<PAGE>
As filed with the Securities and Exchange
Commission on August 15, 1997
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------
NATIONAL GOLF PROPERTIES, INC.
MARYLAND 95-4549193
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2951 28th Street, Suite 3001
Santa Monica, California 90405
(Address of principal executive offices) (Zip Code)
----------
THE 1995 INDEPENDENT DIRECTOR EQUITY PARTICIPATION PLAN OF
NATIONAL GOLF PROPERTIES, INC.
THE 1997 EQUITY PARTICIPATION PLAN OF NATIONAL GOLF PROPERTIES,
INC., NATIONAL GOLF OPERATING PARTNERSHIP, L.P. AND AMERICAN GOLF
CORPORATION
----------
Copy to:
WILLIAM C. REGAN JOHN M. NEWELL, ESQ.
Vice President - Controller and Treasurer Latham & Watkins
National Golf Properties, Inc. 633 West Fifth Street
2951 28th Street, Suite 3001 Suite 4000
Santa Monica, California 90405 Los Angeles, California 90071
(310) 664-4100 (213) 485-1234
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Calculation of Registration Fee
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Proposed
Amount Proposed Maximum
of Shares Maximum Aggregate Amount of
Title of Each Class of to be Offering Price Offering Registration
Securities to be Registered Registered Per Share (1) Price(1) Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$.01 par value 948,000 $30.125 $28,558,500 $8,655
</TABLE>
(1) Estimated based on a bona fide estimate of the maximum offering price
of $30.125 solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) of the Securities Act of 1933, as amended.
<PAGE>
PART I
Item 1. Plan Information
Not required to be filed with this Registration Statement.
Item 2. Registrant Information and Employee Plan Annual Information
Not required to be filed with this Registration Statement.
PART II
Item 3. Incorporation of Documents by Reference
The following documents filed with the Securities and Exchange
Commission (the "Commission") by National Golf Properties, Inc., a Maryland
corporation (the "Company" and the "Registrant"), are incorporated as of their
respective dates in this Registration Statement by reference:
(a) The Annual Report of the Company on Form 10-K for its fiscal
year ended December 31, 1996;
(b) The Quarterly Reports of the Company on Form 10-Q for its
quarterly periods ended March 31, 1997 and June 30, 1997; and
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-B filed with the
Commission on December 29, 1995.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, are incorporated by reference in this
registration statement and are a part hereof from the date of filing such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
2
<PAGE>
Item 6. Indemnification of Directors and Officers
The Company's Articles of Incorporation authorize the Company to
indemnify its present and former directors and officers and to pay or reimburse
expenses in advance of the final disposition of a proceeding to the maximum
extent permitted from time to time by the laws of the State of Maryland. The
Company's Bylaws obligate the Company to indemnify present and former directors
and officers to the maximum extent permitted by Maryland law. The Company's
Bylaws also permit the Company to provide indemnification to a present or former
director or officer who served a predecessor of the Company in such capacity,
and to any employee or agent of the Company or a predecessor of the Company. The
Maryland General Corporation Law (the "MGCL") permits a corporation to indemnify
its present and former directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless it is established that (a) the
act or omission of the director or officer was material to the matter giving
rise to the proceeding and was committed in bad faith or was the result of
active and deliberate dishonesty, (b) the director or officer actually received
an improper personal benefit in money, property or services, or (c) in the case
of any criminal proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful. In addition, the MGCL requires
the Company, as conditions to advancing expenses, to obtain (i) a written
affirmation by the director or officer of his or her good faith belief that he
or she has met the standard of conduct necessary for indemnification by the
Company as authorized by the Company's Bylaws and (ii) a written statement by or
on his or her behalf to repay the amount paid or reimbursed by the Company if it
shall ultimately be determined that the standard of conduct was not met. Under
the MGCL, rights to indemnification and expenses are non-exclusive, in that they
need not be limited to those expressly provided by statute. As a result, under
the MGCL and the Company's Bylaws, the Company is permitted to indemnify its
directors, officers, employees and other agents, within the limits established
by law and public policy, pursuant to an express contract, bylaw provision,
stockholder vote or otherwise.
Because the indemnification provisions of the Company's Articles
and Bylaws are tied to applicable Maryland law, they may be modified by future
changes in such law without further stockholder action. The Company's Bylaws
provide that amendment or repeal of the indemnification provisions of the
Company's Bylaws would be effective on a prospective basis only and neither
repeal nor modification of such provisions would adversely affect rights to
indemnification in effect at the time of any act or omission which is the
subject of a proceeding against an indemnified person.
The MGCL and the Company's Bylaws may permit indemnification for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act. The Board of Directors of the Company has
been advised that, in the opinion of the Commission, indemnification for
liabilities arising under the Securities Act or the Exchange Act is contrary to
public policy and is therefore unenforceable, absent a decision to the contrary
by a court of appropriate jurisdiction.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
4.1 The 1995 Independent Director Equity Participation Plan of
National Golf Properties, Inc.
4.2 The 1997 Equity Participation Plan of National Golf
Properties, Inc., National Golf Operating Partnership, L.P.
and American Golf Corporation
5.1 Opinion of Latham & Watkins
3
<PAGE>
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Latham & Watkins (included as part of Exhibit
5.1)
24.1 Power of Attorney (included on page 5)
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the Registration Statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused the Registration
Statement to be signed on its behalf by the undersigned, thereunto authorized,
in the City of Santa Monica, State of California on the 15th day of August,
1997.
National Golf Properties, Inc.
By: /s/ RICHARD C. PRICE
--------------------
Richard C. Price
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, hereby constitutes and appoints Richard C. Price and William C.
Regan and each acting alone, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments or
supplements to this Registration Statement and to file the same with all
exhibits thereto and other documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing necessary or
appropriate to be done with respect to this Registration Statement or any
amendments or supplements hereto in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ DAVID G. PRICE Chairman of the Board of August 15, 1997
- ------------------ Directors
David G. Price
/s/ RICHARD C. PRICE President and Director August 15, 1997
- --------------------
Richard C. Price
/s/ NEIL M. MILLER Vice President-Finance August 15, 1997
- ------------------
Neil M. Miller
/s/ WILLIAM C. REGAN Vice President-Controller August 15, 1997
- -------------------- and Treasurer
William C. Regan
/s/ RICHARD A. ARCHER Director August 15, 1997
- ---------------------
Richard A. Archer
5
<PAGE>
Signature Title Date
--------- ----- ----
/s/ JOHN C. CUSHMAN, III Director August 15, 1997
- ------------------------
John C. Cushman, III
/s/ BRUCE KARATZ Director August 15, 1997
- ----------------
Bruce Karatz
/s/ CHARLES S. PAUL Director August 15, 1997
- -------------------
Charles S. Paul
/s/ EDWARD R. SAUSE Director August 15, 1997
- -------------------
Edward R. Sause
6
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
- -------
4.1 The 1995 Independent Director Equity Participation Plan
of National Golf Properties, Inc.
4.2 The 1997 Equity Participation Plan of National Golf
Properties, Inc., National Golf Operating
Partnership, L.P. and American Golf Corporation
5.1 Opinion of Latham & Watkins
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Latham & Watkins
(included in Exhibit 5.1)
24.1 Power of Attorney (included on page 5)
<PAGE>
EXHIBIT 4.1
THE 1995 INDEPENDENT DIRECTOR EQUITY PARTICIPATION PLAN
OF
NATIONAL GOLF PROPERTIES, INC.
National Golf Properties, Inc., a Delaware corporation, has
adopted The 1995 Independent Director Equity Participation Plan of National Golf
Properties, Inc. (the "Plan"), effective May 1, 1995, for the benefit of its
Independent Directors (as such term is defined below).
The purposes of this Plan are as follows:
(1) To provide an additional incentive for Independent
Directors to further the growth, development and financial success of the
Company by benefiting Independent Directors through the ownership of Company
stock and/or rights which recognize such growth, development and financial
success.
(2) To enable the Company to obtain and retain the services of
Independent Directors, considered essential to the long range success of the
Company by offering them an opportunity to own stock in the Company and/or
rights which will reflect the growth, development and financial success of the
Company.
ARTICLE I
DEFINITIONS
1.1 General. Wherever the following terms are used in this
-------
Plan they shall have the meaning specified below, unless the context clearly
indicates otherwise.
1.2 Board. "Board" shall mean the Board of Directors of the
-----
Company.
1.3 Code. "Code" shall mean the Internal Revenue Code of 1986,
----
as amended.
1.4 Common Stock. "Common Stock" shall mean the common stock
------------
of the Company, par value $.01 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding any warrants,
options or other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.
1.5 Company. "Company" shall mean National Golf Properties,
-------
Inc., a Delaware corporation, and any successor thereto by merger or otherwise.
1.6 Director. "Director" shall mean a member of the Board.
--------
1.7 Employee. "Employee" shall mean any officer or other
--------
employee (as defined in accordance with Section 3401(c) of the Code) of the
Company, or of any corporation which is a Subsidiary.
1.8 Exchange Act. "Exchange Act" shall mean the Securities
------------
Exchange Act of 1934, as amended.
<PAGE>
1.9 Fair Market Value. "Fair Market Value" of a share of
-----------------
Common Stock as of a given date shall be the average of the daily market price
for the trading day on which the purchase of such share by the exercising party
is consummated. The market price for each such trading day shall be: (i) if the
shares of Common Stock are listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System, the closing price, regular way,
on such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day, (ii) if the shares of Common Stock are
not listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System, the last reported sale price on such day or, if
no sale takes place on such day, the average of the closing bid and asked prices
on such day, as reported by a reliable quotation source designated by the
Company, or (iii) if the shares of Common Stock are not listed or admitted to
trading on any securities exchange or the NASDAQ-National Market System and no
such last reported sale price or closing bid and asked prices are available, the
average of the reported high bid and low asked prices on such day, as reported
by a reliable quotation source designated by the Company, or if there shall be
no bid and asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than 10 days prior to
the date in question) for which prices have been so reported; provided that if
there are no bid and asked prices reported during the 10 days prior to the date
in question, the Fair Market Value of the shares of Common Stock shall be
determined by the Company acting in good faith on the basis of such quotations
and other information as it considers, in its reasonable judgment, appropriate.
1.10 Independent Director. "Independent Director" shall mean a
--------------------
member of the Board who is not an Employee of the Company.
1.11 Option. "Option" shall mean a stock option
------
granted under Article III of this Plan.
1.12 Optionee. "Optionee" shall mean an Independent Director
--------
granted an Option under this Plan.
1.13 Plan. "Plan" shall mean The 1995 Independent Director
----
Equity Participation Plan of National Golf Properties, Inc.
1.14 Restricted Stock. "Restricted Stock" shall mean Common
----------------
Stock awarded under Article VI of this Plan.
1.15 Restricted Stockholder. "Restricted Stockholder" shall
----------------------
mean an Independent Director granted an award of Restricted Stock under Article
VI of this Plan.
1.16 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule
----------
16b-3 under the Exchange Act, as such Rule may be amended from time to time.
1.17 Subsidiary. "Subsidiary" shall mean any corporation in an
----------
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
1.18 Termination of Directorship. "Termination of
---------------------------
Directorship" shall mean the time when an Optionee or Restricted Stockholder who
is an Independent Director ceases to be a Director for any reason, including,
but not by way of limitation, a termination by resignation, failure to be
elected, death or retirement. The Board, in its sole and absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Directorship.
2
<PAGE>
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan.
----------------------
The shares of stock subject to Options and awards of
Restricted Stock, shall be Common Stock, initially shares of the Company's
Common Stock, par value $.01 per share. The aggregate number of such shares
which may be issued upon exercise of such options or rights or upon any such
awards under the Plan shall not exceed one hundred and forty eight thousand
(148,000); and one hundred forty eight thousand (148,000) shares of the
Company's common stock is hereby reserved and authorized for issuance pursuant
to the terms of this Plan. The shares of Common Stock issuable upon exercise of
such options or rights or upon any such awards may be either previously
authorized but unissued shares.
2.2 Unexercised Options and Other Rights. If any Option, or
------------------------------------
other right to acquire shares of Common Stock under any other award under this
Plan, expires or is cancelled without having been fully exercised, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration or cancellation may again
be optioned, granted or awarded hereunder.
ARTICLE III
GRANTING OF OPTIONS
3.1 No Incentive Stock Options. No Option granted under this
--------------------------
Plan shall qualify as an "incentive stock option" under Section 422 of the Code.
3.2 Granting of Options. Options shall be granted to each
-------------------
Independent Director as follows:
(a) At the first annual meeting of the Company following
the adoption of this Plan, each person who is then an
Independent Director automatically shall be granted an
Option to purchase two thousand (2,000) shares of Common
Stock (subject to adjustment as provided in Section 8.3).
(b) Except with respect to those persons who receive
grants under subsection (a), when a person is initially
elected to the Board and is then an Independent Director,
each such new Independent Director automatically shall be
granted an Option to purchase two thousand (2,000) shares
of Common Stock (subject to adjustment as provided in
Section 8.3) on the date of his or her election to the
Board. Members of the Board who are Employees who
subsequently terminate from employment with the Company
and remain on the Board will not receive an initial
Option grant pursuant to this subsection (b), but to the
extent they are otherwise eligible, will receive after
termination from employment with the Company Options as
described in subsection (c). Any person who becomes an
Independent Director of any successor company to the
Company and who, immediately prior to the transaction
rendering such successor a successor to the Company, was
an Independent Director of the Company will not be deemed
for purposes hereof to be a newly elected Independent
Director.
3
<PAGE>
(c) On November 15 of each year during the term of the
Plan, each then current Independent Director shall
automatically be granted an Option to purchase two
thousand (2,000) shares of Common Stock (subject to
adjustment as provided in Section 8.3).
All the foregoing Option grants authorized by this Section 3.2
are subject to stockholder approval of the Plan.
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement. Each Option shall be evidenced by a
----------------
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Board shall determine, consistent with this Plan.
4.2 Option Price. The price per share of the shares subject
------------
to each Option shall be 100% of the Fair Market Value of a share of Common Stock
on the date the Option is granted, without variation.
4.3 Option Term. The Option shall expire on the earlier of
-----------
(i) three months following the Optionee's Termination of Directorship or (ii)
the tenth anniversary of the date the Option is granted, without variation.
4.4 Option Vesting
--------------
(a) Each Option shall become exercisable on the first
anniversary of the date on which the Option was granted provided that the
Optionee has not had a Termination of Directorship during such period. Except as
provided in Section 8.4, there shall be no variation or acceleration of such
vesting.
(b) No portion of an Option which is unexercisable at
Termination of Directorship shall thereafter become exercisable.
4.5 Consideration. In consideration of the granting of an
-------------
Option, the Optionee shall agree, in the written Stock Option Agreement, to
serve as a Director of the Company for a period of at least one year after the
Option is granted. Nothing in this Plan or in any Stock Option Agreement
hereunder shall confer upon any Optionee any right to continue as a Director of
the Company, or shall interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to discharge any Optionee at any
time for any reason whatsoever, with or without good cause.
4.6 Ownership Limit and REIT Status. No Option shall be
-------------------------------
granted or exercised hereunder if the grant or exercise of such Option would
likely result in any of the following:
4
<PAGE>
(a) a violation of the restrictions or limitations on
ownership provided for from time to time under the terms of the organizational
documents of the Company; or
(b) income to the Company that could impair the Company's
status as a real estate investment trust, within the meaning of Section 856
through 860 of the Code.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise. An exercisable Option may be exercised
----------------
in whole or in part; provided, however, that each partial exercise shall be for
not less than 100 shares. An option shall not be exercisable with respect to
fractional shares.
5.2 Manner of Exercise. All or a portion of an exercisable
------------------
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his office:
(a) A written notice complying with the applicable rules
established by the Board stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion;
(b) Such representations and documents as the Board, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Board may, in its absolute
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant
to Section 8.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, at the discretion of the Board, the terms of the Option may (i) allow a
delay in payment up to thirty (30) days from the date the Option, or portion
thereof, is exercised; (ii) allow payment, in whole or in part, through the
delivery of shares of Common Stock owned by the Optionee, duly endorsed for
transfer to the Company with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof;
(iii) subject to the timing requirements of Section 5.3, allow payment, in whole
or in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration; (v)
allow payment, in whole or in part, through the delivery of a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Board, or (vi) allow payment through any combination
of the consideration provided in the foregoing subparagraphs (ii), (iii), (iv)
and (v). In the case of a promissory note, the Board may also prescribe the form
of such note and the security to be given for such note. The Option may not be
exercised, however, by delivery of a promissory note or by a loan from the
Company when or where such loan or other extension of credit is prohibited by
law.
5
<PAGE>
5.3 Certain Timing Requirements. At the discretion of the
---------------------------
Board, shares of Common Stock issuable to the Optionee upon exercise of the
Option may be used to satisfy the Option exercise price or the tax withholding
consequences of such exercise, in the case of persons subject to Section 16 of
the Exchange Act, only (i) during the period beginning on the third business day
following the date of release of the quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date or (ii) pursuant to an irrevocable written election by the
Optionee to use shares of Common Stock issuable to the Optionee upon exercise of
the Option to pay all or part of the Option price or the withholding taxes made
at least six months prior to the payment of such Option price or withholding
taxes.
5.4 Conditions to Issuance of Stock Certificates. The Company
--------------------------------------------
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Board shall, in its absolute discretion, deem
necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Board shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Board may establish from time to time for reasons
of administrative convenience; and
(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
5.5 Rights as Stockholders. The holders of Options shall not
----------------------
be, nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.
5.6 Ownership and Transfer Restrictions. The Board, in its
-----------------------------------
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Stock Option Agreement and may be referred to on the certificates evidencing
such shares. The Board may direct that the certificates evidencing shares
acquired by exercise of an Option refer to such requirement to give prompt
notice of disposition.
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Award of Restricted Stock
-------------------------
(a) Restricted Stock shall be granted to each Independent
Director as follows:
6
<PAGE>
(a) At the first annual meeting of the Company
following the adoption of this Plan, each person
who is then an Independent Director automatically
shall be granted two thousand (2,000) shares of
Restricted Stock (subject to adjustment as
provided in Section 8.3).
(b) Except with respect to those persons who
receive grants under subsection (a), when a person
is initially elected to the Board and is then an
Independent Director, each such new Independent
Director automatically shall be granted two
thousand (2,000) shares of Restricted Stock
(subject to adjustment as provided in Section 8.3)
on the date of his or her election to the Board.
Members of the Board who are Employees who
subsequently terminate from employment with the
Company and remain on the Board will not receive
an initial grant of Restricted Stock pursuant to
this subsection (b), but to the extent they are
otherwise eligible, will receive after termination
from employment with the Company Restricted Stock
awards as described in subsection (c). Any person
who becomes an Independent Director of any
successor company to the Company and who,
immediately prior to the transaction rendering
such successor a successor to the Company, was an
Independent Director of the Company will not be
deemed for purposes hereof to be a newly elected
Independent Director.
(c) On November 15 of each year during the term of
the Plan, each then current Independent Director
shall automatically be granted, five hundred (500)
shares of Restricted Stock (subject to adjustment
as provided in Section 8.3).
All the foregoing Restricted Stock awards authorized by this
Section 6.1 are subject to stockholder approval of the Plan.
(b) The purchase price shall be the par value per share,
payable in cash or by check. In all cases, legal consideration shall be required
for each issuance of Restricted Stock.
(c) Upon the dates set forth in subsection (a), the Board
shall instruct the Secretary of the Company to issue the Restricted Stock then
awarded pursuant to such subsection.
6.2 Restricted Stock Agreement. Restricted Stock shall be
--------------------------
issued only pursuant to a written Restricted Stock Agreement, which shall be
executed by the Independent Director and an authorized officer of the Company
and which shall contain such terms and conditions as the Board shall determine,
consistent with this Plan.
6.3 Consideration. In consideration of the awarding of
-------------
Restricted Stock, in addition to payment of any purchase price, the Restricted
Stockholder shall agree, in the written Restricted Stock Agreement, to serve as
a Director of the Company for a period of at least one year after the Restricted
Stock is issued. Nothing in this Plan or in any Restricted Stock Agreement
hereunder shall confer on any Restricted Stockholder any right to continue as a
Director of the Company, or shall interfere with or restrict in any way the
rights of the Company, which are hereby expressly reserved, to discharge any
Restricted Stockholder at any time for any reason whatsoever, with or without
good cause.
6.4 Rights as Stockholders. Upon delivery of the shares of
----------------------
Restricted Stock to the escrow holder pursuant to Section 6.9, the Restricted
Stockholder shall have, unless otherwise provided by the Board, all the rights
of a stockholder with respect to said shares, subject to the Restrictions
(defined below), including the right to receive all dividends and other
distributions paid or made with respect to the
7
<PAGE>
shares; provided, however, that in the discretion of the Board, any
-------- -------
extraordinary distributions with respect to the Common Stock shall be subject to
the Restrictions.
6.5 Restriction. All shares of Restricted Stock issued under
-----------
this Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall be subject to the following restrictions:
Neither the Restricted Stock nor any interest or right therein
or part thereof shall be liable for the debts, contracts, or
engagements of Independent Director or his successors in
interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or
any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted
disposition thereof shall be null and void and of no effect;
provided, however, that this Section 6.5 shall not prevent
transfers by will or by the applicable laws of descent and
distribution.
In addition, no share of Restricted Stock granted to a person subject to Section
16 of the Exchange Act shall be sold, assigned or otherwise transferred until at
least six months have elapsed from (but excluding) the date on which the
Restricted Stock was issued. (The restrictions set forth in this Section 6.5,
together with the right to repurchase set forth in Section 6.8 and any
additional restrictions imposed under the Restricted Stock Agreement, are
referred to herein as the "Restrictions.")
6.6 Lapse of Restrictions
---------------------
(a) The Restrictions on an award of Restricted Stock shall
lapse on the earlier of (i) the fifth anniversary of the date of such award
provided that the Restricted Stockholder has not has a Termination of
Directorship during such period and (ii) the Restricted Stockholder's normal
retirement at or after age 65. Except as provided in Section 8.4, there shall be
no variation or acceleration of the lapse of such Restrictions.
(b) Upon the lapse of the Restrictions with respect to any
shares of Restricted Stock, the Company shall cause new certificates with
respect to such shares to be issued and delivered to an Independent Director or
his legal representative, free from the legend provided for in Section 6.10 and
any of the other Restrictions. Notwithstanding the foregoing, no such new
certificate shall be delivered to an Independent Director or his legal
representative unless and until such Independent Director or his legal
representative shall have paid to the Company in cash the full amount of all
federal and state withholding or other employment taxes applicable to the
taxable income of the Independent Director resulting from the grant of
Restricted Stock or the lapse of the Restrictions.
6.7 Restrictions On New Shares
--------------------------
In the event that the outstanding shares of the Company's
Common Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation pursuant to
a merger of the Company into another corporation, or the exchange of all or
substantially all of the assets of the Company for the securities of another
corporation, or the acquisition by another corporation of 80% or more of the
Company's then outstanding voting stock, or the liquidation or dissolution of
the Company, or a stock split-up or stock dividend, such new or additional or
different shares or securities which are attributable to the Independent
Director in his capacity as the owner of the Restricted Stock, shall be
considered to be Restricted Stock and shall be subject to all of the
Restrictions.
8
<PAGE>
6.8 Repurchase of Restricted Stock. Immediately upon a
------------------------------
Termination of Directorship of a Restricted Stockholder, the Company shall have
the right to repurchase from the Restricted Stockholder the Restricted Stock
then subject to Restrictions, at a cash price per share equal to the price paid
by the Restricted Stockholder for such Restricted Stock; provided, however, that
-------- -------
no such right of repurchase shall exist in the event of a Termination of
Directorship following a Change in Control (as defined in Section 8.4(b) below)
or because of the Restricted Stockholder's normal retirement at or after age 65.
6.9 Escrow. The Secretary of the Company or such other escrow
------
holder as the Board may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the Restrictions with
respect to the shares evidenced by such certificate expire or shall have been
removed.
6.10 Legend. In order to enforce the Restrictions imposed upon
------
shares of Restricted Stock hereunder, the Board shall cause a legend or legends
to be placed on certificates representing all shares of Restricted Stock that
are still subject to Restrictions, which legend or legends shall make
appropriate reference to the conditions imposed thereby.
6.11 Section 83(b). A Restricted Stockholder may not make an
-------------
election under Section 83(b) of the Code with respect to the receipt of any
share of Restricted Stock.
6.12 Ownership Limit and REIT Status. No Restricted Stock
-------------------------------
shall be granted or vest hereunder if the grant or vesting of such Restricted
Stock would likely result in any of the following:
(a) a violation of the restrictions or limitations on
ownership provided for from time to time under the terms of the organizational
documents of the Company; or
(b) income to the Company that could impair the Company's
status as a real estate investment trust, within the meaning of Section 856
through 860 of the Code.
ARTICLE VII
ADMINISTRATION
7.1 Duties and Powers of Board. It shall be the duty of the
--------------------------
Board to conduct the general administration of this Plan in accordance with its
provisions. The Board shall have the power to interpret this Plan and the
agreements pursuant to which Options and awards of Restricted Stock are granted
or awarded, and to adopt such rules for the administration, interpretation, and
application of this Plan as are consistent therewith and to interpret, amend or
revoke any such rules. Any such grant or award under this Plan need not be the
same with respect to each Optionee or Restricted Stockholder.
7.2 Majority Rule. The Board shall act by a majority of its
-------------
members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Board.
7.3 Compensation; Professional Assistance; Good Faith
-------------------------------------------------
Actions. Members of the Board shall receive such compensation for their services
- -------
as members as may be determined by the Board. All expenses and liabilities which
members of the Board incur in connection with the administration of this Plan
shall be borne by the Company. The Board may, with the approval of the Board,
employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Board, the Company and the Company's officers and Directors shall
be entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the Board
in good faith shall be final and binding upon all Optionees and Restricted
Stockholders, the Company and all other interested persons. No
9
<PAGE>
members of the Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan, Options and awards
of Restricted Stock, and all members of the Board shall be fully protected by
the Company in respect of any such action, determination or interpretation.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Not Transferable. Options or Restricted Stock awards
----------------
under this Plan may not be sold, pledged, assigned, or transferred in any manner
other than by will or the laws of descent and distribution, unless and until
such rights or awards have been exercised, or the shares underlying such rights
or awards have been issued, and all Restrictions applicable to such shares have
lapsed. No Option or Restricted Stock award, or interest or right therein shall
be liable for the debts, contracts or engagements of the Optionee or Restricted
Stockholder or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect.
During the lifetime of the Optionee, only he may exercise an
Option (or any portion thereof) granted to him under the Plan. After the death
of the Optionee, any exercisable portion of an Option or other right or award
may, prior to the time when such portion becomes unexercisable under the Plan,
be exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's will or under the then applicable laws of descent
and distribution.
8.2 Amendment, Suspension or Termination of this Plan. The
-------------------------------------------------
Plan shall terminate on the date of the annual meeting of the Board immediately
following the tenth anniversary of the Board's adoption of this Plan. This Plan
may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Board, provided that the
provisions of the Plan relating to the timing and amount of Option and
Restricted Stock awards, the price of Options and Restricted Stock, the exercise
terms of Options and the Restrictions on Restricted Stock shall not be amended
more than once every six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended from time to
time, or rules thereunder. However, without approval of the Company's
stockholders given within twelve months before or after the action by the Board,
no action of the Board may, except as provided in Section 8.3, increase the
limits imposed in Section 2.1 on the maximum number of shares which may be
issued under this Plan, and no action of the Board may be taken that would
otherwise require stockholder approval as a matter of applicable law, regulation
or rule. No amendment, suspension or termination of this Plan shall, without the
consent of the holder of Options or Restricted Stock awards, alter or impair any
rights or obligations under any Options or Restricted Stock awards theretofore
granted or awarded, unless the award itself otherwise expressly so provides. No
Options or Restricted Stock may be granted or awarded during any period of
suspension or after termination of this Plan.
8.3 Changes in Common Stock or Assets of the Company. In the
------------------------------------------------
event that the outstanding shares of Common Stock are hereafter changed into or
exchanged for cash or a different number or kind of shares or other securities
of the Company, or of another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock splitup, stock
dividend, or combination of shares, appropriate adjustments shall be made by the
Board in the number and kind of shares for which Options and Restricted Stock
awards may be granted, including adjustments of the limitations in Section 2.1
and appropriate adjustments shall be made by the Board in the number and kind of
shares for the purchase of which Options or Restricted Stock are granted.
10
<PAGE>
In the event of such a change or exchange, other than for
shares or securities of another corporation or by reason of reorganization, the
Board, subject to the other provisions of this Plan, shall also make an
appropriate and equitable adjustment in the number and kind of shares as to
which all outstanding Options, or portions thereof then unexercised, shall be
exercisable and in the number and kind of shares of outstanding Restricted
Stock. Such adjustment shall be made with the intent that after the change or
exchange of shares, each Optionee's and each Restricted Stockholder's
proportionate interest shall be maintained as before the occurrence of such
event. Such adjustment in an outstanding Option may include a necessary or
appropriate corresponding adjustment in Option, exercise price, but shall be
made without change in the total price applicable to the Option, or the
unexercised portion thereof (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices).
Notwithstanding the foregoing, in the event of such a
reorganization, merger, consolidation, recapitalization, reclassification, stock
splitup, stock dividend or combination, or other adjustment or event which
results in shares of Common Stock being exchanged for or converted into cash,
securities or other property, the Company will have the right to terminate this
Plan as of the date of the exchange or conversion, in which case all options,
rights and other awards under this Plan shall become the right to receive such
cash, securities or other property, net of any applicable exercise price.
In the event of a "spin-off" or other substantial distribution
of assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Company's Common Stock, the Board may in its discretion make
an appropriate and equitable adjustment to the Option exercise price to reflect
such diminution.
8.4 Change of Control of the Company.
--------------------------------
(a) In the event of a Change of Control (as defined below),
(i) each Option shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in this Plan or in the provisions of
such Option, for a specified period of time prior to such event (as specified by
the Board by resolution) and (ii) the Restrictions upon all shares of Restricted
Stock shall immediately lapse upon such event and all such shares shall cease to
be subject to repurchase under Section 6.8 after such event.
(b) "Change of Control" shall mean the occurrence or
continuation of either of the following events:
(i) DGP Persons shall cease to Beneficially Own in the
aggregate 20% or more of the total voting power in the aggregate of all
classes of capital stock of the Company then outstanding (including
shares of common stock issuable upon exchange of OP Units, whether or
not such OP Units are immediately exchangeable and without regard to
the Ownership Limit) normally entitled to vote in the election of
directors of the Company (or any surviving entity); or
(ii) any transaction or series of transactions (whether
by purchase of existing shares of common stock or OP Units, issuance of
shares of common stock or OP Units, merger, consolidation or otherwise)
the result of which is that (A) any Person or Group other than DGP
Persons becomes the Beneficial Owner, directly or indirectly, of 30% or
more of the total voting power in the aggregate of all classes of
capital stock of the Company then outstanding (including shares of
common stock issuable upon exchange of OP Units, whether or not such OP
Units are immediately exchangeable and without regard to the Ownership
Limit) normally entitled to vote in the election of directors of the
Company (or any surviving entity) and (B) such Person or Group
Beneficially Owns a greater percentage of such capital stock of the
Company than is Beneficially Owned by DGP Persons.
11
<PAGE>
As used in the foregoing definition:
"Beneficial Owner" or "Beneficially Owned" or
"Beneficially Own" shall have the same meaning as
such term has for purposes of Rule 13d-3
promulgated under the Exchange Act, except that a
Person shall be deemed to have beneficial ownership
of all shares that a Person has the right to
acquire, whether or not such right is immediately
exercisable.
"DGP Persons" shall mean David G. Price and his
heirs, current and former spouse(s), parents,
parents-in-law, children, sons- and
daughters-in-law and grandchildren and any trust or
estate, all of the beneficiaries of which consist
of David G. Price or David G. Price's heirs,
current and former spouse(s), parents,
parents-in-law, children, sons- and
daughters-in-law or grandchildren.
"Group" shall have the same meaning as such term
has for purposes of Sections 13(d) and 14(d) of the
Exchange Act.
"Ownership Limit" shall have the same meaning as
such term has in the certificate of incorporation
of the Company.
"OP Units" shall mean units of limited partnership
interest in National Golf Operating Partnership,
L.P.
"Person" shall have the same meaning as such term
has for purposes of Sections 13(d) and 14(d) of the
Exchange Act.
8.5 Approval of Plan by Stockholders. This Plan will be
--------------------------------
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board's initial adoption of this Plan. Options may be
granted and Restricted Stock may be awarded prior to such stockholder approval,
provided that such Options shall not be exercisable and such Restricted Stock
shall not vest prior to the time when this Plan is approved by the stockholders,
and provided further that if such approval has not been obtained at the end of
said twelve-month period, all Options previously granted and all Restricted
Stock previously awarded under this Plan shall thereupon be cancelled and become
null and void.
8.6 Tax Withholding. The Company shall be entitled to require
---------------
payment in cash or deduction from other compensation payable to each Optionee or
Restricted Stockholder of any sums required by federal, state or local tax law
to be withheld with respect to the issuance, vesting or exercise of any Option
or Restricted Stock. Subject to the timing requirements of Section 5.3, the
Board may in its discretion and in satisfaction of the foregoing requirement
allow such Optionee or Restricted Stockholder to elect to have the Company
withhold shares of Common Stock (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be withheld.
8.7 Loans. The Board may, in its discretion, extend one or
-----
more loans to key Independent Directors in connection with the exercise or
receipt of an Option granted under this Plan, or the issuance of Restricted
Stock awarded under this Plan. The terms and conditions of any such loan shall
be set by the Board.
8.8 Limitations Applicable to Section 16 Persons.
--------------------------------------------
Notwithstanding any other provision of this Plan, any Option granted, or
Restricted Stock awarded, to an Independent Director who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations
set forth in any applicable exemptive rule under Section 16 of the Exchange Act
(including any amendment to Rule 16b-3 of the
12
<PAGE>
Exchange Act) that are requirements for the application of such exemptive rule,
and this Plan shall be deemed amended to the extent necessary to conform to such
limitations. Notwithstanding any other provision of this Plan, no Option granted
to a person subject to Section 16 of the Exchange Act shall be exercisable until
at least six months have elapsed from (but excluding) the date on which the
Option was granted and no shares of Restricted Stock may be sold or otherwise
exchanged until at least six months have elapsed from (but excluding) the date
on which the Restricted Stock was awarded.
8.9 Effect of Plan Upon Options and Compensation Plans. The
--------------------------------------------------
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for Employees, Directors or consultants of the
Company or any Subsidiary or (ii) to grant or assume options or other rights
otherwise than under this Plan in connection with any proper corporate purpose
including but not by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, partnership,
firm or association.
8.10 Compliance with Laws. This Plan, the granting and vesting
--------------------
of Options and Restricted Stock awards under this Plan and the issuance and
delivery of shares of Common Stock and the payment of money under this Plan or
under Options granted or Restricted Stock awarded hereunder are subject to
compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan, Options or Restricted Stock granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
8.11 Limits on Ownership and Transfer. Any stock issued under
--------------------------------
this Plan shall be subject to the limits on ownership and transfer as set forth
in the organization documents of the Company.
8.12 Titles. Titles are provided herein for convenience only
------
and are not to serve as a basis for interpretation or construction of this Plan.
8.13 Governing Law. This Plan and any agreements hereunder
-------------
shall be administered, interpreted and enforced under the internal laws of the
state of incorporation of the corporation issuing securities under this Plan
without regard to conflicts of laws thereof.
* * *
I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of National Golf Properties, Inc. on May 2, 1995.
Executed on this 2nd day of May, 1995.
/s/ Edward R. Sause
------------------------
Secretary
13
<PAGE>
EXHIBIT 4.2
THE 1997 EQUITY PARTICIPATION PLAN
OF
NATIONAL GOLF PROPERTIES, INC.,
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
AND
AMERICAN GOLF CORPORATION
National Golf Properties, Inc., a Maryland corporation (the
"Company"), National Golf Operating Partnership, L.P., a Delaware limited
partnership (the "Partnership"), and American Golf Corporation, a California
corporation ("AGC") have adopted The 1997 Equity Participation Plan of National
Golf Properties, Inc., National Golf Operating Partnership, L.P. and American
Golf Corporation (the "Plan"), effective May 6, 1997 (subject to the approval of
the Plan by the Company's stockholders on such date), for the benefit of their
eligible employees. The Plan consists of two plans, one for the benefit of key
Employees (as such term is defined below) of National Golf Properties, Inc. and
its subsidiaries (other than National Golf Operating Partnership, L.P.) and one
for the benefit of key Employees of National Golf Operating Partnership, L.P.
and American Golf Corporation and their subsidiaries.
The purposes of this Plan are as follows:
(1) To provide an additional incentive for key Employees to
further the growth, development and financial success of the Company by
personally benefiting through the ownership of Company stock and/or rights which
recognize such growth, development and financial success.
(2) To enable the Company, AGC, the Partnership and their
respective subsidiaries to obtain and retain the services of key Employees
considered essential to the long range success of the Company by offering them
an opportunity to own stock in the Company and/or rights which will reflect the
growth, development and financial success of the Company.
ARTICLE I
DEFINITIONS
1.1 General. Wherever the following terms are used in this
-------
Plan they shall have the meanings specified below, unless the context clearly
indicates otherwise.
1.2 AGC. "AGC" shall mean American Golf Corporation, a
---
California corporation.
1.3 AGC Employee. "AGC Employee" shall mean any officer or
------------
other employee (as defined in accordance with Section 3401(c) of the Code) of
AGC, or of any corporation which is then an AGC Subsidiary; provided, however,
-------- -------
that any officer or other employee of AGC, or of any AGC Subsidiary shall not be
an AGC Employee for purposes of granting Options, Performance Awards or rights
to acquire Restricted Stock if there are less than
<PAGE>
10 golf course leases in effect between the Company or the Partnership, as
landlord, and AGC, as tenant.
1.4 AGC Optionee Purchased Shares. "AGC Optionee Purchased
-----------------------------
Shares" shall have the meaning set forth in Section 5.4.
1.5 AGC Partnership Purchase Price. "AGC Partnership Purchase
------------------------------
Price" shall have the meaning set forth in Section 5.4.
1.6 AGC Partnership Purchased Shares. "AGC Partnership
--------------------------------
Purchased Shares" shall have the meaning set forth in Section 5.4.
1.7 AGC Subsidiary. "AGC Subsidiary" shall mean any
--------------
corporation in an unbroken chain of corporations beginning with AGC if each of
the corporations other than the last corporation in the unbroken chain then owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. "AGC
Subsidiary" shall also mean any partnership in which AGC and/or any AGC
Subsidiary owns more than 50 percent of the capital or profits interests.
1.8 Award Limit. "Award Limit" shall mean 100,000 shares of
-----------
Common Stock, as adjusted pursuant to Section 9.3.
1.9 Board. "Board" shall mean the Board of Directors of the
-----
Company.
1.10 Code. "Code" shall mean the Internal Revenue Code of
----
1986, as amended.
1.11 Committee. "Committee" shall mean the Compensation
---------
Committee of the Board, or another committee or subcommittee of the Board,
appointed as provided in Section 8.1.
1.12 Common Stock. "Common Stock" shall mean the common stock
------------
of the Company, par value $0.01 per share, and any equity security of the
Company issued or authorized to be issued in the future, but excluding any
preferred stock and any warrants, options or other rights to purchase Common
Stock. Debt securities of the Company convertible into Common Stock shall be
deemed equity securities of the Company.
1.13 Company. "Company" shall mean National Golf Properties,
-------
Inc., a Maryland corporation.
1.14 Company Employee. "Company Employee" shall mean any
----------------
officer or other employee (as defined in accordance with Section 3401(c) of the
Code) of the Company, or of any corporation which is a Company Subsidiary.
1.15 Company Subsidiary. "Company Subsidiary" shall mean any
------------------
corporation in an unbroken chain of corporations beginning with the Company if
each of the corporations other
2
<PAGE>
than the last corporation in the unbroken chain then owns stock possessing 50
percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain. Except with respect to Incentive
Stock Options, "Company Subsidiary" shall also mean any partnership in which the
Company and/or any Company Subsidiary owns more than 50 percent of the capital
or profits interests; provided, however, that "Company Subsidiary" shall not
-------- -------
include the Partnership nor any Partnership Subsidiary.
1.16 Corporate Transaction. "Corporate Transaction" shall mean
---------------------
any of the following stockholder-approved transactions to which the Company is a
party:
(a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State in which the Company is incorporated, form
a holding company or effect a similar reorganization as to form
whereupon this Plan and all Options are assumed by the successor
entity;
(b) the sale, transfer, exchange or other disposition of all
or substantially all of the assets of the Company, in complete
liquidation or dissolution of the Company in a transaction not covered
by the exceptions to clause (a), above; or
(c) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%)
of the total combined voting power of the Company's outstanding
securities are transferred or issued to a person or persons different
from those who held such securities immediately prior to such merger.
1.17 Director. "Director" shall mean a member of the Board.
--------
1.18 Employee. "Employee" shall mean any Company Employee, AGC
--------
Employee or Partnership Employee.
1.19 Exchange Act. "Exchange Act" shall mean the Securities
------------
Exchange Act of 1934, as amended.
1.20 Fair Market Value. "Fair Market Value" of a share of
-----------------
Common Stock as of a given date shall be (i) the closing price of a share of
Common Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii) if Common Stock is not traded on an
exchange but is quoted on NASDAQ or a successor quotation system, the mean
between the closing representative bid and asked prices for the Common Stock on
the trading day previous to such date as reported by NASDAQ or such successor
quotation system; or (iii) if Common Stock is not publicly traded on an exchange
and not quoted on NASDAQ or a successor quotation system, the Fair Market Value
of a share of Common Stock as established by the Committee acting in good faith.
3
<PAGE>
1.21 General Partner Interest. "General Partner Interest"
------------------------
shall mean an ownership interest in the Partnership that is a general
partnership interest and includes any and all benefits to which the holder of
such an interest may be entitled as provided in the Partnership Agreement,
together with all obligations of such holder to comply with the terms and
provisions of such agreement.
1.22 Grantee. "Grantee" shall mean an Employee granted a
-------
Performance Award under this Plan.
1.23 Incentive Stock Option. "Incentive Stock Option" shall
----------------------
mean an option which conforms to the applicable provisions of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Committee.
1.24 Independent Director. "Independent Director" shall mean a
--------------------
member of the Board who is not a Company Employee.
1.25 Non-Qualified Stock Option. "Non-Qualified Stock Option"
--------------------------
shall mean an Option which is not designated as an Incentive Stock Option by the
Committee.
1.26 Option. "Option" shall mean a stock option granted under
------
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to AGC Employees and Partnership
-------- -------
Employees shall be Non-Qualified Stock Options unless such individual is also a
Company Employee.
1.27 Optionee. "Optionee" shall mean an Employee granted an
--------
Option under this Plan.
1.28 Ownership Limit. "Ownership Limit" shall mean 9.8% (by
---------------
value or by number of shares, whichever is more restrictive) of the outstanding
"common stock" (as defined in the Company's Articles of Incorporation) of the
Company or, to the extent shares of other classes of Common Stock are issued
pursuant to this Plan, any limit established with respect to such other Common
Stock pursuant to the organizational documents of the Company.
1.29 Partnership. "Partnership" shall mean National Golf
-----------
Operating Partnership, L.P., a Delaware limited partnership.
1.30 Partnership Agreement. "Partnership Agreement" shall mean
---------------------
the Agreement of Limited Partnership of National Golf Operating Partnership,
L.P., dated as of August 18, 1993, as it may be amended, modified, or restated
from time to time.
1.31 Partnership Employee. "Partnership Employee" shall mean
--------------------
any officer or other employee (as defined in accordance with Section 3401(c) of
the Code) of the Partnership or any entity which is then a Partnership
Subsidiary.
4
<PAGE>
1.32 Partnership Optionee Purchased Shares. "Partnership
-------------------------------------
Optionee Purchased Shares" shall have the meaning set forth in Section 5.5.
1.33 Partnership Purchased Price. "Partnership Purchased
---------------------------
Price" shall have the meaning set forth in Section 5.5.
1.34 Partnership Purchased Shares. "Partnership Purchased
----------------------------
Shares" shall have the meaning set forth in Section 5.5.
1.35 Partnership Subsidiary. "Partnership Subsidiary" shall
----------------------
mean any partnership in an unbroken chain of partnerships beginning with the
Partnership if each of the partnerships other than the last partnership in the
unbroken chain then owns more than 50 percent of the capital or profits
interests in one of the other partnerships. "Partnership Subsidiary" shall also
mean any corporation in which the Partnership and/or any Partnership Subsidiary
owns stock possessing 50 percent or more of the total combined voting power of
all classes of stock.
1.36 Performance Award. "Performance Award" shall mean a cash
-----------------
bonus, stock bonus or other performance or incentive award that is paid in cash,
Common Stock or a combination of both, awarded under Article VII of this Plan.
1.37 Plan. "Plan" shall mean The 1997 Equity Participation
----
Plan of National Golf Properties, Inc., National Golf Operating Partnership,
L.P. and American Golf Corporation.
1.38 QDRO. "QDRO" shall mean a qualified domestic relations
----
order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
1.39 Restricted Stock. "Restricted Stock" shall mean Common
----------------
Stock awarded under Article VI of this Plan.
1.40 Restricted Stockholder. "Restricted Stockholder" shall
----------------------
mean an Employee granted an award of Restricted Stock under Article VI of this
Plan.
1.41 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule
----------
16b-3 under the Exchange Act, as such Rule may be amended from time to time.
1.42 Section 162(m) Participant. "Section 162(m) Participant"
--------------------------
shall mean any key Employee designated by the Committee as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated or a
future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.
1.43 Termination of Employment. "Termination of Employment"
-------------------------
shall mean the time when the employee-employer relationship between an Optionee,
Grantee or Restricted Stockholder and the Company, a Company Subsidiary, AGC, an
AGC Subsidiary, the Partnership
5
<PAGE>
or a Partnership Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an Optionee,
Grantee or Restricted Stockholder by the Company, a Company Subsidiary, AGC, an
AGC Subsidiary, the Partnership or a Partnership Subsidiary and (ii) at the
discretion of the Committee, terminations which result in a temporary severance
of the employee-employer relationship. With respect to AGC Employees,
"Termination of Employment" shall also mean the time when there are less than 10
golf course leases in effect between the Company or the Partnership, as
landlord, and AGC, as tenant. The Committee, in its absolute discretion, shall
determine the effect of all matters and questions relating to Termination of
Employment, including, but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, with respect to Incentive Stock Options,
-------- -------
unless otherwise determined by the Committee in its discretion, a leave of
absence or other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence or
other change interrupts employment for the purposes of Section 422(a)(2) of the
Code and the then applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of this Plan, each of the Company, a Company
Subsidiary, AGC, an AGC Subsidiary, the Partnership or a Partnership Subsidiary
has an absolute and unrestricted right to terminate an Employee's employment
with such entity at any time for any reason whatsoever, with or without cause,
except to the extent expressly provided otherwise in writing.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan.
----------------------
(a) The shares of stock subject to Options, awards of
Restricted Stock or Performance Awards, shall be Common Stock, initially shares
of the Company's Common Stock, par value $0.01 per share. The aggregate number
of such shares which may be issued upon exercise of such Options or upon any
such awards under the Plan shall not exceed eight hundred thousand (800,000).
The shares of Common Stock issuable upon exercise of such Options or upon any
such awards may be either previously authorized but unissued shares or treasury
shares.
(b) The maximum number of shares which may be subject to
Options, awards of Restricted Stock or Performance Awards granted under the Plan
to any individual in any calendar year shall not exceed the Award Limit. To the
extent required by Section 162(m) of the Code, shares subject to Options which
are canceled continue to be counted against the Award Limit and if, after grant
of an Option, the price of shares subject to such Option is reduced, the
transaction is treated as a cancellation of the Option and a grant of a new
Option and both the Option deemed to be canceled and the Option deemed to be
granted are counted against the Award Limit.
6
<PAGE>
2.2 Add-back of Options and Other Rights. If any Option, or
------------------------------------
other right to acquire shares of Common Stock under any other award under this
Plan, expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash as permitted by this Plan, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration, cancellation or exercise
may again be optioned, granted or awarded hereunder, subject to the limitations
of Section 2.1. Furthermore, any shares subject to Options or other awards which
are adjusted pursuant to Section 9.3 and become exercisable with respect to
shares of stock of another corporation shall be considered cancelled and may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Shares of Common Stock which are delivered by the Optionee or
Grantee or withheld by the Company upon the exercise of any Option or other
award under this Plan, in payment of the exercise price thereof, may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. If any share of Restricted Stock is forfeited by the Grantee or repurchased
by the Company pursuant to Section 6.7 hereof, such share may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.
Notwithstanding the provisions of this Section 2.2, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an "incentive stock option" under
Section 422 of the Code.
ARTICLE III
GRANTING OF OPTIONS
3.1 Eligibility. Subject to the Award Limit and the Ownership
-----------
Limit, any Employee selected by the Committee pursuant to Section 3.4(a)(i)
shall be eligible to be granted an Option.
3.2 Disqualification for Stock Ownership. No person may be
------------------------------------
granted an Incentive Stock Option under this Plan if such person, at the time
the Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any then existing subsidiary or parent corporation thereof (within
the meaning of Section 422 of the Code) unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code.
3.3 Qualification of Incentive Stock Options. No Incentive
----------------------------------------
Stock Option shall be granted to any person who is not a Company Employee.
3.4 Granting of Options
-------------------
(a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of this Plan:
7
<PAGE>
(i) Determine which Employees are key Employees and
select from among the key Employees (including Employees who have
previously received Options or other awards under this Plan) such of them
as in its opinion should be granted Options;
(ii) Subject to the Award Limit and the Ownership Limit,
determine the number of shares to be subject to such Options granted to the
selected key Employees;
(iii) Subject to Section 3.3, determine whether such
Options are to be Incentive Stock Options or Non-Qualified Stock Options;
provided, however, that any Option granted to any AGC Employee or any
-------- -------
Partnership Employee shall be a Non-Qualified Stock Option unless such
individual is also a Company Employee; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; provided, however, that the terms and conditions
-------- -------
of Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall include, but not be
limited to, such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code.
(b) Upon the selection of a key Employee to be granted an
Option, the Committee shall instruct the Secretary of the Company to issue the
Option and may impose such conditions on the grant of the Option as it deems
appropriate. Without limiting the generality of the preceding sentence, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to an Employee that the
Employee surrender for cancellation some or all of the unexercised Options,
awards of Restricted Stock or Performance Awards or other rights which have been
previously granted to him under this Plan or otherwise. An Option, the grant of
which is conditioned upon such surrender, may have an Option price lower (or
higher) than the exercise price of such surrendered Option or other award, may
cover the same (or a lesser or greater) number of shares as such surrendered
Option or other award, may contain such other terms as the Committee deems
appropriate, and shall be exercisable in accordance with its terms, without
regard to the number of shares, price, exercise period or any other term or
condition of such surrendered Option or other award.
(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such Option from treatment as an
"incentive stock option" under Section 422 of the Code.
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement. Each Option shall be evidenced by a
----------------
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan. Stock
Option Agreements evidencing Options intended to qualify as
8
<PAGE>
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code. Stock Option Agreements
evidencing Incentive Stock Options shall contain such terms and conditions as
may be necessary to meet the applicable provisions of Section 422 of the Code.
4.2 Option Price. The price per share of the shares subject to
------------
each Option shall be set by the Committee; provided, however, that such price
-------- -------
shall be no less than the par value of a share of Common Stock, unless otherwise
permitted by applicable state law, and (i) in the case of Options intended to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code such price shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the date the Option is granted, (ii) in the case of
Incentive Stock Options such price shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or
the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code); and (iii) in the case of Incentive Stock Options granted to
an individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary corporation thereof (within the meaning of
Section 422 of the Code), such price shall not be less than 110% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or
the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code).
4.3 Option Term. The term of an Option shall be set by the
-----------
Committee in its discretion; provided, however, that in the case of Incentive
-------- -------
Stock Options, the term shall not be more than ten (10) years from the date the
Incentive Stock Option is granted, or five (5) years from such date if the
Incentive Stock Option is granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any subsidiary or parent
corporation thereof (within the meaning of Section 422 of the Code). Except as
limited by requirements of Section 422 of the Code and regulations and rulings
thereunder applicable to Incentive Stock Options, the Committee may extend the
term of any outstanding Option in connection with any Termination of Employment
of the Optionee, or amend any other term or condition of such Option relating to
such a termination.
4.4 Option Vesting
--------------
(a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted. At any time after grant of an
Option, the Committee may, in its sole and absolute discretion and subject to
whatever terms and conditions it selects, accelerate the period during which an
Option vests.
(b) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable, except as may be
otherwise provided by the
9
<PAGE>
Committee in either in the Stock Option Agreement or by action of the Committee
following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
parent or subsidiary corporation (within the meaning of Section 422 of the Code)
of the Company) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.4(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.
4.5 Consideration. In consideration of the granting of an
-------------
Option, the Optionee shall agree, in the written Stock Option Agreement, to
remain in the employ of the Company, a Company Subsidiary, AGC, an AGC
Subsidiary, the Partnership or a Partnership Subsidiary, as the case may be, for
a period of at least one year (or such shorter period as may be fixed in the
Stock Option Agreement or by action of the Committee following grant of the
Option) after the Option is granted. Nothing in this Plan or in any Stock Option
Agreement hereunder shall confer upon any Optionee any right to continue in the
employ of the Company, a Company Subsidiary, AGC, an AGC Subsidiary, the
Partnership or a Partnership Subsidiary, or shall interfere with or restrict in
any way the rights of the Company, any Company Subsidiary, AGC, any AGC
Subsidiary, the Partnership and any Partnership Subsidiary, which are hereby
expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without good cause.
4.6 Limitation on Grants of Options. The Company may not grant
-------------------------------
an Option that would result in a violation of Section 9.15.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise. An exercisable Option may be exercised
----------------
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.
5.2 Manner of Exercise. All or a portion of an exercisable
------------------
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his office:
10
<PAGE>
(a) A written notice complying with the applicable rules
established by the Committee stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion of the Option;
(b) Such representations and documents as the Committee, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act of 1933, as amended, and any
other federal or state securities laws or regulations. The Committee may, in its
absolute discretion, also take whatever additional actions it deems appropriate
to effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant
to Section 9.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, the Committee may in its discretion (i) allow a delay in payment up to
thirty (30) days from the date the Option, or portion thereof, is exercised;
(ii) allow payment, in whole or in part, through the delivery of shares of
Common Stock owned by the Optionee, duly endorsed for transfer to the Company
with a Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof; (iii) allow payment, in whole
or in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration; (v)
allow payment, in whole or in part, through the delivery of a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Committee or the Board; (vi) allow payment, in whole
or in part, through the delivery of a notice that the Optionee has placed a
market sell order with a broker with respect to shares of Common Stock then
issuable upon exercise of the Option, and that the broker has been directed to
pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; or (vii) allow payment through any
combination of the consideration provided in the foregoing subparagraphs (ii),
(iii), (iv), (v) and (vi). In the case of a promissory note, the Committee may
also prescribe the form of such note and the security to be given for such note.
The Option may not be exercised, however, by delivery of a promissory note or by
a loan from the Company when or where such loan or other extension of credit is
prohibited by law.
5.3 Transfer of Shares to a Company Employee. As soon as
----------------------------------------
practicable after receipt by the Company, pursuant to Section 5.2(d), of payment
for the shares with respect to which an Option which was issued to and is held
by a Company Employee in his or her capacity as a Company Employee, or portion
thereof, is exercised, with respect to each such exercise, the Company shall
transfer to the Optionee the number of shares equal to
11
<PAGE>
(a) the amount of the payment made by the Optionee to the
Company pursuant to Section 5.2(d), divided by
----------
(b) the price per share of the shares subject to the Option as
determined pursuant to Section 4.2.
5.4 Transfer of Shares to an AGC Employee. As soon as
-------------------------------------
practicable after receipt by the Company, pursuant to Section 5.2(d), of payment
for the shares with respect to which an Option which was issued to and is held
by an AGC Employee in his or her capacity as an AGC Employee, or portion
thereof, is exercised, with respect to each such exercise:
(a) the Company shall transfer to the Optionee the number of
shares equal to (A) the amount of the payment made by the Optionee to the
Company pursuant to Section 5.2(d) divided by (B) the Fair Market Value of a
----------
share of Common Stock at the time of exercise (the "AGC Optionee Purchased
Shares"); and
(b) the Company shall sell to the Partnership the number of
shares (the "AGC Partnership Purchased Shares") equal to the excess of (A) the
amount obtained by dividing (i) the amount of the payment made by the Optionee
to the Company pursuant to Section 5.2(d) by (ii) the price per share of the
shares subject to the Option as determined pursuant to Section 4.2., over (B)
the AGC Optionee Purchased Shares;
The price to be paid by the Partnership to the Company for the
AGC Partnership Purchased Shares (the "AGC Partnership Purchase Price") shall be
an amount equal to the product of (A) the number of AGC Partnership Purchased
Shares multiplied by (B) the Fair Market Value of a share of Common Stock at the
-------------
time of the exercise;
(c) As soon as practicable after receipt of the AGC
Partnership Purchased Shares by the Partnership, the Partnership shall transfer
such shares to AGC.
(d) As soon as practicable after receipt of the AGC
Partnership Purchased Shares by AGC, AGC shall transfer such shares to the
Optionee at no additional cost, as additional compensation.
5.5 Transfer of Shares to a Partnership Employee. As soon as
--------------------------------------------
practicable after receipt by the Company, pursuant to Section 5.2(d), of payment
for the shares with respect to which an Option which was issued to and is held
by a Partnership Employee in his or her capacity as a Partnership Employee, or
portion thereof, is exercised, with respect to each such exercise:
(a) the Company shall transfer to the Optionee the number of
shares equal to (A) the amount of the payment made by the Optionee to the
Company pursuant to Section 5.2(d) divided by (B) the Fair Market Value of a
----------
share of Common Stock at the time of exercise (the "Partnership Optionee
Purchased Shares"); and
12
<PAGE>
(b) the Company shall sell to the Partnership the number of
shares (the "Partnership Purchased Shares") equal to the excess of (A) the
amount obtained by dividing (i) the amount of the payment made by the Optionee
to the Company pursuant to Section 5.2(d) by (ii) the price per share of the
shares subject to the Option as determined pursuant to Section 4.2., over (B)
the Partnership Optionee Purchased Shares;
The price to be paid by the Partnership to the Company for the
Partnership Purchased Shares (the "Partnership Purchase Price") shall be an
amount equal to the product of (A) the number of Partnership Purchased Shares
multiplied by (B) the Fair Market Value of a share of Common Stock at the time
- -------------
of the exercise;
(c) As soon as practicable after receipt of the Partnership
Purchased Shares by the Partnership, the Partnership shall transfer such shares
to the Optionee at no additional cost, as additional compensation.
5.6 Transfer of Payment to the Partnership. As soon as
--------------------------------------
practicable after receipt by the Company (i) of the amount described in Section
5.2(d), (ii) the AGC Partnership Purchase Price described in Section 5.4 and
(iii) the Partnership Purchase Price described in Section 5.5, the Company may
contribute to the Partnership an amount of cash equal to such payment and the
Partnership shall issue an additional General Partner Interest to the Company on
the terms set forth in the Partnership Agreement.
5.7 Conditions to Issuance of Stock Certificates. The Company,
--------------------------------------------
AGC or the Partnership shall not be required to issue or deliver any certificate
or certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee shall, in its absolute discretion, deem
necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time for
reasons of administrative convenience; and
13
<PAGE>
(e) The receipt by the Company, AGC, or the Partnership of
full payment for such shares, including payment of any applicable withholding
tax.
5.8 Rights as Stockholders. The holders of Options shall not
----------------------
be, nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.
5.9 Ownership and Transfer Restrictions. Shares acquired
-----------------------------------
through the exercise of an Option shall be subject to the restrictions on
ownership and transfer set forth in the Company's Articles of Incorporation and
the limits set forth in Section 9.15. The Committee, in its absolute discretion,
may impose such additional restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Employee or (ii) one year after the transfer of such shares to
such Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Option refer to such requirement to give prompt
notice of disposition.
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Eligibility. Subject to the Award Limit and the Ownership
-----------
Limit, Restricted Stock may be awarded to any Employee whom the Committee
determines is a key Employee.
6.2 Award of Restricted Stock
-------------------------
(a) The Committee may from time to time, in its absolute
discretion:
(i) Determine which Employees are key Employees and
select from among the key Employees (including Employees who have
previously received other awards under this Plan) such of them as in
its opinion should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other
terms and conditions (including, without limitation, in the case of
awards to Partnership Employees and AGC Employees, the mechanism for
the transfer of the Restricted Stock) applicable to such Restricted
Stock, consistent with this Plan.
14
<PAGE>
(b) The Committee shall establish the purchase price, if any, and
form of payment for Restricted Stock; provided, however, that such purchase
-------- -------
price shall be no less than the par value of the Common Stock to be purchased,
unless otherwise permitted by applicable state law. In all cases, legal
consideration shall be required for each issuance of Restricted Stock.
(c) Upon the selection of a key Employee to be awarded Restricted
Stock, the Committee shall instruct the Secretary of the Company to issue such
Restricted Stock and may impose such conditions on the issuance of such
Restricted Stock as it deems appropriate.
6.3 Restricted Stock Agreement. Restricted Stock shall be issued only
--------------------------
pursuant to a written Restricted Stock Agreement, which shall be executed by the
selected key Employee and an authorized officer of the Company and which shall
contain such terms and conditions as the Committee shall determine, consistent
with this Plan.
6.4 Consideration. As consideration for the issuance of Restricted
-------------
Stock, in addition to payment of any purchase price, the Restricted Stockholder
shall agree, in the written Restricted Stock Agreement, to remain in the employ
of, the Company, Company Subsidiary, AGC, an AGC Subsidiary, the Partnership, or
a Partnership Subsidiary for a period of at least one year after the Restricted
Stock is issued (or such shorter period as may be fixed in the Restricted Stock
Agreement or by action of the Committee following grant of the Restricted
Stock). Nothing in this Plan or in any Restricted Stock Agreement hereunder
shall confer on any Restricted Stockholder any right to continue in the employ
of, the Company, Company Subsidiary, AGC, an AGC Subsidiary, the Partnership, or
a Partnership Subsidiary or shall interfere with or restrict in any way the
rights of the Company, any Company Subsidiary, AGC, any AGC Subsidiary, the
Partnership, and any Partnership Subsidiary which are hereby expressly reserved,
to discharge any Restricted Stockholder from employment with such entity at any
time for any reason whatsoever, with or without good cause.
6.5 Rights as Stockholders. Subject to Section 6.6, upon delivery of
----------------------
the shares of Restricted Stock to the escrow holder pursuant to Section 6.8, the
Restricted Stockholder shall have, unless otherwise provided by the Committee,
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his Restricted Stock Agreement, including the right to receive
all dividends and other distributions paid or made with respect to the shares.
6.6 Restriction. All shares of Restricted Stock issued under this
-----------
Plan (including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
-------- -------
that, except with respect to shares of Restricted Stock granted pursuant to
Section 6.10, by action taken after the Restricted Stock is issued, the
Committee may, on such terms and conditions as it may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of the
Restricted Stock Agreement.
15
<PAGE>
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. If no consideration was paid by the Restricted Stockholder
upon issuance, a Restricted Stockholder's rights in unvested Restricted Stock
shall lapse upon Termination of Employment; provided, however, that the
-------- -------
Committee in its sole and absolute discretion may provide that such rights shall
not lapse in the event of a Termination of Employment following a "change of
ownership or control" (within the meaning of Treasury Regulation Section 1.162-
27(e)(2)(v) or any successor regulation thereto) of the Company or because of
the Restricted Stockholder's death or disability; provided, further, that,
-------- -------
except with respect to shares of Restricted Stock granted pursuant to Section
6.10, the Committee in its sole and absolute discretion may provide that such
rights shall not lapse in the event of a Termination of Employment without cause
or following any change in control or ownership of the Company or because of the
Restricted Stockholder's retirement, or otherwise.
6.7 Repurchase of Restricted Stock. The Committee shall provide in
------------------------------
the terms of each individual Restricted Stock Agreement that the Company shall
have the right to repurchase from the Restricted Stockholder the Restricted
Stock then subject to restrictions under the Restricted Stock Agreement
immediately upon a Termination of Employment, at a cash price per share equal to
the price paid by the Restricted Stockholder for such Restricted Stock;
provided, however, that the Committee in its sole and absolute discretion may
- -------- -------
provide that no such right of repurchase shall exist in the event of a
Termination of Employment following a "change of ownership or control" (within
the meaning of Treasury Regulation Section 1.162- 27(e)(2)(v) or any successor
regulation thereto) of the Company or because of the Restricted Stockholder's
death or disability; provided, further, that, except with respect to shares of
-------- -------
Restricted Stock granted pursuant to Section 6.10, the Committee in its sole and
absolute discretion may provide that no such right of repurchase shall exist in
the event of a Termination of Employment without cause or following any change
in control or ownership of the Company or because of the Restricted
Stockholder's retirement, or otherwise.
6.8 Escrow. The Secretary of the Company or such other escrow holder
------
as the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Restricted Stock Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.
6.9 Legend. In order to enforce the restrictions imposed upon shares
------
of Restricted Stock hereunder, the Committee shall cause a legend or legends to
be placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Restricted Stock Agreements, which legend or
legends shall make appropriate reference to the conditions imposed thereby.
16
<PAGE>
6.10 Provisions Applicable to Section 162(m) Participants.
----------------------------------------------------
(a) Notwithstanding anything in the Plan to the contrary, the
Committee may grant Restricted Stock to a Section 162(m) Participant the
restrictions with respect to which lapse upon the attainment of performance
goals for the Company which are related to one or more of the following business
criteria: (i) pre-tax income, (ii) operating income, (iii) cash flow, (iv)
earnings per share, (v) return on equity, (vi) return on invested capital or
assets, (vii) cost reductions or savings, (viii) funds from operations, (ix)
appreciation in the fair market value of Common Stock and (x) earnings before
any one or more of the following items: interest, taxes, depreciation or
amortization.
(b) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
Restricted Stock which may be granted to one or more Section 162(m)
Participants, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Section
162(m) Participants, (ii) select the performance goal or goals applicable to the
fiscal year or other designated fiscal period or period of service, (iii)
establish the various targets and amounts of Restricted Stock which may be
earned for such fiscal year or other designated fiscal period or period of
service and (iv) specify the relationship between performance goals and targets
and the amounts of Restricted Stock to be earned by each Section 162(m)
Participant for such fiscal year or other designated fiscal period or period of
service. Following the completion of each fiscal year or other designated fiscal
period or period of service, the Committee shall certify in writing whether the
applicable performance targets have been achieved for such fiscal year or other
designated fiscal period or period of service. In determining the amount earned
by a Section 162(m) Participant, the Committee shall have the right to reduce
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.
6.11 Limitation on Awards of Restricted Stock. The Company shall not
----------------------------------------
award Restricted Stock that would result in a violation of Section 9.15.
6.12 Ownership and Transfer Restrictions. Shares of Restricted Stock,
-----------------------------------
the restrictions with respect to which lapse, shall be subject to the
restrictions on ownership and transfer set forth in the Company's Articles of
Incorporation and the limits set forth in Section 9.15.
17
<PAGE>
ARTICLE VII
PERFORMANCE AWARDS
7.1 Eligibility. Subject to the Award Limit and the Ownership Limit,
-----------
one or more Performance Awards may be granted to any Employee whom the Committee
determines is a key Employee.
7.2 Performance Awards. Any key Employee selected by the Committee
------------------
may be granted one or more Performance Awards. The value of such Performance
Awards may be linked to the market value, book value, net profits or other
measure of the value of Common Stock or cash flow, funds from operations,
earnings or other specific performance criteria determined appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee, or may be based upon the appreciation in
the market value, book value, net profits or the increase in cash flow or other
measure of the value of a specified number of shares of Common Stock over a
fixed period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee whose
Performance Award is at issue.
7.3 Performance Award Agreement. Each Performance Award shall be
---------------------------
evidenced by a written agreement, which shall be executed by the Grantee and an
authorized officer of the Company and which shall contain such terms and
conditions (including, without limitation, in the case of awards to Partnership
Employees and AGC Employees, the mechanism for the transfer of rights under such
awards) as the Committee shall determine, consistent with this Plan.
7.4 Term. The term of a Performance Award shall be set by the
----
Committee in its discretion.
7.5 Exercise or Purchase Price. The Committee may establish the
--------------------------
exercise or purchase price of a Performance Award; provided, however, that such
price shall be no less than the par value of a share of Common Stock, unless
otherwise permitted by applicable state law.
7.6 Exercise Upon Termination of Employment. A Performance Award is
---------------------------------------
exercisable or payable only while the Grantee is an Employee; provided, however,
-------- -------
that the Committee in its sole and absolute discretion may provide that the
Performance Award may be exercised or paid subsequent to a Termination of
Employment following a "change of ownership or control" (within the meaning of
Treasury Regulation Section 1.162-27(e)(2)(v) or any successor regulation
thereto) of the Company or because of the Grantee's death or disability;
provided, further, that, except with respect to Performance Awards granted
- -------- -------
pursuant to Section 7.9, the Committee in its sole and absolute discretion may
provide that the Performance Award may be exercised or paid subsequent to a
Termination of Employment without cause or following any
18
<PAGE>
change in control or ownership of the Company or because of the Grantee's
retirement, or otherwise.
7.7 Payment on Exercise. Payment of the amount determined under
-------------------
Section 7.2 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VII is
effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 5.7.
7.8 Consideration. In consideration of the granting of a Performance
-------------
Award, the Grantee shall agree, in a written agreement, to remain in the employ
of the Company, any Company Subsidiary, AGC, any AGC Subsidiary, the Partnership
or any Partnership Subsidiary for a period of at least one year after such
Performance Award is granted (or such shorter period as may be fixed in such
agreement or by action of the Committee following such grant). Nothing in this
Plan or in any agreement hereunder shall confer on any Grantee any right to
continue in the employ of, the Company, any Company Subsidiary, AGC, any AGC
Subsidiary, the Partnership, or any Partnership Subsidiary or shall interfere
with or restrict in any way the rights of the Company, any Company Subsidiary,
AGC, any AGC Subsidiary, the Partnership, and any Partnership Subsidiary, which
are hereby expressly reserved, to discharge any Grantee at any time for any
reason whatsoever, with or without good cause.
7.9 Provisions Applicable to Section 162(m) Participants.
----------------------------------------------------
(a) Notwithstanding anything in the Plan to the contrary, the
Committee may grant Performance Awards to a Section 162(m) Participant that vest
or become exercisable or payable upon the attainment of performance goals for
the Company which are related to one or more of the following business criteria:
(i) pre-tax income, (ii) operating income, (iii) cash flow, (iv) earnings per
share, (v) return on equity, (vi) return on invested capital or assets, (vii)
cost reductions or savings, (viii) funds from operations, (ix) appreciation in
the fair market value of Common Stock and (x) earnings before any one or more of
the following items: interest, taxes, depreciation or amortization.
(b) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
Performance Awards which may be granted to one or more Section 162(m)
Participants, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Section
162(m) Participants, (ii) select the performance goal or goals applicable to the
fiscal year or other designated fiscal period or period of service, (iii)
establish the various targets and bonus amounts which may be earned for such
fiscal year or other designated fiscal period or period of service and (iv)
specify the relationship between performance goals and targets and the amounts
to be earned by each Section 162(m) Participant for such fiscal year or other
designated fiscal period or period of service. Following the completion of each
fiscal year or other designated fiscal period or period of service, the
Committee shall certify in writing whether the applicable performance targets
have
19
<PAGE>
been achieved for such fiscal year or other designated fiscal period or period
of service. In determining the amount earned by a Section 162(m) Participant,
the Committee shall have the right to reduce (but not to increase) the amount
payable at a given level of performance to take into account additional factors
that the Committee may deem relevant to the assessment of individual or
corporate performance for the fiscal year or other designated fiscal period or
period of service.
7.10 Limitation on Grants of Performance Awards. The Company may not
------------------------------------------
grant a Performance Award that would result in a violation of Section 9.15.
7.11 Ownership and Transfer Restrictions. Shares acquired through the
-----------------------------------
exercise or payment of a Performance Award shall be subject to the restrictions
on ownership and transfer set forth in the Company's Articles of Incorporation
and the limits set forth in Section 9.15. The Committee, in its absolute
discretion, may impose such additional restrictions on the ownership and
transferability of the shares purchasable upon the exercise or payment of a
Performance Award as it deems appropriate. Any such restriction shall be set
forth in the respective Performance Award Agreement and may be referred to on
the certificates evidencing such shares.
ARTICLE VIII
ADMINISTRATION
8.1 Compensation Committee. The Compensation Committee (or another
----------------------
committee or a subcommittee of the Board assuming the functions of the Committee
under this Plan) shall consist solely of two or more Independent Directors
appointed by and holding office at the pleasure of the Board, each of whom is
both a "non-employee director" as defined by Rule 16b-3 and an "outside
director" for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee may be filled by the Board.
8.2 Duties and Powers of Committee. It shall be the duty of the
------------------------------
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan, the
Options, the Performance Awards, and the Restricted Stock, and the agreements
pursuant to which the Options, the Performance Awards, and the Restricted Stock,
are granted or awarded, and to adopt such rules for the administration,
interpretation, and application of this Plan as are consistent therewith and to
interpret, amend or revoke any such rules. Any such grant or award under this
Plan need not be the same with respect to each Optionee, Grantee or Restricted
Stockholder. Any such interpretations and rules with respect to Incentive Stock
Options shall be consistent with the provisions of Section 422 of the Code. In
its absolute discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under this Plan except
with respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or
any regulations or rules issued thereunder, are required to be determined in the
sole discretion of the Committee.
20
<PAGE>
8.3 Majority Rule; Unanimous Written Consent. The Committee shall act
----------------------------------------
by a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.
8.4 Compensation; Professional Assistance; Good Faith Actions.
---------------------------------------------------------
Members of the Committee shall receive such compensation, if any, for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Optionees, Grantees, Restricted
Stockholders, the Company, AGC, the Partnership and their subsidiaries and all
other interested persons. No members of the Committee or Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan, Options, awards of Restricted Stock or
Performance Awards, and all members of the Committee and the Board shall be
fully protected by the Company in respect of any such action, determination or
interpretation.
8.5 Delegation of Authority. The Committee may in its discretion
-----------------------
delegate to the Chief Financial Officer of the Company or the Secretary of the
Company, or both, any or all of the administrative duties and authority of the
Committee under this Plan, other than the authority to make grants or awards
under this Plan, to determine the price, timing or amount of such grants or
awards or to determine any other matter required by Rule 16b-3 or Section 162(m)
of the Code to be determined in the sole discretion of the Committee.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Not Transferable. Options, Restricted Stock awards or Performance
----------------
Awards under this Plan may not be sold, pledged, assigned, or transferred in any
manner other than by will or the laws of descent and distribution or pursuant to
a QDRO, unless and until such Options or awards have been exercised, or the
shares underlying such Options or awards have been issued, and all restrictions
applicable to such shares have lapsed. No Option, Restricted Stock award or
Performance Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Optionee, Grantee or Restricted Stockholder or
his successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.
21
<PAGE>
During the lifetime of the Optionee or Grantee, only he may exercise
an Option or other award (or any portion thereof) granted to him under the Plan,
unless it has been disposed of pursuant to a QDRO. After the death of the
Optionee or Grantee, any exercisable portion of an Option or other award may,
prior to the time when such portion becomes unexercisable under the Plan or the
applicable Stock Option Agreement or other agreement, be exercised by his
personal representative or by any person empowered to do so under the deceased
Optionee's or Grantee's will or under the then applicable laws of descent and
distribution.
9.2 Amendment, Suspension or Termination of this Plan. Except as
-------------------------------------------------
otherwise provided in this Section 9.2, this Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Board or the Committee. However, without approval of the
Company's stockholders given within twelve months before or after the action by
the Board or the Committee, no action of the Board or the Committee may, except
as provided in Section 9.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or modify the Award
Limit, and no action of the Board or the Committee may be taken that would
otherwise require stockholder approval as a matter of applicable law, regulation
or rule. No amendment, suspension or termination of this Plan shall, without the
consent of the holder of Options, Restricted Stock awards or Performance Awards,
alter or impair any rights or obligations under any Options, Restricted Stock
awards or Performance Awards, theretofore granted or awarded, unless the award
itself otherwise expressly so provides. No Options, Restricted Stock or
Performance Awards may be granted or awarded during any period of suspension or
after termination of this Plan, and in no event may any Incentive Stock Option
be granted under this Plan after the first to occur of the following events:
(a) The expiration of ten years from the date the Plan is adopted by
the Board; or
(b) The expiration of ten years from the date the Plan is approved by
the Company's stockholders under Section 9.4.
9.3 Changes in Common Stock or Assets of the Company, Acquisition or
----------------------------------------------------------------
Liquidation of the Company and Other Corporate Events.
- -----------------------------------------------------
(a) Subject to Section 9.3(e), in the event that the Committee
determines that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company (including, but not limited to, a
Corporate Transaction), or exchange of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event, in
the Committee's sole discretion, affects the Common Stock such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or
22
<PAGE>
potential benefits intended to be made available under the Plan or with respect
to an Option, Restricted Stock award or Performance Award, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options or Performance
Awards may be granted under the Plan, or which may be granted as
Restricted Stock (including, but not limited to, adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares
which may be issued and adjustments of the Award Limit),
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options or Performance
Awards, and in the number and kind of shares of outstanding Restricted
Stock, and
(iii) the grant or exercise price with respect to any Option or
Performance Award.
(b) Subject to Section 9.3(e), in the event of any Corporate
Transaction or other transaction or event described in Section 9.3(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Committee in its discretion is hereby authorized to take any one
or more of the following actions whenever the Committee determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any Option or other award under this Plan, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or
principles:
(i) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide, either
by the terms of the agreement or by action taken prior to the
occurrence of such transaction or event and either automatically or
upon the Optionee's request, for either the purchase of any such Option
or Performance Award or any Restricted Stock for an amount of cash
equal to the amount that could have been attained upon the exercise of
such Option or award or realization of the grantee's rights had such
Option or award been currently exercisable or payable or fully vested
or the replacement of such Option or award with other rights or
property selected by the Committee in its sole discretion;
(ii) In its sole and absolute discretion, the Committee may
provide, either by the terms of such Option, Performance Award or
Restricted Stock or by action taken prior to the occurrence of such
transaction or event that it cannot vest, be exercised or become
payable after such event;
(iii) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide, either
by the terms of such Option,
23
<PAGE>
Performance Award or Restricted Stock or by action taken prior to the
occurrence of such transaction or event, that for a specified period of
time prior to such transaction or event, such Option or award shall be
exercisable as to all shares covered thereby, notwithstanding anything
to the contrary in (i) Section 4.4 or (ii) the provisions of such
Option, Performance Award or Restricted Stock;
(iv) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide, either
by the terms of such Option, Performance Award or Restricted Stock or
by action taken prior to the occurrence of such transaction or event,
that upon such event, such Option or award be assumed by the successor
or survivor corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar Options or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and
prices; and
(v) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may make adjustments
in the number and type of shares of Common Stock (or other securities
or property) subject to outstanding Options or Performance Awards, and
in the number and kind of outstanding Restricted Stock and/or in the
terms and conditions of (including the grant or exercise price), and
the criteria included in, outstanding Options and awards and Options
and awards which may be granted in the future.
(vi) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide either by
the terms of a Restricted Stock award or by action taken prior to the
occurrence of such event that, for a specified period of time prior to
such event, the restrictions imposed under a Restricted Stock Agreement
upon some or all shares of Restricted Stock may be terminated, and that
some or all shares of such Restricted Stock may cease to be subject to
repurchase under Section 6.7 or forfeiture under Section 6.6 after such
event.
(c) Subject to Section 9.3(e), in the event of any Corporate
Transaction, each outstanding Option, Performance Award and Restricted Stock
award shall, immediately prior to the effective date of the Corporate
Transaction, automatically become fully exercisable or payable for all of the
shares of Common Stock at the time subject to such Options, Performance Awards
and Restricted Stock awards or fully vested, as applicable, and may be exercised
for any or all of those shares as fully-vested shares of Common Stock. However,
an outstanding Option, Performance Award or Restricted Stock award shall not so
accelerate if and to the extent: (i) such Option, Performance Award or
Restricted Stock award is, in connection with the Corporate Transaction, either
to be assumed by the successor or survivor corporation (or parent thereof) or to
be replaced with a comparable right with respect to shares of the capital stock
of the successor or survivor corporation (or parent thereof) or (ii) the
acceleration of exercisability or vesting of such Option, Performance Award or
Restricted Stock award is subject to other limitations imposed by the Committee
at the time of grant. The determination of comparability of rights under clause
24
<PAGE>
(i) above shall be made by the Committee, and its determination shall be final,
binding and conclusive.
(d) Subject to Section 9.3(e) and 9.8, the Committee may, in its
discretion, include such further provisions and limitations in any Option or
Performance Award or Restricted Stock agreement or certificate, as it may deem
equitable and in the best interests of the Company.
(e) No adjustment or action described in this Section 9.3 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to violate Section 422(b)(1) of the
Code, or any successor provisions thereto. With respect to Options intended to
qualify as performance-based compensation Section 162(m)(4)(C) of the Code and
Restricted Stock and Performance Awards which are granted to Section 162(m)
Participants and are intended to qualify as performance-based compensation under
Section 162(m)(4)(C) of the Code, no adjustment or action described in this
Section 9.3 or in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause such Option, Restricted Stock
or Performance Award to fail to so qualify under Section 162(m)(4)(C) of the
Code or any successor provisions thereto except that, to the extent permitted by
Section 162(m) of the Code or the regulations thereunder, Options, Performance
Awards and awards of Restricted Stock may, as determined by the Committee in its
sole and absolute discretion, become exercisable or payable or may vest upon a
"change of ownership or control" (within meaning of Treasury Regulation Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company.
Furthermore, no such adjustment or action shall be authorized to the extent such
adjustment or action would result in short-swing profits liability under Section
16 or violate the exemptive conditions of Rule 16b-3 unless the Committee
determines that the Option or other award is not to comply with such exemptive
conditions. The number of shares of Common Stock subject to any Option or award
shall always be rounded to the next whole number.
9.4 Approval of Plan by Stockholders. This Plan will be submitted for
--------------------------------
the approval of the Company's stockholders within twelve months after the date
of the Board's initial adoption of this Plan. Options or Performance Awards may
be granted and Restricted Stock may be awarded prior to such stockholder
approval, provided that such Options or Performance Awards shall not be
exercisable and such Restricted Stock shall not vest prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Options and
Performance Awards previously granted and all Restricted Stock previously
awarded under this Plan shall thereupon be canceled and become null and void.
9.5 Tax Withholding. The Company, AGC and the Partnership shall be
---------------
entitled to require payment in cash or deduction from other compensation payable
to each Optionee, Grantee or Restricted Stockholder of any sums required by
federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Option, Restricted Stock or Performance
Award. The Committee may in its discretion and in satisfaction of the foregoing
requirement allow such Optionee, Grantee or Restricted Stockholder to elect to
have the Company, AGC or the Partnership withhold shares of Common Stock
otherwise issuable
25
<PAGE>
under such Option or other award (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be withheld.
9.6 Loans. The Committee may, in its discretion, extend one or more
-----
loans to key Employees in connection with the exercise or receipt of outstanding
Options or Performance Awards, or the issuance of Restricted Stock awarded under
this Plan. The terms and conditions of any such loan shall be set by the
Committee.
9.7 Forfeiture Provisions. Pursuant to its general authority to
---------------------
determine the terms and conditions applicable to awards under the Plan, the
Committee shall have the right (to the extent consistent with the applicable
exemptive conditions of Rule 16b-3) to provide, in the terms of Options or other
awards made under the Plan, or to require the recipient to agree by separate
written instrument, that (i) any proceeds, gains or other economic benefit
actually or constructively received by the recipient upon any receipt or
exercise of the award, or upon the receipt or resale of any Common Stock
underlying such award, must be paid to the Company, AGC, or the Partnership and
(ii) the award shall terminate and any unexercised portion of such award
(whether or not vested) shall be forfeited, if (a) a Termination of Employment
occurs prior to a specified date, or within a specified time period following
receipt or exercise of the award, or (b) the recipient at any time, or during a
specified time period, engages in any activity in competition with the Company,
AGC, or the Partnership or which is inimical, contrary or harmful to the
interests of the Company, AGC, or the Partnership, as further defined by the
Committee.
9.8 Limitations Applicable to Section 16 Persons and Performance-
-------------------------------------------------------------
Based Compensation. Notwithstanding any other provision of this Plan, this Plan,
- ------------------
and any Option or Performance Award or Restricted Stock awarded, to any key
Employee who is then subject to Section 16 of the Exchange Act, shall be subject
to any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule.
To the extent permitted by applicable law, the Plan, Options, Performance Awards
and Restricted Stock granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule. Furthermore,
notwithstanding any other provision of this Plan, any Option which is intended
to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code and any Restricted Stock or Performance Award which is
granted to a Section 162(m) Participant and is intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and this Plan shall be deemed amended to the extent necessary to conform
to such requirements.
9.9 Effect of Plan Upon Options and Compensation Plans. The adoption
--------------------------------------------------
of this Plan shall not affect any other compensation or incentive plans in
effect for the Company, any Company Subsidiary, AGC, any AGC Subsidiary, the
Partnership or any Partnership Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company, AGC or the Partnership
26
<PAGE>
(i) to establish any other forms of incentives or compensation for Employees of
the Company, any Company Subsidiary, AGC, any AGC Subsidiary, the Partnership or
any Partnership Subsidiary or (ii) to grant or assume options or other rights or
awards otherwise than under this Plan in connection with any proper corporate or
partnership purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, limited liability company, firm or association.
9.10 Section 83(b) Election Prohibited. No Grantee, Optionee or
---------------------------------
Restricted Stockholder may make an election under Section 83(b) of the Code with
respect to any award or grant under this Plan without the consent of the
Company.
9.11 Compliance with Laws. This Plan, the granting and vesting of
--------------------
Options, Restricted Stock awards or Performance Awards under this Plan and the
issuance and delivery of shares of Common Stock and the payment of money under
this Plan or under Options, Performance Awards granted or Restricted Stock
awarded hereunder are subject to compliance with all applicable federal and
state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions, and
the person acquiring such securities shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, Options,
Restricted Stock awards or Performance Awards granted or awarded hereunder shall
be deemed amended to the extent necessary to conform to such laws, rules and
regulations.
9.12 Titles. Titles are provided herein for convenience only and are
------
not to serve as a basis for interpretation or construction of this Plan.
9.13 Governing Law. This Plan and any agreements hereunder shall be
-------------
administered, interpreted and enforced under the internal laws of the State of
Maryland without regard to conflicts of laws thereof.
9.14 Conflicts with Company's Articles of Incorporation.
--------------------------------------------------
Notwithstanding any other provision of this Plan, no Optionee, Grantee, or
Restricted Stockholder shall acquire or have any right to acquire any Common
Stock, and shall not have other rights under this Plan, which are prohibited
under the Company's Articles of Incorporation.
9.15 Restrictions with respect to Options, Performance Awards, and
-------------------------------------------------------------
Restricted Stock. Notwithstanding any provision herein to the contrary, an
- ----------------
Option or Performance Award shall not be exercisable, a Performance Award shall
not be payable, Restricted Stock shall not be awarded and restrictions on
Restricted Stock shall not lapse if the exercise of such Option or Performance
Award, or the payment of the Performance Award or the award of such Restricted
27
<PAGE>
Stock or the lapse of the restrictions on the Restricted Stock, would result or,
in the sole and absolute discretion of the Committee, would likely result, in
any of the following:
(a) The Optionee's, Grantee's, Restricted Stockholder's or any
other person's ownership of Common Stock being in violation of the Ownership
Limit;
(b) Income to the Company that could impair the Company's
status as a real estate investment trust, within the meaning of Sections 856
through 860 of the Code; or
(c) A transfer, at any one time, of more than 0.1% (measured in
value or in number of shares, whichever is more restrictive) of the Company's
total Common Stock (as defined in the Company's Articles of Incorporation) from
the Company to the Partnership pursuant to the provisions of the Plan.
[signature page follows]
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers duly authorized on this 6th day of May, 1997.
AMERICAN GOLF CORPORATION, a
California Corporation
By: /s/ James M. Stanich
-------------------------
Title: Executive Vice President
-------------------------
NATIONAL GOLF PROPERTIES, INC.,
a Maryland Corporation
By: /s/ Richard C. Price
-------------------------
Title: President
-------------------------
NATIONAL GOLF OPERATING
PARTNERSHIP, L.P., a Delaware limited
partnership
By: /s/ Richard C. Price
-------------------------
Title: President
-------------------------
On Behalf of National Golf
Properties, Inc., a Maryland
Corporation, in its Capacity as
General Partner
29
<PAGE>
EXHIBIT 5.1
August 15, 1997
National Golf Properties, Inc.
2951 28th Street, Suite 3001
Santa Monica, California 90405
Re: National Golf Properties, Inc.
Common Stock, par value $.01 per share
--------------------------------------
Gentlemen:
At your request, we have examined the Registration Statement
on Form S-8 (the "Registration Statement"), which you intend to file with the
Securities and Exchange Commission in connection with the registration under the
Securities Act of 1933, as amended, of 948,000 shares of Common Stock, par value
$.01 per share (the "Shares"), to be sold by National Golf Properties, Inc. (the
"Company") under The 1995 Independent Director Equity Participation Plan of
National Golf Properties, Inc. and The 1997 Equity Participation Plan of
National Golf Properties, Inc., National Golf Operating Partnership, L.P. and
American Golf Corporation (collectively, the "Plans"). We are familiar with the
proceedings undertaken in connection with the authorization, issuance and sale
of the Shares. Additionally, we have examined such questions of law and fact as
we have considered necessary or appropriate for purposes of this opinion.
Based upon the foregoing, we are of the opinion that the
Shares have been duly authorized, and upon the issuance of Shares under the
terms of the Plans and delivery and payment therefor of consideration as set
forth in the Maryland General Corporation Law at least equal to the aggregate
par value of the Shares issued, such Shares will be validly issued, fully paid
and nonassessable.
We consent to your filing this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
LATHAM & WATKINS
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of National Golf Properties, Inc. on Form S-8 (File No. (333- )) of
our report dated March 4, 1997, on our audits of the consolidated financial
statements and financial statement schedule of National Golf Properties, Inc. as
of December 31, 1996 and 1995 and for each of the three years in the period
ended December 31, 1996, which report is included in the Annual Report on Form
10-K of National Golf Properties, Inc.
/s/ Coopers & Lybrand L.L.P.
Los Angeles, California
August 14, 1997
