<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 18, 1998
----
RENAISSANCE GOLF PRODUCTS, INC.
You are cordially invited to attend the Annual Meeting of Stockholders of
Renaissance Golf Products, Inc. (the "Company"), which will be held Thursday,
June 18, 1988 at the Company's principal executive offices located at 12187
South Business Park Drive, Suite 100, Draper, Utah 84020, telephone number (801)
501-0200 at 7:00 p.m. local time, or any adjournment thereof for the following
purposes:
1. To elect Company directors for the upcoming year;
2. To approve an amendment of the Company's Certificate of Incorporation
to provide for the name of the Company to be changed to "World Sports Marketing,
Inc.";
3. To approve a quasi-reorganization of the Company permitting a
restatement of the Company's balance sheet as of April 1, 1998 eliminating any
deficit and establishing a new earned surplus account for the accumulation of
earnings;
4. To approve the Company's 1998 Stock Option and Incentive Plan providing
for a total of 1,800,000 shares of the Company's Common Stock to be set aside
for grant pursuant to the 1998 Stock Option Plan in accordance with the
directions of the Company's Compensation Committee as approved by the Board of
Directors;
5. To consider and ratify the appointment of DELOITTE & TOUCHE LLP as
independent auditor of the Company for the fiscal year ending December 31, 1998;
and
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on April 30, 1998 will
be entitled to vote at the Annual Meeting or adjournment thereof.
By Order of the Board of Directors
John B. Hewlett
Chairman of the Board
, 1998
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IMPORTANT
PLEASE COMPLETE, DATE, SIGN, AND MAIL PROMPTLY THE ENCLOSED PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO
EVEN THOUGH YOU HAVE RETURNED YOUR PROXY.
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
12187 South Business Park Drive, Suite 100
Draper, Utah 84020
PRELIMINARY PROXY STATEMENT
May ___, 1998
------------------------
SOLICITATION OF PROXIES
Date, Time, and Place
This Proxy Statement and the accompanying proxy/voting instruction card
("Proxy Card") are being mailed beginning on or about the date shown above, to
holders of common shares (the "Stockholders") in connection with the
solicitation of proxies by the Board of Directors (the "Board of Directors" or
"Board") of RENAISSANCE GOLF PRODUCTS, INC., a Delaware corporation (the
"Company"), to be used at the Annual Meeting of Stockholders (the "Meeting"), to
be held __, June __, 1998 at the Company's principal executive offices located
at 12187 South Business Park Drive, Suite 100, Draper, Utah 84020, telephone
number (801) 501-0200, at 7:00 p.m. local time, or any adjournment thereof.
QUORUM AND VOTING
Proxies are solicited to give all Stockholders of record at the close of
business on April 30, 1998 (the "Record Date"), an opportunity to vote on
matters that come before the Meeting. This procedure is necessary because
Stockholders live in various states and many may not be able to attend the
Meeting. Shares of Common Stock (the "Shares") can be voted only if the
Stockholder is present in person or is represented by proxy. The presence in
person or by proxy of the holders of a majority of the total outstanding voting
Shares is necessary to constitute a quorum at the Meeting.
When your Proxy Card is returned properly signed, the Shares represented
will be voted in accordance with your directions. You can specify your choices
by marking the appropriate boxes on the enclosed Proxy Card. If your Proxy Card
is signed and returned without specifying choices, the Shares will be voted as
recommended by the Board of Directors. Abstentions marked on the Proxy Card and
broker non-votes are voted neither "for" nor "against" items being voted upon,
but are counted in the determination of a quorum.
As of the Record Date, there were 7,050,670 Shares outstanding. Each
outstanding Share is entitled to one vote on each matter properly brought before
the Meeting other than the election of Directors which is by cumulative voting.
SOLICITATION AND COST
The Company will bear all costs and expenses related to this solicitation
of proxies by the Board of Directors, including the costs of preparing,
printing, and mailing to the Stockholders this Proxy Statement and accompanying
materials. In addition to the solicitation of proxies by use of the mails, the
Directors, Officers, and employees of the Company, without receiving additional
compensation, may solicit proxies personally, by telephone, or by any other
means of communication.
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REVOCABILITY OF PROXY
If you wish to give your proxy to someone other than the persons designated
by the Board of Directors, all names appearing on the enclosed Proxy Card must
be crossed out and the name of another person or persons inserted. The signed
card must be presented at the Meeting by the person or persons representing you.
You may revoke your proxy at any time before it is voted at the Meeting by
executing a later-dated proxy, by voting by ballot at the Meeting, or by filing
a written revocation of your proxy with the Company before the Meeting.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO SIGN AND RETURN THE
ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. If you
do attend, you may vote by ballot at the Meeting, thereby canceling any proxy
previously given.
As a matter of policy, proxies, ballots, and voting tabulations that
identify individual Stockholders are kept private by the Company. Such
documents are available for examination only by the inspectors of election and
certain personnel associated with processing Proxy Cards and tabulating the
vote. The vote of any Stockholder is not disclosed except as may be necessary
to meet legal requirements.
DOCUMENTS INCORPORATED BY REFERENCE
The Company specifically incorporates the Financial Statements for the year
ended December 31, 1997, filed as part of the 1997 Annual Report on Form 10-KSB
in response to Item 13 of the 10-KSB. The Annual Report and attached Financial
Statements should have been enclosed in the mailing containing this Proxy
Statement. If you did not receive a copy of the Annual Report and attached
Financial Statement, please contact the Company and request that the information
be sent to you. A copy of the 1997 Annual Report may be obtained from the
Company without cost to the requesting Stockholder by contacting the Company.
INTERESTS OF PERSONS IN MATTERS TO BE ACTED UPON
Upon the election of the Directors at the Meeting, each Director will
be granted 25,000 options upon being elected to the Board to purchase shares of
the Company's Common Stock at a price equal to the fair market value upon the
date of grant. One quarter of the options granted to each Director shall become
subject to exercise upon the successful completion of each calendar quarter of
service as a Director. If a Director is unable to complete his term as a
Director he will forfeit any options not exercisable at the time of his
resignation or dismissal as a Director. The nominees for Directors include:
John B. Hewlett, Dennis L. Crockett, Ralph W. Rasmussen, Bruce H. Haglund, and
Steven L. Flint.
The Board of Directors is recommending the Stockholders approve the 1998
Stock Option and Incentive Plan which provides for 1,800,000 shares of the
Company's Common Stock to be set aside for grant in accordance with the
directions of the Compensation Committee as approved by the Board of Directors.
The options to be granted pursuant to the 1998 Stock Option and Incentive Plan
are intended primarily for grant to Officers, Directors, and key employees of
and key service providers to the Company. Although the Board has not determined
to whom and in what amounts the options will be granted, the Board intends to
approve grants of options to those Officers, Directors, and key personnel who
contribute to the success of the Company during the coming years.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING SECURITIES
As of the Record Date for the Annual Meeting of Stockholders, the number of
issued and outstanding shares of Common Stock totaled 7,050,670.
PRINCIPAL STOCKHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Company's Shares as of April 30, 1998 for (i) each current
Director and each nominee for Director (ii) each named executive officer of the
Company as defined in 402(a)(2) of Regulation S-B of the Securities Act of 1933,
(iii) all persons known by the Company to beneficially own more than 5% of the
Company's voting Shares, and (iv) all officers and Directors of the Company as a
group.
<TABLE>
<CAPTION>
Name and Address of
Beneficial Owner(1) NUMBER OF SHARES (2) PERCENT OF TOTAL (3)
-------------------- -------------------- --------------------
<S> <C> <C> <C>
John B. Hewlett (4) 2,756,250 35.7%
Kenneth W. Craig (5) 452,093 6.2%
Dennis L. Crockett (6) 346,875 4.9%
Miles T. Doody (7) 357,343 4.8%
Wade M. Mitchell (8) 400,000 5.5%
AKA Charitable Trust (9) 646,875 8.7%
Bruce H. Haglund (10) 851,750 11.7%
All officers and Directors (11) 5,940,498 49.8%
as a group (ten persons)
</TABLE>
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(1) Unless otherwise noted, the Company believes that all Shares are
beneficially owned and that all persons named in the table or family
members have sole voting and investment power with respect to all Shares
owned by them. Unless otherwise indicated, the address of each Stockholder
is 12187 South Business Park Drive, Suite 100, Draper, Utah 84020.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon the
exercise of warrants or options.
(3) Assumes 7,164,834 Shares outstanding plus, for each individual, any
securities that specific person has the right to acquire upon exercise of
presently exercisable stock options. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days from the date hereof have been exercised.
(4) Includes 1,000,000 Shares issuable to Mr. Hewlett, and affiliates which he
controls, upon the exercise of currently vested stock options at a price of
$0.50 per Share, 1,000,000 Shares issuable at a price of $1.00 per Share,
225,000 Shares at $3.00 per share, and 500,000 Shares issuable at
$4.25 per Share. Mr. Hewlett's address is 2919 East Granite Hollow Street,
Sandy, Utah 84092.
(5) Includes 403,000 Shares issuable upon the exercise of presently exercisable
stock options at a price of $0.50 per Share and 40,000 Shares issuable at
$3.00 per Share.
(6) Includes 100,000 Shares issuable upon the exercise of presently exercisable
stock options at a price of $0.50 per Share. Mr. Crockett's address is 7050
Union Park Center, Suite 600, Midvale, Utah 84047.
(7) Includes 335,000 Shares issuable upon the exercise of presently exercisable
stock options at a price of $0.50 per Share. Mr. Doody's address is 2983
Java Road, Costa Mesa 92626.
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(8) Includes 200,000 Shares issuable to Mr. Mitchell upon the exercise of stock
options at a price of $0.50 per Share, 150,000 Shares issuable at $1.00 per
Share, and 50,000 Shares issuable at $3.00 per Share.
(9) Includes 200,000 Shares issuable upon the exercise of presently exercisable
stock options at a price at $1.50 per Share, 100,000 Shares issuable at
$2.00 per Share, and 100,000 Shares issuable at $3.00 per Share. Ralph W.
Rasmussen is trustee of the AKA Charitable Remainder Trust.
(10) Includes 250,000 Shares issuable upon the exercise of presently exercisable
stock options at a price of $0.50 per Share and 100,000 Shares issuable at
$3.00 per Share. Mr. Haglund's address is 2010 Main Street, Suite 400,
Irvine, California 92614.
(11) Includes a total of 4,873,000 Shares issuable upon exercise of presently
exercisable stock options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions During 1997
In October 1997, the Board of Directors of the Company approved and granted
an aggregate of 500,000 options exercisable at $3.00 per share to key management
personnel and service providers during 1997. The options vested upon grant and
expire ten years after the grant. The following Directors and Officers received
options in the following amounts: John B. Hewlett, 225,000 options; Wade
Mitchell, 50,000 options; Kenneth W. Craig, 50,000 options, Kurt A. Moore,
75,000 options; and Bruce H. Haglund, 100,000 options. During the first quarter
of 1998, the Company acted to register the shares into which the options can be
converted by filing a Form S-8 with the Securities and Exchange Commission.
During 1997, the Company entered into credit arrangements with the AKA
Charitable Remainder Unitrust #1. The first line of credit was for a maximum
amount of up to $1,000,000 and the second line of credit, still being utilized
by the Company, is for a maximum amount of up to $5,000,000. The lines of credit
have provided the Company with an indispensable cash resource to utilize as the
Company has emerged from near insolvency experienced in the 4th quarter of
1996. Each line of credit, bearing interest at 12%, has been made possible
through the personal guaranty of the credit line by John B. Hewlett, the
Company's Chairman of the Board and Chief Executive Officer.
In December 1997, pursuant to the terms of a Stock Option Agreement, an
affiliate of John B. Hewlett exercised 400,000 stock options at $0.50 per Share
in consideration of the forgiveness of $200,000 of consulting fees owed to Mr.
Hewlett's affiliate by the Company. The Shares were donated to a charitable
organization controlled by a board of directors consisting of five directors,
one of which is Mr. Hewlett.
During September 1997, the Board of Directors of the Company approved and
granted an aggregate of 150,000 options to Kurt A Moore. These options vest in
one-third increments upon the earlier of achieving certain performance goals or
ratably over ten years and are subject to cancellation upon termination of
employment. The performance goals are that the Company achieves sales of
$8,000,000 in 1998, $12,000,000 in 1999, and $18,000,000 in 2000. Edward B.
Paulsen, the Company's Assistant Secretary also received 30,000 options to vest
in 10,000 option increments on January 1, 1998, 1999, and 2000.
Bruce H. Haglund billed the Company approximately $36,000 for legal fees
during 1997.
Transactions During 1996
In connection with the 1996 Private Placement (the "Financing"), the
Company by vote of the Board of Directors, agreed to grant a total of 5,477,000
non-qualified stock options (the "1996 Options"), all of which are exercisable
at a price of $.50 or $1.00 per share and expire on December 31, 2006. The
shares issuable upon exercise of the 1996 Options are not subject to any price
adjustments. The specific grants are reflected in the Options Outstanding chart
below.
During the first quarter of 1997, John B. Hewlett, Chairman of the Board of
Directors, agreed to guaranty a letter of credit to Fila Sport S.p.A. in the
amount of $400,000 to insure compliance with the Company's revised license
agreement for the Fila trademark. Additionally, the Company and Mr.
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Hewlett jointly entered into a loan and security agreement and promissory note
with a lender in April 1997, which provided the Company up to a maximum of
$1,000,000 for working capital. This line of credit was later replaced with a
new line of up to $5,000,000. Mr. Hewlett remains a co-borrower on the new line.
During 1996, Miles T. Doody advanced a total of $50,000 to the Company to
enable the Company to pay various expenses during the year. In October 1996, the
Company agreed to convert the $50,000 advance into a promissory note bearing
interest at 10% and due on June 30, 1999.
In October 1996, the Company agreed with Bruce H. Haglund, Secretary and
general counsel to the Company, to convert up to $150,000 of accrued legal fees
into a promissory note bearing interest at 10% and due on June 30, 1999. The
Company also agreed to grant Mr. Haglund non-qualified stock options to purchase
750,000 Shares at a price of $0.50 per Share. Mr. Haglund's billings for legal
fees to the Company for the fiscal year ended December 31, 1996 totaled
approximately $63,000.
In October 1996, the Company agreed to pay an affiliate of John B. Hewlett
a consulting fee for services to the Company of $250,000 payable as follows:
$50,000 on January 1, 1997, $100,000 on January 1, 1988, and $100,000 on January
1, 1999. Further, the Company agreed to grant an affiliate of Mr. Hewlett non-
qualified stock options to purchase 400,000 Shares at a price of $0.50 per
Share. The consulting services performed by the affiliate of Mr. Hewlett
involved providing marketing contacts and expertise to help accomplish the
Company's plan to re-focus its business strategy and marketing efforts to place
greater emphasis on market niches which have not been productive in the past and
could likely be expanded.
The Company granted Wade B. Mitchell 200,000 1996 Options exercisable at
the price of $.50 per share any time until their expiration 10 years from the
date of grant and 150,000 1996 Options exercisable at the price of $1.00 per
share. The options were granted to Mr. Mitchell for his services provided in
1996 on behalf of the Company to implement the Company's re-focused business
strategy and marketing efforts.
In October 1996, the Company entered into an oral agreement with Kenneth W.
Craig to serve as an Officer of the Company for three years. The oral agreement
provided for a minimum base salary of $48,000 per annum plus a quarterly
incentive compensation bonus equal to 1% of the adjusted gross sales of the
Company for various product lines. Further, the Company agreed to grant Mr.
Craig non-qualified stock options to purchase 600,000 Shares at a price of $0.50
per Share. A total of 300,000 of the options are vested and 300,000 vest upon
the earlier of achieving certain performance goals or ratably over ten years.
The performance goals are that the Company achieve sales of $5,000,000 in 1997,
which the Company accomplished, $8,000,000 in 1998, and $10,000,000 in 1999. The
options are exercisable until December 31, 2006. Mr. Craig's employment
agreement was modified during 1997 to provide $48,000 per year in salary, but to
discontinue any commission on Company sales.
Employees of the Company were granted an aggregate of 417,000 1996 Options,
of which 150,000 have been canceled, which vest upon the earlier of achieving
certain performance goals or ratably over ten years and are subject to
cancellation upon termination of employment. The performance goals are that the
Company achieve sales of $5,000,000 in 1997, $8,000,000 in 1998, and $10,000,000
in 1999. The options are exercisable until December 31, 2006.
A summary of the outstanding options held by key management, directors, and
service providers as of April 30, 1998 follows on the next page:
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Options Outstanding
<TABLE>
<CAPTION>
NAME OF RECIPIENT RELATIONSHIP NUMBER VESTING EXERCISE CONSIDERATION
- ----------------- ------------ OF SHARES DATE PRICE -------------
--------- ---- -----
<S> <C> <C> <C> <C> <C>
John B. Hewlett Chairman, 1,000,000 12/31/96 $1.00 (4)
President 225,000 10/27/97 $3.00 (4)
500,000 3/17/98 $4.25 (4)
Granite Hollow Consultant (1) 600,000 12/31/96 $0.50 (4)
Pine Valley, Ltd. Consultant (2) 400,000 12/31/96 $0.50 (4)
Dennis L. Crockett Director 100,000 12/31/96 $0.50 (5)
Miles T. Doody Director 335,000 12/31/96 $0.50 (6)
Kenneth W. Craig V.P. 300,000 12/31/96 $0.50 (7)
309,000 (3) $0.50 (7)
40,000 10/27/97 $3.00 (7)
Bruce H. Haglund Secretary 250,000 12/31/96 $0.50 (8)
100,000 10/27/97 $3.00 (8)
Wade B. Mitchell Director, 200,000 12/31/96 $0.50 (9)
V.P. 150,000 12/31/96 $1.00 (9)
50,000 10/27/97 $3.00 (9)
Kurt A. Moore V.P. 60,000 10/27/97 $3.00 (10)
150,000 (10) $1.25 (10)
Mont E. Warren C.F.O. 150,000 12/31/97 $0.50 (11)
AKA Charitable Trust Director 200,000 8/15/97 $1.50 (12)
100,000 8/15/97 $2.00 (12)
100,000 8/15/97 $3.00 (12)
Edward B. Paulsen A. Secretary 30,000 (13) $1.25 (13)
Officers and Directors 5,349,000
as a group
</TABLE>
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(1) An affiliate of John B. Hewlett.
(2) An affiliate of John B. Hewlett.
(3) Options are to vest upon the earlier of achieving certain performance goals
or ratably over 10 years. The performance goals are that the Company
achieves sales of $5,000,000 in 1997, $8,000,000 in 1998, and $7,500,000 in
1999.
(4) Mr. Hewlett was granted options for providing marketing contacts and
expertise to help implement the Company's plan to re-focus its business
strategy and marketing efforts through his affiliated companies, for his
personal guaranty of the $400,000 royalty line of credit, and his personal
guaranty of the Company's $1,000,000 and $5,000,000.
(5) Mr. Crockett was granted options for providing consulting services to help
implement the Company's re-focused business strategy.
(6) Mr. Doody agreed to waive his rights to purchase 160,000 options previously
granted and to reduce his salary to $75,000 per year.
(7) Mr. Craig was granted options for providing consulting services related to
organizing and implementing the business plan, for providing services as
the Company's President, and for guiding the Company to the achievement of
certain performance goals. An additional 50,000 options exercisable at
$3.00 per share were granted to Mr. Craig. Mr. Craig has exercised 10,000.
(8) Mr. Haglund agreed to convert $150,000 of legal fees for a long-term
promissory note due June 30, 1999, and he agreed to waive his rights to
50,000 options previously granted. An additional 100,000 options
exercisable at $3.00 per share were granted to Mr. Haglund.
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(9) Mr. Mitchell was granted options for providing services to implement the
Company's re-focused business strategy and marketing efforts. An additional
50,000 options exercisable at $3.00 per share were granted to Mr. Mitchell.
(10) A total of 75,000 options exercisable at $3.00 per share were granted to
Mr. Moore for his services provided during 1997, 15,000 of which have been
exercised. An additional 150,000 options are to vest upon the earlier of
achieving certain performance goals or ratably over 10 years. The
performance goals are that the Company achieves sales of $8,000,000 in
1998, $12,000,000 in 1999, and $18,000,000 in 2000.
(11) A total of 50,000 options vested upon the Company reaching sales goals for
1997.
(12) Mr. Rasmussen is Trustee of the AKA Charitable Remainder Trust which holds
the Options. The options were granted in connection with the Trust
supplying $1,000,000 and $5,000,000 lines of credit to the Company.
(13) Granted in 1997, the options vest 10,000 per year on January 1, 1998, 1999,
and 2000.
In conjunction with 1996 Stock Option grants to the new Directors,
executives, and consultants including John B. Hewlett and his affiliates, Bruce
H. Haglund, Culley W. Davis, Dennis L. Crockett and his affiliates, Kenneth W.
Craig, Miles T. Doody, and Wade L. Mitchell, the specifically named individuals
and their affiliates are hereinafter collectively referred to as the
"Optionholders," entered into an agreement effective in the event of approval of
the Reverse Split ("Optionholder Agreement"). Pursuant to the Optionholder
Agreement, each Optionholder placed his 1996 Options granted in conjunction with
the Financing, but excluding performance based options (the "Escrowed Options"),
into an escrow (the "Escrow") with Bruce H. Haglund, the Secretary of the
Company, to hold the Escrowed Options during the term of the Optionholder
Agreement which provides:
. All Escrowed Options and Shares issued upon the exercise of the Escrowed
Options held by any of the Optionholders participating in the
Optionholder Agreement will be held in the Escrow;
. Shares issued upon the exercise of the Escrowed Options shall be
released from the Escrow only after the post-reverse-stock split closing
price exceeds $1.50 per Share for 60 consecutive trading days (the
"Initial Release Date");
. After the Initial Release Date, the aggregate number of Shares issued
upon the exercise of the Escrowed Options released from the Escrow in
any month shall not exceed the greater of 5% of the total Escrowed
Options and Shares issued upon the exercise of Escrowed Options, or 25%
of the previous month's total trading volume of the Company's Shares;
. All Shares issued upon the exercise of the Escrowed Options shall be
subject to release from the Escrow after the earlier of the 60th
consecutive trading day that the post-stock split closing price exceeds
$5.00 per share or December 31, 2000 (the "Final Release Date"); and
. In the event the Initial Release Date has not occurred within two years
of establishment of the Escrow, the Company by a majority vote of the
directors may permit modification of the Optionholder Agreement.
The Optionholders entered into the Optionholder Agreement to provide
greater incentive for a long-term commitment to the Company by the parties. The
Initial Release Date was February 20, 1998, which represents 60 consecutive
trading days after which the closing price for the Shares exceeded $1.50 per
Share.
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Subsequent Transactions--1998
Subsequent to the year end, on March 17, 1998, the Board of Directors acted
to grant Mr. Hewlett 500,000 options exercisable at $4.25 per Share, which price
was greater than the previous trading day's close of $3.812, for his efforts
during the past year in securing adequate financing for the Company to permit
ongoing operations and for his efforts in guiding the growth of the Company. The
options are exercisable at any time on or before March 17, 2008 and are not
subject to price adjustment.
In March 1998, pursuant to the terms of a Stock Option Agreement, Bruce H.
Haglund exercised 500,000 stock options at $0.50 per Share in consideration of
the forgiveness of $250,000 of legal fees owed to Mr. Haglund by the Company,
including principal and accrued interest on a $150,000 note from the Company to
Mr. Haglund for a portion of such fees.
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act requires the Company's
officers, Directors, and persons who own more than 10% of a registered class of
the Company's equity securities to file reports of ownership and changes in
ownership with the SEC and NASDA. Officers, Directors, and greater than 10%
beneficial owners are required by SEC regulation to furnish the Company with
copies of all Section 16 (a) forms they file. The Company believes that all
filing requirements applicable to its Officers, Directors, and greater than 10%
beneficial owners were complied with.
BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of the Company.
However, in accordance with corporate governance principles, the Board is not
involved in day-to-day operating details. Members of the Board of Directors are
kept informed of the Company's business through discussions with the Chairman
and other officers, by reviewing analyses and reports sent to them, and by
participating in Board and committee meetings.
The Board held six meetings during 1997. All Directors attended more than
75% of the Meetings held.
COMMITTEES OF THE BOARD
The Board of Directors has established a number of committees, including a
Finance Committee, an Audit Committee, and a Compensation Committee, each of
which is briefly described below.
The Finance Committee was established to oversee Company expenditures and
approve contracts entered into by the Company. The committee must, by majority
vote, approve all contracts and negotiated debt obligations on behalf of the
Company whereby the obligation of the Company will exceed $2,500. The committee
consists of two outside Directors, John B. Hewlett and Wade M. Mitchell, one
employee Director, Kenneth W. Craig, and Mont Warren, the Company's Chief
Financial Officer as an ex officio member. The Finance Committee met eight times
during 1997.
The Audit Committee was established to meet with management to consider the
adequacy of the internal controls and the objectivity of financial reporting;
the committee meets with the independent auditors and with appropriate Company
financial personnel about these matters. The committee recommends to the Board
of Directors the appointment of the independent auditors, subject to
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<PAGE>
ratification by the Stockholders at the Annual Meeting. Both the internal
auditors and the independent auditors periodically meet alone with the committee
and always have unrestricted access to the committee. The committee consists of
two non-employee, Directors Dennis L. Crockett and Wade B. Mitchell, one
employee Director, Kenneth W. Craig, and Mont Warren, the Company's Chief
Financial Officer as an ex officio member. The Audit Committee met three times
during 1997.
The Compensation Committee negotiates employment contracts, recommends to
the Board of Directors compensation for officers, Directors, and employees, and
administers management incentive compensation plans, including stock option
plans. The committee consists of two non-employee Directors, John B. Hewlett and
Dennis L. Crockett, one employee Director Miles T. Doody, and Bruce H. Haglund,
Secretary and General Counsel to the Company, as an ex officio member, having no
vote. The Compensation Committee met three times during 1997.
Upon the election of Directors at the Meeting, the Committees will be
reconstituted.
COMPENSATION OF DIRECTORS
The Company's policy has been to not pay cash compensation to directors who
are employees or consultants of the Company for their services as directors.
The Company reimburses reasonable out-of-pocket expenses of directors for
attendance at meetings. Beginning with the election of Directors at the
Meeting, each Director will be granted 25,000 options upon being elected to the
Board to purchase shares of the Company's Common Stock at a price equal to the
fair market value upon the date of grant. One quarter of the options granted to
each Director shall become subject to exercise upon the successful completion of
each calendar quarter of service as a Director. If a Director is unable to
complete his term as a Director he will forfeit any options not exercisable at
the time of his resignation or dismissal as a Director.
LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation limits the liability of
Directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except liability for
(i) any breach of their duty of loyalty to the corporation or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) unlawful payments of dividends or unlawful
stock repurchases or redemptions, or (iv) any transaction from which the
director derived an improper personal benefit. Such limitation of liability does
not apply to liabilities arising under the federal securities laws and does not
affect the availability of equitable remedies such as injunctive relief or
rescission.
At present, there is no pending litigation or proceeding involving any
director, officer, employee, or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that might result in a claim for such indemnification.
PRICE RANGE OF COMMON STOCK
The following table sets forth, for the period from January 1996 to March
1998, the high and low bid quotations for the Common Stock during the three
most recent fiscal years as reported by the OTC Bulletin Board from November 4,
1995, to the date of this Annual Report, and the NASDAQ Small Cap Market prior
to November 4, 1995 and as adjusted after giving effect to the 1997 4:1 reverse
stock split. The prices represent quotations between dealers, without
adjustment for retail markup, mark down or commission, and do not necessarily
represent actual transactions.
9
<PAGE>
COMMON STOCK PRICE ACTUAL AND ADJUSTED
<TABLE>
<CAPTION>
High LOW
----- -----
<S> <C> <C>
1998
----
1st Quarter 4.687 2.937
1997
----
1st Quarter 2.625 1.248
2nd Quarter 2.125 1.124
3rd Quarter 2.624 1.00
4th Quarter 4.375 1.50
1996
----
1st Quarter 1.00 .75
2nd Quarter 2.154 .50
3rd Quarter 2.25 .50
4th Quarter 1.50 8.75
</TABLE>
- ----------------
The Company has not paid any cash dividends on its Common Stock since its
incorporation and anticipates that, for the foreseeable future, earnings, if
any, will continue to be retained for use in its business. As of December 31,
1997, the approximate number of record holders of the Company's Common Stock
was 255.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The Bylaws of the Company provide for the Directors to number at least five
and no more than seven. Five members of the Board of Directors are to be
elected at the Meeting. The five nominees selected by the Board of Directors
are listed on the following pages. Stockholders have cumulative voting rights
when voting for Directors; accordingly, any Stockholder may multiply the number
of Shares he or she is entitled to vote by the number of Directors to be elected
and allocate votes among the candidates in any manner. There are no conditions
precedent to the exercise of the right to cumulate votes in the election of
Directors of the Company: Stockholders may exercise such cumulative voting
rights, either in person or by proxy, with or without advance notice to the
Company. The five Director nominees receiving the highest number of votes will
be elected. Any Shares not voted, whether by abstention, broker non-vote, or
otherwise, have no impact on the vote.
The Board of Directors intends to vote proxies equally for the five
nominees unless otherwise instructed on the Proxy Card. If you do not wish your
Shares to be voted for particular nominees, please identify the exceptions in
the designated space provided on the Proxy Card.
If at the time of the Meeting one or more of the nominees have become
unavailable to serve, Shares represented by proxies will be voted for the
remaining nominees and for any substitute nominee or nominees designated by the
Board of Directors.
Directors elected at the Meeting will hold office until the next Annual
Meeting or until their successors have been elected and qualified. For each
nominee there follows a brief listing of principal occupation for at least the
past five years, other major affiliations, and age as of January 1, 1998.
NOMINEES FOR ELECTION AS DIRECTORS
The names, ages, and positions of the nominees for election as Directors
are as follows:
10
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY FIRST ELECTED
<S> <C> <C> <C>
John B. Hewlett 45 Chairman of the Board, CEO, Director 1996
Ralph W. Rasmussen 52 Director 1998
Dennis L. Crockett 46 Director 1996
Bruce H. Haglund 46 Secretary, Director Nominee --
Steven L. Flint 48 Director Nominee --
</TABLE>
John B. Hewlett has served as Chairman of the Board of the Company since
October 1996 and as Chief Executive Officer since September 1997. Mr. Hewlett
is President of Hewlett Financial Corporation. He has 22 years of experience in
the insurance field, specializing in sales and long and short-term planning.
From 1985 to the present, Mr. Hewlett has been a nationally recognized
consultant and seminar leader on closely held business succession and financial
planning. He is a member of the Million Dollar Round Table, Court of the Table,
and one of three Top of the Table members in the Intermountain West with career
insurance sales approaching $640,000,000. Mr. Hewlett is a member of the
National Basketball Association Utah Jazz 100 Club and Advisory Board.
Ralph W. Rasmussen Jr. has served as a Director of the Company since
January 1998. Mr. Rasmussen graduated from Brigham Young University with a
Bachelor of Science degree in 1969 and a law degree in 1989. From 1969 to 1986,
he provided accounting and business management services for several large
farming operations in southern Idaho. From 1989 to 1996, Mr. Rasmussen
practiced law with the firm of Bradford and Brady in Provo, Utah. In September
1996, Mr. Rasmussen sold his law practice and began working full time for one of
his clients, the Alan Ashton family and their businesses.
Dennis L. Crockett has been a Director of the Company since October 1996.
He is co-founder and Chief Operations Officer of Broadcast International, Inc.,
a communications firm specializing in the delivery of business information via
satellite, FM wireless and cable television technologies, which recently merged
with Data Broadcasting Corporation. Further, Mr. Crockett co-founded the
Instore Satellite Network, one of the nation's largest private satellite
communications networks providing private audio, video, voice, and data
broadcasts to retail clients including Safeway Stores, Osco/Savon Drug, Lucky
Stores, and RE/MAX Reality. Mr. Crockett is a nationally published composer,
arranger, vocalist, and keyboardist as well as a respected musical producer of
both record, radio, and television entertainment. Mr. Crockett attended Brigham
Young University in Provo, Utah.
Bruce H. Haglund has served as Secretary of the Company since January 1994.
Since April 1994, Mr. Haglund has been a partner in the law firm of Gibson,
Haglund & Johnson. From February 1991 to April 1994, Mr. Haglund was a principal
in the law firm of Phillips, Haglund, Haddan & Jeffers. From 1984 to February
1991, he was a partner in the law firm of Gibson & Haglund. Mr. Haglund is also
a member of the Board of Directors of GB Foods Corporation, a public company
whose stock is traded on the NASDAQ Small Cap Market. He is a graduate of the
University of Utah College of Law.
Dr. Steven L. Flint has been a Director of the Company since April 1998.
Dr. Flint has been the Senior Vice President and Chief Financial Officer of The
Alexander Group, Inc., a national marketing and sales consulting firm since
1993. Dr. Flint manages all of the firms Human Resources, Legal, Information
Technology, Accounting, and Finance functions for the corporate headquarters and
five regional offices. Before joining the Alexander Group, Dr. Flint was the
Chief Financial Officer for a software firm. He is a former University
professor having taught at Brigham Young University, Stanford University, Amos
Tuck Graduate School of Management at Dartmouth College, and The University of
Texas. He was an Ayers Fellow at the Stonier Graduate School of Banking. Dr.
Flint has served on the board of directors for the Arizona Shakespeare Festival
and Dimensional Visions Group. Dr. Flint has also served as a consultant to a
number of firms in a wide range of industries and is actively involved in
numerous community activities including The Boy Scouts of America and the Mesa
Public Elementary Schools' Advisory Board. Dr. Flint holds B.A. and M.S.
degrees from Brigham Young University and a Ph.D. from the Stanford Graduate
School of Business.
11
<PAGE>
Management intends to vote for the directors as nominated.
EXECUTIVE OFFICERS
The names, ages, and positions of the Company's executive officers, who are
not also nominees for Directors, as of April 30, 1998 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY FIRST ELECTED
<S> <C> <C> <C>
Kurt A. Moore 40 Executive Vice President 1997
Wade M. Mitchell 33 Vice President of Finance, Director 1996
Kenneth W. Craig 43 Vice President of Product Design, Director 1996
Mont E. Warren 37 Chief Financial Officer 1993
Miles T. Doody 70 Vice Chairman, Director 1993
Edward B. Paulsen 34 Assistant Secretary 1997
</TABLE>
Kurt A. Moore has served as the Executive Vice President since September
1997. Mr. Moore worked with Carbon Fiber Products ("CFP"), a publicly traded
company, as a sales manager from 1983 to 1993, and as the CPF's President from
1993 to 1995. He also served as a director for the CFP from 1992 to 1995.
During 1996, Mr. Moore worked as a mortgage loan officer with Zions Bank and
Bank of Utah. Mr. Moore attended Weber State University from 1975 to 1979,
where he was a marketing major.
Wade M. Mitchell has been a Director since October 1996 and Vice President
of Finance since October 1997. He has been employed as a business consultant
through Mitchell & Associates, a professional corporation specializing in
mergers, acquisitions, and corporate turn-arounds since 1989. Mitchell &
Associates is owned and controlled by Mr. Mitchell. From 1993 to 1995, he was a
special consultant and member of the Board of Directors of Environmental
Safeguards, Inc., of Springville, Utah, and a member of the Board of Directors
of National Fuel & Energy, Inc., a wholly-owned subsidiary of Environmental
Safeguards, Inc. From 1991 to 1993, he was the Chief Operating Officer for
Enpak Surgical Products, Inc., Salt Lake City, Utah. During 1989, he was a
marketing consultant for Novations Group, Inc., Provo, Utah, and from 1985 to
1988, he was the Director of Marketing for Great Wave Software, Inc., Scotts
Valley, California. Mr. Mitchell also serves as a director of Mitchell's
Nursery & Gifts, Inc., a member of the advisory board of GT Travel, Inc., and, a
director of Paradise Optical, Park City, Utah. Mr. Mitchell graduated from
Brigham Young University in April 1988 with a B.S. degree in science, and
received an MBA degree from Brigham Young University's Marriott School of
Management in April 1990.
Kenneth W. Craig has served as either President or Vice President of
Product Design since October 1996 and served as a Director from October 1996 to
January 1998. Mr. Craig has been a private investor since June 1993. He began
his career as an attorney in Houston, Texas and practiced law from 1980 to 1989,
specializing in contracts, tax, mergers, and acquisitions. In the early 1980's,
he participated in the growth of Telecommunications Specialist Inc. ("TSI"), a
telephone system rental company which became the largest distributor for TIE
Communications ("TIE"). In 1987, he founded TIE National Rental Company, Inc.
("TNR") to prove a pilot program for TIE's national telephone rental system. In
1991, he sold his interest in TNR to TIE to pursue the acquisition of Centel
Business Systems ("Centel") by the Williams Companies. Upon the acquisition,
Centel became Wiltel Communications Systems, Inc. and Mr. Craig serves as
President of the Finance/Marketing Divisions until May 1993. Mr. Craig has also
been actively involved in golfing in various capacities including coach of the
University of Mississippi golf team and as a buyer, director, and president of
numerous golf and country clubs. He is a graduate of Stetson University and the
University of Mississippi School of Law.
Mont E. Warren has served as Chief Financial Officer of the Company since
January 1993 and as the Company's Controller since February 1991. In December
1987, Mr. Warren began his PGA apprenticeship at Desert Highlands Golf Club in
Scottsdale, Arizona where he served as assistant Golf
12
<PAGE>
Professional through October 1990. From 1986 to 1987, Mr. Warren was employed by
American Capital Financial Services where he eventually served as a District
Manager. Mr. Warren is also the President and a member of the Board of Directors
of Villavante Maintenance Corporation. Mr. Warren obtained a B. S. degree in
Accounting from Brigham Young University in 1986.
Miles T. Doody served as Chief Executive Officer of the Company from
January 1993 through December 1996, served as President from 1990 to 1996, and
currently serves as Vice Chairman and a Director. From 1986 to 1990, Mr. Doody
operated a golf industry consulting service, advising such companies as Callaway
Golf and Bullet/Cougar Golf Company. From 1971 through 1986, Mr. Doody was
employed with Lynx Precision Golf Company, where he was involved in specific
club designs, various manufacturing procedures, and set-up, and where he served
eventually as General Manager and Executive Vice President. Mr. Doody
negotiated the acquisition by Lynx of Lilly Dache, a leading leisure sportswear
company, whereupon he became the General Manager of Lilly Dache, working with
overseas and domestic soft goods suppliers. From 1967 to 1971, Mr. Doody was
employed by P.G.A. Golf Co., serving as National Accounts Executive and National
Sales Manager.
Edward B. Paulsen has served as Assistant Secretary of the Company since
October 1997. Since February 1996, Mr. Paulsen has been an associate with the
law firm of Gibson, Haglund & Johnson. From April 1995 to February 1996, Mr.
Paulsen was an associate with the law firm of Taylor, Ennenga, Adams & Lowe in
Salt Lake City, Utah, and from August 1990 to March 1995 he was as associate
with the law firm of Chapman, Fuller & Bollard in Irvine, California. Mr.
Paulsen received a B.S. degree in accounting from Brigham Young University and a
J.D. degree from the University of Utah College of Law.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
(ITEM 2 ON PROXY CARD)
The Board of Directors recommends approving an amendment of the Certificate
of Incorporation to provide for the name of the Company to be "World Sports
Marketing, Inc."
The Board believes the Company will benefit by changing its name to World
Sports Marketing, Inc. which more accurately describes the nature of the
Company's business given the recent changes in the Company's focus from
distribution of golf products primarily in North and South America and Europe
through specialty shops to aggressive marketing, distribution, and sales of golf
and fitness equipment through specialty shops, mass merchants, and direct
marketing channels throughout the world.
The Company will still use the name of Renaissance Golf Products, Inc. in
conjunction will its continuing efforts to market and sell golf equipment
bearing the Fila brand name.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Shares is required to
approve this proposal. Management intends to vote "FOR" the proposal to effect
the name change.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO EFFECT THE NAME CHANGE, AND YOUR PROXY
WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
13
<PAGE>
QUAZI-REORGANIZATION OF THE COMPANY--RESTATEMENT OF ACCOUNTS
(ITEM 3 ON PROXY CARD)
The Board of Directors of the Company has adopted a resolution recommending
that the Stockholders approve a quasi-reorganization (the "Reorganization") of
the Company to eliminate its deficit whether resulting from operations, or the
recognition of other losses, or both, and to establish a new earned surplus
account for the accumulation of earnings subsequent to the date selected as the
effective date of the Reorganization. Stockholder approval will be conditioned
upon the Company receiving an opinion from its retained accountant that the
Company qualifies for the Reorganization. If approved, the Reorganization will
be effective April 1, 1998 and will involve restating asset and capital accounts
on the Company's balance sheet.
The Reorganization can likely be effected if at least the following
conditions exist: (1) earned surplus, as of the date selected, is exhausted; (2)
upon consummation of the quasi-reorganization, no deficit exists in any surplus
account; (3) the entire procedure is made known to all persons entitled to vote
on matters of general corporate policy and the appropriate consents to the
particular transactions are obtained in advance in accordance with the
applicable law and charter provisions; and (4) the procedure accomplishes, with
respect to the accounts, substantially what might be accomplished in a
reorganization by legal proceeding, namely, the restatement of assets in terms
of present conditions as well as appropriate modifications of capital and
capital surplus, in order to obviate so far as possible the necessity of future
reorganizations of like nature.
In the event the Reorganization is undertaken, the following specific
balance sheet line items would be changed: Property and Equipment would be
reduced by the associated Accumulated Depreciation account which would return to
zero; Accounts Receivable would be reduced by Allowance for Doubtful Accounts
which would return to zero; Inventories would be reduced by the Obsolete
Inventories balance which would return to zero; and Additional Paid-in Capital
would be reduced by the Accumulated Deficit which would return to zero. Each of
these changes would be made effective as of April 1, 1998.
The Board recommends the Reorganization and restatement of the Company's
capital accounts and assets so that the financial statements will reflect the
Company's recent efforts to revitalize the Company. The Company's recent
activities have included raising substantial capital to save the Company from
insolvency, bringing in a new management team, re-focusing the Company's
operating strategy, bringing in new lines of distribution and distributors,
producing new product lines for distribution through existing and new markets to
the Company, and acquiring other businesses.
The Board believes the Company meets all of the conditions set forth in
Section 210 of the Codification of Financial Reporting Policies for a quasi-
reorganization; although, the Company can provide no assurance that it will meet
all of the conditions at the end of the current year. Undertaking the
Reorganization involves significant risk. One of the elements considered by
regulatory authorities at the end of the year of reorganization is
profitability. In the event the Company is not profitable during 1998, the
Reorganization and accompanying restatement of the Company's balance sheet could
be rejected by regulatory authorities. Such a rejection would require a
reversal of the Restatement which could have a substantial negative effect on
the restated capital accounts, could likely effect the Company's ability to
raise additional capital through public and private markets, and could
negatively effect the Company's stock price.
Although the Company believes that the foregoing summary describes the
material elements and consequences of the proposed Reorganization, there can be
no assurance that the actual consequences will not be different.
14
<PAGE>
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Shares is required to
approve this proposal. Management intends to vote "FOR" the proposal to effect
the Reorganization.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO EFFECT THE QUASI-REORGANIZATION, AND
YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
APPROVAL OF RENAISSANCE GOLF PRODUCTS, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
(ITEM 4 ON THE PROXY CARD)
On April 24, 1998, the Board of Directors of the Company, subject to
stockholder approval, adopted the 1998 Stock Option and Incentive Plan (the
"Plan"), a copy of which is attached hereto as Exhibit "A." The Plan is intended
to provide incentive to key employees and Directors of, and key consultants,
vendors, customers, and others expected to provide significant services to, the
Company, to encourage proprietary interest in the Company, to encourage such key
employees to remain in the employ of the Company and its subsidiaries, to
attract new employees with outstanding qualifications, and to afford additional
incentive to consultants, vendors, customers, and others to increase their
efforts in providing significant services to the Company. The Company has
reserved 1,800,000 shares of Common Stock for issuance under the Plan. The
Plan provides that incentive stock options ("Incentive Stock Options") may be
granted to full-time employees (who may also be Directors) and non-statutory
stock options ("Non-statutory Stock Options") may be granted to non-employee
Directors and consultants from time to time on a discretionary basis by the
Board or the Committee. The Plan also provides for the grant of Non-statutory
Stock Options to outside members of the Board of Directors on a "formula award"
basis as provided in Rule 16b-3 of the Securities Exchange Act of 1934 ("Rule
16b-3").
The Plan provides for administration by the Board in compliance with Rule
16b-3, or by a Committee (the "Committee") appointed by the Board, which
Committee shall be constituted to permit the Plan to comply with Rule 16b-3, and
which shall consist of not less than two members, each of whom has not
participated in the Plan by way of receipt of any discretionary grant of an
option (Incentive Stock Options and Non-statutory Stock Options are together
hereinafter referred to as "Option" or "Options", unless the context otherwise
requires), and who will not so participate while serving as a member of the
Committee, and each of whom has not participated under any other plan or have
received options of the Company during the year preceding adoption of the Plan
by the stockholders (other than pursuant to a formula award grant under the
Plan). A member of the Board or a Committee member shall in no event
participate in any determination related to Options held by or to be granted on
a discretionary basis to such Board or Committee member.
The aggregate number of shares of the Company's authorized but unissued
Common Stock which may be issued upon exercise of Options under the Plan may
not exceed 1,800,000 shares. If any unexercised option, or any portion thereof,
for any reason expires or is terminated, do not vest or are not delivered, the
unexercised or unvested shares allocable to such Option may again be made
subject to any Award.
Upon the election of Directors at the Annual Stockholders Meeting, 25,000
options to purchase Shares of the Company's Common Stock shall be granted to
each Director. The options shall be granted at the fair market price on the date
of election, vesting 1/4 upon the successful completion of each calendar quarter
of service as a Director.
Options must be evidenced by written stock option agreements in such form
as the Committee may from time to time determine. Each Option must state the
number of shares to which it pertains and must provide for the adjustment
thereof if the outstanding shares of Common Stock are exchanged for cash or a
different number or kind of shares or securities of the Company, or if the
outstanding shares of the Common Stock are increased, decreased, exchanged for,
or otherwise changed, or if additional shares or new or different shares or
securities are distributed with respect to the outstanding shares of the Common
Stock, through a reorganization or merger in which the Company is the surviving
entity or
15
<PAGE>
through a combination, consolidation, recapitalization, reclassification, stock
split, stock dividend, reverse stock split, stock consolidation or other capital
change or adjustment. In addition, the Board or the Committee may grant such
additional rights in the foregoing circumstances as the Board or the Committee
deems to be in the best interests of any participant and the Company in order to
preserve for the participant the benefits of the Award.
The exercise price in the case of any Incentive Stock Option must not be
less than the fair market value on the date of grant and, in the case of any
Option granted to an optionee who owns more than 10% of the total combined
voting power of all classes of outstanding stock of the Company, must not be
less than 110% of the fair market value on the date of grant. The exercise
price, in the case of any Non-statutory Stock Option, must not be less than 85%
of the fair market value on the date of grant.
The purchase price is payable in full in United States dollars upon the
exercise of the Option; provided, however, that if the applicable Option
agreement so provides, the purchase price may be paid (i) by the surrender of
shares in good form for transfer, owned by the participant and having a fair
market value on the date of exercise equal to the purchase price, or in any
combination of cash and shares, as long as the sum of the cash so paid and the
fair market value of the shares so surrendered equals the purchase price; (ii)
by cancellation of indebtedness owed by the Company to the participant; (iii)
with a full recourse promissory note executed by the participant; or (iv) any
combination of the foregoing. The interest rate and other terms and conditions
of such note must be determined by the Board or the Committee. The Board or
Committee may require that the participant pledge his shares of Common Stock to
the Company for the purpose of securing the payment of such note, in which event
the stock certificate(s) representing such shares may not be released to the
participant until such note has been paid in full.
Each Option must state the time or times which all or part thereof
becomes exercisable. No Option may be exercised after the expiration of 10
years from the date it was granted, and no Option granted to an optionee who
owns more than 10% of the total combined voting power of all classes of
outstanding stock of the Company may be exercised after the expiration of five
years from the date it was granted. During the lifetime of a participant in the
Plan, his Options may be exercisable only by him and shall not be assignable or
transferable. If a participant dies while Options are exercisable, they may be
exercised, subject to the condition that no option shall be exercisable after
the expiration of 10 years from the date granted and to the extent the right to
exercise the Option accrued at any time within three months after the death of
the participant, by the executors or administrators of the deceased participant
or by persons who acquired the option directly from the deceased option holder
by bequest or inheritance.
Within the limitations of the Plan, the Board or Committee may modify,
extend or renew outstanding Options or accept the cancellation of outstanding
Options (to the extent not previously exercised) for the granting of new Options
in substitution therefor. No modification of an Option may, without the consent
of the participant, alter or impair any rights or obligations under any Option
previously granted.
In the case of Incentive Stock Options granted under the Plan, the
aggregate fair market value (determined as of the date of the grant thereof) of
the shares with respect to which Incentive Stock Options become exercisable by
any participant for the first time during any calendar year (under the Plan and
all other plans maintained by the Company) may not exceed $100,000. The Board
or Committee may, however, with the participant's consent, authorize an
amendment to the Incentive Stock Option which renders it a Nonstatutory Stock
Option.
The stock option agreements authorized under the Plan may contain such
other provisions not inconsistent with the terms of the Plan (including, without
limitation, restrictions upon the exercise of the Options) as the Board or the
Committee deems advisable.
16
<PAGE>
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Shares is required to
approve this proposal. Management intends to vote "FOR" the proposal to approve
the 1998 Stock Option and Incentive Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO APPROVE THE 1998 STOCK OPTION AND
INCENTIVE PLAN, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
RATIFICATION OF APPOINTMENT OF AUDITORS
(ITEM 5 ON PROXY CARD)
The Board of Directors has selected Deloitte & Touche LLP as independent
public accountants for the Company for the fiscal year ending December 31, 1998,
subject to the approval of the Stockholders. To the knowledge of the Company,
at no time has Deloitte & Touche LLP had any direct or indirect financial
interest in or any connection with the Company other than as independent public
accountants. A representative of Deloitte & Touche LLP will be available at the
Meeting to make a statement if the representative so desires and to respond to
appropriate questions.
Corbin & Wertz acted as the Company's independent public accountants for
the years ending December 31, 1996 and 1997. In conjunction with the Company
moving its principal executive office and warehousing functions to Utah, the
Board of Directors determined to change to an auditor with an office in close
proximity to the Company's office in Utah. Upon the recommendation of the Board
of Directors, Corbin & Wertz, located in Irvine, California, will be dismissed
effective April 30, 1998 by the Company in order for the Company to appoint
Deloitte & Touche, located in Salt Lake City, Utah as its auditors. Corbin &
Wertz for the past two years has issued "going concern" opinions based upon the
the Company's financial condition, but has had no disagreements with the
Company. The Company does not anticipate any representative of Corbin & Wertz
being available at the Meeting.
Ratification of the appointment of auditors requires a majority of the
votes cast thereon. Any Shares not voted, whether by abstention, broker non-
vote, or otherwise, have no impact on the vote. If the Stockholders do not
ratify this appointment, other independent auditors will be considered by the
Board or Directors upon recommendation of the Audit Committee.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Shares is required to
approve this proposal. Management intends to vote "FOR" the proposal to ratify
the auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE AUDITORS, AND YOUR PROXY WILL BE
SO VOTED UNLESS YOU SPECIFY OTHERWISE.
REPORT ON EXECUTIVE COMPENSATION
The Company's compensation programs are designed to link executives'
compensation to the performance of the Company. The annual salary paid to
executives over the past three years reflect fixed amounts that are deemed
competitive for executives with comparable ability and experience in the
industry. Additionally, because of cash flow issues for the Company, executives
have not received increases in salary for three years, and in some instances,
executives have taken a salary cut.
17
<PAGE>
COMPENSATION OF OFFICERS
The compensation paid to the John B. Hewlett, the Chief Executive Officer
during a portion of 1997, Kenneth W. Craig, the President for a portion of 1997
and 1996, and Miles T. Doody, the President for a portion of 1996 are reflected
in the Summary Compensation Table. Messrs. Hewlett and Craig joined the Company
in 1996. No other executive officers are listed because none have received
compensation in excess of $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- --------------------------------------------------------------------------------------------------------
NAME AND OTHER AWARDS PAYOUTS ALL
PRINCIPAL YEAR SALARY BONUS ANNUAL -------------------------------------
POSITION ($) ($) COMPEN- RESTRICTED OPTIONS/ LTIP OTHER (1)
SATION STOCK ($) SARS (#) PAYOUTS ($)
($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JOHN HEWLETT, 1996 -0- -0- -0- -0- 2,400,000(2) - -
---------------------------------------------------------------------------------------------
CHAIRMAN,CEO 1997 -0- -0- -0-(3) -0- 225,000(4) - -
- -----------------------------------------------------------------------------------------------------------------------
KENNETH CRAIG, 1996 12,000 3,000 -0- -0- 600,000(6) - -
---------------------------------------------------------------------------------------------
V.P. PRODUCTS(5) 1997 48,000 53,000 -0- -0- 50,000(4) - -
- -----------------------------------------------------------------------------------------------------------------------
MILES DOODY 1995 121,000 -0- -0- -0- -0- - -
---------------------------------------------------------------------------------------------
VICE CHAIRMAN 1996 75,000 -0- -0- -0- 360,000(7) - -
---------------------------------------------------------------------------------------------
1997 75,000 -0- -0- -0- -0- - -
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Remuneration Described in the table does not include the cost to the
Company of benefits furnished to the named executive officers, including
premiums for health insurance and other personal benefits provided to such
individual that are extended to all employees of the Company in connection
with their employment. The value of such benefits cannot be precisely
determined; however, the executive Officers named above did not receive
other compensation in excess of the lesser of $50,000 or 10% of such
Officers' cash compensation.
(2) Granted To John B. Hewlett And Affiliates Of John B. Hewlett. A Total Of
$1,400,000 Priced At $.50 Per Share And 1,000,000 Priced At $1.00 Per
Share.
(3) During 1997, John B. Hewlett's affiliate exercised 400,000 options which it
had assigned to a charitable organization.
(4) Priced at $3.00 per Share.
(5) During the year Kenneth W. Craig stepped down as President to devote his
efforts toward identifying and pursuing acquisitions of companies and
assets which would benefit the Company. Mr. Craig's employment agreement
was modified during 1997 to provide $48,000 per year in salary, but to
discontinue any commission on Company sales.
(6) A total of $300,000 priced at $0.50 per Share vested at the time of grant.
An additional 300,000 Shares priced at $0.50 per Share vest over three
years upon achieving sales goals of $5,000,000 in 1997, which the Company
accomplished, $8,000,000 in 1998, and $10,000,000 in 1999.
(7) In conjunction with the 1996 Financing, Mr. Doody agreed to forfeit stock
options for 160,000 Shares at $4.00 per Share granted in 1993 and to convert
a short-term $50,000 note of the Company to a promissory note in exchange
for 360,000 stock options exercisable at $0.50 per share which price was
above the market price.
Option Grants in Last Fiscal Year--Individual Grants
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
<S> <C> <C> <C> <C>
Number of % of Total
Securities Options
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Underlying Granted to
Options Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year(1) Price ($/Sh) Date
- ----------------------- ----------- --------------- ----------------- -----------
<S> <C> <C> <C> <C>
John B. Hewlett 225,000 28.8% $3.00 12/31/2007
Kenneth W. Craig 100,000 12.8% $0.50 12/31/2006
Kenneth W. Craig 50,000 6.4% $3.00 12/31/2007
</TABLE>
(1) An aggregate of 781,000 options were granted to Officers, Directors, and
employees during 1997.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholders proposals intended for inclusion in next years proxy statement
should be sent via certified mail-return receipt requested to Bruce H. Haglund,
Secretary, 12187 South Business Park Drive, Suite 100, Draper, Utah 84020, and
must be received by March 1, 1999.
MISCELLANEOUS AND OTHER MATTERS
Management knows of no matters to come before the Meeting other than those
specified herein. If any other matter should come before the Meeting, then the
persons named in the enclosed form of proxy will have discretionary authority to
vote all proxies with respect thereto in accordance with their judgment.
DOCUMENTS INCORPORATED BY REFERENCE
The Company specifically incorporates the Financial Statements for the year
ended December 31, 1997, filed as part of the 1997 Annual Report on Form 10-KSB
in response to Item 13 of the 10-KSB. The Annual Report and attached Financial
Statements should have been enclosed in the mailing containing this Proxy
Statement. If you did not receive a copy of the Annual Report and attached
Financial Statement, please contact the Company and request that the information
be sent to you. A copy of the 1997 Annual Report may be obtained from the
Company without cost to the requesting stockholder by contacting the Company.
A COPY OF THE COMPANY'S CURRENT ANNUAL REPORT ON FORM 10-KSB AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, IS BEING MAILED TO EACH STOCKHOLDER TOGETHER WITH THIS PROXY
STATEMENT. ADDITIONAL COPIES MAY BE OBTAINED BY STOCKHOLDERS WITHOUT CHARGE BY
WRITING TO: RENAISSANCE GOLF PRODUCTS, INC., 12187 SOUTH BUSINESS PARK DRIVE,
SUITE 100, DRAPER, UTAH 84020. COPIES OF ANY EXHIBITS TO THE ANNUAL REPORT,
SPECIFICALLY LISTED IN THE ANNUAL REPORT, MAY BE OBTAINED BY STOCKHOLDERS WITH A
CHARGE EQUAL TO THE COMPANY'S COST TO COPY AND SEND ANY REQUESTED EXHIBIT.
19
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
PAGE
I. PURPOSE........................................................... 1
II. DEFINITIONS....................................................... 1
III. EFFECTIVE DATE.................................................... 3
IV. ADMINISTRATION.................................................... 3
V. PARTICIPATION..................................................... 4
5.1 Eligibility............................................... 4
5.2 Ten Percent Stockholders.................................. 4
5.3 Stock Ownership........................................... 4
5.4 Outstanding Stock......................................... 4
VI. STOCK SUBJECT TO THE PLAN......................................... 5
VII. OPTIONS........................................................... 5
7.1 Stock Option Agreements................................... 5
7.2 Number of Shares.......................................... 5
7.3 Exercise Price............................................ 5
7.4 Medium and Time of Payment................................ 5
7.5 Term and Transferability of Options....................... 5
7.6 Modification, Extension, and Renewal of Options........... 6
7.7 Limitation on Grant of Incentive Stock Options............ 6
7.8 Annual Grants to Directors................................ 6
7.9 Other Provisions.......................................... 6
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS,
AND BENEFICIARIES................................................. 6
8.1 Employee Status........................................... 6
8.2 No Employment Contract.................................... 6
8.3 No Transferability........................................ 6
8.4 Plan Not Funded........................................... 7
8.5 Adjustments upon Recapitalizations and Corporate Changes.. 7
8.6 Termination of Employment................................. 7
8.7 Death of Participant...................................... 7
8.8 Disability of Participant................................. 8
8.9 Retirement of Participant................................. 8
8.10 Rights as a Stockholder................................... 8
8.11 Deferral of Payments...................................... 8
8.12 Acceleration of Awards.................................... 8
i
<PAGE>
IX. MISCELLANEOUS..................................................... 8
9.1 Termination, Suspension, and Amendment.................... 8
9.2 No Fractional Shares...................................... 9
9.3 Tax Withholding........................................... 9
9.4 Restrictions of Elections Made by Participants............ 9
9.5 Limitations on the Corporation's Obligations.............. 9
9.6 Compliance with Laws...................................... 9
9.7 Governing Law............................................. 10
9.8 Securities Law Requirements............................... 10
9.9 Execution................................................. 11
ii
<PAGE>
RENAISSANCE GOLF PRODUCTS, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
I. PURPOSE
The 1998 Stock Option and Incentive Plan is intended to provide incentive
to key employees and directors of, and key consultants, vendors, customers, and
others expected to provide significant services to, the Corporation, to
encourage proprietary interest in the Corporation, to encourage such key
employees to remain in the employ of the Corporation and its Subsidiaries, to
attract new employees with outstanding qualifications, and to afford additional
incentive to consultants, vendors, customers, and others to increase their
efforts in providing significant services to the Corporation.
II. DEFINITIONS.
2.1 "Award" shall mean an Option, which may be designated an Incentive
Stock Option or a Nonstatutory Stock Option, in each case as granted pursuant to
the Plan.
2.2 "Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing an Award.
2.3 "Beneficiary" shall mean the person, persons, trust, or trusts
entitled by will or the laws of descent and distribution to receive the benefits
specified under the Plan in the event of a Participant's death.
2.4 "Board" shall mean the Board of Directors of the Corporation.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.6 "Committee" shall mean the committee, if any, appointed by the Board
in accordance with Section 4 of the Plan, or the Board if no Committee has been
appointed.
2.7 "Common Stock" shall mean the Common Stock, $.001 par value, of the
Corporation.
2.8 "Corporation" shall mean Renaissance Golf Products, Inc., a Delaware
corporation, and its Subsidiaries.
2.9 "Disability" shall mean the condition of a Participant who is unable
to perform his or her substantial and material job duties due to injury or
sickness or such other condition as the Board or Committee may determine in its
sole discretion and/or engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
2.10 "Effective Date" shall mean June 30, 1998, a date after the Plan was
adopted by the stockholders of the Company and enacted by the Board.
2.11 "Eligible Employee" shall mean an individual who is employed (within
the meaning of Code Section 3401 and the regulations thereunder) by the
Corporation. Additionally for purposes of this Plan, a Participant who is a
director or a consultant, vendor, customer, or other provider of significant
services to the
EXHIBIT "A"-1
<PAGE>
Corporation or a Subsidiary shall be deemed to be an Eligible Employee, and
service as a director, consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary shall be deemed to be
employment, except that no Incentive Stock Option may be granted to a non-
employee director or non-employee consultant, vendor, customer, or other
provider of significant services to the Corporation or a Subsidiary.
2.12 "Event" shall mean any of the following:
(a) Any person or entity (or group of affiliated persons or entities)
acquires in one or more transactions, whether before or after the effective date
of the Plan, ownership of more than 50% of the outstanding shares of stock
entitled to vote in the election of directors of the Corporation; or
(b) The dissolution or liquidation of the Corporation or a
reorganization, merger, or consolidation of the Corporation with one or more
entities, as a result of which the Corporation is not the surviving entity, or a
sale of all or substantially all of the assets of the Corporation as an entirety
to another entity.
For purposes of this definition, ownership does not include ownership (i)
by a person owning such shares merely of record (such as a member of a
securities exchange, a nominee, or a securities depository system), (ii) by a
person as a bona fide pledgee of shares prior to a default and determination to
exercise powers as an owner of the shares, (iii) by a person who is not required
to file statements on Schedule 13D by virtue of Rule 13d-1(b, or (iv) by a
person who owns or holds shares as an underwriter acquired in connection with an
underwritten offering pending and for purposes of resale.
2.13 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
2.14 "Exercise Price" shall mean the price per Share of Common Stock,
determined by the Board or the Committee, at which an Award may be exercised.
2.15 "Fair Market Value" shall mean the value of one Share of Common
Stock, determined as follows:
(a) If the Shares are traded on an exchange, the price at which Shares
traded at the close of business on the date of valuation; or
(b) If the Shares are traded over-the-counter on the OTC System, the
closing price if one is available, or the mean between the bid and asked prices
on such System at the close of business on the date of valuation; or
(c) If neither (i) nor (ii) above applies, the fair market value as
determined by the Board or the Committee in good faith. Such determination
shall be conclusive and binding on all persons.
2.16 "Incentive Stock Option" shall mean an option described in Section
422A(b) of the Code.
2.17 "Nonstatutory Stock Option" shall mean an option not described in
Section 422(b), 422A(b), 423(b) or 424(b) of the Code.
2.18 "Option" shall mean either an Incentive Stock Option or a Nonstatutory
Stock Option granted pursuant to the Plan.
2.19 "Participant" shall mean Eligible Employee who has received an Award
under the Plan.
EXHIBIT "A"-2
<PAGE>
2.20 "Plan" shall mean the Renaissance Golf Products, Inc. 1998 Stock
Option and Incentive Plan, as it may be amended from time to time.
2.21 "Purchase Price" shall mean the Exercise Price times the number of
Shares with respect to which an Award is exercised.
2.22 "Restricted Stock Awards" shall mean any Award of shares of Common
Stock that may be subject to certain restrictions and to a risk of forfeiture.
2.23 "Retirement" shall mean the voluntary termination of employment by an
Employee upon the attainment of age 65 and the completion of not less than 20
years of service with the Corporation or a Subsidiary.
2.24 "Rule 16b" shall mean Rule 16b of the Securities and Exchange Act of
1934.
2.25 "Share" shall mean one share of Common Stock, adjusted in accordance
with Section 8.5 of the Plan (if applicable).
2.26 "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
2.27 "Stock Appreciation Right" shall mean the right granted to a
Participant to be paid an amount measured by the appreciation in the Fair Market
Value of the Common Stock from the date of grant to the date of exercise of the
right, with payment to be made in cash, Common Stock, or property as specified
in the Award or determined by the Committee.
2.28 "Stock Option Agreements" shall mean an Award Agreement granting
Options under the Plan.
2.29 "Stock Purchase Agreement" shall mean an agreement to exercise Options
under the Plan.
2.30 "Subsidiary" shall mean any corporation at least 50% of the total
combined voting power of which is owned by the Corporation or by another
Subsidiary.
2.31 "Tax Date" shall have the meaning set forth in Section 9.3 hereof.
III. EFFECTIVE DATE
The Effective Date of the Plan is June 30, 1998.
IV. ADMINISTRATION
The Plan shall be administered by the Board in compliance with Rule 16b-3,
or by a Committee appointed by the Board, which Committee shall be constituted
to permit the Plan to comply with Rule 16b-3, and which shall consist of not
less than two members. The Board shall appoint one of the members of the
Committee, if there be one, as Chairman of the Committee. If a Committee has
been appointed, the Committee shall hold meetings at such times and places as it
may determine. Acts of a majority of the Committee at which a quorum is
present, or acts reduced to or approved in writing by a majority of the members
of the Committee, shall be the valid acts of the Committee. The Board, or the
Committee if there be one, shall from time to time at its discretion select the
Eligible Employees and consultants who are to be granted Awards, determine the
number of Shares to be applicable to such Award, and designate any Options as
Incentive Stock Options or Nonstatutory Stock Options, except
EXHIBIT "A"-3
<PAGE>
that no Incentive Stock Option may be granted to a non-employee director or a
non-employee consultant. A member of the Board or a Committee member shall in no
event participate in any determination relating to Awards held by or to be
granted to such Board or Committee member; however, a member of the Board or a
Committee member shall be entitled to receive Awards approved by the
stockholders in accordance with the provisions of Rule 16b-3. The interpretation
and construction by the Board, or by the Committee if there be one, of any
provision of the Plan or of any Award granted thereunder shall be final. No
member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award granted
thereunder. In addition to any right of indemnification provided by the Articles
of Incorporation or Bylaws of the Corporation, such person shall be indemnified
and held harmless by the Corporation from any loss, cost, liability or expense
that may be imposed upon or reasonably incurred by him in connection with any
claim, suit, action or proceeding to which he may be a party by reason of any
action or omission under the Plan.
V. PARTICIPATION
5.1 Eligibility. Subject to the terms and conditions of Section 5.2
below, the Participants shall be such persons as the stockholders may approve or
as the Committee may select from among the following classes of persons: (i)
Eligible Employees of the Corporation or of a Subsidiary (who may be officers,
whether or not they are directors); and (ii) consultants, vendors, customers,
and others expected to provide significant services to the Corporation or a
Subsidiary.
For purposes of this Plan, a Participant who is a director or a consultant,
vendor, customer, or other provider of significant services to the Corporation
or a Subsidiary shall be deemed to be an Eligible Employee, and service as a
director, consultant, vendor, customer, or other provider of significant
services to the Corporation or a Subsidiary shall be deemed to be employment,
except that no Incentive Stock Option may be granted to a non-employee director
or non-employee consultant, vendor, customer, or other provider of significant
services to the Corporation or a Subsidiary, and except that no Nonstatutory
Stock Option may be granted to a non-employee director or non-employee
consultant, vendor, customer, or other provider of significant services to the
Corporation or a Subsidiary other than upon a vote of a majority of
disinterested directors finding that the value of the services rendered or to be
rendered to the Corporation or a Subsidiary by such non-employee director or
non-employee consultant, vendor, customer, or other provider of services is at
least equal to the value of the Awards granted.
5.2 Ten-Percent Stockholders. An Eligible Employee who owns more than 10%
of the total combined voting power of all classes of outstanding stock of the
Corporation, its parent or any of its Subsidiaries shall not be eligible to
receive an Award for an Incentive Stock Option unless (i) the Exercise Price of
the Shares subject to such Award is at least 110% of the Fair Market Value of
such Shares on the date of grant; and (ii) such Award by its terms is not
exercisable after the expiration of five years from the date of grant.
5.3 Stock Ownership. For purposes of Section 5.2 above, in determining
stock ownership an Eligible Employee shall be considered as owning the stock
owned, directly or indirectly, by or for his brothers, sisters, spouses,
ancestors, and lineal descendants. Stock owned, directly or indirectly, by or
for a corporation, partnership, estate, or trust shall be considered as being
owned proportionately by or for its stockholders, partners, or beneficiaries.
Stock with respect to which such Eligible Employee holds an Award shall not be
counted.
5.4 Outstanding Stock. For purposes of Section 5.2 above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant of the Award to the Participant. "Outstanding stock" shall not
include shares authorized for issue under outstanding Options or Purchase Rights
held by the Participant or by any other person.
EXHIBIT "A"-4
<PAGE>
VI. STOCK SUBJECT TO THE PLAN
The stock subject to Awards granted under the Plan shall be Shares of the
Corporation's authorized but unissued or reacquired Common Stock. The
aggregate number of Shares which may be issued as Awards or upon exercise of
Awards under the Plan shall not exceed 1,800,000 shares. The number of Shares
subject to unexercised Options plus the number of Shares previously issued under
the Plan shall not at any time exceed the number of Shares available for
issuance under the Plan. In the event that any unexercised Option, or any
portion thereof, for any reason expires or is terminated, the unexercised or
unvested Shares allocable to such Option may again be made subject to any Award.
Any Shares withheld by the Corporation pursuant to Section 9.3 shall not be
deemed to be issued. The number of withheld Shares shall be deducted from the
applicable Award and shall not entitle the Participant to receive additional
Shares. The limitations established by this Article VI shall be subject to
adjustment in the manner provided in Section 8.5 hereof upon the occurrence of
an event specified therein.
VII. OPTIONS
7.1 Stock Option Agreements. Options shall be evidenced by written Stock
Option Agreements in such form as the Committee shall from time to time
determine. Such agreements shall comply with and be subject to the terms and
conditions set forth below.
7.2 Type and Number of Shares. Each Option shall state the type of Award
and the number of Shares to which it pertains and shall provide for the
adjustment thereof in accordance with the provisions of Section 8.5 hereof.
7.3 Exercise Price. Each Option shall state the Exercise Price thereof.
The Exercise Price in the case of any Incentive Stock Option shall not be less
than the Fair Market Value on the date of grant and, in the case of any Option
granted to an Optionee described in Section 5.2 hereof, shall not be less than
110% of the Fair Market Value on the date of grant. The Exercise Price in the
case of any Nonstatutory Stock Option shall not be less than 85% of the Fair
Market Value on the date of grant.
7.4 Medium and Time of Payment. The Purchase Price shall be payable in
full in United States dollars upon the exercise of the Option; provided,
however, that if the applicable Stock Option Agreement so provides the Purchase
Price may be paid (i) by the surrender of Shares in good form for transfer,
owned by the Participant and having a Fair Market Value on the date of exercise
equal to the Purchase Price, or in any combination of cash and Shares, as long
as the sum of the cash so paid and the Fair Market Value of the Shares so
surrendered equal the Purchase Price, (ii) by cancellation of indebtedness owed
by the Corporation to the Participant, (iii) with a full recourse promissory
note executed by the Participant, or (iv) any combination of the foregoing. The
interest rate and other terms and conditions of such note shall be determined by
the Committee. The Committee may require that the Participant pledge his or her
Shares to the Corporation for the purpose of securing the payment of such note.
In no event shall the stock certificate(s) representing such Shares be released
to the Participant until such note is paid in full.
7.5 Term and Nontransferability of Options. Each Option shall state the
time or times which all or part thereof becomes exercisable. No Option shall be
exercisable after the expiration of 10 years from the date it was granted, and
no Option granted to a Participant described in Section 5.2 hereof shall be
exercisable after the expiration of five years from the date it was granted.
During the lifetime of the Participant, the Option shall be exercisable only by
the Participant and shall not be assignable or transferable. In the event of
the Participant's death, the Option shall not be transferable by the Participant
other than by will or the laws of descent and distribution.
EXHIBIT "A"-5
<PAGE>
7.6 Modification, Extension, and Renewal of Option. Within the
limitations of the Plan, the Committee may modify, extend, or renew outstanding
Options or accept the cancellation of outstanding Options (to the extent not
previously exercised) for the granting of new Options in substitution therefor.
The foregoing notwithstanding, no modification of an Option shall, without the
consent of the Participant, alter or impair any rights or obligations under any
Option previously granted.
7.7 Limitation on Grant of Incentive Stock Options. In the case of
Incentive Stock Options granted hereunder, the aggregate Fair Market Value
(determined as of the date of the grant thereof) of the Shares with respect to
which Incentive Stock Options become exercisable by any Participant for the
first time during any calendar year (under this Plan and all other Plans
maintained by the Corporation, its parent, or its Subsidiaries) shall not exceed
$100,000. The Board or Committee may, however, with the Participant's consent
authorize an amendment to the Incentive Stock Option which renders it a
Nonstatutory Stock Option.
7.8 Annual Grants to Directors. Upon the election of Directors at the
Annual Stockholders Meeting, 25,000 options to purchase Shares of the Company's
Common Stock shall be granted to each Director. The options shall be granted at
the fair market price on the date of election, vesting 1/4 upon the successful
completion of each calendar quarter of service as a Director.
7.9 Other Provisions. The Stock Option Agreements authorized under the
Plan may contain such other provisions not inconsistent with the terms of the
Plan (including, without limitation, restrictions upon the exercise of the
Option) as the Committee shall deem advisable.
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS, AND BENEFICIARIES
8.1 Employee Status. Status as an Eligible Employee shall not be
construed as a commitment that any Award will be made under the Plan to an
Eligible Employee or to Eligible Employees generally.
8.2 No Employment Contract. Nothing contained in the Plan (or in the
Award Agreements or in any other documents related to the Plan or to Awards)
shall confer upon any Eligible Employee or any Participant any right to continue
in the employ of the Corporation or constitute any contract or agreement of
employment, or interfere in any way with the right of the Corporation to reduce
such person's compensation or to terminate the employment of such Eligible
Employee or Participant, with or without cause, but nothing contained in the
Plan or any document related thereto shall affect any other contractual right
of any Eligible Employee or Participant. Nothing contained in the Plan (or in
the Award Agreements or in any other documents related to the Plan or the
Awards) shall confer upon any director of the Corporation any right to continue
as a director of the Corporation.
8.3 No Transferability. Awards may be exercised only by, and amounts
payable or shares issuable pursuant to an Award shall be paid only to or
registered only in the name of, the Participant or, in the event of the
Participant's death, to the Participant's Beneficiary or, in the event of the
Participant's Disability, to the Participant's Personal Representative or, if
there is none, to the Participant. Other than by will or the laws of descent
and distribution, no right or benefit under the Plan or any Award, including,
without limitation, any Option or share of Restricted Stock that has not vested,
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge and any such attempted action shall
be void and no such right or benefit shall be, in any manner, liable for, or
subject to, debts, contract, liabilities, engagements, or torts of any Eligible
Employee, Participant, or Beneficiary, in any case except as may otherwise be
expressly required by applicable law. The Board or the Committee shall
disregard any attempt at transfer, assignment, or other alienation prohibited by
the preceding sentence and shall pay or deliver such cash or shares of Common
Stock in accordance with the provisions of the Plan. Notwithstanding the
foregoing, the Board or the Committee may authorize exercise by or transfers or
payments to a third party in a specific case or more generally; provided,
however, with respect to any option or similar right (including any Stock
Appreciation Right), such discretion may only be exercised to the extent that
applicable rules under Section 16 of the Exchange Act would so permit without
disqualifying the Plan from certain benefits thereunder.
EXHIBIT "A"-6
<PAGE>
8.4 Plan Not Funded. No Participant, Beneficiary, or other person shall
have any right, title, or interest in any fund or in any specific asset
(including shares of Common Stock) of the Corporation by reason of any Award
granted hereunder. There shall be no funding of any benefits which may become
payable hereunder. Neither the provisions of the Plan (or of any documents
related hereto), nor the creation or adoption of the Plan, nor any action taken
pursuant to the provisions of the Plan shall create, or be construed to create,
a trust of any kind or a fiduciary relationship between the Corporation and any
Participant, Beneficiary, or other person. To the extent that a Participant, a
Beneficiary, or other person acquires a right to receive an Award hereunder,
such right shall be no greater than the right of any unsecured general creditor
of the Corporation. Awards payable under the Plan shall be paid in shares of
Common Stock or from the general assets of the Corporation, and no special or
separate fund or deposit shall be established and no segregation of assets or
shares shall be made to assure payment of such Awards.
8.5 Adjustment Upon Recapitalizations and Corporate Changes. If the
outstanding shares of Common Stock are changed into or exchanged for cash or a
different number or kind of shares or securities of the Corporation, or if the
outstanding shares of the Common Stock are increased, decreased, exchanged for,
or otherwise changed, or if additional shares or new or different shares or
securities are distributed with respect to the outstanding shares of the Common
Stock, through a reorganization or merger in which the Corporation is the
surviving entity or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock split, stock
consolidation, or other capital change or adjustment, an appropriate adjustment
shall be made in the number and kind of shares of other consideration that is
subject to or may be delivered under the Plan and pursuant to outstanding
Awards. A corresponding adjustment to the consideration payable with respect to
Awards granted prior to any such change and to the price, if any, to be paid in
connection with Restricted Stock Awards shall also be made as appropriate.
Corresponding adjustments shall be made with respect to Stock Appreciation
Rights related to Options to which they are related. In addition, the Board or
the Committee may grant such additional rights in the foregoing circumstances as
the Board or the Committee deems to be in the best interest of any Participant
and the Corporation in order to preserve for the Participant the benefits of an
Award.
8.6 Termination of Employment, Except by Death, Disability, or Retirement.
If a Participant ceases to be an Employee for any reason other than his or her
death, Disability or Retirement, such Participant shall have the right, subject
to the restrictions of Section 8.3 above, to exercise any Award at any time
within three months after termination of employment, but only to the extent
that, at the date of termination of employment, the Participant's right to
exercise such Award had accrued pursuant to the terms of the applicable
agreement and had not previously been exercised; provided, however, that if the
Participant was terminated for cause (as defined in the applicable agreement),
any Award not exercised in full prior to such termination shall be canceled.
For this purpose, the employment relationship shall be treated as continuing
intact while the Participant is on military leave, sick leave, or other bona
fide leave of absence (to be determined in the sole discretion of the Board or
the Committee). The foregoing notwithstanding, in the case of an Incentive
Stock Option, employment shall not be deemed to continue beyond the 90th day
after the Participant's reemployment rights are guaranteed by statute or by
contract.
8.7 Death of Participant. If a Participant dies while an Employee, or
after ceasing to be an Employee but during the period while he or she could have
exercised the Award under this Section 8.7, and has not fully exercised the
Award, then the Award may be exercised in full at any time within 12 months
after the Participant's death (but not later than the date of termination fixed
in the applicable agreement), by the executors or administrators of his or her
estate or by any person or persons who have acquired the Award directly from the
Participant by bequest or inheritance, but only to the extent that, at the date
of death, the Participant's right to exercise such Award had accrued and had not
been forfeited pursuant to the terms of the applicable agreement and had not
previously been exercised.
EXHIBIT "A"-7
<PAGE>
8.8 Disability of Participant. If a Participant ceases to be an Employee
by reason of Disability, such Participant shall have the right to exercise the
Award at any time within 12 months after termination of employment (but not
later than the termination date fixed in the applicable Agreement), but only to
the extent that, at the date of termination of employment, the Participant's
right to exercise such Award had accrued pursuant to the terms of the applicable
Award Agreement and had not previously been exercised.
8.9 Retirement of Participant. If a Participant ceases to be an Employee
by reason of Retirement, such Participant shall have the right to exercise the
Award at any time within three months after termination of employment (but not
later than the termination date fixed in the applicable Award Agreement), but
only to the extent that, at the date of termination of employment, the
Participant's right to exercise such Award had accrued pursuant to the terms of
the applicable Award Agreement and had not previously been exercised.
8.10 Rights as a Stockholder. A Participant, or a transferee of a
Participant, shall have no rights as a stockholder with respect to any Shares
covered by his or her Award until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities, or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 8.5 hereof.
8.11 Deferral of Payments. The Board or the Committee may approve the
deferral of any payments that may become due under the Plan. Such deferrals
shall be subject to any conditions, restrictions, or requirements as the Board
or the Committee may determine.
8.12 Acceleration of Awards. Immediately prior to the occurrence of an
Event, (i) each Option and Stock Appreciation Right under the Plan shall become
exercisable in full; (ii) Restricted Stock delivered under the Plan shall
immediately vest free of restrictions; and (iii) each other Award outstanding
under the Plan shall be fully vested or exercisable, unless, prior to the Event,
the Board or the Committee otherwise determines that there shall be no such
acceleration or vesting of an Award or otherwise determines those Awards which
shall be accelerated or vested and to the extent to which they shall be
accelerated or vested, or that an Award shall terminate, or unless in connection
with such Event the Board provides (A) for the assumption of such Awards
theretofore granted; or (B) for the substitution for such Awards of new awards
covering securities or obligations (or any combination thereof) of a successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to number and kind of shares and prices; or (C) for the payment of the fair
market value of the then outstanding Awards. In addition, the Board or the
Committee may grant such additional rights in the foregoing circumstances as the
Board or the Committee deems to be in the best interest of the Participant and
the Corporation in order to preserve for the Participant the benefits of an
Award. For purposes of this Section 8.12 only, Board shall mean the Board of
Directors of the Corporation as constituted immediately prior to the Event. In
addition, the Board may in its sole discretion accelerate the exercisability or
vesting of any or all Awards outstanding under the Plan in circumstances under
which the Board or the Committee determines such acceleration appropriate.
IX. MISCELLANEOUS
9.1 Termination, Suspension, and Amendment. The Board or the Committee
may, at any time, suspend, amend, modify, or terminate the Plan (or any part
thereof) and may, with the consent of a Participant, authorize such
modifications of the terms and conditions of such Participant's Award as it
shall deem advisable; provided that, except as permitted under the provisions of
Section 8.5 hereof, no amendment or modification of the Plan may be adopted
without approval by a majority of the shares of the Common Stock represented
(in person or by proxy) at a meeting of stockholders at which a quorum is
present and entitled to vote thereat, if such amendment or modification would:
EXHIBIT "A"-8
<PAGE>
(i) materially increase the benefits accruing to Participants under
the Plan within the meaning of Rule 16b-3 under the Exchange Act or any
successor provision;
(ii) materially increase the aggregate number of shares which may be
delivered pursuant to Awards granted under the Plan; or
(iii) materially modify the requirements of eligibility for
participation in the Plan.
Neither adoption of the Plan nor the provisions hereof shall limit the authority
of the Board to adopt other Plans or to authorize other payments of compensation
and benefits under applicable law. No Awards under the Plan may be granted or
amended during any suspension of the Plan or after its termination. The
amendment, suspension, or termination of the Plan shall not, without the consent
of the Participant, alter or impair any rights or obligations pertaining to any
Awards granted under the Plan prior to such amendment, suspension, or
termination.
9.2 No Fractional Shares. No Award or installment thereof shall be
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded.
9.3 Tax Withholding. As required by law, federal, state, or local taxes
that are subject to the withholding of tax at the source shall be withheld by
the Corporation as necessary to satisfy such requirements. The Corporation is
entitled to require deduction from other compensation payable to each
Participant or, in the alternative: (i) the Corporation may require the
Participant to advance such sums; or (ii) if a Participant elects, the
Corporation may withhold (or require the return of) Shares having the Fair
Market Value equal to the sums required to be withheld. If the Participant
elects to advance such sums directly, written notice of that election shall be
delivered prior to such exercise and, whether pursuant to such election or
pursuant to a requirement imposed by the Corporation, payment in cash or by
check of such sums for taxes shall be delivered within 10 days after the
exercise date. If the Participant elects to have the Corporation withhold
Shares (or be entitled to the return of Shares) having a Fair Market Value equal
to the sums required to be withheld, the value of the Shares to be withheld (or
returned) will be equal to the Fair Market Value on the date the amount of tax
to be withheld (or subject to return) is to be determined (the "Tax Date").
9.4 Restrictions on Elections Made by Participants. Elections by
Participants to have Shares withheld (or subject to return) for this purpose
will be subject to the following restrictions: (i) the election must be made
prior to the Tax Date; (ii) the election must be irrevocable; (iii) the election
will be subject to the Board's disapproval; and (iv) if the Participant is an
"officer" within the meaning of Section 16 of the Exchange Act, the election
shall be subject to such additional restrictions as the Board or the Committee
may impose in an effort to secure the benefits of any regulations thereunder.
9.5 Limitations on the Corporation's Obligations. The Corporation shall
not be obligated to issue shares and/or distribute cash to the Participant upon
any Award exercise until such payment has been received or Shares have been
withheld, unless withholding (or offset against a cash payment) as of or prior
to the exercise date is sufficient to cover all such sums due or which may be
due with respect to such exercise. In addition, the Board or the Committee may
grant to a Participant a cash bonus in any amount required by federal, state,
or local tax law to be withheld with respect to an Award.
9.6 Compliance with Laws. The Plan, the granting of Awards under the
Plan, the Stock Option Agreements, and Stock Purchase Agreements and the
delivery of Options, Shares, and Awards (and/or the payment of money or Common
Stock) pursuant thereto and the extension of any loans hereunder are subject to
such additional requirements as the Board or the Committee may impose to
EXHIBIT "A"-9
<PAGE>
assure or facilitate compliance with all applicable federal and state laws,
rules and regulations (including, without limitation, securities laws and margin
requirements) and to such approvals by any regulatory or governmental agency
which may be necessary or advisable in connection therewith. In connection with
the administration of the Plan or the grant of any Award, the Board or the
Committee may impose such further limitations or conditions as in its opinion
may be required or advisable to satisfy, or secure the benefits of, applicable
regulatory requirements (including those rules promulgated under Section 16 of
the Exchange Act or those rules that facilitate exemption from or compliance
with the Securities Act or the Exchange Act), the requirements of any stock
exchange upon which such shares or shares of the same class are then listed, and
any blue sky or other securities laws applicable to such shares.
9.7 Governing Laws. The Plan and all Awards granted under the Plan and
the documents evidencing Awards shall be governed by, and construed in
accordance with, the laws of the State of Utah as the Corporation's principle
place of business.
9.8 Securities Law Requirements.
(a) Legality of Issuance. The issuance of any Shares upon the
exercise of any Option and the grant of any Option shall be contingent upon the
following:
(i) the Corporation and the Participant shall have taken all
actions required to register the Shares under the Securities Act of 1933, as
amended (the "Securities Act"), and to qualify the Option and the Shares under
any and all applicable state securities or "blue sky" laws or regulations, or to
perfect an exemption from the respective registration and qualification
requirements thereof;
(ii) any applicable listing requirement of any stock exchange on
which the Common Stock is listed shall have been satisfied; and
(iii) any other applicable provision of state or Federal law
shall have been satisfied.
(b) Restrictions on Transfer. Regardless of whether the offering and
sale of Shares under the Plan has been registered under the Securities Act or
has been registered or qualified under the securities laws of any state, the
Corporation may impose restrictions on the sale, pledge, or other transfer of
such Shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Corporation and its counsel, such
restrictions are necessary or desirable in order to achieve compliance with the
provisions of the Securities Act, the securities laws of any state, or any other
law. In the event that the sale of Shares under the Plan is not registered under
the Securities Act but an exemption is available which required an investment
representation or other representation, each Participant shall be required to
represent that such Shares are being acquired for investment, and not with a
view to the sale or distribution thereof, and to make such other representations
as are deemed necessary or appropriate by the Corporation and its counsel. Any
determination by the Corporation and its counsel in connection with any of the
matters set forth in this Section 9.8(b) shall be conclusive and binding on all
persons. Stock certificates evidencing Shares acquired under the Plan pursuant
to an unregistered transaction shall bear the following restrictive legend and
such other restrictive legends as are required or deemed advisable under the
provisions of any applicable law:
THESE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1993, AS AMENDED (THE "ACT"), OR APPLICABLE
STATE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS FROM
SUCH REGISTRATION REQUIREMENTS. THESE SHARES OR ANY INTEREST HEREIN MAY
NOT, BE OFFERED, SOLD OR TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND
APPLICABLE
EXHIBIT "A"-10
<PAGE>
STATE SECURITIES LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE.
(c) Registration or Qualification of Securities. The Corporation may,
but shall not be obligated to register or qualify the issuance of Awards and/or
the sale of Shares under the Securities Act or any other applicable law. The
Corporation shall not be obligated to take any affirmative action in order to
cause the issuance of Awards or the sale of Shares under the Plan to comply with
any law.
(d) Exchange of Certificates. If, in the opinion of the Corporation
and its counsel, any legend placed on a stock certificate representing shares
issued under the Plan is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but lacking such legend.
9.9 Execution. To record the adoption of the Plan in the form set forth
above by the Board effective as of June 30, 1998, the Corporation has caused
this Plan to be executed in the name and on behalf of the Corporation where
provided below by an officer of the Corporation thereunto duly authorized.
RENAISSANCE GOLF PRODUCTS, INC.
By:
----------------------------------------
John B. Hewlett, Chief Executive Officer
ATTEST:
- --------------------------------------
Edward B. Paulsen, Assistant Secretary
(SEAL)
EXHIBIT "A"-11
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
1998 STOCK OPTION AND INCENTIVE PLAN
OF
RENAISSANCE GOLF PRODUCTS, INC.
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement"), is made as of
__________ (the "Effective Date") by and between RENAISSANCE GOLF PRODUCTS,
INC., a Utah corporation, (the "COMPANY") and ________________ (the "OPTIONEE"),
residing at ______________________,pursuant to the COMPANY's 1998 Stock Option
and Incentive Plan (the "Plan").
The Board of Directors of the COMPANY has adopted the Plan as of June 1,
1998 to which this Agreement and the option granted hereunder ("Option") are
subject, and the Board of Directors of the COMPANY has determined that it is to
the advantage and in the best interest of the COMPANY and its stockholders to
grant the Option provided for herein to OPTIONEE as an inducement to remain in
the employ of the COMPANY, and as an incentive for increased effort during such
service.
1. GRANT OF OPTION. The Company grants to OPTIONEE the right and option
to purchase from the COMPANY, on the terms and conditions hereinafter set forth,
all or any part of an aggregate of _____ shares of the authorized $.001 par
value Common Stock of the COMPANY, at the purchase price of $ ____ per share
(being not less than the fair market value per share of said stock on the date
hereof) as OPTIONEE may from time to time elect, exercisable on or after the
Effective Date hereof for a period of 10 years (the latter date hereinafter
referred to as the "Terminal Date"), all in accordance with the schedule
attached hereto and marked Exhibit "A." No partial exercise of such Option may
be for less than 250 full shares, unless the number purchased is the total
number at the time purchasable under the Option. In no event shall the COMPANY
be required to transfer fractional shares to OPTIONEE. This Agreement and the
Option granted hereunder are subject to the Plan, a copy of which is attached
hereto and incorporated herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shall be exercisable,
from the Effective Date, as hereinabove provided, by written notice which shall;
2.1 state the election to exercise the Option, the number of shares in
respect of which it is being exercised, the person in whose name the shares are
to be issued (if the shares are issued to individuals), the names, addresses,
and Social Security Numbers of such persons;
2.2 contain such representations and agreements as to the holder's
investment intent with respect to such shares of Common Stock as are required
by law or as may be satisfactory to the COMPANY's counsel;
2.3 be signed by the person or persons entitled to exercise the Option
and, if the Option is being exercised by any person or persons other than the
OPTIONEE, be accompanied by proof, satisfactory to counsel for the COMPANY, of
the right of such person or persons to exercise the Option; and
2.4 be accompanied by a payment for the purchase price of those shares
with respect to which the Option is being exercised in the form of cash or
check.
1
<PAGE>
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates for
shares of Common Stock as to which the Option shall be exercised shall be
registered in the name of the person or persons exercising the Option. The
COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) compliance with the terms of this Agreement, (b) compliance
with all then applicable requirements of law; and (c) admission of such shares
for trading privileges on any stock exchange on which the stock may then be
listed.
4. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside the number of
shares of Common Stock of the COMPANY subject to be granted upon exercise of
this Option which it now holds as authorized and unissued shares. If the Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased shares which were subject thereto shall be
free from any restrictions occasioned by this Option Agreement. If the COMPANY
has been listed on a stock exchange, the COMPANY will not be required to issue
or deliver any certificate or certificates for shares to be issued hereunder
until such shares have been listed (or authorized for listing upon official
notice of issuance) upon each stock exchange on which outstanding shares of the
same class may then be listed and until the COMPANY has taken such steps as may,
in the opinion of counsel for the COMPANY, be required by law and applicable
regulations, including the rules and regulations of the Securities and Exchange
Commission, and state blue sky laws and regulations, in connection with the
issuance or sale of such shares. The COMPANY will use its best efforts to
comply with any such requirements forthwith upon the exercise of the Option.
5. TERMINATION OF OPTION. The Option and all rights granted hereunder to
the extent such rights shall not have been exercised, shall terminate and become
null and void on the Terminal Date or sooner if OPTIONEE ceases to be in the
continuous employ of the COMPANY (whether by resignation, retirement, dismissal,
or otherwise), except that: (a) in the event of termination of such employment
for any reason other than the permanent disability of OPTIONEE, as defined in
Section 22(e)(3) of the Internal Revenue Code, as amended and as presently in
effect (the "Code"), OPTIONEE may at any time within a period of three months
thereafter exercise the Option granted hereunder to the extent such Option was
exercisable by OPTIONEE on the date of the termination of such employment; and
(b) in the event of the permanent disability of OPTIONEE while in the employ of
the COMPANY, the Option granted hereunder, to the extent that OPTIONEE was
entitled to exercise such Option on the date of OPTIONEE's disability, may be
exercised within one year after such termination as a result of disability by
OPTIONEE or the person or persons to whom OPTIONEE's rights under the Option
granted hereby shall pass by will or by the applicable laws of descent and
distribution. Notwithstanding anything herein to the contrary, however, the
Option and all rights herein granted shall in all events terminate and become
null and void 10 years from the date of this Agreement.
6. LIMITATION UPON TRANSFER. During the lifetime of OPTIONEE, the Option
and all rights granted hereunder shall be exercisable only by OPTIONEE, and
except as in paragraph 5 otherwise provided, the Option and all rights granted
hereunder shall not be transferred, assigned, pledged, or hypothecated in any
way (whether by operation of law or otherwise), and shall not be subject to
execution, attachment, or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate, or otherwise dispose of such Option or of such
rights contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon such Option or such rights, such Option and such rights
shall immediately become null and void.
7. CONDITION OF EMPLOYMENT. In order to be entitled to exercise the
Option granted hereunder as to the first increment of shares as shown in Exhibit
"A," OPTIONEE must remain in the continuous employ of the COMPANY for the period
of at least six months from the date hereof.
8. STOCK AS INVESTMENT. By accepting this Option, the OPTIONEE
acknowledges for OPTIONEE or any heirs and legatees, that any and all shares
purchased hereunder shall be acquired for investment and not for distribution,
and upon the transfer of any or all of the shares subject to the
2
<PAGE>
Option granted hereunder, the OPTIONEE, or heirs or legatees receiving such
shares, shall deliver to the COMPANY a representation in writing that such
shares are being acquired in good faith for investment and not for distribution.
The OPTIONEE shall not dispose (whether by sale, exchange, gift, or any other
transfer) of any shares of stock acquired pursuant to the exercise of the Option
granted hereunder, within two years after the grant of this Option or one year
after the transfer of such shares to him upon his exercise of such Option.
OPTIONEE further recognizes that any disposition (whether a sale, exchange,
gift, or any other transfer) of any shares of stock prior to the aforementioned
periods will not only be a breach of this Agreement, but will also disqualify
the Option as a Incentive Stock Option under Section 422A of the Code.
9. RECLASSIFICATION, CONSOLIDATION, OR MERGER. In the event of any
change in the Common Stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, that in
accordance with the provisions of Section 425(a) of the Code, a new Option may
be substituted for the Option granted hereunder or such Option may be assumed by
an employer corporation, or a parent or subsidiary of such corporation, in
connection with any transaction to which such Section is applicable. Upon the
dissolution or liquidation of the COMPANY other than in connection with a
transaction to which such Section is applicable, the Option granted hereunder
shall terminate and become null and void, but OPTIONEE shall have the right
immediately prior to such dissolution or liquidation to exercise the Option
granted hereunder to the full extent not before exercised.
10. RIGHT AS STOCKHOLDER. Neither OPTIONEE nor his executors,
administrators, heirs or legatees, shall be or have any rights or privileges of
a stockholder of the COMPANY in respect of the shares transferable upon exercise
of the Option granted hereunder, unless and until certificates representing such
shares shall have been endorsed, transferred, and delivered and the transferee
has caused his name to be entered as the stockholder of record on the books of
the COMPANY.
11. NOTICES. Any notice to be given under the terms of this Agreement
shall be addressed to the COMPANY in care of its Secretary at the main offices
for the transaction of its business, and any notice to be given to OPTIONEE
shall be addressed to OPTIONEE at the address set forth above, or at such other
place as either party may hereafter designate in writing to the other. Any such
notice shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as herein required, certified and deposited (postage and
certification prepaid) in a post office regularly maintained by the United
States Government.
12. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit of
and be binding upon each successor of the COMPANY. All obligations imposed upon
the OPTIONEE and all rights granted to the COMPANY under this Agreement shall be
binding upon the OPTIONEE's heirs, legal representatives, and successors. This
Agreement shall be the sole and exclusive source of any and all rights which the
OPTIONEE, OPTIONEE's heirs, legal representatives, or successors may have in
respect to the Plan or any options or Common Stock granted or issued
thereunder, whether to OPTIONEE, or to any other person.
13. INTERNAL REVENUE CODE. All Options granted hereunder are granted
pursuant to the Internal Revenue Code, as amended, as it is in force and effect
at the date of grant.
14. RESOLUTION OF DISPUTES. Any dispute or disagreement which should
arise under, or as a result of, or in any way relate to, the interpretation,
construction, or application of this Agreement will be determined by the Board
of Directors of the COMPANY. Any determination made hereunder shall be final,
binding, and conclusive for all purposes.
3
<PAGE>
IN WITNESS WHEREOF, the COMPANY has caused these presents to be executed on
its behalf by its President, to be sealed by its corporate seal, and attested by
its Secretary, and OPTIONEE has hereunto set his or her hand the date and year
first above written, which is the time of the granting of the Option hereunder.
"COMPANY" "OPTIONEE"
RENAISSANCE GOLF PRODUCTS, INC.
a Utah corporation
By:
------------------------------------ -----------------------------
John B. Hewlett, Chief Executive Officer
-----------------------------
Corporate Seal
ATTEST:
By:
------------------------------------
, Secretary
---------------------
4
<PAGE>
EXHIBIT "A"
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
1998 STOCK OPTION AND INCENTIVE PLAN
OF
RENAISSANCE GOLF PRODUCTS, INC.
----------------
EXERCISE SCHEDULE
Option Period Number of Exercisable Option Shares
------------- -----------------------------------
1. On or after the Effective Date
through Terminal Date
5
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
1998 STOCK OPTION AND INCENTIVE PLAN
OF
RENAISSANCE GOLF PRODUCTS, INC.
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), is made as of
___________ (the "Effective Date") by and between RENAISSANCE GOLF PRODUCTS,
INC., a Utah corporation, (the "COMPANY") and ______________ (the "OPTIONEE"),
residing at ________, pursuant to the COMPANY's 1998 Stock Option and Incentive
Plan (the "Plan").
The Board of Directors of the COMPANY has adopted the Plan as of June 1,
1998 to which this Agreement and the option granted hereunder ("Option") are
subject, and the Board of Directors of the COMPANY has determined that it is to
the advantage and in the best interest of the COMPANY and its stockholders to
grant the Option provided for herein to OPTIONEE to afford additional incentive
to consultants, vendors, customers, and others to increase their efforts in
providing significant services to the COMPANY.
1. GRANT OF OPTION. The Company grants to OPTIONEE the right and Option
to purchase from the COMPANY, on the terms and conditions hereinafter set forth,
all or any part of an aggregate of ____ shares of the authorized no par value
Common Stock of the COMPANY, at the purchase price of $ ___ per share (being not
less than 85% of the fair market value per share of said stock on the date
hereof) as OPTIONEE may from time to time elect, exercisable on or after the
Effective Date hereof for a period of 10 years (the latter date hereinafter
referred to as the "Terminal Date"), all in accordance with the schedule
attached hereto and marked Exhibit "A." No partial exercise of such Option may
be for less than 250 full shares, unless the number purchased is the total
number at the time purchasable under the option. In no event shall the COMPANY
be required to transfer fractional shares to OPTIONEE. This Agreement and the
Option granted hereunder are subject to the Plan, a copy of which is attached
hereto and incorporated herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shall be
exercisable, from time to time, as hereinabove provided, by written notice which
shall;
2.1 state the election to exercise the Option, the number of shares
in respect of which it is being exercised, the person in whose name the shares
are to be issued (if the shares are issued to individuals), the names,
addresses, and Social Security Numbers of such persons;
2.2 contain such representations and agreements as to the holder's
investment intent with respect to such shares of Common Stock as are required
by law dor as may be satisfactory to the COMPANY's counsel;
2.3 be signed by the person or persons entitled to exercise the
Option and, if the Option is being exercised by any person or persons other than
the OPTIONEE, be accompanied by proof, satisfactory to counsel for the COMPANY,
of the right of such person or persons to exercise the Option; and
2.4 be accompanied by a payment for the purchase price of those
shares with respect to which the Option is being exercised in the form of cash
or check.
1
<PAGE>
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates for
shares of Common Stock as to which the Option shall be exercised shall be
registered in the name of the person or persons exercising the Option. The
COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) compliance with the terms of this Agreement, (b) compliance
with all then applicable requirements of law; and (c) admission of such shares
for trading privileges on any stock exchange on which the stock may then be
listed.
4. TERMINATION OF OPTION. The Option and all rights granted hereunder to
the extent such rights shall not have been exercised, shall terminate and become
null and void on the Terminal Date.
5. TRANSFERABILITY OF OPTION. This Option may be transferred in any
manner by will or the laws of descent or distribution and may be exercised
during the lifetime of the OPTIONEE or by an assignee of the OPTIONEE.
6. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside the number
of shares of Common Stock of the COMPANY subject to be granted upon exercise of
this Option which it now holds as authorized and unissued shares. If the Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased shares which were subject thereto shall be
free from any restrictions occasioned by this Option Agreement. If the COMPANY
has been listed on a stock exchange, the COMPANY will not be required to issue
or deliver any certificate or certificates for shares to be issued hereunder
until such shares have been listed (or authorized for listing upon official
notice of issuance) upon each stock exchange on which outstanding shares of the
same class may then be listed and until the COMPANY has taken such steps as may,
in the opinion of counsel for the COMPANY, be required by law and applicable
regulations, including the rules and regulations of the Securities and Exchange
Commission, and state blue sky laws and regulations, in connection with the
issuance or sale of such shares. The COMPANY will use its best efforts to
comply with any such requirements forthwith upon the exercise of the Option.
7. RECLASSIFICATION, CONSOLIDATION, OR MERGER. In the event of any
change in the Common Stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, that in
accordance with the provisions of Section 425(a) of the Code, a new Option may
be substituted for the Option granted hereunder or such Option may be assumed by
an employer corporation, or a parent or subsidiary of such corporation, in
connection with any transaction to which such Section is applicable. Upon the
dissolution or liquidation of the COMPANY other than in connection with a
transaction to which such Section is applicable, the Option granted hereunder
shall terminate and become null and void, but OPTIONEE shall have the right
immediately prior to such dissolution or liquidation to exercise the Option
granted hereunder to the full extent not before exercised.
8. RIGHT AS STOCKHOLDER. Neither OPTIONEE nor his executors,
administrators, heirs, or legatees, shall be or have any rights or privileges of
a stockholder of the COMPANY in respect of the shares transferable upon exercise
of the Option granted hereunder, unless and until certificates representing such
shares shall have been endorsed, transferred, and delivered and the transferee
has caused his name to be entered as the stockholder of record on the books of
the COMPANY.
9. NOTICES. Any notice to be given under the terms of this Agreement
shall be addressed to the COMPANY in care of its Secretary at the main offices
for the transaction of its business, and any notice to be given to OPTIONEE
shall be addressed to OPTIONEE at the address set forth above, or at such other
place as either party may hereafter designate in writing to the other. Any such
notice shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as herein
2
<PAGE>
required, certified, and deposited (postage and certification prepaid) in a post
office regularly maintained by the United States Government.
10. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit of
and be binding upon each successor of the COMPANY. All obligations imposed upon
the OPTIONEE and all rights granted to the COMPANY under this Agreement shall be
binding upon the OPTIONEE's heirs, legal representatives, and successors. This
Agreement shall be the sole and exclusive source of any and all rights which the
OPTIONEE, OPTIONEE's heirs, legal representatives, or successors may have in
respect to the Plan or any options or Common Stock granted or issued
thereunder, whether to OPTIONEE, or to any other person.
11. RESOLUTION OF DISPUTES. Any dispute or disagreement which should
arise under, or as a result of, or in any way relate to, the interpretation,
construction, or application of this Agreement will be determined by the Board
of Directors of the COMPANY. Any determination made hereunder shall be final,
binding, and conclusive for all purposes.
IN WITNESS WHEREOF, the COMPANY has caused these presents to be executed on
its behalf by its President, to be sealed by its corporate seal, and attested by
its Secretary, and OPTIONEE has hereunto set his or her hand the date and year
first above written, which is the time of the granting of the Option hereunder.
"COMPANY" "OPTIONEE"
RENAISSANCE GOLF PRODUCTS, INC.
a Utah corporation
By:
-------------------------------- --------------------------------
John B. Hewlett, President
--------------------------------
Corporate Seal
ATTEST:
By:
--------------------------------
, Secretary
-----------------
3
<PAGE>
EXHIBIT "A"
NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
1998 STOCK OPTION AND INCENTIVE PLAN
OF
RENAISSANCE GOLF PRODUCTS, INC.
----------------
EXERCISE SCHEDULE
Option Period Number of Exercisable Option Shares
------------- -----------------------------------
1. On or after the Effective Date
through the Terminal Date ----------
4
<PAGE>
[SIDE ONE OF CARD]
RENAISSANCE GOLF PRODUCTS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 18, 1998
The undersigned hereby constitutes and appoints John B. Hewlett and Bruce
H. Haglund, and each of them, the true and lawful attorneys, agents, and proxies
of the undersigned, with full power of substitution, to vote with respect to all
the shares of Common Stock, par value $.001, of RENAISSANCE GOLF PRODUCTS, INC.,
standing in the name of the undersigned at the close of business on April 30,
1998, at the Annual Meeting of Stockholders to be held June 18, 1998, and at any
and all adjournments and postponements thereof, to vote:
1. Election of Directors: FOR all nominees listed below
(Except as marked to the contrary below)
------
WITHHOLD AUTHORITY
------
JOHN B. HEWLETT, DENNIS L. CROCKETT, RALPH W. RASMUSSEN,
BRUCE H. HAGLUND, and STEVEN L. FLINT
2. To approve an amendment of the Company's Certificate of Incorporation to
provide for the name of the Company to be changed to "World Sports
Marketing, Inc.":
FOR AGAINST ABSTAIN
------- ------- -------
3. To approve a quasi-reorganization of the Company permitting a restatement
of the Company's balance sheet as of April 1, 1998 eliminating any deficit
and establish a new earned surplus account for the accumulation of
earnings:
FOR AGAINST ABSTAIN
------- ------- -------
4. To approve the Company's 1998 Stock Option Plan providing for a total of
1,800,000 shares of the Company's Common Stock to be set aside for grant
pursuant to the 1998 Stock Option Plan in accordance with the directions of
the Company's Compensation Committee as approved by the Board of Directors.
FOR AGAINST ABSTAIN
------- ------- -------
5. To consider and ratify the appointment of DELOITTE & TOUCHE LLP as
independent auditor of the Company for the fiscal year ending December 31,
1998:
FOR AGAINST ABSTAIN
------- ------- -------
6. In their discretion, the Board of Directors is authorized to vote this
Proxy upon such other matters as may properly come before the meeting or
any adjournment or postponement thereof.
<PAGE>
[SIDE TWO OF CARD]
The shares represented by this Proxy will be voted in the manner directed
herein by the undersigned stockholder. If no directions to the contrary are
made, this Proxy will be voted FOR the election of all of the director nominees
named above and FOR approval of Proposals 2, 3, 4, and 5 if necessary.
DATED: , 1998
--------------------
-------------------------------
(Signature)
-------------------------------
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name
appears at the left. Each joint owner should
sign. Executors, administrators, trustees, should
give full title. If a corporation, please sign in
full corporate name by an authorized officer. If
a partnership, please sign in partnership name by
an authorized person.
Please mark, sign, date and return promptly.
THIS PROXY IS BEING SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
OF RENAISSANCE GOLF PRODUCTS, INC.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 775,854
<SECURITIES> 0
<RECEIVABLES> 987,321
<ALLOWANCES> 0
<INVENTORY> 1,924,983
<CURRENT-ASSETS> 3,745,668
<PP&E> 53,586
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,033,453
<CURRENT-LIABILITIES> 4,555,741
<BONDS> 0
0
3
<COMMON> 4,614
<OTHER-SE> 1,496
<TOTAL-LIABILITY-AND-EQUITY> (922,288)
<SALES> 5,375,160
<TOTAL-REVENUES> 0
<CGS> 4,821,704
<TOTAL-COSTS> 2,391,659
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 324,356
<INCOME-PRETAX> (2,162,559)
<INCOME-TAX> (800)
<INCOME-CONTINUING> (2,163,359)
<DISCONTINUED> 0
<EXTRAORDINARY> 318,228
<CHANGES> 0
<NET-INCOME> (1,845,131)
<EPS-PRIMARY> (.65)
<EPS-DILUTED> 0
</TABLE>
