COMBINED SCHEDULE 14A AND 14C INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Information Statement Pursuant to Section 14(c) 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
|X| Preliminary Information Statement
| | Definitive Proxy Statement
| | Definitive Information Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
|_| Confidential for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
|_| 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.
255 South Orange Avenue
Orlando, Florida 32801
NOTICE OF SHAREHOLDERS MEETING
To Be Held on November __, 1998 at 10:00 A.M.
Pursuant to its Bylaws, Golf Ventures, Inc. ("the Company"), is pleased
to invite all of its Shareholders to the Company's 1998 Shareholders Meeting,
which will be held at the The Club at Pelican Strand located at 5840 Strand
Blvd., Naples, Florida 34110, on November __, 1998 at 10:00 a.m., Eastern Time
for the following purposes:
1. To elect a Board of Directors to serve until the next
Shareholders Meeting
2. To approve the Golf Ventures, Inc. Long Term Equity-Based
Incentive Plan;
3. To transact such other business as may be properly brought
before the Shareholders Meeting or at any adjournment or
postponement thereof.
The close of business on July 31, 1998, 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 Shareholders Meeting. In accordance with Utah
law, a list of the Company's Shareholders entitled to vote at the Shareholders
Meeting will be available for examination at the offices of the Company, 255
South Orange Avenue, Orlando, Florida 32801, for at least ten business days
prior to the Shareholders Meeting, between the hours of 9:00 a.m. and 5:00 p.m.
Eastern Time. This list will also be available for inspection at and during the
Shareholders 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
SHAREHOLDERS 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/Information Statement is the Company's Annual Report to Shareholders
for the year ended December 31, 1997, which contains the audited financial
statements of the Company and certain other information about the Company and
its fiscal 1997 operating results. (As a result of the U.S. Golf Communities,
Inc. ("US Golf") reverse acquisition transaction, which closed in November 1997,
the Company has changed its fiscal year from March 31 to U.S. Golf's fiscal year
end of December 31. Hence the Annual Report, as to balance sheet data, is for
December 31, 1997 and 1996, and as to income statement data, is for the years
ended December 31, 1997, 1996 and 1995.) The Annual Report to Shareholders also
contains a letter from management, a copy of the Company's Amended Report on
Form 10-KSB for the year ended December 31, 1997, and summary information
reporting on the results of the Company for the first six months of 1998.
Dated: October 15, 1998 BY ORDER OF THE BOARD OF DIRECTORS
/s/ Mary Lynn Stanchina
------------------------------
Secretary of the Company
<PAGE>
GOLF VENTURES, INC.
PROXY STATEMENT INFORMATION STATEMENT
Relating to the 1998 Shareholders Meeting Relating to Certain Completed
To Be Held on November __, 1998 Shareholder Actions By Written Consent
Effective as of November __, 1998
October __, 1998
To Be Held on November __, 1998 at 10:00 A.M.
Pursuant to its Bylaws, Golf Ventures, Inc. ("the Company"), is pleased
to invite all of its Shareholders to the Company's 1998 Shareholders Meeting,
which will be held at the The Club at Pelican Strand located at 5840 Strand
Blvd., Naples, Florida 34110, on November __, 1998 at 10:00 a.m., Eastern Time
for the following purposes:
1. To elect a Board of Directors to serve until the next
Shareholders Meeting
2. To approve the Golf Ventures, Inc. Long Term Equity-Based
Incentive Plan;
3. To transact such other business as may be properly brought
before the Shareholders Meeting or at any adjournment or
postponement thereof.
The close of business on July 31, 1998, 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 Shareholders Meeting. In accordance with Utah
law, a list of the Company's Shareholders entitled to vote at the Shareholders
Meeting will be available for examination at the offices of the Company, 255
South Orange Avenue, Orlando, Florida 32801, for at least ten business days
prior to the Shareholders Meeting, between the hours of 9:00 a.m. and 5:00 p.m.
Eastern Time. This list will also be available for inspection at and during the
Shareholders 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
SHAREHOLDERS 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/Information Statement is the Company's Annual Report to Shareholders
for the year ended December 31, 1997, which contains the audited financial
statements of the Company and certain other information about the Company and
its fiscal 1997 operating results. (As a result of the U.S. Golf Communities,
Inc. ("US Golf") reverse acquisition transaction, which closed in November 1997,
the Company has changed its fiscal year from March 31 to U.S. Golf's fiscal year
end of December 31. Hence the Annual Report, as to balance sheet data, is for
December 31, 1997 and 1996, and as to income statement data, is for the years
ended December 31, 1997, 1996 and 1995.) The Annual Report to Shareholders also
contains a letter from management, a copy of the Company's Amended Report on
Form 10-KSB for the year ended December 31, 1997, and summary information
reporting on the results of the Company for the first six months of 1998.
Dated: October 15, 1998 BY ORDER OF THE BOARD OF DIRECTORS
/s/ Mary Lynn Stanchina
---------------------------------
Secretary of the Company
<PAGE>
GOLF VENTURES, INC.
PROXY STATEMENT INFORMATION STATEMENT
Relating to the 1998 Shareholders Meeting Relating to Certain Completed
To Be Held on November __, 1998 Shareholder Actions By Written Consent
Effective as of November __, 1998
October __, 1998
TABLE OF CONTENTS
Page
GENERAL INFORMATION FOR SHAREHOLDERS......................................... 4
INDEPENDENT AUDITORS......................................................... 5
MANAGEMENT OF THE COMPANY.................................................... 6
Board of Directors.................................................. 6
Executive Officers.................................................. 6
COMPENSATION OF MANAGEMENT................................................... 7
Director Compensation.............................................. 7
Summary of Compensation To Certain Executive Officers............... 7
Stock Options and Similar Awards to Management.......................8
CERTAIN TRANSACTIONS BY AND WITH MANAGEMENT AND OTHERS........................9
Directors' and Officers' Liability Insurance.........................9
Interested Party Transactions........................................9
Compliance with Section 16 Reporting Obligations.....................9
Employment Agreements...............................................10
PRINCIPAL SHAREHOLDERS.......................................................12
ACTIONS TAKEN BY WRITTEN CONSENT OF CERTAIN SHAREHOLDERS.....................13
1. The Ratification and Approval of the Board of Directors'
prior designation and issuance of Series A, B, C and
D Preferred Stock and to thereby validate the legality
of any Common Stock previously issued through conversion
of any such preferred shares..................................13
2. The Approval of an amendment to the Company's Articles
of Incorporation increasing the number of authorized
shares of the Company's Common Stock from 25,000,000
shares to 100,000,000 shares..................................15
3. The Approval of an amendment to the Company's Articles
of Incorporation to Change the Company's Name to "Golf
Communities of America".......................................19
PROPOSALS FOR SHAREHOLDER ACTION AT THE 1998 SHAREHOLDERS MEETING
1. To elect a Board of Directors to serve until the next
Shareholders Meeting..........................................19
2. To approve the Golf Ventures, Inc. Long Term Equity-Based
Incentive Plan................................................22
OTHER BUSINESS...............................................................26
DEADLINE FOR SHAREHOLDER PROPOSALS FOR NEXT SHAREHOLDERS MEETING.............27
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................27
APPENDIX "A" - GOLF VENTURES LONG TERM EQUITY-BASED INCENTIVE PLAN
APPENDIX "B" - FORM OF SHAREHOLDER ACTION BY CONSENT DATED JUNE 9, 1998
APPENDIX "C" - INTERESTED PERSON TRANSACTIONS SUMMARY
<PAGE>
GENERAL INFORMATION FOR SHAREHOLDERS
This Combined Proxy Statement/Information Statement is furnished to its
Shareholders by Golf Ventures, Inc., a Utah corporation (hereinafter called the
"Company"), for two purposes. First is to comply with the requirements of
Section 14(c) of the Securities Exchange Act to provide an information statement
to all shareholders in the event that shareholder action is taken by written
consent of only certain large shareholders. Second is to solicit proxies for use
at the Shareholders Meeting to be held at The Club at Pelican Strand, located at
5840 Strand Blvd., Naples, Florida 34110, on November __, 1998 at 10:00 a.m.
Eastern Time, and at any and all adjournments thereof.
A Proxy Designation and Instruction Card ("Proxy" "or Proxy Card") for
your use in connection with the proposals for Shareholder action at the
Shareholders Meeting is enclosed. You are requested to date and sign the Proxy
Card and return them in the envelope provided.
THE COMPANY IS NOT SOLICITING PROXIES WITH RESPECT TO THE ACTIONS TAKEN
BY WRITTEN CONSENT THAT ARE ALSO DISCUSSED IN THIS COMBINED PROXY
STATEMENT / INFORMATION STATEMENT. SUCH ACTIONS HAVE ALREADY BEEN
APPROVED BY THE REQUISITE SHAREHOLDER ACTION.
VOTING SECURITIES
The Board of Directors has fixed the close of business on July 31, 1998
as the Record Date for determination of Shareholders entitled to notice of and
to vote at the Shareholders Meeting (the "Record Date"). As of the Record Date,
there were issued and outstanding 24,610,538 shares of Common Stock, and
6,672,578 shares of Series D Convertible Preferred Stock. Each share of Series D
Preferred Stock may be voted as the equivalent of four (4) shares of Common
Stock on any matter brought before the Shareholders.
PROXIES
Shares 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/Information Statement; and in the discretion
of the designated Proxy holders, as to any other matters which may properly come
before the Shareholders Meeting.
Any Shareholder signing and delivering a Proxy has the right to revoke
it at any time before the vote at the Shareholders Meeting (a) by notifying the
Secretary of the Company in writing prior to 10:00 a.m. Eastern Time on October
, 1998, (b) by signing and dating a later Proxy and submitting the new Proxy in
time to be counted for the Shareholders Meeting, or (c) by attending the
Shareholders Meeting and voting in person contrary to the submitted Proxy at the
time votes are requested.
Any Shareholder signing and delivering a Proxy has the right to revoke
it at any time before the vote at the Shareholders Meeting (a) by notifying the
Secretary of the Company in writing prior to 10:00 a.m. Eastern Time on
September 8, 1998, (b) by signing and dating a later Proxy and submitting the
new Proxy in time to be counted for the Shareholders Meeting, or (c) by
attending the Shareholders Meeting and voting in person contrary to the
submitted Proxy at the time votes are requested.
A Shareholder may designate someone other than the designated persons
named on the Proxy Card as his authorized proxy agent to vote at the
Shareholders Meeting 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 proxy agent for the Shareholder in voting
his shares. Such a special proxy designation must be presented at the
4
<PAGE>
Shareholders Meeting by the new person or persons you have designated on the
Proxy Card, and such persons will be asked to present identification to
establish their identity prior to being allowed to vote through the signed Proxy
Card.
The cost of preparing, assembling and mailing this Proxy
Statement/Information 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 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/Information
Statement to Shareholders.
This Proxy Statement/Information Statement and the enclosed form of
Proxy are being mailed to Shareholders beginning on October __, 1998. Mailed
together with this Proxy Statement/Information Statement is a copy of the
Company's Annual Report to Shareholders for the year ended December 31, 1997.
The Annual Report will consist of a letter from the President of the Company, a
copy of the Company's Form 10-KSB for the fiscal year ended December 31, 1997,
and a summary report on the results of the Company for the first six months of
1998. Shareholders who do not receive a copy of the Annual Report to
Shareholders with this Proxy Statement/Information Statement, or who desire
extra copies, should contact the Company at (407) 245-7557.
VOTES REQUIRED FOR ACTION TO BE TAKEN AT THE SHAREHOLDERS MEETING
A majority of the Common Stock share votes (common shares and preferred
shares entitled to cast common share votes) entitled to be cast at the
Shareholders 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
Shareholders Meeting. Abstentions and broker non-votes are counted "present" for
determining the presence or absence of a quorum for the transaction of business.
Shares of Series D Convertible Preferred Stock are not entitled to vote as a
class, but each share will constitute the vote of four (4) common shares on each
of the matters presented to the Shareholders Meeting.
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 to serve until the next Shareholders Meeting of the
Shareholders. Accordingly, once a quorum is established, abstentions and broker
non-votes will not affect the outcome of the election of Directors.
As to the motion to approve the Long Term Equity-Based Incentive Plan,
more votes must be purposely cast in favor of such 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.
5
<PAGE>
INDEPENDENT AUDITORS
The Board of Directors has appointed BDO Seidman LLP as the auditors
who will examine the accounts of the Company and its subsidiaries for the fiscal
year ended December 31, 1998. BDO Seidman LLP has audited the Company's
financial statements for the year ended December 31, 1997 and 1996. Jones,
Jensen & Company audited the Company's accounts for its fiscal year ended March
31, 1997 and for the prior several fiscal years. The change in outside auditors
from Jones, Jensen & Company to BDO Seidman LLP was made in conjunction with the
U.S. Golf transaction in late 1997, and in connection with the move of the
Company's executive offices to Orlando, Florida. There has been no disagreement
between Jones, Jensen & Company and the Company. A partner in BDO Seidman LLP
will be in attendance at the Shareholders Meeting, will be allowed to make a
statement on behalf of that 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. The Board of Directors is not 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, although
some of the Executive Officers also serve on the Board of Directors.
The Board of Directors meets as needed during the year to review
developments affecting the Company and to act on matters requiring Board
approval. 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
Shareholders Meeting) beneficially own as a group no shares of Common Stock and
2,573,921 shares of Series D Convertible Preferred Stock, or approximately 20%
of the Company's outstanding common stock share votes as of the Record Date.
The Board of Directors held 9 meetings during the year ended December
31, 1997, and acted on several matters by unanimous written consent. All
Directors attended all of the Board meetings and participated in all actions of
the Directors by unanimous written consent.
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. Executive Officers serve at the
pleasure of the Board of Directors.
[This Space Left Blank Intentionally]
6
<PAGE>
<TABLE>
<CAPTION>
Table 1
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
Name Age Position Past Experience
<S> <C> <C> <C>
Warren J. Stanchina 50 President and Chief Executive See "PROPOSALS FOR
Officer, and Director SHAREHOLDER
ACTION--Election of
Directors"
Dr. Wolfgang Duren 54 Director See "PROPOSALS FOR
SHAREHOLDER
ACTION--Election of
Directors")
Mary Lynn Stanchina 42 Vice President, Secretary and See "PROPOSALS FOR
Chief Administrative Officer, SHAREHOLDER
and Director ACTION--Election of
Directors")
Eric LaGrange 48 Executive Vice President and Mr. LaGrange served as
Chief Operating Officer, Chief Financial Officer
for U.S. Golf for over
five years prior to the
reorganization
transaction with the
Company in November
1997. Mr. LaGrange is
the beneficial owner
of no shares of
the Company's Common
Stock, including no
shares subject to stock
options which are
exercisable within 60
days of the Record Date.
Kevin S. Jackson 31 Chief Financial Officer Mr. Jackson joined the
Company in August 1998
after 5 years as an audit
manager and senior
auditor at BDO Seidman
LLP, certified public
accountants in Orlando,
Florida. Mr. Jackson is
the beneficial owner of
no shares of the
Company's Common Stock,
and no shares subject to
stock options that are
exercisable within 60
days of the Record Date.
</TABLE>
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.
7
<PAGE>
Director Equity-Based Compensation. During 1997, the Company awarded
bonus payments of 150,000 shares of common stock to Duane Marchant. 35,000
shares to Steven Spencer, and 30,000 shares to Bruce Frodsham in recognition of
their services to the Company as Directors and in connection with the
negotiation of the US Golf reverse acquisition transaction.
SUMMARY OF COMPENSATION TO CERTAIN EXECUTIVE OFFICERS
Table 2, below, is a Summary Compensation Table showing the various
elements of compensation earned during 1997 and during the previous two fiscal
years by the Company's Chief Executive Officer and any other Executive Officer
earning more than $100,000 in any of these years. <TABLE> <CAPTION>
Table 2
SUMMARY COMPENSATION TABLE
-------------------------- ===============================
Annual Compensation Long-Term Compensation
Awards
==================================== --------- ------------ ------------- ----------------- ------------- ====================
Name and Year Salary1 Bonus2 Restricted Options/ All Other
Principal Position ($) ($) Stock SARs Compensation3
Award(s) (#) ($)
($)
==================================== --------- ------------ ------------- ----------------- ------------- ====================
<S> <C> <C> <C> <C> <C> <C>
Warren Stanchina, 1997 226,000 -0- -0- -0-4
Chief Executive Officer of 1996 317,000 -0- -0- -0-
the Company (after 11/27/97) 1995 97,333 -0- -0- -0-
==================================== ========= ============ ============= ================= ============= ====================
Duane H. Marchant, 1997 72,000 -0- 150,000 -0- -0-
Chief Executive Officer of 1996 72,000 -0- -0- -0- -0-
the Company (until 11/27/97) 1995 72,000 -0- -0- -0- -0-
==================================== ========= ============ ============= ================= ============= ====================
</TABLE>
1 Includes management, consulting and/or director's fees paid by the
Company or its affiliates, if any.
2 Bonuses are listed in the year earned and normally accrued. Stock
bonuses are valued at the market value on the date of receipt.
3 Includes insurance premiums, Company 401(k) plan contributions, and
contributions made to any deferred compensation accounts
4 Mr. Stanchina has entered into an employment agreement with the
Company under which the Company as agreed to grant him stock options
covering 360,000 shares of Common Stock. These options have not yet
been issued.
STOCK OPTIONS AND SIMILAR AWARDS TO MANAGEMENT.
In July 1997, the Company's Board of Directors awarded 150,000 shares
of restricted common stock to Duane Marchant, the former President and Director,
35,000 restricted shares to Steven Spencer, the former Chief Financial Officer
and Director, and 30,000 shares of restricted common stock to Bruce Frodsham,
currently the Company's St. George, Utah Properties Manager and former Director,
as bonus compensation for service to the Company in negotiating the US Golf
reverse acquisition transaction and in negotiating and implementing a healthy
separation of the Company from one of its largest shareholders.
In December, 1997 the Company entered into employment agreements with
Warren Stanchina, President and Chief Executive Officer and with Eric LaGrange,
Executive Vice President and Chief Operating Officer. These agreements call for
the granting of stock options covering 360,000 shares for Mr. Stanchina and
150,000 shares for Mr. LaGrange. These stock options have not yet been granted.
The Company plans on making these grants when the Shareholders approve the Long
Term Equity-Based Incentive Plan, as described later in this Proxy
Statement/Information Statement. (See "CERTAIN TRANSACTIONS BY AND WITH
MANAGEMENT" and "PROPOSALS FOR SHAREHOLDER ACTION, Item 2", below.)
8
<PAGE>
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
ARDCO and George Badger
From 1992 through July 1997, the Company shared office space with
American Resources and Development Company ("ARDCO"), its then majority
Shareholder. Under this arrangement, the Company paid the lease payments due on
the space, and ARDCO provided the services of Messrs. George Badger, Karl Badger
and Steven Spencer to the Company without salary cost. As a practical matter,
the management of ARDCO, primarily George Badger, were in financial and
management control of the Company during this period of time.
George Badger, resigned as President, Chief Executive Officer and a
Director of ARDCO on December 31, 1996. Mr. Badger was indicted on a number of
charges and was arraigned in the U.S. District Court for the Southern District
of New York on October 9, 1996. The Company has been advised that the indictment
related to alleged unlawful and undisclosed compensation to securities brokers
and promoters to induce them to cause customers to purchase securities issued by
the Company and ARDCO. The Company has been advised that Mr. Badger has pleaded
guilty to counts of: (i) conspiracy to commit securities fraud; (ii) securities
fraud; (iii) criminal contempt; and (iv) perjury.
On December 18, 1997, the Securities and Exchange Commission
(hereinafter the "Commission") filed a civil enforcement action complaint, in
the United States District Court for the district of Utah, Central Division,
against George Badger, Karl Badger, Duane Marchant, Stephen Spencer and the
Company, as well as others, alleging violations of the general anti-fraud
provisions of the federal securities laws. The complaint alleges that George
Badger directed a scheme to manipulate the market for securities issued by the
Company through payments to various broker-dealers and registered
representatives. The complaint alleges that Mr. Karl Badger arranged for some of
these payments. The complaint alleges that the Company and its former officers,
Mr. Marchant and Mr. Spencer failed file timely and materially correct reports
with the Commission, and failed to issue materially correct press releases
concerning the Red Hawk development project and concerning the Company's actions
with respect to Mr. Badger. These actions and inactions by the Company
historically took place in the period of time during which Mr. Badger was in
practical control of the Company. The complaint seeks a permanent injunction
against future violations of the federal securities laws, a court order
prohibiting the defendants from future participation in offerings of penny
stocks and disgorgement of alleged profits. The Company has not yet been
required to answer the complaint and is negotiating with the Commission for a
resolution of the Commission's claims against the Company.
During the Summer of 1997, the Company was engaged in negotiations with
US Golf which ultimately led to the US Golf transaction later in the year. In
this connection the Company obtained outside corporate and securities legal
counsel separate from counsel representing ARDCO. On advice from this new legal
counsel, the Company moved out of the space it shared with ARDCO in August, 1997
9
<PAGE>
and relocated its executive offices in a model home owned by the Company in St.
George, Utah. This relocation saved costs, brought management closer to the
Company's St. George-area real estate projects, and achieved a healthy physical
separation from ARDCO management.
ARDCO made a claim on the Company for certain reimbursements and other
payments aggregating over $1,000,000. The Company disputed that it owed anything
to ARDCO. Negotiations since October 1997 resulted in a settlement and mutual
release between ARDCO and the Company in July, 1998. The Company issued 862,000
new shares of common stock to ARDCO in return for ARDCO's accepting
responsibility for certain liabilities and a complete and mutual release by and
between ARDCO and the Company. Partial consideration for the settlement included
ARDCO's help in the closing of the loan transactions with Credit Suisse/First
Boston, then underway.
Management Fee Agreements with Mr. Stanchina.
The Company has entered into management agreements with companies
controlled by Mr. Stanchina and/or Mr. Duren with respect to certain of its golf
course properties. In addition, management fees at the Company's Pelican Strand
development project are paid to an affiliate of the entity through which the
Company controls the Pelican Strand project. Advances have also been made at
Pelican Strand to affiliates to fund construction of the project. These advances
are noninterest bearing and have no stipulated repayment terms. (See Note 2 to
the Financial Statements contained in the Annual Report to Shareholders which
accompanies this Proxy Statement/Information Statement for a detailed discussion
of these management fees and the amounts thereof.)
Loans from Affiliates.
On July 2, 1998, the Company entered into several agreements with
Credit Suisse First Boston Mortgage Capital LLC. to provide a $50,950,000
financing facility for various development projects at the Company's locations,
as well as, for the restructuring of various secured notes payable and for the
reduction in accounts payable of the Company.
The Company used $29,856,492 of the net proceeds from this loan to
pay-off outstanding principal and accrued interest on its secured debt at July
2, 1998, and has established certain property tax, insurance, and specific
project development and interest reserve accounts, all of which will be used in
connection with the further development of the Company's properties.
Approximately $13,000,000 of the net proceeds were paid to shareholders of the
Company who had loaned funds to the Company in the past. These shareholder
lenders included Messrs. Weidemann, Flachsmann, Kummer and Rimbach who appear in
Table 3 as significant holders of Series D Preferred Stock. These loans were
negoitiated at arms length and had terms substantially similar to those of the
commercial lending markets. None of the net proceeds went to the benefit of any
officer or director of the Company.
On July 2, 1998 the Company held-back borrowing $6,500,000 of the total
loan until it becomes necessary for these funds to be used for certain
development and improvement projects in order to reduce interest expense.
Project development and improvement funds as of July 2, 1998, as well as, any
future advances are deposited into a Construction Escrow Account and managed in
accordance with the draw provisions of the loan agreement.
Also, on July 2, 1998, the Company guaranteed a similar financing
facility with Credit Suisse First Boston Mortgage Capital LLC for the Company's
Pelican Strand, Ltd. development project ("Pelican Strand"). This financing
facility provides for the borrowing of $35,600,000 for various development
projects, as well as, for the restructuring of the secured notes payable at
Pelican Strand.
As consideration for structuring and advisory services provided by
Credit Suisse First Boston Mortgage Capital LLC for these loans, the Company and
Pelican Strand, Ltd. paid fees of $4,327,500 at closing and are obligated for an
additional $5,000,000 payment by November 15, 1998. The Company also issued
13,651,710 shares of its Common Stock to Credit Suisse First Boston Mortgage
Capital LLC, representing 24.9% of the current and committed shares of stock to
be outstanding after the effectiveness of modifications to the Articles of
Incorporation increasing the amount of common stock authorized. At July 2, 1998
the Company had issued a total of 13,648,182 shares in payment of the common
stock portion of this fee, which represented 55.5% of the then outstanding
shares of the Company.
On September 3, 1998, the Company purchased a partially developed real
estate property located in Arlington, Texas from an unrelated third party for a
total purchase price of $47,971,635. The purchase price was financed through
funding from Credit Suisse First Boston Mortgage Capital LLC in the form of a
$50,000,000 addition to the Company's previously existing $50,950,000 financing
facility, which increased the aggregate outstanding balance of the Company's
loan to $100,950,000. The loan proceeds were used to pay the sellers mortgage of
$18,944,920, financing costs of $7,487,210(including structuring and advisory
fees of $6,825,000 paid to Credit Suisse First Boston Mortgage Capital LLC),
$5,713,629 of outstanding trade accounts payable, the cash portion of the
purchase price of $4,165,000 and miscellaneous unrelated payments of $174,875.
In addition, residential construction, interest, tax and insurance escrow
accounts totaling $13,514,366 were established with the loan proceeds.
The Company has agreed to issue 3,812,000 shares of the Company's
common stock to Credit Suisse First Boston Mortgage Capital LLC as additional
consideration for structuring and advisory fees related to the financing used to
fund the Arlington purchase.
Summary Table
Attached as Appendix C to this Proxy Statement/Information Statement is
a detailed table summarizing all transactions with affiliated persons and
significant shareholders over the past two years. Shareholders are directed to
this table for a more detailed description the loan and management fee
transactions discussed above.
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. Also Messrs.
Stanchina and LaGrange each filed one Form 4 report late.
EMPLOYMENT AGREEMENTS
In connection with the US Golf transaction, the Company signed and
delivered an agreement employing Duane Marchant as a Vice President with
supervisory responsibilities for the Company's St. George-area projects. As a
result of a civil action filed by the Securities and Exchange Commission against
the Company and Mr. Marchant, Mr. Marchant resigned as an officer, director and
employee of the Company in December 1997.
In December 1997, the Company entered into an employment agreement
with Mr. Warren Stanchina to employ Mr. Stanchina as president and Chief
Executive officer of the Company at an annual base salary of $250,000 with bonus
possibilities in the discretion of the Board of Directors for a term of 3 years.
10
<PAGE>
In addition, the Company agreed to issue to Mr. Stanchina 360,000 options to
purchase the Company's Common Stock upon the closing date of the reverse
acquisition transaction with US Golf. The exercise price of these options is
$2.34 based on the average of the closing bids for the ten (10) consecutive
trading days prior to the closing date of the reverse acquisition transaction
plus 10%. The options will vest one-third on the date of the grant and the
remaining two-thirds equally over two years, commencing one year from the date
of grant. As yet, no options have been granted to Mr. Stanchina.
In December 1997, the Company entered into an employment agreement
with Mr. Eric LaGrange to employ Mr. LaGrange as Executive Vice President and
Chief Operating officer of the Company at an annual base salary of $100,000 with
bonus possibilities in the discretion of the Board of Directors for a term of 3
years. In addition, the Company agreed to issue to Mr. LaGrange 150,000 options
to purchase the Company's Common Stock upon the closing date of the reverse
acquisition transaction with US Golf. The exercise price of these options is
$2.34 based on the average of the closing bids for the ten (10) consecutive
trading days prior to the closing date of the reverse acquisition transaction
plus 10%. The options will vest one-third on the date of the grant and the
remaining two-thirds equally over two years, commencing one year from the date
of grant. As yet, no options have been granted to Mr. LaGrange.
In December 1997, the Company entered into a one-year consulting
agreement with Mr. Wolfgang Duren. Mr. Duren is required to perform business,
financing and shareholder advice to the Company in connection with the business
activities of the Company as well as partnership issues, tax and legal,
especially for the foreign investors of the Company. Mr. Duren will receive
consulting fees in the amount of $15,000 per month for the first seven (7)
months of the Initial Term of the agreement and $8,333 per month thereafter.
SETTLEMENTS WITH MILTEX INDUSTRIES AND BANQUE SCS
In connection with the obtaining of the Shareholder consents just
described, and in connection with requirements of the Credit Suisse First Boston
loan facilities described in the Annual Report to Shareholders, the Company
entered into settlement agreements with Miltex Industries and Banque SCS
Alliance S.A. The Company agreed to issue and deliver 100,000 restricted shares
of Common Stock to Banque SCS, and 325,000 restricted common shares to Miltex
Industries. These shares were valued at $1.69 per share as agreed with the
settling parties. Other cash consideration was given to settle claims by these
entities against the Company and to obtain rights and concessions on the
Company's real property in order to facilitate the delivery of adequate
collateral Boston. These claims by Miltex Industries and by Banque SCS were made
for the first time in connection with approaches made in June 1998, and were not
settled until the closing of the Credit Suisse First Boston loan facilities on
July 2, 1998. Thus these claims were not reflected in the audited financial
statements of the Company as of December 31, 1997.
11
<PAGE>
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 the total numbers of shares of the
Company's outstanding securities at the Record Date. Such percentages are
computed in accordance with Rule 13d-3 of the Securities Exchange Act of 1934,
as amended). The "Total Common Stock Votes" refers to the total common share
votes able to be cast at a meeting of Shareholders as of Record Date by the
holders of the securities shown. <TABLE> <CAPTION>
Table 3
PRINCIPAL SHAREHOLDERS OF THE COMPANY
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
Name and Address Title of Class Amount and Nature of Percent Percent of Total
Beneficial Ownership of Class Possible Common
Share Votes
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
<S> <C> <C> <C> <C>
Credit Suisse First Boston Mortgage Capital LLC(6) Common Stock 13,648,182 shares 55.5 26.6
11 Madison Avenue held directly
5th Floor
New York, New York 10010
- --------------------------------------------- ----------------------- ---------------------- ----------- --------------------
American Resources and Common Stock 1,277,000 shares 5.2 2.5
Development Company ("ARDCO") (4) held directly
102 West 500 South
Suite 400
Salt Lake City, Utah 84101
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
Banque SCS Alliance SA(1,2,3) Common Stock 5,237,990 shares 21.3 10.2
P.O. Box 880 held directly
1211 Geneva 3, and indirectly(1,3)
Switzerland
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
Maricopa Hardy Development Group, Inc. (5) Common Stock 3,432,713 shares 13.9 6.7
10621 Airport Pulling Road North held directly
Suite 1
Naples, Florida 34109
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
Warren and Mary Lynn Stanchina Series D Preferred 1,306,614 shares 19.6 10.2
255 S. Orange Avenue Stock held indirectly
Orlando, Florida 32801
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
Dr. Wolfgang Duren Series D Preferred 1,267,307 shares 19.0 9.9
255 South Orange Avenue Stock held directly
Orlando, Florida 32801
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
Dr. Michael Wiedemann Series D Preferred 614,470 9.2 4.7
Eberlestr. 3 Stock
81477 Munich
Germany
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
Hermann Flachsman Series D Preferred 659,195 9.8 5.1
Kaiserstr. 16 Stock
74072 Heilbronn
Germany
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
Thomas Rimbach Series D Preferred 512,433 7.6 3.9
Hermann Gmeinerstr. 16 Stock
81929 Munich
Germany
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
Nicolaus Kummer Series D Preferred 336,609 5.0 2.6
Autohaus Augsburg (BMW) Stock
86199 Augsburg
Germany
- ---------------------------------------------- ----------------------- ---------------------- ----------- --------------------
</TABLE>
SEE FOOTNOTES ON NEXT PAGE
12
<PAGE>
1 Banque SCS is disclosed in ARDCO's Annual Report on Form 10-KSB
filed in August 1998 to own an approximately 26% common stock
interest in ARDCO. ARDCO's 1,277,000 shares of the Company's Common
Stock are attributed in this Table to Banque SCS as a beneficial
owner and "affiliate" of ARDCO. Banque SCS' shares, above, also
include 245,746 shares of the Company's Common stock held by SB
Trust, Leland McCullough, Trustee, 10 East South Temple Street, Salt
Lake City, Utah 84133, which the Company believes are included within
the 1,277,000 shares disclosed for ARDCO.
2 The Company has requested information about the beneficial owners
of the Company securities held by Banque SCS. Banque SCS has declined
to provide this information to the Company, citing Swiss secrecy
laws.
3 Banque SCS appears to act as agent for Miltex Industries, and the
shares shown for Banque SCS include404,857 shares of the Company's
common stock beneficially owned at the Record Date by Miltex
Industries, attn. Camille Froideaux, Budinet & Associates, 20 Rue
Seneber, P.B. 166, 1211 Geneva, Switzerland..
4 As of July 24, 1998, as reported in its own Annual Report on Form
10-KSB filed in August 1998, ARDCO owned 1,277,000 shares of the
Company's commons stock. As reported in that Annual Report the
following persons are the significant beneficial shareholders of
ARDCO:
<TABLE>
<CAPTION>
Name Number of Shares Percentage of ARDCO
<S> <C> <C>
Banque SCS Alliance SA 848,362 26.38%
P.O. Box 880
12111 Geneva 3, Switzerland
George H. Badger 592,237 18.42%
102 West 500 South, Suite 318
Salt Lake City, UT 84101
Don Pickett, agent for 181,860 6.2%
Mindon Investment and The
Stella Trust
P. O. Box 58548
Salt Lake City, UT 84101
Karl F. Badger 71,320 1.43%
102 West 500 South, Suite 318
Salt Lake City, UT 84101
Barry L. Papenfuss 208,566 4.52%
3855 South 500 West #R
Salt Lake City, UT 84115
Timothy M. Papenfuss 113,823 2.43%
3855 South 500 West #R
Salt Lake City, UT 84115
B. Willes Papenfuss 78,974 1.64%
123 13 Southeast Wagoner Street
Portland, OR 97236
Jeffrey S. Harden 151,809 4.72%
17942 St. Clair Drive
Lake Oswego, OR 97034
Robert Mintz 213,333 6.63%
30 Otter Trail
West Port, CT 06880
</TABLE>
5 The beneficial owners of Maricopa Hardy Development Inc. are
Robert Paul Hardy, David Mobley, Sr. and Rene Tolson.
6 Credit Suisse/First Boston is a division of the Credit Suisse
Group, a publicly traded company listed on the Zurich stock
exchange.
-------------------------------
The Company has previously announced its acquisition of the Arlington
Lakes project in Texas. In connection with that acquisition, the Company issued
$17,804,583 in two convertible notes to the two affiliated sellers. If these
convertible notes were to be converted into common shares of the Company at the
date of this Proxy Statement/Information Statement, which they have not been,
the holders of these notes would be issued a total of 11,400,000 shares of
Common Stock, which would represent approximately 15% of the fully diluted
issued and outstanding common shares.
13
<PAGE>
ACTIONS PREVIOUSLY TAKEN BY WRITTEN CONSENT
Under Utah law, shareholders who, in the aggregate, are able to
cast the total required number of common share votes needed to constitute
Shareholder action on a matter may take such action by written consent without
the need for a meeting of the Shareholders. Under the requirements of the
Securities Exchange Act and rules promulgated thereunder by the Commission, any
such action by written consent without a shareholders meeting must be the
subject of an information statement to all of the shareholders prior to the
effective date of the action(s) taken by written consent.
This Proxy Statement/Information Statement is provided, in part, to
meet the Commission's information statement requirements with respect to the
following items of Shareholder action that were adopted as of June 9, 1998 by
written consent, to become effective on November __, 1998. The form and text of
the Action by Shareholder Written Consent dated June 9, 1998 is attached to this
Proxy Statement / Information Statement at Appendix "B". The Shareholders
executing and delivering the Action by Shareholder Written Consent, as a group,
beneficially owned issued and outstanding securities in of the Company capable
of casting in excess of 71% of all possible common share votes at June 9, 1998.
None of the consent items called for class or series voting of the preferred
stock.
The Company undertook to obtain written consents from the holders
of more than a majority of the Company's voting securities on the following
matters in order to close on its loan facility with Credit Suisse First Boston
on July 2, 1998. These actions were conditions to the closing and were actions
needed faster than could be obtained through the proxy solicitation and
shareholders meeting process.
THE COMPANY IS NOT SOLICITING PROXIES WITH RESPECT TO THE ACTIONS TAKEN
BY WRITTEN CONSENT THAT ARE DISCUSSED IN THIS COMBINED PROXY STATEMENT
/ INFORMATION STATEMENT. SUCH ACTIONS HAVE ALREADY BEEN APPROVED BY THE
REQUISITE SHAREHOLDER ACTION. PROXIES ARE NOT SOLICITED WITH RESPECT TO
THE CONSENT ITEMS, BUT ONLY AS TO THOSE MATTERS FOR SHAREHOLDER ACTION
AT THE SHAREHOLDER MEETING.
The following information is provided to explain the background
behind each action taken by written consent and the effects of each such action:
14
<PAGE>
COMPLETED CONSENT ACTION ITEM NO. 1: APPROVAL AND RATIFICATION OF THE BOARD OF
DIRECTORS' PRIOR DESIGNATION AND ISSUANCE
OF SERIES A, B, C, AND D CONVERTIBLE
PREFERRED STOCK
Background
The Company's articles of incorporation create a class of capital
securities called "preferred stock" but do not explicitly authorize the Board of
Directors to issue such preferred stock in different series or classes. Other
sections of the articles of incorporation provide broad latitude to the Board of
Directors in connection with the issuance of shares of capital stock for
consideration deemed by the Board to be fair. On four occasions in the past, the
Board of Directors designated a series of preferred stock with special voting,
common stock conversion and dividend features. These were the Company's Series
A, B, C, and D Preferred Stocks.
The Board of Directors has been advised by legal counsel that the
absence of authority in the Company's articles of incorporation to create
different series of preferred stock means that all four of the previously issued
series of preferred stocks may have been ultra vires and void. Under the same
legal analysis, the Common Stock issued on the conversion of any such preferred
stock is also void and invalidly issued. Legal counsel also advised the Board of
Directors that a majority of the outstanding Common Stock, including a majority
of the Common Stock issued and outstanding at the time of the creation of the
four series of Preferred Stock (excluding common shares obtained through the
exercise of preferred stock) is needed to ratify each series of preferred stock
to render the shares held by those shareholders valid and legal.
The Series A Preferred Stock
In March 1993, the Company issued a total of 29,084 shares of Series A
Preferred Stock to a small number of investors for cash consideration. Prior to
the Record Date, in July 1998, the Company called all outstanding Series A
Preferred Stock for redemption, and as of the Record Date the outstanding
certificates representing Series A Preferred Stock had ceased to represent
outstanding securities of the Company, but only the right to receive the
redemption price in cash..
The Series B Preferred Stock
Since 1993, the Company has issued a total of 287,767 shares of Series
B Preferred Stock to Banque SCS Alliance SA and to Miltex Industries for cash
consideration and as fees for loans to the company. As of the Record Date, there
were no shares of Series B Preferred Stock outstanding. All such shares have
been previously converted into common stock. (See "Significant Shareholders",
above.)
The Series C Preferred Stock
The Company issued its Series C Preferred Stock to a small number of
investors to raise needed development funds for the Company. The Company has
redeemed all of the Series C Preferred Stock prior to the end of fiscal year
1997, and there were no shares of Series C Preferred Stock outstanding at the
Record Date.
15
<PAGE>
The Series D Preferred Stock
On November 26, 1997, the Company issued and delivered 6,672,576 shares
of a new Series D Preferred Stock to the shareholders of U.S. Golf Communities,
Inc. ("US Golf") in return for all of the outstanding equity of US Golf, thus
acquiring US Golf and its golf course properties as wholly owned property of the
Company. (The Company has filed reports concerning its reverse acquisition of US
Golf, including audited financial statements for US Golf at December 31, 1996
and pro forma financial statements for the Company and US Golf as of September
30, 1997, by means of Form 8-K filings with the Commission, as amended. The
Company has also filed combined financial statements showing the effects of the
US Golf transaction for the year ended December 31, 1997 in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997, as amended. Combined
operations for US Golf and the Company have also been reported on in the
Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998,
as amended. Copies of the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997, as amended, as well as a summary report of operating
results for the first six months of 1998, as amended have been included in the
Annual Report to Shareholders sent together with this Proxy
Statement/Information Statement.)
In connection with the closing of the Credit Suisse/First Boston loans
on July 2, 1998, the Company was required to cause the ratification of all four
of the previously issued series of preferred stock to be done by shareholder
written consent.
THE ACTION BY WRITTEN CONSENT ON ITEM NO. 1
As of June 9, 1998, Shareholders beneficially owning securities able to
cast in excess of 71% of the total common share votes of the Company voted to
ratify the creation and issuance of the Series A, Series B, Series C, and Series
D Preferred Stock, as well as to ratify and approve the issuance of those shares
of common stock issued prior to June 9, 1998 in conversion of Series A and
Series B Preferred Stock into Common Stock. The group of Shareholders signing
this action by written consent included the shareholders who held a majority of
the outstanding common shares at the times of issuance of each of the series of
Preferred Stock being ratified. These ratifications will not become effective
until at least 20 days has passed since the mailing of this Proxy
Statement/Information Statement to the shareholders.
16
<PAGE>
COMPLETED CONSENT ACTION ITEM NO. 2: APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION INCREASING THE
NUMBER OF AUTHORIZED SHARES OF THE
COMPANY'S COMMON STOCK FROM 25,000,000
SHARES TO 100,000,000 SHARES.
THE NEED FOR MORE SHARES
The US Golf Agreement. In its agreement with the shareholders of US
Golf, the Company agreed to issue and deliver a total of 26,690,319 shares of
restricted Common Stock in exchange for all of the issued and outstanding stock
of US Golf. The Company had only 25,000,000 authorized shares, and only
19,309,976 authorized but unissued shares at the time of closing of the US Golf
transaction, and anticipated calling a shareholders meeting for the purpose of
increasing the available common stock prior to closing with US Golf. There was
insufficient time to process and mail a proxy statement meeting regulatory
requirements for a shareholders meeting prior to the time the parties desired to
close the transaction, so US Golf and the Company renegotiated the merger
agreement to provide for 6,672,576 shares of Series D Convertible Preferred
Stock to be issued to the US Golf shareholders in return for all of the
outstanding stock of US Golf. Each Series D Preferred share is convertible into
4 shares of the Company's Common Stock at the time the Company obtains an
increase in its authorized Common Stock sufficient to accommodate such
conversion, equaling the agreed total of 26,690,319 shares of Common Stock. The
Company agreed with US Golf that it would use its best efforts to call and hold
a shareholders meeting at the earliest possible time to seek approval of an
increase in the authorized Common Stock to 100,000,000 shares.
The Pelican Strand Acquisition. Since the closing with US Golf, the
Company has issued an additional 3,432,713 shares of Common Stock to Maricopa
Hardy Development Company to acquire the Company's interest in Pelican Strand.
(See Annual Report to Shareholders.)
The Credit Suisse First Boston Loan Transaction. On July 2, 1998,
the Company entered into a loan agreement and a stock agreement with Credit
Suisse First Boston Mortgage Capital LLC ("Credit Suisse First Boston") under
the terms of which the Company obtained property development loans of
$86,550,000 secured by its golf course properties, and in consideration therefor
issued 13,648,182 restricted shares of Common Stock and agreed to issue
additional restricted shares of Common Stock to Credit Suisse First Boston upon
the happening of certain events.
Other Issuances. The Company has also issued or agreed to issue
3,054,762 additional shares of Common Stock to several third parties, not
including Miltex Industries, Banque SCS, Credit Suisse First Boston or Maricopa
Hardy Development Company since November 25, 1997, most of which issuances or
commitments to issue were undertaken in connection with the closing of the
Credit Suisse First Boston loan transactions..
Stock Option Agreements. The Company has entered into employment
agreements with Messrs. Stanchina and LaGrange providing for the future grant to
these key officers of stock options covering an additional 520,000 shares of
Common Stock. These are non-qualified options exercisable at $ 2.34 per share.
In addition, the Company's Board of Directors has approved the Long-Term
Equity-Based Incentive Plan which reserves 3,000,000 shares of Common Stock for
use in stock-based incentive awards to key employees and management. (See Item 2
for Shareholder Approval, below)
17
<PAGE>
Because the Articles of Incorporation of the Company currently
provide for a only 25,000,000 shares of Common Stock to be issued, compared to
total issuances and commitments of over 54,000,000 as of the date hereof, there
was a need to amend the articles of incorporation of the Company to increase the
number of authorized shares of Common Stock. The 100,000,000 share level was
sought to cover all of the current commitments as well as to give management
flexibility to use the Company's Common Stock in future acquisitions and
financing transactions if that was deemed in the best interests of the
shareholders by the Board of Directors.
The Board of Directors considers the increase in the number of
authorized shares desirable because these amendments give the Board the
necessary flexibility to issue Common Stock in connection with stock dividends
and splits, acquisitions, financings and employee benefits and for other general
corporate purposes without the expense and delay incidental to obtaining
shareholder approval of an amendment to the Certificate increasing the number of
authorized shares at the time of such action, except as may be required for a
particular issuance by applicable law or by the rules of any stock exchange on
which the Company's securities may then be listed.
The Board of Directors desired the flexibility to create separate
series of preferred stock as a financing tool for the Company. In the past, the
Company has found it to be needful to create and issue four series of preferred
stock. The new authority will clarify that the Board of Directors has the legal
power to do so, and will clarify the legal validity of securities issued as part
of a series of preferred stock.
NO PRE-EMPTIVE RIGHTS AND NO UNANNOUNCED CURRENT PLANS TO ISSUE SHARES.
The shareholders of the Company do not have any preemptive rights
with respect to the issuance of any additional shares of Common Stock, and the
shares of Common Stock authorized pursuant to this action by written consent
likewise contains no preemptive rights. Other than as disclosed elsewhere in
this Proxy Statement, the Company has no current plans, understandings or
agreements regarding stock dividends and splits, acquisitions, financings and
employee benefits that would cause the Company to issue any of the additional
shares of Common Stock authorized by this action by written consent, nor to
issue or create any new series of Preferred Stock.
DILUTIVE EFFECT OF ISSUANCE OF ADDITIONAL SHARES
The authorization of the additional shares of Common Stock, will
have a dilutive effect upon the proportionate voting power of the present
shareholders of the Company. For example, Credit Suisse First Boston now is the
beneficial owner of approximately 55% of the outstanding Common Stock, but it
will own only approximately one-half (1/2) of that percentage after all of the
issuances that are awaiting the approval of the additional authorized Common
Stock. To the extent that shares are subsequently issued to persons other than
the present shareholders and/or in proportions other than the proportion that
presently exists, such issuance could have a substantial dilutive effect on
present shareholders.
The Board of Directors of the Company believes, however, that the
increased authorized shares will provide several long-term benefits to the
Company and its shareholders in addition to allowing the Company to meet its
contractual obligations to the US Golf shareholders and to Credit Suisse/First
Boston, including the flexibility to pursue acquisitions in exchange for Common
Stock of the Company. While the Company has no specific plans, proposals,
understandings or agreements for any such acquisition, other than as previously
announced and/or discussed herein, the issuance of additional shares of Common
Stock for an acquisition may have a dilutive effect on earnings per share and
book value per share, as well as a dilutive effect on the voting power of
existing shareholders. The Company would expect that any such dilutive effect on
earnings per share and/or book value per share would be relatively short-term in
duration.
18
<PAGE>
ANTI-TAKEOVER EFFECT
The issuance of additional shares of Common Stock or the creation
and issuance of special series of Preferred Stock by the Company also may
potentially have an anti-takeover effect by making it more difficult to obtain
shareholder approval of various actions, such as a merger. The increase in the
number of authorized shares of Common Stock could enable the Board of Directors
to render more difficult an attempt by another person or entity to obtain
control of the Company, though the Board of Directors has no present intention
of issuing additional shares for such purposes and has no present knowledge of
any such takeover efforts. Special series of Preferred Stock are components of
what are popularly known as "poison pill" anti-take over measures. There is no
current plan by the Board of Directors to implement a "poison pill" anti-take
over program or anything similar using a new series of Preferred Stock.
THE ACTION TAKEN BY WRITTEN CONSENT ON ITEM NO. 2
As of June 9, 1998, Shareholders beneficially owning securities
able to cast in excess of 71% of the total common share votes of the Company
signed and delivered written consents to approve an amendment to the Company's
articles of incorporation to increase the authorized Common Stock from
25,000,000 shares to 100,000,000 shares, and also to provide the Board of
Directors explicit flexibility to create one or more series of preferred stock
with differing conversion, dividend and preference rights. The actual wording of
the action by shareholder consent is as follows:
"ARTICLE IV
CAPITALIZATION
(a) 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.
(b) The Board of Directors by resolution duly adopted may designate
and provide for one or more series of Preferred Stock, each series
having such conversion rights, dividends and preferences as may be
provided by designation of the Board of Directors. Any such action by
the Board of Directors designating a series of Preferred Stock shall
be filed with the Division of Corporations and shall not be effective
prior to such filing."
This increase in the number of authorized shares of Common Stock will become
effective no less than 20 days from the date this Proxy Statement/Information
Statement was mailed to the Shareholders.
19
<PAGE>
COMPLETED CONSENT ACTION ITEM NO. 3: APPROVAL OF AN AMENDMENT TO THE COMPANY
ARTICLES OF INCORPORATION TO CHANGE THE
NAME OF THE COMPANY TO "GOLF COMMUNITIES
OF AMERICA, INC."
GENERAL
The US Golf reorganization agreement calls for the Company's name
to be changed to "Golf Communities of America, Inc.", which is a name which
better reflects the business of the Company. The Board of Directors approved and
recommended to the Shareholders the following amendment to the Company's
Articles of Incorporation to implement the name change:
"ARTICLE I
CORPORATE NAME"
"The name of this Corporation is Golf Communities of America, Inc."
THE ACTION BY WRITTEN CONSENT ON ITEM NO. 3
As of June 9, 1998, Shareholders beneficially owning securities
able to cast in excess of 71% of the total common share votes of the Company
executed and delivered written consents to approve an amendment to the Company's
articles of incorporation to change the Company's name to "Golf Communities of
America, Inc." The amendment will not become effective until at least 20 days
following the mailing of this Proxy Statement/Information Statement to the
Shareholders.
There will be no effect on the outstanding securities of the
Company, and share certificates denominated "Golf Ventures, Inc." will continue
to be recognized as securities of the Company even after the change in the
Company's name. The Company has not decided whether to seek a new trading symbol
for its common stock as traded now on the Non-NASDAQ Over-the-Counter Bulletin
Board. Moreover, although the Company intends to seek listing on the NASDAQ,
there is no current plan to change the trading symbol even if NASDAQ listing
takes place.
[This Space Left Blank Intentionally]
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PROPOSALS FOR SHAREHOLDER ACTION AT THE SHAREHOLDERS MEETING
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 1998 Shareholders Meeting. While no formal procedure exists
with respect to nominations for Director outside of the Shareholders Meeting,
Shareholders are free to write to the Board of Directors, c/o Mary Lynn
Stanchina, Corporate Secretary, at the Company's Orlando, Florida address.
The three (3) persons named in Table 4, below, have been nominated
as Directors by the current Board for election at the Shareholders Meeting, to
serve until the next Shareholders 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.
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 Shareholders Meeting through proxies will be voted FOR the
election of such other person(s) as the Board of Directors may nominate at the
Shareholders Meeting, or the current Directors may conclude to reduce the number
of Directors to be elected.
The previous Board of Directors elected Mssrs. Stanchina and Duren
to their present term of office on November 25, 1997. The Board of Directors
elected Ms. Stanchina as a Director in December 1997 to respond to the
resignation of Duane Marchant as a director.
There is set forth below in Table 4 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.
Table 4
NOMINEES FOR DIRECTOR
WARREN STANCHINA, 50, is President and Chief Executive Officer of the Company,
and serves as Chairman of the Board of Directors. Mr. Stanchina joined the
Company in November 1997 as a result of the US Golf acquisition transaction. He
was a founder of US Golf and its various subsidiary entities which operate
properties under the US Golf corporate umbrella, and continues as Chief
Executive Officer and Chairman of the Board of Directors of US Golf, now a
wholly-owned operating subsidiary of the Company. Mr. Stanchina is the
beneficial owner of no shares of the Company's Common Stock, and 1,306,614
shares of Series D Preferred Stock, including in these totals no shares subject
to stock options which are exercisable within 60 days of the Record Date.
WOLFGANG DUREN, 54, is a paid consultant and a Director of the Company. Dr.
Duren is a citizen of Germany where he has an active law and investment advisory
practice. He has worked with Mr. Stanchina for the past seven years in building
the US Golf group of operating entities, and holds the same positions with US
Golf that he now holds in the Company. Dr. Duren is the beneficial owner of no
shares of the Company's Common Stock, and 1,267,307 shares of Series D Preferred
Stock, including in these totals no shares subject to stock options which are
exercisable within 60 days of the Record Date.
MARY LYNN STANCHINA, 42, is Vice President, Secretary and Chief Administrative
Officer of the Company. She also sits on the Board of Directors, having been
elected in December 1998 upon the resignation of Duane Marchant. Mrs. Stanchina
is the spouse of Warren Stanchina, and has been active in the development and
management of US Golf in the same positions that she now holds with the Company
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for the last several years. Ms. Stanchina is the beneficial owner of no shares
of the Company's Common Stock, and 1,306,614 shares of Series D Preferred Stock,
including in these totals no shares subject to stock options which are
exercisable within 60 days of the Record Date. Ms. Stanchina's shares of Series
D Preferred Stock include the shares that are beneficially owned by her husband,
Warren Stanchina.
Shareholder Approval
Once a quorum is declared present at the Shareholders Meeting, the
three nominees for Director who receive the largest numbers of affirmative votes
cast will be elected as the Company's Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH OF THE ABOVE
NOMINEES. SHAREHOLDERS HAVING VOTING AUTHORITY OVER IN EXCESS OF
27,000,000 COMMON SHARE VOTES, CONSTITUTING OVER 51% OF THE TOTAL
POSSIBLE COMMON SHARE VOTES TO BE CAST AT THE SHAREHOLDERS MEETING
HAVE INDICATED TO THE COMPANY THEIR INTENTION TO VOTE IN FAVOR OF ALL
OF THE ABOVE NOMINEES.
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
prior to the US Golf transaction, 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. 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 "A" to this Proxy Statement/Information
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.
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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 November __, 2008, 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
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
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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 transferable. 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.
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
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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
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.
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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 Shareholders 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 CURRENT MANAGEMENT AND 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, except for
the Employment Agreements with Messrs. Stanchina and LaGrange under which stock
options are called for when the Plan is approved by the Shareholders. (See
"CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS, Employment Agreements",
above).
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 20.1% of the
total Company common share votes.
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 IN EXCESS OF 27,000,000
COMMON SHARE VOTES, OR 51% OF THE TOTAL COMMON SHARE VOTES POSSIBLE
AT THE SHAREHOLDERS MEETING, HAVE INDICATED TO MANAGEMENT THEIR
INTENTION TO VOTE IN FAVOR OF THE PLAN.
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/Information Statement. This report includes
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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/Information Statement, may be directed to Jo
Stanchina, Secretary, Golf Ventures, Inc., 255 South Orange Avenue, Orlando,
Florida 32801.
DEADLINE FOR SHAREHOLDER PROPOSALS
If any Shareholder wishes to present a proposal for action at the
1999 Shareholders Meeting, 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 December 31, 1999. Any proposal must be submitted in
writing by Certified Mail -- Return Receipt Requested, to Golf Ventures, Inc.,
Attention: Secretary, 255 South Orange Avenue, Suite 1515, Orlando, Florida
32801.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has sent to each Shareholder along with this Proxy
Statement/Information Statement a copy of the Company's 1998 Annual Report to
Shareholders. The major part of this Annual Report is the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997, and a summary report
concerning the results of the Company for the first six months of 1998. The
Company hereby incorporates into this Proxy Statement/Information Statement its
1998 Annual Report to Shareholders.
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APPENDIX "A"
THE GOLF VENTURES EQUITY-BASED LONG TERM 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 17, 1997 and approved by the
Shareholders on ______________ , 1998
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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.
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(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").
(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.
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(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.
(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 portion 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)
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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,
(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
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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 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.
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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
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.
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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
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).
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<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
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<PAGE>
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 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
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 shall effect the
cashless exercise.
(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.
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<PAGE>
(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.
(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.
(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
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<PAGE>
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
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.
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<PAGE>
SECTION 6. Stock Appreciation Rights.
(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.
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<PAGE>
(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.
(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.
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<PAGE>
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.
(a) The purchase price for shares of Restricted
Stock shall be equal to or less than their
par value and may be zero.
(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:
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"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 any cash dividends. The Committee,
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<PAGE>
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
44
<PAGE>
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
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
45
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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.
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
46
<PAGE>
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 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
47
<PAGE>
(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 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.
(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.
48
<PAGE>
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.
49
<PAGE>
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
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.
(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.
50
<PAGE>
(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.
(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.
51
<PAGE>
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.
52
<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 October, 1998.
/s/ Warren Stanchina
------------------------------------
Chairman and Chief Executive Officer
53
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Golf Ventures, Inc.
a Utah Corporation
ACTION BY WRITTEN CONSENT OF
CERTAIN SHAREHOLDERS
June 9, 1998
Pursuant to the authority granted in Section 16-10a-704 of the Revised
Utah Business Corporation Act, the undersigned shareholders of Golf Ventures,
Inc. ("the Company") do take, adopt, approve and ratify the following actions by
our written consent, based on our beneficial ownership of in excess of a
majority of all issued and outstanding voting securities of the Company,
measured at all relevant dates.
WHEREAS there are a total of 10,068,538 shares of Common Stock issued and
outstanding as of the date hereof, of which the undersigned (7,966,147
shares of Common Stock) constitute, in the aggregate, the legal and
beneficial owners of in excess of 79% of such shares of Common Stock; and
WHEREAS there are a total of 6,672,578 shares of Series D Preferred Stock
issued and outstanding as of the date hereof, of which the undersigned
(4,549,988 shares) constitute, in the aggregate, the legal and beneficial
owners of in excess of 68% of the outstanding Series D shares; and
WHEREAS there are a total of 36,758,850 common share votes able to be cast
at a meeting of the Shareholders of the Company by the holders of the
outstanding Common Stock and the outstanding Series D Preferred Stock as
of the date hereof, and the undersigned constitute, in the aggregate, the
legal and beneficial owners of 26,166,099 common share votes, or in excess
of 71% of all such possible common share votes; and
WHEREAS all of the Series B and Series C Preferred Stock ever issued by
the Company has been redeemed or converted into Common Stock; and
WHEREAS the Series A Preferred Stock is nonvoting stock, not entitled to
vote under Utah law, and its rights to convert into Common Stock expired
at March 1, 1998; and
WHEREAS legal counsel to the Company has advised that the Series A, Series
B, Series C and Series D Preferred Stock of the Company may not have been
legally or validly issued, and that any and all common stock heretofore
issued in conversion of any of such Preferred Stock also may not have been
legally or validly issued; and WHEREAS on December 28, 1992, as noted in
the minutes of a shareholders meeting held on that date, the following
actions were noted and taken:
(1) the Company had 5,046,540 shares of Common Stock issued and
outstanding, and no preferred stock; and
54
<PAGE>
(2) the Company's Shareholders effected as of that date a 1 for
10 reverse split of all outstanding shares, resulting in 504,654
shares of Common Stock issued and outstanding; and
(3) the Company's Shareholders approved the issue of 3,273,728
shares of new Common Stock (on a post reverse split basis) to
Leasing Technology, Inc. as partial consideration for title to
the Red Hawk, Cotton Acres and Cotton Manor projects in Southern
Utah; and
(4) the Company's Shareholders approved the change of the
Company's name to Golf Ventures, Inc.
WHEREAS on December 31, 1992, the Board of Directors of the Company issued
3,273,728 shares of Common Stock to Leasing Technology, Inc. and also
authorized an offering of 350,000 shares of Series A Preferred Stock at
$5.00 per share; and
WHEREAS Leasing Technology, Inc. later changed its name to American
Resources and Development Company, Inc. ("ARDCO"); and
WHEREAS on December 31, 1992 ARDCO and Olympus Investment Corp. were the
legal and beneficial owner of in excess of 80% of the total issued and
outstanding voting securities of the Company; and
WHEREAS ARDCO and Olympus Investment Corp. continued to beneficially own
in excess of 50% of the outstanding Common Stock of the Company and in
excess of 50% of the common share votes of the Company during the period
of time in which the Company's Board of Directors designated and caused to
be issued the Series B and Series C Preferred Stocks; and
WHEREAS ARDCO, Olympus Investment Corp. and Banque SCS Alliance SA, in the
aggregate, were the beneficial owners of in excess of 50% of the Common
Stock of the Company and in excess of 50% of the possible common share
votes of the Company at the time the Board of Directors designated and
caused to be issued the Series D Preferred Stock; and
WHEREAS assuming the recusal of all currently outstanding shares of Series
D Preferred Stock and all shares of Common Stock issued in conversion of
any shares of the Series A or Series B Preferred Stock prior to the date
hereof, the undersigned shareholders were, in the aggregate, the legal and
beneficial owners of in excess of 70% of all then possible common share
votes; and
WHEREAS class voting is not permitted or required for the Shareholder
actions taken hereby,
55
<PAGE>
SERIES A PREFERRED STOCK
BE IT THEREFORE RESOLVED that all currently issued and outstanding shares
of Series A Preferred Stock are hereby ratified and validated.
COMMON STOCK ISSUED IN CONVERSION OF SERIES A PREFERRED STOCK
All Common Stock previously issued in conversion of Series A Preferred
Stock will be exchanged for, and the Corporation shall issue, new shares
of Common Stock in the same names and same denominations.
SERIES B PREFERRED STOCK
BE IT THEREFORE RESOLVED all shares of Series B Preferred Stock are hereby
ratified and validated, and that all currently issued and outstanding
shares of Common Stock previously issued in conversion of Series B
Preferred Stock is hereby ratified and validated, with no further action
by the holders thereof.
COMMON STOCK ISSUED IN CONVERSION OF SERIES B PREFERRED STOCK
All Common Stock previously issued in conversion of Series B Preferred
Stock will be exchanged for, and the Corporation shall issue, new shares
of Common Stock in the same names and same denominations.
SERIES C PREFERRED STOCK
BE IT THEREFORE RESOLVED that all shares of Series C Preferred Stock are
hereby ratified and validated.
SERIES D PREFERRED STOCK
BE IT THEREFORE RESOLVED that all currently issued and outstanding shares
of Series D Preferred Stock are hereby ratified and validated, and that
certificates representing four (4) shares of validly and legally issued
Common Stock shall be issued in exchange for certificates representing the
currently issued and outstanding Series D Preferred Stock.
INCREASE IN AUTHORIZED COMMON STOCK, CREATION OF SERIES A PREFERRED STOCK,
AND CREATION OF "BLANK CHECK" PREFERRED STOCK AUTHORITY
BE IT FURTHER RESOLVED that the Articles of Incorporation of the Company
be and they are hereby amended to read as follows:
"ARTICLE IV
CAPITALIZATION
(a) 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.
(b) The Board of Directors by resolution duly adopted may designate and
provide for one or more series of Preferred Stock, each series having such
conversion rights, dividends and preferences as may be provided by
56
<PAGE>
designation of the Board of Directors. Any such action by the Board of
Directors designating a series of Preferred Stock shall be filed with the
Division of Corporations and shall not be effective prior to such filing."
CHANGE OF NAME OF THE COMPANY
BE IT FURTHER RESOLVED that the Articles of Incorporation of the Company
be and they are hereby amended to read as follows:
"ARTICLE I
CORPORATE NAME"
"The name of this Corporation is Golf Communities
of America, Inc."
BE IT FURTHER RESOLVED that, at the effective time provided below, the
officers of the Company be and they are hereby authorized and directed to
prepare, execute and file articles of amendment, in the form and substance
attached hereto, with the State of Utah, to effect the changes to the Company's
Articles of Incorporation approved herein.
BE IT FURTHER RESOLVED that the effective date of these Actions by Written
Consent is 20 days from the date on which the subject matter of these actions
has been communicated in writing to the Shareholders generally as required by
Section14(c) of the Securities Exchange Act of 1934.
Date: June 9, 1998
AMERICAN RESOURCES AND DEVELOPMENT COMPANY, INC. (367,746 common)
By: /s/ Karl Badger
------------------------
Its: Authorized Officer
OLYMPUS INVESTMENT CORP. (45,587 common)
By: /s/ Camille Froideaux
--------------------------
Its: Authorized Officer
57
<PAGE>
BANQUE SCS ALLIANCE SA (3,715,244 common)
By: /s/ G. Guyon Krug
---------------------
Its: Authorized Officer
MILTEX INDUSTRIES (404,857 common)
By: /s/ Camille Froideaux
------------------------
Its: Authorized Officer
MARICOPA HARDY DEVELOPMENT GROUP, INC. (3,432,713 common)
By: /s/ Robert Paul Hardy
-------------------------
Its: Authorized Officer
/s/ Michael Wiedemann /s/ Hermann Flachsmann
- ------------------------------------ ---------------------------------
Dr. Michael Wiedemann (614,470 "D") Hermann Flachsmann (659,195 "D")
/s/ Wolfgang Duren /s/ Nico Kummer
- ------------------------------------------ --------------------------
Wolfgang Duren, Nico Kummer (336,609 "D")
personally and as trustee (1,969,709 "D")
Double Eagle Properties, Ltd. (1,306,614 "D")
By: /s/ Warren Stanchina /s/ Thomas Rimbach
---------------------- -----------------------------
Its: Authorized Officer Thomas Rimbach (512,433 "D")
58
<PAGE>
APPENDIX B
FORM OF ACTION BY WRITTEN SHAREHOLDER CONSENT
59
<PAGE>
Golf Ventures, Inc.
a Utah Corporation
ACTION BY WRITTEN CONSENT OF
CERTAIN SHAREHOLDERS
June 9, 1998
Pursuant to the authority granted in Section 16-10a-704 of the Revised
Utah Business Corporation Act, the undersigned shareholders of Golf Ventures,
Inc. ("the Company") do take, adopt, approve and ratify the following actions by
our written consent, based on our beneficial ownership of in excess of a
majority of all issued and outstanding voting securities of the Company,
measured at all relevant dates.
WHEREAS there are a total of 10,068,538 shares of Common Stock issued and
outstanding as of the date hereof, of which the undersigned (7,966,147
shares of Common Stock) constitute, in the aggregate, the legal and
beneficial owners of in excess of 79% of such shares of Common Stock; and
WHEREAS there are a total of 6,672,578 shares of Series D Preferred Stock
issued and outstanding as of the date hereof, of which the undersigned
(4,549,988 shares) constitute, in the aggregate, the legal and beneficial
owners of in excess of 68% of the outstanding Series D shares; and
WHEREAS there are a total of 36,758,850 common share votes able to be cast
at a meeting of the Shareholders of the Company by the holders of the
outstanding Common Stock and the outstanding Series D Preferred Stock as
of the date hereof, and the undersigned constitute, in the aggregate, the
legal and beneficial owners of 26,166,099 common share votes, or in excess
of 71% of all such possible common share votes; and
WHEREAS all of the Series B and Series C Preferred Stock ever issued by
the Company has been redeemed or converted into Common Stock; and
WHEREAS the Series A Preferred Stock is nonvoting stock, not entitled to
vote under Utah law, and its rights to convert into Common Stock expired
at March 1, 1998; and
WHEREAS legal counsel to the Company has advised that the Series A, Series
B, Series C and Series D Preferred Stock of the Company may not have been
legally or validly issued, and that any and all common stock heretofore
issued in conversion of any of such Preferred Stock also may not have been
legally or validly issued; and WHEREAS on December 28, 1992, as noted in
the minutes of a shareholders meeting held on that date, the following
actions were noted and taken:
(1) the Company had 5,046,540 shares of Common Stock issued and
outstanding, and no preferred stock; and
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<PAGE>
(2) the Company's Shareholders effected as of that date a 1 for
10 reverse split of all outstanding shares, resulting in 504,654
shares of Common Stock issued and outstanding; and
(3) the Company's Shareholders approved the issue of 3,273,728
shares of new Common Stock (on a post reverse split basis) to
Leasing Technology, Inc. as partial consideration for title to
the Red Hawk, Cotton Acres and Cotton Manor projects in Southern
Utah; and
(4) the Company's Shareholders approved the change of the
Company's name to Golf Ventures, Inc.
WHEREAS on December 31, 1992, the Board of Directors of the Company issued
3,273,728 shares of Common Stock to Leasing Technology, Inc. and also
authorized an offering of 350,000 shares of Series A Preferred Stock at
$5.00 per share; and
WHEREAS Leasing Technology, Inc. later changed its name to American
Resources and Development Company, Inc. ("ARDCO"); and
WHEREAS on December 31, 1992 ARDCO and Olympus Investment Corp. were the
legal and beneficial owner of in excess of 80% of the total issued and
outstanding voting securities of the Company; and
WHEREAS ARDCO and Olympus Investment Corp. continued to beneficially own
in excess of 50% of the outstanding Common Stock of the Company and in
excess of 50% of the common share votes of the Company during the period
of time in which the Company's Board of Directors designated and caused to
be issued the Series B and Series C Preferred Stocks; and
WHEREAS ARDCO, Olympus Investment Corp. and Banque SCS Alliance SA, in the
aggregate, were the beneficial owners of in excess of 50% of the Common
Stock of the Company and in excess of 50% of the possible common share
votes of the Company at the time the Board of Directors designated and
caused to be issued the Series D Preferred Stock; and
WHEREAS assuming the recusal of all currently outstanding shares of Series
D Preferred Stock and all shares of Common Stock issued in conversion of
any shares of the Series A or Series B Preferred Stock prior to the date
hereof, the undersigned shareholders were, in the aggregate, the legal and
beneficial owners of in excess of 70% of all then possible common share
votes; and
WHEREAS class voting is not permitted or required for the Shareholder
actions taken hereby,
SERIES A PREFERRED STOCK
BE IT THEREFORE RESOLVED that all currently issued and outstanding shares
of Series A Preferred Stock are hereby ratified and validated.
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<PAGE>
COMMON STOCK ISSUED IN CONVERSION OF SERIES A PREFERRED STOCK
All Common Stock previously issued in conversion of Series A Preferred
Stock will be exchanged for, and the Corporation shall issue, new shares
of Common Stock in the same names and same denominations.
SERIES B PREFERRED STOCK
BE IT THEREFORE RESOLVED all shares of Series B Preferred Stock are hereby
ratified and validated, and that all currently issued and outstanding
shares of Common Stock previously issued in conversion of Series B
Preferred Stock is hereby ratified and validated, with no further action
by the holders thereof.
COMMON STOCK ISSUED IN CONVERSION OF SERIES B PREFERRED STOCK
All Common Stock previously issued in conversion of Series B Preferred
Stock will be exchanged for, and the Corporation shall issue, new shares
of Common Stock in the same names and same denominations.
SERIES C PREFERRED STOCK
BE IT THEREFORE RESOLVED that all shares of Series C Preferred Stock are
hereby ratified and validated.
SERIES D PREFERRED STOCK
BE IT THEREFORE RESOLVED that all currently issued and outstanding shares
of Series D Preferred Stock are hereby ratified and validated, and that
certificates representing four (4) shares of validly and legally issued
Common Stock shall be issued in exchange for certificates representing the
currently issued and outstanding Series D Preferred Stock.
INCREASE IN AUTHORIZED COMMON STOCK, CREATION OF SERIES A PREFERRED STOCK,
AND CREATION OF "BLANK CHECK" PREFERRED STOCK AUTHORITY
BE IT FURTHER RESOLVED that the Articles of Incorporation of the Company
be and they are hereby amended to read as follows:
"ARTICLE IV
CAPITALIZATION
(a) 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.
(b) The Board of Directors by resolution duly adopted may designate and
provide for one or more series of Preferred Stock, each series having such
conversion rights, dividends and preferences as may be provided by
designation of the Board of Directors. Any such action by the Board of
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<PAGE>
Directors designating a series of Preferred Stock shall be filed with the
Division of Corporations and shall not be effective prior to such filing."
CHANGE OF NAME OF THE COMPANY
BE IT FURTHER RESOLVED that the Articles of Incorporation of the Company
be and they are hereby amended to read as follows:
"ARTICLE I
CORPORATE NAME"
"The name of this Corporation is Golf Communities of America, Inc."
BE IT FURTHER RESOLVED that, at the effective time provided below, the
officers of the Company be and they are hereby authorized and directed to
prepare, execute and file articles of amendment, in the form and substance
attached hereto, with the State of Utah, to effect the changes to the Company's
Articles of Incorporation approved herein.
BE IT FURTHER RESOLVED that the effective date of these Actions by Written
Consent is 20 days from the date on which the subject matter of these actions
has been communicated in writing to the Shareholders generally as required by
Section14(c) of the Securities Exchange Act of 1934.
Date: June 9, 1998
AMERICAN RESOURCES AND DEVELOPMENT COMPANY, INC. (367,746 common)
By: /s/ Karl Badger
-------------------------------
Its: Authorized Officer
OLYMPUS INVESTMENT CORP. (45,587 common)
By: /s/ Camille Froideaux
-------------------------------
Its: Authorized Officer
BANQUE SCS ALLIANCE SA (3,715,244 common)
By: /s/ G. Guyon Krug
-------------------------------
Its: Authorized Officer
63
<PAGE>
MILTEX INDUSTRIES (404,857 common)
By: /s/ Camille Froideaux
-------------------------------
Its: Authorized Officer
MARICOPA HARDY DEVELOPMENT GROUP, INC. (3,432,713 common)
By: /s/ Robert Paul Hardy
-------------------------------
Its: Authorized Officer
/s/ Michael Wiedemann /s/ Hermann Flachsmann
- ------------------------------- ------------------------------
Dr. Michael Wiedemann (614,470 "D") Hermann Flachsmann (659,195 "D")
/s/ Wolfgang Duren /s/ Nico Kummer
- ------------------------------- ------------------------------
Wolfgang Duren, Nico Kummer (336,609 "D")
personally and as trustee (1,969,709 "D")
Double Eagle Properties, Ltd. (1,306,614 "D")
By: /s/ Warren Stanchina /s/ Thomas Rimbach
- ------------------------------- ------------------------------
Its: Authorized Officer Thomas Rimbach (512,433 "D")
64
<PAGE>
APPENDIX C
SUMMARY TABLE SHOWING INTERESTED PERSON TRANSACTIONS
65
<PAGE>
<TABLE>
<CAPTION>
Year of Description of Amount of
Name Transaction Transaction (5) Transaction
- ---- ----------- --------------- -----------
<S> <C> <C> <C>
Credit Suisse First
Boston Mortgage
Capital LLC 1998 -July 2 note payable financing $50,950,000
September 3 note payable financing $50,000,000
-Issuance of 13,651,710 shares
of Company common stock for
loan costs in July 2, loan
closing $19,112,394
-Accrual of loan costs for July 2,
loan closing $6,298,250
-Payment of loan costs in July 2,
loan closing $2,716,805
-Issuance of 3,812,000 shares
of Company common stock for
loan costs in September 3,
loan closing $5,718,000
Payment of loan costs in
September 3, 1998 loan closing $6,825,000
American Resources
and Development
Company 1998 Promise of the issuance of
862,000 shares of
Common Stock in July 1998
Settlement $1,456,780
Maricopa Hardy
Development Group,
Inc. 1998 -Accrued fee under
management contract between
Maricopa Hardy Development
Group, Inc. and operating
subsidiary of the Company $450,000
1997 -Accrued fee under
management contract between
Maricopa Hardy Development
Group, Inc. and operating
subsidiary of the Company $50,000
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<PAGE>
Warren and Mary Lynn
Stanchina 1998 -Cash payment under management
contract between Stanchina-owned
entity and operating subsidiary of
the Company $85,000
1997 -Cash payment under management
contract between Stanchina-owned
entity and operating subsidiary of
the Company $235,000
-Accrued fee under management
contract between
Stanchina-owned entity and
operating subsidiary of the
Company $434,312
-Management fee under contract
between Stanchina-owned entity
and operating subsidiary of the
Company outstanding at
December 31, 1997 $1,313,429
1996 -Cash payment under management
contract between Stanchina-owned
entity and operating subsidiary of
the Company $234,000
-Accrued fee under
management contract between
Stanchina-owned entity and
operating subsidiary of the
Company $521,226
-Management fee under contract
between Stanchina-owned entity
and operating subsidiary of the
Company outstanding at
December 31, 1996 $1,026,203
Dr. Wolfgang Duren 1998 -Note payable repayment $145,884
-Accrued note payable interest $10,997
-Accrued interest repayment $28,830
-Cash payment under management
contract between Duren-owned
entity and operating subsidiary of
the Company $96,000
-Accrued fee under
management contract between
Duren-owned entity and
operating subsidiary of the
Company $98,333
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<PAGE>
1997 -Note payable repayment $113,525
-Accrued note payable interest $32,094
-Accrued interest repayment $19,610
-Cash payment under management
contract between Duren-owned
entity and operating subsidiary of
the Company $45,000
-Accrued fee under
management contract between
Duren-owned entity and
operating subsidiary of the
Company $150,288
-Management fee under contract
between Duren-owned entity and
operating subsidiary of the
Company outstanding at
December 31, 1997 $611,877
1996 -Note payable borrowing $87,409
-Accrued note payable interest $33,780
-Cash payment under management
contract between Duren-owned
entity and operating subsidiary of
the Company $6,000
-Accrued fee under
management contract between
Duren-owned entity and
operating subsidiary of the
Company $152,574
-Management fee under contract
between Duren-owned entity and
operating subsidiary of the
Company outstanding at
December 31, 1996 $465,303
Michael Weidemann 1998 -Accrued note payable interest $52,164
1997 -Accrued note payable interest $75,000
-Conversion of accrued interest
to equity $225,127
1996 -Note payable borrowing $50,000
-Note payable repayment $300,000
-Accrued note payable interest $71,639
-Accrued interest repayment $31,600
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<PAGE>
Hermann Flachsmann 1998 -Note payable borrowing $413,409
-Note payable repayment $4,350,202
-Accrued note payable interest $176,950
-Accrued interest repayment $536,486
1997 -Conversion of note payable to equity
$2,400,000
1998 -Note payable repayment $100,000
-Accrued note payable interest $508,342
-Accrued interest repayment $26,265
-Conversion of accrued interest
to equity $350,000
1996 -Note payable borrowing $646,301
-Note payable repayment $50,443
-Accrued note payable interest $656,696
-Accrued interest repayment $31,328
Thomas Rimbach 1998 -Note payable repayment $2,869,182
-Accrued note payable interest $221,200
-Accrued interest repayment $83,055
1997 -Note payable borrowing $27,505
-Conversion of note payable to
equity $2,613,373
-Accrued note payable interest $860,504
-Accrued interest repayment $147,338
-Conversion of accrued interest
to equity $212,700
1996 -Note payable borrowing $5,600,000
-Note payable repayment $1,000,000
-Accrued note payable interest $748,916
-Accrued interest repayment $603,563
69
<PAGE>
Nicolaus Kummer
Autohaus Augsburg
(BMW) 1998 -Note payable borrowing $50,000
-Note payable repayment $500,000
-Accrued note payable interest $51,756
1997 -Note payable borrowing $922,000
-Conversion of note payable to
equity $950,000
-Accrued note payable interest $136,512
1996 -Note payable borrowing $450,000
-Note payable repayment $200,000
-Accrued note payable interest $120,856
-Accrued interest repayment $125,000
Miltex Industries 1998 -Note payable repayment $200,962
-Accrued note payable interest $190,030
-Accrued interest repayment $373,498
1997 -Note payable borrowing $3,649,630
-Accrued note payable interest $183,468
Minneola Harber Hills(1) 1998 -Accrued note payable interest $100,109
-Accrued interest repayment $248,744
1997 -Accrued note payable interest $147,000
-Accrued interest repayment $186,830
1996 -Note payable borrowing $280,000
-Accrued note payable interest $140,690
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<PAGE>
MKR(2) 1998 -Note payable borrowing $1,052,488
-Note payable repayment $1,916,778
-Conversion of note payable to
equity $263,063
-Accrued note payable interest $75,671
-Accrued interest repayment $98,032
1997 -Conversion of note payable to
equity $1,083,143
-Note payable repayment $1,145,076
-Accrued note payable interest $227,068
-Accrued interest repayment $234,707
1996 -Note payable borrowing $3,355,572
-Accrued note payable interest $95,000
-Accrued interest repayment $65,000
Palisades Golf Partners(3) 1998 -Accrued note payable interest $3,033
1997 -Accrued note payable interest $5,200
1996 -Accrued note payable interest $5,200
Pelican Strand Ltd.(4) 1998 -Note payable borrowing $3,382,570
</TABLE>
- --------------------------------------------
(1) Minneola Harber Hills is a partnership partially owned by Dr. Wolfgang
Duren
(2) MKR is a german joint venture entity owned by Thomas Rimbach, Nicolaus
Kummer and one other related party person
(3) Palisades Golf Partners is a partnership partially owned by Warren and
Mary Lynn Stanchina, Dr. Wolfgang Duren, Hermann Flachsmann, Michael
Weidemann, Thomas Rimbach and Nicolaus Kummer
(4) Pelican Strand Ltd. is a partnership partially owned by the principals of
Maricopa Hardy Development Group, Inc.
(5) For outstanding balances of notes payable to related parties, see Item 6-
"Management's Discussion & Analysis of Financial Condition & Results of
Operations" in the Company's Annual Report to Shareholders, a copy of
which is sent with this Proxy Statement/Information Statement
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<PAGE>
Golf Ventures, Inc.
255 Orange Avenue
Orlando, Florida
P R O X Y
This Proxy Is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Warren Stanchina and Wolfgang
Duren, and each of them, with full power of substitution, to vote as designated
below, all shares of Golf Ventures, Inc. common or preferred stock owned of
record by the undersigned at the 1998 Shareholders Meeting of Golf Ventures,
Inc. to be held on November __, 1998 at 10:00 A.M. (Eastern Time) at The Club at
Pelican Street located at 5840 Strand Blvd., Naples, Florida 34110, or at any
adjournment thereof, on all matters that may properly come before the
Shareholders Meeting. (Each Shareholder of Record should have received a Proxy
Statement/Information Statement with this Proxy Designation and Instruction Card
describing the proposals for shareholder action at the Meeting.)
IN THE ABSENCE OF DIRECTIONS TO THE CONTRARY, THE DESIGNATED PROXIES WILL VOTE
FOR EACH OF THE FOUR PROPOSALS FOR SHAREHOLDER ACTION.
For Against Abstain
1. On the proposal to elect Warren Stanchina
as a Director of the Company |_| |_| |_|
On the proposal to elect Wolfgang Duren
as a Director of the Company |_| |_| |_|
On the proposal to elect Mary Lynn Stanchina
as a Director of the Company |_| |_| |_|
2. On the proposal to approve the Golf Ventures
Long Term Equity-Based Incentive Plan |_| |_| |_|
DATE OF
THIS PROXY :___________________, 1998 THIS PROXY DESIGNATION AND INSTRUCTION
MAY BE REVOKED BY A MORE RECENTLY DATED
PROXY DESIGNATION AND INSTRUCTION, 0R
BY WRITTEN NOTICE TO THE SECRETARY OF
GOLF VENTURES, INC. PRIOR TO THE ANNUAL
MEETING, OR BY APPEARING AT THE SPECIAL
MEETING AND VOTING IN PERSON
- ---------------------------------
Signature
- ---------------------------------
Print Name
- ---------------------------------
Joint Tenant (if any)
- ---------------------------------
Print Name
(When signing as a Trustee, Executor Corporate Office, or General
Partner, please give full title on the "joint tenant" line.)
72
