<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
BALLY'S GRAND, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: _______
___________________
(2) Aggregate number of securities to which transaction applies: __________
___________________
(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): ____________
___________________
(4) Proposed maximum aggregate value of transaction: ______________________
(5) Total fee paid: _______________________________________________________
[ ] 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: _______________________________________________
(2) Form, Schedule or Registration Statement No.: _________________________
(3) Filing Party: _________________________________________________________
(4) Date Filed: ___________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
BALLY'S GRAND, INC.
3645 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 3, 1997
To Our Stockholders:
The Annual Meeting of Stockholders of Bally's Grand, Inc. (the "Company")
will be held at Bally's Las Vegas, 3645 Las Vegas Boulevard South, Las Vegas,
Nevada 89109, on February 3, 1997 at 9:00 a.m. (local time) to consider and act
upon the following matters which are more fully described in the accompanying
Proxy Statement:
1. The election of six directors to the Company's Board of Directors;
and
2. Such other business as may properly come before the meeting or any
adjournment thereof.
Stockholders of record as of the close of business on December 12, 1996
will be entitled to notice of and to vote at the meeting and any adjournment
thereof. The transfer books will not be closed.
The Board of Directors of the Company desires to have the maximum
representation at the meeting and respectfully requests that you date, execute
and mail promptly the enclosed proxy card in the enclosed postage-paid envelope.
By Order of the Board of Directors,
David Arrajj, Secretary
Las Vegas, Nevada
January 10, 1997
<PAGE> 3
BALLY'S GRAND, INC.
3645 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 3, 1997
To Our Stockholders:
This Proxy Statement is furnished to stockholders of Bally's Grand, Inc.
(the "Company") for use at the Annual Meeting of Stockholders to be held at 9:00
a.m. (local time) on February 3, 1997 (the "Annual Meeting"), at Bally's Las
Vegas, Skyview Three, Twenty Sixth Floor, Main Tower, 3645 Las Vegas Boulevard
South, Las Vegas, Nevada 89109 or at any postponements or adjournments thereof
for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. The approximate date on which this Proxy Statement and the
enclosed proxy card are first being sent to stockholders is January 10, 1997.
The enclosed Proxy Statement and proxy is solicited on behalf of the Board
of Directors of the Company. Any stockholder giving a proxy has the right to
revoke it at any time prior to its exercise, either by delivering notice in
writing to the Secretary of the Company or by appearing and voting in person at
the Annual Meeting. Unless a contrary choice is indicated, all duly executed
proxies received by the Company will be voted:
1. For the election of the nominees for director; and
2. In the discretion of the proxy holder with respect to such other
business as may properly come before the meeting or any adjournment
thereof.
At the Annual Meeting, the results of stockholder voting will be tabulated
by an inspector of elections appointed for the Annual Meeting.
VOTING SECURITIES
Stockholders of record as of the close of business on December 12, 1996
(the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting and any adjournments or postponements thereof. On that date there were
outstanding 8,441,590 shares of common stock, par value $0.01 per share ("Common
Stock"). Each share of Common Stock is entitled to one vote on all matters to
come before the Annual Meeting. Shares of Common Stock cannot be voted at the
Annual Meeting unless the holder is present in person or represented by proxy.
The presence, in person or by proxy, of a majority of stockholders is necessary
to constitute a quorum at the Annual Meeting of Stockholders. The affirmative
vote of holders of a majority of the shares of Common Stock represented in
person or by proxy at the Annual Meeting is required to elect directors. Hilton
Hotels Corporation ("Hilton"), as the successor to Bally Entertainment
Corporation ("BEC"), is the beneficial owner of a majority of the issued and
outstanding shares of Common Stock and has indicated that it intends to cause
its shares to be voted for the election of the nominees for the Board of
Directors.
CHANGE IN CONTROL
On December 18, 1996, BEC was merged with and into Hilton pursuant to a
merger agreement dated June 6, 1996, as amended (the "Merger"). Pursuant to the
merger agreement between BEC and Hilton, Hilton issued 54,692,087 shares of its
common stock and 14,832,300 shares of Hilton Preferred Redeemable Increased
Dividend Equity Securities, 8% PRIDES, Convertible Preferred Stock to BEC's
shareholders as consideration. As a result of the Merger, Hilton owned, directly
and indirectly, approximately 85% of the issued and outstanding shares of Common
Stock as of December 18, 1996.
<PAGE> 4
ELECTION OF DIRECTORS
At the Annual Meeting, six directors are to be elected to serve until the
next annual meeting of stockholders of the Company or until their successors
have been duly elected and qualified. Set forth below are the names of, and
certain information with respect to, the persons nominated by the Board of
Directors for election as directors. It is intended that all duly executed
proxies in the accompanying form will be voted for the election of such nominees
(or such substitute nominees as provided below), unless such authorization has
been withheld.
Authority granted to the persons named in the proxy to vote for nominees is
limited to the six nominees proposed by the Board of Directors and named below,
and proxies cannot be voted for a greater number of persons than the number of
nominees named. The Board of Directors is not aware that any of the nominees
will be unavailable for service at the date of the meeting. If, for any reason,
any of the nominees shall become unavailable for election, an event which is not
presently anticipated, discretionary authority may be exercised by the persons
named in the proxy to vote for substitute nominees proposed by the Board of
Directors.
Information with respect to the nominees for election to the Board of
Directors, furnished in part by each such person, is as follows:
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH THE
COMPANY OTHER THAN DIRECTOR OCCUPATION AND OTHER INFORMATION
- -------------------------------- -----------------------------------------------------------
<S> <C>
Arthur M. Goldberg, 54 Mr. Goldberg was elected Chairman of the Board of Directors
Chairman of the Board of of the Company in August 1992 and has been its Chief
Directors and Chief Executive Executive Officer since September 1992. Mr. Goldberg was
Officer President of the Company from August 1992 through May 1994.
Hilton, as successor to BEC, designated Mr. Goldberg as its
nominee for the Board of Directors of the Company pursuant
to its right under the management agreement dated August
20, 1993 (the "Management Agreement") among the Company,
BEC and Bally's Grand Management Co., Inc., a Nevada
corporation (the "Manager") to nominate one member of the
Company's Board of Directors, which nomination is submitted
to stockholders for election. Mr. Goldberg has served as
Chairman of the Board of Directors, President, Chief
Executive Officer and Secretary of the Manager since
September 1992; served as Chairman of the Board of
Directors and Chief Executive Officer of BEC between
October 1990 and December 1996; President of BEC between
January 1993 and December 1996; and Chairman of the Board
of Directors, President and Chief Executive Officer of
Bally's Casino Holdings, Inc. (an indirect wholly-owned
subsidiary of Hilton) since June 1993. In addition, Mr.
Goldberg serves as Executive Vice President,
President-Gaming Division and a director of Hilton,
Chairman of the Board of Directors and Chief Executive
Officer of GNOC, Corp. and Bally's Park Place, Inc. (both
of which are subsidiaries of Hilton), Chairman of the Board
of Bally Total Fitness Holding Corporation, as well as
Chairman of the Board of Directors, President and Chief
Executive Officer of Di Giorgio Corporation and a director
of White Rose Foods, Inc. (food distributors) since
February 1990. Mr. Goldberg is also a director of First
Union Corporation (a financial services company) and
Managing Partner of Arveron Investments L.P. (an investment
partnership).
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH THE
COMPANY OTHER THAN DIRECTOR OCCUPATION AND OTHER INFORMATION
- -------------------------------- -----------------------------------------------------------
<S> <C>
Jay Burnham, 34 Mr. Burnham was elected a director of the Company in August
1993. Mr. Burnham has been a Vice President of DDJ Capital
Management, LLC (a diversified investment management firm)
since March 1996. From January 1995 until March 1996, Mr.
Burnham served as an investment advisor with Libra
Investments (a diversified investment management firm).
From June 1990 until he joined Libra, Mr. Burnham performed
investment analyst management for Paul D. Sonz Partners (a
diversified investment management firm). Mr. Burnham is
also a director of Live Entertainment, Inc. (a distributor
of motion pictures and home videos).
J. Kenneth Looloian, 74 Mr. Looloian was elected a director of the Company in
October 1995. Mr. Looloian is an Executive Vice President
of Di Giorgio Corporation, a former partner in Arveron
Investments L.P. and a former Executive Vice President of
International Controls Corporation. Mr. Looloian is also a
director of Bally Total Fitness Holding Corporation,
Bally's Casino Holdings, Inc., Bally's Park Place, Inc. and
GNOC, Corp.
Darrell A. Luery, 56 Mr. Luery was elected a director of the Company in October
President and 1995. Mr. Luery has been President of the Company since May
Chief Operating 1994 and its Chief Operating Officer since September 1992.
Officer Mr. Luery served as Senior Vice President of the Company
from August 1989 through May 1994. Mr. Luery has served as
President and Chief Operating Officer of Grand Resorts,
Inc. since July 1990 and Senior Vice President and Chief
Operating Officer of Grand Reservation Services, Inc. since
July 1990. Mr. Luery is also a director of American Bank of
Commerce.
Jack L. McDonald, 63 Mr. McDonald was elected a director of the Company in
August 1993. Mr. McDonald has served as a director of Amre,
Inc. (a home improvements company) since April 1992, a
director of Triangle Pacific Inc. (a wood products company)
since June 1992, a director of U.S. Homes, Inc. (a home
building company) since June 1993 and a director of
American Homestar Corporation (a mobile home manufacturer)
since October 1994.
Nicholas H. Politan, Jr., 35 Mr. Politan was elected a director of the Company in
October 1995. Mr. Politan has been Chief Financial Officer
of Kenetech Corp. (a developer of energy systems) since
April 1996. From April 1995 until March 1996, Mr. Politan
served as Vice President of Kenetech Energy Systems, Inc.
and from October 1992 until April 1995, Mr. Politan was
Counsel for Kenetech Energy Systems, Inc. From September
1986 until he joined Kenetech Energy Systems, Inc., Mr.
Politan was an attorney with Heller, Ehrman, White and
McAuliffe (a law firm). Mr. Politan is a Vice President of
Kenetech Windpower, Inc., a wholly-owned subsidiary of
Kenetech Corp. which filed for protection under Chapter 11
of the United States Bankruptcy Code in May 1996.
</TABLE>
3
<PAGE> 6
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth information regarding the ownership of the
Company's Common Stock and common stock of Hilton on December 18, 1996 by (i)
beneficial owners known to the Company of more than five percent of the
outstanding shares of Common Stock; (ii) each director, nominee to the Board of
Directors and each Named Executive Officer (defined below); and (iii) directors
and executive officers of the Company as a group. Information concerning
beneficial holders of more than five percent of the outstanding shares of Hilton
common stock was supplied by Hilton.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
AMOUNT AND NATURE OF OWNERSHIP OF
NAME OF BENEFICIAL OWNERSHIP PERCENT OF HILTON PERCENT OF
BENEFICIAL OWNER OF COMMON STOCK CLASS (1) COMMON STOCK CLASS (1)
- --------------------------------------- -------------------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>
Arthur M. Goldberg(2) 2,904,738 1.2%
Jerry A. Blumenshine
Jay Burnham
William D. Harrold 266 * 100 *
J. Kenneth Looloian 10,000 *
Darrell A. Luery
Jack L. McDonald
Nicholas H. Politan, Jr.
Directors and executive officers
as a group (11 persons) (3) 266 * 2,914,838 1.2%
BEA Associates (4) 619,899 7.3%
Hilton Hotels Corporation (5) 7,153,238 84.7%
Barron Hilton (6)(7) 46,954,756 18.9%
Conrad N. Hilton Fund(7) 16,498,736 6.6%
FMR Corp. (8) 24,351,348 9.8%
<FN>
- ---------------
* Less than 1%
(1) Calculated on the basis of applicable rules of the Securities and Exchange
Commission (the "Commission"), which require for purposes of calculating
beneficial ownership that presently exercisable warrants or options to
acquire shares of Common Stock and Hilton common stock (which include
options that become exercisable within 60 days) held by the person for whom
the calculation is made be treated as outstanding shares.
(2) Includes options to acquire 600,000 shares of Hilton common stock which Mr.
Goldberg has the right to exercise.
(3) Mr. Contesse's employment with the Company terminated on June 3, 1996. Based
on records available to the Company, it believes he owns no shares of Common
Stock and owns no shares of Hilton common stock.
(4) BEA Associates ("BEA") is a New York corporation with a business address of
153 East 53rd Street, One Citicorp Center, New York, New York 10022. BEA, an
investment advisor, owns 619,899 shares of Common Stock in discretionary
accounts which it manages. BEA has sole dispositive power with respect to
all 619,899 shares of Common Stock. Such information is derived from a
Schedule 13G dated January 15, 1996 which was prepared by BEA pursuant to
Commission regulations.
(5) Hilton is a Delaware corporation with a business address of 9336 Civic
Center Drive, Beverly Hills, California 90210. Such number includes shares
of Common Stock owned by Hilton indirectly through its wholly owned
subsidiaries.
(6) Includes 24,000,000 shares of Hilton common stock owned by the Charitable
Remainder Unitrust (the "Trust"), of which Mr. Hilton is sole Trustee. As
Trustee, Mr. Hilton has the sole voting power with respect to, and is deemed
to be the beneficial owner of, the 24,000,000 shares. The Trust will
continue until the later of Mr. Hilton's death or May 8, 2009. By virtue of
the foregoing and the other shares beneficially owned by Mr. Hilton, Mr.
Hilton may be deemed to be in "control" of Hilton as such term is defined in
the rules and regulations promulgated by the Commission.
(7) Mr. Hilton is one of the nine directors of the Conrad N. Hilton Fund (the
"Fund"). Mr. Hilton disclaims beneficial ownership of the 16,498,736 shares
of Hilton common stock owned by the Fund.
(8) FMR Corp. ("FMR") is a Massachusetts corporation with a business address of
82 Devonshire Street, Boston, Massachusetts 02109. The amount of Hilton
common stock beneficially owned by FMR is reported on the basis of two
Schedule 13Gs filed with the Commission under the Securities Exchange Act of
1934, as amended, which are dated May 9, 1996 with respect to shares of
Hilton common stock and December 9, 1996 with respect to shares of BEC
common stock held prior to the Merger. As reported in such Schedule 13Gs,
wholly-owned subsidiaries of FMR beneficially own an aggregate of 24,318,148
shares of Hilton common stock and members of the family of Edward C. Johnson
3rd, Chairman of FMR, may be deemed, under the Investment Company Act of
1940, as amended, to form a controlling group with respect to FMR.
</TABLE>
4
<PAGE> 7
INFORMATION RELATING TO THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held two (2) meetings during 1995. Each incumbent
director attended at least 75% of the aggregate number of meetings of the Board
of Directors and all committees on which he served during 1995.
The Board of Directors has an Audit Committee and a Compensation Committee.
The general functions of such committees, the identity of each committee member
and the number of committee meetings held by each committee during 1995, are set
forth below.
AUDIT COMMITTEE
The current members of the Audit Committee are Mr. Looloian and Mr.
Politan. The general functions of the Audit Committee include reviewing the
selection of the independent auditors with the Manager, evaluating the
performance of the independent auditors and their fees for services, reviewing
the scope of the annual audit with the independent auditors and the results of
the audit with senior management of the Company and the independent auditors,
and consulting with the Manager, senior management of the Company, internal
auditors and the independent auditors as to the systems of internal accounting
controls. The Audit Committee held two (2) meetings during 1995.
COMPENSATION COMMITTEE
The current members of the Compensation Committee are Mr. McDonald and Mr.
Burnham. The general functions of the Compensation Committee include reviewing
the compensation arrangements for senior management of the Company and oversight
of management development to ensure continuity of senior management. Under the
terms of the Management Agreement, the Manager is responsible for all personnel
decisions of the Company and has authority to determine compensation and other
benefits with the exception of new pension and profit sharing plans. However,
the Company's Board of Directors must approve any employment contracts or other
arrangements for employees of the Company which involve more than $125,000
annual compensation, including salary and bonuses. The Compensation Committee
held one (1) meeting during 1995.
COMPENSATION OF DIRECTORS
Each director who is not an officer of the Company receives $20,000 per
year, payable quarterly, as compensation for his service in such capacity and a
$500 fee for each meeting attended, including meetings of any committees.
Directors who are officers of the Company do not receive additional compensation
for service as directors. In addition, the Company made payments to the members
of the independent Special Committee of the Board of Directors constituted in
connection with the approval of the sale of certain property to BEC. See
"Certain Transactions with Affiliates and Management". The Chairman of the
Special Committee, Mr. McDonald, received $35,000. The other members of the
Special Committee, Messrs. Politan and Burnham, each received $15,000.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid by the Company to its
Chief Executive Officer and the four other most highly compensated executive
officers of the Company at the end of 1995 (the "Named Executive Officers") for
services rendered in all capacities to the Company during the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- -----------------------------
OTHER ANNUAL SECURITIES RESTRICTED ALL OTHER
COMPENSATION UNDERLYING STOCK AWARDS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (1) OPTIONS (#)(2) ($) ($)
- --------------------------- ---- ---------- --------- ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Arthur M. Goldberg (3) 1995
Chairman of the Board of 1994
Directors and Chief 1993 3,535,000(3)
Executive Officer
Darrell A. Luery 1995 558,000 283,500 25,000 67,468(4)
President and 1994 540,000 270,000 75,000 39,351
Chief Operating Officer 1993 493,269 210,000 30,000 921,625 4,947
Jerry A. Blumenshine 1995 184,231 56,000 7,500 26,082(5)
Vice President and Chief 1994 183,654 75,000 25,000 22,909
Financial Officer 1993 172,019 60,000 10,000 391,375 82,386
Paul Contesse (6) 1995 198,077 80,000 8,250 27,294(7)
Senior Vice President -- 1994 187,115 75,000 25,000 22,565
Hotel Operations 1993 172,596 50,000 10,000 391,375 3,673
William D. Harrold 1995 217,885 103,500 8,250 26,505(8)
Executive Vice President 1994 186,250 75,000 25,000 19,620
1993 167,308 50,000 10,000 391,375 4,672
<FN>
- ---------------
(1) Certain incidental personal benefits to executive officers of the Company
may result from expenses incurred by the Company in the interest of
attracting and retaining qualified personnel. These incidental personal
benefits made available to executive officers during 1995 are not described
herein because the incremental cost to the Company of such benefits is below
the Commission disclosure threshold.
(2) Such amounts represent the number of shares of BEC common stock underlying
options granted by BEC to each named executive officer.
(3) Mr. Goldberg was the Chairman of the Board of Directors, President and Chief
Executive Officer of BEC. For serving in such capacities, Mr. Goldberg
received from BEC in 1995, 1994 and 1993 aggregate compensation of
$6,203,812, $3,530,285 and $3,486,997, respectively. Mr. Goldberg was also
awarded non-qualified options to purchase 550,000 shares, 150,000 shares and
450,000 shares of BEC common stock during 1995, 1994 and 1993, respectively.
BEC did not allocate the amount of any compensation paid to Mr. Goldberg as
being compensation paid to Mr. Goldberg for services rendered to the
Company. In connection with the services provided to the Company by the
Manager under the Management Agreement, including the services of Mr.
Goldberg, the Company pays the Manager an annual management fee of
$3,000,000. See "Certain Transactions with Affiliates and Management." On
August 20, 1993, Mr. Goldberg received an award of 280,000 shares of Common
Stock pursuant to the Company's Incentive Stock Plan (as hereinafter
defined). As of such date, the Common Stock had a fair market value of
$12.625 per share. On December 13, 1993, Mr. Goldberg sold the shares to a
wholly-owned subsidiary of BEC.
(4) This total includes (i) $5,082 paid to the Company's 401(k) plan and (ii)
$62,386 matched by the Company for Mr. Luery's participation in the Bally
Entertainment Corporation Management Retirement Savings Plan (the "Savings
Plan"). See "Compensation of Executive Officers -- Retirement Savings Plan."
(5) This total includes (i) $5,082 paid to the Company's 401(k) plan and (ii)
$21,000 matched by the Company for Mr. Blumenshine's participation in the
Savings Plan.
(6) Mr. Contesse's employment with the Company terminated effective June 3,
1996.
(7) This total includes (i) $5,082 paid to the Company's 401(k) plan and (ii)
$22,212 matched by the Company for Mr. Contesse's participation in the
Savings Plan.
(8) This total includes (i) $5,082 paid to the Company's 401(k) plan and (ii)
$21,423 matched by the Company for Mr. Harrold's participation in the
Savings Plan.
</TABLE>
6
<PAGE> 9
STOCK OPTION AND SAR GRANTS
The following table sets forth certain information concerning grants by BEC
of options to purchase BEC common stock made during 1995 to each of the Named
Executive Officers pursuant to the 1989 Incentive Plan of BEC (the "Incentive
Plan"). In connection with the Merger, all options to purchase BEC common stock
were settled for an amount in cash equal to $28.425 per share less the exercise
price per share. The "option settlement price" was determined based on a formula
set forth in the agreement governing the Merger which was related to the
consideration received by BEC stockholders for each share of BEC common stock
they owned prior to the Merger.
BEC OPTION/SAR (1) GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EMPLOYEES EXERCISE TERM(2)
OPTIONS OF THE COMPANY IN PRICE EXPIRATION ------------------------
NAME GRANTED(#)(3) FISCAL YEAR ($/SH.)(3) DATE 5%($) 10%($)
- ------------------------------------- -------------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Goldberg(4).... -- -- -- -- -- --
Darrel A. Luery.......... 25,000 25.2% 11.05 12/12/05 173,732 440,271
Jerry A. Blumenshine..... 7,500 7.6% 11.05 12/12/05 52,150 132,081
Paul Contesse............ 8,250 8.3% 11.05 12/12/05 57,332 145,290
William D. Harrold....... 8,250 8.3% 11.05 12/12/05 57,332 145,290
- ---------------
<FN>
(1) There were no SARs granted in 1995 to any of the executive officers named in
this table. In addition, the Incentive Plan was amended in 1995 to eliminate
BEC's ability to issue SARs.
(2) The potential realizable values represented future opportunity at December
31, 1995 and have not been reduced to present value in 1995 dollars. The
dollar amounts included in these columns are the result of calculations at
assumed rates set by the Commission for illustration purposes. The potential
realizable values are based on arbitrarily assumed annualized rates of stock
price appreciation of 5% and 10% over the full 10-year term of the options
and do not reflect the results of the Merger. For example, in order for the
individuals named above who received options with an exercise price of
$11.05 per share to have realized the potential values set forth in the 5%
and 10% columns in the table above, the price per share of BEC's common
stock would have had to be approximately $18.00 and $28.66, respectively.
(3) Pursuant to the terms of BEC's stock option plans, BEC's Compensation and
Stock Option Committee made an adjustment to the exercise price of all
outstanding options in connection with the distribution of the shares of
Bally Total Fitness Holding Corporation to BEC's stockholders in January
1996. The adjustment was equal to one quarter of the average closing price
for the shares of Bally Total Fitness Holding Corporation for the first 20
days of trading, reflecting the distribution of one quarter of a share of
Bally Total Fitness Holding Corporation for each share of BEC common stock.
This adjustment resulted in a reduction of all exercise prices by $1.20 per
share.
(4) Mr. Goldberg was the Chairman of the Board of Directors, President and Chief
Executive Officer of BEC. For serving in such capacities, during 1995 BEC
granted Mr. Goldberg options to purchase 500,000 shares of BEC common stock
at an exercise price of $6.30 per share, which options expire on January 19,
2005, and 50,000 shares of BEC common stock at an exercise price of $11.05
per share, which options expire on December 12, 2005. The aggregate
potential realizable value of such options at assumed annualized rates of
stock price appreciation of 5% and 10% for the option term would be
$2,328,482 and $5,900,832, respectively.
</TABLE>
7
<PAGE> 10
STOCK OPTION AND SAR EXERCISES
The following table sets forth certain information concerning exercises of
BEC stock options and SARs during 1995 by each of the Named Executive Officers
and their stock options and SARs outstanding as of December 31, 1995. As
described previously, all options to purchase BEC common stock were settled in
connection with the Merger for an amount in cash equal to $28.425 per share less
the exercise price per share.
AGGREGATED BEC OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
AT FISCAL YEAR-END(#) FISCAL YEAR-END($)(3)
SHARES VALUE --------------------- ---------------------
ACQUIRED ON RECEIVED EXERCISABLE(E)/ EXERCISABLE(E)/
NAME EXERCISE(#) ($)(2) UNEXERCISABLE(U) UNEXERCISABLE(U)
- ------------------------------------ --------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Arthur M. Goldberg(4)...
Darrell A. Luery........ None -- 55,001(E) 436,008(E)
84,999(U) 551,992(U)
Jerry A.
Blumenshine(5)........ 3,000 23,850 25,335(E) 130,241(E)
27,499(U) 181,534(U)
Paul Contesse........... None -- 20,001(E) 164,216(E)
28,249(U) 183,747(U)
William D. Harrold...... None -- 20,001(E) 164,216(E)
28,249(U) 183,747(U)
- ---------------
<FN>
(1) Pursuant to the terms of BEC's stock option plans, BEC's Compensation and
Stock Option Committee made an adjustment to the exercise price of all
outstanding options in connection with the distribution of the shares of
Bally Total Fitness Holding Corporation to BEC's stockholders in January
1996. The adjustment was equal to one quarter of the average closing price
for the shares of Bally Total Fitness Holding Corporation for the first 20
days of trading, reflecting the distribution of one quarter of a share of
Bally Total Fitness Holding Corporation for each share of BEC common stock.
This adjustment resulted in a reduction of all exercise prices by $1.20 per
share.
(2) Value based on the closing price of BEC common stock as of May 12, 1995 (the
exercise date) minus the exercise price.
(3) Value based on the closing price of BEC common stock as of December 31, 1995
($14.00) minus the exercise or base price and does not reflect the results
of the Merger.
(4) Mr. Goldberg had 2,650,000 unexercised shares under option at December 31,
1995 of which 1,850,001 were exercisable and 799,999 were unexercisable. The
1,850,001 exercisable option shares and 799,999 unexercisable option shares
are valued at $22,020,008 and $5,678,742, respectively, based on the $14.00
closing price per share of BEC common stock as of December 31, 1995, minus
the exercise or base price and does not reflect the results of the Merger.
Those options included an award to purchase 500,000 shares of BEC common
stock that could have been deemed stock appreciation rights at Mr.
Goldberg's election.
(5) Such options included an award to purchase 8,334 shares of BEC common stock
that could have been deemed stock appreciation rights at Mr. Blumenshine's
election.
</TABLE>
EMPLOYMENT ARRANGEMENTS
Mr. Luery
The Company and Mr. Luery entered into an employment agreement dated June
5, 1995, for a term expiring April 30, 1998. The agreement provides for the
payment of an annual base salary, subject to periodic review by the Manager,
plus bonuses, payable at the discretion of the Manager. As of December 1, 1996,
8
<PAGE> 11
Mr. Luery's annual base salary is $567,000. In the event that Mr. Luery
voluntarily terminates the agreement or his employment is terminated by the
Company for "cause", Mr. Luery will be subject to certain non-competition
covenants for a period of one year following the termination of his employment.
In the event a change in control of the Company occurs and Mr. Luery is asked to
leave the employ of the Company, or, absent cause, Mr. Luery elects to terminate
his employment because he has been constructively terminated, Mr. Luery will be
entitled to receive a lump sum payment equal to the full amount of his then
current base salary for the remainder of the term of his agreement or
twenty-four (24) months, whichever is greater, and the greater of the average of
the bonuses, if any, paid to Mr. Luery for the three (3) previous years or the
bonus paid to Mr. Luery for the prior year, if any. If a change in control of
the Company occurred on December 1, 1996 and Mr. Luery were asked to leave the
employ of the Company or, absent cause, constructively terminated, he would be
entitled to a payment of approximately $1,434,000 under his agreement.
Additionally, if a change in control occurred on December 1, 1996 Mr. Luery
could elect, at his option, to terminate the employment agreement and receive a
lump sum of six (6) months salary or $283,500.
Mr. Blumenshine
The Company and Mr. Blumenshine entered into an employment agreement dated
December 1, 1992, that was subsequently amended on August 26, 1993, for a term
expiring December 31, 1995. As of December 1, 1996, Mr. Blumenshine's annual
base salary is $140,000.
Mr. Harrold
The Company and Mr. Harrold entered into an employment agreement dated July
10, 1995, for a term expiring June 30, 1998. The agreement provides for the
payment of an annual base salary, subject to periodic review by the Manager,
plus bonuses, payable at the discretion of the Manager. As of December 1, 1996,
Mr. Harrold's annual base salary is $260,000. In the event that Mr. Harrold
voluntarily terminates the agreement or his employment is terminated by the
Company for "cause", Mr. Harrold will be subject to certain non-competition
covenants for a period of one year following the termination of his employment.
In the event a change in control of the Company occurs and Mr. Harrold is asked
to leave the employ of the Company, or, absent cause, Mr. Harrold elects to
terminate his employment because he has been constructively terminated, Mr.
Harrold will be entitled to receive a lump sum payment equal to the full amount
of his then current base salary for the remainder of the term of his agreement
or for twenty-four (24) months, whichever is greater, and the greater of the
average of the bonuses, if any, paid to Mr. Harrold for the three (3) previous
years or the bonus paid to Mr. Harrold for the prior year, if any. If a change
in control of the Company occurred on December 1, 1996 and Mr. Harrold were
asked to leave the employ of the Company or, absent cause, constructively
terminated, he would be entitled to payment of approximately $670,000 under his
agreement.
RETIREMENT SAVINGS PLAN
The Savings Plan, adopted by BEC on September 7, 1994, is a deferred
compensation plan designed to permit a select group of management or highly
compensated employees to enhance the security of themselves and their
beneficiaries following retirement or other termination of their employment. The
Savings Plan is intended to be an "employee pension benefit plan" under the
Employee Retirement Income Security Act of 1974, as amended, and is unfunded and
maintained by BEC. The Savings Plan is not intended to be qualified under the
Internal Revenue Code of 1986, as amended. The Board of Directors of BEC, in its
sole discretion, designates those members of management or highly compensated
employees who are eligible to participate in the Savings Plan.
During the first half of 1995, the Company provided a matching contribution
as follows: 100% of the first 10% of eligible compensation the participant
defers, 50% of the second 10% of eligible compensation the participant defers
and 0% thereafter. Effective July 1, 1995, the Savings Plan was amended so that
the Company provides a matching contribution of 50% of the first 15% of eligible
compensation the participant defers and 0% thereafter. Matching contributions
are credited to a participant's matching account and become vested as follows:
after one but less than two Years of Deferral they become 33 1/3% vested, after
two but less
9
<PAGE> 12
than three Years of Deferral they become 66 2/3% vested, and after more than
three Years of Deferral they become fully vested. For this purpose, a "Year of
Deferral" is credited with respect to a matching contribution for each completed
calendar year commencing after the calendar year for which the matching
contribution was made. A participant generally may elect to receive his benefits
under the Savings Plan in a lump sum or in installments over a period of no more
than ten years. As soon as possible (but not later than five business days)
after a change in control of BEC, as defined in the Savings Plan, all of the
participants' accounts will become 100% vested.
For 1995, the Company contributed cash of $258,113 to the accounts of
participants in the Savings Plan, of which $142,333 was allocated to the
accounts of all executive officers as a group. Amounts allocated to each of the
Named Executive Officers are as follows: Mr. Luery $62,386, Mr. Blumenshine
$21,000, Mr. Contesse $22,212 and Mr. Harrold $21,423.
INCENTIVE STOCK AWARDS
In accordance with the Company's Chapter 11 Plan of Reorganization, on
August 20, 1993, the Company established the Bally's Grand, Inc. 1993 Incentive
Stock Plan, pursuant to which 600,000 shares of its Common Stock were made
available for award to its officers actively involved in its management or
operations (the "Incentive Stock Plan"). The Incentive Stock Plan generally
provides for grants of stock awards to participants for no consideration which
may or may not be subject to restrictions.
Pursuant to the Chapter 11 Plan and the Management Agreement, the Manager
is responsible for the administration of the Incentive Stock Plan and has
authority, in its sole discretion, to determine which officers of the Company
will participate in the Incentive Stock Plan, any individual or corporate
performance goals applicable to a participant, which participants will be
awarded shares, the date on which awards will be made, the number of shares to
be awarded, if any, and all other terms of the awards, which need not be the
same for all participants. Subject to the express provisions of the Incentive
Stock Plan, the Manager also has the authority, in its sole discretion, to
construe, amend and rescind the rules and regulations relating to the Incentive
Stock Plan, and to make all other determinations necessary or advisable for
administering the Incentive Stock Plan.
The following table sets forth certain information with respect to awards
granted under the Incentive Stock Plan to each of the Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK
AWARDED (ALL IN
NAME 1993)
---- -------------------
<S> <C>
Arthur M. Goldberg.............................. 280,000
Darrell A. Luery................................ 73,000
Jerry A. Blumenshine............................ 31,000
Paul Contesse................................... 31,000
William D. Harrold.............................. 31,000
</TABLE>
The Company, the Manager and each participant in the Incentive Stock Plan
entered into individual stock award agreements which set forth the specific
terms and conditions applicable to such participant's stock award. The stock
award agreement entered into with Mr. Goldberg provided that the shares awarded
to him were not subject to restrictions. During 1993, Mr. Goldberg sold the
280,000 shares of Common Stock awarded to him to a wholly owned subsidiary of
BEC. The stock award agreements entered into with the four other persons listed
above contained substantially identical terms. These stock award agreements
provided for a grant of shares of Common Stock subject to certain restrictions
and subject to forfeiture if the participant's employment with the Company was
terminated before the restrictions lapsed. The restrictions applicable to the
shares awarded automatically lapsed as to approximately one-third of the number
of shares awarded on each of December 31, 1993, 1994 and 1995. On January 12,
1994, December 31, 1994 and December 29, 1995, the Company purchased from
participants in the Incentive Stock Plan 98,150 shares, 82,025 shares and
10
<PAGE> 13
76,900 shares, respectively, of Common Stock at prices of $12.625 per share,
$11.00 per share and $16.00 per share, respectively. Such shares are held by the
Company as treasury stock.
As of December 18, 1996, 42,925 shares of Common Stock were available for
future award pursuant to the Incentive Stock Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Burnham and Mr. McDonald were members of the Compensation Committee
during 1995. Neither Mr. Burnham nor Mr. McDonald have interlocking
relationships with third parties which might be considered conflicts of interest
based on their membership of the Company's Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In connection with the Management Agreement, the role of the Board of
Directors includes the approval of compensation determinations made by the
Manager which involves more than $125,000 (including salary and bonus). The
Manager and the Board of Directors each believe that the growth of the Las Vegas
casino market has made the recruitment and retention of top casino executives
highly competitive. Consequently, the Manager and the Board of Directors believe
that the payment of significant base salaries to key personnel is very important
to the Company's ability to retain these employees.
In reviewing the bonuses approved by the Manager, the Board of Directors
considered the Company's prime strategic goals and the qualitative factors which
contributed to their achievement. The Company's prime strategic goal was, and
is, to maximize shareholder value by generating increased operating income on a
consistent and sustainable basis. This goal was largely accomplished in 1995
(during a period when neither the Manager nor the Board of Directors expected to
increase market share) by the Company establishing a competitive uniqueness
geared toward those segments of the market the Company believes it is best
equipped to handle and that are most profitable. The Company's positioning was
achieved through changes to operations which were implemented by senior
management. In that regard, the qualitative factors that the Manager and the
Board of Directors recognized were managerial vision, decision-making acumen,
effectiveness, teamwork and the results obtained by senior management.
11
<PAGE> 14
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
FROM AUGUST 1, 1994 TO DECEMBER 31, 1995*
BALLY'S GRAND, INC., S&P 500 INDEX AND
DOW JONES CASINO INDUSTRY GROUP INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) BALLY'S GRAND DJ CASINO S&P 500
<S> <C> <C> <C>
8/1/94 100 100 100
12/31/94 97 109 101
12/31/95 142 144 139
- -------------
<FN>
* Assumes $100 invested on August 1, 1994 in Bally's Grand, Inc. Common Stock,
the S&P 500 Index and the Dow Jones Casino Industry Group Index. Bally's
Grand, Inc. Common Stock was first listed for trading on August 1, 1994. Total
return assumes reinvestment of dividends.
</TABLE>
CERTAIN TRANSACTIONS WITH AFFILIATES AND MANAGEMENT
Pursuant to the Management Agreement, the Manager provides certain
management and administrative services to the Company and BEC licenses, on a
non-exclusive basis, the use of the "Bally" name and certain computer software
to the Company for an annual fee of $3,000,000 payable in monthly installments.
The initial term of the Management Agreement is ten years. The Management
Agreement will be automatically renewed from year to year unless notice of
intent not to renew is given at least six months prior to the expiration of the
initial term or any subsequent term or in the event that Bally's Las Vegas is
sold. Property, general liability and other insurance coverage has been obtained
by BEC for the Company. BEC paid insurance premiums for itself, its subsidiaries
and the Company and allocated these premiums among those parties. In 1995, the
Company paid approximately $1,173,000 to BEC for allocated insurance premiums.
In addition, BEC leased an airplane which was used for the business of BEC, its
subsidiaries and the Company and allocated the cost of the airplane based upon
usage. In 1995, the Company paid approximately $121,000 for allocated airplane
usage costs.
Pursuant to the terms of the Management Agreement, Hilton has the right to
nominate one of the six members of the Company's Board of Directors and a member
to any of the committees thereof, provided such nominee is reasonably acceptable
to the Company. The Company is required to submit the name of Hilton's nominee
to the Company's stockholders for election, subject to the exercise of the
fiduciary duties of the Company's Board of Directors. Hilton has designated Mr.
Goldberg as its nominee to serve on the Board of Directors of the Company.
12
<PAGE> 15
Under the terms of the Management Agreement, the Manager is responsible for
all personnel decisions of the Company and has the authority to determine
compensation and other benefits with the exception of new pension and profit
sharing plans. However, the Company's Board of Directors must approve any
employment contracts or other arrangements for employees of the Company which
involve more than $125,000 annual compensation, including salary and bonuses.
Beginning on March 21, 1995, when BEC's ownership percentage of outstanding
Common Stock reached 80%, taxable income or loss of the Company has been
included in the consolidated federal income tax return of BEC. Under a tax
sharing arrangement between the Company and BEC, income taxes are allocated to
the Company based on amounts the Company would pay or receive if it filed a
separate consolidated federal income tax return. Payments to BEC for tax
liabilities are due at such time and in such amounts as payments would be
required to be made to the Internal Revenue Service. Payments from BEC for tax
benefits are due at the time BEC files the applicable consolidated federal
income tax return.
On December 29, 1995, the Company purchased 76,900 shares of Common Stock
for $16.00 per share from participants in the Incentive Stock Plan, which
included purchases from the Named Executive Officers as follows: 24,300 shares
from Mr. Luery, 10,300 shares from Mr. Blumenshine, 10,300 shares from Mr.
Contesse, and 10,300 shares from Mr. Harrold. See "Compensation of Executive
Officers -- Incentive Stock Awards."
On May 10, 1995, the Company made a payment of $250,000 to Arveron
Investments L.P., of which Mr. Goldberg is Managing Partner, as compensation for
consulting services provided in connection with the Company's investments in
publicly-traded securities and certain repurchases of Common Stock.
In August 1996, the Company sold Paris Casino Corp. (an indirect wholly
owned subsidiary that owns 24 acres of land next to Bally's Las Vegas upon which
the Paris Casino-Resort is planned to be developed) to BEC for consideration
having an aggregate value of $57,500,000 ($17,500,000 in cash and 1,457,195
shares of BEC common stock which were converted into 1,457,195 shares of Hilton
common stock in the Merger). In addition, BEC reimbursed the Company for Paris
Casino-Resort development costs incurred to date and certain transaction-related
costs, and granted the Company certain operating considerations pursuant to a
shared facilities agreement. The transaction was negotiated and approved by an
independent Special Committee of the Board of Directors of the Company
consisting of Mr. McDonald, Mr. Politan and Mr. Burnham. The Special Committee
retained independent legal counsel and financial advisors in connection with the
evaluation and negotiation of the transaction.
13
<PAGE> 16
AUDITORS
The Company's independent auditors for 1995 were Ernst & Young LLP. In
connection with the Merger, the Manager recommended the Company engage Arthur
Andersen LLP (Hilton's independent auditors) so as to provide uniformity in
certifying public accountants. On December 31, 1996, after review by the Audit
Committee of the Company, the Board of Directors of the Company unanimously
approved the engagement of Arthur Andersen LLP as its independent auditors for
the fiscal year ending December 31, 1996 to replace the firm of Ernst & Young
LLP, who were dismissed as auditors of the Company on that date.
The reports of Ernst & Young LLP on the Company's financial statements for
each of the two fiscal years ended December 31, 1995 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles. In connection with the
audits of the Company's financial statements for each of the two fiscal years
ended December 31, 1995 and in the subsequent interim period, there were no
disagreements with Ernst & Young LLP on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and procedures
which, if not resolved to the satisfaction of Ernst & Young LLP would have
caused Ernst & Young LLP to make reference to the matter in their report.
Neither representatives of Ernst & Young LLP or Arthur Andersen LLP will be
present at the meeting.
LITIGATION
Two derivative actions purportedly brought on behalf of the Company against
its directors and BEC, one commenced in October 1995 and the other in September
1996, were consolidated under the caption In re: Bally's Grand Derivative
Litigation in the Court of Chancery of the State of Delaware, in and for New
Castle County. The consolidated complaint alleges breaches of fiduciary duty and
waste of corporate assets in connection with certain actions including the sale
by the Company to BEC of the capital stock of Paris Casino Corp. (the "Paris
Transaction"), alleged improper delegation of duties by the Company's Board of
Directors by virtue of the Management Agreement, the Manager's designation
pursuant to the Management Agreement of recipients awarded Common Stock pursuant
to the Incentive Stock Plan, purchases of Common Stock by the Company and BEC,
and a consulting agreement entered into by the Company with Arveron Investments
L.P. in connection with the Company's investments in publicly-traded securities
and certain repurchases of Common Stock. The plaintiffs seek, among other
things: (i) rescission of the Paris Transaction, (ii) a declaration that the
Management Agreement is unlawful, (iii) an accounting of damages to the Company
and profits to defendants as a result of the transactions complained of, (iv) an
accounting for purchases of Common Stock by the Company and BEC, and (v) costs
and expenses including reasonable attorneys' fees. A third derivative action
purportedly brought on behalf of the Company against its directors, BEC, the
Manager and Hilton was commenced in November 1996 under the caption Tower
Investment Group, Inc., et al. v. Bally's Grand, Inc., et al. in the Court of
Chancery of the State of Delaware, in and for New Castle County. The complaint
alleges breach of fiduciary duty and waste of corporate assets by the Company's
directors and BEC in connection with the Paris Transaction, aiding and abetting
by Hilton of the breaches of fiduciary duty and waste by the Company's directors
and BEC, fraud, willful misconduct or gross negligence by BEC and the Manager in
connection with the Management Agreement, breach of fiduciary duty by the
Company's directors in connection with purchases of Common Stock by BEC while in
possession of material inside information concerning the Company's earnings,
breach of fiduciary duty by BEC in connection with alleged threats to abuse its
controlling interest in the Company, and violation by the Company's directors
and BEC of Section 203 of the Delaware General Corporation Law in connection
with the Paris Transaction. The plaintiffs seek, among other things: (i)
rescission of the Paris Transaction, (ii) termination of the Management
Agreement, (iii) appointment of a custodian to manage the Company's affairs,
(iv) compensatory damages, (v) an order enjoining BEC and Hilton from conveying
the Paris Casino-Resort, (vi) disgorgement by BEC and Hilton of the profits of
the Paris Casino-Resort, (vii) disgorgement by Arthur M. Goldberg of all
payments, warrants and interests received in connection with the Merger, and
(viii) disgorgement by BEC of profits earned from any transactions in shares of
the Common Stock based upon material inside information. This action has been
consolidated with the original consolidated action under the caption In re:
Bally's Grand, Inc. Shareholders Litigation. The defendants believe the
complaints are without merit.
14
<PAGE> 17
OTHER BUSINESS
Management knows of no other business to be presented for action at the
meeting. If other matters properly come before the meeting or any adjournment
thereof, the persons named as proxies will vote upon them in accordance with
their best judgment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to identify any director, officer, beneficial owner
of more than ten percent of Common Stock or any other person subject to Section
16 of the Exchange Act that failed to file on a timely basis, as disclosed in
their forms, reports required by Section 16(a) of the Exchange Act. Based on a
review of forms submitted to the Company, the Company believes all forms were
timely filed.
EXPENSE OF SOLICITATION
The cost of this solicitation will be borne by the Company. In addition to
the use of the mail, proxy solicitation may be made by telephone, telegraph and
personal interviews by regular employees of the Company.
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
The 1997 Annual Meeting of Stockholders is expected to be held in October
of 1997. Accordingly, the date by which stockholder proposals for inclusion in
the proxy materials relating to the next Annual Meeting of Stockholders must be
received by the Company at its principal executive offices, Attention David
Arrajj, Secretary, Bally's Grand, Inc., 3645 Las Vegas Boulevard South, Las
Vegas, Nevada 89109, is June 30, 1997.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for 1995, which contains
the consolidated financial statements of the Company, was previously sent to
stockholders. The Company will provide to any stockholder as of the record date,
who so requests in writing, copies of its Annual Report on Form 10-K, and, if
specifically requested, the exhibits thereto. Requests for such copies should be
directed to David Arrajj, Secretary, Bally's Grand, Inc., 3645 Las Vegas
Boulevard South, Las Vegas, Nevada 89109.
By Order of the Board of Directors,
David Arrajj, Secretary
Las Vegas, Nevada
January 10, 1997
PLEASE DATE AND SIGN YOUR
PROXY CARD AND RETURN IT PROMPTLY
USING THE ENCLOSED RETURN ENVELOPE.
15
<PAGE> 18
- --------------------------------------------------------------------------------
PROXY BALLY'S GRAND, INC.
3645 Las Vegas Boulevard South, Las Vegas, Nevada 89109
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints David Arrajj and Jerry A. Blumenshine, or either of
them, proxies of the undersigned with full power of substitution, to vote all
shares of the undersigned at the Annual Meeting of Stockholders to be held on
February 3, 1997, at 9:00 a.m. (local time), at Bally's Las Vegas, 3645 Las
Vegas Boulevard South, Las Vegas, Nevada 89109, or at any adjournments thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL NUMBER
(1).
(1) Election of Directors of Bally's Grand, Inc.
<TABLE>
<CAPTION>
<S> <C>
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for the nominees listed below
</TABLE>
ARTHUR M. GOLDBERG, JAY BURNHAM, J. KENNETH LOOLOIAN, DARRELL A. LUERY,
JACK L. MCDONALD AND NICHOLAS H. POLITAN, JR.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE LINE BELOW.)
-----------------------------------------------------------------------
(2) In their discretion on all other matters that may properly come before
the meeting.
(Continued and to be signed and dated on reverse side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL NUMBER (1).
PLEASE DATE, SIGN EXACTLY AS NAME APPEARS BELOW, AND RETURN THIS PROXY IN THE
ENCLOSED POSTPAID ENVELOPE.
Dated: ______________, 1997
----------------------------
Signature
----------------------------
Signature if held jointly
(If signing as attorney,
administrator, executor,
trustee, guardian, etc.,
please add your title as
such.)
No additional postage need
be affixed to the enclosed
envelope if mailed in the
United States. Your prompt
attention will be of
assistance.
- --------------------------------------------------------------------------------
