares
at the time of disposition.
If the optionholder disposes of Shares acquired upon the exercise of an ISO
(other than in certain tax-free transactions) within two years from the date on
which the ISO is granted or within one year after the transfer of the Shares to
the optionholder pursuant to the exercise of the ISO (a "disqualifying
disposition"), then at the time of disposition the optionholder will generally
recognize ordinary income equal to the lesser of (i) the excess of such Shares'
fair market value on the date of exercise over the exercise price paid by the
optionholder or (ii) the optionholder's actual gain (i.e. the excess, if any, of
the amount realized on the disposition over the exercise price paid by the
optionholder). If the total amount realized on a taxable disposition (including
return of capital and capital gain) exceeds the fair market value on the date of
exercise, then the optionholder will recognize a capital gain in the amount of
such excess. If the optionholder incurs a loss on the disposition (i.e., if the
total amount realized is less than the exercise price paid the optionholder),
then the loss will be a capital loss.
If any optionholder disposes of Shares acquired upon exercise of a
nonqualified option in a taxable transaction, the optionholder will recognize
capital gain or loss in an amount equal to the difference between his/her basis
(as discussed above) in the Shares sold and the total amount realized upon
disposition. Any such capital gain or loss (and any capital gain or loss
recognized on a disqualifying
18
<PAGE>
disposition of Shares acquired upon exercise of ISOs as discussed above) will be
long-term depending on whether the Shares were held for more than one year from
the date such Shares were transferred to the optionholder.
Alternative minimum tax ("AMT") is imposed in addition to, but only to the
extent it exceeds, the optionholder's regular tax for the taxable year.
Generally, AMT is computed at the rate of 26% on the excess of a taxpayer's
alternative minimum taxable income ("AMTI") over the exception amount, but only
if such excess amount does not exceed $175,000 ($87,500 in the case of married
individuals filing separate returns). The AMT tax rate is 28% of such excess
amount over the $175,000 ($87,500 ) amount. For these purposes, the exemption
amount is $45,000 for joint returns or returns of surviving spouses ($33,750 for
single taxpayers and $22,500 for married individuals filing separate returns),
reduced by 25% of the excess of AMTI over $150,000 for joint returns or returns
of surviving spouses ($112,500 for single taxpayers and $75,000 for married
individuals filing separate returns). A taxpayer's AMTI is essentially the
taxpayer's taxable income adjusted pursuant to the AMT provisions and increased
by items of tax preference.
The exercise of ISOs (but not nonqualified options) will generally result
in an upward adjustment to the optionholder's AMTI in the year of exercise by an
amount equal to the excess, if any, of the fair market value of the stock on the
date of exercise over the exercise price. The basis of the stock acquired for
AMT purposes, will equal the exercise price increased by the prior upward
adjustment of the taxpayer's AMTI due to the exercise of the option. This will
result in a corresponding downward adjustment to the optionholder's AMTI in the
year the stock is disposed. The AMT paid with respect to the exercise of an ISO
is allowed as a credit against the regular tax liability of the optionholder in
a subsequent year when he disposes of the stock; therefore, imposition of the
AMT at the time of exercise of an ISO may not increase the aggregate amount of
income tax paid by the optionholder, but instead may only affect the timing of
such payments.
Consequences to the Company. There are no federal income tax consequences
to the Company by reason of the grant of ISOs or nonqualified options or the
exercise of ISOs (other than disqualifying dispositions). At the time the
optionholder recognizes ordinary income from the exercise of a nonqualified
option, the Company will be entitled to a federal income tax deduction in the
amount of the ordinary income so recognized (as described above), provided that
the Company satisfies its tax reporting obligations described below. To the
extent the optionholder recognized ordinary income by reason of a disqualifying
disposition of the stock acquired upon exercise of ISOs, the Company will be
entitled to a corresponding deduction in the year in which the disposition
occurs, provided that the Company satisfies a tax reporting obligation described
below. The Company will be required to report to the Internal Revenue Service
any ordinary income recognized by any optionholder by reason of the exercise of
a nonqualified option or the disqualifying disposition of stock acquired upon
exercise of ISOs. The Company will be required to withhold income and employment
taxes (and pay the employer's share of employment taxes) with respect to
ordinary income recognized by the optionholder upon the exercise of nonqualified
options.
Tax Treatment of Restricted Stock. An employee who receives a restricted
stock award under the 1995 Incentive Plan generally will not recognize taxable
income at the time the award is received, but will recognize ordinary
compensation income when the transfer and forfeiture restrictions lapse in an
amount equal to the excess of the aggregate fair market value, as of the date
the restrictions lapse, over the amount, if any, paid by the employee for the
restricted stock. Alternatively, an employee receiving stock may elect, in
accordance with Section 83(b) of the Code, to be taxed on the excess of the fair
market value of the shares of restricted stock at the time of grant over the
amount if any, paid by the employee, notwithstanding
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the transfer and forfeiture restrictions on the stock. All such taxable amounts
are deductible by the Company at the time and in the amount of the ordinary
compensation income recognized by the employee. The full amount of dividends or
other distributions of property made with respect to restricted stock prior to
the lapse of the transfer and forfeiture restrictions will constitute ordinary
compensation income to the employee and the Company will be entitled to a
deduction at the same time and in the same amount.
Tax Treatment of Unrestricted Stock. Upon receiving an award of
unrestricted stock under the 1995 Incentive Plan, the employee will realize
ordinary compensation income to the extent of the fair market value (determined
at the time of transfer to the employee) of such Shares, over the amount, if any
paid by the employee for the Shares. Such taxable amounts are deductible as
compensation by the Company.
Limitation on Deduction Under Section 162(m) of the Code. Section 162(m) of
the Code generally limits an employer's income tax deduction for compensation
paid to certain key executives of a public company to $1,000,000 per executive
per year. The deduction limitation of Section 162(m) does not apply, however, to
certain performance-based compensation arrangements, including plans providing
for stock options having an exercise price of not less than 100% of fair market
value, which establish specific performance goals and/or limits on awards, which
are administered by a committee composed exclusively of "outside" directors, and
are disclosed to and approved by the shareholders of the public company.
Other Tax Consequences. The foregoing discussion is not a complete
description of the federal income tax aspects of ISOs and nonqualified options
under the 1995 Incentive Plan. In addition, administrative and judicial
interpretations of the application of the federal income tax laws are subject to
change. Furthermore, the foregoing discussion does not address state or local
tax consequences.
Proposal 5 - Ratification of the Appointment of Ernst & Young LLP as Independent
Auditors of the Company
The Board of Directors has appointed the firm of Ernst & Young LLP ("E&Y")
as auditors for fiscal 1999, subject to final approval by the Audit Committee of
the scope of, and E&Y's fees for, performing the audit for such fiscal year. E&Y
and its predecessor, Arthur Young & Co., have served as the Company's auditors
since 1984. The Company has been informed that E&Y has no direct or indirect
financial interest in the Company and has no other connection with the Company
other than as independent auditors. Representatives of E&Y are expected to be
present at the Special Meeting and will have the opportunity to make a statement
if they so desire and will be available to respond to appropriate questions.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than ten percent of its Common Stock to file
reports with the Securities and Exchange Commission disclosing their ownership
of stock in the Company and changes in such ownership. Copies of such reports
are also required to be furnished to the Company. Based solely on a review of
the copies of such reports received by it, the Company believes that, during
fiscal 1998, all such filing requirements were complied with.
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Other Matters
As of the date of this Proxy Statement, the Board of Directors knows of no
business to come before the meeting except as set forth above. If any other
matters should properly come before the meeting, it is expected that the
enclosed proxy will be voted on such matters in accordance with the best
judgment of the proxies. Discretionary authority with respect to any such
matters is conferred by the proxy.
By the order of the Board of Directors,
/s/ PATRICK E. RONDEAU
Patrick E. Rondeau, Clerk
June 26, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT AND/OR FORM 10-K FOR THE YEAR ENDED
MARCH 29, 1998, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO,
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE PROVIDED WITHOUT
CHARGE UPON WRITTEN REQUEST TO INVESTOR RELATIONS, BLUEGREEN CORPORATION, 4960
BLUE LAKE DRIVE, BOCA RATON, FLORIDA 33431.
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Appendix A
BLUEGREEN CORPORATION
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This 1998 Non-Employee Director Stock Option Plan (hereinafter,
the "Plan") is intended to promote the interests of Bluegreen Corporation, a
Massachusetts corporation (the "Company"), by providing an inducement to obtain
and retain the services of qualified persons who are not employees or officers
of the Company to serve as members of its Board of Directors (the "Board").
2. Available Shares. The total number of shares of Common Stock, $.01 par
value per share, of the Company (the "Common Stock"), for which options may be
granted under the Plan shall not exceed 500,000 shares subject to adjustment in
accordance with paragraph 10 of the Plan. Shares subject to the Plan are
authorized but unissued shares or shares that were once issued and subsequently
reacquired by the Company. If any options granted under the Plan are surrendered
before exercise or lapse without exercise, in whole or in part, the shares
reserved therefor shall continue to be available under the Plan.
3. Administration. The Plan shall be administered by the Board or by a
committee appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains from appointing a Committee, the Board shall have all
power and authority to administer the Plan. In such event, the word "Committee"
wherever used herein shall be deemed to mean the Board. The Committee shall,
subject to the provisions of the Plan, have the power to construe the Plan, to
determine all questions hereunder, and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.
4. Granting of Options. During the term of the Plan and subject to the
availability of shares under the Plan, on the day following each Annual Meeting
of the Company's Stockholders occurring after 1998, each person who is then
serving on the Board, and who is not a current or former employee or officer of
the Company, shall automatically be granted an option to purchase 15,000 shares
of the Common Stock. Except for the specific options referred to above, no other
options shall be granted under the Plan.
5. Option Price. The purchase price of the stock covered by an option
granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of Section 10 below. For purposes
of this Plan, if, at the time an option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available the date such option is granted and shall mean (i) the closing
sales price of the Common Stock on the principal national securities exchange on
which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; (ii) the last reported sale price (on that date)
of the Common Stock on the Nasdaq National Market, if the Common Stock is not
then traded on a national securities exchange; or (iii) the closing bid price
(or average of bid prices) last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on the Nasdaq National Market or on a national securities exchange. If,
at the time an option is granted under this Plan, the Company's stock is not
publicly traded, "fair market value" shall be the fair market value on the date
the option is granted as determined by the Board in good faith.
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6. Period of Option. Unless sooner terminated in accordance with the
provisions of Section 8 below, an option granted hereunder shall expire on the
date which is ten (10) years after the date of grant of the option.
7. Vesting of Shares and Non-transferability of Options.
(a) Vesting. Options granted under this Plan shall not be exercisable until
they become vested. Options granted under this Plan shall vest in the Optionee
and thus become exercisable by the Optionee in three equal annual installments
commencing on the first anniversary of the date of grant.
(b) Legend on Certificates. The certificates representing such shares shall
carry such appropriate legend and such written instructions shall be given to
the Company's transfer agent as may be deemed necessary or advisable by counsel
to the Company in order to comply with the requirements of the Securities Act of
1933, as amended, or any state securities laws.
(c) Non-transferability. Any option granted pursuant to this Plan shall not
be assignable or transferable other than by will or the laws of descent and
distribution and shall be exercisable during the Optionee's lifetime only by him
or her.
8. Termination of Option Rights.
(a) In the event an Optionee ceases to be a member of the Board for any
reason other than death or permanent disability, any then unexercised portion of
options granted to such Optionee shall, to the extent not then vested,
immediately terminate and become void; any portion of an option which is then
vested but has not been exercised at the time the Optionee so ceases to be a
member of the Board may be exercised, to the extent it is then vested, by the
Optionee until the earlier of the scheduled expiration date of the option and 90
days after the date the Optionee ceased to be a member of the Board.
(b) In the event that an Optionee ceases to be a member of the Board by
reason of his or her death or permanent disability, any option granted to such
Optionee shall be immediately and automatically accelerated and become fully
vested and all unexercised options shall be exercisable by the Optionee (or by
the optionee's personal representative, heir or legatee, in the event of death)
until the earlier of the scheduled expiration date of the option or one year
after the death or disability of the Optionee.
(c) Notwithstanding the provisions in this Section 8, the Committee may, in
its sole discretion, establish different terms and conditions pertaining to the
effect of a participant's ceasing to be a member of the Board.
9. Exercise of Option. An option granted hereunder shall, to the extent
then exercisable, be exercisable in whole or in part by giving written notice to
the Company at its principal office address, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares. Payment may be (a) in United States dollars in cash or by
check, (b) in whole or in part in shares of Common Stock of the Company already
owned by the person or persons exercising the option or shares subject to the
option being exercised (subject to such restrictions and guidelines as the Board
may adopt from time to time), valued at fair market value determined in
accordance with the provisions of Section 5 or (c) consistent with applicable
law, through the delivery of an assignment to the Company of a sufficient amount
of the proceeds from the sale of the Common Stock acquired upon exercise of the
option and an
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authorization to the broker or selling agent to pay that amount to the Company,
which sale shall be at the participant's direction at the time of exercise.
There shall be no such exercise at any one time as to fewer than one hundred
(100) shares or all of the remaining shares then purchasable by the person or
persons exercising the option, if fewer than one hundred (100) shares. The
Company's transfer agent shall, on behalf of the Company, prepare a certificate
or certificates representing such shares acquired pursuant to exercise of the
option, shall register the optionee as the owner of such shares on the books of
the Company and shall cause the fully executed certificates(s) representing such
shares to be delivered to the optionee as soon as practicable after payment of
the option price in full. The holder of an option shall not have any rights of a
stockholder with respect to the shares covered by the option except to the
extent that one or more certificates for such shares shall be delivered to him
or her upon the due exercise of the option.
10. Adjustments Upon Changes in Capitalization and Other Matters. Upon the
occurrence of any of the following events, an Optionee's rights with respect to
options granted to him or her hereunder shall be adjusted as hereinafter
provided:
(a) Stock Dividends. In the event the Company shall issue any of its
shares as a stock dividend upon or with respect to the shares of stock of
the class which shall at the time be subject to option hereunder, each
Optionee upon exercising an option shall be entitled to receive (for the
purchase price paid upon such exercise) the shares as to which he is
exercising his option and, in addition thereto (at no additional cost),
such number of shares of the class or classes in which such stock dividend
or dividends were declared or paid, and such amount of cash in lieu of
fractional shares, as he would have received if he had been the holder of
the shares as to which he is exercising his option at all times between the
date of grant of such option and the date of its exercise.
(b) Merger; Consolidation; Liquidation; Sale of Assets. In the event
the Company is merged into or consolidated with another corporation under
circumstances where the Company is not the surviving corporation or if the
Company is liquidated or sells or otherwise disposes of all or
substantially all of its assets to another corporation while unexercised
options remain outstanding under this Plan, (i) subject to the provisions
of clauses (iii), (iv) and (v) below, after the effective date of such
merger, consolidation or sale, as the case may be, each holder of an
outstanding option shall be entitled, upon exercise of such option, to
receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to
the terms of the merger, consolidation or sale; or (ii) the Board may waive
any discretionary limitations imposed with respect to the exercise of the
option so that all options from and after a date prior to the effective
date of such merger, consolidation, liquidation or sale, as the case may
be, specified by the Board, shall be exercisable in full; or (iii) all
outstanding options may be cancelled by the Board as of the effective date
of any such merger, consolidation, liquidation or sale, provided that
notice of such cancellation shall be given to each holder of an option, and
each such holder thereof shall have the right to exercise such option in
full (without regard to any discretionary limitations imposed with respect
to the option) during a 30-day period preceding the effective date of such
merger, consolidation, liquidation or sale; or (iv) all outstanding options
may be cancelled by the Board as of the date of any such merger,
consolidation, liquidation or sale, provided that notice of such
cancellation shall be given to each holder of an option and each such
holder thereof shall have the right to exercise such option but only to the
extent exercisable in accordance with any discretionary limitations imposed
with respect to the option prior to the effective date of such merger,
consolidation, liquidation or sale; or (v) the Board may provide for the
cancellation of all outstanding options and for the payment to the holders
thereof of some part or all of the amount by which the value of the Common
Stock issuable upon the exercise thereof exceeds the payment, if any, which
the holder would have been required to make to exercise such option.
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(c) Issuance of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
(d) No Fractional Shares. No fractional shares shall actually be
issued under the Plan. Any fractional shares which, but for this
subparagraph (d), would have been issued to an Optionee pursuant to an
option, shall be deemed to have been issued and immediately sold to the
Company for their fair market value, and the Optionee shall receive from
the Company cash in lieu of such fractional shares.
(e) Adjustments. Upon the happening of any of the foregoing events,
the class and aggregate number of shares set forth in Section 2 above that
are subject to options which previously have been or subsequently may be
granted under the Plan shall also be appropriately adjusted to reflect such
events. The Board shall determine the specific adjustments to be made under
this Section 10 and its determination shall be conclusive.
11. Restrictions on Issuance of Shares. Notwithstanding the provisions of
Sections 4 and 9 above, the Company shall have no obligation to deliver any
certificate or certificates upon exercise of an option until one of the
following conditions shall be satisfied:
(i) The shares with respect to which the option has been exercised
are at the time of the issue of such shares effectively
registered under applicable federal and state securities laws as
now in force or hereafter amended; or
(ii) Counsel for the Company shall have given an opinion that such
shares are exempt from registration under federal and state
securities laws as now in force or hereafter amended; and the
Company has complied with all applicable laws and regulations
with respect thereto, including without limitation all
regulations required by any stock exchange upon which the
Company's outstanding Common Stock is then listed.
12. Representation of Optionee. If requested by the Company, the Optionee
shall deliver to the Company written representations and warranties upon
exercise of the option that are necessary to show compliance with federal and
state securities laws, including representations and warranties to the effect
that a purchase of shares under the option is made for investment and not with a
view to their distribution (as that term is used in the Securities Act of 1933).
13. Option Agreement. Each option granted under the provisions of this Plan
shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf of the Company and by the Optionee to whom such
option is granted. The option agreement shall contain such terms, provisions and
conditions not inconsistent with this Plan as may be determined by the officer
executing it.
14. Term and Amendment of Plan. This Plan was adopted by the Board
effective as of June 4, 1998, subject to approval by the stockholders of the
Company. Options may no longer be granted under the Plan after June 4, 2003, and
the Plan shall terminate when all options granted or to be granted hereunder are
no longer outstanding. Subject to the provisions of Section 4 above, options may
be granted under the Plan prior to the date of stockholder approval of the Plan.
If the approval of stockholders is not obtained by June
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4, 1999, any grants of options under the Plan made prior to that date will be
rescinded. The Board may at any time terminate the Plan or make such
modification or amendment thereof as it deems advisable; provided, however, that
the Board may not, without approval by the stockholders, (a) increase the
maximum number of shares for which options may be granted under the Plan (except
by adjustment pursuant to Section 10), (b) materially modify the requirements as
to eligibility to participate in the Plan, (c) materially increase benefits
accruing to option holders under the Plan or (d) amend the Plan in any manner
which would cause Rule 16b-3 to become inapplicable to the Plan; and provided
further that the provisions of this Plan specified in Rule 16b-3(c)(2)(ii)(A)
(or any successor or amended provision thereof) under the Securities Exchange
Act of 1934 (including without limitation, provisions as to eligibility, amount,
price and timing of awards) may not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act or the rules thereunder. Termination or any
modification or amendment of the Plan shall not, without consent of a
participant, affect his or her rights under an option previously granted to him
or her.
15. Compliance with Regulations. It is the Company's intent that this Plan
comply in all respects with Rule 16b-3 under the Securities Exchange Act of 1934
(or any successor or amended version thereof) and any applicable Securities and
Exchange Commission interpretations thereof. If any provision of the Plan is
deemed not to be in compliance with Rule 16b-3, the provision shall be null and
void.
16. Governing Law. The validity and construction of this Plan and the
instruments evidencing options shall be governed by the laws of The Commonwealth
of Massachusetts, without giving effect to the principles of conflicts of law
thereof.
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Appendix B
BLUEGREEN CORPORATION
1995 STOCK INCENTIVE PLAN
(as amended June 4, 1998)
-----------------
1. Purpose. The purpose of the Bluegreen Corporation 1995 Stock Incentive
Plan (the "Plan") is to advance the interests of Bluegreen Corporation (the
"Company") and its present and future Affiliates by strengthening the ability of
the Company and its Affiliates to attract, retain and motivate employee and
consultants to and independent contractors of the Company and its Affiliates by
providing incentives, opportunities and favorable terms for them to acquire
stock of the Company and to receive other Awards.
The Plan shall be administered by the Board of Directors of the Company
(the "Board"). The Board shall have the right, at its discretion, to delegate
any and all of its powers under the Plan to the Compensation Committee of the
Board, or such other committees or persons designated by the Board (such
Compensation Committee or other committee or persons designated by the Board is
hereinafter referred to as the "Committee"), as provided in and subject to
Section 14. In the event that the Board appoints a Committee to administer the
Plan, in whole or in part, the Committee's determinations with respect thereto
shall not be subject to approval by the Board. References in the Plan to the
Committee shall be deemed to refer to the Board to the extent the Board has not
delegated administration of the Plan to the Committee, and any references to the
Board shall be deemed references to the Committee if the Board has delegated its
powers.
2. Participation. The Committee shall have exclusive power (except as may
be delegated by the Committee as permitted herein) to select the employees and
other individuals performing services for the Company and its Affiliates who
shall be eligible individuals who may participate in the Plan and be granted
Awards under the Plan. Eligible individuals may be selected individually or by
groups or categories, as determined by the Committee in its discretion. As used
herein the term "Participant" means each eligible individual to whom an Award
has been made under any provision of the Plan.
3. Awards Under the Plan.
3.1 Types of Awards. Awards under the Plan ("Awards") may include, but need
not be limited to, one or more of the following types, either alone or in any
combination thereof: (i) Stock Options; (ii) Restricted Stock; (iii)
Unrestricted Stock; (iv) Performance Shares; (v) Loans; (vi) Supplemental Cash
Grants; and (viii) any other type of Award deemed by the Committee in its
discretion to be consistent with the purposes of the Plan.
Stock Options, which include "Nonqualified Stock Options" and "Incentive
Stock Options" or combinations thereof, are rights to purchase shares of the
common stock of the Company ("Shares" or "Stock"). Nonqualified Stock Options
and Incentive Stock Options are subject to the terms, conditions and
restrictions specified in Section 4. Restricted Stock are Shares which are
issued subject to terms, conditions and restrictions specified in Section 5.
Unrestricted Stock are Shares issued without restrictions as described in
Section 5. Performance Shares are contingent awards, subject to terms,
conditions and restrictions described in Section 6, under which the Participant
may become entitled to receive cash, Shares, Other
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Securities, or other forms of payment, or any combination thereof, as determined
by the Committee.
Loans and Supplemental Cash Grants are other Awards which may be made
subject to the terms described in Section 7.
3.2 Maximum Number of Shares That May be Issued. There may be issued under
the Plan (as Restricted Stock or Unrestricted Stock, in payment of Performance
Shares, pursuant to the exercise of Stock Options, or in payment of or pursuant
to the exercise of other Awards) up to an aggregate of 3,000,000 Shares, subject
to adjustment as provided in Section 12. Shares issued pursuant to the Plan may
be either authorized but unissued Shares, treasury Shares, reacquired Shares, or
any combination thereof. If any Shares issued as Restricted Stock or otherwise
subject to repurchase or forfeiture rights are reacquired by the Company
pursuant to such rights, or if any Stock Option or other Award (other than Stock
Options or other Awards issued in respect of such Assumed Options) is canceled,
terminates or expires unexercised, or if any Award payable in Stock or cash
(other than Stock Options or other Awards issued in respect of such Assumed
Options) is satisfied in cash rather than Stock, any Shares that would otherwise
have been issuable pursuant thereto will be available for issuance under new
Awards.
3.3 Rights With Respect to Shares and Other Securities.
(a) Unless otherwise determined by the Committee in its discretion, a
Participant to whom an Award of Restricted Stock has been made (and any person
succeeding to such a Participant's rights pursuant to the Plan) shall have,
after issuance of a certificate for the number of Shares awarded and prior to
the expiration of the Restricted Period (as defined in Section 5) or the earlier
repurchase of such Shares as herein provided, ownership of such Shares,
including the right to vote the same and to receive dividends or other
distributions made or paid with respect to such Shares (provided that such
Shares, and any new, additional or different Shares, or Other Securities, or
other forms of consideration which the Participant may be entitled to receive
with respect to such Shares as a result of a stock split, stock dividend or any
other change in the capital structure of the Company, shall be subject to the
restrictions hereinafter described as determined by the Committee in its
discretion), subject, however, to the options, restrictions and limitations
imposed thereon pursuant to the Plan. Notwithstanding the foregoing, a
Participant with whom any agreement is made to issue Shares in the future, shall
have no rights as a shareholder with respect to Shares related to such agreement
until issuance of a certificate to him.
(b) Unless otherwise determined by the Committee in its discretion, a
Participant to whom a grant of Stock Options, Performance Shares or any other
Award is made (and any person succeeding to such a Participant's rights pursuant
to the Plan) shall have no rights as a shareholder with respect to any Shares or
as a holder with respect to Other Securities, if any, issuable pursuant to any
such Award until the date of the issuance of a stock certificate to him for such
Shares or other instrument of ownership, if any. Except as provided in Section
12, no adjustment shall be made for dividends, distributions or other rights for
which the record date is prior to the date such stock certificate or other
instrument of ownership, if any, is issued.
3.4 Definitions of Certain Terms. Whenever the "Fair Market Value" of
Shares or Other Securities or any other property must be determined pursuant to
any provisions of the Plan, "Fair Market Value" shall be the amount determined
by the Committee as follows:
(i) if the Stock or Other Securities or other property are then
traded on a securities exchange, the closing sale price on the
principal market on which the Stock or Other Securities or
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other property are traded on the date in question (or if such
price is not available on such date, on the business day closest
to such date for which such price is available); or
(ii) if the Stock or Other Securities or other property are then
traded in the over-the-counter market, the mean between the
closing bid and asked price of the Stock or Other Securities or
other property on the date in question (or if such prices are not
available on such date, on the business day closest to such date
for which such prices are available), as such price is reported
in a publication of general circulation selected by the
Committee; or
(iii)if the Stock or Other Securities or other property are not then
actively traded on an exchange or in the over-the-counter market,
the amount determined in good faith by the Committee.
As used herein, a "subsidiary corporation" is any corporation of which the
Company is the owner of at least 50% of the total combined voting power of all
classes of stock of such corporation. "Affiliate" means any entity in which the
Company or any subsidiary corporation has a substantial direct or indirect
equity interest.
An "eligible individual" shall be deemed to refer to any person eligible to
receive an Award under the Plan and shall include (1) employees and (2)
individuals performing services as non-employee independent contractors.
"Section 162(m) employee" means a Participant who, as of the date of
vesting and/or payout of an Award, is one of the group of "covered employees,"
as defined in regulations promulgated under Section 162(m) of the Code.
For purposes of this Plan, a Participant shall be deemed to have terminated
his employment or performance of services for the Company and its Affiliates by
reason of "Disability" if he is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months, or the
Participant has incurred total and permanent disability as determined under the
provisions of a Company long-term disability program which is applicable to the
Participant.
"Cause" means a felony conviction of a Participant or the failure of a
Participant to contest prosecution for a felony, or a Participant's misconduct
or dishonesty, any of which is directly and materially harmful to the business
or reputation of the Company or any Affiliate.
"Retirement" means the Participant's retirement from active employment with
the Company or an Affiliate (or ceasing to provide services as an independent
contractor) within or after the calendar year the Participant attains age sixty
(60).
4. Stock Options. The Committee may grant Stock Options either alone, or in
conjunction with Performance Shares or other Awards, either at the time of grant
or by amendment thereafter, provided that an Incentive Stock Option may be
granted only to an employee of the Company or its parent or subsidiary
corporation. Incentive Stock Options are Stock Options which are intended to
meet the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Each Stock
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Option granted under the Plan shall be evidenced by an instrument ("Option
Agreement") in such form as the Committee shall prescribe from time to time in
accordance with the Plan which shall comply with the terms and conditions
specified in this Section 4 and with such other terms and conditions, including,
but not limited to, restrictions upon the Stock Option or the Shares issuable
upon exercise thereof, as the Committee, in its discretion, shall establish.
4.1 Option Price. The option price may be less than, equal to, or greater
than, the Fair Market Value of the Shares subject to the option at the time the
Stock Option is granted, as determined by the Committee, but in no event will
the option price be less than 50% of the Fair Market Value of the underlying
Shares at the time the Stock Option is granted; provided, however, that in the
case of an Incentive Stock Option, the option price shall not be less than the
Fair Market Value of the Shares at the time the Incentive Stock Option is
granted, or if granted to an employee who owns stock representing more than ten
percent of the voting power of all classes of stock of the Company or of its
parent or subsidiary corporation (a "10% Employee"), such option price shall not
be less than 110% of such Fair Market Value at the time the Incentive Stock
Option is granted; and provided, further, that in the case of any Stock Option
intended to satisfy the "performance-based" exemption under Section 162(m) of
the Code, the option price shall not be less than the Fair Market Value of the
Share at the time the Stock Option is granted. However, in no event will the
option price be less than the par value of such Shares.
4.2 Number of Option Shares. The Committee shall determine the number of
Shares to be subject to each Stock Option; provided, however, that if the
Committee determines that a Stock Option should satisfy the "performance-based"
exemption under Section 162(m) of the Code, the maximum number of Shares subject
to Stock Options which may be granted to any single Participant during any
calendar year is one hundred fifty thousand (150,000). The number of Shares
subject to an outstanding Stock Option may be reduced on a share-for-share or
other appropriate basis, as determined by the Committee, to the extent that
Shares under the Stock Option are used to calculate the cash, Shares, Other
Securities, or other forms of payment, or any combination thereof, to the extent
that any other Award granted in conjunction with such Stock Option is paid.
4.3 Nontransferability of Stock Options. A Stock Option may not be sold,
assigned, transferred, pledged, or otherwise disposed of by the optionee, except
by will or the laws of descent and distribution, and shall be exercisable during
the optionee's lifetime only by the optionee.
4.4 Exercisability of Stock Options. A Stock Option shall not be
exercisable, as follows:
(a) in the case of any Incentive Stock Option granted to a 10%
Employee, after the expiration of five (5) years from the date it is
granted, and in the case of any other Incentive Stock Option or any
Nonqualified Stock Option, after the expiration of ten (10) years from the
date it is granted; any Stock Option may be exercised during such period
only at such time or times and in such installments as the Committee may
establish in the Option Agreement;
(b) unless payment in full is made for the Share at the time of
exercise and such payment shall be made in such form (including, but not
limited to, cash, check, or, if permitted by the Committee in the Option
Agreement, by delivery to the Company of Shares, or a promissory note, or
an irrevocable undertaking by a broker to deliver to the Company sufficient
funds to pay the exercise price, or the surrender of another outstanding
Award under the Plan, or any combination thereof) as the Committee may
determine in its discretion;
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(c) unless the person exercising the Stock Option has been, at all
times during the period beginning with the date of the grant of the Stock
Option and ending on the date of such exercise, employed by, otherwise
performing services for the Company or an Affiliate, or a corporation
substituting or assuming the Stock Option in a transaction to which Section
424(a) of the Code is applicable, except that:
(i) unless otherwise provided in the Option Agreement, if the
optionee ceases to perform services for the Company or an
Affiliate because of Retirement or Disability, any unvested
Stock Option or portion thereof shall fully vest, and
following such Retirement or Disability the Participant may
at any time within a period of three (3) years from the date
of such Retirement or Disability exercise the Stock Option;
(ii) unless otherwise provided in the Option Agreement, if the
optionee ceases to perform services for the Company or an
Affiliate because of his death, any unvested Stock Option or
portion thereof shall fully vest, and his estate, personal
representative or Beneficiary to whom it has been
transferred pursuant to Section 13 may at any time within a
period of three (3) years from the date of the Participant's
death exercise the Stock Option;
(iii)if the optionee ceases to perform services for the Company
or an Affiliate for Cause, all Stock Options shall
immediately expire and cease to be vested or exercisable,
and the optionee shall have no further rights or claims with
respect thereto; and
(iv) unless otherwise provided in the Option Agreement, if the
optionee ceases to perform services for the Company or an
Affiliate for any reason other than death, Disability or
Retirement, or for Cause, any Stock Option or portion
thereof which was not vested and exercisable shall
immediately terminate and the optionee shall have no further
rights or claims with respect thereto, and the Participant
may at any time within a period of thirty (30) days from the
date of such termination exercise the Stock Option to the
extent that the Stock Option was exercisable by him on the
date he ceased to perform services;
provided, however, that the Committee may provide specifically in the
Option Agreement for such other period of time during which an optionee may
exercise a Stock Option after termination of the optionee's services,
subject to the overriding limitation that no Stock Option may be exercised
to any extent by anyone after the date of expiration of the Stock Option.
In the event that an Incentive Stock Option is exercised by an optionee
after the exercise period that applies for purposes of treatment as an incentive
stock option under Section 422 of the Code, such Stock Option shall thereafter
be treated as a Nonqualified Stock Option.
4.5. Restrictions on Incentive Stock Options. In the case of an Incentive
Stock Option, the amount of aggregate Fair Market Value of Shares (determined at
the time of grant of the Stock Option pursuant to Section 4.1) with respect to
which incentive stock options are exercisable for the first time by an employee
during any calendar year (under all such plans of the Company) shall not exceed
$100,000. To the extent the limitation in the preceding sentence would be
exceeded with respect to any portion of a Stock Option otherwise first becoming
exercisable for any year in accordance with the vesting schedule established for
an optionee, the Committee may determine at the time of grant that vesting with
respect to such excess amount shall be deferred until the first subsequent year
that such excess amount (or any part thereof) can
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become exercisable within the limitation of the preceding sentence or, in the
alternative, that such excess amount become vested as a Nonqualified Stock
Option.
4.6. Restrictions on Shares. Shares purchased by an optionee upon exercise
of a Stock Option may be subject to such transfer and repurchase restrictions
(including without limitation transfer and repurchase restrictions like those
which may be applicable to Restricted Stock under the provisions of Section 5)
as the Committee in its sole discretion shall establish in the Option Agreement.
5. Restricted Stock and Unrestricted Stock. Each Award of Restricted Stock
under the Plan shall be evidenced by an instrument ("Restricted Stock
Agreement") in such form as the Committee shall prescribe from time to time in
accordance with the Plan which shall comply with the terms and conditions
specified in this Section 5, and with such other terms and conditions as the
Committee, in its discretion, shall establish.
5.1. Number of Shares of Restricted Stock. The Committee shall determine
the number of Shares to be issued to a Participant pursuant to the Award of
Restricted Stock, and the extent, if any, to which they shall be issued in
exchange for cash, other consideration, or both; provided, however, that if the
Committee determines that an Award of Restricted Stock should satisfy the
"performance-based" exemption under Section 162(m) of the Code, the maximum
number of Shares of Restricted Stock which may be granted to any single
Participant during any calendar is one hundred fifty thousand (150,000) and
provided further that Restricted Stock may not be issued for a price which is
less than the par value of the Shares.
5.2. Restriction on Transfer; Repurchase Option. Shares issued to a
Participant in accordance with the Award of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise disposed of, except by will or the
laws of descent and distribution, or as otherwise determined by the Committee in
the Restricted Stock Agreement, for such period as the Committee shall determine
from the date on which the Award is granted (the "Restricted Period").
The Company will have the option to repurchase the Shares subject to the
Award at such price as the Committee shall have fixed in the Restricted Stock
Agreement which option will be exercisable:
(i) if the Participant's continuous employment or performance of
services for the Company and its Affiliates shall terminate for
any reason or except as otherwise provided in Section 5.3, prior
to the expiration of the Restricted Period;
(ii) if, on or prior to the expiration of the Restricted Period or the
earlier lapse of such repurchase option, the Participant has not
paid to the Company an amount equal to any federal, state, local
or foreign income or other taxes which the Company determines is
required to be withheld in respect of such Shares; or
(iii)under such other circumstances as determined by the Committee in
its discretion.
Such repurchase option shall be exercisable on such terms, in such manner and
during such period as shall be determined by the Committee in the Restricted
Stock Agreement.
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Each certificate for Shares issued pursuant to an Award of Restricted Stock
shall bear an appropriate legend referring to the foregoing repurchase option
and other restrictions; shall be deposited by the awardholder with the Company,
together with a stock power endorsed in blank; or shall be evidenced in such
other manner permitted by applicable law as determined by the Committee in its
discretion. Any attempt to dispose of any such Shares in contravention of the
foregoing repurchase option and other restrictions shall be null and void and
without effect.
If Shares issued pursuant to an Award of Restricted Stock shall be
repurchased pursuant to the repurchase option described above, the Participant,
or in the event of his death, his personal representative, shall forthwith
deliver to the Secretary or Clerk of the Company the certificates for the Shares
awarded to the Participant, accompanied by such instrument of transfer, if any,
as may reasonably be required by the Secretary of the Company. If the repurchase
option described above is not exercised by the Company, such option and the
restrictions imposed pursuant to the first paragraph of this Section 5.2 shall
terminate and be of no further force and effect.
5.3. Termination of Services Under Certain Circumstances. If a Participant
who has been in continuous employment or performance of services for the Company
or an Affiliate since the date on which an Award of Restricted Stock was granted
to him shall, while in such employment, performance of services, die, or
terminate such employment, or performance of services by reason of Disability or
Retirement and any of such events shall occur prior to the end of the Restricted
Period of such Award, the Committee may determine to cancel the repurchase
option (and any and all other restrictions) on any or all of the Shares subject
to such Award; and the repurchase option shall become exercisable at such time
as to the remaining Shares, if any.
5.4. Other Restrictions. The Committee shall impose such other conditions
and/or restrictions on Restricted Stock as it may deem advisable including,
without limitation, a requirement that Participants pay a stipulated purchase
price therefor, restrictions based upon the achievement of specific performance
goals (Company-wide, divisional and/or individual) and/or restrictions under
applicable federal or state securities laws.
Unless and until the Committee proposes for stockholder vote a change in
the general performance measures set forth below, the attainment of which shall
determine the number of Shares of Restricted Stock that become vested under the
Plan, the performance measure(s) to be used for purposes of grants to Section
162(m) employees shall be selected from among the following alternatives:
(a) Return on invested capital in relation to target objectives.
(b) Share earnings/earnings growth in relation to target objectives.
(c) Cash flow/cash flow growth in relation to target objectives.
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Restricted Stock that shall not qualify for the "performance-based"
exemption under Section 162(m) of the Code, the Committee may make grants which
do not qualify for such exemption.
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5.5. Notice of Election Under Section 83(b). A Participant making an
election under Section 83(b) of the Code with respect to Restricted Stock must
provide a copy thereof to the Company within ten (10) days of the filing of such
election with the Internal Revenue Service.
5.6. Unrestricted Stock. The Committee may, in its discretion, approve the
sale and transfer to a Participant of Shares free of any transfer restriction or
repurchase options ("Unrestricted Stock") for a price which is not less than the
par value of the Shares.
6. Performance Shares. The Award of Performance Shares ("Performance Share
Grant") to a Participant will entitle him to receive a specified amount
determined by the Committee (the "Value"), if the terms and conditions specified
herein and in the Award are satisfied. Each Performance Share Grant shall be
subject to the terms and conditions specified in this Section 6, and to such
other terms and conditions, including but not limited to, restrictions upon any
cash, Shares, Other Securities, or other forms of payment, or any combination
thereof, issued in respect of the Performance Share Grant, as the Committee, in
its discretion, shall establish, and shall be embodied in an instrument (a
"Performance Share Agreement") in such form and substance as is determined by
the Committee.
6.1. Description of Performance Shares. The Committee shall determine the
Value or range of a Performance Share Grant to be awarded to each Participant
selected for such an Award and whether or not such a Performance Share Grant is
granted in conjunction with an Award of Stock Options, Restricted Stock or other
Award, or any combination thereof, under the Plan (which may include, but need
not be limited to, deferred Awards) concurrently or subsequently granted to the
Participant (the "Associated Award"). If the Committee determines that a grant
of Performance Shares should satisfy the "performance-based" exemption under
Section 162(m) of the Code, the maximum payout to any Section 162(m) employee
with respect to Performance Shares granted in any one calendar year shall be
five hundred thousand dollars ($500,000).
As determined by the Committee in the Performance Share Agreement, the
maximum value of each Performance Share Grant (the "Maximum Value") shall be:
(i) an amount fixed by the Board at the time the Award is made or amended
thereafter; (ii) an amount which varies from time to time based in whole or in
part on the then current value of a Share, Other Securities or property, or any
combination thereof; or (iii) an amount that is determinable from criteria
specified by the Committee.
Performance Share Grants may be issued in different classes or series
having different names, terms and conditions. In the case of a Performance Share
Grant awarded in conjunction with an Associated Award, the Performance Share
Grant may be reduced on an appropriate basis to the extent that the Associated
Award has been exercised, paid to or otherwise received by the Participant, as
determined by the Committee.
6.2. Performance Objectives. The award period in respect of any Performance
Share Grant shall be a period determined by the Committee. At the time each
Award is made, the Committee shall establish performance objectives to be
attained within the award period as the means of determining the Value of such a
Performance Share Grant. The performance objectives shall be based on such
measure or measures of performance, which may include, but need not be limited
to, the performance of the Participant, the Company, one or more of its
subsidiaries or one or more of their divisions or units, or any combination of
the foregoing, as the Committee shall determine, and may be applied on an
absolute basis or be relative to industry or other indices, or any combination
thereof.
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The Value of a Performance Share Grant shall be equal to its Maximum Value
only if the performance objectives are attained in full, but the Committee shall
specify the manner in which the Value of Performance Share Grants shall be
determined if the performance objectives are met in part. Such performance
measures, the Value or the Maximum Value, or any combination thereof, may be
adjusted in any manner by the Committee in its discretion at any time and from
time to time during or as soon as practicable after the award period, if it
determines that such performance measures, the Value or the Maximum Value, or
any combination thereof, are not appropriate under the circumstances.
Notwithstanding the foregoing, unless and until the Committee proposes for
stockholder vote a change in the general performance measures set forth below,
the attainment of which shall serve as a basis for the determination of the
number and/or value of Performance Shares granted under the Plan, the
performance measure(s) to be used for purposes of grants to Section 162(m)
employees shall be selected from among the following alternatives:
(a) Return on invested capital in relation to target objectives.
(b) Share earnings/earnings growth in relation to target objectives.
(c) Cash flow/cash flow growth in relation to target objectives.
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Restricted Stock that shall not qualify for the "performance-based"
exemption under Section 162(m) of the Code, the Committee may make grants which
do not qualify for such exemption.
6.3. Effect of Termination of Services. The rights of a Participant in
Performance Shares awarded to him shall be provisional and may be canceled or
paid in whole or in part, all as determined by the Committee, if the
Participant's employment or performance of services for the Company and its
Affiliates shall terminate for any reason prior to the end of the award period.
6.4. Payment of Performance Shares. The Committee shall determine whether
the conditions of Section 6.1 or 6.2 have been met and, if so, shall ascertain
the Value of the Performance Share Grants. If the Performance Share Grants have
no Value, the Award and such Performance Share Grants shall be deemed to have
been canceled and the Associated Award, if any, may be canceled or permitted to
continue in effect in accordance with its terms. If the Performance Share Grants
have any Value and:
(i) were not awarded in conjunction with an Associated Award, the
Committee shall cause an amount equal to the Value of the
Performance Share Grants earned by the Participant to be paid to
him or his Beneficiary as provided below; or
(ii) were awarded in conjunction with an Associated Award, the
Committee shall determine, in accordance with criteria specified
by the Board, (A) to cancel the Performance Share Grants, in
which event no amount in respect thereof shall be paid to the
Participant or his Beneficiary, and the Associated Award may be
permitted to continue in effect in accordance with its terms, (B)
to pay the Value of the Performance Share Grants to the
Participant or his Beneficiary as
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provided below, in which event the Associated Award may be
canceled, or (C) to pay to the Participant or his Beneficiary as
provided below, the Value of only a portion of the Performance
Share Grants, in which event all or a portion of the Associated
Award may be permitted to continue in effect in accordance with
its terms or be canceled, as determined by the Committee.
Such determination by the Committee shall be made as promptly as practicable
following the end of the award period or upon the earlier termination of
employment or performance of services, or at such other time or times as the
Committee shall determine, and shall be made pursuant to criteria specified by
the Committee.
Payment of any amount in respect of the Performance Shares which the
Committee determines to pay as provided above shall be made by the Company as
promptly as practicable after the end of the award period or at such other time
or times as the Committee shall determine, and may be made in cash, Shares,
Other Securities, or other forms of payment, or any combination thereof, or in
such other manner, as determined by the Committee in its discretion.
Notwithstanding anything in this Section 6 to the contrary, the Committee may,
in its discretion, determine and pay out the Value of the Performance Shares at
any time during the award period.
7. Loans; Supplemental Cash Grants; Other Awards.
7.1. Loans. The Company may make a loan to a Participant ("Loan"), either
on the date of or after the grant of any Award to the Participant. A Loan may be
made either in connection with the purchase of Stock under the Award or with the
payment of any federal, state and local income tax with respect to income
recognized as a result of the Award. The Committee will have full authority to
decide whether to make a Loan and to determine the amount, terms and conditions
of the Loan, including the interest rate, whether the Loan is to be secured or
unsecured or with or without recourse against the borrower, the terms on which
the Loan is to be repaid and the conditions, if any, under which it may be
forgiven. However, no Loan may have a term (including extensions) exceeding ten
(10) years in duration.
7.2. Supplemental Cash Grants. In connection with any Award, the Committee
may at the time such Award is made or at a later date, provide for and grant a
cash award to the Participant ("Supplemental Cash Grant") not to exceed an
amount equal to (i) the amount of any federal, state and local income tax on
ordinary income for which the Participant may be liable with respect to the
Award, determined by assuming taxation at the highest marginal rate, plus (ii)
an additional amount on a grossed-up basis intended to make the Participant
whole on an after-tax basis after discharging all the Participant's income tax
liabilities arising from all payments under this Section 7.2. Any payments under
this Section 7.2 will be made at the time the Participant incurs federal income
tax liability with respect to the Award.
7.3. Other Awards. In addition to the types of Awards specifically
described in the foregoing provisions of the Plan, the Committee may in its
discretion determine, describe and award or grant any other type of Award which
is consistent with the terms and purposes of the Plan. Such Awards may include
special Awards relating to a single eligible individual and Awards made pursuant
to special or recurring plans or programs covering groups of eligible
individuals.
8. Deferral of Compensation. The Committee shall determine whether or not
an Award shall be made in conjunction with deferral of the Participant's salary,
bonus or other compensation, or any combination thereof, and whether or not such
deferred amounts may be (i) forfeited to the Company or to
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other Participants, or any combination thereof, under certain circumstances
(which may include, but need not be limited to, certain types of termination of
employment or performance of services for the Company and its Affiliates), (ii)
subject to increase or decrease in value based upon the attainment of or failure
to attain, respectively, certain performance measures, and/or (iii) credited
with investment equivalents (which may include, but need not be limited to,
interest, dividends or other rates of return) until the date or dates of payment
of the Award, if any.
9. Deferred Payment of Awards. The Committee may specify that the payment
of all or any portion of cash, Shares, Other Securities, or any other form of
payment, or any combination thereof, under an Award shall be deferred until a
later date. Deferrals shall be for such periods or until the occurrence of such
events, and upon such terms, as the Committee shall determine in its discretion.
Deferred payments of Awards may be made by undertaking to make payment in the
future based upon the performance of certain investment equivalents (which may
include, but need not be limited to, government securities, Shares, Other
Securities, other property, or any combination thereof), together with such
additional amounts of investment equivalents as may be determined by the
Committee in its discretion.
10. Amendment or Substitution of Awards Under the Plan. The terms of any
outstanding Award under the Plan as provided in any instrument may be amended
from time to time by the Committee in its discretion in any manner that it deems
appropriate (including, but not limited to, acceleration of the date of exercise
of any Award and/or payments thereunder); provided that no such amendment shall
adversely affect in a material manner any right of a Participant under the Award
without his written consent, unless the Committee determines in its discretion
that there have occurred or are about to occur significant changes in the
economic, legislative, regulatory, tax, accounting or cost/benefit conditions
which are determined by the Committee in its discretion to have or to be
expected to have a substantial effect on the performance of the Company, or any
subsidiary, Affiliate, division or department thereof, on the Plan, or on any
Award under the Plan. The Committee may, in its discretion, permit holders of
Awards under the Plan to surrender outstanding Awards in order to exercise or
realize the rights under other Awards, or in exchange for the grant of new
Awards, or require holders of Awards to surrender outstanding Awards as a
condition precedent to the grant of new Awards under the Plan.
11. Termination of Services by a Participant. For all purposes under the
Plan, the Committee shall determine whether a Participant has terminated
employment by or the performance of services for the Company and its Affiliates;
provided, however, that transfers between the Company and an Affiliate or
between Affiliates, and approved leaves of absence shall not be deemed such a
termination.
12. Changes in the Company's Capital Structure. The existence of
outstanding Awards shall not affect in any way the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business or any merger or consolidation of the Company or any
issue of capital stock, bonds, debentures, or Other Securities ahead of or
affecting the Shares or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
The number of Shares covered by any outstanding Award and the price per
share thereof shall be appropriately adjusted for any increase or decrease in
the number of issued Shares resulting from the subdivision or consolidation of
Shares or any other similar capital adjustment, the payment of a stock
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dividend or any other increase in such Shares effected without receipt of
consideration by the Company or any other decrease therein effected without a
distribution of cash or property in connection therewith, or any other
extraordinary or unusual event similarly affecting the Shares. Any such
adjustment shall be made by the Committee, in its discretion, and such
adjustment shall be final, conclusive and binding for all purposes of the Plan.
In the event the Company merges or consolidates with one or more
corporations and the Company is the surviving corporation, thereafter upon any
exercise of an Award, the holder thereof shall be entitled to purchase or
receive in lieu of the number of Shares as to which the Award relates, the
number and class of shares of stock or securities to which the holder would have
been entitled pursuant to the terms of the agreement of merger or consolidation
if immediately prior to such merger or consolidation, the holder had been the
holder of record of Shares as to which the Award related.
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company is liquidated or sells or otherwise disposes of substantially all of
its assets to another corporation while unexercised Stock Options or other
Awards remain outstanding under the Plan:
(i) subject to the provisions of clauses (iii), (iv) and (v) below,
after the effective date of such merger, consolidation or sale,
as the case may be, each holder of an outstanding Stock Option or
other Award shall be entitled, upon exercise of such Stock Option
or other Award, to receive in lieu of Shares of the Company,
shares of such stock or other securities as the holders of Shares
received pursuant to the terms of the merger, consolidation or
sale; or
(ii) the Committee may waive any discretionary limitations imposed
with respect to the exercise of the Stock Option or other Award
so that all Stock Options or other Awards from and after a date
prior to the effective date of such merger, consolidation,
liquidation or sale, as the case may be, specified by the
Committee, shall become fully vested or be exercisable in full;
or
(iii)any or all outstanding Stock Options or other Awards may be
canceled by the Committee as of the effective date of any such
merger, consolidation, liquidation or sale, provided that notice
of such cancellation shall be given to each holder of a Stock
Option or other Award, and each such holder thereof shall have
the right to exercise such Stock Option or other Award in full
(without regard to any discretionary limitations imposed with
respect to the Stock Option or other Award) during a 30-day
period preceding the effective date of such merger,
consolidation, liquidation or sale; or
(iv) any or all outstanding Stock Options or other Awards may be
canceled by the Committee as of the date of any such merger,
consolidation, liquidation or sale, provided that notice of such
cancellation shall be given to each holder of a Stock Option or
other Award, and each such holder thereof shall have the right to
exercise such Stock Option or other Award but only to the extent
exercisable in accordance with any discretionary limitations
imposed with respect to the Stock Option or other Award prior to
the effective date of such merger, consolidation, liquidation or
sale; or
(v) the Committee may provide for the cancellation of any or all
outstanding Stock Options or other Awards and for the payment to
the holders thereof of some part or all of the amount
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by which the value thereof exceeds the payment, if any, which the
holder would have been required to make to exercise such Stock
Option or other Award.
Except as hereinbefore expressly provided, the issuance by the Company of
shares of capital stock of any class or securities convertible into shares of
capital stock of any class for cash or property or for labor or services either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number, class or price of
Shares then subject to outstanding Stock Options or other Awards.
13. Designation of Beneficiary by Participant. Subject to compliance with
applicable securities laws and to the other provisions of this Plan (including
without limitation Section 4.3), a Participant may name a Beneficiary to receive
any benefit or payment to which he may be entitled in respect of any Award under
the Plan in the event of his death, on a written form to be provided by and
filed with the Company, and in a manner determined by the Committee. A
Participant may change his Beneficiary from time to time in the same manner,
unless such Participant has made an irrevocable designation. Any designation of
Beneficiary under the Plan (to the extent it is valid and enforceable under
applicable law) shall be controlling over any other disposition, testamentary or
otherwise, as determined by the Committee in its discretion. If no designated
Beneficiary survives the Participant or is otherwise in existence on the date on
which any amount becomes payable to such Participant's Beneficiary, such payment
will be made to the legal representatives of the Participant's estate, and the
term "Beneficiary" as used in the Plan shall be deemed to include such person or
persons.
14. Administration. The Plan shall be administered by the Compensation
Committee of the Board, or by any other Committee appointed by the Board
consisting of not less than two (2) non-employee Directors (such Compensation
Committee or other Committee appointed by the Board is herein referred to as the
"Committee"). The members of the Committee shall be appointed from time to time
by, and shall serve at the discretion of, the Board. The Committee shall be
comprised solely of Directors who are eligible to administer the Plan pursuant
to Rule 16b-3(c)(2) under the Exchange Act and Prop. Treas. Reg. 1.162-27(e)(3).
However, if for any reason the Committee does not qualify to administer the
Plan, as contemplated by Rule 16b-3(c)(2) under the Exchange Act or Prop. Treas.
Reg. 1.162-27(e)(3), the Board may appoint a new Committee so as to comply with
Rule 16b-3(c)(2) and Prop. Treas. Reg. 1.162-27(e)(3).
The Board or the Committee may delegate the administration of the Plan in
whole or in part, on such terms and conditions, and to such person or persons as
it may determine in its discretion, as it relates to Awards to persons not
subject to Section 16 of the Exchange Act (or any successor provisions) and to
persons who are not Section 162(m) employees.
The Committee shall have full power, except as limited by law, the Articles
of Organization and/or By-Laws of the Company, subject to such other restricting
limitations or directions as may be imposed by the Board from time to time, to
exercise all of the powers vested in it by the terms of the Plan set forth
herein, such powers to include exclusive authority (except as may be delegated
as permitted herein) to select the employees and other individuals to be granted
Awards under the Plan, to determine the type, size and terms of the Award to be
made to each individual selected, to modify the terms of any Award that has been
granted, to determine the time when Awards will be granted, to establish
performance objectives, and to prescribe the form of the instruments embodying
Awards made under the Plan. The Committee is authorized to interpret
39
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the Plan and the Awards granted under the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any other
determinations which it deems necessary or desirable for the administration of
the Plan.
The Committee may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any Award in the manner and to the extent
the Committee deems necessary or desirable to carry it into effect. Any decision
of the Committee (or its delegate as permitted herein) in the interpretation and
administration of the Plan, as described herein, shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned.
No member of the Board or the Committee and no officer of the Company shall
be liable for anything done or omitted to be done by him, by any other member of
the Board or the Committee or by any officer of the Company in connection with
the performance of duties under the Plan, except for his own willful misconduct
or as expressly provided by statute.
15. Miscellaneous Provisions.
15.1. No Rights to Awards or Employment. No employee or other person shall
have any claim or right to be granted an Award under the Plan. Determinations
made by the Committee under the Plan need not be uniform and may be made
selectively among eligible individuals under the Plan, whether or not such
eligible individuals are similarly situated. Neither the Plan nor any action
taken hereunder shall be construed as giving any employee or other person any
right to continue to be employed by or perform services for the Company or any
Affiliate, and the right to terminate the employment of or performance of
services by any Participant at any time and for any reason is specifically
reserved.
15.2. Delivery of Written Instruments. No Participant or other person shall
have any right with respect to the Plan, the Shares reserved for issuance under
the Plan or in any Award, contingent or otherwise, until written evidence of the
Award shall have been delivered to the recipient and all the terms, conditions
and provisions of the Plan and the Award applicable to such recipient (and each
person claiming under or through him) have been met.
15.3. Assignment Prohibition. Notwithstanding anything contained in this
Plan to the contrary, except as may be approved by the Committee where such
approval shall not adversely affect compliance of the Plan with Rule 16b-3, a
Participant's rights and interest under the Plan may not be assigned or
transferred, hypothecated or encumbered in whole or in part either directly or
by operation of law or otherwise (except in the event of a Participant's death)
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner; provided, however, that
any Stock Option or similar right offered pursuant to the Plan shall not be
transferable other than by will or the laws of descent and distribution and
shall be exercisable during the Participant's lifetime only by him.
15.4. Compliance With Applicable Laws. No Shares, Other Securities, or
other forms of payment shall be issued hereunder with respect to any Award
unless counsel for the Company shall be satisfied that such issuance will be in
compliance with applicable federal, state, local and foreign legal, securities
exchange and other applicable requirements.
40
<PAGE>
15.5. Rule 16b-3 and Section 162(m). It is the intent of the Company that
the Plan comply in all respects with Rule 16b-3, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3. It is the intent
of the Company that Awards to Section 162(m) employees may satisfy for
"performance-based" compensation under Section 162(m) of the Code to the extent
that the Committee shall make Awards which the Committee intends to satisfy such
exemption; any ambiguities or inconsistencies in the Plan shall be interpreted
to give effect to such intention.
15.6. Tax Withholding. The Company and its Affiliates shall have the right
to deduct from any payment made under the Plan any federal, state, local or
foreign income or other taxes required by law to be withheld with respect to
such payment. It shall be a condition to the obligation of the Company to issue
Shares, Other Securities, or other forms of payment, or any combination thereof,
upon exercise, settlement or payment of any Award under the Plan, that the
Participant (or any Beneficiary or person entitled to act) pay to the Company,
upon its demand, such amount as may be requested by the Company for the purpose
of satisfying any liability to withhold federal, state, local or foreign income
or other taxes. If the amount requested is not paid, the Company may refuse to
issue Shares, Other Securities, or other forms of payment, or any combination
thereof.
Notwithstanding anything in the Plan to the contrary the Committee may, in
its discretion, permit an eligible Participant (or any Beneficiary or person
entitled to act) to elect to pay a portion or all of the amount requested by the
Company for such taxes with respect to such Award, at such time and in such
manner as the Committee shall deem to be appropriate including, but not limited
to, by authorizing the Company to withhold, or agreeing to surrender to the
Company on or about the date such tax liability is determinable, Shares, Other
Securities, or other forms of payment, or any combination thereof, owned by such
person or a portion of such forms of payment that would otherwise be
distributed, or have been distributed, as the case may be, pursuant to such
Award to such person, having a Fair Market Value equal to the amount of such
taxes.
15.7. Plan Not Funded. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under the Plan, and
rights to the payment of Awards shall be no greater than the rights of the
Company's general creditors.
15.8. Consent of Participant. By accepting any Award or other benefit under
the Plan, each Participant and each person claiming under or through him shall
be conclusively deemed to have indicated his acceptance and ratification of, and
consent to, any action taken under the Plan by the Company, the Committee, or
the delegates of the Committee.
15.9. Rules of Construction. The masculine pronoun includes the feminine
and the singular includes the plural wherever appropriate. The validity,
construction, interpretation, administration and effect of the Plan, and of its
rules and regulations, and rights relating to the Plan and to Awards granted
under the Plan, shall be governed by the substantive laws but not the choice of
law rules, of The Commonwealth of Massachusetts.
41
<PAGE>
16. Plan Amendment or Suspension. The Plan may be amended or suspended in
whole or in part at any time and from time to time by the board, provided that
no amendment shall be effective unless and until the same is approved by
shareholders of the Company where the failure to obtain such approval would
adversely affect the compliance of the Plan with Rule 16b-3 or the amendment
would (i) increase the total number of Shares reserved for issuance under the
Plan, (ii) decrease the option price of any Nonqualified Stock Option to less
than 50% of Fair Market Value on the date of granting the option, (iii) change
the class of persons who may be eligible individuals, or (iv) extend the
termination date of the Plan beyond the date determined in accordance with
Section 17. No amendment of the Plan shall adversely affect in a material manner
any right of any Participant with respect to any Award theretofore granted
without such Participant's written consent, except as permitted under Section
10.
17. Plan Termination. This Plan shall terminate upon the earlier of the
following dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the
Plan; or
(b) ten (10) years from the date the Plan is initially approved and
adopted by the shareholders of the Company in accordance with Section 18.
No Award of an Incentive Stock Option may be granted under the Plan more
than ten (10) years after the date of adoption of this Plan by the Board.
No termination of the Plan shall materially alter or impair any of the
rights or obligations of any person, without his consent, under any Award
theretofore granted under the Plan, except that subsequent to termination of the
Plan, the Board may make amendments permitted under Section 10.
18. Effective Date and Shareholder Adoption. The Plan shall become
effective upon the date of its adoption by the Board, subject, however, to its
approval by the shareholders of the Company within 12 months of such date.
42
<PAGE>
BLUEGREEN CORPORATION
4960 BLUE LAKE DRIVE
BOCA RATON, FLORIDA 33431
The undersigned shareholder of BLUEGREEN CORPORATION, a Massachusetts
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated June 26, 1998, and hereby appoints
Patrick E. Rondeau and Anthony M. Puleo, and both of them, proxies and
attorneys-in-fact with full power of substitution, on behalf and in the name of
the undersigned, to represent the undersigned at the 1998 Annual Meeting of
Shareholders of BLUEGREEN CORPORATION to be held on Tuesday, July 28, 1998 at
10:00 a.m., local time at the Hotel Inter-Continental New York at 111 East 48th
Street (between Park Avenue and Lexington Avenue), New York, New York, and at
any adjournment(s) thereof and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below. Such attorneys or substitutes shall have and may
exercise all of the powers of said attorneys-in-fact thereunder.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder, or IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5 AND AS SAID PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT(S)
THEREOF.
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<PAGE>
<TABLE>
<S> <C> <C>
Please mark
your votes as [X]
indicated in
this example
1. FIX THE NUMBER OF 2. ELECT DIRECTORS (INSTRUCTION: To withhold authority to 3. APPROVE THE 1998 NON-EMPLOYEE
DIRECTORS AT SEVEN FOR all nominees WITHHOLD vote for any individual nominee, strike DIRECTORS STOCK OPTION PLAN
listed (except AUTHORITY a line through the nominee's name in
as marked in the to vote for the list below)
contrary) all nominees
FOR AGAINST ABSTAIN listed Joseph C. Abeles, George F. Donovan, FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] Ralph A. Foote, Frederick M. Myers, [ ] [ ] [ ]
J. Larry Rutherford, Stuart A. Shiklar,
Bradford T. Whitmore
4. APPROVE AN AMENDMENT TO THE 1995 5. RATIFY ERNST & YOUNG LLP AS INDEPENDENT In their discretion, the Proxies are
STOCK INCENTIVE PLAN AUDITORS OF THE COMPANY authorized to vote upon such other
business as may properly come before
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN this meeting and any adjournment(s)
[ ] [ ] [ ] [ ] [ ] [ ] thereof.
Please sign exactly as your name
appears on this proxy. When shares
are held by joint tenants or as
community property, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign the full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
DATED: ________________________, 1998
_____________________________________
Signature
_____________________________________
Signature
PLEASE VOTE, SIGN, DATE AND RETURN
USING THE ENCLOSED ENVELOPE
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</TABLE>
