<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
VENTURE CATALYST INCORPORATED
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
VENTURE CATALYST INCORPORATED
16868 Via Del Campo Court, Suite 200
San Diego, California 92127
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
We cordially invite you to attend our Annual Meeting of Shareholders. This
Annual Meeting will be held at 10:00 A.M., California time, on Friday,
December 8, 2000, at the executive offices of Venture Catalyst Incorporated,
located at 16868 Via Del Campo Court, Suite 200, San Diego, California 92127,
for the following purposes:
1. To elect eight directors to the Board of Directors to hold office for
a term of one year and until their respective successors are elected and
qualified.
2. To approve an amendment to the Company's 1996 Nonemployee Directors
Stock Option Plan to increase the number of shares of our common stock
which may be issued and sold under the 1996 Nonemployee Directors Stock
Option Plan.
3. To transact such other business as may properly come before this
Annual Meeting or adjournment thereof.
The Board of Directors has fixed the close of business on October 27, 2000,
as the record date for the determination of shareholders entitled to notice
of, and to vote at, the Annual Meeting.
YOU ARE CORDIALLY INVITED TO BE PRESENT AND TO VOTE AT THIS ANNUAL MEETING IN
PERSON. HOWEVER, YOU ARE ALSO REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ENCLOSED POSTAGE-PAID AND ADDRESSED ENVELOPE, WHETHER OR NOT YOU
EXPECT TO ATTEND. IN THE EVENT YOU HAVE RETURNED A SIGNED PROXY, BUT ELECT TO
ATTEND THIS ANNUAL MEETING AND VOTE IN PERSON, YOU WILL BE ENTITLED TO VOTE.
By Order of the Board of Directors,
Glenn D. Smith
Secretary
San Diego, California
October 27, 2000
<PAGE>
VENTURE CATALYST INCORPORATED
16868 Via Del Campo Court, Suite 200
San Diego, California 92127
----------------
PROXY STATEMENT
----------------
The Board of Directors of Venture Catalyst Incorporated ("VCAT") is
soliciting proxies to be voted at the Annual Meeting of Shareholders of VCAT
to be held on Friday, December 8, 2000, at the executive offices of VCAT,
located at 16868 Via Del Campo Court, Suite 200, San Diego, California 92127,
at 10:00 A.M., California time, and at any adjournments (the "Annual Meeting"
or the "Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders and described herein. This Proxy Statement
describes issues on which we would like you, as a shareholder, to vote. It
also gives you information on these issues so that you can make an informed
decision. The approximate date on which this Proxy Statement and the enclosed
form of proxy are first being sent or given to shareholders is November 10,
2000.
VOTING RIGHTS AND SOLICITATION OF PROXIES
WHO MAY VOTE. The Board of Directors of VCAT (the "Board of Directors" or
the "Board") has fixed the close of business on October 27, 2000, as the
record date for the determination of shareholders entitled to receive notice
of, and to vote at, the Annual Meeting (the "Record Date"). The only
outstanding class of stock of VCAT is its common stock, par value $.001 per
share ("Common Stock"), and, at the Record Date, 7,422,490 shares were
outstanding. Each share of Common Stock entitles the record holder on the
Record Date to one vote on all matters.
REVOCABILITY OF PROXY. You may revoke your proxy prior to its exercise. You
may do this by (a) delivering to the Secretary of VCAT, Glenn D. Smith, at or
prior to the Annual Meeting, an instrument of revocation or another proxy
bearing a date or time later than the date or time of the proxy being revoked,
or (b) voting in person at the Annual Meeting. Mere attendance at the Annual
Meeting will not serve to revoke your proxy.
HOW YOUR SHARES WILL BE VOTED. All proxies received and not revoked will be
voted as directed. If no directions are specified, such proxies will be voted
FOR (a) election of the Board's eight nominees for directors, and (b) approval
of the amendment to increase the number of shares of the Company's common
stock which may be issued and sold under the 1996 Nonemployee Directors Stock
Option Plan. As to any other business which may properly come before the
Annual Meeting, the persons named in such proxies will vote in accordance with
their best judgment, although the Company does not presently know of any other
such business.
QUORUM; VOTING; BROKER NON-VOTES. Shares of Common Stock will be counted as
present at the Annual Meeting if the shareholder is present and votes in
person at the Meeting or has properly submitted a proxy card. A majority of
VCAT's outstanding shares entitled to vote as of the Record Date must be
present at the Annual Meeting in order to hold the Meeting and conduct
business. This is called a quorum. For the proposal, once a quorum is
established, shareholder approval is obtained when the votes cast in favor of
the proposal exceed the votes cast against such proposal. Abstentions and
broker non-votes will not have the effect of being considered as votes cast
against any matter considered at the Annual Meeting. A non-vote may occur when
a nominee holding shares of Common Stock for a beneficial owner does not vote
on a proposal because such nominee does not have discretionary voting power
and has not received instructions from the beneficial owner.
EXPENSES; METHOD OF SOLICITATION. The expenses of soliciting proxies for the
Annual Meeting are to be paid by VCAT. Solicitation of proxies may be made by
means of personal calls upon, or telephonic or telegraphic communications
with, shareholders or their personal representatives by directors, officers
and
1
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employees of VCAT who will not be specially compensated for such services.
Although there is no formal agreement to do so, VCAT may reimburse banks,
brokerage houses and other custodians, nominees and fiduciaries for their
reasonable expenses in forwarding this Proxy Statement to shareholders whose
Common Stock is held of record by such entities.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This table contains certain information as of September 25, 2000 regarding
all persons who, to the knowledge of VCAT, were the beneficial owners of more
than 5% of the outstanding shares of Common Stock, each of the directors of
VCAT, each of the executive officers named in the Summary Compensation Table
set forth herein under the caption "Compensation of Executive Officers" (we
refer to all these officers as the "Named Executive Officers") and all
directors and executive officers as a group. The persons named hold sole
voting and investment power with respect to the shares shown opposite their
respective names, unless otherwise indicated. The information with respect to
each person specified is as supplied or confirmed by such person, based upon
statements filed with the U.S. Securities and Exchange Commission (the "SEC"),
or based upon the actual knowledge of VCAT.
<TABLE>
<CAPTION>
Amount and
Nature
of Beneficial Right to Percent of
Name Ownership Acquire(3) Class(1)(2)
---- ------------- ---------- -----------
<S> <C> <C> <C>
Richard T. ("Chip") Harrison(5).......... 750,000 -- 10.1%
747 Golden Park Avenue
San Diego, California 92106
Jonathan Ungar........................... 485,487 144,775 8.3%
220 Montgomery Street, Suite 500
San Francisco, California 94104
Karol M. Schoen.......................... 477,216 112,784 7.8%
9254-B Lake Murray Blvd.
San Diego, California 92119
Directors:
L. Donald Speer, II(4)................... 1,578,360 630,000 27.4%
Andrew B. Laub(4)........................ -- 370,000 4.7%
Stephen M. Dirks(4)...................... -- 86,250 1.1%
Glenn D. Smith(4)........................ -- -- *
Jana McKeag.............................. -- 50,000 *
1350 I Street, N.W., Suite 1800
Washington, D.C. 20005
Charles T. Owen.......................... -- 10,000 *
4909 Murphy Canyon Road, Suite 200
San Diego, CA 92123
Charles Reibel........................... -- 40,000 *
11755 Wilshire Blvd., Suite 1800
Los Angeles, California 90025
Sanjay Sabnani(6)........................ -- 392,500 5.0%
3420 Ocean Park Blvd., Suite 3020
Santa Monica, California 90405
Cornelius E. ("Neil") Smyth.............. 35,750 6,250 *
60 Montego Court
Coronado, CA 92118
Named Executive Officers Who are Not
Directors:
Robert Regent(4)........................ -- 100,000 1.3%
All directors and executive officers as a
group (11 persons)...................... 1,614,110 1,854,000 37.3%
</TABLE>
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* Less than one percent
(1) Subject to applicable community property and similar statutes.
(2) Includes shares beneficially owned, whether directly or indirectly,
individually or together with associates.
(3) Shares that can be acquired through stock option or warrant exercises
through December 26, 2000, within 60 days of the Record Date.
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(4) The mailing address of such shareholder is in care of Venture Catalyst
Incorporated, 16868 Via Del Campo Court, Suite 200, San Diego, California
92127.
(5) Mr. Harrison resigned as a director, officer and employee of VCAT on
December 17, 1999.
(6) Mr. Sabnani joined VCAT in July 1999 and subsequently resigned as an
officer and director of VCAT on September 29, 2000.
Change in Control of VCAT
Arrangements Which May Result in a Change of Control. Pursuant to VCAT's
Articles of Incorporation, no person may become an officer, director or the
beneficial owner of such number of any class or series of VCAT's issued and
outstanding capital stock such that he or she shall hold, directly or
indirectly, one of the ten greatest financial interests in VCAT (an
"Interested Person") unless such Interested Person agrees in writing to (a)
provide the National Indian Gaming Commission ("Gaming Commission") or other
gaming authority having jurisdiction over VCAT's operations ("Gaming
Authority") with information regarding such Interested Person, including
information regarding other gaming-related activities of such Interested
Person and financial statements, in such form, and with such updates, as may
be required by the Gaming Commission or other Gaming Authority; (b) respond to
written or oral questions that may be propounded by the Gaming Commission or
any Gaming Authority; and (c) consent to the performance of any background
investigation that may be required by the Gaming Commission or any Gaming
Authority, including an investigation of any criminal record of such
Interested Person.
In the event that an Interested Person (a) fails to provide information
requested by the Gaming Commission or any Gaming Authority, (b) gives the
Gaming Commission or any Gaming Authority cause either to deny approval of or
to seek to void a management contract to which VCAT is a party, or (c) takes
action that will affect the voiding of any such management contract, such
Interested Person shall be required to divest all of VCAT's stock owned by
such shareholder within a 90-day period. If the Interested Person is unable to
sell such stock within this period, the Interested Person shall notify VCAT in
writing, and VCAT shall repurchase such stock at a purchase price equivalent
to the lower of such stock's book value or cost.
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ELECTION OF DIRECTORS
PROPOSAL 1
Under the Articles of Incorporation and Bylaws of VCAT (the"Bylaws"), eight
persons, Stephen M. Dirks, Andrew B. Laub, Jana McKeag, Charles T. Owen,
Charles Reibel, Glenn D. Smith, Cornelius E. ("Neil") Smyth and L. Donald
Speer, II, have been nominated by the Board of Directors for election at the
Annual Meeting to serve one year terms expiring at VCAT's annual meeting in
2001 and until his or her respective successor is elected and qualified.
The Bylaws provide for not less than three nor more than ten directors, the
exact number within the range being set by the Board of Directors from time to
time. Currently, the Board of Directors has set that number at eight
directors. Each of the eight nominees, whose term expires at the Annual
Meeting, presently serves as a director and has served continuously as a
director of VCAT since the date indicated under the caption "Information with
Respect to the Director Nominees" below. In the event the nominee is unable to
or declines to serve as a director at the time of the Annual Meeting, which is
not anticipated, the persons named in the proxy will vote for the election of
such person or persons as may be designated by the Board of Directors. Unless
otherwise directed in the accompanying proxy, the persons named therein will
vote FOR the election of the eight director nominees listed below.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
STEVEN M. DIRKS, ANDREW B. LAUB, JANA MCKEAG, CHARLES T. OWEN, CHARLES REIBEL,
GLENN D. SMITH, CORNELIUS E. ("NEIL") SMYTH, AND L. DONALD SPEER, II AS
DIRECTORS. A PLURALITY OF THE VOTES CAST AT THE ANNUAL MEETING IS REQUIRED FOR
ELECTION OF EACH NOMINEE.
5
<PAGE>
APPROVAL OF THE AMENDMENT TO THE COMPANY'S
1996 NONEMPLOYEE DIRECTORS STOCK OPTION PLAN, AS AMENDED
PROPOSAL 2
VCAT's 1996 Plan provides a means for nonemployee directors of VCAT to
acquire stock of VCAT through stock options. The purposes of the Plan are to
attract and retain persons of ability as directors and to motivate such
persons to exert their best efforts on behalf of VCAT.
The Board of Directors in October 2000 adopted, subject to shareholder
approval, an amendment to the 1996 Plan to increase the number of shares of
Common Stock available for issuance under the 1996 Plan by 200,000 shares. The
Board of Directors has directed the submission to a vote of the shareholders a
proposal to approve the amendment to the 1996 Plan.
Currently, the number of shares of Common Stock which may be issued and sold
upon the exercise of options granted under the 1996 Plan shall not exceed
100,000. As of the Record Date, options to purchase 80,000 shares of Common
Stock have been awarded, of which options to purchase 55,000 shares have been
exercised, and options to purchase 25,000 shares remain outstanding.
Accordingly, as of the Record Date, only 20,000 shares of Common Stock remain
available to be issued and sold pursuant to the exercise of option grants
under the 1996 Plan. The 1996 Plan provides that each nonemployee director who
becomes a member of the Board shall initially be awarded options to purchase
10,000 shares of Common Stock (as may be adjusted pursuant to the 1996 Plan)
automatically on the date of his or her election or appointment to the Board
of Directors. The 1996 Plan further provides that each nonemployee director
shall be granted options to purchase 5,000 shares of Common Stock (as adjusted
pursuant to Section 7 of the 1996 Plan) automatically effective on the date of
each of VCAT's Annual Meeting of Shareholders, commencing on the Effective
Date, at which such nonemployee director is reelected. The grant of stock
options to nonemployee directors under the 1996 Plan is nondiscretionary.
As mentioned above, only 20,000 shares of Common Stock, as of the Record
Date, remain available for option grants under the 1996 Plan. Based upon the
fact that the grant of options under the 1996 Plan is automatic and due to the
limited number of shares available for issuance under the 1996 Plan, the Board
believes a larger allocation of shares of Common Stock for option grants is
currently necessary.
In light of the foregoing, the Board of Directors believes that it is
appropriate to increase the number of shares of Common Stock which may be
issued and sold pursuant to the options granted under the 1996 Plan.
Accordingly, the Board of Directors in October 2000 has unanimously approved,
subject to shareholder approval, an amendment to the 1996 Plan (the
"Amendment") to change one paragraph in the 1996 Plan. A copy of the 1996 Plan
as amended by such Amendment is set forth in full in Appendix A to this Proxy
Statement and is summarized below.
The Amendment amends Paragraph 2 of the 1996 Plan to increase the number of
shares of Common Stock which may be issued to nonemployee directors and sold
upon the exercise of options granted under the 1996 Plan from 100,000 to
300,000. Specifically, you are being asked for your approval to amend
Paragraph 2 of the 1996 Plan by replacing Paragraph 2 with the following:
"The total number of shares of Common Stock with respect to which options
may be granted under the Plan shall not exceed 300,000 (as adjusted
pursuant to Section 7 hereof). Shares issued upon exercise of options
granted under the Plan may be either authorized and previously unissued
shares, issued shares which have been reacquired by the Company, or any
combination thereof. In the event that any option granted under the Plan
shall terminate, expire or, with the consent of the optionee, be cancelled
as to any shares of Common Stock, without having been exercised in full,
new options may be granted with respect to such shares without again being
charged against the maximum share limitations set forth above in this
Section 2."
In the judgment of the Board, these changes to Paragraph 2 of the 1996 Plan
are desirable and in the best interest of VCAT and its shareholders in view of
the our long-term business goals of growth and profitability.
6
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Under the 1996 Plan, 100,000 shares of Common Stock, which has not been
increased since the 1996 Plan was adopted, were reserved and allocated to
nonemployee directors under the 1996 Plan. However, the Board believes that
the increase of 200,000 shares of Common Stock in the maximum number of shares
of the Common Stock to be issued and sold under the 1996 Plan represent a
necessary, reasonable and beneficial business decision if VCAT desires to
continue to attract and retain persons of ability as directors.
If the proposal is not approved by the shareholders at the Annual Meeting,
the Plan will remain in effect; however, as stated above, only 20,000 shares
of Common Stock remain available for grant as of the Record Date. VCAT has
registered with the SEC on a Form S-8 Registration Statement the 100,000
shares of Common Stock currently issuable under the 1996 Plan, and the Board
intends to cause the additional 200,000 shares of Common Stock to be issuable
under the amendment to the 1996 Plan to be registered on a Form S-8
Registration Statement to be filed with the SEC at VCAT's expense.
As mentioned above, the 1996 Plan, as amended by the Amendment, is set forth
in full as Appendix A to this Proxy Statement and is summarized below. Such
summary is not intended to be complete and reference should be made to
Appendix A for a complete statement of the terms and provisions of the 1996
Plan, as amended.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO VCAT'S 1996 STOCK OPTION PLAN. THE AFFIRMATIVE VOTE OF A MAJORITY
OF THE OUTSTANDING SHARES OF COMMON STOCK PRESENT IN PERSON OR BY PROXY AT THE
ANNUAL MEETING AND ENTITLED TO VOTE ON THE PROPOSAL IS REQUIRED FOR APPROVAL
OF THIS PROPOSAL.
SUMMARY OF THE 1996 PLAN, AS AMENDED
Shares Subject to the 1996 Plan
Options may be granted covering a maximum of 300,000 shares of Common Stock.
Shares issued upon exercise of options granted under the 1996 Plan may be
either authorized and previously unissued shares, issued shares which have
been reacquired by the Company, or any combination. Options granted under the
1996 Plan which terminate or are cancelled, expire without exercise are
available for reissuance. Options granted under the 1996 Plan are not intended
to qualify under the Internal Revenue Code as incentive stock options.
Eligible Persons
All nonemployee members of VCAT's Board of Directors or any of its
subsidiaries ("nonemployee directors") are eligible to participate in the 1996
Plan.
Option Price
The purchase price per share at which an option may be exercised shall be
equal to the fair market value per share at the time such option is granted.
For this purpose, fair market value shall mean, (i) the closing price of the
Common Stock on such date, if available, or, if there are no sales of the
Common Stock on such date or if a closing sales price is not available, (ii)
the average of the "bid" and "asked" prices of Common Stock on such date, in
each case as reported by The Nasdaq Stock Market or any national securities
exchange on which the Common Stock is traded or any other generally recognized
over-the-counter trading or quotation system if the Common Stock is traded in
the over-the-counter market; or if (i) or (ii) are not available, the fair
market value on such date as determined by the Committee (as defined below) in
accordance with applicable law and regulations.
7
<PAGE>
Term of Exercise and Expiration of Options
Options become exercisable six months following the date of grant; however,
the Board may accelerate the exercisability if service as a director of VCAT
ceases prior to six months. Each option shall expire no more than 10 years
from the date of grant. Options held by a nonemployee director under the 1996
Plan shall not be affected if the director subsequently becomes an employee of
VCAT while a member of the Board of Directors. Section 6(e) of the 1996 Plan
requires that each option agreement shall provide that any option therein
granted is not transferable by the optionee other than by will or by the laws
of descent and distribution or a qualified domestic relations order and that,
during the lifetime of the optionee, such option may be exercised only by the
optionee or such optionee's representative or permitted successor.
Nontransferability of Options
Options are not transferable by the optionee other than by will or the laws
of descent and distribution, or, pursuant to a qualified domestic relations
order. Options are exercisable during the optionee's lifetime only by such
optionee or, in the event of such optionee's legal incapacity to do so, by
such optionee's guardian or legal representative acting in a fiduciary
capacity.
Adjustments
The Committee may adjust the option price and in the number or kind of
shares or other securities covered by the 1996 Plan and any outstanding
options as a result of (a) any stock dividend, stock split, combination of
shares, issuance of rights or warrants to purchase stock, spin-off,
recapitalization or other changes in the capital structure, (b) any merger,
consolidation, reorganization or partial or complete liquidation, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing.
Administration
The 1996 Plan is administered and interpreted by a committee consisting of
all directors who are not eligible to participate in the 1996 Plan and the
Chief Financial Officer of VCAT (the "Committee"). The Committee has no
discretion with respect to the eligibility or selection of directors to
receive options under the 1996 Plan, the times at which options shall be
granted or shall become exercisable, the number of shares subject to any such
options or the Plan, or the purchase price thereunder, except for adjustments
as described in the 1996 Plan. The Committee shall not have the authority to
take any action or make any determination that would materially increase the
benefits under the Plan.
The Board of Directors may at any time amend the 1996 Plan, although no
amendment may increase the number of shares that may be granted under the 1996
Plan without shareholder approval.
8
<PAGE>
FEDERAL INCOME TAX ASPECTS
The following is a brief summary of certain of the federal income tax
consequences of certain transactions under the 1996 Plan based on federal
income tax laws as currently in effect. This summary is not intended to be
exhaustive and does not describe state or local tax consequences.
Tax Consequences to Participants Concerning Options
In general (i) no income will be recognized by an optionee at the time an
option is granted; (ii) at exercise, ordinary income will be recognized by the
optionee in an amount equal to the difference between the option price paid
for the shares and the fair market value of the shares, if unrestricted, on
the date of exercise; and (iii) at sale, appreciation (or depreciation) after
the date of exercise will be treated as either short-term or long-term capital
gain (or loss) depending on how long the shares have been held.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT TO
THE 1996 NONEMPLOYEE DIRECTORS STOCK OPTION PLAN. A PLURALITY OF THE VOTES
CAST AT THE ANNUAL MEETING IS REQUIRED FOR THE AMENDMENT TO PASS.
9
<PAGE>
INFORMATION WITH RESPECT TO THE DIRECTOR NOMINEES
The following table sets forth information regarding the nominees, including
age on the date of the Annual Meeting, present position with VCAT, and other
business experience during at least the past five years. With the exception of
Messrs. Owen, Reibel and Smyth, each of the directors/nominees is an executive
officer of VCAT.
<TABLE>
<CAPTION>
Director Principal Occupation and Other
Name Age Since Information Concerning Nominee
---- --- -------- ------------------------------
<C> <C> <C> <S>
Stephen M. Dirks........ 43 March 2000 Stephen M. Dirks has served as
director and Vice President of
Corporate Development for VCAT
since March 2000. Mr. Dirks founded
webinc., Inc., a services company
focusing on start up technology
companies, and was the CEO of the
company from April 1999 until it
was acquired by VCAT in February
2000. From March 1996 to February
1999, Mr. Dirks was the CEO of a
gourmet pizza franchise called The
Wedge, Inc. From March 1995 to
November 1996, Mr. Dirks was
President of Spyglass Capital,
Inc., an investment advisory
company. From 1992 to April 1995,
Mr. Dirks was CEO of the Pro
Athletes Golf League, Inc., a
publicly traded golf tournament
organizer and golf clothing
manufacturer. Mr. Dirks served as
Senior Vice President of the
investment banking firms Everen
Securities and Gilford Securities
from 1984 to 1992.
Andrew B. Laub.......... 48 May 1995 Mr. Laub has served VCAT and its
predecessors in a variety of
positions since September 1994. Mr.
Laub has served as Executive Vice
President, Corporate Development
for VCAT since December 1999. From
July 1995 to December 1999, Mr.
Laub was Executive Vice President,
Finance and Development for VCAT.
During these years, he also served
VCAT as Chief Financial Officer
from October 1997 until December
1999, and Treasurer from September
1994 until December 1999. From
September 1994 to July 1995,
Mr. Laub also held the position of
Vice President. From January 1994
through August 1994, he was self-
employed as a financial consultant.
From July 1987 through January
1994, Mr. Laub was Treasurer for
Southwest Gas Corporation, a
publicly traded natural gas
distribution utility.
Jana McKeag............. 49 February 1996 Jana McKeag has served as Vice
President, Governmental Relations
for VCAT since 1996 and as a
consultant to VCAT from February
1996 to March 1996. Prior to
joining VCAT, Ms. McKeag served
from April 1991 through December
1995 as a Commissioner on the
National Indian Gaming Commission.
From January through April 1991,
Ms. McKeag served as Director of
Native American Programs for the
U.S. Department of Agriculture and
from April 1985 to December 1990,
she held several senior management
and policy level posts at the U.S.
Department of the Interior
including Assistant to the
Assistant Secretary of Indian
Affairs.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Director Principal Occupation and Other
Name Age Since Information Concerning Nominee
---- --- -------- ------------------------------
<C> <C> <C> <S>
Charles T. Owen......... 59 February 2000 Charles T. Owen was appointed a
director of VCAT in February 2000.
Since 1992 he has been president
and publisher of the San Diego
Business Journal, responsible for
both the Administrative and
Editorial phases of the newspaper.
He also held these same positions
during the years 1987-1990. From
1990-1992 he was president of TCS
Publishing.
Charles Reibel.......... 50 May 1997 Charles Reibel is a certified
public accountant and has Been a
member of Reibel & Rose LLP,
Certified Public Accountants, since
January 1999. President of Charles
Reibel, Inc., C.P.A. since February
1986, Mr. Reibel was retained as
VCAT's independent certified public
accountant from March 1991 to June
1994. He is also the current
President of Reibel & Rose
Financial Services, Inc. In
addition, Mr. Reibel is President
and a director of Gorilla World,
Inc., a privately-held company that
manufactures and distributes
active-wear clothing.
Glenn D. Smith.......... 36 April 2000 Glenn D. Smith has served as
Secretary, General Counsel, and a
director of VCAT since April 2000.
From 1989 through April 2000, Mr.
Smith was with, most recently as a
partner, the Los Angeles office of
Stroock & Stroock & Lavan LLP, a
national law firm with offices in
New York, Los Angeles, Miami, and
Washington, D.C. Mr. Smith received
his law degree from the Cornell
University Law School.
Cornelius E. ("Neil")
Smyth.................. 74 May 1995 Cornelius E. ("Neil") Smyth has
served as a director of VCAT and
its predecessors since September
1994. Mr. Smyth is currently
retired. From February 1990 through
August 1990, Mr. Smyth was a
consultant in the gaming industry.
From March 1989 through February
1990, he was President of Mexican
operations of Caesars World
International Inc. and from
September 1983 through March 1989,
Mr. Smyth was Executive Vice
President of Latin American
operations for Caesars World
International Inc. From 1981
through 1983, he was President of
the Sands Hotel in Las Vegas. From
1970 through 1981, he was Chief
Financial Officer and Senior Vice
President of Caesars Palace in Las
Vegas.
L. Donald Speer, II..... 51 May 1995 L. Donald Speer, II has served as
Chief Executive Officer and
Chairman of the Board of VCAT and
its predecessors since founding the
company. He has served as Chief
Operating Officer since September
5, 2000, and President since
September 29, 2000; he had
previously held these positions
from June 1997 until February 18,
2000. From July 1986 through
January 1992, Mr. Speer was
Chairman of the Board, Chief
Executive Officer and a director of
Southwest Gaming, Inc., which
provided operating services for the
Desert Oasis Indian Casino, a poker
casino on the Cabazon Indian
Reservation near Indio, California.
</TABLE>
11
<PAGE>
INFORMATION WITH RESPECT TO EXECUTIVE OFFICER
WHO IS NOT A DIRECTOR NOMINEE
The following table sets forth similar information as that provided for the
director nominees with respect to the only executive officer of VCAT who is not
a director nominee.
<TABLE>
<CAPTION>
Director Principal Occupation and Other
Name Age Since Information Concerning Nominee
---- --- -------- ------------------------------
<C> <C> <C> <S>
Robert Regent........... 60 Robert Regent has served as Vice
President, Casino Operations of VCAT
since February 1996. From October 1995
to February 1996, Mr. Regent served as
Director of Casino Operations for VCAT.
From May to October 1995, Mr. Regent
served as Manager of the Barona Casino
for the Barona Group of Capitan Grande
Band of Mission Indians. Mr. Regent has
held numerous positions with various
casinos including Director of Gaming for
the Gold Coast/Shore Casino in Biloxi,
Mississippi from February 1993 to May
1995; Assistant Casino Manager/Shift
Manager for the Splash Casino in Tunica,
Mississippi from September 1992 to
February 1993; and Pit Boss and Shift
Manager for the Horseshoe Hotel & Casino
in Las Vegas, Nevada from June 1988 to
September 1992.
</TABLE>
12
<PAGE>
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
Meetings of the Board and its Committees
The Board of Directors manages the business of VCAT. It establishes overall
policies and standards for VCAT and reviews the performance of management. In
addition, the Board has established an Executive Committee, an Audit Committee
and a Compensation Committee whose functions are briefly described below. VCAT
has not established a Nominating Committee. The directors are kept informed of
VCAT's operations at meetings of the Board and its committees through reports
and analyses and discussions with management.
During the fiscal year ended June 30, 2000 (the "Fiscal Year" or "Fiscal
2000"), the Board of Directors met on nine occasions. In addition, the Board
took action on nine occasions by Unanimous Written Consent.
Executive Committee. At times when the Board of Directors is not in session,
the Executive Committee is empowered to exercise the authority of the Board of
Directors with respect to the significant day-to-day operational decisions of
VCAT. The current members of the Executive Committee are L. Donald Speer, II
(Chairman), Andrew B. Laub, Stephen M. Dirks, and Glenn D. Smith. During the
Fiscal Year, the Executive Committee met on a regular basis.
Audit Committee. The principal duties of the Audit Committee are to: (a)
meet with the independent accountants to review and approve the scope of their
audit engagement; (b) meet with VCAT's financial management personnel and
independent accountants to review matters relating to internal accounting
controls, VCAT's accounting practices and procedures and other matters
relating to the financial condition of VCAT; and (c) report to the Board
periodically any recommendations the Audit Committee may have with respect to
such matters. The current members of the Audit Committee are Cornelius E.
("Neil") Smyth and Charles Reibel (Chairman). During the Fiscal Year, the
Audit Committee met on four occasions.
Compensation Committee. The principal functions of the Compensation
Committee are to (a) evaluate the performance of VCAT's officers, including
the Chief Executive Officer; (b) evaluate the recommendations of VCAT's Chief
Executive Officer with respect to performance and compensation of all VCAT's
officers, and thereafter to make recommendations to the Board relating to
VCAT's compensation plans and arrangements relating to such persons, including
approval of loans to, or guaranteeing the obligations of, such officers; and
(c) administer, and make compensation determinations under, all of VCAT's
stock option plans. The current members of the Compensation Committee are
Cornelius E. ("Neil") Smyth (Chairman) and Charles Reibel. The Compensation
Committee met on eleven occasions during the Fiscal Year. In addition, the
Compensation Committee took action on seven occasions by Unanimous Written
Consent.
Each of the incumbent directors attended at least 75% of the aggregate of
(a) the total number of meetings of the Board of Directors held during the
Fiscal Year (which were held during the period that such person served as a
director) and (b) the total number of meetings held by each committee of the
Board on which such director served during the Fiscal Year (which were held
during the period that such person served on such committee).
Compensation of Directors
Directors who also are employees of VCAT are not paid any fees or
remuneration, as such, for their service on the Board or on any Board
committee.
Cash Compensation. During Fiscal 2000, each nonemployee director of VCAT
received for their services as directors $2,500 per meeting attended in person
or by telephone plus travel expenses incurred in connection with attendance at
each Board of Directors' meeting and $250 per informational presentation
attended in person or by telephone plus travel expenses. Nonemployee directors
who are members of the Audit Committee and the Compensation Committee received
for their services as members of such committees $2,500 per committee meeting
attended in person or by telephone during the Fiscal Year.
13
<PAGE>
Nonemployee Directors' Plan. Each nonemployee director also is eligible to
receive stock options under VCAT's 1996 Nonemployee Directors Stock Option
Plan (the "1996 Plan"), a non-discretionary, formula stock option plan
pursuant to which 100,000 shares of Common Stock have been authorized for
issuance. Each nonemployee director who first becomes a member of the Board of
Directors will be granted an option to purchase 10,000 shares of Common Stock
automatically on the date of his or her election or appointment to the Board
of Directors. Each nonemployee director also is granted an option to purchase
5,000 shares of Common Stock automatically on the date of each of VCAT's
Annual Meetings of Shareholders at which such nonemployee director is
reelected to the Board of Directors. The exercise price for all options
granted under the 1996 Plan is based on the fair market value of the Common
Stock on the date of grant. Each option granted under the 1996 Plan becomes
exercisable 6 months following the date of grant.
At the close of VCAT's last annual meeting of shareholders on December 10,
1999, Charles Reibel and Neil Smyth were each granted, pursuant to the 1996
Plan, an option to purchase 5,000 shares of Common Stock at an exercise price
of $3.38 per share, the fair market value of the Common Stock on the date of
grant.
The 1995 Plan. Each nonemployee director also is eligible to receive awards
under VCAT's 1995 Stock Option Plan, as amended (the "1995 Plan"), a
discretionary stock option plan administered by the Compensation Committee,
except in the case of grants to nonemployee directors in which case the 1995
Plan is administered by the Board of Directors.
In Fiscal 2000, Charles Reibel and Neil Smyth were each granted, pursuant to
the 1995 Plan, an option to purchase 25,000 shares of Common Stock at an
exercise price of $2.63 per share, the fair market value of the Common Stock
at the time of the grant. Charles T. Owen was granted, pursuant to the 1995
Plan, an option to purchase 15,000 shares of Common Stock at an exercise price
of $12.50 per share, the fair market value of the Common Stock on the date of
the grant.
14
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
This table shows, for the last three fiscal years, compensation information
for VCAT's Chief Executive Officer and the next four most highly compensated
executive officers. We refer to all of these officers as the "Named Executive
Officers."
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------------ Awards--
Other Annual Securities All Other
Name and Principal Salary Bonus Compensation Underlying Compensation
Position Year ($)(1) ($) ($)(2) Options/SARS (#) ($)(3)
------------------ ---- -------- -------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
L. Donald Speer, II.... 2000 $500,000 $100,000 -- 600,000 $32,812
Chairman of the Board
and 1999 463,014 102,477 -- -- 28,877
Chief Executive
Officer, 1998 400,000 -- $10,441 300,000 26,278
President and Chief
Operating
Officer
Andrew B. Laub......... 2000 $225,000 $ 62,143 -- -- $ 374
Executive Vice
President, 1999 206,507 -- -- -- 958
Corporate Development 1998 175,000 15,000 $ 7,115 200,000 958
Sanjay Sabnani(4)...... 2000 $208,308 -- -- 740,000 $ 146
1999
1998
Robert Regent.......... 2000 $170,000 -- $21,983 -- $ 1,228
Vice President, 1999 165,000 -- 19,006 -- 958
Casino Operations 1998 165,000 $ 15,000 4,234 -- 958
Jana McKeag............ 2000 $150,000 -- -- -- $ 351
Vice President,
Governmental 1999 150,000 -- -- -- 958
Relations 1998 150,000 $ 7,500 $ 7,317 -- 958
</TABLE>
--------
(1) Portions of the salaries for Messrs. Speer, Sabnani, Regent and McKeag
were deferred under VCAT's 401(k) Plan.
(2) The amounts disclosed in this column include:
(a) L. Donald Speer, II--In Fiscal 1998, the amount reflects tax gross-up
payments related to long-term disability insurance and automobile
benefits. Perquisites provided to Mr. Speer in each of Fiscal 2000 and
1999 did not meet the disclosure threshold established by the SEC.
(b) Andrew B. Laub--In Fiscal 1998, the amount reflects tax gross-up
payments related to long-term disability insurance and automobile
benefits. Perquisites provided to Mr. Laub in each of Fiscal 2000 and
1999 did not meet the disclosure threshold established by the SEC.
(c) Sanjay Sabnani--Perquisites provided to Mr. Sabnani in Fiscal 2000 did
not meet the disclosure threshold established by the SEC.
(d) Robert Regent--In Fiscal 2000, the amount reflects perquisites of which
$12,977 is related to automobile benefits and $9,006 is related to
country club membership fees; the remaining perquisites and related
amounts do not meet the disclosure threshold established by the SEC. In
Fiscal 1999, the amount reflects perquisites of which $12,503 is
related to automobile benefits and $5,127 is related to country club
membership fees; the remaining perquisites and related amounts do not
meet the disclosure threshold established by the SEC. In Fiscal 1998,
the amount reflects tax gross-up payments related to long-term
disability insurance and automobile benefits.
(e) Jana McKeag--In Fiscal 1998, the amount reflects tax gross-up payments
related to long-term disability insurance and automobile benefits.
Perquisites provided to Ms. McKeag in each of Fiscal 2000 and 1999 did
not meet the disclosure threshold established by the SEC.
15
<PAGE>
(3) The Fiscal 2000 amounts disclosed in this column reflect payments by VCAT
in Fiscal 2000 of premiums for (a) universal life insurance on behalf of
Mr. Speer in the amount of $32,228 and (b) term life insurance on behalf
of Messrs. Speer, Laub, Sabnani, Regent and McKeag in the amounts of $584,
$374, $146, $1,228 and $351, respectively. The Fiscal 1999 amounts
disclosed in this column reflect payments by VCAT in Fiscal 1999 of
premiums for (a) universal life insurance on behalf of Mr. Speer in the
amount of $27,920 and (b) term life insurance on behalf of Messrs. Speer,
Laub, Regent and McKeag in the amounts of $958, $958, $958 and $958,
respectively. The Fiscal 1998 amounts disclosed in this column reflect
payments by VCAT in Fiscal 1998 of premiums for (a) universal life
insurance on behalf of Mr. Speer in the amount of $25,320 and (b) term
life insurance on behalf of Messrs. Speer, Laub, Regent and McKeag in the
amounts of $958, $958, $958 and $958, respectively.
(4) Sanjay Sabnani joined VCAT in July 1999 and subsequently resigned as an
Officer and Director of VCAT effective September 29, 2000.
Stock Options
Stock Option Grants. This table shows certain information with respect to
stock options granted to the Named Executive Officers in Fiscal 2000.
<TABLE>
<CAPTION>
Percent of
Number of Total Options
Securities Granted to
Underlying Employees in Exercise or
Options Fiscal Base Price Expiration
Name Granted Year (%) ($/Share) Date
---- ---------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
L. Donald Speer, II............ 600,000(4) 16.0% $ 4.63(1) 12/29/09
Sanjay Sabnani................. 262,500(5) 7.0% $ 2.56(1) 7/16/09
237,500(6) 6.7% 3.38(1) 12/10/09
140,000(5) 3.7% 10.41(2) 2/7/10
100,000(5) 2.7% 10.41(3) 5/31/10
</TABLE>
--------
(1) Options were granted at the market price on the date of grant.
(2) Options were granted at 85% of the closing price of the Common Stock on
February 7, 2000.
(3) Options were granted at a price above the closing price of the Common
Stock on May 31, 2000.
(4) All nonstatutory stock options that vest in four equal annual installments
commencing December 29, 1999 (i.e. at the date of grant 25% of options are
immediately vested).
(5) All nonstatutory stock options that are fully vested in one year from
grant date in four equal quarter year installments, some of which have
been cancelled.
(6) All nonstatutory stock options that vest in four equal annual installments
commencing December 10, 2000, which have been cancelled.
16
<PAGE>
Option Exercises/Fiscal Year End Value. The following table includes the
number of shares of Common Stock acquired by the Named Executive Officers upon
the exercise of stock options and the aggregate dollar value realized upon
such exercise during Fiscal 2000. Also reported are the number of shares of
Common Stock covered by both exercisable and unexercisable stock options and
the value of such options that are "in-the-money" as of June 30, 2000 for the
Named Executive Officers.
Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SARs at In-the-Money Options/SARs
Acquired on FY-End (#) at FY-End ($)(1)
Exercise Value ------------------------- -------------------------
Name (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. Donald Speer, II..... -- -- 630,000 870,000 $523,200 $486,300
Andrew B. Laub.......... -- -- 370,000 130,000 208,750 166,250
Sanjay Sabnani.......... -- -- 231,875 508,125 258,890 203,860
Robert Regent........... 30,000 $413,813 100,000 70,000 87,100 63,450
Jana McKeag............. 30,000 390,281 50,000 20,000 -- 19,900
</TABLE>
--------
(1) Excludes the value of all unexercised options that have an exercise price
greater than or equal to $3.875, the closing price of the Common Stock on
June 30, 2000 (the last stock trading day of Fiscal 2000).
Change of Control Arrangements
Certain of VCAT's stock option plans, and certain of the individual stock
option agreements entered into thereunder, contain change in control
provisions which, under certain circumstances, trigger the acceleration of
vesting of options granted thereunder.
17
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In connection with the resignation of G. Fritz Opel as an officer, director
and an employee of VCAT on February 13, 2000, VCAT entered into both a
settlement and release agreement, and a consulting agreement with Mr. Opel.
Pursuant to the settlement and release agreement, in consideration of the
release of VCAT by Mr. Opel of all claims and liabilities he had or may have
had against VCAT based on acts or events occurring on or before the date of
the agreement, VCAT agreed to (a) reimburse Mr. Opel for premiums paid by him
if he elects to participate in any of VCAT's group health insurance plans
pursuant to COBRA through April 30, 2000, and (b) extend all provisions of the
stock options granted to Mr. Opel under VCAT's stock option plans during the
period of time he is engaged as a consultant for VCAT. Pursuant to the
consulting agreement, VCAT retained Mr. Opel as a consultant through February
25, 2001. In consideration for the performance of such consulting services,
VCAT agreed to pay Mr. Opel $33,395.67 through April 30, 2000 and, commencing
May 1, 2000 and continuing through the remainder of the consulting term, a
minimum base fee of $2,500 per month, said fee to be credited at a rate of
$250.00 per hour, against Mr. Opel's first ten hours of services rendered,
plus an additional fee of $250.00 per hour for services rendered in excess of
the base fee. On August 15, 2000, VCAT and Mr. Opel amended the consulting
agreement to provide for a consulting fee of $7,500 per month and to increase
the minimum hours of services rendered to thirty per month, said consulting
fee pro rated for the month of August 2000. The consulting agreement also
contains certain confidential information and non-competition provisions. As a
consultant, Mr. Opel renders advisory services and performs projects as
assigned to it, from time to time, by the Chairman of the Board of VCAT for
matters specifically relating to the Barona Casino and the Barona Tribe.
On August 27, 1998, VCAT acquired 100% of the outstanding equity of
Cyberworks, Inc., a California corporation ("Cyberworks") for an aggregate
purchase price, exclusive of acquisition costs, of $3,560,000. Richard T.
Harrison, as the sole shareholder of Cyberworks, received 750,000 shares of
newly-issued Common Stock and $500,000 in cash. For purposes of the merger
transaction, the fair market value of a share of Common Stock was determined
to be $4.08 per share, this price being established pursuant to a formula set
forth in the reorganization agreement. On the effective date of the merger, in
addition to becoming a principal shareholder of VCAT, Richard T. Harrison, the
former President and Chief Executive Officer of Cyberworks, was appointed a
director of VCAT. In addition, on the effective date of the merger, Mr.
Harrison entered into an employment agreement (the "Employment Agreement") and
a noncompetition agreement (as amended, restated, supplemented or otherwise
modified, the "Noncompetition Agreement") with VCAT and Cyberworks relating to
Mr. Harrison's service as President and Chief Operating Officer of Cyberworks
following the merger transaction. The Employment Agreement provided for an
initial base salary of $228,000 per year.
In connection with the resignation of Mr. Harrison as an officer, director
and an employee of VCAT and Cyberworks on December 17, 1999, VCAT entered into
a settlement and release agreement, a call agreement and a stock pledge
agreement with Mr. Harrison and also agreed to amend and restate the
Noncompetition Agreement (as described below) with Mr. Harrison. Pursuant to
the settlement and release agreement, in consideration of the general release
by Mr. Harrison of all claims and liabilities and a release of federal age
discrimination claims he had or may have had against VCAT and its related
entities based on acts or events occurring on or before the date of the
agreement, VCAT or Cyberworks agreed to pay or give Mr. Harrison: (a) the then
current portion of his earned salary and documented reimbursement expenses,
(b) accrued and unused vacation pay, (c) nonaccountable automobile benefits
and (d) title to certain computer equipment. Pursuant to the call agreement,
in consideration of $20,000 payable to Mr. Harrison and in consideration of
Mr. Harrison and VCAT entering into the settlement and release agreement and
the call agreement, Mr. Harrison granted to VCAT the right and option until
December 25, 2001 to purchase all or part of his 750,000 shares of Common
Stock at an exercise price of $2.50 per share. Pursuant to the stock pledge
agreement, VCAT was granted a security interest in Mr. Harrison's 750,000
shares of Common Stock as an inducement for VCAT to enter into the settlement
and release agreement and the call agreement and to secure Mr. Harrison's
obligations under the call agreement.
18
<PAGE>
The Noncompetition Agreement (as amended from two years ago in connection
with Mr. Harrison's resignation and his entering into the settlement and
release agreement, call agreement and stock pledge agreement with VCAT)
prohibits Mr. Harrison from (i) competing with VCAT and Cyberworks and certain
affiliates thereof within the territory of the United States of America for 18
months after December 19, 1999 and (ii) soliciting certain employees,
customers and suppliers of VCAT and Cyberworks and certain affiliates thereof
during the noncompetition term; provided, however, that VCAT consented to Mr.
Harrison's employment by Working Woman Network, Inc. and Working Woman Network
Internet, Inc. and his solicitation and/or hiring of VCAT employee Charles
Gillespie.
In September 2000, VCAT provided to L. Donald Speer, II, Chairman and Chief
Executive Officer of VCAT and a Director/Nominee, and his spouse, Kelly Jacobs
Speer, a bridge loan in the principal amount of up to $400,000, with interest
at the rate of 7%. The debt was secured with the interest in VCAT Common Stock
owned by Mr. Speer. As of the Record Date, the Speers had been advanced an
aggregate of approximately $250,000 under the terms of this loan.
On July 16, 1999, VCAT purchased certain assets and assumed certain
liabilities of Typhoon Capital Consultants, LLC, whose members were Sanjay
Sabnani, an executive officer of VCAT and a Director/Nominee, and his spouse,
Manisha Sabnani, for a purchase price of $100,000.
In connection with the transaction, Mr. Sabnani became an executive officer
and a director of VCAT and entered into a one year employment agreement with
VCAT relating to Mr. Sabnani's service as Vice President, Investor Relations
Officer of VCAT and President of VCAT's Internet Consulting Division operating
under the name Venture-Catalyst.com. The Employment Agreement provided for an
initial annual base salary of $180,000. Effective February 18, 2000, Mr.
Sabnani became President and Chief Operating Officer of VCAT and the
Compensation Committee increased his annual base salary to $275,000.
In connection with the Employment Agreement, the Compensation Committee of
the Board (a) granted to Mr. Sabnani on July 16, 1999 a nonstatutory stock
option to purchase 262,500 shares of Common Stock, at an exercise price per
share equal to the fair market value on the date of grant, with vesting to
occur in four equal installments on October 15, 1999 and on the 15th of
January, April and July 2000, and (b) agreed to grant in the future a
nonstatutory stock option to purchase 240,000 shares of Common Stock, at an
exercise price of $10.00 per share on the date that the fair market value (as
defined in the 1995 Plan, as amended) of a share of Common Stock is $10.00,
provided, however, that to be granted such option Mr. Sabnani must be an
employee of VCAT or one of its subsidiaries on such date of grant, in each
case pursuant to the terms established by the Compensation Committee. In
February 2000, the date on which the fair market value of a share of Common
Stock exceeded $10.00, Mr. Sabnani agreed to waive his rights as to 100,000
shares of such option and to accept an exercise price of $10.41 per share in
order to comply with the restrictions of the 1995 Plan. In May 2000,
Mr. Sabnani was granted 100,000 shares at a price of $10.41, a price greater
than the fair market value of the stock on such date, vesting in four equal
installments on August 31, 2000, November 20, 2000, February 28, 2001, and May
31, 2001.
In connection with the resignation of Mr. Sabnani as an officer and director
of VCAT on September 29, 2000, VCAT entered into a severance agreement and
general release with Mr. Sabnani. Pursuant to the severance agreement and
general release, and in consideration of the general release by Mr. Sabnani of
all claims and liabilities he had or may have had against VCAT and its related
entities based on acts or events occurring on or before the date of the
agreement, VCAT agreed to pay or give Mr. Sabnani: (a) the then current
portion of his earned salary, documented reimbursement expenses, and vacation;
(b) Mr. Sabnani's automobile lease; (c) certain documented mileage
reimbursement for Mr. Sabnani's automobile; (d) initial separation payment of
$10,577; (e) compensation provided that Mr. Sabnani remains an employee of
VCAT; (f) certain payments if terminated other than for cause prior to
December 22, 2000; and (g) cancellation of all options vesting after September
29, 2000.
19
<PAGE>
On January 28, 2000, VCAT entered into a stock purchase agreement with
Stephen M. Dirks and webinc., Inc., a Delaware corporation, whose owners
included Mr. Dirks, for a purchase price of $20,000. webinc.,Inc. was
subsequently merged into VCAT.
In connection with the transaction, Mr. Dirks became an executive officer of
VCAT and entered into a letter agreement with VCAT relating to Mr. Dirks'
service as Vice President of Corporate Development. The letter of employment
provides for a monthly base salary of $8,333. The base salary may be adjusted
by the Compensation Committee of the Board of Directors.
In connection with the letter agreement, the Compensation Committee of the
Board (a) granted to Mr. Dirks on January 29, 2000 a nonstatutory stock option
to purchase 230,000 shares of Common Stock, at an exercise price per share
equal to the fair market value on the date of grant, with vesting to occur in
eight equal installments commencing April 28, 2000, provided, however, that to
exercise such options Mr. Dirks must have been in the continuous employ of
VCAT or one of its subsidiaries through each of the vesting dates. Mr. Dirk's
employment with VCAT is at will and can be terminated by either VCAT or Mr.
Dirks at any time for any reason, with or without prior notice or cause.
On March 22, 2000, Mr. Dirks was appointed to the Board of Directors and
became an officer of VCAT.
In the opinion of management, the terms of the above-described transactions
are fair and reasonable and as favorable to VCAT as those which could have
been obtained from unrelated third parties at the time of their execution.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires VCAT's directors and executive officers, and persons
who beneficially own more than 10% of a registered class of VCAT's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of VCAT.
Officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish VCAT with copies of all Section 16(a) forms they file.
To VCAT's knowledge, based solely on a review of the copies of such reports
furnished to VCAT and written representations that no other reports were
required during the Fiscal Year, VCAT's officers, directors and greater than
10% beneficial owners complied with all Section 16(a) filing requirements,
except for one filing by Cornelius E. ("Neil") Smyth, which was inadvertently
not filed, reflecting one transaction for an exercise of options to acquire
common stock.
RELATIONSHIP OF VCAT WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors selected the firm of Grant Thornton LLP ("Grant
Thornton"), independent certified public accountants, as VCAT's auditors for
Fiscal 2000 and have selected such firm to act as auditors for the fiscal year
ending June 30, 2001. Representatives of Grant Thornton are expected to be
present at the Annual Meeting and will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond
to appropriate questions.
SHAREHOLDER PROPOSALS
If you want us to consider including a proposal in VCAT's proxy materials
relating to the annual meeting of shareholders to be held in the year 2001,
you must submit such proposal to VCAT no later than June 30, 2001. If such
proposal is in compliance with all of the requirements of Rule 14a-8 under the
Exchange Act, we will include it in the proxy statement and on the form of
proxy issued for such annual meeting of shareholders. You should direct any
such shareholder proposals to the attention of the Secretary of VCAT at the
address of VCAT set forth on the first page of this Proxy Statement.
20
<PAGE>
With respect to any proposal that a shareholder of VCAT presents at the
annual meeting of shareholders to be held in 2000 that is not submitted for
inclusion in VCAT's proxy materials pursuant to Rule 14a-8 under the Exchange
Act, the proxy for such annual meeting of shareholders will confer
discretionary voting authority to vote on such shareholder proposal unless (a)
VCAT is notified of such proposal no later than September 25, 2001, and (b)
the proponent complies with the other requirements set forth in Rule 14a-4
under the Exchange Act.
ANNUAL REPORT
You may obtain, without charge, a copy of the Annual Report on Form 10-KSB
for the Fiscal Year, including the Financial Statements and the Financial
Statements Schedules required to be filed with the SEC pursuant to Rule 13a-1
of the Exchange Act. You may obtain copies of Exhibits to the Form 10-KSB, but
we will charge a reasonable fee to shareholders requesting such Exhibits. You
should direct your request in writing to VCAT at the address of VCAT set forth
on the first page of this Proxy Statement, Attention: Glenn D. Smith,
Secretary.
By Order of the Board of Directors,
Glenn D. Smith
Secretary
San Diego, California
Dated: October 27, 2000
21
<PAGE>
APPENDIX A
VENTURE CATALYST INCORPORATED
1996 Nonemployee Directors Stock Option Plan, as Amended
SECTION 1. PURPOSE.
The purpose of the Venture Catalyst Incorporated (formerly Inland Casino
Corporation) 1996 Nonemployee Directors Stock Option Plan (the "Plan") is to
attract, retain and compensate highly qualified individuals to serve as
members of the Board of Directors who are not current employees of Venture
Catalyst Incorporated (the "Company") and to enable them to increase their
ownership of shares of common stock, par value $.001 per share, of the Company
("Common Stock"). The Plan will be beneficial to the Company and its
shareholders since it will allow these directors to have a greater personal
financial stake in the Company through the ownership of Common Stock, in
addition to underscoring their common interest and identification with
shareholders in increasing the value of Common Stock.
SECTION 2. SHARES SUBJECT TO PLAN.
The total number of shares of Common Stock with respect to which options may
be granted under the Plan shall not exceed 300,000 (as adjusted pursuant to
Section 7 hereof). Shares issued upon exercise of options granted under the
Plan may be either authorized and previously unissued shares, issued shares
which have been reacquired by the Company, or any combination thereof. In the
event that any option granted under the Plan shall terminate, expire or, with
the consent of the optionee, be cancelled as to any shares of Common Stock,
without having been exercised in full, new options may be granted with respect
to such shares without again being charged against the maximum share
limitations set forth above in this Section 2.
SECTION 3. ADMINISTRATION.
The Plan shall be administered by a committee consisting of all directors
who are not eligible to participate in the Plan and the Chief Financial
Officer of the Company (the "Committee"). Subject to the provisions of the
Plan, the Committee shall be authorized to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, and to make
all other determinations necessary or advisable for the administration of the
Plan. The Committee shall have no discretion with respect to the eligibility
or selection of directors to receive options under the Plan, the times at
which options shall be granted or shall become exercisable, the number of
shares subject to any such options or the Plan, or the purchase price
thereunder, except for adjustments as described in Section 7. The Committee
shall not have the authority to take any action or make any determination that
would materially increase the benefits accruing to participants under the
Plan. The determination of the Committee in the administration of the Plan, as
described herein, shall be final and conclusive and binding upon all persons,
including, without limitation, the Company, its shareholders and persons
granted options under the Plan. The Secretary of the Company shall be
authorized to implement the Plan in accordance with its terms and to take such
actions of a ministerial nature as shall be necessary to effectuate the intent
and purposes hereof. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in
accordance with the internal substantive laws of the State of Utah.
SECTION 4. ELIGIBILITY.
All members of the Company's Board of Directors who are not current
employees of the Company or any of its subsidiaries at the time of the option
award ("Nonemployee Directors") are eligible to participate in the Plan.
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SECTION 5. OPTION AWARDS.
(a) Initial Awards. Each Nonemployee Director who was in office immediately
prior to the meeting at which the shareholders of the Company approve this
Plan and continues in office immediately after the meeting at which the
shareholders of the Company approve this Plan shall be granted an option to
purchase 10,000 shares of Common Stock. Such option shall be granted on the
date of the shareholders' meeting at which this Plan is approved (the
"Effective Date").
(b) Future Awards. (i) Each Nonemployee Director who first becomes a member
of the Board at the meeting at which the shareholders of the Company approve
this Plan or after the Effective Date shall be granted an option to purchase
10,000 shares of Common Stock (as adjusted pursuant to Section 7 hereof)
automatically on the date of his or her election to the Board of Directors.
(ii) Each Nonemployee Director shall be granted an option to purchase 5,000
shares of Common Stock (as adjusted pursuant to Section 7 hereof)
automatically effective on the date of each of the Company's Annual Meeting of
Shareholders, commencing on the Effective Date, at which such Nonemployee
Director is elected a Nonemployee Director.
(c) Nonstatutory Stock Options. All options granted under the Plan shall be
nonstatutory options not intended to qualify under Section 422 of the Internal
Revenue Code, as in effect from time to time (the "Code"). Each option granted
under the Plan shall provide that such option shall not be treated as an
"incentive stock option," as that term is defined in Section 422(b) of the
Code.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
All options granted under the Plan shall be evidenced by stock option
agreements in writing (hereinafter referenced to as "option agreements"), in
such form as the Committee may from time to time approve, executed on behalf
of the Company by the Chairman of the Board or the President of the Company.
Each option agreement shall be subject to the Plan, and, in addition to such
other terms and conditions as the Committee may deem desirable, shall provide
in substance as follows:
(d) Purchase Price. The purchase price per share of Common Stock for which
each option is exercisable shall be equal to 100% of the fair market value of
a share of Common Stock as of the date such option is granted ("Fair Market
Value"). Such Fair Market Value shall be, for any date, (i) the closing price
of the Common Stock on such date, if available, or, if there are no sales of
the Common Stock on such date or if a closing sales price is not available,
(ii) the average of the "bid" and "asked" prices of Common Stock on such date,
in each case as reported by The Nasdaq Stock Market or any national securities
exchange on which the Common Stock is then traded or any other generally
recognized over-the-counter trading or quotation system if the Common Stock is
traded in the over-the-counter market or if (i) or (ii) are not available, the
fair market value on such date as determined by the Committee in accordance
with applicable law and regulations. The option price shall be subject to
adjustment as provided in Section 7 hereof.
(e) Exercisability and Terms of Options. Subject to Section 6(c) hereof,
each option granted pursuant to Sections 5(a) and 5(b) hereof shall be
exercisable in full six months following the date of grant; provided, however,
that the Board of Directors shall have the discretion to accelerate the
vesting of any options granted to an optionee if such optionee's service as a
director of the Company ceases prior to the vesting of such options. Each
option granted under the Plan shall expire 10 years from the date of grant and
shall be subject to earlier termination as hereinafter provided. If a
Nonemployee Director subsequently becomes an employee of the Company while
remaining a member of the Board of Directors, any options held under the Plan
by such individual at the time of such commencement of employment shall not be
affected thereby.
(f) Cessation of Service. Except as hereinafter set forth, no option shall
be exercisable after the date of cessation of an optionee's service as a
director of the Company. Upon the death of an optionee at any time, all of the
then outstanding options of such optionee shall become immediately
exercisable. If an optionee's service
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ceases for any reason, such optionee's exercisable options may be exercised by
the optionee within one year after such cessation of service. If an optionee
shall die within such one-year period, or if cessation of his or her service
shall have been due to such optionee's death, such options may be exercised at
any time within one year after such death by the optionee's executor or
administrator or by his or her distributee to whom such options may have been
transferred by will or by the laws of descent and distribution. The foregoing
provisions shall not extend the period during which an option may be exercised
beyond the date it expires by its terms.
(g) Manner of Exercise. Each option agreement shall provide that any option
therein granted shall be exercisable only by giving in each case written
notice of exercise, accompanied by full payment of the purchase price either
(i) in cash (including check, bank draft, or money order, or wire or other
transfer of funds, or advice of credit to the Company), (ii) in shares of
Common Stock with a fair market value equal to the purchase price or (iii) a
combination of cash and shares of Common Stock which in the aggregate are
equal in value to such purchase price. At the discretion of the Committee, the
option agreement may provide that shares of Common Stock may be issued in the
name of the optionee and another person jointly with the right of
survivorship. All grants will provide for a deferred payment of the purchase
price from the proceeds of sale through a bank or broker on the date of
exercise of some or all of the shares of Common Stock to which the exercise
relates.
(h) Nontransferability. Each option agreement shall provide that any option
therein granted is not transferable by the optionee other than by will or by
the laws of descent and distribution or a qualified domestic relations order
and that, during the lifetime of the optionee, such option may be exercised
only by the optionee or such optionee's legal representative or permitted
successor.
SECTION 7. ADJUSTMENT UPON CHANGES IN STOCK.
The Committee shall make or provide for such adjustments in the option price
and in the number or kind of shares or other securities (including shares or
other securities of another issuer) covered by outstanding options as the
Committee in its sole discretion, exercised in good faith, shall determine is
equitably required to prevent dilution or enlargement of rights of optionees
that would otherwise result from (a) any stock dividend, stock split,
combination of shares, issuance of rights or warrants to purchase stock, spin-
off, recapitalization or other changes in the capital structure of the
Company, (b) any merger, consolidation, reorganization or partial or complete
liquidation, or (c) any other corporate transaction or event having an effect
similar to any of the foregoing. The Committee also shall make or provide for
such adjustment in the number or kind of shares of the Company's capital stock
or other securities (or in shares or other securities of another issuer) which
may be acquired pursuant to options granted under the Plan and the number of
such securities to be awarded to each optionee as the Committee in its sole
discretion, exercised in good faith, shall determine is appropriate to reflect
any transaction or event described in the preceding sentence. In the event of
any such transaction or event, the Committee may provide in substitution for
any or all outstanding options under the Plan such alternative consideration
(including securities of any surviving entity) as it may in good faith
determine to be equitable under the circumstances and may require in
connection therewith the surrender of all options so replaced. In any case,
such substitution of securities shall not require the consent of any person
who is granted options pursuant to the Plan. The determination of the
Committee as to what adjustments shall be made, and the extent thereof, shall
be final, binding and conclusive.
SECTION 8. FRACTIONAL SHARES.
No fractional shares shall be issued pursuant to options granted hereunder
and any fractional share resulting from an adjustment pursuant to Section 7
hereof shall be eliminated.
SECTION 9. GOVERNMENT REGULATIONS.
The Plan, the grant and exercise of options hereunder, and the Company's
obligation to sell and deliver shares of stock pursuant to any such exercise,
shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any regulatory or government agency as
shall be required.
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SECTION 10. TERM OF THE PLAN.
The Plan shall become effective on the Effective Date. The Plan shall
terminate at such time as all of the shares of Common Stock authorized under
Section 2 of this Plan have been granted. In the event that at any future
grant date as determined under Section 5 hereof, the aggregate number of
options to be granted at such time exceed the remaining options available
under the Plan as determined in accordance with Section 2 hereof, the
remaining options available shall be granted on a pro rata basis among each
Nonemployee Director. Termination of the Plan, however, shall not affect
outstanding options which have been granted prior to such termination, and all
unexpired options shall continue in full force and operation after termination
of the Plan, except as they shall lapse or terminate by their own terms and
conditions, and the terms of the Plan shall continue to apply to such options.
SECTION 11. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
The Board of Directors at any time and from time to time may, amend, suspend
or terminate the Plan; provided, however, that no amendment to the Plan may
increase the number of shares of Common Stock which may be granted pursuant to
the Plan without the approval of a majority of the total votes cast by
shareholders in person or by proxy on such proposal to amend the Plan. Without
the written consent of the optionee, no amendment, suspension or termination
of the Plan shall adversely affect any option previously granted under the
Plan, but it shall be conclusively presumed that any adjustment or change as
provided in Section 7 does not adversely affect any such right.
SECTION 12. NO RIGHT TO CONTINUE AS DIRECTOR.
Neither the Plan, nor the granting of an option nor any other action taken
pursuant to the Plan, shall constitute or be evidence of any agreement or
understanding, express or implied, that a director has a right to continue as
a director for any period of time, or at any particular rate of compensation.
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PROXY
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
VENTURE CATALYST INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE
The undersigned shareholder(s) of Venture Catalyst Incorporated, a Utah
corporation (the "Company"), hereby appoints Kevin McIntosh, Glenn D. Smith, or
either of them, proxies, each with full power of substitution, for and in the
name of the undersigned at the Annual Meeting of Shareholders of the Company to
be held on December 8, 2000, and at any and all adjournments, to vote all shares
of the capital stock of said Company held of record by the undersigned on
October 27, 2000, as if the undersigned were present and voting the shares.
The Shares Represented by this Proxy Will Be Voted in the Manner Directed. In
the Absence of Any Direction, the Shares Will Be Voted for the Nominees Named in
Proposal 1, for Proposal 2 and in Accordance with Their Discretion on Such Other
Matters That May Properly Come Before the Meeting.
(CONTINUED AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE)
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VENTURE CATALYST INCORPORATED
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
THE LISTED NOMINEES AND THE LISTED PROPOSALS HAVE BEEN PROPOSED BY THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL THE NOMINEES LISTED AND "FOR"
THE LISTED PROPOSALS.
[ ] I plan to attend the meeting
1. Election of Directors:
Nominees for election to the Board of Directors: Steven M. Dirks, Andrew B.
Laub, Jana McKeag, Charles T. Owen, Charles Reibel, Glenn D. Smith,
Cornelius E. "Neil" Smyth and L. Donald Speer, II.
FOR all the WITHHOLD
Nominees listed AUTHORITY
(except as indicated to vote for all
to the contrary) Nominees listed
[ ] [ ]
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THE
NOMINEE'S(S') NAME(S) ON THE SPACE PROVIDED BELOW.)
2. To approve an amendment to the Company's 1996 Nonemployee Directors Stock
Option Plan to increase the number of shares of our common stock which may
be issued and sold under the 1996 Nonemployee Directors Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. The proxies are authorized to vote in their discretion upon such other
business as may properly come before the meeting.
Date: _____________________, 2000
_________________________________
Signature
_________________________________
Signature (if held jointly)
(Please date this Proxy and sign exactly as your name appears hereon.
When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If there is more than one
trustee, all should sign. All joint owners should sign.)
