SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. _________]
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
_X_ Preliminary Proxy Statement
___ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
___ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SAINT ANDREWS GOLF CORPORATION
(Name of Registrant as Specified in Its Charter)
SAINT ANDREWS GOLF CORPORATION
(Name of Person(s) Filing Proxy Statement)
PRELIMINARY COPY
SAINT ANDREWS GOLF CORPORATION
5325 SOUTH VALLEY VIEW BOULEVARD, SUITE 4
LAS VEGAS, NEVADA 89118
(702) 798-7777
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 7, 1998
TO THE SHAREHOLDERS OF SAINT ANDREWS GOLF CORPORATION:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of Saint
Andrews Golf Corporation, a Nevada corporation, will be held at the Pepsi
Pavillion in the All-American SportPark, 121 East Sunset Avenue, Las Vegas,
Nevada 89119, near the intersection of Las Vegas Boulevard and Sunset Road,
on Monday, December 7, 1998, at 10:00 a.m., Pacific Time, and at any and all
adjournments thereof, for the purpose of considering and acting upon the
following matters:
1. The election of five (5) Directors of the Company to serve until the
next Annual Meeting of Shareholders and until their successors have been duly
elected and qualified.
2. The ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors;
3. An amendment to the Articles of Incorporation of the Company to
change the name of the Company to "All-American SportPark, Inc."; and
4. The approval of the Company's 1998 Stock Incentive Plan.
5. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the Common Stock, $.001 par value, Series A Convertible
Preferred Stock and Series B Convertible Stock of the Company of record at the
close of business on November 12, 1998, will be entitled to notice of and to
vote at the Meeting or at any adjournment or adjournments thereof. The proxies
are being solicited by the Board of Directors of the Corporation.
All shareholders, whether or not they expect to attend the Annual Meeting
of Shareholders in person, are urged to sign and date the enclosed Proxy and
return it promptly in the enclosed postage-paid envelope which requires no
additional postage if mailed in the United States. The giving of a proxy will
not affect your right to vote in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
RONALD S. BORETA, PRESIDENT
Las Vegas, Nevada
November 12, 1998
SAINT ANDREWS GOLF CORPORATION
5325 SOUTH VALLEY VIEW BOULEVARD, SUITE 4
LAS VEGAS, NEVADA 89118
(702) 798-7777
-------------------------------------
PROXY STATEMENT
-------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 7, 1998
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Saint Andrews Golf Corporation, a Nevada corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be held
at the Pavillion in the All-American SportPark, 121 East Sunset Avenue, Las
Vegas, Nevada 89119, near the intersection of Las Vegas Boulevard and Sunset
Road, on Monday, December 7, 1998, at 10:00 a.m., Pacific Time, and at any
adjournment thereof. It is anticipated that this Proxy Statement and the
accompanying Proxy will be mailed to the Company's shareholders on or about
November 13, 1998.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated that
solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report which consists of the Annual Report on Form
10-KSB for the year ended December 31, 1997, is being simultaneously mailed to
the Company's shareholders, but does not constitute part of these proxy
soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
Common Stock, Series A Convertible Preferred Stock, and Series B Convertible
Preferred Stock. Each share of Common Stock, Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock entitles the holder to one (1)
vote and all such shares vote together as a single class. The holders of the
Series A Convertible Preferred Stock are also entitled to elect one Director.
Only shareholders of record at the close of business on November 12, 1998, are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
On November 12, 1998, the Company had 3,000,000 shares of its Common Stock,
500,000 shares of its Series A Convertible Preferred Stock and 250,000 shares
of its Series B Convertible Preferred Stock outstanding. Cumulative voting in
the election of Directors is not permitted.
A majority of the Company's outstanding Common Stock and Preferred Stock
represented in person or by proxy shall constitute a quorum at the Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares
entitled to vote owned beneficially, as of November 12, 1998, by any person,
who is known to the Company to be the beneficial owner of 5% or more of the
Company's Common and Preferred Stock, considered as a single class, and, in
addition, by each Executive Officer and Director of the Company and by all
Directors, Nominees for Director and Executive Officers of the Company as a
group. Information as to beneficial ownership is based upon statements
furnished to the Company by such persons.
NAME AND ADDRESS OF AMOUNT OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------- -------------------- ----------
Las Vegas Discount Golf &
Tennis, Inc. (1) 2,250,000 (2) 60.1%
Suite 4
5325 S. Valley View Blvd
Las Vegas, Nevada 89118
Vaso Boreta 110,000 (3) 2.8%
Suite 4
5325 S. Valley View Blvd.
Las Vegas, Nevada 89118
Ronald S. Boreta 435,000 (3) 10.4%
Suite 4
5325 S. Valley View Blvd.
Las Vegas, Nevada 89118
Robert R. Rosburg 5,000 (3) 0.1%
49-425 Avenida Club La Quinta
La Quinta, California 92253
William Kilmer 5,000 (3) 0.1%
1500 Sea Breeze Boulevard
Ft. Lauderdale, Florida 33316
Motoharu Iue 0 (4) 0%
666 - 5th Avenue
New York, New York 10103
Three Oceans Inc. 750,000 (5) 20.0%
2001 Sanyo Avenue
San Diego, California 92173
All Directors and Officers 575,000 (6) 13.3%
as a Group (7 persons)
___________________
(1) Las Vegas Discount Golf & Tennis, Inc. is a publicly-held corporation of
which Vaso Boreta is President, Director and a principal shareholder; Ronald
S. Boreta is a Director and a principal shareholder; and Robert R. Rosburg and
William Kilmer are Directors. In addition, John Boreta, a son of Vaso Boreta,
2
and Boreta Enterprises Ltd., a limited liability company owned by Vaso, Ronald
and John Boreta, and ASI Group, LLC, principal shareholders of Las Vegas
Discount Golf & Tennis, Inc. The following sets forth the percentage
ownership beneficially held by such persons in Las Vegas Discount Golf &
Tennis, Inc.:
Vaso Boreta 22.6%
Ronald S. Boreta 20.5%
John Boreta 12.8%
Boreta Enterprises Ltd. 16.0%
Robert Rosburg 0.1%
William Kilmer 0.1%
ASI Group, LLC 31.3%
(2) Represents 2,000,000 shares of Common Stock and 250,000 shares of Series
B Convertible Preferred Stock held by Las Vegas Discount Golf & Tennis, Inc.
(3) Represents shares underlying options exercisable within 60 days held by
the named person. Does not include shares held by Las Vegas Discount Golf &
Tennis, Inc. of which such person is an Officer, Director and/or principal
shareholder.
(4) Mr. Iue is President of Three Oceans, Inc. and the shares held by Three
Oceans, Inc. are not being treated as beneficially owned by Mr. Iue.
(5) Represents 500,000 shares of Series A Convertible Preferred Stock held by
Three Oceans Inc. and 250,000 shares of Common Stock underlying stock options
held by Three Oceans, Inc.
(6) Includes shares beneficially held by the five named Directors, 10,000
shares underlying stock options held by Kevin B. Donovan and 10,000 shares
underlying options held by John Hoover. Messrs. Donovan and Hoover are
Executive Officers of the Company.
ELECTION OF DIRECTORS
The Bylaws currently provide for a Board of Directors of five (5)
members. The Board of Directors recommends the election as Directors of the
five (5) nominees listed below, to hold office until the next Annual Meeting
of Shareholders and until their successors are elected and qualified or until
their earlier death, resignation or removal. Four (4) of the Directors will
be elected by the holders of the Common Stock and the Series A and Series B
Convertible Preferred Stock voting as a single class, and one (1) Director
will be elected by the holder of the Series A Convertible Preferred Stock.
Each member of the present Board of Directors has been nominated for
reelection. The persons named as "Proxies" in the enclosed form of Proxy will
vote the shares represented by all valid returned proxies in accordance with
the specifications of the shareholders returning such proxies. If at the time
of the Meeting any of the nominees named below should be unable to serve,
which event is not expected to occur, the discretionary authority provided in
the Proxy will be exercised to vote for such substitute nominee or nominees,
if any, as shall be designated by the Board of Directors.
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
3
POSITIONS AND OFFICES
NAME AGE HELD AND TERM AS A DIRECTOR
- --------------- --- --------------------------------------
Vaso Boreta 65 Chairman of the Board and Director
since 1984
Ronald S. Boreta 35 President, Chief Executive Officer,
Treasurer and Director since 1984
Robert S. Rosburg 71 Director since 1994
William Kilmer 58 Director since 1994
Motoharu Iue 60 Director since 1997
Except for the fact that Vaso Boreta and Ronald Boreta are father and
son, respectively, there is no family relationship between any Director or
Officer of the Company.
In February 1998, the Company established an audit committee whose
members are William Kilmer and Robert Rosburg, both of whom are independent
Directors of the Company. The Company presently has no compensation or
nominating committee, but has agreed to establish a compensation committee.
Set forth below are the names of all Directors and Executive Officers of
the Company, all positions and offices with the Company held by each such
person, the period during which he has served as such, and the principal
occupations and employment of such persons during at least the last five
years:
VASO BORETA has served as Chairman of the Board of Directors since August
1994, and has been an Officer and Director of the Company since its formation
in 1984. He has also been an officer and director of the Company's Parent,
Las Vegas Discount Golf & Tennis, Inc., since 1988. In 1974, Mr. Boreta first
opened a specialty business named "Las Vegas Discount Golf & Tennis," which
retailed golf and tennis equipment and accessories. He was one of the first
retailers to offer golf merchandise at a discount. He also developed a major
mail order catalog sales program from his original store. Mr. Boreta
continues to operate his original store, which has been moved to a new
location near the corner of Flamingo and Paradise roads in Las Vegas. Mr.
Boreta devotes approximately 10% of his time to the business of the Company,
and the balance to the Company's Parent and to operating his store.
RONALD S. BORETA has served as President of the Company since 1992, Chief
Executive Officer since August 1994, and a Director since its inception in
1984. He also served as an officer and director of the Company's Parent, Las
Vegas Discount Golf & Tennis, Inc., from 1988 until July 1994, and he
continues to serve as a director. He has been employed by the Company since
its inception in March 1984, with the exception of a 6-month period in 1985
when he was employed by a franchisee of the Company located in San Francisco,
California. Prior to his employment by the Company, Mr. Boreta was an
assistant golf professional at San Jose Municipal Golf Course in San Jose,
California, and had worked for two years in the areas of sales and warehousing
activities with a golf discount store in South San Francisco, California. Mr.
Boreta devotes 100% of his time to the business of the Company.
ROBERT R. ROSBURG has served as a Director of the Company since August
1994, and has been a director of the Company's Parent, Las Vegas Discount Golf
4
& Tennis, Inc., since November 1989. Mr. Rosburg has been a professional
golfer since 1953. From 1953 to 1974 he was active on the Professional Golf
Association tours, and since 1974 he has played professionally on a limited
basis. Since 1975 he has been a sportscaster on ABC Sports golf tournament
telecasts. Since 1985 he has also been the Director of Golf for Rams Hill
Country Club in Borrego Springs, California. Mr. Rosburg received a
Bachelor's Degree in Humanities from Stanford University in 1948.
WILLIAM KILMER has served as a Director of the Company since August 1994,
and has been a director of the Company's Parent, Las Vegas Discount Golf &
Tennis, Inc., since July 1990. Mr. Kilmer is a retired professional football
player, having played from 1961 to 1978 for the San Francisco Forty-Niners,
the New Orleans Saints and the Washington Redskins. Since 1978, he has toured
as a public speaker and also has served as a television analyst. Mr. Kilmer
received a Bachelor's Degree in Physical Education from the University of
California at Los Angeles.
MOTOHARU IUE has served as a Director of the Company since April 1997.
Mr. Iue has served as Chairman of the Board of Sanyo North America Corporation
("Sanyo") and President of Three Oceans Inc. ("Three Oceans") since October
1996. Mr. Iue previously served as President of Sanyo and as Chairman of the
Board of Three Oceans from 1992 to 1996 and still serves as Chief Executive
Officer of Sanyo and Three Oceans. From 1989 to 1992, he was Executive Vice
President of Tottori Sanyo Electric Co., Ltd. All three companies are
affiliates of Sanyo Electric Co., Ltd. ("Sanyo Electric"), and Three Oceans
Inc. is a shareholder of the Company. Mr. Iue has bee a director of Sanyo
Electric since 1977.
JOHN A. HOOVER, JR. has served as General Manager of All-American
SportParks since April 1995. From June 1993 until April 1995, he served as
Director of Operations of the MGM Grand Adventure Theme Park, a $120 million
theme park associated with the MGM Grand Hotel Resort in Las Vegas. From
January 1990 until June 1993, he served as operations manager for the Fiesta
Texas Theme Park in San Antonio, Texas, and from October 1986 until December
1990, he served as general manager for the Malibu Grand Prix/Castle Golf &
Games in San Antonio, Texas.
KEVIN B. DONOVAN has served as Vice President of New Business Development
since April 1994. Prior to joining the Company, from March 1992 to March
1994, he was President and Creative Director of Donovan Design Agency, Dallas,
Texas, which is engaged in designing corporate logos and graphics, and
providing marketing and package designs. From June 1989 to March 1992, he was
President, Chief Executive Officer and Creative Director for Donovan & Houston
Design For Retail, Dallas, Texas, which was engaged in providing design
services to retail oriented companies. From March 1986 to June 1989, Mr.
Donovan was Art Director and Creative Director for John Ryan & Co. Retail
Marketing Agency in Minneapolis, Minnesota, which was engaged in providing
design services to retail and banking companies. Mr. Donovan received a B.A.
Degree in Commercial Arts from St. Paul Technical College, St. Paul,
Minnesota, in 1983. He devotes his full time to the business of the Company.
Three Oceans, Inc., as sole holder of the Company's Series A Convertible
Preferred Stock, has the right to elect one Director of the Corporation and
has nominated Motoharu Iue to be re-elected as a Director at the Annual
Meeting of Shareholders.
The Company's Board of Directors held no formal meetings during the
fiscal year ended December 31, 1997. However, the Board of Directors did take
action by unanimous consent on a number of occasions.
5
The Company's executive officers hold office until the next annual
meeting of directors of the Company, which currently is scheduled for December
7, 1998. There are no known arrangements or understandings between any
director or executive officer and any other person pursuant to which any of
the above-named executive officers or directors was selected as an officer or
director of the Company.
SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE
Based solely on a review of the Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain written representations, no persons who were either a
director, officer or beneficial owner of more than 10% of the Company's common
stock, failed to file on a timely basis reports required by Section 16(a) of
the Exchange Act during the most recent fiscal year, except that Ronald S.
Boreta, John A. Hoover, Jr. and Kevin B. Donovan, Executive Officers of the
Company, each filed late Form 4's reporting stock options they received; and
Vaso Boreta, Ronald S. Boreta, John A. Hoover, Jr., Kevin B. Donovan, William
Kilmer, and Robert R. Rosburg each filed Form 5's late reporting the
cancellation and reissuance of stock options.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the executive
compensation for the Company's President and each other executive officer who
received compensation in excess of $100,000 for the years ended December 31,
1997, 1996 and 1995 from the Company:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
SECURI-
TIES
UNDERLY-
OTHER RE- ING ALL
ANNUAL STRICTED OPTIONS/ OTHER
NAME AND PRINCIPAL COMPEN- STOCK SARs LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (NUMBER)PAYOUTS SATION
- ------------------ ---- -------- -------- ------- -------- ------- ------- ------
Ronald S. Boreta, 1997 $101,000 $100,000 $58,183 -- 435,000 -- $4,231
<FN1> <FN2>
President and CEO 1996 $120,000 $ 5,500 $39,160 -- 325,000 -- $8,265
<FN1> <FN2>
1995 $100,000 -0- $19,071 -- -0- -- -0-
<FN1>
Charles Hohl, 1996 $100,000 $ 22,000 $10,000 -- -0- -- -0-
Executive Vice <FN4>
President<FN3> 1995 $100,000 -0- $ 2,346 -- -0- -- -0-
<FN4>
Kevin B. Donovan, 1997 $117,166 $ 25,000 $ 6,212 -- 10,000 -- -0-
Vice President <FN5>
of New Business
Development
6
_________________
<FN>
<FN1>
Represents amounts paid for country club memberships for Ronald S. Boreta, an
automobile for his personal use, and contributions made by the Company to
retirement plans on his behalf. For 1997, these amounts were $16,393 for club
memberships, $16,790 for an automobile and $25,000 to the Company's
Supplemental Retirement Plan.
<FN2>
Represents premiums paid on a life insurance policy for Ronald S. Boreta's
benefit.
<FN3>
Mr. Hohl's employment as Executive Vice President ended on February 26, 1997.
<FN4>
Represents amount contributed to the Company's retirement plan on behalf of
Mr. Hohl.
<FN5>
Represents $4,712 paid for an automobile provided for Mr. Donovan's personal
use and $1,500 contributed to a retirement plan on behalf of Mr. Donovan.
</FN>
OPTION GRANTS IN LAST FISCAL YEAR - INDIVIDUAL GRANTS
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE ($/SH) DATE
- ---------------- ------------ ------------ ----------- ----------
Ronald S. Boreta 110,000 24.1% $3.0625 8-7-1999
125,000 27.4% $3.0625 4-16-2001
200,000 43.9% $3.0625 4-24-2001
Kevin B. Donovan 10,000 2.2% $3.0625 4-16-2001
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
SECURITIES
UNDERLYING VALUE OF UNEXER-
SHARES UNEXERCISED CISED IN-THE
ACQUIRED OPTIONS MONEY OPTIONS
ON AT FY-END AT FY-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (NUMBER) REALIZED UNEXERCISABLE UNEXERCISABLE
- ---------------- -------- -------- -------------- ---------------
Ronald S. Boreta -0- -0- 435,000 / 0 $0 / $0
Kevin B. Donovan -0- -0- 10,000 / 0 $0 / $0
EMPLOYMENT AGREEMENTS
Effective August 1, 1994, the Company entered into an employment
agreement with Ronald S. Boreta, the Company's President and Chief Executive
Officer, pursuant to which he receives a base salary of $100,000 per year plus
annual increases as determined by the Board of Directors. His salary was
7
increased to $120,000 for the year ended December 31, 1996 and returned to
$100,000 for the year ended December 31, 1997. The employment agreement is
automatically extended for additional one year periods unless 60 days' notice
of the intention not to extend is given by either party. In addition to his
base salary, Ronald S. Boreta also will receive a royalty equal to 2% of all
gross revenues directly related to the All-American SportPark and Slugger
Stadium concepts. However, such royalty is only payable to the extent that
the Company's annual consolidated income before taxes after the payment of the
royalty exceeds $1,000,000. Ronald S. Boreta also receives the use of an
automobile, for which the Company pays all expenses, and full medical and
dental coverage. The Company also pays all dues and expenses for membership
at two local country clubs at which Ronald S. Boreta entertains business
contacts for the Company. Ronald S. Boreta has agreed that for a period of
three years from the termination of his employment agreement he will not
engage in a trade or business similar to that of the Company. In the event of
a change of more than 25% of the beneficial ownership of the Company or its
parent, the termination date is extended from December 31, 1996 to December
31, 1998, and it may be extended up to an additional five years under certain
conditions.
In June 1997, the Company's Board of Directors awarded a $100,000 bonus
to Ronald S. Boreta for his extraordinary services related to the raising of
capital and development of the Company's Las Vegas SportPark. Fifty thousand
dollars ($50,000) of this bonus was paid during October 1998, and the other
$50,000 had not been paid by the date of this Proxy Statement.
Effective October 1, 1996, the Company entered into a one year employment
agreement with Kevin B. Donovan, pursuant to which he receives a base salary
of $100,000 per year. In addition to his base salary, Mr. Donovan received a
$25,000 bonus upon the opening of a portion of the All-American SportPark, and
receives a commission of 5% of all sponsorship sales related to the
All-American SportPark. Mr. Donovan also receives the use of an automobile
provided by the Company. Mr. Donovan's employment agreement ended on
September 30, 1997, but his employment has continued on the same terms since
that date.
Effective August 8, 1994, the Company entered into an employment
agreement with Charles L. Hohl, the Company's Executive Vice President,
Franchise Systems, pursuant to which he received a base salary of $100,000 per
year plus annual increases as determined by the Board of Directors. This
employment agreement ended on February 26, 1997, in connection with the sale
of the Company's franchise business and the termination of Mr. Hohl's
employment.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company do not receive any fees
for Board meetings they attend but are entitled to be reimbursed for
reasonable expenses incurred in attending such meetings.
STOCK OPTION PLAN
During July 1994, the Board of Directors adopted a Stock Option Plan (the
"Plan"). The Plan authorizes the issuance of options to purchase up to
300,000 shares of the Company's Common Stock.
The Plan allows the Board to grant stock options from time to time to
employees, officers, directors and consultants of the Company. The Board has
the power to determine at the time the option is granted whether the option
8
will be an Incentive Stock Option (an option which qualifies under Section 422
of the Internal Revenue Code of 1986) or an option which is not an Incentive
Stock Option. Vesting provisions are determined by the Board at the time
options are granted. The option price for any option will be no less than the
fair market value of the Common Stock on the date the option is granted.
Since all options granted under the Plan must have an exercise price no
less than the fair market value on the date of grant, the Company will not
record any expense upon the grant of options, regardless of whether or not
they are incentive stock options. Generally, there will be no federal income
tax consequences to the Company in connection with Incentive Stock Options
granted under the Plan. With regard to options that are not Incentive Stock
Options, the Company will ordinarily be entitled to deductions for income tax
purposes of the amount that option holders report as ordinary income upon the
exercise of such options, in the year such income is reported.
In August 1994, the Board of Directors granted stock options to the
following persons who were then Officers and Directors of the Company, to
purchase shares of the Company's Common Stock at $5.00 per share. These
options expire on August 8, 1999. On June 9, 1997, each of these options
(except Charles Hohl's) were reissued at an exercise price of $3.0625.
NAME SHARES SUBJECT TO OPTION
----------------- ------------------------
Vaso Boreta 110,000
Ronald Boreta 110,000
Charles Hohl 60,000
Glenn Raynes 10,000
Robert R. Rosburg 5,000
William Kilmer 5,000
-------
Total 300,000
In April 1996, the Company's Board of Directors approved increases in the
number of shares of Common Stock which may be issued under the Plan from
300,000 to 700,000, subject to approval by the Company's shareholders within
one year. Also in April 1996, the Company's Board of Directors granted stock
options as indicated below.
RELATIONSHIP SHARES SUBJECT EXERCISE
NAME TO THE COMPANY TO OPTION PRICE (3)
- ---------------- -------------------- -------------- ---------
Joel Rubenstein Consultant 10,000 $5.00
Ronald S. Boreta Officer and Director 125,000 $4.75
Ronald S. Boreta Officer and Director 200,000 (1) $4.625
Kevin B. Donovan Officer 10,000 $4.75
John Hoover Officer 10,000 $4.75
Robert Finley Employee 1,000 $4.75
Ted Abbruzzese Consultant 10,000 $4.75
Jeff Gordon Consultant 10,000 (2) $4.75
Hal Price Consultant 1,000 $4.75
___________________
(1) This option was not to vest until the Company completed a transaction
with a major business or investor made it probable that the Company will be
able to pursue its plan of building and operating SportParks. This condition
was met in September 1996 as a result of the investment by Three Oceans, Inc.
of $5,000,000 in the Company.
9
(2) This option is currently vested as to 5,000 shares and will vest as to an
additional 2,500 on April 24, 1998, and April 24, 1999
(3) On June 9, 1997, each of these options were reissued for the same number
of shares at a new exercise price of $3.0625 per share.
401(k) PLAN
The Company's Parent maintains a 401(k) employee retirement and savings
program (the "401(k) Plan") which covers the Company's employees. Under the
401(k) Plan, an employee may contribute up to 15% of his or her gross annual
earnings, subject to a statutory maximum, for investment in one or more funds
identified under the plan. The Company's Parent makes matching contributions
equal to 25% of participants' contributions.
SUPPLEMENTAL RETIREMENT PLAN
In November 1996, the Company and its majority shareholder established a
Supplemental Retirement Plan, pursuant to which certain employees selected by
the Company's Chief Executive Officer receive benefits based on the amount of
compensation elected to be deferred by the employee and the amount of
contributions made on behalf of the employee by the Company. Company
contributions to the Supplemental Retirement Plan are immediately vested for
Category I employees, and vest 20% per year of employment for Category II
employees. Vested amounts under the Supplemental Retirement Plan are paid out
over 5 to 20 years upon retirement, disability, death or termination of
employment.
For 1997, Ronald S. Boreta (the President of the Company) was designated
as a Category I employee. The Company made contributions to the Supplemental
Retirement Plan on behalf of Ronald S. Boreta in the amount of $25,000.
The Company's Board of Directors has not yet determined the amounts, if
any, which will be contributed to the Supplemental Retirement Plan for 1998.
BOARD OF DIRECTORS' REPORT ON OPTION REPRICING
On June 9, 1997, the Company's Board of Directors reissued all of the
options outstanding under the Company's Stock Option Plan, except a non-
qualified option held by Charles Hohl, a former employee. All of the Options
issued on June 9, 1997 were issued in exchange for the cancellation of
outstanding options for the same number of shares and the same exercise
periods. The exercise price of the new options is $3.0625 per share. The
exercise prices of the options which were replaced ranged from $4.625 to $5.00
per share.
The Company's Board of Directors made the decision to reprice the
outstanding options. The Company does not have a compensation or similar
committee. The Board of Directors based their decision on the fact that the
exercise prices of the outstanding options were so far above the market price
for the Company's Common Stock that the options no longer served as incentives
to the holders.
Ronald S. Boreta, the Company's President and Chief Executive Officer,
received options for a total of 435,000 shares of Common Stock exercisable at
$3.0625 per share in exchange for his options to purchase the same number of
shares at prices ranging from $4.625 to $5.00 per share.
10
Kevin B. Donovan, the Company's Vice President of New Business
Development, received an option to purchase 10,000 shares of Common Stock
exercisable at $3.0625 per share in exchange for his option to purchase the
same number of shares at $4.75 per share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Las Vegas Discount Golf & Tennis, Inc. ("LVDG"), a publicly-held
corporation, owns 66.7% of the Company's outstanding Common Stock and all of
the Company's outstanding Series B Convertible Preferred Stock. Vaso Boreta,
the Company's Chairman of the Board, is an Officer, Director and principal
shareholder of LVDG. Ronald S. Boreta, President and a Director of the
Company, is a Director and principal shareholder of LVDG. Robert S. Rosburg
and William Kilmer, Directors of the Company, are also Directors of LVDG. In
addition, John Boreta, the son of Vaso Boreta and the brother of Ronald S.
Boreta, is a principal shareholder of LVDG.
Until August 1, 1994, the Company and LVDG shared the expenses of
jointly-used facilities and administrative and accounting personnel on a 50-50
basis under a verbal agreement. Since August 1, 1994, the Company and LVDG
have allocated these costs on a pro rata basis based on which entity receives
the benefit of the particular expense. With respect to the lease for the
office and warehouse facilities, starting July 1, 1996 LVDG paid 33% of the
monthly lease payments and the Company paid 67%.
Effective August 1, 1994, LVDG also agreed to purchase, warehouse and
make available to the Company and its franchisees certain merchandise. In
exchange, the Company agreed to pay $350,000 from the proceeds of its December
1994 initial public offering to retire certain bank indebtedness described
below.
Through February 1997, certain facilities used by the Company and LVDG
were leased by the Company from Vaso Boreta, the Company's Chairman of the
Board. LVDG leased approximately 15,500 square feet of warehouse space and
6,000 square feet of office space from Mr. Boreta at a base monthly rent of
$13,000. The Board of Directors of the Company believes that the terms of
this lease were at least as favorable as those which could have been obtained
from an unaffiliated entity.
Effective October 1, 1990, a franchise agreement with Vaso Boreta, the
Company's Chairman of the Board, was mutually terminated, and a new agreement
was entered into with him pursuant to which he was permitted to operate a Las
Vegas Discount Golf & Tennis store in Las Vegas, Nevada, which is not a
franchise store. The agreement also provided that Mr. Boreta may purchase
certain merchandise for his store at the same cost as the Company, use the
facilities and personnel of the Company on a limited basis, and operate a
limited mail order business from his store. In exchange for these rights, Mr.
Boreta paid the Company a fee of $3,000 per month. This agreement with the
Company was terminated on July 31, 1994. Mr. Vaso Boreta now has a similar
agreement with Las Vegas Discount Golf & Tennis, Inc. As a result of this
arrangement, Mr. Vaso Boreta did not pay any royalties to the Company even
though he may have received a benefit from the Company's activities including
any advertising conducted by the Company.
Prior to becoming the Company's Vice President of New Business
Development in April 1994, Kevin B. Donovan was President and a major
shareholder of Donovan Design Agency, Inc., which performed certain design
services for the Company. During 1993, Donovan Design Agency billed the
Company $136,000 for such services of which $59,000 had been paid as of
11
December 31, 1993. During 1994, Donovan Design Agency billed the Company
$9,300 for additional services, and the Company paid $32,000 on its account.
As of December 31, 1995 and 1994, the Company owed Donovan Design Agency
$54,300. During 1996, the amount due was reduced to $36,000 and this amount
was paid. Kevin B. Donovan presently owns all of the outstanding stock of
Donovan Design Agency, however, this receivable has been assigned to an entity
with which Mr. Donovan has no affiliation.
During 1997, Vaso Boreta, the Company's Chairman of the Board, loaned the
Company a total of $600,000. This loan is evidenced by a demand note bearing
interest at 10% per annum.
As indicated above, the Company has extensive transactions with LVDG,
LVDG's other subsidiaries, and Voss Boreta's Las Vegas store. As of December
31, 1996, the Company was owed $461,500 by LVDG and its subsidiaries. This
amount was completely paid off during the six months ended June 30, 1997.
During September 1997, the Company agreed to sell its rights to the St.
Andrews name to Boreta Enterprises, Ltd. for a $20,000 two-year promissory
note since the Company has committed all of its efforts to the development and
management of the All-American SportPark and no longer intends to engage in
the business of selling golf equipment or apparel.
On October 19, 1998, the Company sold 250,000 shares of its Series B
Convertible Preferred Stock to LVDG for $2,500,000 in cash. This investment
was funded from the purchase of common stock of LVDG by ASI Group, L.L.C., in
a private transaction. The shares of Series B Convertible Preferred Stock
purchased by LVDG have a liquidation value of $10.00 per share and may be
redeemed by the Company under certain circumstances. Each share is
convertible into one share of Common Stock, is entitled to one vote per share
and votes together with the Common Stock as a single class. The Series B
Convertible Preferred Stock entitles the holder to receive dividends equal to
those paid to the holders of the Company's Common Stock, on an as-converted
basis.
A majority of the Company's Board of Directors believes that the terms of
the above transactions were on terms no less favorable to the Company than if
the transactions were with unaffiliated third parties.
INDEPENDENT ACCOUNTANTS
The independent accounting firm of Arthur Andersen LLP audited the
financial statements of the Company for the years ended December 31, 1997, and
has been selected in such capacity for the current fiscal year. At the
direction of the Board of Directors, this appointment is being presented to
the shareholders for ratification or rejection at the Annual Meeting of
Shareholders. If the Shareholders do not ratify the appointment of Arthur
Andersen LLP the appointment of auditors will be reconsidered by the Board of
Directors.
It is expected that representatives of Arthur Andersen LLP will be
present at the meeting and will be given an opportunity to make a statement if
they desire to do so. It is also expected that the representatives will be
available to respond to appropriate questions from shareholders.
12
AMENDMENT TO ARTICLES OF
INCORPORATION CONCERNING NAME CHANGE
The Board of Directors has approved an amendment to the Articles of
Incorporation to change the name of the Company to "All-American SportPark,
Inc." The new name is being proposed to better reflect the business of the
Company, since the Company is no longer in the business of franchising golf
equipment stores and is now engaged in developing the All-American SportPark
in Las Vegas, Nevada.
An affirmative vote of a majority of the shares of Common and Preferred
Stock outstanding will be required to approve the proposed amendment to the
Company's Articles of Incorporation. The Board of Directors recommends
approval of the amendment.
APPROVAL OF THE COMPANY'S 1998 STOCK INCENTIVE PLAN
On October 26, 1998, the Board of Directors approved, subject to
stockholder approval, the 1998 Stock Incentive Plan (the "Plan"), and the
issuance of approximately 750,000 shares of the Company's common stock (the
"Stock") pursuant to awards thereunder.
The purpose of the Plan is to advance the interests of the Company and
its subsidiaries by enhancing their ability to attract and retain employees
and other persons or entities who are in a position to make significant
contributions to the success of the Company and its subsidiaries, through
ownership of shares of Stock of the Company and cash incentives. The Plan is
intended to accomplish these goals by enabling the Company to grant awards in
the form of options, stock appreciation rights, restricted stock or
unrestricted stock awards, deferred stock awards, or performance awards (in
cash or stock), other stock-based awards, or combinations thereof, all as more
fully described below.
General
The Plan will be administered and awards granted by the Company's Board
of Directors (the "Board"). Key employees of the Company and its subsidiaries
and other persons or entities, not employees of the Company and its
subsidiaries, who are in a position to make a significant contribution to the
success of the Company or its subsidiaries are eligible to receive awards
under the Plan. In addition, individuals who have accepted offers of
employment from the Company and who the Company reasonably believes will be
key employees upon commencing employment with the Company ("New Hires") are
eligible to receive awards under the Plan.
Section 162(m) of the Code places annual limitations on the deductibility
by public companies of compensation in excess of $1,000,000 paid to any of the
chief executive officer and the other four most-highly compensated officers,
unless, among other things, the compensation is performance-based. The
performance-based exception applies if awards are granted under a plan the
material terms of which have been approved by stockholders and if certain
other requirements are satisfied. The material terms of the Plan include the
eligibility provisions described above, limits on amounts that may be awarded
to any participant in a specified period, and in the case of a
performance-based award other than stock options and stock appreciation
rights, the performance criteria to be used by the Board in determining the
performance goals required to be achieved in order for the participant to
benefit under the award. The Plan limits to 750,000 the maximum number of
shares for which stock options may be awarded to any participant in any
13
three-year period and also limits to 500,000 the maximum number of shares for
which stock appreciation rights may be awarded to any participant in any
three-year period. The limits applicable to other performance-based awards,
and the performance criteria applicable to such awards, are described below.
Stock Options. The exercise price of an incentive stock option ("ISO")
granted under the Plan or an option intended to qualify for the
performance-based compensation exception under Section 162(m) of the Code may
not be less than 100% of the fair market value of the Stock at the time of
grant. The exercise price of a non-ISO granted under the Plan is determined
by the Board. Options granted under the Plan will expire and terminate not
later than 10 years from the date of grant. The exercise price may be paid in
cash or by check, bank draft or money order payable to the order of the
Company. Subject to certain additional limitations, the Board may also permit
the exercise price to be paid with Stock, a promissory note, an undertaking by
a broker to deliver promptly to the Company sufficient funds to pay the
exercise price, or a combination of the foregoing.
Stock Appreciation Rights (SARs). Stock appreciation rights ("SARs") may
be granted either alone or in tandem with stock option grants. Each SAR
entitles the holder on exercise to receive an amount in cash or Stock or a
combination thereof (such form to be determined by the Board) determined in
whole or in part by reference to appreciation in the fair market value of a
share of Stock. SARs may be based solely on appreciation in the fair market
value of Stock or on a comparison of such appreciation with some other measure
of market growth. The date at which such appreciation or other measure is
determined shall be the exercise date unless another date is specified by the
Board. If an SAR is granted in tandem with an option, the SAR will be
exercisable only to the extent the option is exercisable. To the extent the
option is exercised, the accompanying SAR will cease to be exercisable, and
vice versa. An SAR not granted in tandem with an option will become
exercisable at such time or times, and on such conditions, as the Board may
specify.
Restricted and Unrestricted Stock Awards; Deferred Stock. The Plan
provides for awards of nontransferable shares of restricted Stock subject to
forfeiture ("Restricted Stock"), as well as awards of unrestricted shares of
Stock. Except as otherwise determined by the Board, shares of Restricted
Stock may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated until the end of the applicable restriction period and the
satisfaction of any other conditions or restrictions established by the Board.
Other awards under the Plan may also be settled with Restricted Stock. The
Plan also provides for deferred grants entitling the recipient to receive
shares of Stock in the future at such times and on such conditions as the
Board may specify.
Other Stock-Based Awards. The Board may grant other types of awards
under which stock is or may in the future be acquired. Such awards may
include debt securities convertible into or exchangeable for shares of Stock
upon such conditions, including attainment of performance goals, as the Board
may determine.
Performance Awards. The Plan provides that at the time any stock
options, SARs, stock awards (including restricted stock, unrestricted stock or
deferred stock) or other stock-based awards are granted, the Board may impose
the additional condition that performance goals must be met prior to the
participant's realization of any vesting, payment or benefit under the award.
In addition, the Board may make awards entitling the participant to receive an
amount in cash upon attainment of specified performance goals. In order for a
14
performance-based award (other than, in general, a stock option or stock
appreciation right) to qualify for the performance-based compensation
exception to the $1 million deduction limitation under Section 162(m) of the
Code, among other things, benefits under the award must be conditioned on the
attainment of preestablished performance goals or measures that are based on
performance criteria approved by stockholders. Performance-based awards under
the Plan that are intended to qualify for the Section 162(m) performance-based
compensation exception, other than, in general, stock options and stock
appreciation rights under the Plan, must be conditioned on the attainment of
objectively determinable performance goals established by the Board and based
on one or more of the following (on a consolidated, divisional, subsidiary,
line of business or geographical basis or in combinations thereof): (i) sales;
revenues; assets; expenses; earnings before or after deduction for all or any
portion of interest, taxes, depreciation or amortization, whether or not on a
continuing operations or an aggregate or per share basis; return on equity,
investment, capital or assets; inventory level or turns; one or more operating
ratios; borrowing levels, leverage ratios or credit rating; market share;
capital expenditures; cash flow; stock price; stockholder return; or any
combination of the foregoing; or (ii) acquisitions and divestitures (in whole
or part); joint ventures and strategic alliances; spin-offs, split-ups and the
like; reorganizations; recapitalizations, restructuring; financings (issuance
of debt or equity) and refinancings; transactions that would constitute a
change of control; or any combination of the foregoing. The performance goals
established by the Board need not involve an increase, a positive or improved
result of avoidance of loss. The maximum number of shares of Stock subject to
Stock-based performance awards that may be awarded to any participant under
the Plan in any three-year period (other than stock options and stock
appreciation rights, for which the Plan provides a separate limit) is 500,000
shares. In the case of cash performance awards, the maximum amount that may
be paid to any participant under the Plan for any year is $1,000,000. The
Company will not grant any awards under the Plan unless and until the
Company's stockholders approve the Plan.
In connection with any award, the Board may provide for and make a cash
payment to a participant not to exceed an amount equal to (a) the amount of
any federal, state and local income tax on ordinary income for which the
participant will be liable with respect to the award, plus (b) an additional
amount on a grossed-up basis necessary to make him or her whole after tax,
discharging all the participant's income tax liabilities arising from all
payments under to the award, all based on such reasonable estimates of
applicable tax rates as the Board may determine.
Termination. Except as otherwise determined by the Board, if a
participant dies, options and SARs exercisable immediately prior to death may
be exercised by the participant's executor, administrator or transferee during
a period of one year following such death (or for the remainder of their
original term, if less). Options and SARs not exercisable at a participant's
death terminate. Except as otherwise determined by the Board, outstanding
awards of Restricted Stock will be forfeited upon a participant's death, and
deferred stock grants, performance awards and other stock-based awards to
which a participant is not irrevocably entitled will be terminated unless
otherwise provided. If (i) a participant who is an employee ceases to be an
employee for any reason other than death, (ii) there is a termination (other
than by reason of death or satisfactory completion of the project or service)
of the consulting, service or similar relationship in respect of which a
non-employee participant was granted an award under the Plan or (iii) a New
Hire's offer of employment is terminated prior to such individual commencing
employment with the Company or the New Hire does not commence his or her
employment with the Company within two months after receipt of an award under
15
the Plan then, except as the Board otherwise determines, all options and SARs
will remain exercisable, to the extent they were exercisable immediately prior
to termination, for three months (or for the remainder of their original term,
if less), shares of Restricted Stock will be forfeited, and deferred stock
grants, performance awards and other stock-based awards will terminate.
In the case of certain mergers, consolidations or other transactions in
which the Company is acquired or is liquidated, all outstanding awards will
terminate. The Board may, however, in its discretion cause unvested awards to
vest or become exercisable, remove performance or other conditions on the
exercise of or vested right to an award, or in certain circumstances provide
for replacement awards. With respect to an outstanding award held by a
participant who, following the transaction, will be employed by or otherwise
providing services to an entity which is a surviving or acquiring entity in
the transaction or an affiliate of such an entity, the Board may at or prior
to the effective time of the transaction and in lieu of the action described
in the previous two sentences, arrange to have such surviving or acquiring
entity or affiliate assume any award held by such participant outstanding
under the Plan or grant a replacement award which, in the judgment of the
Board, is substantially equivalent to any award being replaced.
Amendment. The Board may amend the Plan or any outstanding award at any
time, provided that no such amendment will, without the approval of the
stockholders of the Company, effectuate a change for which stockholder
approval is required in order for the Plan to continue to qualify for the
award of ISOs under Section 422 of the Code or for the award of
performance-based compensation under Section 162(m) of the Code.
Dividend Equivalents. Except as specifically provided by the Plan, the
receipt of an award will not give a participant rights as a stockholder. In
general, the participant will obtain such rights only upon the issuance of
Stock. However, the Board may, on such conditions as it deems appropriate,
provide that a participant will receive a benefit in lieu of cash dividends
that would have been payable on any or all Stock subject to the participant's
awards had such Stock been outstanding.
Tax Withholding. The Company will withhold from any cash payment made
pursuant to an award an amount sufficient to satisfy all federal, state and
local withholding tax requirements.
In the case of an award pursuant to which Stock may be delivered, the
Board may require that the participant remit to the Company an amount
sufficient to satisfy the withholding requirements prior to the delivery of
any Stock or removal of restrictions thereon. To the extent that such
withholding is required, the Board may permit the participant to elect to have
the Company hold back from the shares to be delivered, or to deliver to the
Company, Stock having a value calculated to satisfy the withholding
requirement. The Board may make such share withholding mandatory.
If at the time an ISO is exercised the Board determines that the Company
could be liable for withholding requirements with respect to the exercise or
with respect to a disposition of the Stock received upon exercise, the Board
may require as a condition of exercise that the person exercising the ISO
agree (a) to provide for withholding, (b) to inform the Company promptly of
any disposition of Stock received upon exercise, and (c) to give such security
as the Board deems adequate to meet the potential liability of the Company for
other withholding requirements and to augment such security from time to time
in any amount reasonably deemed necessary by the Board to preserve the
adequacy of such security.
16
Adjustments in the Event of Certain Transactions. In the event of a
stock dividend, stock split or combination of shares, recapitalization or
other change in the Company's capitalization, or other distribution to holders
of Stock other than normal cash dividends, the Board will make any appropriate
adjustments to the maximum number of shares that may be delivered under the
Plan and to the specific limits set forth in the Plan. The Board will also
make any appropriate adjustments to the number and kind of shares of Stock or
securities subject to awards then outstanding or subsequently granted, any
exercise prices relating to awards and any other provision of awards affected
by such change. In the case of ISOs or awards intended to qualify for the
"performance-based compensation" exception under Section 162(m)(4)(C) of the
Code, the foregoing adjustments will be made only to the extent consistent
with continued qualification of the option or other award under Section 422 of
the Code or Section 162(m) of the Code, as the case may be.
New Plan Benefits
On October 26, 1998, the Company's Board of Directors granted, contingent
on shareholder approval of the Plan, to Ronald S. Boreta, the Company's
President, 125,000 Stock Appreciation Rights with a base price of $6.00 each,
with the condition that no money will be paid unless the fair market value of
the Company's Common Stock at the time of exercise is at least $10.00 per
share. In addition, a maximum of $500,000 will be payable to Mr. Boreta upon
the exercise of these Stock Appreciation Rights. No other rights or other
awards have been granted under the Plan.
On October 26, 1998, the fair market value of the Company's Common Stock
was approximately $2.11. Since the base price of $6.00 and the minimum price
of $10.00 are substantially above the current market price, the current value
of the stock appreciation rights is minimal and the future value is not
determinable. In addition, because any future grants under the Plan are
discretionary, the future benefits or amounts that would be received under the
Plan by executive officers, non-executive officer directors and non-executive
officer employees are not determinable at this time.
Federal Tax Effects
The following discussion summarizes certain federal income tax
consequences of the issuance and receipt of options under the Plan. The
summary does not purport to cover federal employment tax or other federal tax
consequences that may be associated with the Plan, nor does it cover state,
local or foreign taxes.
Incentive Stock Options. In general, an optionee realizes no taxable
income upon the grant or exercise of an ISO. However, the exercise of an ISO
may result in an alternative minimum tax liability to the optionee. With
certain exceptions, a disposition of shares purchased under an ISO within two
years from the date of grant or within one year after exercise produces
ordinary income to the optionee (and a deduction to the Company) equal to the
value of the shares at the time of exercise less the exercise price. Any
additional gain recognized in the disposition is treated as a capital gain for
which the Company is not entitled to a deduction. If the optionee does not
dispose of the shares until after the expiration of these one- and two-year
holding periods, any gain or loss recognized upon a subsequent sale is treated
as a long-term capital gain or loss for which the Company is not entitled to a
deduction.
Nonstatutory (Non-ISO) Options. In general, in the case of a non-ISO,
the optionee has no taxable income at the time of grant but realizes income in
17
connection with exercise of the option in an amount equal to the excess (at
the time of exercise) of the fair market value of the shares acquired upon
exercise over the exercise price. A corresponding deduction is available to
the Company. Any gain or loss recognized upon a subsequent sale or exchange
of the shares is treated as capital gain or loss for which the Company is not
entitled to a deduction.
In general, an ISO that is exercised more than three months after
termination of employment is treated as a non-ISO. (Special rules apply in
the case of permanent disability or death.) ISOs are also treated as non-ISOs
to the extent that, in the aggregate, they first become exercisable by an
individual in any calendar year for shares having a fair market value
(determined as of the date of grant) in excess of $100,000.
In the event of a change in control (as defined) of the Company, certain
payments in the nature of compensation to certain individuals, if contingent
on the change in control, could be nondeductible to the Company and subject to
an additional 20% tax. Awards under the Plan that are made or that vest or
become payable in connection with a change in control may be required to be
taken into account in determining whether these penalties apply.
Under Section 162(m) of the Code, certain remuneration in excess of
$1,000,000 may be nondeductible if paid by a publicly traded corporation to
any of its chief executive officer or other four most highly compensated
officers. Option awards under the Plan are intended to be eligible for
exemption from the Section 162(m) deduction limit.
The affirmative vote of a majority of the shares of Common and Preferred
Stock represented at the meeting will be required to approve the 1998 Stock
Incentive Plan.
The Board of Directors recommends a vote "FOR" the 1998 Stock Incentive
Plan.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not
aware of any other matter to be presented at the Meeting other than as set
forth herein. However, if any other matters are properly brought before the
Meeting, the shares represented by valid proxies will be voted with respect to
such matters in accordance with the judgment of the persons voting them. A
majority vote of the shares represented at the meeting is necessary to approve
any such matters.
ANNUAL REPORT
The Company's Annual Report on Form 10-KSB for the fiscal year ending
December 31, 1997, accompanies this Proxy Statement. The Annual Report is not
incorporated into this Proxy Statement and is not to be considered part of the
solicitation material.
18
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN NOVEMBER 1999
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in November 1999 must be received at
the offices of the Company, 5325 South Valley View Boulevard, Suite 4, Las
Vegas, Nevada 89118, on or before July 16, 1999, in order to be included in
the Company's proxy statement and proxy relating to that meeting.
RONALD S. BORETA, PRESIDENT
Las Vegas, Nevada
November 12, 1998
19
APPENDIX
SAINT ANDREWS GOLF CORPORATION
1998 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this Stock Incentive Plan (the "Plan") is to advance the
interests of Saint Andrews Golf Corporation (the "Company") and its
subsidiaries by enhancing their ability to attract and retain employees and
other individuals or entities who are in a position to make significant
contributions to the success of the Company and its subsidiaries through
awards based on the Company's common stock, $.001 par value ("Stock"), and
cash incentives.
The Plan is intended to accomplish these goals by enabling the Company to
grant awards ("Awards") in the form of Options, Stock Appreciation Rights,
Restricted Stock or Unrestricted Stock Awards, Deferred Stock Awards,
Performance Awards, Other Stock-Based Awards, or combinations thereof, all as
more fully described below.
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the
Corporation (the "Board"). The Board will have authority, not inconsistent
with the express provisions of the Plan and in addition to other authority
granted under the Plan, to (a) grant Awards at such time or times as it may
choose; (b) determine the size of each Award, including the number of shares
of Stock subject to the Award; (c) determine the type or types of each Award;
(d) determine the terms and conditions of each Award; (e) waive compliance by
a holder of an Award with any obligations to be performed by such holder under
an Award and waive any terms or conditions of an Award; (f) amend or cancel an
existing Award in whole or in part (and if an award is canceled, grant another
Award in its place on such terms and conditions as the Board shall specify),
except that the Board may not, without the consent of the holder of an Award,
take any action under this clause with respect to such Award if such action
would adversely affect the rights of such holder; (g) prescribe the form or
forms of any instruments to be used under the Plan, including any written
notices and elections required of Participants (as defined below), and change
such forms from time to time; (h) adopt, amend and rescind rules and
regulations for the administration of the Plan; and (i) interpret the Plan and
decide any questions and settle all controversies and disputes that may arise
in connection with the Plan. Such determinations and actions of the Board, and
all other determinations and actions of the Board made or taken under
authority granted by any provision of the Plan, will be conclusive and will
bind all parties. Nothing in this paragraph shall be construed as limiting the
power of the Board to make adjustments under Section 7.3 or Section 8.6.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on the date on which it is approved by the
stockholders of the Company. Awards may be made prior to such stockholder
approval if made subject thereto. No Award may be granted under the Plan after
October 25, 2008 (the 10th anniversary of day before Board approval), but
Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section
8.6, the aggregate number of shares of Stock that may be delivered under the
Plan will be 750,000. If any Award requiring exercise by the Participant for
delivery of Stock terminates without having been exercised in full, or if any
Award payable in Stock or cash is satisfied in cash rather than Stock, the
number of shares of Stock as to which such Award was not exercised or for
which cash was substituted will be available for future grants.
(b) Special Limitations Applicable to Certain Awards. Subject to
adjustment as provided in Section 8.6(a) to the extent such adjustment is
consistent with the continued satisfaction with respect to Awards of the
requirements of Section 162(m)(4)(C) of the Code, the maximum number of shares
of Stock for which Options and Stock Appreciation Rights may be awarded under
the Plan to any participant during any three-calendar-year period is in the
case of each such form of Award 500,000 shares. For purposes of the preceding
sentence, the regrant of a canceled Option or Stock Appreciation Right, or the
repricing of an Option or Stock Appreciation Right, shall be treated as a
separate Award to the extent required under Section 162(m)(4)(C) of the Code.
For maximum limits relating to Performance Awards, see Section 6.5 below.
(c) Shares to be Delivered. Stock delivered under the Plan may be
either authorized but unissued Stock or previously issued Stock acquired by
the Company and held in treasury. No fractional shares of Stock will be
delivered under the Plan.
5. ELIGIBILITY AND PARTICIPATION
Each key employee of the Company or any of its subsidiaries (an
"Employee") and each other individual or entity (other than employees of the
Company or any of its subsidiaries, but including without limitation directors
of the Company or a subsidiary of the Company) who, in the opinion of the
Board, is in a position to make a significant contribution to the success of
the Company or its subsidiaries will be eligible to receive Awards under the
Plan (each such Employee, other individual or entity receiving an Award, "a
Participant"). Participants shall also include individuals who have accepted
an offer of employment from the Company and who the Company reasonably
believes will be key employees upon commencing employment with the Company (a
"New Hire").
6. TYPES OF AWARDS
6.1. Options
(a) Nature of Options. An option ("Option") is an Award giving the
recipient the right on exercise thereof to purchase Stock.
Both "incentive stock options," as defined in Section 422(b) of the
Code (any Option intended to qualify as an incentive stock option being
hereinafter referred to as an "ISO"), and Options that are not ISOs, may be
granted under the Plan. ISOs shall be awarded only to Employees. An Option
awarded under the Plan shall be a non-ISO unless it is expressly designated as
an ISO at time of grant.
(b) Exercise Price. The exercise price of an Option will be
determined by the Board subject to the following:
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(1) The exercise price of an ISO or an Option intended to
qualify as performance based compensation under Section 162(m) of the Code
shall not be less than 100% of the fair market value of the Stock subject to
the Option, determined as of the time the Option is granted.
(2) In no case may the exercise price paid for Stock which is
part of an original issue of authorized Stock be less than the par value per
share of the Stock.
(c) Duration of Options. The latest date on which an Option may be
exercised will be the tenth anniversary of the day immediately preceding the
date the Option was granted, or such earlier date as may have been specified
by the Board at the time the Option was granted.
(d) Exercise of Options. An Option will become exercisable at such
time or times, and on such conditions, as the Board may specify. The Board may
at any time and from time to time accelerate the time at which all or any part
of the Option may be exercised. Except as otherwise determined by the Board,
any period during which a Participant who is an Employee is on an unpaid leave
of absence (or other unpaid absence) from the Company shall toll the period of
time over which an option becomes exercisable. Any exercise of an Option must
be in writing, signed by the proper person and delivered or mailed to the
Company, accompanied by (1) any documents required by the Board and (2)
payment in full in accordance with paragraph (e) below for the number of
shares for which the Option is exercised.
(e) Payment for Stock. Stock purchased on exercise of an Option must
be paid for as follows: (1) in cash or by check (acceptable to the Company in
accordance with guidelines established for this purpose), bank draft or money
order payable to the order of the Company or (2) if so permitted by the Board
at or after the grant of the Option, (i) through the delivery of shares of
Stock which have been held for at least six months (unless the Board approves
a shorter period) and which have a fair market value equal to the exercise
price, (ii) by delivery of a promissory note of the Participant to the Company
containing such terms as are specified by the Board, (iii) by delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to
the Company sufficient funds to pay the exercise price, or (iv) by any
combination of the foregoing permissible forms of payment.
(f) Discretionary Payments. If (i) the market price of shares of
Stock subject to an Option (other than an Option which is in tandem with a
Stock Appreciation Right as described in Section 6.2) exceeds the exercise
price of the Option at the time of its exercise, and (ii) the person
exercising the Option so requests in writing, the Board may in its sole
discretion cancel the Option and cause the Company to pay in cash or in shares
of Common Stock (valued at fair market value) to the person exercising the
Option an amount equal to the difference between the fair market value of the
Stock which would have been purchased pursuant to the exercise (determined on
the date the Option is canceled) and the aggregate exercise price which would
have been paid.
6.2. Stock Appreciation Rights.
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right
("Stock Appreciation Right" or "SAR") is an Award entitling the holder on
exercise to receive an amount in cash or Stock or a combination thereof (such
form to be determined by the Board) determined in whole or in part by
reference to appreciation, from and after the date of grant, in the fair
3
market value of a share of Stock. SARs may be based solely on appreciation in
the fair market value of Stock or on a comparison of such appreciation with
some other measure of market growth such as (but not limited to) appreciation
in a recognized market index. The date as of which such appreciation or other
measure is determined shall be the exercise date unless another date is
specified by the Board.
(b) Grant of Stock Appreciation Rights. Stock Appreciation Rights
may be granted in tandem with, or independently of, Options granted under the
Plan.
(1) Rules Applicable to Tandem Awards. When Stock Appreciation
Rights are granted in tandem with Options, (A) the Stock Appreciation Right
will be exercisable only at such time or times, and to the extent, that the
related Option is exercisable and will be exercisable in accordance with the
procedure required for exercise of the related Option; (B) the Stock
Appreciation Right will terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock
Appreciation Right granted with respect to fewer than the full number of
shares covered by an Option will not be reduced until the number of shares as
to which the related Option has been exercised or has terminated exceeds the
number of shares not covered by the Stock Appreciation Right; (C) the Option
will terminate and no longer be exercisable upon the exercise of the related
Stock Appreciation Right; and (D) the Stock Appreciation Right will be
transferable only with the related Option.
(2) Exercise of Independent Stock Appreciation Rights. A Stock
Appreciation Right not granted in tandem with an Option will become
exercisable at such time or times, and on such conditions, as the Board may
specify. Except as otherwise determined by the Board, any period during which
a Participant who is an Employee is on an unpaid leave of absence (or other
unpaid absence) from the Company shall toll the period of time over which a
Stock Appreciation Right becomes exercisable. The Board may at any time
accelerate the time at which all or any part of the Right may be exercised.
Any exercise of an independent Stock Appreciation Right must be in
writing, signed by the proper person and delivered or mailed to the Company,
accompanied by any other documents required by the Board.
6.3. Restricted and Unrestricted Stock.
(a) Grant of Restricted Stock. Subject to the terms and provisions
of the Plan, the Board may grant shares of Stock in such amounts and upon such
terms and conditions as the Board shall determine subject to the restrictions
described below ("Restricted Stock").
(b) Restricted Stock Agreement. The Board may require, as a
condition to an Award, that a recipient of a Restricted Stock Award enter into
a Restricted Stock Award Agreement, setting forth the terms and conditions of
the Award. In lieu of a Restricted Stock Award Agreement, the Board may
provide the terms and conditions of an Award in a notice to the Participant of
the Award, in the resolution approving the Award, or in such other manner as
it deems appropriate. The stock certificate representing the Restricted Stock
shall be appropriately legended to reflect the applicable restrictions.
(c) Transferability and Other Restrictions. Except as otherwise
provided in this Section 6.3, the shares of Restricted Stock granted herein
may not be sold, transferred, pledged, assigned, or otherwise alienated or
4
hypothecated until the end of the applicable period or periods established by
the Board and the satisfaction of any other conditions or restrictions
established by the Board (such period during which a share of Restricted Stock
is subject to such restrictions and conditions is referred to as the
"Restricted Period"). Except as the Board may otherwise determine under
Section 7.1 or Section 7.2, if a Participant dies or suffers a Status Change
(as defined at Section 7.2(a)) for any reason during the Restricted Period,
the Company may purchase the shares of Restricted Stock subject to such
restrictions and conditions for the amount of cash paid by the Participant for
such shares; provided, that if no cash was paid by the Participant such shares
of Restricted Stock shall be automatically forfeited to the Company.
During the Restricted Period with respect to any shares of
Restricted Stock, the Company shall have the right to retain in the Company's
possession the certificate or certificates representing such shares.
(d) Removal of Restrictions. Except as otherwise provided in this
Section 6.3, a share of Restricted Stock covered by a Restricted Stock grant
shall become free from restrictions under the Plan upon completion of the
Restricted Period, including the passage of any applicable period of time and
satisfaction of any conditions to vesting. Except as otherwise determined by
the Board, any period during which a Participant who is an Employee is on
leave of absence (or other unpaid absence) from the Company shall, to the
extent the Restricted Period relates to the passage of time, toll such time
period. The Board shall have the right at any time, in its sole discretion,
immediately to waive all or any part of the restrictions and conditions with
regard to all or any part of the shares held by any Participant.
(e) Voting Rights, Dividends and Other Distributions. During the
Restricted Period, Participants holding shares of Restricted Stock granted
hereunder may exercise full voting rights and shall receive all regular cash
dividends paid with respect to such shares. Except as the Board shall
otherwise determine, any other cash dividends and other distributions paid to
Participants with respect to shares of Restricted Stock, including any
dividends and distributions paid in shares, shall be subject to the same
restrictions and conditions as the shares of Restricted Stock with respect to
which they were paid.
(f) Other Awards Settled with Restricted Stock. The Board may, at
the time any Award described in this Section 6 is granted, provide that any or
all of the Stock delivered pursuant to the Award will be Restricted Stock.
(g) Unrestricted Stock. Subject to the terms and provisions of the
Plan, the Board may grant shares of Stock free of restrictions under the Plan
in such amounts and upon such terms and conditions as the Board shall
determine.
6.4. Deferred Stock.
A Deferred Stock Award ("Deferred Stock Award") is an unfunded and
unsecured promise by the Company to deliver shares of Stock in the future
("Deferred Stock"). Delivery of the Stock will take place at such time or
times, and on such conditions, as the Board may specify. The Board may at any
time accelerate the time at which delivery of all or any part of the Stock
will take place. At the time any Award described in this Section 6 is granted,
the Board may provide that any or all of the Stock delivered pursuant to the
Award will be Deferred Stock.
5
6.5. Performance Awards.
The Board may, at the time an Award described in Sections 6.1, 6.2,
6.3, 6.4 or 6.6 is granted, impose the additional condition that performance
goals must be met prior to the Participant's realization of any vesting,
payment or benefit under the Award. In addition, the Board may make awards
entitling the Participant to receive an amount in cash upon attainment of
specified performance goals ("A Cash Incentive"). Any Award or Cash Incentive
made subject to performance goals as described in the preceding two sentences
shall be a "Performance Award" subject to the provisions of this Section 6.5
in addition to any other applicable provisions of the Plan or the Award.
Performance Awards may consist of Cash Incentives or Awards that are intended
to qualify for the performance-based compensation exception under Section
162(m) of the Code, other than Options or Stock Appreciation Rights intended
to qualify for such exception by reason of the special rules under Section
162(m) of the Code applicable to stock options and stock appreciation rights
granted at an exercise price not less than fair market value on the date of
grant ("Qualified Performance Awards") or Cash Incentives or Awards that
either are not intended so to qualify or are Options or Stock Appreciation
Rights intended to qualify for such exception by reason of the special rules
under Section 162(m) of the Code applicable to stock options and stock
appreciation rights granted at an exercise price not less than fair market
value on the date of grant ("Other Performance Awards"). The Board will
determine the performance measures, the period or periods during which
performance is to be measured, and all other terms and conditions applicable
to the Performance Award. The performance measures to which a Performance
Award is subject may be related to personal performance, corporate
performance, departmental performance, or any other category of performance
established by the Board. In the case of a Qualified Performance Award,
payment under the Award or of the Cash Incentive must be conditioned on the
satisfaction of one or more "qualified performance measures" preestablished by
the Board in accordance with the rules under Section 162(m) of the Code and on
certification (within the meaning of the rules under Section 162(m) of the
Code) by the Board that such measure or measures have been met or exceeded.
For purposes of the preceding sentence, a qualified performance measure is an
objectively determinable measure of performance based on any one or more of
the following (on a consolidated, divisional, subsidiary, line of business or
geographical basis or in combinations thereof): (i) sales; revenues; assets;
expenses; earnings before or after deduction for all or any portion of
interest, taxes, depreciation or amortization, whether or not on a continuing
operations or an aggregate or per share basis; return on equity, investment,
capital or assets; inventory level or turns; one or more operating ratios;
borrowing levels, leverage ratios or credit rating; market share; capital
expenditures; cash flow; stock price; stockholder return; or any combination
of the foregoing; or (ii) acquisitions and divestitures (in whole or in part);
joint ventures and strategic alliances; spin-offs, split-ups and the like;
reorganizations; recapitalizations, restructurings, financings (issuance of
debt or equity) and refinancings; transactions that would constitute a change
of control; or any combination of the foregoing. A qualified performance
measure and targets with respect thereto determined by the Board need not be
based upon an increase, a positive or improved result or avoidance of loss.
The maximum number of shares of Stock subject to Performance Awards (other
than Cash Incentives) awarded to any Participant in any three-calendar-year
period shall be 500,000 shares. The maximum amount payable under Cash
Incentives to any Participant for any year shall be $200,000.
6
6.7. Other Stock-Based Awards.
(a) Nature of Awards. The Board may grant other Awards under which
Stock is or may in the future be acquired ("Other Stock-Based Awards"). Such
awards may include, without limitation, debt securities convertible into or
exchangeable for shares of Stock upon such conditions, including attainment of
performance goals, as the Board shall determine. Such convertible or
exchangeable securities may have such terms and conditions as the Board may
determine at the time of grant. However, no convertible or exchangeable debt
shall be issued unless the Board shall have provided (by Company right of
repurchase, right to require conversion or exchange, or other means deemed
appropriate by the Board) a means of avoiding any right of the holders of such
debt to prevent a Company transaction by reason of covenants in such debt.
(b) Purchase Price; Form of Payment. The Board may determine the
consideration, if any, payable upon the issuance or exercise of an Other
Stock-Based Award. The Board may permit payment by certified check or bank
check or other instrument acceptable to the Board or by surrender of other
shares of Stock (excluding shares then subject to restrictions under the
Plan).
(c) Forfeiture of Awards; Repurchase of Stock; Acceleration or
Waiver of Restrictions. The Board may determine the conditions under which an
Other Stock-Based Award shall be forfeited or, in the case of an Award
involving a payment by the recipient, the conditions under which the Company
may or must repurchase such Award or related Stock. At any time the Board may
in its sole discretion accelerate, waive, or, amend any or all of the
limitations or conditions imposed under any Other Stock-Based Award.
7. EVENTS AFFECTING OUTSTANDING AWARDS
7.1. Death.
Except as the Board may otherwise determine, if a Participant dies
the following will apply:
(a) All Options and Stock Appreciation Rights held by the
Participant immediately prior to death, to the extent then exercisable, may be
exercised by the Participant's executor or administrator or the person or
persons to whom the Option or Right is transferred by will or the applicable
laws of descent and distribution, at any time within the one year period
ending with the first anniversary of the Participant's death (or such shorter
or longer period as the Board may determine), and shall thereupon terminate.
In no event, however, shall an Option or Stock Appreciation Right remain
exercisable beyond the latest date on which it could have been exercised
without regard to this Section 7. All Options and Stock Appreciation Rights
held by a Participant immediately prior to death that are not then exercisable
shall terminate at death.
(b) All Restricted Stock held by the Participant must be
transferred to the Company (and, in the event the certificates representing
such Restricted Stock are held by the Company, such Restricted Stock will be
so transferred without any further action by the Participant in accordance
with Section 6.3(c)).
(c) Any payment or benefit under a Deferred Stock Award,
Performance Award or Other Stock-Based Award to which the Participant was not
irrevocably entitled prior to death will be forfeited and the Award canceled
as of the time of death.
7
7.2. Termination of Service (Other Than By Death).
If (i) a Participant who is an Employee ceases to be an Employee
for any reason other than death, (ii) there is a termination (other than by
reason of death or satisfactory completion of the project or service as
determined by the Board) of the consulting, service or similar relationship in
respect of which a non-Employee Participant was granted an Award hereunder or
(iii) a New Hires offer of employment is terminated prior to the New Hire
commencing employment with the Company or the New Hire does not commence his
or her employment with the Company within two months after receipt of an Award
hereunder (such termination of the employment or other relationship being
hereinafter referred to as a "Status Change"), then, except as the Board may
otherwise determine, the following will apply:
(a) All Options and Stock Appreciation Rights held by the
Participant that were not exercisable immediately prior to the Status Change
shall terminate at the time of the Status Change. Any Options or Rights that
were exercisable immediately prior to the Status Change will continue to be
exercisable for a period of three months, and shall thereupon terminate,
unless the Award provides by its terms for immediate termination in the event
of a Status Change or unless the Status Change results from a discharge for
cause which in the opinion of the Board casts such discredit on the
Participant as to justify immediate termination of the Award. In no event,
however, shall an Option or Stock Appreciation Right remain exercisable beyond
the latest date on which it could have been exercised without regard to this
Section 7. For purposes of this paragraph, in the case of a Participant who is
an Employee, a Status Change shall not be deemed to have resulted by reason of
(i) a sick leave or other bona fide leave of absence approved for purposes of
the Plan by the Board, so long as the Employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) a transfer of employment
between the Company and a subsidiary or between subsidiaries, or to the
employment of a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an option in a transaction to which Section
424(a) of the Code applies.
(b) All Restricted Stock held by the Participant at the time of the
Status Change must be transferred to the Company (and, in the event the
certificates representing such Restricted Stock are held by the Company, such
Restricted Stock will be so transferred without any further action by the
Participant) in accordance with Section 6.3(c) above.
(c) Any payment or benefit under a Deferred Stock Award, Performance
Award or Other Stock-Based Award to which the Participant was not irrevocably
entitled prior to the Status Change will be forfeited and the Award canceled
as of the date of such Status Change.
7.3. Certain Corporate Transactions.
Except as otherwise provided by the Board, in the event of a
consolidation or merger in which the Company is not the surviving corporation
or which results (or that is part of a series of related transactions that
results) in the acquisition of substantially all the Company's outstanding
Stock by a single person or entity or by a group of persons or entities acting
in concert, or in the event of the sale or transfer of substantially all the
Company's assets or a dissolution or liquidation of the Company (a "covered
transaction"), the following rules shall apply:
8
(a) Subject to paragraph (b) below, all outstanding Awards
requiring exercise will cease to be exercisable, and all other Awards to the
extent not fully vested (including Awards subject to conditions not yet
satisfied or determined) will be forfeited, as of the effective time of the
covered transaction, provided that the Board may in its sole discretion, on or
prior to the effective date of the covered transaction, (1) make any
outstanding Option and Stock Appreciation Right exercisable in full, (2)
remove the restrictions from any Restricted Stock, (3) cause the Company to
make any payment and provide any benefit under any Deferred Stock Award or
Performance Award or (4) remove any performance or other conditions or
restrictions on any Award; or
(b) With respect to an outstanding Award held by a participant who,
following the covered transaction, will be employed by or otherwise providing
services to an entity which is a surviving or acquiring entity in the covered
transaction or an affiliate of such an entity, the Board may at or prior to
the effective time of the covered transaction and in lieu of the action
described in paragraph (a) above, arrange to have such surviving or acquiring
entity or affiliate assume any Award held by such participant outstanding
hereunder or grant a replacement award which, in the judgment of the Board, is
substantially equivalent to any Award being replaced.
8. GENERAL PROVISIONS
8.1. Documentation of Awards.
Awards will be evidenced by such written instruments, if any, as
may be prescribed by the Board from time to time. Such instruments may be in
the form of agreements to be executed by both the Participant and the Company,
or certificates, letters or similar instruments, which need not be executed by
the Participant but acceptance of which will evidence agreement to the terms
thereof.
8.2. Rights as a Stockholder, Dividend Equivalents.
Except as specifically provided by the Plan, the receipt of an
Award will not give a Participant rights as a stockholder; the Participant
will obtain such rights, subject to any limitations imposed by the Plan or the
instrument evidencing the Award, only upon the issuance of Stock. However, the
Board may, on such conditions as it deems appropriate, provide that a
Participant will receive a benefit in lieu of cash dividends that would have
been payable on any or all Stock subject to the Participant's Award had such
Stock been outstanding. Without limitation, the Board may provide for payment
to the Participant of amounts representing such dividends, either currently or
in the future, or for the investment of such amounts on behalf of the
Participant.
8.3. Conditions on Delivery of Stock.
The Company will not be obligated to deliver any shares of Stock
pursuant to the Plan or to remove restriction from shares previously delivered
under the Plan (a) until all conditions of the Award have been satisfied or
removed, (b) until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulation have been complied with, (c) if the
outstanding Stock is at the time listed on any stock exchange or The Nasdaq
Stock Market, until the shares to be delivered have been listed or authorized
to be listed on such exchange or market upon official notice of issuance, and
9
(d) until all other legal matters in connection with the issuance and delivery
of such shares have been approved by the Company's counsel. If the sale of
Stock has not been registered under the Securities Act of 1933, as amended,
the Company may require, as a condition to exercise of the Award, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
If an Award is exercised by the Participant's legal representative,
the Company will be under no obligation to deliver Stock pursuant to such
exercise until the Company is satisfied as to the authority of such
representative.
8.4. Tax Withholding.
The Company will withhold from any cash payment made pursuant to an
Award an amount sufficient to satisfy all federal, state and local withholding
tax requirements (the "withholding requirements").
In the case of an Award pursuant to which Stock may be delivered,
the Board will have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the Board
with regard to such requirements, prior to the delivery of any Stock or
removal of restrictions thereon. If and to the extent that such withholding is
required, the Board may permit the Participant or such other person to elect
at such time and in such manner as the Board provides to have the Company hold
back from the shares to be delivered, or to deliver to the Company, Stock
having a value calculated to satisfy the withholding requirement. The Board
may make such share withholding mandatory with respect to any Award at the
time such Award is made to a Participant.
If at the time an ISO is exercised the Board determines that the
Company could be liable for withholding requirements with respect to the
exercise or with respect to a disposition of the Stock received upon exercise,
the Board may require as a condition of exercise that the person exercising
the ISO agree (a) to provide for withholding under the preceding paragraph of
this Section 8.4, if the Board determines that a withholding responsibility
may arise in connection with the exercise, (b) to inform the Company promptly
of any disposition (within the meaning of section 424(c) of the Code) of Stock
received upon exercise, and (c) to give such security as the Board deems
adequate to meet the potential liability of the Company for other withholding
requirements and to augment such security from time to time in any amount
reasonably deemed necessary by the Board to preserve the adequacy of such
security.
8.5. Transferability of Awards.
Unless otherwise permitted by the Board, no Award (other than an
Award in the form of an outright transfer of cash or Unrestricted Stock) may
be transferred other than by will or by the laws of descent and distribution.
8.6. Adjustments in the Event of Certain Transactions.
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization, or
other distribution to holders of Stock other than normal cash dividends, after
10
the effective date of the Plan, the Board will make any appropriate
adjustments to the maximum number of shares that may be delivered under the
Plan under the first paragraph of Section 4 above and to the limits described
in the second paragraph of Section 4 and in Section 6.5(c).
(b) In any event referred to in paragraph (a), the Board will also
make any appropriate adjustments to the number and kind of shares of Stock or
securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to Awards and any other provision of Awards affected
by such change. The Board may also make such adjustments to take into account
material changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions or similar corporate transactions,
or any other event, if it is determined by the Board that adjustments are
appropriate to avoid distortion in the operation of the Plan.
(c) In the case of ISOs or Awards intended to qualify for the
"performance-based compensation" exception under Section 162(m)(4)(C) of the
Code, the adjustments described in (a) and (b) will be made only to the extent
consistent with continued qualification of the Option or other Award under
Section 422 of the Code or Section 162(m) of the Code, as the case may be.
8.7. Employment Rights, Etc.
Neither the adoption of the Plan nor the grant of Awards will
confer upon any person any right to continued retention by the Company or any
subsidiary as an Employee or otherwise, or affect in any way the right of the
Company or subsidiary to terminate an employment, service or similar
relationship at any time. Except as specifically provided by the Board in any
particular case the loss of existing or potential profit in Awards granted
under the Plan will not constitute an element of damages in the event of
termination of an employment, service or similar relationship even if the
termination is in violation of an obligation of the Company or any of its
subsidiaries to the Participant.
8.8. Deferral of Payments.
The Board may agree at any time, upon request of the Participant,
to defer the date on which any payment under an Award will be made.
8.9. Past Services as Consideration.
Where a Participant purchases Stock under an Award for a price
equal to the par value of the Stock the Board may determine that such price
has been satisfied by past services rendered by the Participant.
9. EFFECT, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of Awards to a Participant
will affect the Company's right to grant to such Participant awards that are
not subject to the Plan, to issue to such Participant Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Stock may be
issued to Employees.
The Board may at any time or times amend the Plan or any outstanding
Award for any purpose which may at the time be permitted by law, or may at any
time terminate the Plan as to any further grants of Awards, provided that
(except to the extent expressly required or permitted by the Plan) no such
11
amendment will, without the approval of the stockholders of the Company,
effectuate a change for which stockholder approval is required in order for
the Plan to continue to qualify for the award of ISOs under Section 422 of the
Code or for the award of performance-based compensation under Section 162(m)
of the Code.
12
PRELIMINARY COPY
P R O X Y
SAINT ANDREWS GOLF CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ronald S. Boreta the power to appoint his
substitute, and hereby authorizes him to represent and to vote as designated
below, all the shares of Common and Preferred Stock of Saint Andrews Golf
Corporation held of record by the undersigned on November 12, 1998, at the
Annual Meeting of Shareholders to be held on December 7, 1998, or any
adjournment thereof.
1. Election of Directors:
___ FOR all nominees listed below
___ FOR all nominees except as crossed out below:
Vaso Boreta Robert R. Rosburg
Ronald S. Boreta William Kilmer
[INSTRUCTION: To withhold authority to vote for any individual nominee, cross
out that nominee's name above.]
2. The ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors.
____ FOR ____ AGAINST ____ ABSTAIN
3. The approval of an amendment to the Articles of Incorporation to
change the name of the Company to "All-American SportPark, Inc."
____ FOR ____ AGAINST ____ ABSTAIN
4. The approval of the Company's 1998 Stock Incentive Plan.
____ FOR ____ AGAINST ____ ABSTAIN
5. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, Proxy Statement and Annual Report.
Dated: __________________________ ____________________________________
Signature(s) of Shareholder(s)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SAINT
ANDREWS GOLF CORPORATION. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED
PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.