<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant
to Rule 14a-11(c) or
Rule 14a-12
USTRAILS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction compute pursuant
to Exchange Act Rule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing:
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing party: N/A
(4) Date filed: N/A
<PAGE>
USTRAILS INC.
2711 LBJ FREEWAY, SUITE 200
DALLAS, TEXAS 75234
NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD DECEMBER 7, 1995
To the Stockholders:
The Company cordially invites you to attend the Annual Meeting of the
Stockholders of USTrails Inc., a Nevada corporation (the "Company"), at the
offices of the Company, 2711 LBJ Freeway, Suite 200, Dallas, Texas on
December 7, 1995, at 10:00 a.m., for the following purposes:
1. The election of the directors of the Company, who will serve until the
election and qualification of their successors.
2. The ratification of Arthur Andersen LLP as the Company's independent
certified public accountants for the fiscal year ending June 30, 1996.
3. The transaction of such other business as may properly come before the
meeting and any adjournment thereof.
The board of directors of the Company has established the close of
business on November 7, 1995, as the record date for the determination of
stockholders entitled to notice of this meeting and to vote thereat and at any
adjournment thereof.
By Order of the Board of Directors
/s/ WALTER B. JACCARD
WALTER B. JACCARD
Vice President, General Counsel, and Secretary
Dallas, Texas
November 10, 1995
If you cannot be present at the annual meeting, PLEASE SIGN, DATE, AND
RETURN THE ACCOMPANYING PROXY CARD in the enclosed stamped and addressed
envelope so that proxyholders may vote your shares at the meeting. If you
attend the meeting in person, you may revoke your proxy and vote your shares in
person.
<PAGE>
USTRAILS INC.
PROXY STATEMENT
ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD DECEMBER 7, 1995
INTRODUCTION
The board of directors (the "Board of Directors") of USTrails Inc., a
Nevada corporation (the "Company"), hereby solicits your proxy on behalf of the
Company for use at the Annual Meeting of the Stockholders of the Company and any
adjournment thereof (the "Annual Meeting"). The Annual Meeting will be held at
the principal executive offices of the Company at 2711 LBJ Freeway, Suite 200,
Dallas, Texas 75234, on December 7, 1995, at 10:00 a.m. The telephone number of
the Company's principal executive offices is (214) 243-2228.
The Company mailed this proxy statement and the accompanying proxy on
or about November 10, 1995.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the stockholders of the Company (the
"Stockholders") will vote upon the following matters:
1. The election of the directors of the Company, who will serve until the
election and qualification of their successors.
2. The ratification of Arthur Andersen LLP ("Arthur Andersen") as the
Company's independent certified public accountants for the fiscal year
ending June 30, 1996.
3. The transaction of such other business as may properly come before the
meeting and any adjournment thereof.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that you vote to:
1. Elect as directors the nominees named in this proxy statement and the
accompanying proxy.
2. Ratify Arthur Andersen as the Company's independent certified public
accountants.
RECORD DATE AND VOTING
The Board of Directors established the close of business on November
7, 1995, as the record date for the determination of Stockholders entitled to
notice of the Annual Meeting and to vote thereat and at any adjournment thereof.
On that date, the Company had issued and outstanding 3,702,726 shares of common
stock, par value $.01 per share (the "Common Stock"). The Company did not have
any other shares of capital stock outstanding.
Each Stockholder will be entitled to one vote per share of Common
Stock in connection with the election of each of the six directors, the
ratification of the independent certified public accountants, and each other
matter that may be properly brought before the Annual Meeting. The Stockholders
do not possess cumulative voting rights.
The presence, in person or by proxy, of the holders of a majority of
the shares of Common Stock issued and outstanding will constitute a quorum at
the meeting. Shares represented at the meeting in person or by proxy but not
voted will nevertheless be counted for purposes of determining the presence of a
quorum. The election of each of the six nominees for director requires the
affirmative vote of the holders of a majority of the shares present or
represented at the meeting, assuming that a quorum is present or represented at
the meeting. Votes may be cast for a
<PAGE>
nominee or withheld. Instructions on the accompanying proxy to withhold
authority to vote for one or more of the nominees will result in such nominee(s)
receiving fewer votes. However, the number of votes otherwise received by such
nominee(s) will not be reduced by such action. The ratification of Arthur
Andersen as the Company's independent certified public accountants requires the
affirmative vote of the holders of a majority of the shares present or
represented at the meeting, assuming that a quorum is present or represented at
the meeting. With respect to this proposal, an abstention with respect to shares
present or represented at the meeting will have the same effect as withholding
authority with respect to the election of directors or voting against the
matter. Under the rules of the New York and American Stock Exchanges, if a
broker forwards this proxy statement and the accompanying material to its
customers at least fifteen days before the Annual Meeting, the broker may vote
the customers' shares of Common Stock on the proposals to elect directors and
ratify the independent public accountants if the broker does not receive voting
instructions from the customer by the tenth day before the meeting.
Proxyholders will vote the shares of Common Stock represented by valid
proxies at the meeting in accordance with the directions given. If a
Stockholder signs and returns a proxy card without giving any directions, the
proxyholders will vote the shares for the election of the six nominees for
director named in this proxy statement and the accompanying proxy and for the
ratification of Arthur Andersen as the Company's independent certified public
accountants. The Board of Directors does not intend to present, and has no
information that others will present, any business at the Annual Meeting
requiring a Stockholder vote other than the election of the directors and the
ratification of the independent certified public accountants. If other matters
requiring the vote of the Stockholders come before the Annual Meeting, the
proxyholders intend to vote the proxies that they hold in accordance with their
best judgment.
A Stockholder has the unconditional right to revoke such Stockholder's
proxy at any time prior to the voting thereof by (i) submitting a later dated
proxy to the Company or someone else who attends the Annual Meeting, (ii)
attending the Annual Meeting and delivering a written notice of revocation of
the proxy to an officer of the Company present thereat, or (iii) delivering a
written notice of revocation of the proxy to the principal executive offices of
the Company, which the Company receives on or before December 6, 1995.
The Company will bear the cost of soliciting the accompanying proxies.
The directors, officers, and other employees of the Company may solicit proxies
by mail, personal interview, telephone, or facsimile transmission. They will
receive no additional compensation therefor. The Company will reimburse banks,
brokerage firms, and other custodians, nominees, and fiduciaries for the
reasonable expenses that they incur when forwarding this proxy statement and the
accompany proxy to the beneficial owners of shares of Common Stock.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The Stockholders will vote for the election of all six directors of
the Company, who will serve until the election and qualification of their
successors. If any nominee is unavailable for election as a result of
unforeseen circumstances, the proxyholders will vote for the election of such
substitute nominee as the Board of Directors may propose.
Each of the nominees, except Mr. Leopold, is a current director of the
Company. Pursuant to the Company's plan of reorganization (the "Plan") in the
Company's bankruptcy case under Chapter 11 ("Chapter 11") of the Bankruptcy
Code, the Official Committee of Unsecured Creditors in the Company's Chapter 11
case (the "Creditors' Committee") designated Messrs. Boas, Kovacs, Mathis, and
Nelson as directors of the Company upon the Company's emergence from its Chapter
11 proceedings on December 31, 1991. Messrs. Boas and Kovacs were members of
the Creditors' Committee. Mr. Kovacs served as an advisory director from
December 3, 1992 to December 2, 1993. The Board of Directors elected Mr. Shaw a
director in May 1995 when he became the Company's Chief Executive Officer. The
Board of Directors selected Mr. Leopold as a nominee for director in October
1995, at the recommendation of the Nominating Committee.
Each nominee has furnished to the Company the following information
with respect to his principal occupation or employment, principal business, and
directorships of public companies.
Page 2
<PAGE>
<TABLE>
<CAPTION>
OFFICES AND
POSITIONS
WITH THE DIRECTOR BOARD COMMITTEE
NAME AGE COMPANY SINCE MEMBERSHIPS
- ------------------------ --- ------------- ------------ -----------------
<S> <C> <C> <C> <C>
Andrew M. Boas 40 None December Audit, Compensation,
1991 Marketing, and
Nominating
William P. Kovacs 49 None December Audit, Compensation,
1991 and Special
Committee of
Independent
Directors
Donald R. Leopold 45 None Nominee None
H. Sean Mathis 48 None December Audit, Compensation,
1991 Nominating, and
Special Committee
of Independent
Directors
Douglas K. Nelson 53 None December Audit, Compensation,
1991 and Marketing
William J. Shaw 52 Chairman of May 1995 None
the Board,
Chief Executive
Officer, and
President
</TABLE>
Since November 1986, Andrew M. Boas has been a general partner of Carl
Marks Management Co., LP ("CM Management"), an advisory and management firm that
is the general partner of investment partnerships and managed accounts
specializing in investments in troubled companies. Mr. Boas also has been (i) a
Managing Director of Carl Marks & Co., Inc., a broker-dealer firm, since
December 1977, (ii) a director of CMCO Inc., an investment banking firm, since
March 1988, (iii) a director of Herman's Sporting Goods, Inc., since March 1993,
(iv) a director of Pratt & Lambert United, Inc., a manufacturer of consumer and
industrial coatings, since August 1994, (v) a director of Sport and Health, LLC,
an operator of fitness centers, since October 1993, and (vi) a director of
Vertientes Camaguey Sugar Company, a holding company, since November 1994. Mr.
Boas also served as a director of American Corp. LTD, an Australian company that
invests in the securities of companies located in the United States, from
January 1988 to February 1992, and a director of Smith Newcourt, Carl Marks,
Inc., a broker-dealer firm, from March 1988 to June 1990.
From October 1989 to August 1995, William P. Kovacs was a Vice
President and Assistant Secretary of Kemper Financial Services, Inc., the
investment management subsidiary of Kemper Corp. From June 1981 to September
1989, Mr. Kovacs held various legal positions with the Principal Financial
Group, Des Moines, Iowa.
Since November 1991, Donald R. Leopold has been a senior partner of
Sherbrooke Associates, Inc., a marketing, strategic planning, and organization
development consulting firm. From May 1994 to September 1995, Sherbrooke
Associates, Inc. performed consulting services for the Company with respect to
its marketing and sales operations, and Mr. Leopold was primarily responsible
for the consulting work performed for the Company. From 1984 to November 1991,
Mr. Leopold was President of Game Plan, Inc., a management consulting firm. He
is also a director of Jullian's Entertainment Corporation, an owner and operator
of alternative entertainment centers.
Since October 1992, H. Sean Mathis has been President and a director
of RCL Capital Corporation and a managing director of RCL Capital Partners, an
advisory firm. From May 1988 to November 1993, Mr. Mathis was a director and
the Chief Operating Officer of Ameriscribe Corporation, a national provider of
reprographic and related facilities management services. Ameriscribe
Corporation was sold to Pitney Bowes in November 1993. From August 1992 to May
1994, Mr. Mathis was the Federal Court Appointed Trustee for International Wire
News Service Liquidation Corporation, formerly United Press International
("UPI"). From November 1991 to July 1992, Mr. Mathis was Vice Chairman and a
director of UPI, which was then a news syndication service. In August 1991, as
part of a restructuring program, UPI filed for protection under the Bankruptcy
Code. Mr. Mathis was a managing director of International Financial Group,
Inc., a merchant banking firm, from 1987 to 1990. He is also a director of
Allis-Chalmers Manufacturing, Inc., an industrial manufacturer, Allied Digital
Technologies Corp., a duplicator of audio and video devices, and Canadian's
Corp., a specialty retailer.
Page 3
<PAGE>
Since April 1976, Douglas K. Nelson has been President of Strategic
Directions, a management consulting firm which focuses on businesses in the
areas of leisure, sports, and entertainment. From February 1970 through March
1976, Mr. Nelson was an associate with McKinsey and Co., Inc., a management
consulting firm.
Since May 1995, William J. Shaw has been the President, Chief
Executive Officer, and a director of the Company. In July 1995, Mr. Shaw became
Chairman of the Board of Directors of the Company and the President and Chief
Executive Officer of Thousand Trails, Inc. ("Trails") and National American
Corporation ("NACO") . From February 1989 to November 1993, Mr. Shaw was a
director and the President and Chief Executive Officer of Ameriscribe
Corporation, a national provider of reprographic and related facilities
management services. Ameriscribe Corporation was sold to Pitney Bowes in
November 1993. From 1983 to January 1989, Mr. Shaw was the President and Chief
Executive Officer of Grandy's, a Dallas based chain of fast service restaurants.
Page 4
<PAGE>
SECURITY OWNERSHIP
The following table sets forth the persons and groups who beneficially
own more than 5% of the Common Stock as of November 7, 1995. The Company
compiled this information from its stock records, the Schedules 13D and 13G
filed with the Company, and other information available to the Company. Unless
otherwise indicated, these persons possess sole voting and investment power with
respect to the shares that they beneficially own.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
- --------------------------------------- -------------------- -------------------
<S> <C> <C>
Andrew M. Boas........................ 1,778,553/1/ 45.52%/1/
c/o Carl Marks Management Co., LP
135 East 57th Street
New York, New York 10022
Carl Marks Management Co., LP......... 1,762,811/1/ 45.23%/1/
135 East 57th Street
New York, New York 10022
Carl Marks Strategic Investments, LP.. 1,363,100/1/ 34.98%/1/
c/o Carl Marks Management Co., LP
135 East 57th Street
New York, New York 10022
Peter M. Collery...................... 647,513/2/ 17.49%/2/
c/o Siegler & Collery & Co.
712 Fifth Avenue
New York, NY 10019
Pacholder Associates, Inc............. 204,010/3/ 5.22%/3/
8044 Montgomery Road, Suite 382
Cincinnati, Ohio 45236
Mr. Robert C. Ruocco.................. 1,762,811/1/ 45.23%/1/
c/o Carl Marks Management Co., LP
135 East 57th Street
New York, New York 10022
SC Fundamental Inc.................... 425,113/2/ 11.48%/2/
712 Fifth Avenue
New York, NY 10019
SC Fundamental Value BVI, Inc......... 222,400/2/ 6.01%/2/
712 Fifth Avenue
New York, NY 10019
Gary N. Siegler....................... 647,513/2/ 17.49%/2/
c/o Siegler & Collery & Co.
712 Fifth Avenue
New York, NY 10019
</TABLE>
Page 5
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES
- --------------------------------------- -------------------- -------------------
<S> <C> <C>
The SC Fundamental Value Fund, LP..... 425,113/2/ 14.48%/2/
712 Fifth Avenue
New York, NY 10019
Martin J. Whitman..................... 1,907,599/1/ 48.95%/1/
c/o Carl Marks Management Co., LP
135 East 57th Street
New York, New York 10022
</TABLE>
- -----------------------------
/1/ The ownership of these shares of Common Stock includes multiple beneficial
ownership of the same shares. Carl Marks Strategic Investments, LP ("CM
Strategic") owns 1,168,579 shares and is deemed to own an additional 194,521
shares because it owns warrants to acquire 194,521 shares at a price of $4.24
per share. CM Management is the general partner of CM Strategic. CM
Management, therefore, beneficially owns all of the shares of Common Stock that
CM Strategic beneficially owns. In addition, CM Management beneficially owns
120,000 shares of Common Stock that are owned by Carl Marks Strategic
Investments II, LP ("CMSI"), because CM Management is the general partner of
CMSI. Moreover, CM Management beneficially owns 279,711 shares because it has
investment discretion over advisory accounts that own these shares. Messrs.
Boas, Ruocco, and Whitman are each a general partner of CM Management. Messrs.
Boas, Ruocco, and Whitman, therefore, beneficially own all of the shares of
Common Stock that CM Management beneficially owns. In addition, Mr. Boas (i)
owns 4,684 shares of Common Stock, (ii) is deemed to own an additional 10,000
shares because he owns options to acquire 5,000 shares at a price of $2.75 per
share and 5,000 shares at a price of $.79 per share, and (iii) beneficially
owns 1,058 shares because he is a co-trustee of a trust that owns these shares.
In addition, Mr. Whitman (i) owns 2,850 shares of Common Stock, (ii)
beneficially owns 34,746 shares that are owned by Martin J. Whitman & Co., Inc.
("MJ Whitman") as he is a principal stockholder of MJ Whitman, and (iii)
beneficially owns 107,192 shares because he is affiliated with the investment
advisor to a registered investment company that owns these shares. CM
Strategic, CM Management, and Messrs. Boas, Ruocco, and Whitman disclaim the
existence of a group. The reported voting and investment power over these
shares is as follows (i) CM Strategic - sole voting and investment power over
1,363,100 shares, (ii) CM Management - sole voting and investment power over
1,762,811 shares, (iii) Mr. Boas - sole voting and investment power over 15,742
shares and shared voting and investment power over 1,762,811 shares, (iv) Mr.
Ruocco - shared voting and investment power over 1,762,811 shares, and (v) Mr.
Whitman - sole voting and investment power over 144,788 shares and shared
voting and investment power over 1,762,811 shares. The following table shows
the beneficial ownership of the shares of Common Stock described in this
footnote:
(continued)
Page 6
<PAGE>
<TABLE>
<CAPTION>
(Footnotes continued)
CM CM MR. MR.
STRATEGIC MANAGEMENT MR. BOAS RUOCCO WHITMAN
------------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Shares Owned by CM Strategic............ 1,168,579 1,168,579 1,168,579 1,168,579 1,168,579
Warrants Owned by CM Strategic.......... 194,521 194,521 194,521 194,521 194,521
Shares Owned by CMSI 120,000 120,000 120,000 120,000
Shares Over Which CM Management
Possesses Investment Discretion........ 279,711 279,711 279,711 279,711
Shares Owned by Mr. Boas................ 4,684
Options Owned by Mr. Boas............... 10,000
Shares Held in Trust Over Which Mr.
Boas is a Co-Trustee................... 1,058
Shares Owned by Mr. Whitman............. 2,850
Shares Owned by MJ Whitman in Which Mr.
Whitman is a Principal Stockholder..... 34,746
Shares Owned by a Registered Investment
Company Whose Investment Advisor is
Affiliated with Mr. Whitman............ 107,192
------------ --------- --------- --------- ---------
Total............................ 1,363,100 1,762,811 1,778,702 1,762,811 1,907,599
============ ========= ========= ========= =========
Percentage of Outstanding Shares........ 34.98% 45.23% 45.52% 45.23% 48.95%
</TABLE>
/2/ The ownership of these shares of Common Stock includes multiple beneficial
ownership of the same shares. SC Fundamental Value Fund, LP, a Delaware limited
partnership (the "Fund") owns 425,113 shares. SC Fundamental Inc., a Delaware
corporation ("SC") is the general partner of the Fund and, therefore,
beneficially owns all of the shares of the Common Stock that the Fund owns. SC
Fundamental Value BVI, Inc., a Delaware corporation ("BVI") owns 222,400 shares.
Gary N. Siegler is a controlling stockholder and the president and a director of
SC and BVI. Peter M. Collery is also a controlling stockholder and a vice
president and director of SC and BVI. Messrs. Siegler and Collery are in a
position to directly and indirectly determine the investment and voting
decisions made by SC and BVI and, therefore, are deemed to beneficially own all
of the shares of Common Stock that the Fund and BVI own.
/3/ Pacholder Associates, Inc. is deemed to beneficially own 204,010 shares
because its clients own warrants to acquire 204,010 shares of Common Stock at a
price of $4.24 per share.
Page 7
<PAGE>
The following table sets forth the number of shares of Common Stock
beneficially owned as of November 7, 1995, by each nominee for director, each
officer named in the summary compensation table below, and all nominees for
director and executive officers of the Company as a group. The Company obtained
this information from its nominees for director and officers. Unless otherwise
indicated, these individuals possess sole voting and investment power with
respect to the shares that they beneficially own.
<TABLE>
<CAPTION>
NUMBER
OF SHARES PERCENTAGE OF
NAME BENEFICIALLY OWNED OUTSTANDING SHARES
- ------ -------------------- --------------------
<S> <C> <C>
Andrew M. Boas.......................... 1,778,553/1/ 45.52%
Charles C. Davis........................ 62,947 1.70%
William F. Dawson....................... 45,000/2/ 1.21%
Donald W. Hair.......................... -0- 0%
Walter B. Jaccard....................... 25,000/2/ *
William P. Kovacs....................... 60,000/2/ 1.62%
Donald R. Leopold....................... -0- 0%
H. Sean Mathis.......................... 10,000/2/ *
Douglas K. Nelson....................... 10,000/2/ *
William J. Shaw......................... -0- 0%
Harry J. White, Jr...................... 57,500/2/ 1.54%
All nominees for director and executive
officers as a group (9 individuals).... 1,941,053/2/ 48.80%/3/
</TABLE>
- -------------------
/1/ See footnote number 1 to the preceding table for a description of Mr. Boas'
beneficial ownership of Common Stock.
/2/ The shares of Common Stock beneficially owned by the following individuals
include vested stock options for the number of shares following their name: Mr.
Boas, 10,000; Mr. Dawson, 25,000; Mr. Jaccard, 15,000; Mr. Kovacs, 10,000; Mr.
Mathis, 10,000; Mr. Nelson, 10,000; Mr. White, 25,000; and all nominees for
director and executive officers as a group, 80,000.
/3/ Includes only the nine nominees for director and executive officers of the
Company as of November 7, 1995, and excludes Messrs. Davis, Dawson, and Hair.
* Less than 1%.
The Company's articles of incorporation limit certain transactions
involving the Company. In addition to state law requirements, the articles of
incorporation require an affirmative vote of the holders of at least 66 2/3% of
the issued and outstanding shares of Common Stock to authorize certain going-
private transactions. The articles of incorporation also require authorization
and approval of two-thirds of the Board of Directors prior to certain issuances
or sales of shares of Common Stock.
Page 8
<PAGE>
BOARD OF DIRECTORS
MEETINGS. During the fiscal year ended June 30, 1995, the Board of
Directors held one regularly scheduled meeting and nine special meetings. Each
director attended at least 75% or more of all meetings of: (i) the Board of
Directors held during the periods for which he was a director, and (ii) the
committees to which he was assigned during the periods that he served.
COMPENSATION. Directors who are not employees of the Company receive a
retainer of $24,000 per year and $500 for each day that they attend meeting(s)
of the Board of Directors or committee(s) thereof. The Company also reimburses
such directors for their travel and lodging expenses when attending meetings.
The following table summarizes amounts paid to each director and nominee for
director during the year ended June 30, 1995, excluding reimbursements of travel
and lodging expenses.
<TABLE>
<CAPTION>
ANNUAL AMOUNT PAID STOCK OPTIONS
NAME RETAINER FOR MEETINGS CONSULTING FEES GRANTED
------- ---------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Andrew M. Boas $24,000 $3,500 -0- 5,000
Charles C. Davis/1/ -0- -0- -0- -0-
William P. Kovacs 24,000 3,500 -0- 5,000
Donald R. Leopold/2/ -0- -0- $291,875 -0-
H. Sean Mathis/3/ 24,000 3,500 35,000 5,000
Douglas K. Nelson/4/ 24,000 3,500 10,777 5,000
William J. Shaw/1/ -0- -0- -0- -0-
</TABLE>
/1/ Messrs. Davis and Shaw did not receive additional compensation for serving
as directors of the Company.
/2/ From May 1994 to September 1995, Sherbrooke Associates, Inc. served as a
consultant to the Company with respect to its marketing and sales
operations, and these fees were paid to Sherbrooke Associates, Inc. Mr.
Leopold is a senior partner of Sherbrooke Associates, Inc. and was primarily
responsible for the consulting work performed for the Company.
/3/ Mr. Mathis was paid a consulting fee in connection with the hiring of Mr.
Shaw.
/4/ Mr. Nelson periodically serves as a consultant to the Company with respect
to marketing and strategic planning issues.
AUDIT COMMITTEE. The Board of Directors has an Audit Committee (the
"Audit Committee"), presently composed of Messrs. Boas, Kovacs, Mathis, and
Nelson, and Robert M. Galecke. Mr. Galecke's term as a director will end at the
Annual Meeting. Pursuant to its charter, the Audit Committee (i) reviews the
Company's systems of internal accounting controls and financial reporting, (ii)
reviews the Company's internal audit function, (iii) approves the selection of
the Company's independent certified public accountants, and (iv) reviews the
reports that the Company's independent certified public accountants render on
the Company's financial statements and other matters. The Audit Committee also
performs such other duties and functions as it or the Board of Directors deem
appropriate. During the fiscal year ended June 30, 1995, the Audit Committee
held three meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Board
of Directors has a Compensation Committee (the "Compensation Committee"),
presently composed of Messrs. Boas, Galecke, Kovacs, Mathis, and Nelson. Mr.
Boas is deemed to beneficially own more than 5% of the Common Stock, and Mr.
Galecke was formerly an officer of the Company. The Compensation Committee
recommends to the Board of Directors (i) the base salaries and bonuses of the
officers of the Company and (ii) the awards that the Company should make under
its stock plans. During the fiscal year ended June 30, 1995, the Compensation
Committee held one meeting.
Page 9
<PAGE>
MARKETING COMMITTEE. The Board of Directors has a Marketing Committee
that reviews sales and marketing programs, direction, and other issues with the
Company's senior management. The Marketing Committee is presently composed of
Messrs. Boas, Galecke, and Nelson. During the fiscal year ended June 30, 1995,
the Marketing Committee held ten meetings.
NOMINATING COMMITTEE. The Board of Directors has a Nominating Committee
(the "Nominating Committee"), presently composed of Messrs. Boas and Mathis,
which recommends to the Board of Directors the individuals to be nominated for
director at the annual meeting of Stockholders. The Nominating Committee will
consider nominees for director recommended by any Stockholder. To make such a
recommendation with respect to directors to be elected at the 1996 annual
meeting, a Stockholder should contact the Company at its principal executive
offices on or before the deadline for submitting Stockholder proposals set forth
on the last page of this proxy statement. During the fiscal year ended June 30,
1995, the Nominating Committee held one meeting.
SPECIAL COMMITTEE. The Board of Directors has a Special Committee of
independent directors that is authorized to review and make recommendations to
the full Board of Directors regarding recapitalization and reorganization
alternatives for the Company. This Special Committee is presently composed of
Messrs. Galecke, Kovacs, and Mathis. During the fiscal year ended June 30,
1995, the Special Committee held one meeting.
REPORT OF THE COMPENSATION COMMITTEE
The Company's executive compensation program is administered by the
Compensation Committee. The role of the Compensation Committee is to review and
approve salaries and other compensation of the principal officers of the
Company, including those individuals listed in the compensation tables in this
proxy statement.
OVERALL POLICY. The Compensation Committee's compensation policies are
intended to (i) provide incentives for certain executive officer performance
that results in continuing improvements in the Company's financial results and
(ii) align the interests of the Company's executives and the holders of its
securities by providing for payment of compensation based on increases in the
value of such securities.
ANNUAL COMPENSATION. The Compensation Committee establishes annual
salary levels by evaluating individual performance with input from the Chief
Executive Officer. In addition, certain executive officers are also eligible
for annual incentive awards. These awards are designed to place a portion of
the executive's annual compensation at risk, based on corporate performance
measured by revenues, expenses, and achievement of strategic objectives.
For fiscal 1995, the Compensation Committee did not increase the base
salaries of the Company's executive officers, and their base salaries continued
at the same level as fiscal 1994. In fact, Mr. Davis' base salary remained at
the same level originally set when the Company emerged from Chapter 11 on
December 31, 1991. Similarly, Mr. White's base salary remained at the same
level originally approved by the Compensation Committee in June 1992 at the time
Mr. White joined the Company as its Chief Financial Officer. In addition, Mr.
Jaccard's base salary remained at the same level originally approved by the
Compensation Committee upon Mr. Jaccard's appointment as the Company's General
Counsel in December 1992. Furthermore, the base salaries of Messrs. Dawson and
Hair remained at the same level originally approved by the Compensation
Committee in October 1992. At the same time, for the three officers eligible
for incentive awards (Messrs. Dawson, Hair, and White), the awards made in
fiscal 1995 were lower than in fiscal 1994.
In May 1995, Mr. Davis resigned and Mr. Shaw was appointed the Company's
new President and Chief Executive Officer. In connection with this appointment,
the Company entered into an employment agreement with Mr. Shaw, which was
negotiated between Mr. Boas and Mr. Shaw and subsequently approved by the
Compensation Committee and the full Board of Directors. Under this employment
agreement, Mr. Shaw's salary is not less than $250,000 per year. If the Company
terminates Mr. Shaw, other than for cause, the Company must pay Mr. Shaw a
severance payment equal to one year of his salary. In addition, if the
Company's major shareholder sells 42% or more of the outstanding Common Stock to
an unaffiliated person prior to the date the Company completes a
recapitalization or reorganization, the Company must pay Mr. Shaw a change in
control bonus equal to two times his annual salary.
Mr. Shaw's employment agreement also provides that he may receive a one-
time bonus equal to 4% to 6% of the amount by which the aggregate market value
of the Company's outstanding securities exceeds $75 million at the time he
elects to receive the bonus. Mr. Shaw's right to receive this bonus vests 50%
on May 11, 1995, another
Page 10
<PAGE>
25% on May 11, 1996, and another 25% on May 11, 1997, although Mr. Shaw may not
exercise his right to receive the bonus before January 1, 1996. The Company has
obtained an irrevocable standby letter of credit in the amount of $1.5 million
on which Mr. Shaw may draw all or part of this bonus if the Company fails to pay
the bonus after receiving a request from Mr. Shaw. The Company has deposited
$1.5 million with the bank that issued the letter of credit with respect to the
Company's reimbursement obligation to the bank in the event Mr. Shaw draws upon
the letter of credit.
In September 1995, Mr. Gelinas was appointed the Company's new Vice
President of Sales and Marketing. In connection with this appointment, the
Company entered into an employment agreement with Mr. Gelinas, which was
negotiated between Mr. Shaw and Mr. Gelinas and subsequently approved by the
Compensation Committee and the full Board of Directors. Under this employment
agreement, Mr. Gelinas' salary is not less than $130,000 per year, and he may
receive a bonus each year at the discretion of the Company's Chief Executive
Officer. If the Company terminates Mr. Gelinas, other than for cause, the
Company must pay Mr. Gelinas a severance payment equal to one year of his
salary.
The Compensation Committee does not presently intend to increase the
annual salaries of the executive officers of the Company and the principal
officers of NACO and Trails for fiscal 1996. This decision is based on the
recently negotiated employment agreements with Messrs. Shaw and Gelinas and, for
the other officers, on corporate performance, including the Company's continuing
losses.
STOCK OPTIONS. Stock options were granted in fiscal 1993 to the
executive officers of the Company and the principal officers of NACO and Trails
to aid in the retention of these individuals and to align their interests with
those of the Stockholders. The exercise price of these stock options exceeded
the market price of the Common Stock on the date of grant and, therefore, these
options provide value to the officers only with appreciation in stock prices.
These stock options are currently 100% vested.
Additional stock options were granted in September 1995 to the executive
officers of the Company, other than Mr. Shaw, and the principal officers of
NACO and Trails to aid in the retention of these individuals and to align their
interests with those of the Stockholders. The exercise price of these stock
options was equal to the market price of the Common Stock on the date of grant
and, therefore, these options provide value to the officers only with
appreciation in stock prices. In addition, the stock options will vest and
become exercisable over a three year period at the rate of 33 1/3% per year.
FISCAL 1995 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. As discussed
above, for fiscal 1995, the Compensation Committee did not increase Mr. Davis'
base salary, and it remained at the same level originally set when the Company
emerged from Chapter 11 on December 31, 1991. Mr. Davis resigned as Chief
Executive Officer in May 1995, and he ceased to be employed by the Company as of
June 8, 1995. In connection with his departure, Mr. Davis was paid accrued
vacation of $17,200 and severance of $250,000 in accordance with his employment
agreement. He was also paid consulting fees of $57,300 during the period after
his employment ended through August 31, 1995, in accordance with his severance
agreement. In addition, for fiscal 1995, Mr. Davis received matching
contributions of $1,208 from the Company under its 401(k) Plan.
Also, as discussed above, in May 1995, Mr. Shaw was appointed the
Company's new President and Chief Executive Officer. In connection with this
appointment, the Company entered into an employment agreement with Mr. Shaw,
which provides for an annual salary equal to the annual salary paid to Mr.
Davis. In addition, Mr. Shaw's employment agreement provides that he may
receive a one-time bonus equal to 4% to 6% of the amount by which the aggregate
market value of the Company's outstanding securities exceeds $75 million at the
time he elects to receive the bonus. This bonus was designed to provide value
to Mr. Shaw only with appreciation above $75 million in the market value of the
Company's securities, including the Common Stock and the Company's Secured
Notes. Before approving the agreement with Mr. Shaw, the Compensation Committee
obtained an opinion from an independent employment compensation consultant that
the bonus and the other compensation payable to Mr. Shaw
Page 11
<PAGE>
under the agreement was a reasonable compensatory arrangement for Mr. Shaw given
the Company's present financial and operating condition and prospects.
Respectfully submitted,
Andrew M. Boas
Robert M. Galecke
William P. Kovacs
H. Sean Mathis
Douglas K. Nelson
EXECUTIVE OFFICERS
The following table sets forth the current executive officers of the
Company. Although each of these individuals has an employment agreement with
the Company, they each serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE OFFICES
------ ---- ---------
<S> <C> <C>
William J. Shaw 52 Chairman of the Board, President, and Chief
Executive Officer
Harry J. White, Jr. 41 Vice President, Chief Financial Officer,
Chief Accounting Officer, and Treasurer
R. Gerald Gelinas 49 Vice President of Sales and Marketing
Walter B. Jaccard 42 Vice President, General Counsel,
and Secretary
</TABLE>
William J. Shaw is also a director of the Company and his business
experience is described above.
Harry J. White, Jr. joined the Company as Vice President, Chief Financial
Officer, and Chief Accounting Officer in June 1992. At that time, Mr. White
also became a Vice President and the Chief Financial Officer of NACO and Trails.
In September 1992, Mr. White became a director and the Chief Accounting Officer
of NACO and Trails. In June 1995, Mr. White became the Company's Treasurer.
From September 1988 through May 1992, Mr. White was the Chief Financial Officer
of Cosmo World Corporation and its subsidiaries. During this period, Cosmo
World Corporation was a holding company that owned Ben Hogan Company, a
manufacturer of golf equipment, Pebble Beach Company, the owner and operator of
golf courses and hotels in Pebble Beach, California, and other companies that
owned residential and golf course developments. Cosmo World of Nevada, Inc., a
subsidiary of Cosmo World Corporation, filed a Chapter 11 petition in December
1991. From June 1976 through August 1988, Mr. White practiced public accounting
with the firm of Deloitte Haskins & Sells, now known as Deloitte & Touche. Mr.
White is a Certified Public Accountant.
R. Gerald Gelinas joined the Company in September 1995 as Vice President,
Sales and Marketing for the Company, Trails, and NACO. From January 1988
through June 1995, Mr. Gelinas served as Senior Vice President, Marketing, for
Club Corporation of America ("CCA"), an owner and manager of country clubs and
golf courses. While with CCA, Mr. Gelinas also served as Chairman for two CCA
subsidiaries, Associate Clubs International ("ACI") and Associate Club
Publications ("ACPI"), from January 1992 through June 1995. ACI operates a fee-
based network which provides members with various services including access to
other CCA and non-CCA clubs, hotels, and resorts. ACPI produces and distributes
a bi-monthly magazine to CCA members. From May 1984 through September 1988, Mr.
Gelinas served as Senior Vice President, Marketing, for Ramada, Inc., which owns
and manages hotel facilities.
Walter B. Jaccard has been Vice President, General Counsel, and Secretary
of the Company since December 1992. Mr. Jaccard has been a director of Trails
and NACO since February 1992. He has been Vice President and General Counsel of
Trails since January 1987 and Secretary since January 1988. He served as
Associate General
Page 12
<PAGE>
Counsel from 1983 to 1986. Mr. Jaccard has also been Vice President and
Assistant Secretary of NACO since August 1989, and he served as a director of
Trails and NACO from May 1991 to June 1991.
INDEMNIFICATION
Under the articles of incorporation of the Company, the Company must
indemnify its present and former directors and officers for the damages and
expenses that they incur in connection with threatened or pending actions,
suits, or proceedings arising because of their status as directors and officers,
provided that they acted in good faith and in a manner that they reasonably
believed to be in or not opposed to the best interests of the Company (or with
respect to any criminal action or proceeding, provided that they had no
reasonable cause to believe that their conduct was unlawful). In connection
with this indemnification obligation, the Company has entered into
indemnification agreements with its directors and officers.
The Company must advance funds to these individuals to enable them to
defend any such threatened or pending action, suit, or proceeding. The Company
cannot release such funds, however, until it receives an undertaking by or on
behalf of the requesting individual to repay the amount if a court of competent
jurisdiction ultimately determines that such individual is not entitled to
indemnification. In connection with this obligation, the Company established a
trust (the "Indemnification Trust") that will reimburse its present and former
directors and officers for any indemnifiable damages and expenses that they
incur and that will advance to them defense funds. On May 8, 1991, the Company
contributed $500,000 to the Indemnification Trust. Pursuant to the trust
agreement, interest on the Indemnification Trust corpus will become part of the
trust estate.
The Indemnification Trust will terminate on the earlier of (i) the
execution by a majority of the beneficiaries of a written instrument terminating
the trust, (ii) the exhaustion of the entire trust estate, or (iii) the
expiration of ten years from the establishment of the trust. The
Indemnification Trust may not terminate, however, if there is pending or
threatened litigation with respect to a claim by a beneficiary against the
Indemnification Trust, until (i) a final judgment in such proceeding, (ii) the
execution and delivery of a statement by such beneficiary that assertion of a
threatened claim is unlikely, or (iii) the expiration of all applicable statutes
of limitations. The Company possesses a residuary interest in the trust estate
upon termination of the Indemnification Trust.
NACO and Trails also have indemnification obligations to their
respective directors and officers. In connection therewith, NACO and Trails
have contributed an aggregate of $500,000 to trusts. These trusts will
reimburse NACO's and Trails' directors and certain officers for any
indemnifiable damages and expenses that they incur and will advance defense
funds to them.
Page 13
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended June 30,
1995, 1994, and 1993, the cash compensation that the Company and its
subsidiaries paid, as well as other compensation paid or accrued for these
years, to the Company's Chief Executive Officer and former Chief Executive
Officer, to the two other executive officers of the Company at June 30, 1995,
and to the two most highly compensated officers of the Company's subsidiaries,
who are not considered executive officers for reporting purposes.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- ---------------------------------------------
AWARDS PAYOUTS
----------------------- ---------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPEN- AWARDS OPTIONS/ PAYOUTS COMPEN-
POSITION YEAR ($) ($) SATION($)/2/ ($)/3/ SARS(#)/4/ ($)/3/ SATION($)/5/
- ------------------- ----- ------- ------- ------------- ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles C. Davis, former Chairman of 1995 234,700/1/ -0- -0- -0- -0- -0- 325,708/1/
the Board, President, and CEO 1994 250,000 -0- -0- -0- -0- -0- -0-
1993 250,000 -0- -0- -0- 128,000 -0- -0-
William F. Dawson, CEO of RPI and Vice 1995 163,750 78,900 6,000/6/ -0- -0- -0- 4,316
President of NACO and Trails 1994 163,750 84,400 6,000/6/ -0- -0- -0- -0-
1993 163,750 85,100 6,000/6/ -0- 25,000 -0- -0-
Donald W. Hair, 1995 160,000 50,000 -0- -0- -0- -0- 2,481
Vice President 1994 160,000 95,000 -0- -0- -0- -0- -0-
of NACO 1993 183,000 95,000 -0- -0- -0- -0- -0-
Walter B. Jaccard, 1995 140,000 -0- -0- -0- -0- -0- 1,290
Vice President, General Counsel, and 1994 140,000 -0- -0- -0- -0- -0- -0-/7/
Secretary 1993 134,000 -0- -0- -0- 15,000 -0- -0-
William J. Shaw, Chairman of the Board, 1995 29,800/8/ -0- -0- -0- -0- -0- -0-
President, and CEO 1994
1993
Harry J. White, Jr., Vice President, 1995 124,032 15,000 -0- -0- -0- -0- 36,454/9/
CFO, CAO, and Treasurer 1994 124,032 30,000 -0- -0- -0- -0- -0-
1993 123,100 28,500 -0- -0- 25,000 -0- 13,700/9/
</TABLE>
- --------
/1/ Mr. Davis resigned as an officer of the Company on May 11, 1995, and he
ceased to be employed by the Company as of June 8, 1995. Mr. Davis was paid
accrued vacation of $17,200 and severance of $250,000 in accordance with his
employment agreement, and consulting fees of $57,300 during the period after
his employment ended through August 31, 1995, in accordance with his severance
agreement. Other compensation also includes matching contributions of $1,208
by the Company under its 401(k) Plan.
/2/ On October 29, 1992, Messrs. Davis, Dawson, Jaccard, and White purchased
Common Stock from a third party in connection with the Company's repurchase of
certain Secured Notes. No amounts are shown as the purchases of Common Stock
were made at fair market value.
/3/ The Company did not make any restricted stock awards or any long-term
incentive plan payouts during the periods presented other than the matching
contributions under the 401(k) Plan described below.
(continued)
Page 14
<PAGE>
(Footnotes continued)
/4/ Awards are grants of stock options pursuant to the Company's 1991 Employee
Plan.
/5/ Amounts include matching contributions by the Company under its 401(k) Plan
as follows: Mr. Davis, $1,208; Mr. Dawson, $4,316; Mr. Hair, $2,481; Mr.
Jaccard, $1,290; and Mr. White, $2,654. Except as noted below, the amounts do
not include compensation payable to the named executive officers under their
employment agreement upon the termination of their employment if their
employment has not terminated because no amounts have been paid or accrued
therefor (see "Employment Contracts").
/6/ Mr. Dawson was paid a car allowance of $500 per month during the three
reporting periods presented.
/7/ The Company accrued $70,000 at June 30, 1994, for severance compensation
under the terms of Mr. Jaccard's employment agreement because Mr. Jaccard
declined the Company's offer to relocate to Dallas, Texas. This severance
compensation has not yet been paid to Mr. Jaccard, however, because he is still
employed by the Company.
/8/ Mr. Shaw became the Company's President and Chief Executive Officer on May
11, 1995.
/9/ During the year ended June 30, 1995, the Company reimbursed Mr. White
$33,800 for moving expenses that he incurred during his relocation to Dallas,
Texas. During the year ended June 30, 1993, the Company reimbursed Mr. White
$13,700 for moving expenses that he incurred during his relocation to Bellevue,
Washington.
Employment Contracts. The Company has entered into an employment agreement
dated as of May 11, 1995, with Mr. Shaw. Under this employment agreement, Mr.
Shaw's salary is not less than $250,000 per year. If the Company terminates Mr.
Shaw, other than for cause, the Company must pay Mr. Shaw a severance payment
equal to one year of his salary. In addition, if the Company's major
shareholder sells 42% or more of the outstanding Common Stock to an unaffiliated
person prior to the date the Company completes a recapitalization or
reorganization, the Company must pay Mr. Shaw a change in control bonus equal to
two times his annual salary.
Mr. Shaw's employment agreement also provides that he may receive a one-
time bonus equal to 4% to 6% of the amount by which the aggregate market value
of the Company's outstanding securities exceeds $75 million at the time he
elects to receive the bonus. Mr. Shaw's right to receive this bonus vests 50%
on May 11, 1995, another 25% on May 11, 1996, and another 25% on May 11, 1997,
although Mr. Shaw may not exercise his right to receive the bonus before January
1, 1996. The Company has obtained an irrevocable standby letter of credit in
the amount of $1.5 million on which Mr. Shaw may draw all or part of this bonus
if the Company fails to pay the bonus after receiving a request from Mr. Shaw.
The Company has deposited $1.5 million with the bank that issued this letter of
credit with respect to the Company's reimbursement obligation to the bank in the
event Mr. Shaw draws upon the letter of credit.
On September 14, 1995, the Company entered into an employment agreement
with Mr. Gelinas. Under this employment agreement, Mr. Gelinas' salary is not
less than $130,000 per year, and he may receive a bonus each year at the
discretion of the Company's Chief Executive Officer. If the Company terminates
Mr. Gelinas, other than for cause, the Company must pay Mr. Gelinas a severance
payment equal to one year of his salary.
On September 10, 1992, NACO, Trails, and Shorewood Corporation ("RPI")
entered into an employment agreement with Mr. Dawson. Under this employment
agreement, Mr. Dawson's base salary is not less than $163,750 per year, and he
may receive a bonus each year at the discretion of the Company's Chief Executive
Officer. If these companies terminate Mr. Dawson other than for cause, they
must pay Mr. Dawson a severance payment equal to six months of his base salary.
On November 2, 1992, the Company and NACO entered into a letter agreement
with Mr. Hair. Under this letter agreement, Mr. Hair's base salary is not less
than $160,000 per year, and he may receive a discretionary bonus of up to
$100,000 per year.
On December 3, 1992, the Company, NACO, and Trails entered into an
employment agreement with Mr. Jaccard. Under this employment agreement, Mr.
Jaccard's salary is not less than $140,000 per year. If these
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<PAGE>
companies terminate Mr. Jaccard, other than for cause, they must pay Mr. Jaccard
a severance payment equal to six months of his salary.
On October 21, 1993, the Company entered into an employment agreement with
Mr. White. Under this employment agreement, Mr. White's base salary is not less
than $124,032 per year, and he may receive a discretionary bonus of up to
$30,000 per year. If the Company terminates Mr. White other than for cause, the
Company must pay Mr. White a severance payment equal to six months of his base
salary.
Stock Options and Stock Appreciation Rights. In connection with its
emergence from Chapter 11, the Company adopted the 1991 Employee Stock Incentive
Plan (the "1991 Employee Plan") to enable the Company and its subsidiaries to
attract, retain, and motivate their officers, employees, and directors. Awards
under the 1991 Employee Plan may take various forms, including (i) shares of
Common Stock, (ii) options to acquire shares of Common Stock ("Options"), (iii)
securities convertible into shares of Common Stock, (iv) stock appreciation
rights, (v) phantom stock, or (vi) performance units. Options granted under the
1991 Employee Plan may be (i) incentive stock options ("ISOs"), which have
certain tax benefits and restrictions, or (ii) non-qualified stock options
("Non-Qualified Options"), which do not have any tax benefits and have few
restrictions.
The Compensation Committee of the Board of Directors (the "Compensation
Committee") may grant awards under the 1991 Employee Plan until December 30,
2001. The recipient of an award duly granted on or prior to such date may
thereafter exercise or settle it in accordance with its terms, although the
Company may not issue any shares of Common Stock pursuant to any award after
December 30, 2011.
The Board of Directors may amend or terminate the 1991 Employee Plan at any
time and in any manner, provided that (i) an amendment or termination may not
affect an award previously granted without the recipient's consent, and (ii) an
amendment will not be effective until the stockholders approve it if any
national securities exchange or securities association that lists any of the
Company's securities requires stockholder approval or if Rule 16b-3 requires
stockholder approval.
The Company reserved 291,780 shares of Common Stock for issuance under the
1991 Employee Plan. In fiscal 1993, the Company granted key employees ISOs
covering 285,000 of these shares with an exercise price of $2.50 per share.
39,000 of these ISOs were canceled in fiscal 1995, and 148,000 were canceled
during the first quarter of fiscal 1996, as a result of employees leaving the
Company. No awards were made under the 1991 Employee Plan in fiscal 1995. In
September 1995, the Company granted key employees ISOs covering an additional
135,000 shares with an exercise price of $0.625 per share. These ISOs vest over
a three year period at the rate of 33 1/3% per year. The officers named in the
summary compensation table above received ISO's as follows: Mr. Dawson, 10,000
shares; Mr. Hair, 10,000 shares; Mr. Jaccard, 15,000 shares; and Mr. White,
15,000 shares. In addition, Mr. Gelinas received ISO's covering 20,000 shares.
To date, none of these ISOs has been exercised.
On December 2, 1993, the Company adopted the 1993 Stock Option and
Restricted Stock Purchase Plan (the "1993 Employee Plan") in order to enable the
Company and its subsidiaries to attract, retain, and motivate their officers and
employees. Awards under the 1993 Employee Plan are restricted to (i) awards of
the right to purchase shares of Common Stock ("Stock Awards"), or (ii) awards of
Options, which may be either ISOs or Non-Qualified Options. The purchase price
for any Stock Awards and the exercise price for any Non-Qualified Options may be
less than the fair market value of the Common Stock on the date of grant. The
exercise price of any ISOs may not be less than the fair market value of the
Common Stock on the date of grant.
The Compensation Committee may grant awards under the 1993 Employee Plan
until October 20, 2003. The termination of the 1993 Employee Plan, however,
will not alter or impair any rights or obligations under any award previously
granted under the plan.
The Board of Directors may amend or terminate the 1993 Employee Plan at any
time and in any manner, provided that (i) an amendment or termination may not
affect an award previously granted without the recipient's consent, (ii) an
amendment will not be effective until the stockholders approve it if any
national securities exchange or securities association that lists any of the
Company's securities requires stockholder approval or if Rule 16b-3 requires
stockholder approval, and (iii) the stockholders must approve any amendment
decreasing the minimum exercise price specified in the plan for any ISO granted
thereunder.
The Company reserved 285,919 shares of Common Stock for issuance under the
1993 Employee Plan. The 1993 Employee Plan, however, limits the number of
shares of Common Stock with respect to which awards can be
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<PAGE>
made in any calendar year to any one participant to 200,000 shares. No awards
have been made under the 1993 Employee Plan.
On December 2, 1993, the Company adopted the 1993 Director Stock Option
Plan (the "Director Plan"), which provides for the grant of stock options to
non-employee directors of the Company. Awards under the Director Plan are
restricted to Non-Qualified Options. The Director Plan is designed to be a
"formula plan," pursuant to which each non-employee director will automatically
receive a grant of Non-Qualified Options to purchase 5,000 shares of Common
Stock on the day immediately after each annual meeting of the stockholders at
which directors are elected, beginning with the annual meeting held in December
1993. If on any such day, the number of shares of Common Stock remaining
available for issuance under the Director Plan is insufficient for the grant of
the total number of Non-Qualified Options to which all participants would
otherwise be entitled, each participant will receive Non-Qualified Options to
purchase a proportionate number of the available number of remaining shares.
The exercise price of each Non-Qualified Option will be equal to the fair
market value on the date of grant of such Option as determined under the
Director Plan. Generally, the Director Plan specifies that such fair market
value will be the average trading price of the Common Stock during the period
beginning 45 days before the date of grant and ending 15 days before the date of
grant.
The Company reserved 50,000 shares of Common Stock for issuance under the
Director Plan, all of which were issued as Non-Qualified Options to the non-
employee directors of the Company, 25,000 in fiscal 1994 with an exercise price
of $2.75 per share and 25,000 in fiscal 1995 with an exercise price of $0.79 per
share. As of June 30, 1995, these options were 100% vested and none of them had
been exercised.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
SHARES ACQUIRED OPTIONS/SARS AT FY-END THE-MONEY OPTIONS/SARS
NAME ON EXERCISE (#) VALUE REALIZED ($) (#)/1/ AT FY-END ($)/1/
- ------ ---------------- ------------------ -------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles C. Davis 0 0 128,000/2/ 0 0 0
William F. Dawson 0 0 25,000 0 0 0
Donald W. Hair 0 0 0 0 0 0
Walter B. Jaccard 0 0 15,000 0 0 0
William J. Shaw 0 0 0 0 0 0
Harry J. White, Jr. 0 0 25,000 0 0 0
</TABLE>
/1/ At June 30, 1995, the Company had options outstanding for which no value is
reflected as the fair market value of the Company's stock was less than the
exercise price.
/2/ The options held by Mr. Davis at fiscal year-end were forfeited in September
1995 as a result of his leaving the Company.
LONG TERM INCENTIVE PLANS. As of June 30, 1995, the Company's long term
incentive plans consisted of the employment agreement with Mr. Shaw discussed
above, and the Company's Employees Savings Trust (the "401(k) Plan"), which was
adopted July 1, 1994, for the purpose of establishing a contributory employee
savings plan exempt under Section 401(k) of the Internal Revenue Code. An
eligible employee participating in the 401(k) Plan may contribute up to 10% of
his or her annual salary, subject to certain limitations. In addition, the
Company may make discretionary matching contributions as determined annually by
the Company. The Company made matching contributions totaling approximately
$213,000 for the year ended June 30, 1995, and has committed to make
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<PAGE>
matching contributions for the year ended June 30, 1996, in an amount equal to
47.5% of the voluntary contribution made by each participant, up to 4% of the
participant's annual compensation (a maximum of 1.9% of the participant's annual
compensation). Employer contributions are subject to a seven-year vesting
schedule.
PERFORMANCE GRAPH
The following Performance Graph compares the Company's cumulative total
Stockholder return on the Common Stock for the period from January 1, 1992 (the
day the Common Stock commenced trading in the over-the-counter market) to June
30, 1995 with the cumulative total return of the NASDAQ market index (which
includes the Company), and a peer group of companies selected by the Company for
purposes of the comparison and described more fully below (the "Peer Group").
Dividend reinvestment has been assumed and, with respect to companies in the
Peer Group, the returns of each such company have been weighted to reflect
relative stock market capitalization.
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN* AMONG
THE COMPANY, NASDAQ MARKET INDEX, AND PEER GROUP**
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) USTRAILS INC. PEER GROUP NASDAQ MARKET
- --------------------- ------------- ---------- -------------
<S> <C> <C> <C>
Measurement Point-
January 1, 1992 100.00 100.00 100.00
FYE 6/30/92 125.00 120.79 93.00
FYE 6/30/93 200.00 165.55 114.16
FYE 6/30/94 175.00 147.57 125.19
FYE 6/30/95 50.00 200.83 146.83
</TABLE>
Assumes $100 invested on January 1, 1992 in Common Stock, NASDAQ market
index, and Peer Group
- -------------
*Total Return assumes reinvestment of dividends
**Fiscal year ending June 30
Page 18
<PAGE>
The Peer Group selected by the Company for the above Performance Graph is
based on SIC Code 799 - Miscellaneous Amusement & Recreation Services - that is
presently comprised of the following companies: Acres Gaming, Inc., Alliance
Gaming Corporation, Alpha Hospitality Corporation, American Bingo & Gaming
Corporation, American Casino Enterprises, Inc., Anchor Gaming, Inc., Argosy
Gaming Company, Aztar Corporation, Bally Entertainment Corporation, BoomTown,
Inc., Boyd Gaming Corporation, Brassie Golf Corporation, Casino America, Inc.,
Cedar Fair, LP, Century Casinos, Inc., Childrobics, Inc., Cinema Ride, Inc.,
Circus Circus Enterprises, Inc., Colorado Casino Resorts, Inc., Crown Casino
Corporation, Elsinore Corporation, Encore Marketing International, Family Golf
Centers, Inc., Gaming Corporation of America, Gaming World International, Global
Resources, Inc., Golf Enterprises, Inc., Grand Casinos, Inc., Grand Gaming
Corporation, Great American Recreation, Inc., Griffin Gaming & Entertainment,
Inc., Imax Corporation, International Lottery, Inc., Irata, Inc., Jackpot
Enterprises, Inc., Jillian's Entertainment Corporation, Lady Luck Gaming
Corporation, Laser Video Network, Inc., Lone Star Casino Corporation, Master
Glazier's Karate, Inc., Mirage Resorts, Inc., Mountasia Entertainment
International, National Gaming Corporation, Players International, Inc., Pratt
Hotel, President Casinos, Inc., Renaissance Entertainment Corporation, Rio Hotel
and Casino, Inc., S-K-I, Ltd., Sahara Gaming Corporation, Sands Regent, Inc.,
Senior Tour Players Development, Inc., Showboat, Inc., Sky Games International
Ltd., Skylands Park Management, Inc., Skyline Multimedia Entertainment, Inc.,
Southshore Corporation, Sports Club Co., Inc., Stratosphere Corporation, and
Walt Disney Company. During the year ended June 30, 1995, the following
companies were added to the Peer Group: Alliance Gaming Corporation, American
Bingo & Gaming Corporation, Brassie Golf Corporation, Cinema Ride, Inc.,
Colorado Casino Resorts, Inc., Crown Casino Corporation, Family Golf Centers,
Inc., Golf Enterprises, Inc., Grand Gaming Corporation, Griffin Gaming &
Entertainment, Inc., Irata, Inc., National Gaming Corporation, Renaissance
Entertainment Corporation, Rio Hotel and Casino, Inc., Senior Tour Players
Development, Inc., Sky Games International, Ltd., and Sports Club Co., Inc.
During the year ended June 30, 1995, the following companies were deleted from
the Peer Group: Buckeye Communications, Inc., Caesars World, Inc., Creator
Capital, Inc., Gamma International Ltd., International Gaming Management, Inc.,
Las Vegas Major League SPR, MCDC Casino Corporation, MGM Grand, Inc., Resorts
International, Sahara Casino Partners, LP, and United Gaming, Inc. The
companies in the Peer Group provide a broad range of amusement and recreation
services in several industries.
SECTION 16(a)
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who
beneficially own more than 10% of the shares of Common Stock to file with the
SEC initial reports of Common Stock ownership and reports of changes in
ownership therein. Directors, executive officers, and greater than 10%
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's knowledge, based solely
upon a review of the copies of such reports furnished to the Company and written
representations that no other reports were required during the year ended June
30, 1995, the Company believes that all Section 16(a) filing requirements
applicable to its directors, executive officers, and greater than 10%
shareholders were complied with except for the initial report of Mr. Shaw which
was filed late.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
(ITEM 2 ON PROXY CARD)
The Audit Committee and the Board of Directors have selected Arthur
Andersen as the Company's independent certified public accountants for the
fiscal year ending June 30, 1996, subject to the Stockholders ratifying such
selection at the Annual Meeting. Arthur Andersen previously audited the
accounts of the Company for fiscal 1995, 1994, and 1993, and for the twelve
months ended June 30, 1992. Representatives of Arthur Andersen will be present
at the Annual Meeting and may make a statement thereat if they desire. These
representatives will also be available to respond to appropriate questions from
the Stockholders.
Audit services of Arthur Andersen for fiscal 1995 included the examination
of the consolidated financial statements of the Company and its subsidiaries and
services related to filings with the SEC. The Audit Committee meets with Arthur
Andersen on an annual basis at which time the Audit Committee reviews both audit
and nonaudit services performed by Arthur Andersen for the preceding year as
well as the fees charged by Arthur Andersen for such services. Nonaudit
services are approved by the Audit Committee, which considers, among other
things, the possible effect of the performance of such services on the auditor's
independence.
Page 19
<PAGE>
STOCKHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
The Company's 1996 annual meeting of Stockholders is scheduled to be held
on December 5, 1996. To be considered for inclusion in the Company's proxy
statement for that meeting, Stockholder proposals must be received at the
Company's principal executive offices no later than July 31, 1996.
INCORPORATION BY REFERENCE
With respect to any past or future filings with the SEC into which this
proxy statement is incorporated by reference, the material under the headings
"Report of the Compensation Committee" and "Performance Graph" shall
nevertheless not be so incorporated.
FORM 10-K
The Company previously sent to each Stockholder a copy of its Annual Report
on Form 10-K for the fiscal year ended June 30, 1995, which the Company has
filed with the SEC. Upon request, the Company will send to any Stockholder an
additional copy of the Annual Report on Form 10-K. In addition, the Company
will furnish to any Stockholder copies of any exhibits thereto if such
Stockholder reimburses the Company for its costs in furnishing such exhibits.
By Order of the Board of Directors
/S/ WALTER B. JACCARD
WALTER B. JACCARD
Vice President, General Counsel, and Secretary
Dallas, Texas
November 10, 1995
Page 20
<PAGE>
PROXY USTRAILS INC.
2711 LBJ FREEWAY, SUITE 200
DALLAS, TEXAS 75234
TELEPHONE NO. (214) 243-2228
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Walter B. Jaccard and Harry J. White, Jr., as
Proxyholders, each with the power to appoint his substitute, and hereby
authorizes either of them to represent and vote, as designated below, all the
shares of the common stock of USTrails Inc. (the "Company"), held of record by
the undersigned on November 7, 1995, at the annual meeting of stockholders to be
held on December 7, 1995, and any adjournment thereof.
The board of directors of the Company (the "Board of Directors") recommends a
vote "FOR" the following proposals.
<TABLE>
<C> <S> <C> <C>
1. ELECTION OF DIRECTORS / /FOR all nominees / /WITHHOLD AUTHORITY to
listed below (except vote for all nominees
as marked to the
contrary below)
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Nominees:
ANDREW M. BOAS . WILLIAM P. KOVACS . DONALD R. LEOPOLD . H. SEAN MATHIS .
DOUGLAS K. NELSON . WILLIAM J. SHAW
2. RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
<TABLE>
<CAPTION>
<C> <C> <C>
/ /FOR ratification of the / /AGAINST ratification of / /ABSTAIN from voting
nominee listed below the nominee listed below for ratification of
the nominee listed
below
</TABLE>
Nominee:
ARTHUR ANDERSEN LLP
3. In their discretion, the Proxyholders are authorized to (a) vote upon such
other matters presented at the meeting that the Board of Directors did not
know would be presented a reasonable time before this solicitation, (b) vote
to approve the minutes of the last annual meeting of stockholders (which
approval will not amount to ratification of the action taken at that
meeting), (c) vote for the election of such substitute nominees for director
as the Board of Directors may propose if any of the nominees listed above are
unavailable to stand for election as a result of unforeseen circumstances,
and (d) vote upon matters incident to the conduct of the meeting.
THE PROXYHOLDERS WILL VOTE THE UNDERSIGNED'S SHARES OF COMMON STOCK IN THE
MANNER DIRECTED HEREIN. IF THE UNDERSIGNED DOES NOT GIVE ANY DIRECTIONS HEREIN,
THE PROXYHOLDERS WILL VOTE SUCH SHARES FOR PROPOSALS 1 AND 2.
Please sign and date below. When shares are held by joint tenants, both joint
tenants should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give your full title. If a corporation, an
authorized officer should sign in the name of the corporation. If a
partnership, a general partner should sign in the name of the partnership.
DATED:________________________________, 1995
____________________________________________
Signature
____________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
