<PAGE>
SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NATIONAL GOLF PROPERTIES, INC.
------------------------------
(Name of Registrant as Specified in its Charter)
-------------------------------------------------
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11:
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which the transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
NATIONAL GOLF PROPERTIES, INC.
2951 28TH STREET, SUITE 3001
SANTA MONICA, CALIFORNIA 90405
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1997
The Annual Meeting of Stockholders (the "Annual Meeting") of National Golf
Properties, Inc. will be held at DC3 Restaurant - Flight Room, 2800 Donald
Douglas Loop North, Santa Monica, California, on Tuesday, May 6, 1997 at 9:00
a.m., local time, for the following purposes:
1. To elect two directors to serve until the 2000 annual meeting of
stockholders and until their successors are elected and have
qualified;
2. To approve the Company's 1997 Equity Participation Plan, as described
herein; and
3. To transact such other business as may properly come before the
meeting.
The Board of Directors of the Company has fixed the close of business on
March 31, 1997 as the record date for determining the stockholders entitled to
receive notice of and to vote at the Annual Meeting and at any and all
adjournments or postponements thereof.
Management welcomes your attendance at the Annual Meeting. WHETHER OR NOT
YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, HOWEVER, YOU ARE REQUESTED TO
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
POSTAGE-PAID ENVELOPE. Your proxy is revocable and will not affect your right to
vote in person in the event you attend the Annual Meeting.
By Order of the Board of Directors,
/s/ Edward R. Sause
Edward R. Sause
Executive Vice President and Secretary
Santa Monica, California
April 4, 1997
<PAGE>
NATIONAL GOLF PROPERTIES, INC.
--------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1997
This Proxy Statement is furnished to the stockholders of National Golf
Properties, Inc., a Maryland corporation (the "Company"), in connection with
the solicitation of proxies by the Board of Directors of the Company from
holders of outstanding shares of common stock, par value $.01 per share, of the
Company ("Common Stock") for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on May 6, 1997, and at any and all adjournments
or postponements thereof, for the following purposes:
1. To elect two directors to serve until the 2000 annual meeting of
stockholders and until their successors are elected and have
qualified;
2. To approve the 1997 Plan (as defined below); and
3. To transact such other business as may properly come before the
meeting.
On March 31, 1997, the record date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting, the Company had
12,364,320 shares of Common Stock outstanding. Each such share of Common Stock
is entitled to one vote on all matters properly brought before the meeting.
Stockholders are not permitted to cumulate their shares of Common Stock for the
purpose of electing directors or otherwise. Presence at the Annual Meeting, in
person or by proxy, of a majority of the outstanding shares of Common Stock will
constitute a quorum for the transaction of business at the Annual Meeting. The
affirmative vote of holders of a plurality of the shares voting is required to
elect new directors to the Company's Board of Directors. The approval of the
1997 Plan requires the affirmative vote of holders of a majority of the shares
voting, provided the total votes cast represent a majority of the outstanding
shares of Common Stock. Shares represented by proxies that reflect abstentions
or "broker non-votes" (i.e., shares held by a broker or nominee which are
represented at the Annual Meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal or proposals) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining whether the
1997 Plan is approved, abstentions and broker non-votes will not be counted as
shares voting. Accordingly, abstentions and broker non-votes may have the
effect of votes against approval of the 1997 Plan if they result in a failure of
the total votes cast to represent a majority of the outstanding shares of Common
Stock. Shares represented by proxies that reflect abstentions will have no
effect on the outcome of the vote to elect the two new directors.
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted at the Annual Meeting for
the nominees named below for election as directors and in favor of adopting the
1997 Plan. With respect to any other business which may properly come before
the Annual Meeting and be submitted to a vote of stockholders, proxies received
by the Board of Directors will be voted in accordance with the best judgment of
the designated proxy holders. A stockholder may revoke his or her proxy at any
time before exercise by delivering to the Secretary of the Company a written
notice of such revocation, by filing with the Secretary of the Company a duly
executed proxy bearing a later date, or by voting in person at the Annual
Meeting.
<PAGE>
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors and officers of the Company, without
receiving any additional compensation, may solicit proxies personally or by
telephone or telegraph. The company will request brokerage houses, banks, and
other custodians or nominees holding stock in their names for others to forward
proxy materials to their customers or principals who are the beneficial owners
of shares and will reimburse them for their expenses in doing so. The Company
has retained the services of D.F. King & Co., Inc. for a fee of $4,500 plus out-
of-pocket expenses to assist in the solicitation of proxies from brokerage
houses, banks, and other custodians or nominees holding stock in their names for
others.
The principal executive offices of the Company are located at 2951 28th
Street, Suite 3001, Santa Monica, California 90405. The approximate date on
which this proxy statement and form of proxy solicited on behalf of the Board of
Directors will first be sent to the Company's stockholders is April 4, 1997.
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<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently is comprised of seven
members divided into three classes serving staggered terms of three years each.
Pursuant to the Company's Articles of Incorporation and Bylaws, the term of
office of one class of directors expires each year and at each annual meeting
the successors of the class whose term is expiring in that year are elected to
hold office for a term of three years and until their successors are elected and
have qualified. The current terms of two directors expire in this year, two
expire in 1998 and three expire in 1999.
In the absence of instructions to the contrary, the persons named as proxy
holders in the accompanying proxy intend to vote in favor of the election of the
two nominees designated below, each of whom is currently a director of the
Company, to serve until the 2000 annual meeting of stockholders and until their
respective successors shall have been elected and qualified. The Company expects
that each of the nominees will be available to serve as a director, but if any
such nominee should become unavailable for election, the shares of Common Stock
represented by the proxy may (unless such proxy contains instructions to the
contrary) be voted for such other person or persons as may be determined by the
holders of such proxies. In no event will the proxy be voted for more than two
nominees.
Under the Company's Bylaws, nominations of persons for election to the
Board of Directors, other than those made by or at the direction of the Board of
Directors, may be made at the Annual Meeting only if pursuant to a timely notice
delivered or mailed to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
Company's principal executive offices not more than 75 nor less than 50 days
prior to the Annual Meeting or, if less than 65 days' notice or prior public
disclosure of the date of the meeting is given to stockholders, on the fifteenth
day following the day on which such notice of the date of the Annual Meeting was
mailed or such public disclosure was made, whichever occurs first. A notice of
nomination must set forth certain information as required under the Company's
Bylaws.
NOMINEES FOR ELECTION AS DIRECTOR
<TABLE>
<CAPTION>
NAME AGE PRESENT POSITION WITH THE COMPANY DIRECTOR SINCE
- ---- --- --------------------------------- --------------
<S> <C> <C> <C>
Richard A. Archer.............. 69 Director 1993
David G. Price................. 64 Chairman of the Board of Directors 1993
</TABLE>
Richard A. Archer has served as a director of the Company since August 31,
1993. Mr. Archer served as the Chairman of the board of directors of Jardine
Insurance Brokers, Inc. ("Jardine") from 1986 to 1993, and served as Deputy
Chairman of Jardine until December 31, 1995. Mr. Archer is now an independent
consultant. Mr. Archer is also a director of the Hydril Company.
David G. Price has served as the Chairman of the Board of Directors of the
Company since its formation in April 1993. Mr. Price also serves as the Chairman
of the board of directors of American Golf Corporation ("AGC") and has served in
such capacity since he founded AGC in 1973. Mr. Price is also a Trustee and the
President of the Museum of Flying in Santa Monica, California.
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE TERM EXPIRES
- ---- --- -------------- ------------
<S> <C> <C> <C>
John C. Cushman, III....... 56 1994 1999
Bruce Karatz............... 51 1993 1998
Charles S. Paul............ 47 1993 1999
Richard C. Price........... 42 1993 1998
Edward R. Sause............ 42 1993 1999
</TABLE>
3
<PAGE>
John C. Cushman, III has served as a director of the Company since July 20,
1994. Mr. Cushman has been President and Chief Executive Officer of Cushman
Realty Corporation since 1978. Mr. Cushman also serves as director of the Boy
Scouts of America, the Los Angeles Museum of Contemporary Art and Junior
Achievement, Inc.
Bruce Karatz has served as a director of the Company since August 31, 1993.
Mr. Karatz has been President, Chief Executive Officer and a director of Kaufman
and Broad Home Corporation ("Kaufman") since 1986 and Chairman of the board of
directors of Kaufman since July 1993. Mr. Karatz is also a director of
Honeywell, Inc., Smith's Food & Drug Centers, Inc. and a Trustee of the National
Park Foundation and RAND Corporation.
Charles S. Paul has served as a director of the Company since August 31,
1993. Mr. Paul is Chairman and Chief Executive Officer of Sega GameWorks L.L.C.
Prior to joining Sega GameWorks L.L.C., Mr. Paul was an Executive Vice President
and director of MCA, Inc. from 1989 until March of 1996 and served as President
of MCA Enterprises, Inc. from 1986 until March of 1996. Mr. Paul is also a
director of The 3DO Company and Interplay Productions.
Richard C. Price has served as President and as a director of the Company
since April 1993. Prior to the initial public offering of the Company's Common
Stock in August 1993, Mr. Price served as Executive Vice President in charge of
golf course acquisitions for AGC. In such capacity, he oversaw the evaluation
and due diligence processes for all acquisitions and managed acquisition
personnel in AGC's eastern, central and western regions. Mr. Price was also
responsible for the expansion of new business opportunities for AGC and was a
member of AGC's executive committee. Mr. Price is a son-in-law of David G.
Price.
Edward R. Sause has served as Executive Vice President, Chief Financial
Officer and Secretary and as a director of the Company since April 1993. Prior
to the Company's initial public offering in 1993, Mr. Sause was a director, a
member of AGC's executive committee and the Senior Vice President and Chief
Financial Officer of AGC. Mr. Sause is also a Trustee and Treasurer of the
Museum of Flying. Prior to joining AGC in September 1990, Mr. Sause was employed
at Columbia Pictures Entertainment from June 1986 to September 1990 as Senior
Vice President and Controller of Columbia Pictures Television and Columbia
International, and prior to that time served as Vice President and Controller
for the Entertainment Business Sector of The Coca-Cola Company and Columbia
Pictures Motion Picture Division. In April 1997, Mr. Sause is expected to
resign as an officer of the Company to become an officer and director of AGC.
Mr. Sause thereafter will continue to be a director of the Company and, if
approved by the Company's Board of Directors and the Independent Committee (as
defined below), will serve as a consultant to the Company. See "Executive
Officers" and "Executive Compensation - Employment Agreements."
BOARD OF DIRECTORS MEETINGS; COMMITTEES AND COMPENSATION
The Board of Directors of the Company is currently comprised of seven
members divided into three classes serving staggered terms of three years each.
The Company's Bylaws provide that the majority of its Board of Directors must
consist of directors who are unaffiliated with David G. Price (the "Independent
Directors"). Messrs. Archer, Karatz, and Paul were elected as Independent
Directors by the Company's Board of Directors on August 31, 1993. Mr. Cushman
was elected as an Independent Director on July 20, 1994.
In accordance with the Company's Bylaws, transactions involving the Company
and affiliates of David G. Price require the approval of a committee of the
Board of Directors consisting solely of Independent Directors (the "Independent
Committee"). Such transactions with affiliates of David G. Price include,
without limitation, (i) lease negotiation with respect to owned golf courses and
the enforcement and renegotiation of such leases, (ii) the selection of
operators for acquired golf courses, and (iii) consideration of the Company's
right of first refusal to acquire limited partnership units ("OP Units") in
National Golf Operating Partnership, L.P. (the "Operating Partnership"),
through which the Company owns substantially all of the golf courses and
conducts its operations, upon transfer of OP Units as provided in the Operating
Partnership's Agreement of Limited Partnership (the "OP
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<PAGE>
Operating Agreement"). Certain other significant actions of the Company's Board
of Directors will require the approval of a minimum of five directors and
certain matters relating to the Operating Partnership require the approval of
holders of a majority of the OP Units. David G. Price and his affiliates own
more than 90% of the OP Units.
The Company's Board of Directors held five meetings during the year ended
December 31, 1996. During that period, no director attended fewer than 75% of
the total number of meetings of the Board of Directors and of committees of the
Board of Directors on which such director served.
The Company currently pays each of its Independent Directors a fee of
$12,000 per year for services as a director plus $1,000 for attendance at each
meeting of the Company's Board of Directors. In addition, the Company
reimburses all directors for reasonable travel expenses incurred in connection
with their duties as directors of the Company.
The Board of Directors has (i) an Independent Committee, (ii) an Executive
Committee, (iii) an Audit Committee and (iv) a Compensation Committee, each
established on August 10, 1993 under the Company's Bylaws. The Company does not
have a Nominating Committee.
Independent Committee. As provided in the Company's Bylaws, the
Independent Committee includes only Independent Directors. The Independent
Committee was established to oversee the selection of operators for golf courses
acquired in the future and to approve transactions between the Company and
affiliates of David G. Price that it considers from time to time. Messrs.
Archer, Cushman, Karatz and Paul are the current Independent Committee members.
Executive Committee. The Executive Committee has such authority as may be
granted by the Company's Board of Directors, including the power to acquire and
dispose of real property and the power to authorize, on behalf of the full Board
of Directors, the execution of certain contracts and agreements. The Executive
Committee consists of the Chairman of the Board of Directors, the Chairman of
the Independent Committee and an executive officer of the Company. Messrs. David
G. Price, Archer, and Richard C. Price are the current members of the Executive
Committee.
Audit Committee. The Audit Committee was established to make
recommendations concerning the engagement of independent public accountants,
review with the independent public accountants the plans and results of the
audit engagement, approve professional services provided by the independent
public accountants, review the independence of the independent public
accountants, consider the range of audit and non-audit fees and review the
adequacy of the Company's internal accounting controls. Messrs. Cushman, Karatz
and Paul are the current members of the Audit Committee. The Audit Committee
held one meeting during 1996.
Compensation Committee. The Compensation Committee is responsible for the
administration of the Company's employee benefit plans. The Compensation
Committee is authorized to determine the persons eligible to participate in any
of the plans, the extent of such participation and the terms and conditions
under which benefits may be vested, received or exercised. The Compensation
Committee also reviews and approves the compensation of the Company's executive
officers and determines the general compensation policy for the Company. Messrs.
Cushman and Paul are the current members of the Compensation Committee. The
Compensation Committee held no meetings during 1996, but took action with
respect to certain matters by unanimous written consent.
5
<PAGE>
PROPOSAL 2
1997 EQUITY PARTICIPATION PLAN
Pursuant to its policy of seeking to structure compensation paid to key
employees to be deductible for federal income tax purposes, the Board of
Directors has terminated the 1993 Stock Option and Incentive Plan for Key
Employees of National Golf Properties, Inc., National Golf Operating
Partnership, L.P. and American Golf Corporation (the "1993 Plan") as of May 6,
1997 and adopted the 1997 Equity Participation Plan of National Golf Properties,
Inc., National Golf Operating Partnership, L.P. and American Golf Corporation
(the "1997 Plan"), effective upon stockholder approval. The terms of the 1997
Plan are summarized below. The summary of the 1997 Plan below is qualified in
its entirety by reference to the 1997 Plan itself, copies of which will be
available at the Annual Meeting and can also be obtained by making a written
request to the Company's Secretary.
The Board of Directors recommends approval of the 1997 Plan.
REASONS FOR ADOPTION OF THE 1997 PLAN
Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as
amended (the "Code"), limits the deductibility of compensation paid to certain
top executives unless such compensation constitutes "qualified performance-based
compensation" or satisfies another exemption from the limits of Section 162(m).
The Board of Directors has determined that it is advisable to continue to
provide stock-based compensation to key employees of the Company, the Operating
Partnership and AGC and their respective subsidiaries, thereby providing such
employees with additional incentive to further the growth, development and
financial success of the Company and to enable the Company, the Operating
Partnership, AGC and their respective subsidiaries to obtain and retain the
services of such key employees. The Board of Directors has further determined
that it is advisable that such stock-based compensation paid to employees
covered by Section 162(m) constitute "qualified performance-based compensation"
to the extent the Compensation Committee determines is appropriate or advisable.
In accordance with such determination, the Board of Directors has terminated the
1993 Plan and adopted the 1997 Plan. Therefore, the Board of Directors
recommends that the 1997 Plan be approved.
DESCRIPTION OF THE 1997 PLAN
The 1997 Plan consists of two plans: (i) one for the benefit of the key
employees of the Company and its subsidiaries (other than the Operating
Partnership); and (ii) one for the benefit of key employees of the Operating
Partnership and AGC and their respective subsidiaries. The principal purposes
of the 1997 Plan are to provide incentives for key employees of the Company, the
Operating Partnership and AGC and their respective subsidiaries through granting
of options, restricted stock and performance awards, thereby providing them with
incentive to further the Company's growth, development and financial success,
and to enable the Company, the Operating Partnership and AGC and their
respective subsidiaries to obtain and retain the services of key employees
considered essential to the long range success of the Company.
Under the 1997 Plan, not more than 800,000 shares of Common Stock (i.e.,
----
the Common Stock of the Company, par value $0.01 per share, and any equity
security of the Company (including debt securities convertible into Common
Stock) 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) are authorized for issuance subject to options or performance awards or
as restricted stock awards. Initially, such Common Stock shall be shares of the
Company's common stock, par value $.01 per share. Furthermore, the maximum
number of shares which may be subject to options, awards of restricted stock or
performance awards granted under the 1997 Plan to any individual during any
calendar year cannot exceed 100,000 (the "Award Limit"). No options or
performance awards have been granted and no restricted stock has been awarded
under the 1997 Plan, and the 1997 Plan will become effective upon stockholder
approval of the 1997 Plan. On March 26, 1997, the closing price of the Common
Stock on the New York Stock Exchange was $31.375 per share.
6
<PAGE>
The shares available under the 1997 Plan upon exercise of stock options or
performance awards, and for issuance as restricted stock, may be either
previously unissued shares or treasury shares. Subject to certain limitations,
in the event that the Compensation 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, as defined below), 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
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 potential benefits intended to be made available under the 1997
Plan or with respect to an option, restricted stock or performance awards, the
Committee shall, as it may deem equitable adjust (i) the number and kind of
shares of Common Stock (or other securities or property) issuable under the 1997
Plan, (ii) the Award Limit, (iii) the number and kind of Common Stock subject to
outstanding awards and (iv) the grant or exercise price of options or
performance awards.
For purposes of the 1997 Plan, "Corporate Transaction" means any of the
following stockholder-approved transactions to which the Company is a party:
(i) 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 the 1997 Plan and all options are assumed by
the successor entity; (ii) 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 (i), above; or (iii) any reverse merger in which the Company is the
surviving entity but in which securities possessing more than 50% of the total
combined voting power of the Company's outstanding securities are transferred to
a person or persons different from those who held such securities immediately
prior to such merger.
Subject to the 1997 Plan's limit on the maximum number of shares which may
be issued under the 1997 Plan, the following shares shall continue to be, or
shall again become, available for issuance under the 1997 Plan: (i) any shares
which were subject to the unexercised portion of a stock option or other award
that expires or is canceled; (ii) any shares which were subject to an option or
award that is exercised for cash; (iii) any shares of restricted stock that are
forfeited by the grantee or repurchased by the Company; (iv) shares of Common
Stock which are delivered to or withheld by the Company upon the exercise of any
option or other award, in payment of the exercise price thereof, and (v) any
shares subject to options or other awards which are adjusted pursuant to certain
corporate transactions or events and become exercisable with respect to shares
of stock of another corporation; provided, however, that no shares shall again
be available for issuance if such action would cause an option intended to be an
incentive stock option under Section 422 of the Code to fail to so qualify.
ADMINISTRATION
The 1997 Plan will be administered by the Compensation Committee, or
another committee or a subcommittee of the Board of Directors assuming the
functions of the Compensation Committee under the 1997 Plan (any such committee
administering the 1997 Plan is hereinafter referred to as the "Committee"),
consisting solely of two or more members of the Board of Directors each of whom
is both a "non-employee director" as defined by Rule 16b-3 under the Exchange
Act and an "outside director" for purposes of Section 162(m) of the Code.
The Committee is authorized to select from among the eligible employees of
the Company, the Operating Partnership, or AGC or their subsidiaries the
individuals to whom options, restricted stock and/or performance awards are to
be granted and to determine the number of shares to be subject thereto and the
terms and conditions thereof, consistent with the 1997 Plan.
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<PAGE>
The Committee is also authorized to interpret the 1997 Plan and the
options, restricted stock and performance awards thereunder, to adopt such rules
for the administration, interpretation and application of the 1997 Plan as are
consistent therewith and to interpret, amend or revoke any such rules. In
addition, the Board of Directors, in its absolute discretion, may at any time
exercise any and all rights or duties of the Committee under the 1997 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 and absolute discretion of the Committee.
Members of the Committee will receive such compensation, if any, for their
services as may be determined by the Board of Directors. All expenses and
liabilities that the members of the Committee incur in connection with the
administration of the 1997 Plan will be borne by the Company.
The Committee may in its discretion delegate to the principal accounting
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 the 1997 Plan,
other than the authority to make grants or awards under the 1997 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 Compensation Committee.
ELIGIBILITY TO RECEIVE OPTIONS, RESTRICTED STOCK AND PERFORMANCE AWARDS
Subject to the Award Limit and the Ownership Limit (i.e., the limit set
---
forth in the Company's Articles of Incorporation which provides that no person
may own more than 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), officers and other employees of the
Company, the Operating Partnership, AGC or any of their respective subsidiaries
who are determined by the Committee to be key employees are eligible to receive
options, performance awards and restricted stock grants under the 1997 Plan.
If, however, there are less than 10 golf course leases in effect between the
Company or Operating Partnership, as landlord, and AGC, as tenant, employees of
AGC and subsidiaries of AGC will no longer be eligible to receive awards under
the 1997 Plan.
The approximate number of individuals in each class eligible to participate
in the 1997 Plan is as follows: five officers and employees of the Company and
its subsidiaries, fourteen officers and employees of the Operating Partnership
and its subsidiaries, and fifty officers and employees of AGC and its
subsidiaries.
More than one option or performance award may be granted and more than one
award of restricted stock may be made to a key employee, but the options,
performance awards and restricted stock granted may not exceed the Award Limit
or the Ownership Limit.
AWARDS UNDER THE 1997 PLAN
The 1997 Plan provides that, subject to the Award Limit and the Ownership
Limit, the Committee may grant or issue stock options, restricted stock or
performance awards, or any combination thereof, to any eligible employee whom
the Committee determines is a key employee. Each grant or issuance will be set
forth in a separate agreement between the person receiving the award and the
Company and will indicate the type, terms and conditions of the award, as
determined by the Committee consistent with the 1997 Plan.
Options. Options granted to employees of the Company may be either
nonqualified stock options ("NQSOs") or incentive stock options ("ISOs"). Any
option granted to any employee of the Operating Partnership or its subsidiaries
or any employee of AGC or its subsidiaries shall be a NQSO unless such
individual is also an employee of the Company or its subsidiaries.
NQSOs will provide for the right to purchase Common Stock at a specified
price which may be less than fair market value on the date of grant (but not
less than par value unless otherwise permitted by applicable state law
8
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(if state law permits, the exercise price may be zero)). NQSOs may be granted
for any term specified by the Committee.
The exercise price of options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall not be less
than 100% of the fair market value of Common Stock on the date the option is
granted.
ISOs will be designed to comply with the applicable provisions of the Code
and will be subject to restrictions contained in the Code but may be
subsequently modified by the Committee to disqualify them from treatment as an
ISO. The exercise price of an ISO shall equal at least 100% of fair market
value 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);
provided, however, in the case of an ISO 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 the Company's stock (or the stock of any
subsidiary or any parent corporation of the Company), the price per share must
be at least 110% of the fair market value of such share 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). The term of ISOs shall not be more than ten
years from the date granted, or five years from such date if the ISO is granted
to an individual then owning more than 10% of the total combined voting power
described in the preceding sentence.
Options usually will become exercisable (in the discretion of the
Committee) in one or more installments after the grant date. The Committee may
accelerate the time at which options granted to employees become exercisable.
Restricted Stock. Restricted Stock may be sold to eligible employees at
various prices (but not below par value unless otherwise permitted by applicable
state law (if state law permits, the purchase price may be zero)) and made
subject to such restrictions as may be determined by the Committee. Generally,
restricted stock may be repurchased by the Company immediately upon a restricted
stockholder's termination of employment at the original purchase price if the
restrictions have not then lapsed. In addition, unless provided otherwise by
the Committee, 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. In general, restricted stock may not be
sold or encumbered, until restrictions are removed or expire. Subject to the
restrictions imposed by the 1997 Plan and the restricted stock agreement, unless
otherwise provided by the Committee, purchasers of restricted stock, unlike
recipients of options, will have voting rights and will receive dividends prior
to the time when the restrictions lapse.
The Committee may provide for other terms and conditions with respect to
awards of Restricted Stock, including, without limitations, in the case of
awards to employees of the Operating Partnership, AGC, or their subsidiaries,
the mechanism for transfer of the Restricted Stock to the grantee.
A "Section 162(m) Participant" is 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. The
Committee may grant to Section 162(m) Participants restricted stock subject to
restrictions which lapse upon the attainment of performance goals 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.
Performance Awards. Performance Awards may be granted by the Committee to
any key employee. Generally, performance awards will be based upon specific
performance targets and may be paid in cash or in Common Stock or in a
combination of both. Performance awards may include "phantom" stock awards that
provide for payments based upon increases in the price of the Company's Common
Stock over a predetermined
9
<PAGE>
period. Performance awards may also include bonuses which may be payable in
cash or in Common Stock or in a combination of both. The Committee may
establish the exercise price or purchase price of Performance Awards, which may
be zero. The Committee may provide for other terms and conditions with respect
to grants of Performance Awards, including, without limitation, in the case
awards to employees of the Operating Partnership, AGC or their subsidiaries, the
mechanism for the transfer of rights under such Performance Awards to the
grantee.
A "Section 162(m) Participant" is any key employee designated by the
Committee as a key employee whose compensation for a given 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. The
Committee may grant to Section 162(m) Participants performance awards that vest
upon the attainment of performance goals 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.
1997 PLAN BENEFITS
The benefits, amounts and values to be received under the 1997 Plan by the
Named Executive Officers (as defined in "Executive Compensation--Summary
Compensation Table"), individually and as a group, and by other employees of the
Company, the Operating Partnership or AGC, or their subsidiaries, are not
determinable; provided, however, that in any calendar year no individual,
including a Named Executive Officer, may receive Options, awards of Restricted
Stock or Performance Awards under the 1997 Plan in excess of the Award Limit.
CONSIDERATION
Except as the Committee may otherwise provide, in consideration of the
granting of an option or performance award or the award of restricted stock, the
employee must agree in the written award agreement to remain an employee of the
Company, the Operating Partnership, or AGC, or a subsidiary thereof, for at
least one year (or such shorter period as may be fixed in the agreement or by
actions of the Committee following the grant) after the option or award is
granted.
RESTRICTIONS WITH RESPECT TO OPTIONS, PERFORMANCE AWARDS AND RESTRICTED
STOCK
An option or performance award will not be exercisable, a performance award
will not be payable and restricted stock shall not be awarded and restrictions
on restricted stock shall not lapse if such exercise, payment, award or lapse
would result in, or in the sole and absolute discretion of the Committee would
likely result in, any of the following: (i) the optionee's, grantee's or
restricted stockholder's or any other person's ownership of Common Stock in
violation of the Ownership Limit; (ii) 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 (iii) 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 Operating Partnership
pursuant to the provisions of the 1997 Plan. In addition, no optionee, grantee
or restricted stockholder shall have any rights to acquire Common Stock or any
other right under the 1997 Plan which would otherwise be prohibited under the
Company's Articles of Incorporation.
To the extent that the aggregate fair market value of stock with respect to
which ISOs are first exercisable during any calendar year (under the 1997 Plan
and all other incentive stock option plans of the Company, any subsidiary and
any parent corporation) exceeds $100,000, such options shall be treated as NQSOs
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 this purpose, the fair market value of the
stock shall be determined as of the time the option with respect to such stock
is granted.
10
<PAGE>
Options may be exercised by compliance with certain prescribed procedures.
The option price must be paid in cash upon exercise unless the Committee in its
discretion allows payment through (i) a delay in payment for up to thirty days;
(ii) delivery of shares of Common Stock with a fair market value on the date of
delivery equal to the aggregate option price; (iii) the surrender of shares
issuable upon exercise of the option; (iv) the delivery of other property that
constitutes good and valuable consideration; (v) delivery of a full recourse
promissory note; (vi) delivery of a market sell order with a broker directing
the broker to pay the exercise price from the net proceeds; or (vii) by a
combination of these methods described in (ii), (iii), (iv), (v) or (vi). The
Committee may make loans to employees in connection with the exercise or receipt
of options or performance awards, or the vesting of restricted stock.
The Committee may, as a condition of the exercise of any option, restricted
stock or performance award, require that the grantee deliver such
representations and documents as it deems necessary to effect compliance with
applicable federal and state securities laws and regulations. The Committee may
also take whatever action it deems appropriate to effect such compliance.
Upon the exercise of an option by an employee of the Operating Partnership,
AGC or their respective subsidiaries, the Company will transfer to such optionee
only a number of shares (the "Optionee Purchased Shares") with an aggregate fair
market value equal to the exercise price paid by the optionee. The Company will
sell to the Operating Partnership a number of shares (the "Partnership Purchased
Shares") equal to the difference between (A) the quotient of (i) the aggregate
exercise price of all shares subject to such option, divided by (ii) the per
share exercise price of Common Stock subject to such option, less (B) the
Optionee Purchased Shares. The price to be paid by the Operating Partnership
for the Partnership Purchased Shares shall be an amount equal to the product of
the number of Partnership Purchased Shares, multiplied by the fair market value
of a share of Common Stock at the time of the exercise of the option. If the
optionee at issue is an employee of the Operating Partnership or its
subsidiaries, the Operating Partnership shall transfer such Partnership
Purchased Shares to the optionee for no additional consideration. If the
optionee at issue is an employee of AGC or its subsidiaries, the Operating
Partnership shall transfer such Partnership Purchased Shares to AGC, and AGC
shall transfer such shares to the optionee for no additional consideration.
As soon as practicable after receipt by the Company of payment for the
shares with respect to the exercise of an option, the Company may contribute to
the Operating Partnership an amount of cash equal to such payment and the
Operating Partnership shall issue an additional General Partnership Interest to
the Company on the terms set forth in the Partnership Agreement.
ACCELERATION AND TERMINATION UPON CORPORATE EVENTS AND TRANSACTIONS
In the event of any "Corporate Transaction" (as defined above under the
subsection entitled "Description of the 1997 Plan") or other transaction or
event described above with respect to the adjustment provisions of the 1997 Plan
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 may 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 1997 Plan or with respect to any option,
restricted stock or performance awards to facilitate such transactions or events
or to give effect to such changes in laws, regulations or principles:
(i) Provide 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;
11
<PAGE>
(ii) Provide that the option, performance award or restricted stock
cannot vest, be exercised or become payable after such event;
(iii) Provide 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 the
provisions of the 1997 Plan or such option or award regarding the
exercisability of the option, performance award or restricted stock;
(iv) Provide that upon such event, such option or award shall 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) 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 exercise price),
and the criteria included in, outstanding options, performance awards and
restricted stock as well as options, performance awards and restricted
stock which may be granted in the future.
(vi) Provide that for a period prior to such event, the restrictions
imposed upon some shares of restricted stock terminate, and that some or
all shares of such restricted stock cease to be subject to repurchase or
forfeiture after such transaction or event.
Furthermore, in the event of any Corporate Transaction (as defined above
under the subsection entitled "Description of the 1997 Plan"), 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 rights 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 right shall not so accelerate if and to the extent: (i) such right
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 such right is subject to other limitations imposed by the
Committee at the time of grant. The determination of comparability of rights
under clause (i) above shall be made by the Committee, and its determination
shall be final, binding and conclusive.
No adjustment or action described above or in any other provision of the
1997 Plan shall be authorized to the extent such adjustment or action would
cause the 1997 Plan to violate Section 422(b)(1) of the Code. With respect to
options or other awards intended to qualify as performance-based compensation
under Section 162(m) 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 or
ownership or control" (within meaning of Treasury Regulation Section 1.162-
27(e)(2)(v) or any successor regulation thereto) of the Code, no adjustment or
action described above or in any other provision of the 1997 Plan shall be
authorized to the extent that such adjustment or action would cause such option
or other award to fail to so qualify under Section 162(m). 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, restricted stock or performance award is not to comply with such
exemptive conditions.
12
<PAGE>
MISCELLANEOUS PROVISIONS
For purposes of the 1997 Plan, if Common Stock is traded on an exchange,
the fair market value of a share of the Common Stock as of a given date will be
the closing price of a share of Common Stock on the principal exchange on which
such shares are then trading, or as reported on any composite index which
includes such principal exchange, on the trading day previous to such date, or,
if the shares are not traded on the trading day previous to such date, then on
the next preceding trading date on which a trade occurred. The 1997 Plan
provides for alternative definitions of fair market value of Common Stock in the
event that the Common Stock ceases to be traded on an exchange.
No option, restricted stock or performance award granted under the 1997
Plan may be assigned, sold, pledged or transferred by the grantee, except by
will or the laws of descent and distribution or pursuant to a "qualified
domestic relations order," unless and until such options or awards have been
exercised or the shares underlying such options or awards have been issued and
all applicable restrictions have lapsed. During the lifetime of a grantee, an
option or performance award may be exercised only by the grantee unless such
option or performance award has been disposed of pursuant to a "qualified
domestic relations order." No option, restricted stock or performance award or
interest or right therein or part thereof will be liable for the debts,
contracts or engagements of the grantee or the grantee's successors in interest
or will be subject to disposition by transfer, alienation, pledge, encumbrance,
assignment or any other means, whether voluntary, involuntary or by operation of
law, except to the extent that such disposition is permitted by the first
sentence of this paragraph.
Persons receiving options will not be, nor have any of the rights or
privileges of, stockholders of the Company as to shares covered by the option
until such shares are issued by the Company and delivered to such persons.
Restricted Stock and shares acquired through the exercise of an option or
pursuant to performance award shall be subject to the restrictions on ownership
and transfer set forth in the Company's Articles of Incorporation. The
Committee, in its discretion, may impose such restrictions on the
transferability of shares purchasable upon exercise of an option or performance
award as it deems appropriate. Any such restriction shall be set forth in the
respective stock option or performance award agreement and may be referred to on
the certificates evidencing such shares. The Committee may require the employee
to give prompt notice of any disposition of shares of Common Stock, acquired by
exercise of an ISO, within two years from the date such option is granted (or
the date the option is modified, extended or renewed for purposes of Section
424(h) of the Code) or one year after the transfer of such shares to such
employee.
The Company, the Partnership and AGC may require participants to discharge
withholding tax obligations in connection with the exercise of any option
granted under the 1997 Plan, the exercise or payment of any performance award,
or the lapse of restrictions on restricted stock. The Committee may in its
discretion allow a grantee to use shares held by or to be issued to such grantee
to discharge tax withholding obligations related to exercise of options or
receipt of other awards.
AMENDMENT AND TERMINATION
Generally, the 1997 Plan can be amended, modified, suspended or terminated
by the Board of Directors or the Committee. Without approval of the Company's
stockholders given within twelve months before or after the action by the
Committee or the Board of Directors, however, no action of the Committee or the
Board of Directors may increase the limits imposed on the maximum number of
shares which may be issued under the 1997 Plan or modify the Award Limit (except
for adjustments as described above), and no action of the Committee or the Board
of Directors may be taken that would otherwise require stockholder approval as a
matter of applicable law, regulation or rule. No amendments, suspension or
termination of the 1997 Plan will, without the consent of the participant,
affect such person's rights under an award previously granted, unless the award
itself otherwise expressly so provides. No termination date is specified for
the 1997 Plan.
13
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of the material U.S. federal
income tax consequences to U.S. participants in the 1997 Plan, and is intended
for general information only. The discussion is based on the Code, regulations
thereunder, rulings and decisions now in effect, all of which are subject to
change. Alternative minimum tax and state and local income taxes are not
discussed, and may vary depending on individual circumstances and from locality
to locality. Depending on the interaction of Section 83(a) of the Code with the
provisions of Rule 16b-3 which apply to the 1997 Plan at the time of the grant
of options, restricted stock and performance awards, the tax consequences to
persons subject to Section 16 of the Exchange Act may be different from the
general consequences described below.
Section 162(m). Under Section 162(m) of the Code, income tax deductions of
publicly-traded companies may be limited to the extent total annual compensation
(including base salary, annual bonus, stock option exercises and non-qualified
benefits) paid for certain executive officers exceeds $1 million (less the
amount of any "excess parachute payments" as defined in Section 280G of the
Code) in any one year. However, under Section 162(m), the deduction limit does
not apply to certain "qualified performance-based compensation" established by
an independent compensation committee which is adequately disclosed to, and
approved by, stockholders. In particular, stock options will satisfy the
performance-based exception if the awards are made by a qualifying compensation
committee under a plan that has been approved by the Company's stockholders, the
plan sets the maximum number of shares that can be granted to any particular
employee within a specified period and the compensation is based solely on an
increase in the stock price after the grant date (i.e. the option exercise price
is equal to or greater than the fair market value of the stock subject to the
award on the grant date). Restricted stock granted under the 1997 Plan, if any,
will qualify as "qualified performance-based compensation" for purposes of
Section 162(m) only if such restricted stock vests upon preestablished objective
performance goals, the material terms of which are disclosed to and approved by
the stockholders of the Company and certain other conditions are satisfied.
Performance awards granted under the 1997 Plan, if any, will qualify as
"qualified performance based compensation" for purposes of Section 162(m) only
if such performance awards vest or become exercisable upon preestablished
objective performance goals, the material terms of which are disclosed to and
approved by the stockholders of the Company and certain other conditions are
satisfied.
It is the practice of the Committee to attempt to have all compensation
treated as tax-deductible compensation wherever, in the judgment of the
Committee, to do so would be consistent with the objectives of the compensation
plan under which the compensation is paid. Accordingly, the Board of Directors
is asking stockholders to approve the 1997 Plan in compliance with requirements
of Section 162(m). In general, the Company intends to comply with other
requirements of the performance-based compensation exclusion under Section
162(m) with respect to option grants, including option pricing requirements and
requirements governing the administration of the 1997 Plan, so that, upon
stockholder approval of the 1997 Plan, the deductibility of compensation paid to
top executives thereunder is not expected to be disallowed.
Nonqualified Stock Options. For federal income tax purposes, the recipient
of NQSOs granted under the 1997 Plan will not have taxable income upon the grant
of the option, nor will the Company then be entitled to any deduction.
Generally, upon exercise of NQSOs the optionee will realize ordinary income, in
an amount equal to the difference between the option exercise price and the fair
market value of the stock at the date of exercise. Subject to the deductibility
limits of Section 162(m), upon exercise of a NQSO by an employee of the Company
or a Company Subsidiary, the Company will be entitled to a deduction in an
amount equal to such difference. An optionee's basis for the stock for purposes
of determining his gain or loss on his subsequent disposition of the shares
generally will be the fair market value of the stock on the date of exercise of
the NQSO.
The tax consequence resulting from the exercise of a NQSO through delivery
of already-owned Company shares are not completely certain. In published
rulings, the Internal Revenue Service has taken the position that, to the extent
an equivalent value of shares is acquired, the optionee will recognize no gain
and the employee's basis in the stock acquired upon such exercise is equal to
the employee's basis in the surrendered shares, that any additional
14
<PAGE>
shares acquired upon such exercise are compensation to the employee taxable
under the rules described above and that the employee's basis in any such
additional shares is their then-fair market value.
Incentive Stock Options. There is no taxable income to an optionee when an
ISO is granted to him or when that option is exercised; provided, however, that
upon exercise the optionee's alternative minimum taxable income will generally
include an amount equal to the difference between the option exercise price and
the fair market value at the time of exercise. Gain realized by an optionee
upon sale of stock issued on exercise of an ISO is taxable at capital gains
rates, and no tax deduction is available to the Company, unless the optionee
disposes of the shares within two years after the date of grant of the option or
within one year of the date the shares were transferred to the optionee. In
such event, the difference between the option exercise price and the fair market
value of the shares on the date of the option's exercise will be taxed at
ordinary income rates, and, subject to the deductibility limits of Section
162(m), the Company will be entitled to a deduction to the extent the employee
must recognize ordinary income. An ISO exercised more than three months after
an optionee's retirement from employment, other than by reason of death or
disability, will be taxed as a NQSO, with the optionee deemed to have received
income upon such exercise taxable at ordinary income rates. Subject to the
deductibility limits of Section 162(m), the Company will be entitled to a tax
deduction equal to the ordinary income, if any, realized by an employee of the
Company or a Company subsidiary.
The tax consequences resulting from the exercise of an ISO through delivery
of already-owned shares of Common stock are not completely certain. In
published rulings and proposed regulations, the Internal Revenue Service has
taken the position that generally the employee will recognize no income upon
such stock-for-stock exercise, that, to the extent an equivalent number of
shares is acquired, the employee's basis in the shares acquired upon such
exercise is equal to the employee's basis in the surrendered shares increased by
any compensation income recognized by the employee, that the employee's basis in
any additional shares acquired upon such exercise is zero and that any sale or
other disposition of the acquired shares within the one- or two-year period
described above will be viewed first as a disposition of the shares with the
lowest basis.
Restricted Stock. An employee to whom restricted stock is issued will not
have taxable income upon issuance and the Company will not then be entitled to a
deduction unless the employee, with the consent of the Company, makes an
election under Section 83(b) of the Code. However, when restrictions on shares
of restricted stock lapse, such that the shares are no longer subject to
repurchase by the Company, the employee will realize ordinary income and,
subject to the deductibility limits of Section 162(m), the Company will be
entitled to a deduction in an amount equal to the fair market value of the
shares at the date such restrictions lapse, less the purchase price therefor.
Grantees of restricted stock may not make an election under Section 83(b) of the
Code without the consent of the Company. If an election is made under Section
83(b) with respect to restricted stock, the employee will realize ordinary
income at the date of issuance equal to the difference between the fair market
value of the shares at that date less the purchase price therefor and, subject
to the deductibility limits of Section 162(m) of the Code, the Company will be
entitled to a deduction in the same amount.
Performance Awards. A participant who has been granted a performance award
generally will not recognize taxable income at the time of grant, and the
Company will not be entitled to a deduction at that time. When an award is
paid, whether in cash or Common Stock, the participant generally will recognize
ordinary income, and, subject to the deductibility limits of Section 162(m) of
the Code, the Company will be entitled to a corresponding deduction.
15
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions of each of the
Company's executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- ---- --------
<S> <C> <C>
Richard C. Price........... 42 President and Director
Edward R. Sause............ 42 Executive Vice President, Chief Financial
Officer, Secretary and Director
Scott S. Thompson.......... 39 General Counsel and Chief Leasing Officer
</TABLE>
In addition to Messrs. Richard C. Price and Edward R. Sause, whose
biographies appear above, the following person is an executive officer of the
Company:
Scott S. Thompson has served as the Company's General Counsel and Chief
Leasing Officer since July 1993. Prior to joining the Company in July 1993, Mr.
Thompson was a partner with the Los Angeles law firm of Gilchrist & Rutter where
he specialized in real estate transactions and commercial, industrial and retail
leasing. Mr. Thompson joined Gilchrist & Rutter in June 1987.
In April 1997, Edward R. Sause is expected to resign as an officer of the
Company to become an officer and director of AGC. Mr. Sause thereafter will
continue to be a director of the Company and, if approved by the Company's Board
of Directors and the Independent Committee, will serve as a consultant to the
Company. It is currently anticipated that following Mr. Sause's resignation as
Executive Vice President, Chief Financial Officer and Secretary of the Company,
Paul W. Major will be appointed to serve as Senior Vice President-Acquisitions
of the Company, William C. Regan will be appointed to serve as Vice President-
Controller of the Company, Neil M. Miller will be appointed to serve as Vice
President-Finance of the Company and Scott S. Thompson will be appointed to
serve as the Company's Secretary. Mr. Major currently is Vice President-
Acquisitions of the Company, Mr. Regan currently is Controller of the Company
and Mr. Miller currently is Associate General Counsel of the Company. Such
appointments are subject to approval by the Company's Board of Directors.
16
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of the close of business on March 26, 1997, the Company had outstanding
12,364,320 shares of Common Stock. The following table sets forth information as
to the number of shares of Common Stock beneficially owned as of March 26, 1997
by (i) each person known by the Company to be the beneficial owner of more than
5% of any class of the Company's voting securities, (ii) each director of the
Company, (iii) the Chief Executive Officer and other named executive officers,
and (iv) the Company's directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP (2) PERCENT OF CLASS
- --------------------------- ------------------------ ----------------
<S> <C> <C>
David G. Price ....................... 3,346,177 (3) 22.3%
Richard A. Archer .................... 7,500 (4) *
John C. Cushman, III ................. 17,000 (4) *
Bruce Karatz ......................... 7,600 (4) *
Charles S. Paul ...................... 10,000 (4) *
Richard C. Price ..................... 160,000 (5) 1.3%
Edward R. Sause ...................... 180,550 (6) 1.4%
Scott S. Thompson .................... 34,500 (7) *
All directors and executive officers
as a group (8 persons) ............... 3,763,327 24.6%
</TABLE>
- ----------------------
* Less than 1%
(1) Unless otherwise indicated, the address for each named person is c/o
National Golf Properties, Inc., 2951 28th Street, Suite 3001, Santa Monica,
California 90405.
(2) For purposes of this Proxy Statement, beneficial ownership of securities is
defined in accordance with the rules of the Securities and Exchange
Commission and means generally the power to vote or exercise investment
discretion with respect to securities, regardless of any economic interests
therein. Except as otherwise indicated, the Company believes that the
beneficial owners of shares of Common Stock listed below have sole
investment and voting power with respect to such shares, subject to
community property laws where applicable.
(3) Includes 673,475 shares of Common Stock owned of record by the Price Trust
of which David G. Price is the sole trustee, and David G. Price, his wife
Dallas P. Price and their children are the beneficiaries, and 2,672,702
shares of Common Stock issuable upon exchange of 2,672,702 OP Units
beneficially owned by Mr. Price. Does not include 5,404,268 shares of
Common Stock issuable upon exchange of an additional 5,404,268 OP Units
beneficially owned by Mr. Price which presently are not entitled to be
exchanged pursuant to the terms of the OP Partnership Agreement. Exchange
of any of the OP Units beneficially owned by Mr. Price is subject to the
ownership limit contained in the Company's Articles of Incorporation (the
"Ownership Limit"), which prohibits the actual or constructive ownership of
more than 9.8% of the outstanding shares of Common Stock by any person.
Without regard to the Ownership Limit and the limitation on the exchange of
OP Units contained in the OP Partnership Agreement, all 8,076,970 OP units
beneficially owned by Mr. Price presently would be exchangeable into
8,076,970 shares of Common Stock and the total amount and percentage of
shares of Common Stock beneficially owned by Mr. Price as of March 26, 1997
would be 8,750,445 and 42.8%, respectively.
17
<PAGE>
(4) Includes 4,000 shares of Common Stock issuable upon exercise of options
that are presently exercisable and excludes 2,000 shares of Common Stock
subject to options that are not exercisable within 60 days.
(5) Includes 16,000 shares of Common Stock that Richard C. Price is entitled to
vote but that are subject to forfeiture upon termination of his employment
and various other restrictions, 75,000 shares of Common Stock that
presently are issuable upon exchange of 75,000 OP Units owned by Mr. Price,
and 45,000 shares of Common Stock issuable upon exercise of options that
presently are exercisable. Does not include 15,000 shares of Common Stock
subject to options that are not exercisable within 60 days and shares of
Common Stock issuable upon exchange of 11,185 OP Units that presently are
not exchangeable. Richard C. Price currently is the beneficial owner of
86,185 OP Units, which constitute less than 1% of all OP Units outstanding.
(6) Includes 56,000 shares of Common Stock that Mr. Sause is entitled to vote
but that are subject to forfeiture upon termination of his employment and
various other restrictions, 55,550 shares of Common Stock that are
presently issuable upon exchange of all of the 55,550 OP Units owned by Mr.
Sause, and 45,000 shares of Common Stock issuable upon exercise of options
that are presently exercisable. Does not include 55,000 shares of Common
Stock subject to options that are not exercisable within 60 days.
(7) Includes 22,000 shares of Common Stock that Mr. Thompson is entitled to
vote but that are subject to forfeiture upon termination of employment and
various other restrictions and 7,500 shares of Common Stock issuable upon
exercise of options that presently are exercisable. Does not include 7,500
shares of Common Stock subject to options that are not exercisable within
60 days.
18
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of
the Company's Chief Executive Officer and the two other executive officers of
the Company (the "Named Executive Officers") for the fiscal years ended December
31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ------------------------------------
AWARDS PAYOUTS
------------------ --------------
SECURITIES
RESTRICTED UNDERLYING
STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) SARS(#) PAYOUTS(3) COMPENSATION(4)
- --------------------------- ---- ------ ----- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Price................... 1996 $215,798 $86,319 -- -- $217,920 $2,250
President 1995 $210,535 $84,214 -- -- $170,920 $2,250
1994 $205,000 $82,000 -- -- $171,920 $2,250
Edward R. Sause.................... 1996 $215,798 $86,319 (2) 40,000 $217,920 $2,250
Executive Vice President, Chief 1995 $210,535 $84,214 -- -- $170,920 $2,250
Financial Officer and Secretary 1994 $205,000 $82,000 -- -- $171,920 $2,250
Scott S. Thompson.................. 1996 $140,000 $35,000 (2) -- $108,960 $2,250
General Counsel and Chief 1995 $131,584 $25,000 -- -- $ 85,460 $2,250
Leasing Officer 1994 $128,125 $25,000 -- -- $ 85,960 $1,041
</TABLE>
(1) The aggregate number and value of shares of restricted stock, all of which
shares are designated as long term incentive awards, held by each Named
Executive Officer as of December 31, 1996, were as follows: Mr. Richard C.
Price, 16,000 shares valued at $506,000; Mr. Sause, 56,000 shares valued at
$1,771,000; and Mr. Thompson, 13,000 shares valued at $411,125. Such shares
represent the unvested portion of the 40,000, 40,000 and 20,000 shares of
restricted stock awarded to Messrs. Price, Sause and Thompson,
respectively, in 1993. All such shares vest on a pro-rata basis over a
five year period, and unvested shares are subject to continued employment
and certain additional conditions such as financial performance of the
Company. During the period in which any restrictions apply, holders of
restricted stock are entitled to receive all dividends or other
distributions paid with respect to such stock.
(2) Restricted stock awards are subject to performance restrictions and are
designated as long-term incentive awards.
(3) Represents the market value of the shares of restricted stock that vested
in 1996, 1995 and 1994 as of the vesting date.
(4) Represents contributions to the Company's 401(k) Retirement Plan.
19
<PAGE>
STOCK OPTION GRANTS
The following table provides information on options to purchase Common
Stock granted in 1996 to the Named Executive Officers pursuant to the Company's
Stock Incentive Plan:
INDIVIDUAL GRANTS OF STOCK OPTIONS (1)
<TABLE>
<CAPTION>
Number of % of Total
Securities Option Shares
Underlying Granted to Exercise or
Options Employees in Base Price Expiration Grant Date
Name Granted Fiscal Year per Share (2) Date Present Value (4)
- ----------------------- ---------- ------------- ------------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Richard C. Price.............. -- -- -- -- --
Edward R. Sause............... 40,000 100 $25.875 Jul 30, 2006 (3) $245,368.00
Scott S. Thompson............. -- -- -- -- --
</TABLE>
(1) Stock appreciation rights were not granted during 1996.
(2) Options are granted at the market price of Common Stock on the date of
grant.
(3) 25% of these options will become exercisable at the end of each of the
first four years following the date such options were granted.
(4) These values were established using the Black-Scholes stock option
valuation model. Assumptions used to calculate the grant date present
value of option shares granted during 1996 were in accordance with SFAS
123, as follows:
(a) Expected Volatility -- The standard deviation of the continuously
compounded rates of return calculated on the average daily stock price over
a period of time immediately preceding the grant and equal in length to the
expected life. The volatility was 19.6%.
(b) Risk-Free Interest Rate -- The rate available at the time the grant was
made on zero-coupon U.S. Government issues with a remaining term equal to
the expected life. The risk-free interest rate was 6.3%.
(c) Dividend Yield -- The expected dividend yield was 1.3% based on the
historical dividend yield over a period of time immediately preceding the
grant date equal in length to the expected life of the grant.
(d) Expected Life -- The expected life of the grant was four years,
calculated based on the historical expected life of previous grants.
(e) Forfeiture Rate -- Under SFAS 123, forfeitures may be estimated or
assumed to be zero. The forfeiture rate was assumed to be zero.
20
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information related to the exercise of stock
options during the year ended December 31, 1996 by each of the Named Executive
Officers and the 1996 fiscal year-end value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
SHARES AT FY-END OPTIONS/SARS AT FY-
ACQUIRED VALUE EXERCISABLE/ END EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE (1)
- ---- ----------- --------- ---------------------- -------------------
<S> <C> <C> <C> <C>
Richard C. Price ............. -- N/A 45,000/15,000 $506,250/168,750
Edward R. Sause .............. -- N/A 45,000/55,000 $506,250/398,750
Scott S. Thompson ............ 15,000 $94,425 7,500/7,500 $ 84,375/84,375
</TABLE>
(1) Calculated on the basis of the closing price per share of Common Stock on
the NYSE of $31.625 on December 31, 1996, the last trading day in fiscal
1996.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On August 18, 1993, the Company entered into employment agreements with
Richard C. Price and Edward R. Sause. Each agreement was for an initial term of
two years that is automatically extended for an additional year on the
expiration of the initial term and each anniversary thereafter unless earlier
terminated pursuant to the terms of the agreements. Each agreement provides for
a base salary for the twelve calendar months beginning August 18, 1993 at the
annual rate of $200,000 to be adjusted annually at the discretion of the
Company's Board of Directors, but at a minimum to reflect increases in the
Consumer Price Index. The agreements provide for bonus compensation on the terms
set forth below.
Each agreement includes provisions restricting the officers from competing,
directly or indirectly, with the Company or the Operating Partnership during
employment and, except in certain circumstances, for one year after termination
of employment. Each of the employment agreements provide for certain severance
payments in the event of disability or termination by the Company without cause
or by the employee with good reason.
The Company generally will have cause to terminate Mr. Price's and Mr.
Sause's employment if they (1) engage in acts or omissions with respect to the
Company which constitute intentional misconduct or a knowing violation of law;
(2) personally receive a benefit in money, property or services from the Company
or from another person dealing with the Company in violation of law; (3) breach
their non-competition covenant with the Company; (4) breach their duty of
loyalty to the Company; (5) engage in gross negligence in the performance of
their duties; or (6) frequently and repeatedly fail to perform services that
have been reasonably requested of them by the Company's Board of Directors and
which are consistent with the terms of the employment agreements.
Mr. Price and Mr. Sause generally will have good reason to terminate their
employment with the Company in the event of any reduction in their compensation
without their consent, any material breach or default by the Company under the
employment agreements or any substantial diminution in their respective duties.
The Compensation Committee established incentive compensation arrangements
for its executive officers and certain key employees beginning in 1993. These
arrangements provide that each executive officer and covered key employee will
earn a cash bonus if certain targets specified for each participant are met.
The amount of cash bonus to Company employees is based on a formula determined
for each employee by the Compensation Committee but
21
<PAGE>
will not exceed 50% of base salary. Pursuant to his employment agreement, Mr.
Sause's bonus with respect to each fiscal year of his employment will, if the
Company satisfies the performance targets specified by the Compensation
Committee, be equal to 40% of his base salary for such fiscal year.
Mr. Sause is expected to resign as Executive Vice President, Chief
Financial Officer and Secretary of the Company in April 1997 in order to assume
the role of principal financial officer and director at AGC. Subject to
approval of the Company's Board of Directors and the Independent Committee, upon
Mr. Sause's resignation, his existing employment agreement with the Company will
be terminated and replaced with a consulting agreement pursuant to which Mr.
Sause will continue to provide certain services to the Company on an as-needed
basis. Mr. Sause also will continue to serve as a director of the Company. See
"Certain Relationships and Related Transactions."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Messrs. Cushman and Paul,
neither of whom is or has been an officer or employee of the Company. For a
description of the background of each of these individuals, see "Election of
Directors--Directors Continuing in Office."
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report and the Stock Performance Graph shall be deemed not to
be incorporated by reference by any general statement incorporating by reference
this proxy statement into any filings under the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, except to the extent that
the Company specifically incorporates this information by reference and shall
not otherwise be deemed filed under such Acts.
Compensation and benefit practices of the Company are established and
governed by the Compensation Committee, which is made up of two Independent
Directors. The Compensation Committee is chartered to establish the general
compensation policy of the Company, to review and approve compensation of the
executive officers of the Company and to administer all of the Company's
employee benefit plans. The Compensation Committee reviews the Company's
overall compensation program to assure that it (i) is reasonable and consistent
with competitive practices, (ii) adequately recognizes performance, and (iii)
meets the Company's overall compensation and business objectives.
COMPENSATION PHILOSOPHY
The primary focus of the Company's compensation program is to create value
for stockholders. The Committee attempts to promote desired financial and
operational results by attracting, motivating and assisting in the retention of
key employees with outstanding ability. In addition, the compensation program
is designed to promote teamwork, initiative and resourcefulness on the part of
key employees whose performance and responsibilities directly affect the Company
profits. In this regard, the compensation program is designed to balance short
and long-term incentive compensation to achieve desired results and above all to
pay for performance. The Compensation Committee intends to establish policies
regarding qualification of compensation under Section 162(m) of the Code to the
extent it considers such policies appropriate.
COMPENSATION MIX
The Company's executive compensation is based on three components designed
in each case to accomplish the Company's compensation philosophy.
Base Salary. Salaries for executives are reviewed by the Compensation
Committee on an annual basis and may be increased based upon an assessment of
the individual's contributions to the asset and financial growth of the
22
<PAGE>
Company as well as competitive pay levels. The Compensation Committee generally
targets base salary levels within the range of the 50th to 75th percentile of
salaries paid by other publicly-traded REITS, with a desire to reward excellent
results with incentive compensation consistent with the Company's pay-for-
performance philosophy.
Base salary levels for the Company's executive officers for 1996 fell in
the middle part of the targeted range. The Compensation Committee has reviewed
the base salary for each of the executive officers for 1996 and believes that
such compensation is reasonable in view of the Company's performance and the
contribution of those officers to that performance. The increases in base
salary experienced by Mr. Price and Mr. Sause in 1996 represented cost-of-living
increases provided for in their employment agreements. The increase in base
salary experienced by Mr. Thompson in 1996 represented a merit increase as well
as a cost-of-living increase.
Annual Cash Incentive Awards. Annual cash bonus incentive awards
generally are designed to protect stockholder interests by establishing a cash
available for distribution or reinvestment performance target (the "Performance
Target") which must be satisfied before any awards are paid to executive
officers. The Performance Target is based on increases in FFO and, in the case
of the Company's President (the "President"), the acquisitions made by the
Company. To establish the Performance Target, the Compensation Committee sets
goals for such criteria at the beginning of each year at a level considered to
provide stockholders with an acceptable rate of return. For the 1996
Performance Target, these goals were adjusted upward from the goals set in the
previous year to reflect expected performance of the Company's golf course
portfolio. In addition to satisfying the Performance Target, bonus awards also
are based on personal performance measured by the extent of which personal goals
are achieved.
A target award is established for each officer based on the level of his or
her position and on competitive practices. The Compensation Committee approves
each officer's target award. The target award is expressed as a percentage of
salary and as a corresponding dollar amount. No award can exceed 50% of an
officer's base salary. The Performance Target approved by the Compensation
Committee was achieved in 1996. See "Executive Compensation--Summary
Compensation Table."
Stock Options and Restricted Stock. If the 1997 Plan is approved by the
Company's stockholders, the Compensation Committee may grant stock options,
restricted stock and performance awards to executives and other key employees of
the Company pursuant to the 1997 Plan. In determining the grants of stock
options, restricted stock and performance awards, the Compensation Committee
takes into account, among other things, the competitive practice in the REIT
industry, the respective scope of responsibility and the anticipated performance
requirements and contributions to the Company of each proposed award recipient.
Stock options, restricted stock and performance awards are designed to align the
interest of executives with those of the stockholders. The Compensation
Committee believes that significant equity interests in the Company held by the
Company's management serve to retain and motivate management.
President. Mr. Richard C. Price, the President, is employed pursuant to a
two-year employment agreement which became effective August 18, 1993. The terms
of the employment agreement were determined when the terms of the Company's
initial public offering were negotiated in August 1993, and not by the
Compensation Committee. Pursuant to the employment agreement, the President
receives base compensation of $200,000 per year with an annual CPI increase and
is entitled to participate in the Company's bonus programs. Payment of the
President's target award, which is set at 40% of base salary, depends on the
Company's achievement of certain goals based on increases in FFO, total number
of golf course acquisitions and aggregate total amount of investment in such
acquisitions. These goals are established by the Compensation Committee based in
part on the Company's annual business plan, which the President assists in
formulating. The target awards for the Company's other executive officers are
based solely upon the Company's achievement of increases in FFO. The
Compensation Committee, of which the President is not a member, has sole
discretion to determine whether the President's target award is paid.
23
<PAGE>
The President's 1996 base salary was paid in accordance with this employment
agreement, and the target award in the amount of $86,319 was also paid after the
FFO goal was exceeded, and the other performance goals were achieved for the
year.
John C. Cushman, III
Charles S. Paul
STOCK PERFORMANCE GRAPH
The graph below compares cumulative total return of the Company, the S&P
500 Index and the NAREIT Equity REIT Total Return Index from August 12, 1993,
the first day of trading of the Common Stock on the New York Stock Exchange, to
December 31, 1996. The S&P 500 Index and the NAREIT Equity REIT Total Return
Index for the month of August, 1993 have been prorated to arrive at the
beginning index used in this graph. The comparison assumes $100 was invested on
August 12, 1993 in the Company's Common Stock and each of the foregoing indices
and assumes reinvestment of dividends before consideration of income taxes.
COMPARISON OF TOTAL RETURN AMONG
NATIONAL GOLF PROPERTIES, INC., THE S&P INDEX AND
THE NAREIT EQUITY REIT TOTAL RETURN INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period NATIONAL GOLF S&P NAREIT
(Fiscal Year Covered) PROPERTIES 500 INDEX EQUITY
- ------------------- ---------- --------- ------
<S> <C> <C> <C>
Measurement Pt-08/12/93 $100.00 $100.00 $100.00
FYE 09/30/93 $103.07 $102.99 $107.47
FYE 12/31/93 $110.07 $105.39 $ 99.53
FYE 03/31/94 $ 98.79 $101.39 $102.92
FYE 06/30/94 $108.82 $101.82 $104.82
FYE 09/30/94 $105.35 $106.79 $102.67
FYE 12/31/94 $117.42 $106.78 $102.69
FYE 03/31/95 $106.93 $117.17 $102.52
FYE 06/30/95 $115.98 $128.36 $108.55
FYE 09/30/95 $123.13 $138.56 $113.66
FYE 12/31/95 $131.22 $146.91 $118.91
FYE 03/31/96 $148.11 $154.79 $118.16
FYE 06/30/96 $143.92 $161.74 $123.42
FYE 09/30/96 $168.06 $166.74 $131.50
FYE 12/31/96 $193.43 $180.64 $156.29
</TABLE>
The stock performance depicted in the above graph is not necessarily
indicative of future performance. The Stock Performance Graph shall not be
deemed to be "soliciting material" or to be "filed" with the SEC or subject
to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange
Act, except to the extent that the Company specifically requests that such
information be treated as soliciting material or specifically incorporates them
by reference into a filing under the Securities Act or the Exchange Act.
24
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 1, 1996, the Company exercised certain options to acquire two golf
course properties owned by the Price Trust and two golf course properties owned
by a partnership that is beneficially owned 90% by David G. Price and 10% by
Richard C. Price (such four golf course properties collectively, the ''Option
Golf Courses''). The Option Golf Courses previously collateralized certain
participating mortgage loans (the "Loans") made by the Company to the prior
owners of the Option Golf Courses in an aggregate principal amount of
approximately $25.2 million, which Loans were guaranteed by AGC. In connection
with acquiring the Option Golf Courses, (i) the Company assumed $25.2 million in
aggregate principle amount of indebtedness, (ii) the Operating Partnership
issued approximately 61,000 OP Units to the owners of the Option Golf Courses,
(iii) the Company agreed to pay AGC approximately $3 million as reimbursement
for AGC's cost of constructing a clubhouse on one of the Option Golf Courses,
(iv) the Company agreed to reduce the base rent and modify the percentage rents
payable by AGC on each of the Option Golf Courses so as to comport generally
with other leases then in effect between AGC and the Company, and (v) the
Company agreed to reduce the base rent payable by AGC with respect to the
Company's Carolina Shores golf course, which was originally acquired by the
Company at the time of its initial public offering, by $250,000 per year,
beginning on July 1, 1996, for the remaining term of approximately 17 years.
On May 14, 1996, the Operating Partnership entered into an Office Lease
(the "Lease") with 2951 Company LLC, a California limited liability company that
is majority-owned by David G. Price, with respect to approximately 5,100 square
feet of commercial office space that the Company is using as its corporate
headquarters. The term of the Lease is 12 years, commencing December 16, 1996.
The Lease requires the Company to make monthly rental payments of approximately
$9,500 for the first five years of the term, followed by a higher fixed monthly
rental payment for the remaining seven years of the term. Cushman Realty
Corporation, of which John C. Cushman, III, is President and Chief Executive
Officer, represented 2951 Company LLC as its exclusive broker in its purchase of
the office building which is subject to the Lease, for which Cushman Realty
Corporation was paid $188,250.00 by the seller of such property.
Robert Williams, a limited partner in the Operating Partnership, is the
holder of a promissory note for approximately $2.1 million that the Company
assumed at the time of the Company's initial public offering in 1993 in
connection with the Company's acquisition of four golf courses from a
corporation that previously had been 50% owned by Mr. Williams. Mr. Williams
owns 75,003 OP Units, which could be exchanged for 75,003 shares of Common
Stock.
During 1994, the Operating Partnership entered into 16 leases with AGC with
respect to 20 golf courses acquired in such year, during 1995, the Operating
Partnership entered into eight leases with AGC with respect to 10 golf courses
acquired in such year, and during 1996, the Operating Partnership entered into
12 leases with AGC with respect to 31 golf courses (including the 20 golf
courses acquired from Golf Enterprises, Inc.). The aggregate initial annual
base rent payable under such leases is approximately $8.8 million for the leases
entered into in 1994, $7.3 million for the leases entered into in 1995 and $13.3
million for the leases entered into in 1996. Pursuant to the Company's Bylaws,
the terms of all such leases were approved by the Independent Committee. The
Company's General Counsel and Chief Leasing Officer, who has no prior
affiliation with David G. Price or his affiliates (including AGC), assists the
Independent Committee with respect to certain potential conflicts of interest
between the Company and affiliates of David G. Price, including the negotiation,
enforcement and renegotiation of all leases. David G. Price, the Chairman of
the Board of Directors of the Company, owns approximately 70.5% of the
outstanding common stock of AGC. Richard C. Price, the President and a director
of the Company, together with his wife owns approximately 4.0% of the
outstanding common stock of AGC. See "Election of Directors-Board of Directors
Meetings; Committees and Compensation."
Edward R. Sause is expected to resign as an officer of the Company to
become an officer and director of AGC in April 1997. Following his resignation,
it is currently anticipated that, subject to approval by the Company's Board of
Directors and the Independent Committee, Mr. Sause will enter into a consulting
agreement with the Company pursuant to which Mr. Sause will provide consulting
services on an as-needed basis to the Company.
25
<PAGE>
Such consulting services would consist of advising the Company on capital
raising, budgeting, financial reporting, acquisitions, corporate governance and
strategic planning. It is expected that Mr. Sause will be paid approximately
$200.00 per hour for the consulting services he provides pursuant to such
agreement. It is currently anticipated that, upon becoming an officer and
director of AGC, AGC will issue to Mr. Sause shares of common stock of AGC and
options to acquire shares of common stock of AGC.
David G. Price currently intends to enter into an agreement with Paul W.
Major pursuant to which Mr. Price will grant to Mr. Major an option to purchase
shares of AGC common stock which, subject to certain vesting requirements
(including full vesting in the event of a sale or certain other corporate
transactions involving AGC), will enable Mr. Major to receive shares of AGC
common stock. Subject to approval of the Company's Board of Directors, it is
currently anticipated that Mr. Major will be appointed Senior Vice President-
Acquisitions of the Company in April 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission and the New York Stock Exchange initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten-percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with, except that each
of Richard A. Archer, John C. Cushman, III, Bruce Karatz and Charles S. Paul
failed to file a Form 5 for the year ended December 31, 1995 with respect to two
grants of restricted stock and two grants of stock options made in 1995. Each
of Messrs. Archer, Cushman, Karatz and Paul included such grants in a Form 5
filed for the year ended December 31, 1996.
26
<PAGE>
APPOINTMENT OF AUDITORS
Coopers & Lybrand L.L.P. audited the Company's financial statements for the
year ended December 31, 1996 and has been the Company's auditors since the
Company's formation in 1993. The Audit Committee of the Company's Board of
Directors has selected the firm of Coopers & Lybrand L.L.P. as independent
accountants for the Company for the fiscal year ending December 31, 1997. A
representative of Coopers & Lybrand L.L.P. is expected to be present at the
Annual Meeting with an opportunity to make a statement if he desires to do so,
and such representative is expected to be available to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
The proxy rules adopted by the SEC provide that certain proposals by the
Company stockholders must be included in the proxy statement for the Company's
Annual Meeting. For a proposal to be considered for inclusion in next year's
proxy statement, it must be received by the Company no later than December 4,
1997.
The Company stockholders may also bring business for consideration at next
year's Company Annual Meeting (the "1998 Meeting"). In addition to any other
applicable requirements, the Company Bylaws provide that in order for business
to be properly brought before the 1998 Meeting by a stockholder, the stockholder
must give notice of such business in writing to the secretary of the Company.
The notice must be delivered to or mailed and received at the principal
executive offices of the Company, not less than fifty days nor more than
seventy-five days prior to the 1998 Meeting; provided, however that in the event
that less than sixty-five days' notice or prior public disclosure of the date of
the 1998 Meeting is given or made to stockholders, notice by the stockholder
must be received not later than the close of business on the fifteenth day
following the day on which such notice of the date of the 1998 Meeting was
mailed or such public disclosure was made, whichever occurs first. A
stockholder's notice to the secretary shall set forth (a) as to each matter the
stockholder proposes to bring before the 1998 Meeting (i) a brief description
of the business desired to be brought before such meeting and their reasons for
conducting such business at such meeting, (ii) the name and record address of
the stockholder proposing such business, (iii) the class, series and number of
shares of the Company which are beneficially owned by the stockholder, and (iv)
any material interest of the stockholder in such business and (b) as to the
stockholder giving the notice (i) the name and record address of the stockholder
and (ii) the class and number of shares of capital stock of the Company which
are beneficially owned by the stockholder. Any stockholder business not meeting
these requirements will not be brought before the 1998 Meeting.
OTHER MATTERS
The Board of Directors of the Company knows of no matters to be presented
at the Annual Meeting other than those described in this Proxy Statement. Other
business may properly come before the Company Annual Meeting, and in that event
it is the intention of the persons named in the accompanying proxy to vote in
accordance with their judgment on such matters.
The Company's Annual Report to Stockholders, including the Company's
audited financial statements for the year ended December 31, 1996, is being
mailed herewith to all stockholders of record. THE COMPANY WILL PROVIDE WITHOUT
CHARGE TO ANY PERSON SOLICITED HEREBY, UPON THE WRITTEN REQUEST OF ANY SUCH
PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL
STATEMENTS OF AGC, FOR THE YEAR ENDED DECEMBER 31, 1996 FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH REQUESTS SHOULD BE DIRECTED TO THE
INVESTOR RELATIONS DEPARTMENT OF THE COMPANY, AT 2951 28TH STREET, SUITE 3001,
SANTA MONICA, CALIFORNIA 90405.
27
<PAGE>
ALL STOCKHOLDERS ARE URGED TO IMMEDIATELY COMPLETE, SIGN AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
/s/ Edward R. Sause
Edward R. Sause
Executive Vice President
and Secretary
Santa Monica, California
April 4, 1997
28
<PAGE>
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NATIONAL GOLF PROPERTIES, INC.
ANNUAL MEETING OF STOCKHOLDERS--MAY 6, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of NATIONAL GOLF PROPERTIES, INC., a Maryland
corporation ("NGP"), revoking all prior proxies, does hereby nominate,
constitute and appoint Richard C. Price and Edward R. Sause, or either of
them, the true and lawful proxies, agents and attorneys-in-fact of the
undersigned, with full power of substitution to vote all shares of common
stock of NGP, standing in the name of the undersigned on NGP's books at the
close of business on March 31, 1997, at the Annual Meeting of Stockholders to
be held at DC3 Restaurant - Flight Room, 2800 Donald Douglas Loop North,
Santa Monica, California on Tuesday, May 6, 1997 at 9:00 a.m. local time (or
at any adjournments or postponements thereof) (the "Annual Meeting"), with
all the powers which would be possessed by the undersigned if personally
present, upon the following proposals described in the accompanying Proxy
Statement dated April 4, 1997 (the "Proxy Statement").
(Continued and to be signed on other side)
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<PAGE>
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Please mark
your votes [X]
as in this
example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NAMED
NOMINEES AND "FOR" THE APPROVAL OF NGP'S 1997 EQUITY PARTICIPATION PLAN.
1. Election of Directors To vote for both of the following nominees: Richard
A. Archer, David G. Price.
FOR WITHHOLD
For both nominees except: _________________________ [_] [_]
2. Proposal to approve the 1997 Equity Participation Plan of NGP, National
Golf Operating Partnership, L.P. and American Golf Corporation (the "1997
Plan").
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, to vote on any other matter that may properly come
before the Annual Meeting and at any adjournments or postponements thereof.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE TO ENSURE RECEIPT PRIOR TO THE ANNUAL MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
IF NO CONTRARY INSTRUCTION IS INDICATED ABOVE,
THIS PROXY WILL BE VOTED FOR ELECTION OF THE
NAMED NOMINEES AND FOR APPROVAL OF THE 1997
PLAN.
The undersigned hereby acknowledges receipt of
the accompanying Notice of Annual Meeting of
Stockholders dated April 4, 1997 and Proxy
Statement.
I PLAN TO ATTEND THE ANNUAL MEETING. [_]
Signature(s) ____________________________ Date _______________________ , 1997
Note: Please sign name exactly as your name (or names) appears printed in the
space above. When signing as attorney, executor, administrator, trustee or
guardian, please give full title. If more than one trustee, all should
sign. All joint owners must sign.
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