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:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
GOLF VENTURES, INC.
(Name of Registrant as Specified In Its Charter)
(same)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies: n/a
2) Aggregate number of securities to which transaction
applies: n/a
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1 n/a
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
------------------
1Set forth the amount on which the filing fee is calculated and state how it was
determined.
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
GOLF VENTURES, INC.
345 North 2450 East
St. George, Utah 84790
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held , , 1997 at :00 P.M.
Pursuant to the Bylaws of Golf Ventures, Inc. ("the Company"), we are
pleased to invite all of the Company's Shareholders to the Company's Annual
Shareholders Meeting, which will be held at the Company's executive offices,
located at 345 North 2450 East, St. George, Utah, on , , 1997 at :00 p.m.,
Mountain Time for the following purposes:
1. To elect a Board of Directors to serve for the ensuing year;
2. To approve the Golf Ventures, Inc. Long Term Equity-Based
Incentive Plan;
3. To approve the proposed amendment to the Company's Articles of
Incorporation increasing the number of authorized shares of
the Company's common stock from the current 25,000,000 shares
to 100,000,000 shares, primarily to accommodate the closing of
the reorganization transaction with U.S. Golf Communities,
Inc.;
4. To change the name of the Company to Golf Communities of
America, Inc.; and
5. To transact such other business as may be properly brought
before the Annual Meeting or at any adjournment or
postponement thereof.
The close of business on September 30, 1997, was fixed by the Board of
Directors as the Record Date for the determination of the Shareholders entitled
to notice of, and to vote at the 1997 Annual Meeting. In accordance with Utah
law, a list of the Company's Shareholders entitled to vote at the 1997 Annual
Meeting will be available for examination at the offices of the Company, 345
North 2450 East, St. George, Utah 84790, for ten business days prior to the
Annual Meeting, between the hours of 9:00 a.m. and 5:00 p.m. Mountain Time. This
list will also be available for inspection at and during the Annual Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE IMMEDIATELY SIGN AND
COMPLETE THE ENCLOSED PROXY DESIGNATION AND INSTRUCTION CARD ("PROXY") AND
RETURN IT IN THE ENVELOPE PROVIDED SO THAT YOUR SHARES MAY BE REPRESENTED AT THE
ANNUAL MEETING. NO POSTAGE IS REQUIRED IF A PROXY IS MAILED IN THE UNITED
STATES. IF A MAJORITY OF OUTSTANDING SHARES ARE NOT PRESENT AT THE MEETING
EITHER IN PERSON OR BY PROXY, THE MEETING MUST BE ADJOURNED WITHOUT CONDUCTING
BUSINESS, AND ADDITIONAL EXPENSE WILL BE INCURRED TO RESOLICIT THE SHAREHOLDERS
FOR A NEW MEETING DATE.
Sent to you with this Notice and the accompanying Proxy Statement is
the Company's 1997 Annual Report to Shareholders, which contains the audited
financial statements of the Company and certain other information about the
Company and its fiscal 1997 operating results.
Dated: , 1997 BY ORDER OF THE BOARD OF DIRECTORS
/s/ Bruce Frodsham
---------------------------------
Bruce Frodsham,
Secretary of the Company
<PAGE>
GOLF VENTURES, INC.
PROXY STATEMENT
, 1997
TABLE OF CONTENTS
Page
GENERAL INFORMATION FOR SHAREHOLDERS....................................... 2
INDEPENDENT AUDITORS....................................................... 3
MANAGEMENT OF THE COMPANY.................................................. 3
Board of Directors................................................ 3
Executive Officers................................................ 4
COMPENSATION OF MANAGEMENT................................................. 5
Director Compensation.......................................... . 5
Summary of Compensation To Certain Executive Officers............. 5
Stock Options and Similar Awards to Management.....................6
CERTAIN TRANSACTIONS BY AND WITH MANAGEMENT AND OTHERS......................6
Directors' and Officers' Liability Insurance.......................6
Interested Party Transactions......................................6
Compliance with Section 16 Reporting Obligations...................7
Employment Agreements..............................................7
PRINCIPAL SHAREHOLDERS......................................................7
PROPOSALS FOR SHAREHOLDER ACTION............................................8
1. Election of Directors.....................................8
2. Proposed Approval of the Golf Ventures Long Term
Equity-Based Incentive Plan..............................10
3. Proposed Approval of the proposed amendment to the
Company's Articles of Incorporation increasing the
number of authorized shares of the Company's Common
Stock from the current 25,000,000 shares to 100,000,000
shares, primarily to accommodate the reorganization
transaction with U.S. Golf Communities, Inc..............14
4. Proposed Approval of the proposed amendment to the
Company's Articles of Incorporation changing the name
of the Company to "Golf Communities of America, Inc."....24
OTHER BUSINESS.............................................................25
DEADLINE FOR SHAREHOLDER PROPOSALS.........................................25
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................25
APPENDIX "A" -- MANAGEMENT INFORMATION ABOUT US GOLF
APPENDIX "B" -- GOLF VENTURES LONG TERM EQUITY-BASED INCENTIVE PLAN
<PAGE>
GENERAL INFORMATION FOR SHAREHOLDERS
This Proxy Statement is furnished to its Shareholders by Golf Ventures,
Inc., a Utah corporation (hereinafter called the "Company"), in connection with
the solicitation by the current Board of Directors of proxies for use at the
Annual Meeting of Shareholders to be held at the Company's executive offices,
located at 345 North 2450 East, St. George, Utah, on , , 1997 at :00 p.m., and
at any and all adjournments thereof.
A Proxy Designation and Instruction Card ("Proxy" "or Proxy Card") for
your use in connection with the Annual Meeting is enclosed. You are requested to
date and sign the Proxy Card and return them in the envelope provided.
VOTING SECURITIES
The Board of Directors has fixed the close of business on September 30,
1997 as the Record Date for determination of shareholders entitled to notice of
and to vote at the 1997 Annual Meeting (the "Record Date"). As of the Record
Date, there were issued and outstanding 2,101,723 shares of Common Stock and -0-
shares of Class "A", 343,744 shares of Class "B", and -0- shares of Class "C"
Preferred Stock ("Preferred Stock") outstanding.
The holders of record of the shares of the Company's Common Stock and
shares of the Company's Series B Preferred Stock on the Record Date are entitled
to vote on each matter submitted to a vote at the Annual Meeting.
PROXIES
Shares of Common Stock which are represented by properly executed
Proxies will be voted in accordance with the instructions indicated on such
Proxies. If no instructions are indicated, such shares will be voted FOR the
election of each of the Director nominees; FOR each of the other Proposals for
Shareholder Action described in this Proxy Statement; and in the discretion of
the designated Proxy holders, as to any other matters which may properly come
before the Annual Meeting.
Any Shareholder signing and delivering a Proxy has the power to revoke
it at any time before the vote at the Annual Meeting (a) by notifying the
Secretary of the Company in writing prior to :00 p.m. Mountain Time on , 1997,
(b) by signing and dating a later Proxy and submitting the new Proxy in time to
be counted for the Annual Meeting, or (c) by attending the Annual Meeting and
voting contrary to the submitted Proxy at the time votes are requested.
If a Shareholder wishes to designate someone other than the designated
persons named on the Proxy Card as his authorized agent to vote at the 1997
Annual Meeting, you may do so by crossing out the names of all of the designated
persons printed on the Proxy Card and by writing in the name of another person
or persons (not more than 2) to act as agent for the Shareholder in voting his
shares. Such a special designation signed by the Shareholder(s) must be
presented at the Annual Meeting by the person or persons you have designated on
the Proxy Card.
The cost of preparing, assembling and mailing this Proxy Statement and
related materials will be borne by the Company. The solicitation of Proxies by
the Directors is being made by mail, and may also be made by agents of the
-2-
<PAGE>
Company, in person, by telephone, or by mail. No additional compensation will be
given to employees or Directors for such solicitation. Custodians of securities
held for Shareholders of record (for example, banks, brokers, etc.) may be paid
their reasonable out-of-pocket expenses incurred in forwarding Proxy Cards and
this Proxy Statement to Shareholders.
This Proxy Statement and the enclosed form of Proxy are being mailed to
Shareholders beginning on , 1997. Mailed together with this Proxy Statement is a
copy of the Company's 1997 Annual Report to Shareholders. Shareholders who do
not receive a copy of the 1997 Annual Report with this Proxy Statement, or who
desire extra copies, should contact the Company at (435) 628-8142.
VOTES REQUIRED FOR ACTION TO BE TAKEN AT THE 1997 ANNUAL MEETING
A majority of the common stock share votes entitled to be cast at the
Annual Meeting (legal ownership of outstanding shares as of the Record Date)
must be present in person or by Proxy for a quorum to exist at the Annual
Meeting. Abstentions and broker non-votes are counted "present" for determining
the presence or absence of a quorum for the transaction of business.
In the election of Directors, the three (3) nominees receiving the
highest number of votes cast in their favor will be elected as the Board of
Directors of the Company for the 1997-98 period until the 1998 Annual
Shareholders' Meeting. Accordingly, abstentions and broker non-votes will not
affect the outcome of the election of Directors.
As to the other Proposals for Shareholder Action, more votes must be
purposely cast in favor of each proposal than are purposely cast against each
proposal for it to pass as the action of the Shareholders. Thus abstentions and
broker non-votes will not affect the outcome of the votes on these proposals.
INDEPENDENT AUDITORS
The Board of Directors has not appointed the independent auditors who
will examine the accounts of the Company and its subsidiaries for fiscal year
1998. Jones, Jensen & Company has audited the Company's accounts for 1997 and
for the last several years. A partner in Jones, Jensen & Company will be in
attendance at the 1997 Annual Meeting, will be allowed to make a statement on
behalf of the firm if he so desires, and will answer appropriate questions, if
any, from Shareholders.
MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS
The business of the Company is managed under the direction of its Board
of Directors. The Board has responsibility for establishing broad corporate
policies, for the overall performance of the Company and for the election and
compensation of officers of the Company. It is not, however, involved in
managing the Company and its operating units on a day-to-day basis. The Company
is managed on a day- to-day basis by its Executive Officers.
-3-
<PAGE>
The Board of Directors meets regularly during the year to review
significant developments affecting the Company and to act on matters requiring
Board approval. It also holds special meetings when important matters require
Board action between scheduled meetings. Officers and agents responsible for
significant operations or supervisory activities of the Company are frequently
invited to meet with the Board of Directors to discuss their areas of
responsibility.
As disclosed to the Company, the Board of Directors as presently
constituted (including any new nominees to be voted on for the first time at the
1997 Annual Meeting) beneficially own as a group 221,989 shares, or
approximately 10.56% of the Company's outstanding Common Stock as of the Record
Date.
The Board of Directors held four (4) meetings during fiscal year 1997.
All Directors attended all of the Board meetings.
Executive Officers
Set forth on Table 1, below, are the names, ages, primary areas of
responsibility, and economic and beneficial stock ownership (as of the Record
Date) of the Company's Executive Officers as of September 30, 1997. Executive
Officers serve at the pleasure of the Board of Directors.
Table 1
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
Duane H. Marchant, 57, is the President, Chief Executive Officer of the Company
and Treasurer. He has also been a Director of the Company since 1994. As of the
Record Date, Mr. Marchant was the beneficial owner of 156,000 shares of Common
Stock, including no option shares exercisable within 60 days, but not yet
exercised. This represents 7.43% of the issued and outstanding shares at the
Record Date.
Bruce Frodsham, 31, is Vice President and Secretary of the Company. He has also
been a Director of the Company since 1994. As of the Record Date, Mr. Frodsham
beneficially owned 30,000 shares of Common Stock, including no option shares
exercisable within 60 days, but not yet exercised. This represents 1.4% of the
issued and outstanding shares at the Record Date.
Steven B. Spencer, 40, is a Director of the Company. He was also Secretary and
Treasurer of the Company from 1992 to 1997. He resigned in September 1997 to
accept employment out of the country. Mr. Spencer had also served as Secretary,
Treasurer and as a Director of ARDCO from 1992 to 1997. He has also been a
Director of the Company since 1994. As of the Record Date, Mr. Frodsham
beneficially owned 35,000 shares of Common Stock, including no option shares
exercisable within 60 days, but not yet exercised. This represents 1.6% of the
issued and outstanding shares at the Record Date.
If the US Golf transaction is consummated (see discussion later in this
Proxy Statement), Mr. Frodsham and Mr. Spencer will resign as Directors of the
Company, and Mr. Marchant will resign as President and Chief Executive Officer,
although he will remain as a Director. Mr. Warren Stanchina, currently President
of US Golf, will likely be elected as President of the Company following the
consummation of the US Golf transaction, and certain other executive officers of
-4-
<PAGE>
US Golf will likely be elected as executive officers of the Company at the same
time. Mr. Marchant has agreed to assume the position of Vice President and will
supervise the combined companies' developments in the Western United States,
specifically the Company's current projects at Red HawkTM, Cotton Acres and
Cotton Manor.
COMPENSATION OF MANAGEMENT
DIRECTOR COMPENSATION
Cash Compensation. The Company currently provides no cash compensation
to its Directors. Out of pocket expenses incurred by Directors in their capacity
as a Director may be reimbursed by the Company as approved by the Board of
Directors.
Director Equity-Based Compensation. In the second quarter of fiscal
1997, the Company awarded bonus payments of 150,000 shares of common stock to
Mr. Marchant. 35,000 shares to Mr. Spencer, and 30,000 shares to Mr. Frodsham in
recognition of their services to the Company in the negotiation of the US Golf
transaction (discussed later in this Proxy Statement) and in negotiating a more
healthy and separate relationship with the Company's largest shareholders, who
had exercised control of the Company between 1992 and January 1997.
SUMMARY OF COMPENSATION TO CERTAIN EXECUTIVE OFFICERS
Set out in Table 2, below, is a Summary Compensation Table showing the
various elements of compensation earned during fiscal 1997 (ended March 31,
1997) and during the previous two fiscal years by the Company's Chief Executive
Officer.
<TABLE>
<CAPTION>
Table 2
SUMMARY COMPENSATION TABLE
=========================================================================
Annual Compensation Long-Term Compensation
Awards
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Year Salary1 Bonus2 Restricted Options/ All Other
Principal Position ($) ($) Stock SARs3 Compensation4
Award(s) (#) ($)
($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Duane H. Marchant, 1997 72,000 -0- -0- -0- -0-
President, Chief Executive 1996 72,000 -0- -0- -0- -0-
Officer and Treasurer of 1995 72,000 -0- -0- -0- -0-
the Company
====================================================================================================================================
</TABLE>
1 Includes Director's Fees paid by the Company or its affiliates, if
any.
2 Bonuses are listed in the year earned and normally accrued, although
such bonuses may be paid in the following year. Stock bonuses are
valued at the market value on the date of receipt. As noted above, Mr.
Marchant was awarded a bonus of 150,000 shares of restricted common
stock in July, 1997, which are not reflected in Table 2 because the
grant took place in fiscal 1998.
3 The Company has never issued SARs.
4 Amounts shown include premiums paid on insurance policies,
contributions by the Company to the account of each of the named
Executive Officers in any 401(k) plan, and contributions made by the
Company to any deferred compensation accounts, if any, of these
Executive Officers.
-5-
<PAGE>
STOCK OPTIONS AND SIMILAR AWARDS TO MANAGEMENT.
Until July 1997, the Company had not issued stock options or similar
awards to its Executive Officers or Directors. In July 1997, the Company awarded
150,000 shares of restricted common stock to Mr. Marchant, 35,000 restricted
shares to Mr. Spencer, and 30,000 shares of restricted common stock to Mr.
Frodsham as bonus compensation for service to the Company in negotiating the US
Golf transaction and in negotiating and implementing a healthy and separate
relationship of the Company with its largest shareholders.
CERTAIN TRANSACTIONS BY AND WITH MANAGEMENT AND OTHERS
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Company has not purchased directors' and officers' liability and
corporate reimbursement insurance on behalf of the Directors and Executive
Officers of the Company. However, management believes the premium expense for
such a policy will be worth the protection given the Company and its officers
and directors once the Company's financial performance improves. Such a policy
will indemnify, and reimburse attorney fees and other legal action defense costs
to, Executive Officers and Directors of the Company in connection with claims
made against them by third parties, including Shareholders' claims.
INTERESTED PARTY TRANSACTIONS
From 1992 through July 1997, the Company shared office space with
American Resources and Development Company ("ARDCO"), one of its two largest
Shareholders. Under this arrangement, the Company paid the lease payments due on
the space, and ARDCO provided the services of Mr. Spencer to the Company without
cost. In August 1997, the Company moved out of the space it shared with ARDCO
and located its executive offices in a model home owned by the Company in St.
George, Utah. This relocation saves costs, brings management closer to the
Company's real estate projects, and achieves a healthy separation from ARDCO.
During 1997, a former control person of the Company significantly
assisted the Company in negotiating with Oppenheimer & Company, Inc. (investment
bankers), and with US Golf, in the negotiation of the US Golf transaction
(discussed later in the Proxy Statement). The Company has negotiated with this
former control person through separate counsel, and has agreed to pay 250,000
shares of restricted common stock as a fee to this former control person upon
the closing of the US Golf transaction.
Between 1992 and December 31, 1996, ARDCO exercised day to day control
over the operations of the Company based on its majority voting power. In this
connection, ARDCO extended cash advances and capital contributions to the
Company as needed by the Company, and directed the Company to distribute
significant sums of cash to ARDCO as ARDCO needed it. ARDCO also introduced the
Company to several of its large shareholders, who supported the Company with
purchases of equity shares at critical times. As part of the negotiated
separateness between the Company and ARDCO that will lead to the US Golf
transaction (discussed later in this Proxy Statement), the Company and ARDCO
negotiated through separate counsel and agreed that ARDCO would be issued
-6-
<PAGE>
715,000 shares of restricted common stock as a full and complete settlement of
any and all amounts owed to or claimed by ARDCO for any reason and on any theory
whatsoever. These shares will be issued at or before the closing of the US Golf
transaction.
COMPLIANCE WITH SECTION 16 REPORTING OBLIGATIONS
The Directors and Executive Officers of the Company are required under
the Securities Exchange Act of 1934 to file reports with the Securities and
Exchange Commission evidencing their ownership of, and their current
transactions in, the Company's equity securities. This is a personal obligation
of the Executive Officers and Directors. Based on information provided to the
Company by its Directors and Executive Officers, it appears that all Directors
and Executive Officers have timely filed these reports during fiscal 1997 except
that Messrs. Marchant, Frodsham and Spencer each filed one delinquent report on
Form 4 following their receipt of bonus shares on July 8, 1997.
EMPLOYMENT AGREEMENTS
The Company has not entered into employment or termination
agreements with any of its Executive Officers. The US Golf agreement (discussed
later in this Proxy Statement) provides that Mr. Marchant will be employed by
the combined companies as a Vice President with supervisory responsibilities for
the Company's current projects and any future projects in the Western United
States. In this connection, compensation levels and stock options have been
discussed with Mr. Marchant but have not yet been finalized pending consummation
of the US Golf transaction.
PRINCIPAL SHAREHOLDERS
The following Table 3 provides information with respect to any
person known to the Company to be the beneficial owner (within the meaning of
applicable governmental regulations) of five percent (5%) or more of any class
of the Company's voting securities as of the Record Date (Unless otherwise
indicated the individuals or entities identified each own their respective
shares and have sole voting and sole investment powers regarding their
disposition. The percentages are based upon 2,101,723 shares of the Company's
common stock outstanding as of the Record Date and are computed in accordance
with Rule 13d-3 of the Securities Exchange Act of 1934, as amended):
-7-
<PAGE>
<TABLE>
<CAPTION>
Table 3
PRINCIPAL SHAREHOLDERS OF THE COMPANY
====================================================================================================================================
Name and Address Title of Class Amount and Nature of Percent
Beneficial Ownership of Class
====================================================================================================================================
<S> <C> <C> <C>
American Resources and Common Stock 532,246 shares4 25.33%
Development Company
102 West 500 South
Suite 400
Salt Lake City, Utah 84101
- ------------------------------------------------------------------------------------------------------------------------------------
Banque SCS Alliance SA Common Stock 659,189 shares2 31.37%
P.O. Box 880
1211 Geneva 3,
Switzerland
- ------------------------------------------------------------------------------------------------------------------------------------
Banque SCS Alliance SA Series B Preferred Stock1 315,404 shares3 91.76%
P.O. Box 880
1211 Geneva 3,
Switzerland
- ------------------------------------------------------------------------------------------------------------------------------------
Miltex Industries Series B Preferred Stock1 28,340 shares 8.24%
c/o Camille Froidevaux
Budinet & Associates
20 Rue Senebier, P.B. 166
1211 Geneva, Switzerland
====================================================================================================================================
</TABLE>
1 Series B Preferred Shares, in the aggregate, are able to cast
approximately 3,355,362 votes, which calculation is based on the
market price of GVIM Common Stock into which the Series B Preferred
Stock is convertible. This voting power was calculated based on the
September 30 low bid price of $1.18 per share.
2 Banque SCS Alliance SA owns 51.5% of the outstanding common stock
of ARDCO. ARDCO's 532,246 shares in the Company are attributed to
Banque SCS as a beneficial owner and "affiliate" of ARDCO.
3 Banque SCS Alliance SA has appointed ARDCO as proxy to vote its
Series B Preferred Shares. Giving effect to its proxy over the
Series B Preferred Stock, ARDCO has the current right to 3,611,126
votes at meetings of the Company's stockholders. If Banque SCS were
to cancel their voting proxy, then shareholder control of the
Company would change from ARDCO to Banque SCS Alliance SA. (See
Note 4 of the Financial Statements for further disclosure.
4 The Company has agreed with ARDCO to settle outstanding disputes
over cost advances made to the Company by ARDCO over the years by
issuing 715,000 shares of restricted common stock to ARDCO in
return for a release. These shares are expected to be issued at or
about the time of theclosing of the US Golf transaction. The
Company has agreed with a former control person of the Company to
pay him a finder's fee in connection with the US Golf transaction
of 250,000 restricted common shares of the Company. These shares
will be issued and delivered in connection with the closing of the
US Golf transaction.
PROPOSALS FOR SHAREHOLDER ACTION
ITEM NO. 1: ELECTION OF DIRECTORS
The Board of Directors has nominated the following candidates for
election to the Company's Board of Directors for the coming year. Nominations
for election as a Director also will be accepted from the floor by any
Shareholder at the 1997 Annual Meeting. While no formal procedure exists with
respect to nominations for Director outside of the Annual Meeting, Shareholders
are free to write to the Board of Directors, c/o Bruce Frodsham, Secretary at
the Company's address.
-8-
<PAGE>
The three (3) persons named in Table 4, below, have been nominated
as Directors by the current Board for election at the 1997 Annual Meeting, to
serve until the next Annual Meeting or until their successors are elected and
qualified. The Bylaws of the Company provide that the size of the Board of
Directors may be increased through action of the Board, and that vacancies on
the Board may be filled by the remaining Directors even if less than a quorum.
SHAREHOLDERS SHOULD NOTE THAT THE REORGANIZATION AGREEMENT WITH US
GOLF (DISCUSSED IN CONNECTION WITH PROPOSAL NO. 4, BELOW), CALLS FOR THE
RESIGNATION OF MR. FRODSHAM AND MR. SPENCER FROM THE BOARD OF DIRECTORS OF THE
COMPANY AND THE ELECTION OF TWO US GOLF NOMINEES TO THE BOARD OF DIRECTORS OF
THE COMPANY. THE SAME AGREEMENT REQUIRES MR. MARCHANT TO RESIGN FROM THE BOARD
OF DIRECTORS UNDER CERTAIN ENUMERATED CIRCUMSTANCES. IT IS ALSO LIKELY THAT THE
SIZE OF THE COMPANY'S BOARD OF DIRECTORS WILL BE INCREASED TO FIVE TO PROVIDE
FOR PARTICIPATION BY INDEPENDENT DIRECTORS FOLLOWING THE CLOSING OF THE US GOLF
TRANSACTION. THESE EFFECTS ON THE BOARD OF DIRECTORS WILL TAKE PLACE IF AND WHEN
THE US GOLF TRANSACTION IS CONSUMMATED, AND THE ELECTION OF US GOLF'S NOMINEES
WILL TAKE PLACE BY VOTE OF THE THEN-SERVING DIRECTORS OF THE COMPANY, BEING
THOSE ELECTED AT THE ANNUAL MEETING AND DESCRIBED BELOW.
All duly signed and delivered proxies will be voted FOR the
election of ALL of the nominees listed below in the absence of contrary
direction. The Directors know of no reason why any nominee listed below may be
unable to serve as a Director. If any nominee is unable to serve, the shares
present at the 1997 Annual Meeting through proxies will be voted FOR the
election of such other person(s) as the Board of Directors may nominate at the
Annual Meeting, or the current Directors may conclude to reduce the number of
Directors to be elected.
All of the nominees were elected to their present term of office by
a vote of the Shareholders at the 1996 Annual Meeting.
There is set forth below in Table 6 as to each of the three (3)
nominees for election as a Director of the Company, his/her age, the year he/she
first became a Director of the Company, his/her principal occupation, his/her
business experience during the past five years, other material officerships or
directorships in other companies held at this time, and beneficial stock
ownership in the Company as of the Record Date.
-9-
<PAGE>
Table 4
NOMINEES FOR DIRECTOR
DUANE H. MARCHANT, 57, has been a Director of the Company since 1994 and is
President, Chief Executive Officer and Treasurer of the Company. From 1985 to
1994, Mr. Marchant was President and Chief Executive Officer of Property
Alliance, Inc., a real estate development company. From 1990 until August 1995,
he served as a Director and President of ARDCO, a publicly held company involved
in real estate development and the computer industry and which is one of the two
largest stockholders in the Company. Mr. Marchant is the father-in-law of Mr.
Frodsham. (Mr. Marchant's beneficial stock ownership is set out in Table 1,
above.)
BRUCE FRODSHAM, 31, has been a Director of the Company since 1994. He is Vice
President and Secretary of the Company, the latter offices being assumed in
September, 1997. Mr. Frodsham is also sales manager of the Company's real estate
developments in St. George, Utah, Cotton Acres and Cotton Manor. Mr. Frodsham is
the son-in-law of Mr. Marchant. (Mr. Frodsham's beneficial stock ownership is
set out in Table 1, above.)
STEPHEN B. SPENCER, 40, has been a Director of the Company since 1992. From 1992
through June, 1997, he was also the Secretary and Treasurer of the Company. Mr.
Spencer is a Certified Public Accountant. Prior to joining the Company in 1990,
Mr. Spencer was the Controller of Mrs. Fields, Inc. (baked goods manufacturer
and retailer). He was Director of Operations for the Salt Lake Convention and
Visitors Bureau from 1985 to 1988. Since 1992, Mr. Spencer has been an officer
and director of ARDCO, the largest of the Company's Shareholders. (Mr. Spencer's
beneficial stock ownership is set out in Table 1, above.)
Mr. Frodsham and Mr. Spencer have agreed to resign from the Board
of Directors following the closing of the US Golf transaction (discussed later
in this Proxy Statement), if the US Golf transaction is consummated. Mr. Warren
Stanchina, President of US Golf, Mr. Wolfgang Duren, a Director of US Golf, and
Mr. Robert von Hagge, an internationally known golf course designer, have all
agreed to join the board of directors of the Company following the closing of
the US Golf transaction. Biographical information about US Golf management
personnel can be found at Appendix "A" attached to this Proxy Statement.
Item No. 2: Proposed Approval of the Golf Ventures Long Term Equity-Based
Incentive Plan.
General
This Plan was approved by the Board of Directors of the Company on
October 17, 1997 as a needed program to provide incentives to management that
are aligned with the interests of the Shareholders. This Plan is required to be
put in place by the US Golf Reorganization Agreement (See Proposal No. 4,
below). No stock options or other awards have been issued under this Plan to
date.
Summary of the Plan
The following description of the Golf Ventures Long Term
Equity-Based Incentive Plan does not purport to be complete and is qualified in
its entirety by reference to the full text of the Plan. A copy of the full text
of the Plan is attached as Appendix "B" to this Proxy Statement.
Purpose. The purpose of the Plan is to promote the long-term
success of the Company and the creation of incremental shareholder value by (a)
encouraging key employees of the Company and its subsidiaries to focus on
critical long-range objectives, (b) encouraging the attraction and retention of
key employees with exceptional qualifications, and (c) linking the interests of
key employees of the Company directly to shareholder interests through increased
stock ownership.
-10-
<PAGE>
Administration. The Plan is administered by the Board of Directors,
although this duty may be delegated in the future to a Compensation Committee
(the "Committee") of the Board of Directors consisting solely of a non-employee
directors, as defined in the IRS regulations under Section 162(m). The Committee
selects the key employees who are to receive awards under the Plan, determines
the amount, vesting requirements and other conditions of such awards, interprets
the Plan, executes agreements setting forth the terms of such awards (each, an
"Award") and makes all other decisions relating to the operation of the Plan.
Duration of the Plan. The Plan became effective in 1997 and will
remain in effect until , unless earlier terminated by the Company's Board of
Directors. Notwithstanding the termination of the Plan, the Plan will continue
in effect after such termination for purposes of the administration of any award
granted prior to the termination of the Plan.
Shares Subject to the Plan. The Plan provides for the issuance of
Incentive Stock Options (the "Incentive Options"), as that term is defined in
Section 422 of the Code (Section 422A before redesignation by the Revenue
Reconciliation Act of 1990), nonqualified stock options which are not governed
by the provisions of Section 422 of the code ("Nonqualified Options") for shares
of Common Stock (the Incentive Options and the Nonqualified Options may be
referred to collectively as the "Options"), certain corresponding stock
appreciation rights ("SARs"), restricted shares of Common Stock ("Restricted
Shares") and other stock based units, described below, or any combination
thereof (the various awards are referred to collectively as the "Awards"). The
maximum number of Options, Restricted Shares and other stock based awards that
may be awarded under the Plan is currently equal to 3,000,000 shares. If any
Options, Restricted Shares or stock units are forfeited or if any Option
terminates for any reason before being exercised, then such Options, Restricted
Shares or stock units again become available for Awards under the Plan.
Notwithstanding the above, if any Options are surrendered because corresponding
SARs are exercised, such Options will not become available again for Awards
under the Plan. Any Common Stock issued pursuant to the Plan may be authorized
but unissued shares or treasury shares. Shares of Common Stock to be issued upon
the exercise of Awards granted pursuant to the Plan have not been registered
with the Securities and Exchange Commission, but such registration may be
authorized and directed in the future using Form S-8 when and if such
registration statement becomes available to the Company.
In the event of a subdivision of the outstanding shares of the
Company's Common Stock, a declaration of a dividend payable in Common Stock, a
declaration of a dividend payable in a form other than Common Stock in an amount
that has a material effect on the price of the shares of Common Stock, a
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a lesser number of shares of Common stock, a
recapitalization or similar occurrence (the occurrence of each of which may be
referred to as a "Capital Change"), the Committee will make appropriate
adjustments to the shares subject to the Plan and to then-outstanding Options,
Restricted Shares and stock units.
Eligibility. Awards may be granted only to employees of the Company
and its subsidiaries that the Committee, in its sole discretion, determines to
be key employees (the "Key Employees"), including, without limitation, executive
officers of the Company who are determined by the Committee to be Key Employees;
and may also be granted in the Committee's discretion to outside consultants and
advisors to the Company. If the Board of Directors administers the plan, then
-11-
<PAGE>
Directors may participate and receive awards. If a disinterested Committee
administers the Plan, its members will not be eligible to participate in the
Plan.
Stock Options. The Committee, in its sole discretion, may grant
both Incentive Options and Nonqualified Options from time to time. The Committee
has complete authority, subject to the terms of the Plan, to determine the
persons to whom and the time or times at which grants of Options will be made.
The Plan provides that the exercise price of Options, restrictions upon the
exercise of Options and restrictions on the transferability of shares issued
upon the exercise of Options, will be determined by the Committee in its sole
discretion, except that (i) the exercise price of any Incentive Option may not
be less than the fair market value of a share of Common Stock as of the date of
the grant, (ii) in the case of an Incentive Option granted to any individual
who, at the time that the Incentive Option is granted, owns more than ten
percent of the total combined voting power of all classes of stock of the
Company or any of its subsidiaries (a "Restricted Shareholder"), the exercise
price of such Incentive Option may not be less than 110% of the fair market
value, determined pursuant to the Plan, of a share of Common Stock as of the
date on which the Option is granted, and (iii) the exercise price of any
Nonqualified Option may be not less than the par value of the Common Stock. The
Committee, in its sole discretion, may determine the time or times when each
Option vests and becomes exercisable. The term of an Incentive Option, however,
may not be more than ten years from the date of grant and the term of any
Incentive Option granted to a Restricted Shareholder may not be more than five
years from the date of grant. During the lifetime of the employee receiving the
Option (the "Optionee"), the Option may be exercisable only by the Optionee and
shall not be assignable or transferrable. Each Option will become exercisable in
such installments, at such time or times, and is subject to such conditions, as
the Committee, in its discretion, may determine at or before the time the Option
is granted. The Committee may provide for the accelerated exercisability of an
Option in the event of the death, disability or retirement of the Optionee and
may provide for expiration of the Option prior to the end of its term in the
event of the termination of the Optionee's employment.
Payment. The exercise price of Options granted under the Plan is
payable at the time of exercise in cash or, in the discretion of the Committee,
in shares of Common Stock or other forms of payment approved by the Committee.
In the case of an Incentive Option, payment must be made only pursuant to the
express provisions with regard to exercise that the Committee determines to
include in the applicable Award Agreement. Any payment method approved by the
Committee must be consistent with applicable law, regulations and rules as well
as the terms and conditions of the Plan.
Stock Appreciation Rights. In connection with the grant of any
Option, the Committee, in its sole discretion, may also grant an SAR, which
shall relate to a specific Option granted to the Optionee. Such SAR shall
entitle the Optionee to surrender to the Company, unexercised, all or any part
of that portion of the Option which then is exercisable and to receive from the
Company an amount equal to the difference between the aggregate exercise price
of the shares of Common Stock subject to the Option and the fair market value,
as determined under the Plan, of such shares on the date of such exercise.
Payment by the Company of any amount owing pursuant to the exercise of an SAR
may be made in shares of Common Stock, cash, or any combination of cash and
shares, as determined in the sole discretion of the Committee. The determination
of the Committee to include an SAR in an Incentive Option may be made only at
the time of the grant of the Incentive Option. The Committee may include an SAR
in a Nonqualified Option at the time of the grant, and any time thereafter until
six months before the expiration of the Nonqualified Option.
-12-
<PAGE>
An SAR may be exercised only to the extent the Option to which it
is applicable is exercisable and may not be exercised unless both the SAR and
the related Option have been outstanding for more than six months. If, on the
date an Option expires, the exercise price of the Option is less than the fair
market value of the shares of Common Stock on such date, then any SARs included
in such Option shall automatically be deemed to be exercised as of such date
with respect to any portion of such Option that has not been exercised or
surrendered.
Restricted Stock Awards. The Committee may grant shares of Common
Stock which are subject to vesting conditions as an Award under the Plan (the
"Restricted Shares"). The award of Restricted Shares may be made at any time and
for any year of the Plan. The Restricted Shares shall become vested, in full or
in installments, upon satisfaction of the conditions specified in the Stock
Award Agreement. The Committee shall select the vesting conditions, which may be
based upon the recipient's service and/or performance, the Company's
performance, or such other criteria as the Committee may adopt. The Award
Agreement may also provide for accelerated vesting in the event of the
recipient's death, disability or retirement. A recipient of Restricted Shares,
as a condition to the grant of such Restricted Shares, shall be required to pay
the Company, in cash, an amount equal to the par value of the Restricted Shares.
The holders of Restricted Shares shall have the same voting, dividend and other
rights as the Company's other shareholders.
Other Stock Unit Awards. A stock unit or other similar equity-based
award is an unfunded and unsecured bookkeeping entry representing the equivalent
of one share of Common Stock which is subject to certain vesting conditions (a
"Stock Unit"). Holders of Stock Units have no voting rights or other rights of a
shareholder, but are entitled to receive "Dividend Equivalents" in an amount
equal to the amount of cash dividends paid on the number of shares of Common
Stock represented by the Stock Units while the Stock Units are outstanding.
Stock Units and corresponding Dividend Equivalents will be settled at a time
determined by the Committee and may be paid, in the discretion of the Committee,
in the form of cash, shares of Common Stock or a combination thereof.
Stock Units may be awarded in combination with Restricted Shares or
Nonqualified Options, and the Committee may provide that the Stock Units will be
forfeited in the event that the related Nonqualified Options are exercised. No
cash consideration shall be required for an award of a Stock Unit. The Committee
may grant Stock Units at anytime during the term of the Plan. The Committee may,
in its sole discretion, select the vesting conditions for each award of a Stock
Unit. The vesting conditions may be based upon the recipient's service or
performance, the Company's performance, or such other criteria that the
Committee may adopt.
Amendments to Plan. The Board of Directors may, at any time and for
any reason amend or terminate the Plan. Any amendment to the Plan, however, is
subject to the approval of the Company's Shareholders to the extent required by
applicable laws, regulations or rules, and the Plan itself. For example, no
increase in the number of shares available under the Plan and no change in the
exercise price of outstanding options under the Plan may be made without
Shareholder approval. No amendment, suspension or termination of the Plan shall
affect an Award granted on or prior to the effective date of such amendment.
General Provisions. Neither the Plan nor the grant of any Award
thereunder will be deemed to give any individual the right to remain employed by
the Company or any of its subsidiaries. The Plan shall not inhibit the Company's
ability to terminate or modify the terms of the employment of any employee at
-13-
<PAGE>
anytime, with or without cause. Participants in the Plan will have no rights
with respect to dividends, voting or any other privileges accorded to the
Company's shareholders prior to the issuance of stock certificates for shares of
Common Stock. Recipients of Options under the Plan will have no obligation to
exercise such Options. Participants in the Plan will not have any rights or
interest under the Plan in any Option or shares of the Company's Common Stock
prior to the grant of an Option, Restricted Share or Stock Unit to such
participant.
Limit on the Number of Shares That Can be Awarded to Any Single
Person Under the Plan. To ensure that the Plan is in full compliance with the
provisions regarding performance-based compensation, the Plan establishes a
specific limit on the number of stock options which may be granted to an
individual under the Plan. The individual limit is 20% of the shares authorized
and approved for grants under the Plan. This 20% figure would equal 600,000
shares, based on the Plan's current 3,000,000 Share authorization.
Shareholder Approval; Effect of Non-Approval.
Under Utah law, which governs the Company, the Plan can be
implemented without approval by the Shareholders based on the approval of the
Plan by the Board of Directors.
Shareholder approval is no longer required for plans like the Plan
in order for the Company to obtain certain benefits under Rule 16b-3 of the
Securities and Exchange Commission, and if the Shareholders decline to approve
the Plan, the Board of Directors may proceed to use the Plan and grant awards
thereunder in conformity with Rule 16b-3.
Shareholder approval is required to meet the requirements of
Section 162(m) of the Internal Revenue Code, which disallows a tax deduction for
compensation to an Executive Officer in excess of $1,000,000 unless such
compensation is "performance based." Shareholder approval of the Plan is an
important element in determining that Awards under the Plan are "performance
based compensation" for purposes of Section 162(m). While it will be some time,
if ever, before any Executive Officer's annual compensation, even including
Awards under the Plan, will equal or exceed $1,000,000, the Board of Directors
feels it appropriate to present the Plan to the Shareholders at this time.
Approval of the Plan for tax purposes requires that a majority of the votes cast
in person or by proxy at the Annual Meeting with respect to the Plan be cast in
favor of the Plan. Approval of the Plan will not result directly in the grant of
any Awards to Executive Officers, Directors, key employees or consultants of the
Company.
If the Shareholders decline to approve the Plan, the Board of
Directors may proceed to use the Plan and grant awards thereunder pending the
practical need to confront Section 162(m).
Certain Interests of Directors
In considering the recommendation of the Board of Directors with
respect to the Plan, Shareholders should be aware that the members of the Board
of Directors are all eligible to receive Awards under the Plan, and thus have a
conflict of interest in connection with such proposal. There are no approvals or
proposals now in place as to any awards to be made under the Plan.
-14-
<PAGE>
The Board of Directors believes that the Plan is in the best
interests of the Company and its Shareholders, and therefore, unanimously
recommends a vote FOR the Plan. In considering the foregoing recommendation of
the Board of Directors, Shareholders should be aware that the current members of
the Board of Directors directly or indirectly control approximately 10.56% of
the Company's common stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL
OF THE GOLF VENTURES LONG TERM EQUITY-BASED INCENTIVE PLAN. SHAREHOLDERS HOLDING
VOTING RIGHTS TO 3,611,126 SHARE VOTES, OR 66.17% OF THE TOTAL COMMON SHARE
VOTES POSSIBLE AT THE ANNUAL MEETING, HAVE INDICATED TO MANAGEMENT THEIR
INTENTION TO VOTE IN FAVOR OF THE PLAN.
******
Item No. 3: Proposed Approval of the proposed amendment to the Company's
Articles of Incorporation increasing the number of authorized shares of the
Company's Common Stock from the current 25,000,000 shares to 100,000,000 shares,
primarily to accommodate the reorganization transaction with U.S. Golf
Communities, Inc.
General
The Company has entered into an Agreement and Plan of
Reorganization with U.S. Golf Communities, Inc. ("US Golf") dated August 26,
1997, whereby the Company has agreed to issue and deliver a total of 30,524,319
shares of its restricted Common Stock to the current shareholders of US Golf in
return for the delivery to the Company of all of the issued and outstanding
equity stock of US Golf. The result of this transaction just summarized, which
has been approved by the Boards of Directors of both US Golf and the Company,
will be that US Golf will become a wholly owned subsidiary of the Company, and
the shareholders of US Golf will own, in the aggregate, 81% of the then issued
and outstanding shares of the Common Stock of the Company. The Company's current
Shareholders will, as a result of the US Golf transaction, change from 100%
Common Stock ownership in the Company to approximately 19% Common Stock
ownership in the Company. The Company, in turn, will increase in assets,
liabilities, and revenues through US Golf becoming a consolidated subsidiary of
the Company.
Because the Articles of Incorporation of the Company currently
provide for a total of 25,000,000 shares of Common Stock to be issued, of which
2,101,723 were issued and outstanding on the Record Date, there is a need to
increase the number of authorized shares of Common Stock in order to accomplish
the US Golf transaction and to provide ongoing flexibility to the Board of
Directors to use shares of Common Stock as compensation under plans, such as the
Golf Ventures Long Term Equity-Based Incentive Plan described in Proposal No. 2,
above; as consideration for additional acquisitions; and as a means for raising
cash from the sale of shares to investors in private or public market
transactions. The US Golf transaction requires that the Shareholders approve
this authorization of additional common stock as a condition to the closing of
the US Golf transaction.
-15-
<PAGE>
The Specific Proposal For Shareholder Action
In accordance with its approval of the US Golf transaction, the
Board of Directors has approved and now recommends the following amendment to
the Company's Articles of Amendment:
"ARTICLE IV
CAPITALIZATION"
"The aggregate number of shares which this corporation shall have
authority to issue is ONE HUNDRED MILLION (100,000,000) shares of
$0.001 par value Common Stock and TEN MILLION (10,000,000) shares
of $0.001 par value Preferred Stock."
This increase of the Common Stock from 25,000,000 to 100,000,000 authorized
shares will allow for the closing of the US Golf transaction and still leave
shares available for stock options and other incentive awards, for use in
acquisitions, and for use in raising capital.
Reasons for the US Golf Transaction
The Board of Directors of the Company agreed to and approved the US
Golf transaction for several reasons, including those set forth below.
First, the Company will obtain the services of noted golf
professional and golf course community development leader Warren Stanchina, who
is now the President and Chief Executive Officer of US Golf. It is anticipated
that Mr. Stanchina will assume the office of President of the Company following
closing of the US Golf transaction and become a Director. (Mr. Marchant, the
Company's current President and, Chief Executive Officer and Treasurer has
agreed to become a Vice President of the Company and Manager of the Company's
new Western Region, which includes the Company's Red Hawk, Cotton Manor and
Cotton Acres developments in St. George, Utah.)
Second, the Company will obtain diversification of its golf course
development efforts by the acquisition of properties and development projects
from US Golf. This increase in property and project diversification reduces the
overall risk of the Company and should allow for improved financing terms for
ongoing development of current and new projects through cross collateralization
with the acquired US Golf properties.
Third, the Company currently has significant financial commitments
on its various agreements through which it obtained its property rights in the
Red HawkTM, Cotton Manor and Cotton Acres projects that become due in the next
few years, with significant ongoing payment obligations. The Company does not
have sufficient cash flow from operations to meet these obligations, or the
significant development expenses for the Red Hawk development project. Without
the financial strength and expertise brought to the Company by US Golf and its
financial advisor, Oppenheimer & Company, Inc., ("Oppenheimer"), there is a
significant risk that the Company could lose some or all of its rights in its
current projects, or suffer costly delays in the construction of facilities
needed to facilitate property sales. Once it has consolidated all of its
affiliated partnership properties and assets (as well as liabilities) into
-16-
<PAGE>
itself, and following its reorganization with the Company, US Golf anticipates
improved access to the public investor markets in order to attract the needed
investment capital needed to complete the development of US Golf's properties,
as well as the development of the Company's Red HawkTM, Cotton Manor and Cotton
Acres projects. US Golf and the Company have already engaged Oppenheimer to
consult on sources of new capital following the consolidation of US Golf and the
closing of the US Golf transaction with the Company. Oppenheimer has expressed
confidence that the combined enterprise will have access to sufficient
development capital to preserve and accelerate the development of all of the
combined companies' current projects, although there can be no guarntee that
such capital can in fact be raised.
Fourth, the Board recognized the tax free nature of the acquisition
of US Golf, and the concomitant benefits to the Company and its shareholders
from this tax free treatment.
Material Aspects of the US Golf Transaction
The following are the material terms of the US Golf transaction.
The Plan and Agreement of Reorganization with US Golf was filed with the
Securities and Exchange Commission in connection with the filing of this Proxy
Statement. It can be accessed by Shareholders through the Commission's EDGAR
data base at www.sec.gov.. A Shareholder seeking a copy of this Agreement may
also request one in writing from the Company and the Company will undertake to
provide such a copy.
1. The shareholders of US Golf, including its investment
partnerships as a result of US Golf's acquisition of the assets of these
partnerships in return for its own common stock, will receive 30,524,319 shares
of the Company's common stock, resulting in the shareholders of US Golf owning
approximately 81% of the outstanding Common Stock of the Company following
closing of the US Golf transaction.
2. The current Shareholders of the Company will own approximately
19% of the outstanding Common Stock of the Company following closing of the US
Golf transaction.
3. US Golf will become a wholly owned subsidiary of the Company.
4. The executive management of US Golf will be elected as the
executive management of the Company, with the Company's current management
taking responsibility for the development of the Company's properties in the
western United States.
5. The Company will change from being the owner/developer of one
large golf course project and two smaller residential projects in St. George,
Utah into the owner of seven golf course projects and four residential
development projects in several locations in the so-called "Sunbelt" states. The
market is expected to recognize this increase in size and value in an improved
stock price and accretion to the Shareholders in the value of their shares,
although no assurance can be given as to any future price of the Company's
shares.
6. US Golf will advance sufficient funds to the Company to preserve
the Company's property and contract rights in its ongoing St. George area
developments.
7. The Company has agreed to allow the shareholders of US Golf to
include their shares of the Company's common stock in a future registration
statement filed by the Company, this to enable such shareholders to sell their
shares in the Company other than through Rule 144.
-17-
<PAGE>
8. The Company need not close with US Golf if US Golf has less than
a $12 million shareholders equity at the time of closing of the US Golf
transaction, among other less significant conditions to the Company's obligation
to close.
9. It is contemplated that the Company will move its executive
offices to Orlando, Florida, where US Golf is headquartered, following the
closing of the US Golf transaction.
Federal Tax Aspects of the US Golf Transaction
The Company has been advised, as has US Golf been separately
advised, by legal and accounting counsel, that the US Golf transaction, as
presently agreed and structured, will not be taxable to either the shareholders
of US Golf or to the Shareholders of the Company, nor will it be taxable to US
Golf or to the Company.
Neither the Company nor US Golf have received a formal opinion of
counsel to this effect, although legal opinions to this effect are expected to
be exchanged at closing of the US Golf transaction.
Accounting Aspects of the US Golf Transaction
The Company and US Golf expect that the US Golf transaction will be
accounted for under the pooling of interests method of accounting. Neither
company has obtained a formal opinion from their accountants as to this
treatment. Such an opinion or similar written comfort is expected as part of the
closing of the US Golf transaction.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE PROPOSED INCREASE IN THE AUTHORIZED SHARES OF COMMON STOCK OF
THE COMPANY
SHAREHOLDERS HOLDING VOTING POWER OVER 3,611,126 COMMON STOCK
VOTES, OUT OF A POSSIBLE TOTAL OF 5,457,085 COMMON STOCK VOTES AT
THE ANNUAL MEETING, OR 66.17% OF ALL POSSIBLE VOTES, HAVE INDICATED
TO MANAGEMENT THEIR INTENT TO BE PRESENT AT THE ANNUAL MEETING AND
TO CAST ALL OF THEIR COMMON STOCK VOTES IN FAVOR OF THE PROPOSED
AMENDMENT TO THE ARTICLES OF INCORPORATION. THUS IT APPEARS TO
MANAGEMENT THAT THE PROPOSED AMENDMENT TO THE ARTICLES OF
INCORPORATION WILL BE APPROVED BY THE SHAREHOLDERS.
SHAREHOLDERS ARE NOT BEING ASKED TO VOTE ON THE US GOLF AGREEMENT,
AND THERE ARE NO DISSENTER'S RIGHTS AVAILABLE UNDER UTAH LAW FOR
SHAREHOLDERS WHO MAY DISAGREE WITH THE US GOLF TRANSACTION. A
SHAREHOLDER DISAGREEING WITH THE US GOLF TRANSACTION MAY VOTE
AGAINST THE AMENDMENT TO INCREASE THE AUTHORIZED SHARES, AND/OR MAY
-18-
<PAGE>
SELL HIS/HER GVIM SHARES INTO THE PUBLIC MARKETS PRIOR TO THE
CLOSING OF THE US GOLF TRANSACTION.
IF THE SHAREHOLDERS FAIL TO APPROVE THE INCREASE IN THE AUTHORIZED
COMMON SHARES, THE COMPANY MAY STILL GO FORWARD WITH SOME FORM OF
TRANSACTION WITH US GOLF, WHICH MAY INVOLVE SALES OF ASSETS OR
OTHER CONSIDERATION.
Information About US Golf
The following summary information provides the Shareholders with
information about US Golf and the basis for the Company entering into the US
Golf transaction.
General
US Golf Communities, Inc. ("US Golf") was organized in April, 1996,
as a Delaware corporation formed to consolidate, acquire and hold certain golf
course-related real estate developments previously constructed, acquired or
conceptualized by the principals of US Golf, Warren Stanchina and Wolfgang
Duren. Messrs. Stanchina and Duren funded these projects through private limited
partnerships. The overall business plan for US Golf is to combine and
consolidate its private limited partnerships into US Golf to create
diversification and liquidity for US Golf partnership investors. The business
plan also calls for US Golf, after this combination of its affiliated properties
and investors, to become a publicly traded single stock company through
regulatory filings or a reorganization with a public company. Since its
inception, US Golf has been moving forward with the consolidation of its
partnerships and the concomitant conversion of the debt and equity of the
partnership investors into shares of the common stock of US Golf. US Golf has
agreed that all of its partnerships will be consolidated into US Golf prior to
the closing of the US Golf transaction with the Company.
Although US Golf is relatively new, its senior management has
disclosed to the Company an established track record in the acquisition,
development, operation and marketing of golf courses and related residential
properties. The consolidation of the existing US Golf-affiliated golf courses
and communities will give US Golf a solid corps of seasoned line and mid-level
management and operating and maintenance personnel experienced in most facets of
golf course and real estate management and development.
US Golf operates under established business principles. These are:
*keeping abreast of and respecting each project's ever-changing
market;
*providing professional and friendly service by knowledgeable and
well-trained personnel;
*providing a high quality product by maintaining amenities in the
best possible condition;
*maintaining accurate and detailed financial reporting; and
*employing respect and open communication between staff and
management.
-19-
<PAGE>
Warren J. Stanchina is the President and founder of US Golf, and he
would become President of the Company upon the closing of the US Golf
transaction. Prior to forming US Golf, Mr. Stanchina has acquired, built and/or
operated 22 different golf course properties since 1983. The Stanchina group
originally specialized in golf course management, new golf course construction
and the revitalization of depressed golf course properties. The acquisition and
development of properties came next, with the attendant experience of
residential and resort real estate planning, development and marketing. Along
the way, the Stanchina team has acquired significant experience in real estate
investment financing and in negotiating and structuring project acquisitions and
sales.
The 22 public, private, semi-private or resort golf projects with
which Mr. Stanchina has been affiliated over the past fourteen years have been
located in Michigan, Florida, Wisconsin, Texas and North Carolina. In connection
with the investment partnerships which own the golf courses and communities, and
which are being rolled into US Golf, Mr. Stanchina and his team have raised in
excess of $50,000,000 in investment capital, mostly from German investors
referred by Wolfgang Duren, a key member of the US Golf team and a likely
Director of the Company following the closing of the US Golf transaction.
Additionally, the Stanchina group, which now is the management and controlling
shareholder group of US Golf, has managed properties and consulted for large
Japanese, European and Mexican investment groups, and has provided work-out
services for U.S. institutional investors, banks, savings & loans, and
developers.
US Golf recognized in the Company a business plan for the
development of golf course-related residential communities like its own, and
also found the Company to be a vehicle for providing public market liquidity to
its investors.
US Golf's Properties
Following the consolidation of all of its operating and investment
partnerships with and into itself, US Golf will own six (6) golf course and
related community development projects. These are:
NorthShore Country Club and Community, a 185 acre golf course with
195 acres of residential development land and an additional 150
acres in various stages of development preparation. The golf course
was developed by Robert von Hagge and Bruce Devlin on prime
bayfront property traversing Corpus Christi Bay.
Monastery Golf & Country Club, an approximately 75 acre golf course
and country club facility in Orange City, Florida. The golf course
was developed by Peter Craig and Gene Cook. There is no significant
residential development potential with this property.
Montverde Country Club, a 430 acre development containing a planned
120 acre golf course and 310 acres of mixed density homesites. This
project is located approximately 20 miles West of Orlando, Florida
on some of the highest elevated land in central Florida.
Wedgefield Golf and Country Club, an approximately 123 acre golf
course and country club facility located in the Wedgefield
community (unaffiliated developer) in Orlando, Florida. The golf
course was designed by R. Albert Anderson.
-20-
<PAGE>
Pinehurst Plantation Golf Club, a 535 acre development, including a
131 acre golf course designed by Arnold Palmer and Ed Seay.
Pinehurst Plantation is located in Pinehurst, North Carolina, which
is 55 miles South West of Raleigh/Durham. Upgraded club facilities
and residential lot development are underway.
Cutter Sound Golf & Yacht Club, a 217 acre development along the
waterfront in Palm City, Florida. This project has a 80 acre golf
course started by Gary Player Design Company and completed by a
local developer. Condominiums, townhomes and yacht moorings are
planned for this development.
US Golf's Near Term Business Plan Following the
Closing with the Company
US Golf's management has informed the Company that its strategic
plan calls for selective and controlled growth by the acquisition in targeted
areas of existing and to-be-built residential and resort real estate
developments with a golf course or club as the foundation and focal point.
The Company has also been informed that US Golf has entered into an
arrangement with Oppenheimer & Co., respected New York-based investment bankers,
to provide financial advisory services, including assisting in the raising of
capital with respect to the combined companies. With the assistance of
Oppenheimer & Co., development capital is also being pursued by US Golf through
the concept of Community Development District Bond financings. In such projects,
the local government extends its ability to issue tax exempt debt instruments
for the benefit of developers, like US Golf, who are willing to add to the local
economy and tax base. Such financing has high front end costs, however, and
significant restrictions on the developer/borrower based in the federal tax
code. US Golf is exploring the benefits and risks of this type of financing in
connection with its new Montverde project (discussed above). If this type of
financing vehicle can be developed and perfected, it may offer significant
assistance to the development of Red HawkTM, given the interest of the
Washington City, Utah in the project and its future tax base expansion from the
Red HawkTM project. There can be no assurance that this financing concept will
be cost effective or available for any given project.
US Golf intends to joint venture with reputable development
partners to obtain additional construction and marketing capital and expertise.
This effort would include development of golf oriented resort hotels and
vacation destinations, and condominium and patio home developments within US
Golf's golf course developments. Negotiations are underway for such a joint
venture arrangement for US Golf's "Pinehurst Plantation" project in North
Carolina. This arrangement contemplates a national investment banking firm and a
local developer funding and developing a new phase of residential real estate, a
permanent clubhouse, and providing operating and marketing capital. US Golf
would retain 50% ownership of the entire project, and would operate the golf and
country club facility, while sharing the profits with its joint venture partners
as agreed. Similarly, US Golf is negotiating with a regional home builder for a
joint venture on US Golf's "Montverde" project, near Orlando, Florida. This plan
calls for the builder to pay-off US Golf's existing bank debt on the project,
provide capital to build the infrastructure, and to conduct a home building and
marketing program. US Golf hopes to retain ownership of the golf course land
free of encumbrances, and would need only to provide capital for the golf course
and clubhouse construction. US Golf and the builder would share in the profits
-21-
<PAGE>
from home and lot sales. US Golf also has identified a development partner and
is negotiating a similar agreement for its "Cutter Sound" project in Palm City,
Florida.
The above-described proposed joint venture arrangements illustrate
US Golf's intention to utilize the specific market and product expertise of
developers while ensuring the developer's commitment to the project by requiring
investment of significant capital. In return the developer acquires prime
property in a master planned golf project, with the main amenity - the golf and
country club - funded and operated by US Golf, an experienced golf course
developer and operator. Added benefits to US Golf include reduced overhead by
eliminating the need for a full scale development and construction division.
Moreover, the exposure and risk of these large projects is shared by the joint
venture partners, rather than borne entirely by US Golf. The Company looks to US
Golf's experience with this business model as a development model for Red
HawkTM, which the Company has had difficulty developing on its own.
Some hotel chains are talking with US Golf about its NorthShore
project, in Portland, Texas, and its Pinehurst Plantation project. Both of these
projects are suited as destination conference sites, and hotel development will
be beneficial to their long term success potential.
Summary Financial Information About US Golf and the Company
The following summary unaudited financial information is presented
with respect to the Company and with respect to US Golf. The Company has not
audited this information and makes no representation as to its accuracy,
although Management believes the foregoing information to be materially
accurate.
<TABLE>
<CAPTION>
COMPARATIVE YEAR-END FINANCIAL INFORMATION FOR THE COMPANY
12 months Ended 12 Months Ended 12 Months Ended
March 31, 1995 March 31, 1996 March 31, 1997
<S> <C> <C> <C>
Current Assets $ 1,624,543 $ 711,456 $ 961,474
Total Assets 6,912,148 5,673,607 12,639,500
Current Liabilities 2,160,163 1,533,554 2,536,127
Total Liabilities 3,570,695 2,759,332 8,892,458
Stockholders' Equity 3,341,453 2,914,275 3,747,042
Net Income (Loss) (114,168) (3,686,291) (685,917)
Earnings (Loss) Per Share (0.15) (2.59) (0.38)
</TABLE>
-22-
<PAGE>
SUMMARY COMPARATIVE BALANCE SHEET INFORMATION ON US GOLF AND THE COMPANY
The following financial information presents summary unaudited
results as of June 30, 1997, and has been supplied by both the Company, for
itself, and by US Golf, for itself and for the combined pro forma presentation.
The pro forma combined numbers have been compiled using the pooling of interests
method of combined accounting.
<TABLE>
<CAPTION>
Pro Forma Combined
(U.S. Golf and
The Company US Golf Combined(1) The Company)
<S> <C> <C> <C>
Cash on Hand $ 14,732 $ 493,386 $ 508,118
Accounts Receivable 56,465 7,201,149 7,257,614
Inventories 0 125,540 125,540
Investments 0 8,255,204 8,255,205
Fixed Assets 12,811,082 27,425,640 40,236,602
Misc. Assets 0 3,014,125 3,014,125
----- --------- ---------
TOTAL ASSETS 12,882,259 46,514,945 59,397,204
---------- ---------- ----------
Current Liabilities 1,919,343 7,634,2282 9,553,571
Long Term Liabilities 7,469,080 39,288,619(2) 46,755,699
Shareholders Equity 3,493,836 (405,903) 3,087,933
--------- --------- ---------
TOTAL LIABILITIES 12,882,259 48,514,945 59,397,204
AND EQUITY
</TABLE>
1 US Golf and its affiliated partnerships as if combined at this
date.
2 The Reorganization Agreement with US Golf requires that US
Golf cause the conversion of at least $12,000,000 of its debt
into equity, which will create a positive shareholders equity
and reduce the level of the US Golf liabilities.
-23-
<PAGE>
SUMMARY COMPARATIVE INCOME INFORMATION FOR THE COMPANY AND FOR US GOLF
The following financial information is unaudited results for the
six months ended June 30, 1997, for US Golf; and for the six months ended
September 30, 1997, for the Company. This information and has been supplied by
both the Company, for itself, and by US Golf, for itself. Because of the
mismatch of the two companies' fiscal, a pro forma combined presentation of
these six month results is not possible.
The Company US Golf Combined1
(Six Months Ended (Six Months Ended
September 30, 1997) June 30, 1997)
REVENUE
Food & Beverage Revenue $ $ 516,809
Golf Revenue 2,018,109
Membership Revenue 512,746
Real Estate Revenue 3,104,604
Misc. Revenue 72,807
------
TOTAL REVENUE 6,225,076
---------
EXPENSES
Cost of Goods Sold 2,222,873
General and Administrative Expense 4,142,530
---------
TOTAL EXPENSE 6,365,403
---------
NET OPERATING INCOME (LOSS) (140,328)
========
INTEREST EXPENSE 1,487,1682
NET INCOME (LOSS) (1,627,496)
==========
1 US Golf and its affiliated partnerships as if
combined at this date.
2 US Golf expects to raise approximately
$15,000,000 in new equity capital following the
US Golf transaction with the Company, through
the assistance of Oppenheimer. Moreover US Golf
will gain more equity from the conversion of
between $10-12,000,000 of debt into equity at
the time of the closing of the US Golf
transaaction. Both of these planned developments
will signficantly reduce indebtedness and,
hence, interest expense going forward.
Shareholders will note that US Golf is a larger entity than the
Company, but is like the Company in that it is still in the development stage
with several of its properties, and will require large amounts of development
capital to bring its projects into full development and sale potential. Because
US Golf has operating golf courses and clubs in its asset portfolio, a certain
level of cash revenues are generated on a more regular basis than at the
Company, which has historically depended on sales of residential units for
revenue generation.
-24-
<PAGE>
US Golf Management Information
Biographical information about the current management personnel at
US Golf has been provided to the Company by US Golf, and this information is
attached in Appendix "A" for the information of the Shareholders. The Company
has not independently verified this information, but believes its to be
materially accurate.
**************
Item No. 4: Proposed Approval of the proposed amendment to the Company Articles
of Incorporation in order to change the name of the Company to "Golf Communities
of America, Inc."
General
The terms of the reorganization transaction with US Golf
contemplates that the Company's name will be changed to Golf Communities of
America, Inc. following the closing of the transaction.
The foregoing change is being made in recognition of the national
nature of the Company following the closing of the US Golf transaction. If the
US Golf transaction fails to close, the Company may or may not file this
amendment to its articles of incorporation, depending on the nature of the
Company's future operations.
The Board of Directors have approved and now recommends the
following amendment to the Company's Articles of Amendment, to be implemented
only if the US Golf transaction is consummated:
"ARTICLE I
CORPORATE NAME"
"The name of this Corporation is Golf Communities of America, Inc."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE PROPOSED NAME CHANGE
SHAREHOLDERS HOLDING VOTING POWER OVER 3,611,126 COMMON STOCK
VOTES, OUT OF A POSSIBLE TOTAL OF 5,457,085 COMMON STOCK VOTES AT
THE ANNUAL MEETING, OR 66.17% OF ALL POSSIBLE VOTES, HAVE INDICATED
TO MANAGEMENT THEIR INTENT TO BE PRESENT AT THE ANNUAL MEETING AND
TO CAST ALL OF THEIR COMMON STOCK VOTES IN FAVOR OF THE PROPOSED
NAME CHANGE. THUS IT APPEARS TO MANAGEMENT THAT THE PROPOSED NAME
CHANGE WILL BE APPROVED BY THE SHAREHOLDERS.
-25-
<PAGE>
OTHER BUSINESS
Management does not know of any other business to be presented at
the Meeting. However, if any other business is presented, it is the intention of
the Proxies to vote according to their best judgment with respect to such other
business.
The Company's Annual Report to Shareholders is being sent to you
together with this Proxy Statement. This report includes the Company's financial
statements and the schedules thereto. Any questions regarding the Annual Report,
including a request for the copy that may not have arrived with this Proxy
Statement, may be directed to Duane H. Marchant, Treasurer, Golf Ventures, Inc.,
345 North 2450 East, St. George, Utah 84790.
DEADLINE FOR SHAREHOLDER PROPOSALS
If any Shareholder wishes to present a proposal for action at the
1998 Annual Meeting of the Shareholders, the Shareholder must comply with
applicable Securities and Exchange Commission Regulations, including adequate
notice to the Company, which means that any such proposal must be presented to
the Company in writing on or before January 31, 1998. Any proposal must be
submitted in writing by Certified Mail -- Return Receipt Requested, to Golf
Ventures, Inc., Attention: Secretary, 345 North 2450 East, Suite 125, St.
George, Utah 84790.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has sent to each Shareholder along with this Proxy
Statement a copy of the Company's Annual Report to Shareholders for Fiscal 1997.
The major part of this Annual Report is the Company's Amended Annual Report on
Form 10-KSB for the fiscal year ended March 31, 1997. The Company hereby
incorporates into this Proxy Statement its Amended Annual Report on Form 10-KSB
for the fiscal year ended March 31, 1997.
-26-
<PAGE>
APPENDIX "A"
U.S. GOLF COMMUNITIES, INC.
Senior Management Personnel as of September 30, 1997
Warren J. Stanchina, Director, Chairman and Chief Executive
Officer. Mr. Stanchina is the founder of the various corporations and
partnerships going under the U.S. Golf Communities, Inc. umbrella. He is
responsible for acquisition, financing, planning, development, marketing and
operational management of all US Golf projects. After starting as the head golf
professional, he advanced to become the project director for a 5,000 acre
full-amenity resort in Central Michigan. He gained extensive investment real
estate experience through the operation of his own commercial real estate
business in Southern California. There, he specialized in acquisitions,
syndications and sales of income-producing properties. In 1983, he put together
his first limited partnership and acquired his first golf property, in Central
Michigan. Since then, Mr. Stanchina has owned and/or operated 22 golf properties
throughout the United States during his professional career to date.
Mr. Stanchina received a Masters Degree in Educational
Administration from Central Michigan University. Mr. Stanchina was a tenured
elementary school teacher receiving various commendations for his contributions.
He also holds a "Class A" PGA professional designation and is a veteran of the
United States Army with a Top Secret Krypto security clearance.
Dr. Wolfgang Duren, Director, International Investment Advisor. Dr.
Duren has been associated with Mr. Stanchina for seven years and has raised over
$30 million for investment in Mr. Stanchina's development projects. Dr. Duren
serves as a major advisor to Mr. Stanchina and to US Golf.
Since 1980, Dr. Duren has acted as trustee and counselor for
numerous European clients investing, managing and developing several real estate
ventures in Central Florida. In 1989, Dr. Duren and Warren Stanchina joined
forces and have jointly acquired and controlled seven properties together with
their investors. Dr. Duren's knowledge and expertise in real estate development
and international law and tax accounting is very useful to US Golf.
Dr. Duren has over 15 years of extensive experience in business and
the practice of law. For the past 18 years, he has practiced law in Munich,
Germany originally specializing in business counseling and evolving to
international investment counseling and trust and estate administration. Dr.
Duren was a co-founder and partner of DIABOS, GmbH, a concrete saving company
with six subsidiaries with its headquarter offices located in Munich. Dr. Duren
also spent three (3) years with Klinge Pharma, GmbH, a large pharmaceutical
company located in Munich.
A citizen of Germany, Dr. Duren received a law degree from the
University of Munich and was later admitted to the bar after a three-year
internship in Bavaria. Dr. Duren received a Doctor of Jurisprudence in
international law at the University of Munich. Dr. Duren received grants for
studies and research at the University of California, Berkeley.
Mary Lynn (Jo) Stanchina, Co-Founder, Director, Chief
Administrative Officer. Since 1980, Mrs. Stanchina has worked with her husband,
Warren, participating in the co-founding and management of their numerous
projects in Michigan, Florida, Texas and North Carolina. Focusing on the
accounting and legal administration of the various entities and operations, Mrs.
Stanchina acts as the liaison between project staff, investors, partners,
lenders and the various CPA and legal consultants. Acquisition structuring,
contract analysis, permitting and licensing, local, state and federal regulatory
<PAGE>
filings, finance management, supervision of operational accounting and
administration, promotional and informational publications are some of her
responsibilities. Mrs. Stanchina has over 23 years experience in the banking and
real estate industries, including being the administrative assistant for eight
loan officers at Isabella Bank and Trust, located in Mt. Pleasant, Michigan.
Before transferring to California and working in commercial real estate
ventures, Mrs. Stanchina gained valuable experience at the Lake Isabella resort
in Central Michigan where she handled various aspects of residential real estate
and golf resort accounting and administration.
Eric LaGrange, Chief Financial Officer. Mr. LaGrange jointed the
U.S. Golf group in 1991 and currently serves as the Company's Chief Financial
Officer. He was initially delegated the responsibility for developing and
implementing a standardized, comprehensive financial information and reporting
system for all U.S. Golf properties. This included detailed financial planning
and comparison, monthly reporting and financial controls in all aspects of the
business. The result of his efforts is a business planning and reporting system
that is second to none in the industry. Mr. LaGrange is responsible for the
analysis of seller data for new investment opportunities, training of staff
accountants, hazard and liability insurance for all properties, and the hardware
and software administration for accounting and point of sale systems.
Prior to joining the group, Mr. LaGrange spent 25 years in banking.
From 1981 to 1991, Mr. LaGrange served as Executive Vice President and Chief
Financial Officer for St. Tammany National Bank, located in Mandeville,
Louisiana. Mr. LaGrange majored in accounting and finance at Tulane University
in New Orleans.
Ken Breland, Director of Property Development. Mr. Breland joined
the U.S. Golf group in 1994 and currently serves as the Company's Director of
Property Development. Prior to joining the U.S. Golf, Mr. Breland spent over 22
years in the real estate development and building business. His experience and
expertise includes land planning and zoning, the start-up and turnaround of
commercial and residential developments, property management, marketing and
sales, and horizontal and vertical construction. Mr. Breland has managed major
residential and commercial developments and the sale of thousands of homesites
and homes in Texas and Florida. He successfully operated his own building and
development company for ten years. Mr. Breland also served as division president
for Key Homes and AllState Homes, regional volume homebuilder located in
Greensboro, North Carolina and Tampa, Florida, respectively.
Mr. Breland received a Bachelor of Science degree in finance and
real estate management from the University of Alabama. He is a licensed real
estate broker in Florida and Texas and a Florida "Class A" general contractor.
Mr. Breland has been recognized in the industry as a director and officer at the
local, state and national level for various professional associations and is the
recipient of NAHB's commercial property builder designation.
Mark Buelow, Director of Club Operations. Mr. Buelow joined U.S.
Golf in 1990 and serves as Director of Club Operations. In addition, Mr. Buelow
currently serves as the general manager and director of development operations
for Cutter Sound Golf and Yacht Club, a U.S. Golf property. As a member of the
group's management team, Mr. Buelow has served as general manager and golf
director at the Palisades Country Club and project manager for NorthShore
Country Club near Corpus Christi, Texas, a 500-member golf and country club
within a residential development.
Prior to joining the U.S. Golf group, Mr. Buelow's background
included serving as the head professional at Ranch Penasquitos in San Diego and
the proprietor of the golf shop at Barbara Worth Country Club in El Centro,
California.
Mr. Buelow received a two-year BA degree from the San Diego Golf
Academy and is a "Class A-1" member of the PGA. He has qualified for and placed
in various mini-tour golf events in Florida and California.
<PAGE>
Christopher Little, Director of Golf. Mr. Little joined the U.S.
Golf group in 1990 and serves as the Company's Director of Golf. His
responsibilities include training and implementation of golf operations and
merchandising programs. Golf outing and membership marketing, tee-time
maximization, inventory and financial controls are some of Mr. Little's
specialties. In addition, Mr. Little serves as general manager for Pinehurst
Plantation in North Carolina.
Mr. Little, a native of Capetown, South Africa, received a Bachelor
of Arts degree in recreational management from the University of Arkansas. While
attending the university, Mr. Little was named to the All-Conference team (golf)
in 1985, 1986, 1987 and 1988 and a Division I, All-American in 1985, 1986, 1987
and 1988. He received a "Class A" PGA professional designation in 1995.
Daniel (Sam) Stanchina, Chief Golf Course Superintendent. Sam's
extensive background in the golf industry started in 1974 when he was assistant
golf professional at the Lake Isabella Golf Resort in Central Michigan.
Following five years of golf operations experience, he became Assistant Golf
Course Superintendent at the same (18 holes, championship) facility. Four years
later he assumed the position of Head Superintendent at Pleasant Hills Golf
Club, Mt. Pleasant, Michigan, eventually also becoming the General Manager
there.
Sam keeps current with all the latest trends and developments
throughout continuing education in all aspects of turf and equipment
maintenance. His extensive expertise in the entire golf operation, including
budgeting, personnel management, safety, turf disease and drainage issues make
Sam invaluable as the Corporate Superintendent. His duties and responsibilities
include training, supervision and consultation for all affiliated golf
facilities.
Sam and his family moved to Central Florida in 1989 when he
accepted the position of Superintendent at Wedgefield Golf & Country Club.
Presently he is based at Wedgefield as the General Manager and Head
Superintendent. Sam has also served as Corporate Superintendent for U.S. Golf
for the past five years.
In early 1994, Sam assumed responsibility for completing the
construction and setting up the maintenance program at the Pinehurst Plantation
Golf Course, Pinehurst, North Carolina. Following a year and one-half under
Sam's supervision, the Plantation course received a four and one-half star
rating by Golf Digest Magazine. Only a handful of courses received such a
coveted distinction in the entire country.
Karen Mathis, Chief Accountant. Ms. Mathis joined the U.S. Golf
group's management team in 1992 and currently serves as the Company's Chief
Accountant. In this capacity, she is responsible for maintaining and
consolidating financial and administrative records for all affiliate companies.
Her responsibilities and expertise have included full golf operation accounting
and account reconciliation, member billing, construction accounting, payroll and
employee benefits, tax reporting and auditing. Ms. Mathis is proficient in
numerous computer accounting software systems and is responsible for the
coordination between each project's on-site bookkeeper, various regulatory
agencies and contracted accounting firms for tax analysis and filings. Prior to
joining U.S. Golf, Ms. Mathis spent six years responsible for accounting and
administration for a private investor. She also spent 11 years in accounting and
administration with The Investment Counsel Company, a multi-million dollar
pension fund manager which included the city of Orlando.
Ms. Mathis received a business degree from Jones College located in
Jacksonville, Florida.
<PAGE>
APPENDIX "B"
THE GOLF VENTURES EQUITY-BASED LONG TERM INCENTIVE PLAN
<PAGE>
GOLF VENTURES, INC.
LONG TERM EQUITY-BASED INCENTIVE PLAN
SECTION CONTENTS PAGE
1. Purpose; Definitions 1
2. Administration 4
3. Stock Subject to Plan 5
4. Eligibility 6
5. Stock Options 6
6. Stock Appreciation Rights 12
7. Restricted Stock 14
8. Long-Term Performance Awards 16
9. Change-in-Control Provisions 18
10. Amendments and Termination 21
11. Unfunded Status of Plan 21
12. General Provisions 22
13. Effective Date of Plan 22
14. Term of Plan 24
15. Indemnification of Committee 24
16. Financing 25
Adopted by the Board of Directors on October , 1997, and approved by the
Shareholders on November , 1997
<PAGE>
SECTION 1. Purpose; Relationship to Other Plans of the Company; Definitions.
The name of this plan is the Golf Ventures,Inc. Long Term
Equity-Based Incentive Plan (the "Plan").
The purposes of the Plan are to promote the best interests of the
Corporation and its Shareholders by strengthening the Corporation's ability to
attract and retain skilled and competent managerial and technical employees and
contractors, and to provide a means to encourage stock ownership and proprietary
interest in the Corporation and its future success by executive and other
officers, key consultants and contractors, and key employees upon all of whose
judgment, initiative and efforts the financial success and growth of the
Corporation largely depend, and to align the interests of such persons directly
with the interests of the Shareholders of the Corporation. Specifically the Plan
will enable key employees, directors and Eligible Independent Contractors (as
hereinafter defined) of Golf Ventures, Inc. ("the Company") to (i) own shares of
stock in the Company, (ii) participate in the shareholder value which has been
created, (iii) have a mutuality of interest with other shareholders and (iv)
enable the Company to attract, retain and motivate key employees, non-employee
directors, and independent contractors of particular merit.
It is intended that eligibility under this Plan be restricted to a
select group of management or highly compensated employees as defined by the
Employee Retirement Income Security Act of 1974. All provisions of this Plan
shall be construed to effectuate such purposes.
For the purposes of the Plan, the following terms shall be defined
as set forth below:
(i) "Board" means the Board of Directors of the
Company.
(ii) "Cause" means a felony conviction of a
Participant or the failure of a Participant to
contest prosecution for a felony, or a
Participant's willful misconduct or dishonesty,
any of which is directly and materially harmful
to the business or reputation of the Company.
(iii) "Code" means the Internal Revenue Code of 1986,
as amended from time to time, and any successor
thereto.
(iv) "Committee" means the Administrative Committee
referred to in Section 2 of the Plan. If at any
time no Committee shall be duly elected and
serving as a result of Board action or
resignations of the Committee or otherwise, then
the functions of the Committee specified in the
Plan shall be exercised by the Board.
(v) "Company" means Golf Ventures, Inc., a
corporation organized under the laws of the
State of Utah and its subsidiaries or any
successor organization.
(vi) "Disability" shall mean the inability or failure
of a person to perform the functions of his/her
employment for a period in excess of 90 days in
any 365 day measurement period.
(vii) "Disinterested Person" shall mean a Director of
the Company meeting the requirements for a
"disinterested person" set forth in Rule 16b-3
as promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
-1-
<PAGE>
(viii) "Early Retirement" means retirement, with
consent of the Committee at the time of
retirement, from active employment with the
Company prior to normal retirement age under
provisions of the Company's pension plan, if
such a plan is in effect at the time; or
pursuant to the Company's profit-sharing plan if
no pension plan is then in effect; or retirement
prior to age 65 if neither a pension plan nor a
profit sharing plan are then in place.
(ix) "Eligible Independent Contractor" means an
independent contractor hired by the Company to
provide consulting services on a regular basis
for the Company at or after the time the Plan is
initially approved by the shareholders.
(x) "Fair Market Value" means, as of any given date,
the last sale price of the Stock as furnished by
the National Association of Securities Dealers
Inc.'s Automated Quotation System on the day
before, or, if either no such sale is reported
by NASDAQ on such date or the Stock is not
publicly traded on or as of such date, the fair
market value of the Stock as determined by the
Committee in good faith based on the best
available facts and circumstances at the time.
(xi) "Incentive Stock Option" means any Stock Option
intended to be and designated as an "Incentive
Stock Option" within the meaning of Section 422A
of the Code.
(xii) "Insider" means a Participant who is subject to
the requirements of the Rules (as defined
below).
(xiii) "Long-Term Performance Award" or "Long-Term
Award" means an award made pursuant to Section 8
below that is payable in cash and/or Stock
(including Restricted Stock) in accordance with
the terms of the grant, based on Company,
business unit and/or individual performance over
a period of at least two years.
(xiv) "Non-Qualified Stock Option" means any Stock
Option that is not an Incentive Stock Option.
(xv) "Normal Retirement" means retirement from active
employment with the Company and any Affiliate
(as defined in Section 9) pursuant to the normal
retirement provisions of the Company's pension
plan, if such a plan is in effect at the time;
or pursuant to the Company's profit-sharing plan
if no pension plan is then in effect; or
retirement at or after age 65 if neither a
pension plan nor a profit sharing plan are then
in place.
(xvi) "Participant" means an employee, non-employee
director of the Company, or an Eligible
Independent Contractor to whom an Award is
granted pursuant to the Plan.
(xvii) "Restricted Stock" means an award of shares of
Stock that is subject to restrictions pursuant
to Section 7 below.
(xviii) "Retirement" shall have the same meaning
prescribed in Section (xv), above. The term
shall contemplate either normal or early
retirement.
(xix) "Rules" means the regulations promulgated under
Section 16 of the Exchange Act.
-2-
<PAGE>
(xx) "Securities Broker" means the registered
securities broker acceptable to the Company who
agrees to effect the cashless exercise of an
Option pursuant to Section 5(m) hereof.
(xxi) "Stock" means the Common Stock of the Company.
(xxii) "Stock Appreciation Right" means the right,
pursuant to an award granted under Section 6
below, to surrender to the Company all (or a
portion) of a Stock Option in exchange for an
amount equal to the difference between (i) the
Fair Market Value, as of the date such Stock
Option (or such porion thereof) is surrendered,
of the shares of Stock covered by such Stock
Option (or such portion thereof), and (ii) the
aggregate exercise price of such Stock Option
(or such portion thereof).
(xxiii) "Stock Option" or "Option" means any option to
purchase shares of Stock (including Restricted
Stock, if the Committee so determines) granted
pursuant to Section 5 below.
In addition, the terms "Change-in-Control," "Potential
Change-in-Control" and "Change-in-Control Price" shall have meanings set forth,
respectively, in Sections 9(b), (c) and (d) below.
SECTION 2. Administration; Duty of Insiders.
The Plan shall be administered by an Administrative Committee of
not less than three Disinterested Persons, who shall be appointed by the Board
of Directors of the Company and who shall serve at the pleasure of the Board. In
the absence of such a Committee, Awards may be made by the Board of Directors.
References herein to "the Committee" shall be deemed to refer to the Board of
Directors if the Board is the body making Awards under this Plan.
The Committee shall have the authority to grant pursuant to the
terms of the Plan: (i) Stock Options, (ii) Stock Appreciation Rights, (iii)
Restricted Stock and/or (iv) Long-Term Performance Awards to key employees and
officers of the Company; (i) Stock Options and/or (ii) Stock Appreciation Rights
to Eligible Independent Contractors.
In particular, the Committee shall have the authority:
(i) to select the officers and other key employees
of the Company to whom Stock Options, Stock
Appreciation Rights, Restricted Stock and
Long-Term Performance Awards may from time to
time be granted hereunder and Eligible
Independent Contractors to whom Stock Options
and Stock Appreciation Rights may from time to
time be granted hereunder;
(ii) to determine whether and to what extent
Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted
Stock and Long-Term Performance Awards, or any
combination thereof, are to be granted
hereunder;
(iii) to determine the number of shares of Stock to be
covered by each such award granted hereunder,
-3-
<PAGE>
(iv) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any
award granted hereunder: including, but not
limited to, the share price and any restriction
or limitation, or any vesting acceleration or
forfeiture waiver regarding any Stock Option or
other award and/or the shares of Stock relating
thereto, based on such factors as the Committee
shall determine, in its sole discretion;
(v) to determine whether and under what
circumstances a Stock Option may be settled in
cash or stock, including Restricted Stock under
Section 5(1);
(vi) to determine whether and under what
circumstances a Stock Option may be exercised
without a payment of cash under Section 5(m);
and
(vii) to determine whether, to what extent and under
what circumstances Stock or cash distributable
or payable with respect to an award under this
Plan shall be deferred either automatically or
at the election of the Participant.
The Committee shall have the authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable; to interpret the terms and provisions
of the Plan and any award issued under the Plan (and any agreements relating
thereto); and to otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Plan Participants.
It shall be a condition of participation in this Plan by an Insider
that such Participant individually assume full responsibility to comply with all
federal, state or other applicable securities laws in connection with their
Awards and award exercise decisions under the Plan, and that such Insider retain
competent counsel or other advisors to ensure compliance with all such
applicable laws.
SECTION 3. Stock Subject to the Plan.
(i) Stock Subject to Plan. Awards of Stock under
the Plan shall be made from Stock which is
either authorized and unissued or held in the
treasury of the Company. The maximum number of
shares of Stock authorized for issuance under
the Plan with respect to the grant of awards
while the Plan is in effect, subject to
adjustment in accordance with paragraph 3(d)
below, shall be up to 2,000,000 shares in the
aggregate, or such other number of shares as are
subsequently approved by the Company's
Shareholders.
(ii) Computation of Stock Available for the Plan. For
the purpose of computing the total number of
shares of Stock available for distribution at
any time in each calendar year during which the
Plan is in effect in connection with the
exercise of options awarded under the Plan,
there shall be debited against the total number
of shares determined to be available pursuant to
paragraphs (i), and (iii) of this Section 3 the
maximum number of shares of Stock subject to
issuance upon exercise of options or other stock
based awards made under the Plan.
(iii) Unused, Forfeited and Reacquired Shares. Any
unused portion of the shares annually available
for award shall be carried forward and shall be
made available for Plan awards in succeeding
calendar years. The shares related to the
-4-
<PAGE>
unexercised or undistributed portion of any
terminated, expired or forfeited award for which
no material benefit was received by a
Participant (i.e. dividends) also shall be made
available for distribution in connection with
future awards under the Plan to the extent
permitted to receive exemptive relief pursuant
to the Rules.
(iv) Other Adjustments. In the event of any merger,
reorganization, consolidation, recapitalization,
stock dividend, or other change in corporate
structure affecting the Stock, such substitution
or adjustment shall be made in the aggregate
number of shares reserved for issuance under the
Plan, and in the number and option price of
shares subject to outstanding Options granted
under the Plan, as may be determined to be
appropriate by the Committee in its sole
discretion, provided that the number of shares
subject to any award shall always be a whole
number. Such adjusted option price shall also
be used to determine the amount payable by the
Company upon the exercise of any Stock
Appreciation Right associated with any Stock
Option.
SECTION 4. Eligibility; Limit on Awards to Certain Persons.
Officers of the Company, other key employees of the Company, and
Eligible Independent Contractors, who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company are
eligible to be granted awards under the Plan as determined in the sole
discretion of the Committee.
Section 162(m) of the Internal Revenue Code places a limit of $1
million on the tax-deductibility of compensation paid to individuals listed in
the proxy statements of publicly held corporations. Compensation for the
individual executives listed in company proxy statements which exceeds $1
million on an individual basis may not be tax-deductible unless it meets certain
requirements with respect to being performance-based.
To ensure that its executive compensation program is in full
compliance with the provisions regarding performance-based compensation, the
number of Awards (calculated as a number of Shares granted to an individual
under the Plan may not exceed, in total over the life of that individual, 20% of
the shares authorized and approved for grants under the Plan.
SECTION 5. Stock Options.
Stock Options may be granted alone, in addition to or in tandem
with other awards granted under the Plan, consistent with the requirement of
Section 12(vi), below. Any Stock Option granted under the Plan shall be in such
form as the Committee may from time to time approve.
Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options (in each
case with or without Stock Appreciation Rights). To the extent that any Stock
Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of
this Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
-5-
<PAGE>
exercised, so as to disqualify the Plan under Section 422A of the Code, or,
without the consent of the optionee(s) affected, to disqualify any Incentive
Stock Option under such Section 422A.
In the discretion of the Committee, Non-Qualified Stock Options may
be issued to an employee in consideration of the waiver of a portion of such
Employee's salary, compensation or fees, with the spread between the exercise
price of such Stock Options and the then Fair Market Value of the Stock subject
to such Stock Options being equal to the salary, compensation or fees waived or
such other terms and provisions as the Committee may in its discretion provide.
Stock Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem appropriate:
(i) Option Price. The option price per share of
Stock purchasable under a Stock Option shall be
determined by the Committee at the time of grant
but shall be not less than 100% of the Fair
Market Value of the Stock at the time of grant
for Incentive Stock Options and 85% of the Fair
Market Value of the Stock at the time of grant
for Non-Qualified Options; provided, however
that Non-Qualified Options issued in exchange
for options held by employees of an acquired
company or a division or subsidiary thereof may,
at the Committee's discretion, be issued at not
less than 50% of the Fair Market Value of the
Stock at the time of grant.
Any Incentive Stock Option granted to any
optionee who, at the time the option is granted,
owns more than 10% of the voting power of all
classes of stock of the Company or of a Parent
or Subsidiary corporation, shall have an
exercise price no less than 110% of Fair Market
Value per share on date of the grant.
(ii) Option Term. The term of each Stock Option shall
be fixed by the Committee, but no Incentive
Stock Option shall be exercisable more than ten
years after the date the Option is granted and
no Non-Qualified Stock Option shall be
exercisable more than ten years and one day
after the date the Option is granted. However,
any option granted to any optionee who, at the
time the option is granted owns more than 10% of
the voting power of all classes of Stock of the
Company or of a Parent or Subsidiary corporation
may not have a term of more than five years. No
option may be exercised by any person after
expiration of the term of the option.
(iii) Exercisability. Stock Options shall be
exercisable at such time or times and subject to
to such terms and conditions as shall be
determined by the Committee at or after grant,
provided, however, that, except as provided in
Section 5(vii) and Section 9, unless otherwise
determined by the Committee at or after grant,
no Stock Option shall be exercisable during the
six months following the date of the granting of
the Option. If the Committee provides, in its
discretion, that any Stock Option is exercisable
only in installments, the Committee may waive
such installment exercise provisions at any time
at or after grant in whole or in part, based on
such factors as the Committee shall determine,
in its sole discretion. No shares of Stock shall
be issued until full payment therefor has been
made. An optionee shall generally have the
rights to dividends or other rights of a
shareholder with respect to shares subject to
the Option when the optionee has given written
notice of exercise, has paid in full for such
shares, and, if requested, has given the
representation described in Section 12(i).
-6-
<PAGE>
(iv) Methods of Exercise.
(a) Stock Options may be
exercised in whole or in
part by giving written
notice of exercise to the
Company specifying the
number of shares of Stock
to be purchased. Such
notice shall be
accompanied by payment in
full of the purchase
price, either by
certified or bank check,
or such other instrument
as the Committee may
accept.
(b) As determined by the
Committee, in its sole
discretion, at or after
grant, payment in full or
in part may also be made
in the form of
unrestricted shares of
Stock already owned by
the optionee based on the
Fair Market Value of the
Stock on the date the
option is exercised, as
determined by the
Committee), provided,
however, that, in the
case of an Incentive
Stock Option, the right
to make a payment in the
form of already owned
shares may be authorized
only at the time the
option is granted.
If payment of the option
exercise price of a
Non-Qualified Stock
Option is made in whole
or in part in the form of
Restricted Stock, such
Restricted Stock (and any
replacement shares
relating thereto) shall
remain (or be) restricted
in accordance with the
original terms of the
Restricted Stock award in
question, and any
additional Stock received
upon the exercise shall
be subject to the same
forfeiture restrictions,
unless otherwise
determined by the
Committee, in its sole
discretion, at or after
grant.
If payment of the Option
exercise price of a
Non-Qualified Option is
made in whole or in part
in the form of
unrestricted stock
already owned by the
Participant, the Company
may require that the
stock has been owned by
the Participant for a
period of time so that
such payment would not
result in a charge to the
Company's earnings as a
result of the exercise.
Such provision may be
used by the Company to
prevent a pyramid
exercise.
(c) On receipt of written
notice to exercise, the
Committee may, in its
sole discretion, elect to
cash out all or part of
the portion of the
option(s) to be exercised
by paying the optionee an
amount, in cash or Stock,
equal to the excess of
the Fair Market Value of
the Stock over the option
price (the "Spread
Value") on the effective
date of such cash-out.
In addition, if the
option agreement so
provides at grant or is
amended after grant and
prior to exercise to so
provide (with the
optionee's consent), the
Committee may require
that all or part of the
shares to be issued with
respect to the Spread
Value of an exercised
option take the form of
Restricted Stock, which
shall be valued on the
date of exercise on the
basis of the Fair Market
-7-
<PAGE>
Value of such Restricted
Stock determined without
regard to the forfeiture
restrictions involved.
(d) To the extent permitted
under the applicable laws
and regulations, at the
request of the
Participant, and with the
consent of the Committee,
the Company agrees to
cooperate in a "cashless
exercise" of an Option.
The cashless exercise
shall be effected by the
Participant delivering to
a Securities Broker
instructions to sell a
sufficient number of
shares of Common Stock
to cover the costs and
expenses associated
therewith.
(v) Withholding Taxes. The Company shall withhold
the number of shares of Common Stock obtainable
on the exercise of an Option which, when valued
at Fair Market Value (determined as of the day
preceding the date of exercise), is equivalent
to the required withholding taxes due.
(vi) Replacement Options. If an Option granted
pursuant to the Plan may be exercised by an
optionee by means of a stock-for-stock swap
method of exercise as provided above, then the
Committee may, in its sole discretion and at the
time of the original option grant, authorize the
Participant to automatically receive a
replacement Option pursuant to this part of the
Plan. This replacement option shall cover a
number of shares determined by the Committee,
but in no event more than the number of shares
equal to the difference between the number of
shares of the original option exercised and the
net shares received by the Participant from such
exercise. The exercise price of the replacement
option shall equal the then current Fair Market
Value, and with a term extending to the
expiration date of the original Option.
The Committee shall have the right, in its sole
discretion and at any time, to discontinue the
automatic grant of replacement options if it
determines the continuance of such grants to no
longer be in the best interest of the Company.
(vii) Non-transferability of Options. No Stock Option
shall be transferable by the optionee otherwise
than by will or by the laws of descent and
distribution, and all Stock Options shall be
exercisable, during the optionee's lifetime,
only by the optionee.
(viii) Termination of Participant's Employment by
Reason of Death. Subject to Section 5(xi), if
an optionee's employment by the Company
terminates by reason of death, any Stock Option
then held by optionee may thereafter be
exercised, to the extent then exercisable or on
such accelerated basis as the Committee may
determine at or after grant, by the legal
representative of the estate or by the legatee
of the optionee under the will of the optionee,
for a period of five (5) years (or such shorter
period as the Committee may specify at grant)
from the date of such death or until the
expiration of the stated term of such Stock
Option, whichever period is the shorter. In the
event of termination of employment by reason of
Death, if an Incentive Stock Option is exercised
after the expiration of the exercise
periods that apply for purposes of Section 422A
of the Code, such Stock Option will thereafter
be treated as a Non-Qualified Stock Option.
-8-
<PAGE>
(ix) Termination of Participant's Employment by
Reason of Disability. Subject to Section 5(xi),
if an optionee's employment by the Company
terminates by reason of Disability, any Stock
Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was
exercisable at the time of termination, or on
such accelerated basis as the Committee may
determine at or after grant, for a period of
five years (or such shorter period as the
Committee may specify at grant) from the date of
such termination of employment or until the
expiration of the stated term of such Stock
Option, whichever period is the shorter;
provided, however, that, if the optionee dies
within such five-year period (or such shorter
period as the Committee shall specify at grant),
any unexercised Stock Option held by such
optionee shall thereafter be exercisable to the
extent to which it was exercisable at the time
of death for a period of twelve months from the
date of such death or until the expiration of
the stated term of such Stock Option, whichever
period is the shorter. In the event of
termination of employment by reason of
Disability, if an Incentive Stock Option is
exercised after the expiration of the exercise
periods that apply for purposes of Section 422A
of the Code, such Stock Option will thereafter
be treated as a Non-Qualified Stock Option.
-9-
<PAGE>
(x) Termination of Participant's Employment by
Reason of Retirement. Subject to Section 5(xi),
if an optionee's employment by the Company
terminates by reason of Normal or Early
Retirement, any Stock Option held by such
optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at
the time of such Retirement or on such
accelerated basis as the Committee may determine
at or after grant, for a period of five years
(or such shorter period as Committee may specify
at grant) from the date of such termination of
employment or the expiration of the stated term
of such Stock Option, whichever period is the
shorter; provided, however, that, if the
optionee dies within such three-year period, any
unexercised Stock Option held by such optionee
shall thereafter be exercisable, to the extent
to which it was exercisable at the time of
death, for a period of twelve months from the
date of such death or until the expiration of
the stated term of such Stock Option, whichever
period is the shorter. In the event of
termination of employment by reason of
Retirement, if an Incentive Stock Option is
exercised after the expiration of the exercise
periods that apply for purposes of Section 422A
of the Code, the option will thereafter be
treated as a Non-Qualified Stock Option.
(xi) Other Terminations of Employment of a
Participant. Unless otherwise determined by the
by the Committee at or after grant, if an
optionee's employment by the Company terminates
for any reason other than death, Disability or
Normal or Early Retirement, the Stock Option
shall thereupon terminate, except that such
Stock Option may be exercised for the lesser of
three months or the balance of such Stock
Option's term if the optionee is involuntarily
terminated by the Company without Cause to the
extent it was exercisable at the time of such
termination or on such accelerated basis as the
Committee may determine at or after grant.
(xii) Special Incentive Stock Option Limitations. To
the extent required for "incentive stock option"
status under Section 422A of the Code, the
aggregate Fair Market Value (determined as of
the time of grant) of the Stock with respect to
which Incentive Stock Options granted after 1986
are exercisable for the first time by the
optionee during any calendar year under the Plan
and/or any other stock option plan of the
Company (within the meaning of Section 425 of
the Code) after 1986 shall not exceed $100,000.
To the extent (if any) permitted under Section
422A of the Code, if (i) a Participant's
employment with the Company is terminated by
reason of death, Disability or Retirement and
(ii) the portion of any Incentive Stock Option
that is otherwise exercisable during the
post-termination period specified under Section
5(g), (h) or (i), applied without regard to this
Section 5(k), is greater than the portion of
such option that is exercisable as an "incentive
stock option" during such post-termination
period under Section 422A, such post-termination
period shall automatically be extended (but not
beyond the original option term) to the extent
necessary to permit the optionee to exercise
such Incentive Stock Option. The Committee is
also authorized to provide at grant for a
similar extension of the post-termination
exercise period in the event of a
Change-in-Control.
SECTION 6. Stock Appreciation Rights.
-10-
<PAGE>
(i) Grant and Exercise. Stock Appreciation Rights
may be granted in conjunction with all or part
of any Stock Option granted under the Plan,
complying at all times with the requirement of
Section 12(vi), below. In the case of a
Non-Qualified Stock Option, such rights may be
granted either at or after the time of the grant
of such Stock Option. In the case of an
Incentive Stock Option, such rights may be
granted only at the time of the grant of such
Stock Option.
A Stock Appreciation Right or applicable portion
thereof granted with respect to a given Stock
Option shall terminate and no longer be
exercisable upon the termination or exercise of
the related Stock Option, except that, unless
otherwise determined by the Committee, in its
sole discretion, at the time of grant, a Stock
Appreciation Right granted with respect to less
than the full number of shares covered by a
related Stock Option shall not be reduced until
the number of shares covered by an exercise or
termination of the related Stock Option exceeds
the number of shares not covered by the Stock
Appreciation Right.
A Stock Appreciation Right may be exercised by
an optionee, in accordance with Section 6(ii),
by surrendering the applicable portion of the
related Stock Option. Upon such exercise and
surrender, the optionee shall be entitled to
receive an amount determined in the manner
prescribed in Section 6(b). Stock Options which
have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been
exercised.
(ii) Terms and Conditions. Stock Appreciation Rights
shall be subject to such terms and conditions,
not inconsistent with the provisions of the
Plan, as shall be determined from time to time
by the Committee, including the following:
(a) Stock Appreciation Rights
shall be exercisable only
at such time or times and
to the extent that the
Stock Options to which
they relate, if any,
shall be exercisable in
accordance with the
provisions of Section 5
and this Section 6 of the
Plan; provided, however,
that any Stock
Appreciation Right
granted subsequent to the
grant of the related
Stock Option shall not be
exercisable during the
first six months of its
term, except that this
special limitation shall
not apply in the event of
death or Disability of
the optionee prior to the
expiration of the
six-month period.
(b) Upon the exercise of a
Stock Appreciation Right,
an optionee shall be
entitled to receive up
to, but not more than, an
amount in cash and/or
shares of Stock equal in
value to the excess of
the Fair Market Value of
one share of Stock over
the option price per
share specified in the
related Stock Option,
multiplied by the number
of shares in respect of
which the Stock
Appreciation Right shall
have been exercised, with
the Committee having the
right to determine the
form of payment.
(c) Stock Appreciation Rights
shall be transferable
only when and to the
extent that the
underlying Stock Option
would be transferable
under Section S(f) of the
Plan.
-11-
<PAGE>
(d) Upon the exercise of a
Stock Appreciation Right,
the Stock Option or part
thereof to which such
Stock Appreciation Right
is related shall be
deemed to have been
exercised for the purpose
of the limitation set
forth in Section 3 of the
Plan on the number of
shares of Stock to be
issued under the Plan,
but only to the extent of
the number of shares
issued under the Stock
Appreciation Right at the
time of exercise based on
the value of the Stock
Appreciation Right at
such time.
(e) A Stock Appreciation
Right granted in
connection with an
Incentive Stock Option
may be exercised only if
and when the market price
of the Stock subject to
the Incentive Stock
Option exceeds the
exercise price of such
Stock Option.
(f) In its sole discretion,
the Committee may
provide, at the time of
grant of a Stock
Appreciation Right under
this Section 6, that such
Stock Appreciation Right
can be exercised only in
the event of a
Change-in-Control and/or
a Potential
Change-in-Control,
subject to such terms and
conditions as the
Committee may specify at
grant.
(g) The Committee, in its
sole discretion, may also
provide that, in the
event of a
Change-in-Control and/or
a Potential Change-in-
Control, the amount to be
paid upon the exercise of
a Stock Appreciation
Right shall be based on
the Change-in-Control
Price, subject to such
terms and conditions as
the Committee may specify
at grant.
SECTION 7. Restricted Stock.
(i) Administration. Shares of Restricted Stock may
be issued either alone or in addition to other
awards granted under the Plan, complying at all
times with the requirement of Section 12(vi),
below. The Committee shall determine the number
of shares to be awarded, the price (if any) to
be paid by the recipient of Restricted Stock
(subject to Section 7(ii)), the time or times
within which such awards may be subject to
vesting and/or forfeiture, and all other
conditions of the awards.
The Committee may condition the grant of
Restricted Stock upon the attainment of
specified performance goals or such other
factors as the Committee may determine, in its
sole discretion.
The provisions of Restricted Stock awards need
not be the same with respect to each recipient.
(ii) Awards and Certificates. The grantee of a
Restricted Stock award shall not have any rights
with respect to such award, unless and until
such recipient has executed an agreement
evidencing the award and has delivered a fully
executed copy thereof to the Company, and has
otherwise complied with the applicable terms and
conditions of such award.
-12-
<PAGE>
(a) The purchase price for
shares of Restricted
Stock shall be equal to
or less than their par
value and may be zero.
-13-
<PAGE>
(b) Awards of Restricted
Stock must be accepted
within a period of 60
days (or such shorter
period as the Committee
may specify at grant)
after the award date, by
executing a Restricted
Stock Award Agreement and
paying whatever price (if
any) is required under
Section 7(ii)(a).
(c) Each Participant
receiving a Restricted
Stock award shall be
issued a stock
certificate in respect of
such shares of Restricted
Stock. Such certificate
shall be registered in
the name of such
Participant, and shall
bear an appropriate
legend referring to the
terms, conditions, and
restrictions applicable
to such award,
substantially in the
following form:
"THE TRANSFERABILITY OF THIS
CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE
TERMS AND CONDITIONS (INCLUDING
FORFEITURE) OF THE GOLF VENTURES
LONG TERM EQUITY-BASED INCENTIVE
PLAN AND AN AGREEMENT ENTERED INTO
BETWEEN THE REGISTERED OWNER AND
GOLF VENTURES, INC. COPIES OF SUCH
PLAN AND AGREEMENT ARE ON FILE AT
THE OFFICES OF THE COMPANY".
(d) The Committee shall
require that the stock
certificates evidencing
such shares be held in
custody by the Company
until the restrictions
thereon shall have
lapsed, and that, as a
condition of any
Restricted Stock award,
the Participant shall
have delivered a stock
power, endorsed in blank,
relating to the Stock
covered by such award.
(iii) Restrictions and Conditions. The shares of
Restricted Stock awarded pursuant to this
Section 7 shall be subject to the following
restrictions and conditions:
(a) Subject to the provisions
of this Plan and the
award Agreement, during a
period set by the
Committee commencing with
the date of such award
(the "Restriction
Period"), the Participant
shall not be permitted
to sell, transfer,
pledge, assign or
otherwise encumber shares
of Restricted Stock
awarded under the Plan.
Within these limits, the
Committee, in its sole
discretion, may provide
for the lapse of such
restrictions in
installments and may
accelerate or waive such
restrictions in whole or
in part, based on
service, performance
and/or such other factors
or criteria as the
Committee may determine,
in its sole discretion.
(b) Except as provided in
this paragraph (b) and
Section 7(iii)(a), the
Participant shall have,
with respect to the
shares of Restricted
Stock, all of the rights
of a Shareholder of the
Company, including the
right to vote the shares,
and the right to receive
-14-
<PAGE>
any cash dividends. The
Committee, in its sole
discretion, as determined
at the time of award, may
permit or require the
payment of cash dividends
to be deferred and, if
the Committee so
determines, reinvested in
additional Restricted
Stock to the extent
shares are available
under Section 3.
(c) Subject to the applicable
provisions of the award
Agreement and this
Section 7, upon
termination of a
Participant's employment
with the Company for any
reason during the
Restriction Period, all
shares still subject to
restriction shall be
forfeited by the
Participant.
(d) In the event of hardship
or other special
circumstances of a
Participant whose
employment with the
Company is involuntarily
terminated (other than
for Cause), the Committee
may, in it sole
discretion, waive in
whole or in part any or
all remaining
restrictions with respect
to such Participant's
shares of Restricted
Stock, based on such
factors as the Committee
may deem appropriate.
(e) If and when the
Restriction Period
expires without a prior
forfeiture of the
Restricted Stock subject
to such Restriction
Period, the certificates
for such shares shall be
delivered to the
Participant promptly.
SECTION 8. Long Term Performance Awards.
(i) Awards and Administration. Long Term
Performance Awards may be awarded either alone
or in addition to other awards granted under the
Plan, complying at all times with the
requirement of Section 12(vi), below. The
Committee shall determine the nature, length and
starting date of the performance period (the
"Performance Period") for each Long Term
Performance Award, which shall be at least two
years (subject to Section 9 below), and shall
determine the performance objectives to be used
in valuing Long Term Performance Awards and
determining the extent to which such Long Term
Performance Awards have been earned. Performance
objectives may vary from Participant to
Participant and between groups of Participants
and shall be based upon such Company, business
unit and/or individual performance factors and
criteria as the Committee may deem appropriate,
including, but not limited to, earnings per
share or return on equity. Performance Periods
may overlap and Participants may participate
simultaneously with respect to Long Term
Performance Awards that are subject to different
Performance Periods and/or different performance
factors and criteria.
At the beginning of each Performance Period, the
Committee shall determine for each Long Term
Performance Award subject to such Performance
period the range of dollar values or number of
shares of Stock to be awarded to the Participant
at the end of the performance Period if and to
the extent that the relevant measure(s) of
performance for such Long Term Performance Award
is (are) met. Such dollar values or number of
shares of Stock may be fixed or may vary in
-15-
<PAGE>
accordance with such performance and/or other
criteria as may be specified by the Committee,
in its sole discretion.
(ii) Adjustment of Awards. In the event of special or
unusual events or circumstances affecting the
application of one or more performance
objectives to a Long Term Performance Award, the
Committee may revise the performance objectives
and/or underlying factors and criteria
applicable to the Long Term Performance Awards
affected, to the extent deemed appropriate by
the Committee, in its sole discretion, to avoid
unintended windfalls or hardship.
(iii) Termination of Employment. Subject to Section 9
below and unless otherwise provided in the
applicable award agreement(s), if a Participant
terminates employment with the Company during a
Performance Period because of death, Disability
or Retirement, such Participant shall be
entitled to a payment with respect to each
outstanding Long Term Performance Award at the
end of the applicable Performance Period:
(a) based, to the extent
relevant under the terms
of the award, upon the
Participant's performance
for the portion of such
Performance Period ending
on the date of
termination and the
performance of the
applicable business
unit(s) for the entire
Performance Period, and
(b) prorated, where deemed
appropriate by the
Committee, for the
portion of the
Performance Period during
which the Participant was
employed by the Company,
all as determined by the
Committee, in its sole
discretion.
However, the Committee may provide for an
earlier payment in settlement of such award in
such amount and under such terms and conditions
as the Committee deems appropriate.
Subject to Section 9 below, if a Participant
terminates employment with the Company during a
Performance Period for any other reason, then
such Participant shall not be entitled to any
payment with respect to the Long Term
Performance Awards subject to such Performance
Period, unless the Committee shall otherwise
determine, in its sole discretion.
(iv) Form of Payment. The earned portion of a Long
Term Performance Award may be paid currently or
on a deferred basis with such interest or
earnings equivalent as may be determined by the
Committee, in its sole discretion. Payment shall
be made in the form of cash or whole shares of
Stock, including Restricted Stock, either in a
lump sum payment or in annual installments
commencing as soon as practicable after the end
of the relevant Performance Period, all as the
Committee shall determine at or after grant. If
and to the extent a Long Term Performance Award
is payable in Stock and the full amount of such
value is not paid in Stock, then the shares of
Stock representing the portion of the value of
the Long Term Performance Award not paid in
Stock shall again become available for award
under the Plan.
-16-
<PAGE>
SECTION 9. Change in Control Provisions.
(i) Impact of Event. In the event of:
(a) a "Change in Control" as
defined in Section 9(ii),
unless otherwise
determined by the
Committee or the Board at
or after grant, but prior
to the occurrence of such
Change in Control, or
(b) a "Potential Change in
Control" as defined in
Section 9(iii), but only
if and to the extent so
determined by the
Committee or the Board at
or after grant (subject
to any right of approval
expressly reserved by the
Committee or the Board at
the time of such
determination),
the following acceleration and valuation provisions shall apply:
(c) Any Stock Appreciation
Rights outstanding for at
least six months and any
Stock Options awarded
under the Plan not
previously exercisable
and vested shall become
fully vested and
exercisable.
(d) The restrictions
applicable to any
Restricted Stock awards
under the Plan shall
lapse and such shares and
awards shall be deemed
fully vested.
(e) The value of all
outstanding Stock
Options, Stock
Appreciation Rights and
Restricted Stock awards
shall, unless otherwise
determined by the
Committee at or after
grant, be cashed out on
the basis of the "Change
in Control Price" as
defined in Section 9(iv)
as of the date such
Change in Control or such
Potential Change in
Control is determined to
have occurred or such
other date as the
Committee may determine
prior to the Change in
Control.
(f) Any outstanding Long Term
Performance Awards shall
be vested and paid out
based on the prorated
target results for the
Performance Periods in
question, unless the
Committee provides at or
after grant and prior to
the Change in Control
event, for a different
payment.
(ii) Definition of "Change in Control". For purposes
of Section 9(i), a "Change in Control" means the
happening of any of the following:
(a) When any "person," as
such term is used in
Sections 13(d) and 14(d)
of the Exchange Act,
other than the Company or
an Affiliate of the
Company (as defined in
Rule 12b-2 under the
Securities Exchange Act)
or any Company employee
benefit plan (including
any trustee of such plan
acting as trustee) is or
becomes the "beneficial
owner" (as defined in
Rule 13d-3 under the
Exchange Act), directly
or indirectly of
securities of the
-17-
<PAGE>
Company representing 20
percent or more of the
combined voting power of
the Company's then
outstanding securities
without the consent of a
majority of the Board;
(b) The occurrence of any
transactions or event
relating to the Company
required to be described
pursuant to the
requirements of Item 5(f)
of Schedule 13A of the
Exchange Act;
(c) When, during any period
of two consecutive years
during the existence of
the Plan, the individuals
who, at the beginning of
such period, constitute
the Board of Directors of
the Company cease for any
reason other than death
to constitute at least a
two-thirds majority
thereof, provided,
however, that a director
who was not a director at
the beginning of such
period shall be deemed to
have satisfied the
two-year requirement if
such director was elected
by, or on the
recommendation of, at
least two-thirds of the
directors who were
directors at the
beginning of such period
(either actually or by
prior operation of this
Section 9(b) (iii); or
(d) The occurrence of a
transaction requiring
stockholder approval for
the acquisition of the
Company by an entity
other than the Company
through purchase of
assets, or by merger, or
otherwise.
(iii) Definition of Potential Change in Control. For
purposes of Section 9(i), a "Potential Change in
Control" means the happening of any one of the
following:
(a) The entering into an
agreement by the Company,
the consummation of which
would result in a Change
in Control of the Company
as defined in Section
9(ii); or
(ii) The acquisition of
beneficial ownership,
directly or indirectly,
by any entity, person or
group other than the
Company or any Company
employee benefit plan
(including any trustee of
such plan acting as such
trustee) of securities of
the Company representing
five percent or more of
the combined voting power
of the Company's
outstanding securities
and the adoption by the
Board of Directors of a
resolution to the effect
that a Potential Change
in Control of the Company
has occurred for the
purposes of this Plan.
(iv) Change in Control Price. For purposes of this
Section 9, "Change in Control Price" means the
highest bid price per share paid in any
transaction as furnished by NASDAQ-NMS or the
highest price paid or offered in any bona fide
transaction related to a potential or actual
change in control of the Company at any time
during the preceding sixty day period as
determined by the Committee except that, in the
case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock
Options, such price shall be based only on
transactions reported for the date on which the
Committee decides to cash out such options.
-18-
<PAGE>
(v) Compliance with Section 280G. No payment shall
be made under this Section 9 which, when
aggregated with other payments made to the
employee, would, as determined by such person(s)
as the Committee shall irrevocably designate at
or prior to a Change in Control or Potential
Change in Control, result in an excess parachute
payment for which the Company, would not receive
a Federal income tax deduction by reason of
Section 280G of the Code.
SECTION 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan at any time and
from time to time, but no amendment, alteration, or discontinuation shall be
made which would impair the rights of an optionee or Participant under a Stock
Option, Stock Appreciation Right, Restricted Stock or Long Term Performance
Award theretofore granted, without the optionee's or Participant's consent, or
which, without the approval of the Company's stockholders, would:
(i) except as expressly provided in this Plan,
increase the total number of shares reserved for
the purpose of the Plan;
(ii) decrease the option price of (i) any Stock
Option to less than 100% of the Fair Market
Value on the date of grant, or (ii) change the
pricing terms of Section 9(i);
(iii) change the employees or class of employees
eligible to participate in the Plan, or
(iv) extend the maximum option period under Section
5(ii) of the Plan.
The Committee may amend the terms of any Stock Option or other
award theretofore granted, prospectively or retroactively, but, subject to
Section 3 above, no such amendment shall impair the rights of any Award holder
without the holder's consent. The Committee may also substitute new Stock
Options for previously granted Stock Options, including previously granted Stock
Options having higher option prices.
Subject to the above provisions, the Board shall have broad
authority to amend the Plan to take into account changes in applicable tax laws
and accounting rules, as well as other developments.
SECTION 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
Participant or optionee by the Company, nothing contained herein shall give any
such Participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that, unless the Committee otherwise determines
with the consent of the affected Participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.
SECTION 12. General Provisions.
(i) The Committee may require each person purchasing
shares pursuant to a Stock Option under the Plan
to represent to and agree with the Company in
writing that the optionee or Participant is
-19-
<PAGE>
acquiring the shares without a view to
distribution thereof. The certificates for such
shares may include any legend which the
Committee deems appropriate to reflect any
restrictions on transfer.
All certificates for shares of Stock or other
securities delivered under the Plan shall be
subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable
under the rules, regulations, and other
requirements of the Exchange Act, any stock
exchange upon which the Stock is then listed,
and any applicable Federal or state securities
law, and the Committee may cause a legend or
legends to be put on any such certificates to
make appropriate reference to such restrictions.
(ii) Nothing contained in this Plan shall prevent the
Board of Directors from adopting other or
additional compensation arrangements, subject to
stockholder approval if such approval is
required; and such arrangements may be either
generally applicable or applicable only in
specific cases.
-20-
<PAGE>
(iii) The adoption of the Plan shall not confer upon
any Participant any right to continued
employment with the Company, as the case may be,
nor shall it interfere in any way with the right
of the Company to terminate the employment of
any of its employees, directors, or independent
contractors at any time.
(iv) No later than the date as of which an amount
first becomes includable in the gross income of
the Participant for Federal income tax purposes
with respect to any award under the Plan, the
Participant who is an officer or key employee of
the Company, shall pay to the Company, or make
arrangements satisfactory to the Committee
regarding the payment of, any Federal, state, or
local taxes of any kind required by law to be
withheld with respect to such amount. Unless
otherwise determined by the Committee, the
minimum required withholding obligations will be
settled with Stock that is part of the award
that gives rise to the withholding requirement.
If the particular Award is not payable in Stock,
the obligations of the Company under the Plan
shall be conditional on such withholding tax
payment or arrangements and the Company shall,
to the extent permitted by law, have the right
to deduct any such taxes from any payment of any
kind otherwise due to the Participant.
(v) At the time of grant, the Committee may provide
in connection with any grant made under this
Plan that the shares of Stock received as a
result of such grant shall be subject to a right
of first refusal, pursuant to which the
Participant shall be required to offer to the
Company any shares that the Participant wishes
to sell, with the price being the then Fair
Market Value of the Stock, subject to such other
terms and conditions as the Committee specify at
the time of grant.
(vi) Any grant made under this Plan shall be
represented by a WRITTEN AGREEMENT between the
Company and the Participant receiving the grant
setting forth the material terms of the grant,
and incorporating the terms of this Plan
(specifically as well as generally by reference)
into each such Agreement.
(vii) The Committee shall establish such procedures as
it deems appropriate for a Participant to
designate a beneficiary to whom any amounts
payable in the event of the Participant's death
are to be paid.
(viii) In the event any Section or paragraph in this
Plan or any Agreement or writing relating to the
Plan is found to be illegal or invalid for any
reason, such illegality or invalidity shall not
affect the remaining provisions of the Plan and
the Plan shall be construed and enforced as if
such illegal and invalid provision had never
been set forth in the Plan; provided, that the
Committee may conclude that the purposes of the
Plan have been materially frustrated by such a
finding, and may thereupon terminate the Plan.
(ix) Where applicable, the masculine includes
feminine and neuter and vice versa. Where
applicable, the singular includes the plural and
vice versa. Where a word or phrase is defined in
one place in the Plan and appears in capitalized
form in another paragraph of the Plan, such word
or phrase shall have the meaning first set forth
unless the context clearly requires otherwise. A
word or phrase in noncapitalized form shall
retain its plain meaning taken in the context in
which it appears, regardless of whether said
word or phrase is defined in the Plan.
-21-
<PAGE>
(x) The headings are for reference only. In the
event of a conflict between a heading and the
content of an Article or paragraph, the content
of the Article or paragraph shall control.
(xi) The Plan and all awards made and actions taken
thereunder shall be governed by and construed in
accordance with the laws of the State of
Delaware.
SECTION 13. Effective Date of Plan.
The Plan, as amended and restated, shall be effective on the date
it is approved by the Company's Executive Committee or Board of Directors,
subject to a condition subsequent that the Shareholders of the Company also
approve the Plan, as amended and restated, at a meeting duly noticed and called
for that purpose by the vote of holders of a majority of the total outstanding
Stock within 12 months of such date.
SECTION 14. Term of Plan.
No Stock Option, Stock Appreciation Right, Restricted Stock or Long
Term Performance Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the date of stockholder approval, but awards granted prior
to such tenth anniversary may extend beyond that date.
SECTION 15. Indemnification of Committee
In addition to such other rights of indemnification as they may
have as Directors of the Company, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Incentive Award
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member is liable
for gross negligence or willful misconduct in the performance of his duties;
such indemnification shall result provided that within sixty (60) days after
institution of any above action, suit or proceeding, a member of such Committee
shall in writing offer the Company the opportunity, at its own expense, to
handle and defend the same. Notwithstanding anything herein to the contrary, a
condition of such indemnification shall be the cooperation of the Committee
member with the Company in the defense of any such action, suit or proceeding.
SECTION 16. Financing
The Committee may arrange for and offer loans to a Participant
under the Plan to pay for the exercise of any Stock Option or other Award if
applicable, provided that no Participant shall have a right or entitlement to
such a loan, and loans may be determined on a basis of individual selection in
the sole and absolute discretion of the Committee governed at all times by
Regulation G or successor provisions of the Federal Reserve Board. This
provision shall not be construed to require that loans be made available to any
Participant at any time by the Company.
-22-
<PAGE>
IN WITNESS WHEREOF, verifying that the required approvals of the
shareholders and the Directors have been obtained for the foregoing Plan as of
the th day of November, 1997.
/s/
Chairman and Chief Executive Officer
-23-
