SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to
___________
Commission file number: 0-14897
PLAYERS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 95-4175832
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification No.)
Suite 800, 1300 Atlantic Avenue, Atlantic City, New Jersey
(Address of principal executive offices)
08401
(Zip Code)
(609) 449-7777
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.005 par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of July 10, 1997, the aggregate market value of the
registrant's Common Stock held by non-affiliates of the
registrants was not less than $76,725,755.00.
As of July 10, 1997, there were 32,563,312 shares of the
registrant's Common Stock outstanding.
Documents Incorporated by Reference:
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors and executive officers of
Players International, Inc. ("the Company"), as of July 10, 1997,
is as follows:
Name Age Since Present Position With the Company
Edward Fishman 54 1985 Chairman of the Board of Directors
Howard Goldberg 51 1986 President, Chief Executive Officer
and Director
Thomas Gallagher 52 1992 Director
Marshall S.Geller 58 1989 Director
Lee Seidler 62 1987 Director
Charles Masson 44 1996 Director
Earl Webb 40 1996 Director
Lawrence Cohen 39 1996 Director
Peter J. Aranow 51 - Executive Vice President-Finance,
Treasurer and Secretary
John Groom 52 - Executive Vice President and Chief
Operating Officer
Henry M. Applegate, III 50 - Senior Vice President and Chief
Financial Officer
Patrick Madamba,Jr. 35 - Vice President and General Counsel
Edward Fishman has served as Chairman of the Board of the
Company since 1985. He served as Chief Executive Officer from
1985 until December, 1995 and served as President during May,
1993. Prior to his retirement as an active Company employee in
September, 1996, his principal activities for the Company related
to marketing, long-range development and strategic planning. He
has 18 years of marketing experience in the casino industry and
he has served as a marketing and strategic planning consultant to
casinos throughout the world.
Howard Goldberg became President and Chief Operating Officer
of the Company in May, 1993, and then became Chief Executive
Officer in December, 1995. Prior to joining the Company, he was
the managing shareholder practicing law in the Atlantic City, New
Jersey law firm of Horn, Goldberg, Gorny, Plackter, Weiss &
Perskie ("Horn, Goldberg"), which has represented the company
since its inception. Since the advent of casino gaming in
Atlantic City, Mr. Goldberg specialized in representing casinos
in New Jersey and other jurisdictions for development and
regulatory matters. Mr. Goldberg's name remains a part of the
firm name of Horn, Goldberg, but he does not currently engage in
any firm-related activities or matters. The amount of any
payments due him from the firm is not affected by or dependent
upon fees paid by the Company to Horn, Goldberg.
Thomas E. Gallagher has served as Executive Vice President
and General Counsel of Hilton Hotels Corporation since July 1,
1997. From April, 1992 through June, 1997, he was President and
Chief Executive Officer of The Griffin Group. From November 1,
1993, until December, 1996, he served as a director, and from
May, 1995 to December, 1996, he served as President and Chief
Executive Officer of Griffin Gaming & Entertainment, Inc.
(formerly Resorts International, Inc.) ("GG&E"). For the
preceding 15 years, he was a partner in the law firm of Gibson,
Dunn & Crutcher.
Marshall S. Geller is the Chairman, Chief Executive Officer
and founding partner of Geller & Friend Capital Partners, Inc., a
merchant banking investment company. He was formerly interim
President and Chief Operating Officer of the Company from
November, 1992, through April, 1993, and now serves as a member
of the Compensation Committee, of which he was Chairman from
September, 1995 to September, 1996. From 1991 through 1995, Mr.
Geller was the Senior Managing Partner and founder of Golenberg &
Geller, Inc., a merchant banking investment company. Mr. Geller
served as Vice Chairman of Gruntal & Co. Inc., an investment
banking firm, from 1988 to 1990. From 1967 until 1988, he was a
Senior Managing Director of Bear Stearns & Co. Inc., an
investment banking firm ("Bear Stearns"). He is currently a
director, and was formerly the interim Co-Chairman of Hexcel
Corporation. Mr. Geller is a director of Value Vision
International, Inc. and serves as Chairman of its Investment
Committee. He also serves on the Boards of Ballantyne of Omaha,
Inc. and Cabletel Communications Corporation. Mr. Geller previously
served on the Boards of Styles -On- Video, Inc. and Dycam, Inc.
Lee Seidler is a private investor. He is affiliated with
Bear Stearns as Managing Director Emeritus. From 1981 to 1989,
he was a Senior Managing Director of Bear Stearns. He is a
director of Synthetic Industries, Inc., The Shubert Organization,
Inc. and The Shubert Foundation. Mr. Seidler is the Chairman of
the Company's Audit Committee.
Lawrence Cohen has served as President and Chief Executive
Officer of the Griffin Group since July 1, 1997. From 1988 to
June, 1997, he served as Executive Vice President and Chief
Financial Officer of the Griffin Group. From 1986 to 1988, he
was Assistant Corporate Controller of Columbia Pictures
Entertainment, Inc. Prior to 1986, Mr. Cohen was with the
accounting firm of Paneth, Haber & Zimmerman. He also served as
a Director of Resorts International Hotel, Inc. from 1994 to
December, 1996. From 1994 until July, 1996, Mr. Cohen served as
a Director of Liberty Broadcasting, Inc., a privately held
broadcasting company. Mr. Cohen is a member of the Company's
Audit and Compensation Committees.
Earl E. Webb is the head of LaSalle Partners' Investment
Banking Group, which provides real estate acquisition,
disposition and financing services to clients that include
domestic and foreign corporations, pension funds, developers and
financial institutions. He serves on the Board of Directors of
LaSalle Partners and as a member of its management. Mr. Webb
serves as the Chairman of the Company's Compensation Committee.
Charles M. Masson is an independent consultant and has been
President of McCloud Partners, a private advisory firm in New
York City since 1993. He served as the Chairman of the Board of
Directors of Cadillac Fairview Corporation Limited, a real estate
management and development company from September, 1994 through
August, 1995, as a director of Salomon Brothers Inc. from 1991
through May, 1993, and as Vice President of Salomon Brothers,
Inc. from 1990 through 1993. Mr. Masson served as a director of
GG&E from November, 1993 until December, 1996. He is also a
director of Color Tile, Inc.
Peter J. Aranow joined the Company as an Executive Vice
President in May, 1993, became Secretary in September, 1993 and
Treasurer in March, 1996. Mr. Aranow also served as Chief
Financial Officer of the Company from May, 1993 until March,
1996. From 1977 to May 1993, he was a Senior Managing Director
in the investment banking department of Bear Stearns specializing
in the gaming industry.
John Groom joined the Company as Executive Vice President,
Operations in January, 1996 and became Chief Operating Officer of
the Company in September, 1996. Mr. Groom has held a number of
executive positions in the gaming industry, including the Caesars
organization, serving as Senior Vice President of Caesars
Atlantic City from May, 1979 through June, 1993.
Henry M. Applegate, III joined the Company as Senior Vice
President and Chief Financial Officer in March, 1996. Mr.
Applegate previously served as Senior Vice President and
Controller of Mirage Resorts, Inc. from September, 1992 until
January, 1996. From January, 1990 until August, 1992, Mr.
Applegate served as Senior Vice President and Chief Operating
Officer of Bally's Casino Resort in Reno, Nevada.
Patrick Madamba, Jr. joined the Company as Vice President
and Associate General Counsel in January, 1995 and became Vice
President and General Counsel to the Company on June 10, 1997.
From May, 1988 through January, 1995, he was associated with the
law firm of Horn, Goldberg. From 1985 through 1988, he held
various positions at the Claridge Casino Hotel in Atlantic City,
New Jersey, including the position of Regulatory Affairs Manager.
Howard Goldberg and Lee Seidler are brothers-in-law.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934
requires the Company's executive officers and directors to file
initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission. Executive officers
and directors are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive
officers and directors, the Company believes that none of its
executive officers and directors failed to comply with Section
16(a) reporting requirements in 1996 except for Marshall Geller,
who filed a late report concerning two transactions.
Item 11. Executive Compensation
Summary Compensation Table
The following summary compensation table sets forth, for the
Company's last three fiscal years, the cash compensation paid by
the Company, as well as certain other compensation paid or
accrued for those years, to Howard Goldberg, the Company's Chief
Executive Officer and to each of the Company's other four most
highly compensated executive officers along with three former
executives as of March 31, 1997 (collectively, the "Named
Executives"):
Summary Compensation Table
Long-Term
Annual Compensation
Compensation
Securities
Name and Fiscal Year Underlying All
Principal Position Ending Salary Bonus Options Other
March 31,(1) Compensation
Edward Fishman 1997 $221,91 - - $2,000,0
Chairman of the 1996 8(1) - - 00(2)
Board 1995 $500,00 - 600,000(3) -
0 -
$500,00
0
Howard Goldberg 1997 $475,00 - 600,000(4) -
President, Chief 1996 0 - - -
Executive Officer 1995 $500,00 $250,00 600,000(3) -
and Director 0 0
$500,00
0
Peter J. Aranow 1997 $300,00 - 150,000(5) -
Executive Vice 1996 0 - 25,000(6) -
President-Finance 1995 $350,00 $150,00 45,000(7) -
0 0
$300,00
0
John Groom 1997 $300,00 - 100,000(8) -
Chief Operating 1996 0 - 100,000(9) -
Officer 1995 $54,918 - - -
(18)
-
Henry M. Applegate, 1997 $200,00 - 50,000(10) -
III 1996 0 - 50,000(11) -
Sr. Vice President 1995 $7,650( - - -
and Chief Financial 18)
Officer -
Patrick Madamba, 1997 $139,82 - 15,000(12) -
Jr. 1996 9 $25,000 7,500(13) -
Vice President and 1995 $127,35 - 15,000(14) -
General Counsel 6
$23,288
(18)
David Fishman 1997 $221,91 - - $2,000,0
Former Vice 1996 8(1) - - 00(2)
Chairman of the 1995 $500,00 - 600,000(3) -
Board 0 -
and Director $500,00
0
Steven P. Perskie 1997 $168,49 - 50,000(15) $56,000(
Former Executive 1996 3(1) - 25,000(16) 19)
Vice President, 1995 $325,00 - 150,000(17) -
General Counsel and 0 -
Director $122,01
9(18)
______________
(1) Reflects compensation through retirement date of September
9, 1996 for Edward and David Fishman and December 2, 1996
for Mr. Perskie.
(2) Pursuant to their retirement agreements, Edward and David
Fishman each received $500,000 in cash in September, 1996
and elected in March, 1997, to receive 301,884 shares each
of Common Stock, with a market value of $1,500,000 at such
time, in lieu of their remaining cash payments of
$1,500,000.
(3) Includes 150,000 shares subject to options granted on April
14, 1994, with an exercise price of $11.50 per share and
450,000 shares subject to options granted on March 1, 1995,
with an exercise price of $16.50 per share. With respect to
each of Edward and David Fishman, 150,000 options to purchase
Common Stock at $11.50 per share and 90,000 options to
purchase Common Stock at $16.50 per share will remain
outstanding for certain specified periods following their
retirement date of September 9, 1996, and the remaining
options depicted above expired unexercised. Mr. Goldberg's
options depicted above are subject to repricing and
cancellation (see "Fiscal 1997 Option Repricing" and
"Retirement, Employment and Change Of Control Agreements ").
(4) Includes 375,000 shares subject to options granted on
September 19, 1996, with an exercise price of $7.70 per share and
225,000 shares subject to options granted on September 19, 1996,
with an exercise price of $8.47 (see "Fiscal 1997 Option Repricing").
(5) Includes 50,000 shares subject to options and 100,000 Stock
Appreciation Rights granted on September 19, 1996, with an
exercise price of $7.70 per share.
(6) Includes 25,000 shares subject to options granted on
November 17, 1995 with an exercise price of $13.56 per
share. The options vest 20% on each of the first through
fifth anniversaries of the date of the grant.
(7) Includes 45,000 shares subject to options granted on April
14, 1994, with an exercise price of $11.50 per share.
The options vest 20% on each of the first and second
anniversaries of the date of the grant, respectively, and the
remaining 60% of the options vest on the third anniversary
of the date of the grant.
(8) Includes 100,000 shares subject to options granted on
September 19, 1996, with an exercise price of $7.00 per share.
The options vest 20% on each of the first through fifth anniversaries
of the date of the grant.
(9) Includes 100,000 shares subject to options granted on
January 24, 1996, with an exercise price of $9.25 per share. The
options vest 20% on each of the first through fifth
anniversaries of the date of the grant.
(10) Includes 50,000 shares subject to options granted on
September 19, 1996, with an exercise price of $7.00 per share.
The options vest 20% on each of the first through fifth
anniversaries of the date of the grant.
(11) Includes 50,000 shares subject to options granted on
March 27, 1996, with an exercise price of $10.00 per share. The
options vest 20% on each of the first through fifth
anniversaries of the date of the grant.
(12) Includes 15,000 shares subject to options granted on
September 19,1996, with an exercise price of $7.70 per share.
The options vest 20% on date of the grant and on each of the first
through fourth anniversaries of the date of grant (see "Fiscal
1997 Option Repricing").
(13) Includes 7,500 shares subject to options granted on November
17, 1995, with an exercise price of $13.56 per share. The
options vest 20% on each of the first through fifth
anniversaries of the date of the grant (see "Fiscal 1997 Option
Repricing").
(14) Includes 15,000 shares subject to options granted on January
23, 1995, with an exercise price of $13.96 per share. The
options vest 20% on each of the first and second anniversaries
of the date of the grant, respectively, and the remaining 60% of
the options vest on the third anniversary of the date of the
grant (see "Fiscal 1997 Option Repricing").
(15) Includes 50,000 shares subject to options granted on
September 19, 1996, with an exercise price of $7.70 per share.
The options vest 20% on date of the grant and on each of the
first through fourth anniversaries of the date of the grant (see
"Fiscal 1997 Option Repricing").
(16) Includes 25,000 shares subject to options granted on
November 17, 1995, with an exercise price of $13.56 per share.
The options vest 20% on each of the first through fifth
anniversaries of the date of the grant (see "Fiscal 1997 Option
Repricing").
(17) Includes 150,000 shares subject to options granted on May 2,
1994, with an exercise price of $13.25 per share. The options
vest 20% on each of the first and second anniversaries of the
date of the grant, respectively, and the remaining 60% of the
options vest on the third anniversary of the date of the
grant (see "Fiscal 1997 Option Repricing").
(18) Represents fiscal year compensation following January 25,
1996 for John Groom, March 18, 1996 for Henry M. Applegate,
III, January 23, 1995 for Patrick Madamba, Jr. and May 2,
1994 for Steven P. Perskie, the dates when each became an
employee of the Company.
(19) Pursuant to Mr. Perskie's retirement agreement, Mr.
Perskie received $48,000 in severance benefits in fiscal
year 1997. An additional $8,000 was received pursuant to
his consulting agreement. Under these agreements with the
Company, Mr. Perskie receives monthly payments of $8,000 and
$2,000 respectively through December, 1998.
No other annual compensation or long-term incentive plan payouts
were paid during the fiscal year ending March 31, 1997.
Stock Option Grants
The following table relates to options granted to the Named
Executives during the fiscal year ended March 31, 1997.
Option/SAR Grants in Last Fiscal Year
Potential
Realizable Value
Individual at Assumed
Grants Annual Rates of
Stock Price
Appreciation for
Option Terms
% of Total
Options Exercise
Options Granted to Price Expiration
Name /SAR Employees Per Date 5% 10%
Granted in Fiscal Share
Year
Edward - - - - - -
Fishman
Howard 375,000 27.34 $7.70 10/1/99 $156,143 $617,340
Goldberg 225,000 16.41 8.47 9/19/01 $104,394 $630,803
Peter J. 50,000 3.65 $7.70 9/19/01 $ 61,699 $178,679
Aranow 100,000 7.29 7.70 9/19/01 $123,397 $357,357
John Groom 100,000 (1) 7.29 $7.00 9/19/02(1) $193,397 $427,357
Henry M. 50,000 (1) 3.65 $7.00 9/19/02(1) $ 96,699 $213,679
Applegate,III
Patrick 15,000 1.09 $7.70 9/19/01 $ 18,510 $ 53,604
Madamba, Jr.
David Fishman - - - - - -
Steven P. 50,000 3.65 $7.70 9/19/01 $ 61,699 $178,679
Perskie
(1) Options vest in 20% increments on each of the first through
fifth anniversaries of September 19, 1996. These options
expire on September 19, 2001, except for the final vested
increment, which expires one year following vesting, on
September 19, 2002.
Stock Option Exercises
The following table relates to options exercised during the
fiscal year ended March 31, 1997 and options outstanding at the
year end.
Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year End Option Value
Shares Number of Value of Unexercised
Acquired Unexercised In-the-Money
on Value Options at Options at March 31,
Name Exercise Realized March 31, 1997 1997(2)
Exercisable Unexercisable Exercisable Unexercisable
Edward
Fishman 301,884 $1,500,000 150,000 - - -
Howard
Goldberg - - 476,250 180,000 - -
Peter J.
Aranow - - 258,000 187,000 - -
John Groom - - 20,000 180,000 - -
Henry M.
Applegate, III - - 10,000 90,000 - -
Patrick
Madamba, Jr. - - 3,000 12,000 - -
David Fishman
301,884 $1,500,000 465,000 - - -
Steven P. - - 10,000 40,000 - -
Perskie
(1) See Note 2 to Summary Compensation Table.
(2) Based upon the aggregate sum of the positive difference
between the Nasdaq National Market closing quotation for the
Common Stock on March 31, 1997 and the exercise price for
each option, no outstanding options have inherent value.
FISCAL 1997 OPTION REPRICING
On September 19, 1996, the Compensation Committee of the
Board of Directors authorized an option repricing and exchange
program concerning certain outstanding stock options of key
employees and executive officers who are critical to the
Company's future success in order to provide a meaningful long-
term incentive compensation opportunity in light of recent
trading prices for the Common Stock. The repricing program was
approved on September 19, 1996 at exercise prices equal to at
least a ten percent (10%) premium above the then-prevailing price
of Common Stock ($7.70 per share, based upon the September 19,
1996 closing quotation of $7.00 for Common Stock on the Nasdaq
National Market). On such date, the Company also authorized new
stock option grants for certain executive officers and key
employees.
Among the Named Executives, the Compensation Committee
authorized Howard Goldberg to exchange stock options to purchase
375,000 shares of Common Stock at an exercise price of $11.83 per
share for 375,000 stock options with an exercise price per share
of $7.70 and stock options to purchase 600,000 shares of Common
Stock at a weighted average exercise price of $15.25 per share
for options to purchase 225,000 shares of Common Stock at $8.47
per share; Patrick Madamba, Jr. to exchange stock options to
purchase 22,500 shares of Common Stock at a weighted average
exercise price of $13.83 per share for options to purchase 15,000
shares of Common Stock at $7.70 per share; and Steven P. Perskie,
former Executive Vice President, General Counsel to exchange
options to purchase 175,000 shares of Common Stock at a weighted
average exercise price of $13.30 per share for options to
purchase 50,000 shares of Common Stock at an exercise price of
$7.70 per share. Excluding Named Executives, the Company
permitted key employees to exchange an aggregate of 270,400 stock
options with exercise prices ranging from $11.17 to $19.75 per
share for an aggregate of 177,300 stock options with an exercise
price of $7.70 per share.
RETIREMENT, EMPLOYMENT, AND CHANGE OF CONTROL AGREEMENTS
Edward Fishman and David Fishman Agreements. On September
9, 1996, the Company announced senior management changes and an
expansion of its Board of Directors, and in connection therewith,
Edward Fishman and David Fishman (the "Fishmans") retired from
the Company and executed separate agreements which became
effective on September 9, 1996 (the "Retirement Agreements").
Each of the Retirement Agreements provide the Fishmans with
severance benefits equal to the salary, bonus and fringe
benefits, perquisites and retirement accruals which approximate
the amounts the Fishmans were entitled to receive during the
succeeding three years assuming employment continued with the
Company and based upon such amounts and benefits paid to each of
the Fishmans for the preceding three years. See Executive
Compensation--Summary Compensation Table. The cash amounts
associated therewith would be payable in four equal installments
of $500,000, less tax withholding, as of September 17, 1996 and
on each of the three succeeding anniversaries (the "Installment
Payments"), subject to acceleration in certain events described
below. The Fishmans each received the first Installment Payment
of $500,000 in September, 1996. With regard to each of the
Fishmans, the Company accelerated the vesting of outstanding
options to purchase 90,000 shares of Company Common Stock at
$11.50 per share, which options were scheduled to vest in full on
April 14, 1997. The Company also agreed that Edward Fishman
could exercise currently exercisable options through September 9,
1997, and that David Fishman could exercise currently exercisable
options for a one-year period following the cessation of
consulting services on March 11, 1997 pursuant to his Retirement
Agreement. The Retirement Agreements also provide for
continuation, at current cost levels, of long-term care insurance
and medical insurance through age 65, with any increases in
future premiums payable by each of the Fishmans.
The Retirement Agreements provide that, subject to the
consent of the Company, each of the Fishmans may request that all
or any unpaid Installment Payment which was due or scheduled to
become due in the future be paid currently in the form of shares
of Common Stock if written notice of such election was delivered
to the Company (which, when given, represented the ("Stock
Election Date") and such election were not revoked prior to the
close of business on the fourth trading day following the Stock
Election Date (the "Stock Payment Date"). Any payment so
authorized by the Company in the form of Common Stock (a "Stock
Payment") would be based upon the following fair market valuation
methodology: the number of shares issuable pursuant to a Stock
Payment shall be determined based on the average reported high
and low trading prices of the Common Stock for each of the five
trading days beginning on the Stock Election Date and ending on
the Stock Payment Date, less applicable tax withholding; and any
Stock Payment which satisfied part of, but not all of, the total
aggregate outstanding Installment Payment deemed to satisfy the
Installment Payment amounts in their reverse order of due date.
In March, 1997 the Fishmans each elected to receive 301,884
shares of Common Stock in lieu of their remaining Installment
Payments of $1,500,000.
The Fishmans have agreed to become subject to certain
confidentiality, non-solicitation and non-competition agreements,
as part of the Retirement Agreements, which prohibit: (i) the
misuse of Company confidential information; (ii) the
solicitation, hiring, or the encouragement of any solicitation or
hiring of any managerial or high-level Company employee for one
year following execution of the Retirement Agreements; and (iii)
competition with the Company within certain geographic limits for
one year following execution of the Retirement Agreements.
Additionally, Edward Fishman has a verbal agreement to waive all
directors fees.
The Company has entered into employment agreements with
three executives, Howard A. Goldberg, Peter J. Aranow and Patrick
Madamba, Jr. ("Employment Agreements"). The Company has entered
into change of control agreements with two executives, Henry M.
Applegate, III and John Groom.
Employment Agreements for Howard A. Goldberg and Peter J.
Aranow. In 1996, the Company entered into new Employment
Agreements with Howard A. Goldberg and Peter J. Aranow to replace
their 1993 agreements. Mr. Goldberg's Employment Agreement
extends to September 30, 1999, and Mr. Aranow's Employment
Agreement extends to September 30, 1998. During the terms of
the respective Employment Agreements, Mr. Goldberg will serve as
Chief Executive Officer of the Company, and Mr. Aranow will serve
as Executive Vice President-Finance and Treasurer of the Company.
Mr. Goldberg's base compensation will be not less than $450,000
per year. Mr. Aranow's base compensation will be not less than
$300,000 per year for the period through March 31, 1997 and
$250,000 for the balance of the term of the Employment Agreement.
The Board may grant discretionary bonuses and stock-based
compensation. The executives, their spouses and dependents will
be provided with welfare and retirement benefit coverages
pursuant to the Employment Agreements.
If the Company terminates an executive's employment without
cause (as defined in the applicable Employment Agreement), for a
reason other than death or disability, or in the event of
constructive termination (as defined in the applicable Employment
Agreement), the executive will be entitled to receive severance
compensation upon his execution of a release of the Company as to
all matters arising in connection with his employment and
termination. If the Employment Agreement expires at the end of
its present term or at the expiration of any renewal and the
Company has not given six months prior notice of its intention
not to renew, the executive will receive severance compensation
upon execution of a release of the Company. The severance
compensation payable upon expiration of Mr. Goldberg's Employment
Agreement on September 30, 1999, or Mr. Aranow's Employment
Agreement on September 30, 1998, will consist of continued base
compensation for a period of six months less the number of months
of non-renewal notice provided by the Company. The severance
compensation payable in the other circumstances described above
will consist of continued base compensation and performance
bonuses for a period of 12 months following his termination of
employment or, if longer, to the end of the term of the
Employment Agreement. The executive may elect to have the
present value of the base compensation payments paid in a lump
sum after his termination of employment. In addition, the
executive will immediately vest in all stock options previously
granted to him and may exercise the options for 12 months
following his date of termination, but in no event beyond the
expiration of the option term; provided, however, that such
accelerated vesting and continued exercisability shall not apply
to the Non-Qualified Stock Option and Stock Appreciation Right
granted to Mr. Aranow on September 19, 1996. The executive will
continue to participate in the Company's applicable employee
benefit programs during the period for which he receives
severance compensation (without regard to whether payments are
made in a lump sum), unless the Company provides him with a
payment equal to the cost of such coverage.
If a change of control occurs and the Company terminates the
executive's employment without cause (including constructive
termination), or, in the case of Mr. Goldberg, if the executive
terminates employment within 180 days following a change of
control because there has been a change of circumstances with the
Company that affects his position or responsibilities such that
he is no longer able to discharge his duties and responsibilities
effectively, the executive will be entitled to receive severance
compensation. In addition, if a change of control occurs and the
executive's employment is terminated without cause (including
constructive termination) within six months before the change of
control, the executive will be entitled to receive severance
compensation. As severance compensation under this paragraph,
the executive will receive a lump sum payment equal to the
present value of the base compensation that would be due him for
a period of 36 months following his termination of employment,
based on his average annual base compensation for the 36-month
period preceding his termination, and a lump sum payment equal to
the present value of the aggregate performance bonuses that he
received for the 36-month period preceding his termination (or,
in the case of Mr. Goldberg, if greater, 150% of the largest
performance bonus paid to him during the 36-month period). The
executive will immediately vest in all stock options previously
granted to him and may exercise the options for 12 months
following his date of termination, but in no event beyond the
expiration of the option term. The executive will continue to
participate in the Company's applicable employee benefit programs
during the period for which he receives severance compensation
(without regard to whether payments are made in a lump sum),
unless the Company provides him with a payment equal to the cost
of such coverage.
The benefits provided under the Employment Agreements in the
event of a change of control are limited by the Internal Revenue
Code parachute provisions. If and to the extent that the
benefits to be provided under the Agreements are considered
"excess parachute payments" under section 280G of the Internal
Revenue Code, the benefits will be reduced to the maximum amount
that may be paid under section 280G without resulting in the
imposition of penalties on "excess parachute payments."
For purposes of the Employment Agreements, the occurrence of
any of the following events will be considered a change in
control: (i) any person (except The Griffin Group, Inc., Company
management as of the effective date of the Agreements, the
Company or any employee benefit plan of the Company), shall
become the beneficial owner of 30% or more of the Company's
voting stock; (ii) consummation by the Company of a merger or
similar transaction with respect to which the persons who were
the beneficial owners of the Company's voting stock immediately
before the transaction do not, following the transaction,
beneficially own more than 50% of the then outstanding shares of
voting stock in substantially the same proportion as their
ownership before the transaction; (iii) a complete liquidation
or dissolution of the Company; (iv) a sale or other disposition
of all or substantially all the assets of the Company other than
to a corporation with respect to which, following such sale or
disposition, more than 50% of the voting stock is owned
beneficially by the persons who were the beneficial owners of the
Company's voting stock immediately before such sale or
disposition in substantially the same proportion as their
ownership before the sale or disposition; (v) individuals who, as
of the beginning of any 24-month period, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any individual who
becomes a director after the beginning of such period and whose
election or nomination was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection
with an actual or threatened Board election contest; or (vi) a
"change in control" (as defined in the form of indenture
governing any indebtedness of the Company) shall have occurred.
If the Company terminates the executive's employment because
of the termination of his license to take part in the casino and
gaming business in any state in which the Company conducts
business, the executive will receive continued base compensation
for six months after his termination (or 12 months if the loss of
license was not the result of an activity that the executive knew
or should have known would result in the loss of his license).
If the executive dies, his base compensation will continue
to be paid for three months following the month of his death. If
the executive is disabled, he will be entitled to benefits
payable under applicable plans of the Company. In the event of
death or disability, the Company will also pay a proportionate
portion of any performance bonus for the year in which his death
or disability occurs or, if performance results are not
available, the applicable portion of the performance bonus paid
to the executive for the prior year.
If the executive voluntarily terminates employment or the
Company terminates his employment for cause, the executive will
be prohibited from engaging in competition with the Company for
one year following such termination. If the executive is
terminated on any other basis resulting in payments under the
Employment Agreement (without regard to whether the payments are
made in a lump sum), the executive will be prohibited from
engaging in competition with the Company for a period equal to
the payment period.
Employment Agreement for Patrick Madamba, Jr. In 1997, the
Company entered into a new Employment Agreement with Patrick
Madamba, Jr. to replace his 1995 agreement. Mr. Madamba's
Employment Agreement extends to January 22, 1999. During the
term of the Employment Agreement, Mr. Madamba will serve as Vice
President and General Counsel of the Company. Mr. Madamba's base
compensation will be not less than $150,000 per year for the
period commencing January 23, 1997 through January 22, 1999. The
Board may grant discretionary bonuses and stock-based
compensation. The executive and his spouse and dependents will
be provided with welfare and retirement benefit coverages
pursuant to the Employment Agreement.
If the Company terminates the executive's employment without
cause (as defined in the Employment Agreement), for a reason
other than death or disability, or in the event of constructive
termination (as defined in the Employment Agreement), the
executive will be entitled to receive severance compensation
consisting of continued base compensation through the end of the
term of the Employment Agreement, payable in a lump sum.
If a change of control occurs and the Company terminates the
executive's employment without cause (including constructive
termination) within two years after the change of control or
within six months before the change of control, the executive
will be entitled to receive severance compensation. As severance
compensation, the executive will receive a lump sum payment equal
to the present value of the base compensation that would be due
him for a period of 36 months following his termination of
employment, based on his average annual base compensation for the
36-month period preceding his termination, and a lump sum payment
equal to the present value of the aggregate performance bonuses
that he received for the 36-month period preceding his
termination. The executive will immediately vest in all stock
options previously granted to him and may exercise the options
for 12 months following his date of termination, but in no event
beyond the expiration of the option term. The executive will
continue to participate in the Company's applicable employee
benefit programs during the period for which he receives
severance compensation (without regard to whether payments are
made in a lump sum), unless the Company provides him with a
payment equal to the cost of such coverage. "Change of control"
has the meaning described in the section above entitled
"Employment Agreements for Howard A. Goldberg and Peter J.
Aranow." The benefits provided under the Employment Agreement in
the event of a change of control are limited by the Internal
Revenue Code parachute provisions, as described in the section
above entitled "Employment Agreements for Howard A. Goldberg and
Peter J. Aranow."
If the executive voluntarily terminates employment with the
Company (unless he terminates employment after the expiration of
the term of the Employment Agreement because of the Company's
failure to renew the Agreement on at least as favorable terms as
the current Agreement), or if the Company terminates the
executive's employment for cause, the executive is prohibited
from engaging in competition with the Company for one year
following such termination.
Change of Control Agreements. The Company has approved a
form of change of control agreement ("Agreements") for two
executives, Henry M. Applegate, III and John Groom, that will
provide severance benefits in the event the executive's
employment is terminated as a result of a change of control of
the Company. If the Company terminates the executive's
employment other than for cause (as defined in the Agreement)
within two years after a change of control or within six months
before a change in control, or if the executive terminates
employment for good reason (as defined in the Agreement) within
such period, the executive will be entitled to receive severance
benefits. The severance benefits include a lump sum payment
equal to the present value of the executive's base compensation
that would be due to him for a period of 36 months following his
termination of employment, based on the executive's average
annual base compensation for the 36-month period preceding his
termination, and a lump sum payment equal to the present value of
the aggregate performance bonuses that the executive received for
the 36-month period preceding his termination. In addition, the
executive will continue to participate in the Company's
applicable employee benefit programs during the period for which
the executive receives severance benefits, unless the Company
provides the executive with a payment equal to the cost of such
coverage. The benefits under the Agreements are limited,
however, by the Internal Revenue Code parachute provisions, as
described in the section above entitled "Employment Agreements
for Howard A. Goldberg and Peter J. Aranow."
For purposes of the Agreements, the occurrence of any of the
change of control events described above under "Employment
Agreements for Howard A. Goldberg and Peter J. Aranow" will be
considered a change of control, unless the Board determines
otherwise before the event occurs. An event may be considered a
change of control for purposes of other plans or agreements of
the Company without being considered a change of control for
purposes of these Agreements.
Upon execution, each form of Agreement will continue through
December 31, 1998; provided that if a change of control occurs
during the term of the Agreement, the Agreement will
automatically continue in effect for 24 months after the month in
which the change of control occurs.
COMPENSATION OF DIRECTORS
Effective October 1, 1996, the Company amended its
compensation package for directors who were not also full-time
employees of the Company ("Non-employee Directors") and
established a reduced annual compensation rate of $25,000 (versus
$40,000), payable in quarterly installments (the "Annual Fee");
established a policy whereby Committee Chairs received a fee of
$5,000 (the "Committee Chair Fee"); awarded a fair market value
stock option grant for 22,500 shares on the date of the grant
(October 1, 1996) to the Non-employee Directors (Messrs. Cohen,
Gallagher, Geller, Masson, Seidler and Webb) reduced the size of
stock option awards (the "Annual Grant") from 22,500 to 5,000
options; and reset the award date for Annual Grants to the date
of election of directors at the Annual Meeting of Stockholders
commencing with the 1997 Annual Meeting of Stockholders. The
Company also established in its stock-based compensation program
for Non-employee Directors an initial grant of 22,500 stock
options exercisable at a price equal to the fair market value
per share of Common Stock on the date of grant for each director
who joined the Board. Fifty (50%) of the October 1, 1996, option
grant will vest as of the date of the grant, with the balance
vesting upon the first re-election to the Board after completion
of the first full year of service as a Director. Future Annual
Grants will be immediately exercisable as of the date of the
grant. In addition, directors are paid an attendance fee of
$1,000 for actual attendance at Board or Committee meetings and
$250 for attendance by telephone at any such meetings. Fees for
Committee meetings are limited to one fee per day, in addition to
any fee for attendance at a Board meeting on that day. The
Company reimburses the directors for reasonable expenses incurred
in attending Board of Committee meetings.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth, as of the close of business
on July 10, 1997, certain information with respect to the
beneficial ownership of Common Stock: (i) by each director and
executive officer of the Company; (ii) by all executive officers
and directors, as a group; and (iii) by each stockholder who was
known to the Company to be the beneficial owner, as defined in
Rule 13d-3 under the Securities Exchange Act of 1934 (the
"Exchange Act"), of more than 5% of the Common Stock. As noted
below, certain ownership information is presented as of December
31, 1996, the last date for reporting significant ownership
positions by certain institutions under Securities and Exchange
Commission ("SEC") rules. Each of the persons listed below has
sole voting and investment power with respect to such shares,
unless otherwise indicated.
NUMBER OF SHARES
BENEFICIALLY PERCENT OF CLASS
NAME OF BENEFICIAL OWNER(1) OWNED BENEFICIALLY
OWNED
The Griffin Group, Inc. 4,267,350(2) 13.10%
Edward Fishman. 1,701,843(3) 5.20%
Thomas Gallagher 1,084,800(4) 3.32%
Howard Goldberg (5) 2.53%
Peter J. Aranow 300,000(6) *
Lawrence Cohen. 232,350(7) *
Marshall S. Geller. 218,377(8) *
Lee Seidler 179,000(9) *
John Groom. 161,500(10) *
Charles M. Masson 11,250(11) *
Earl E. Webb. 11,250(12) *
Henry M. Applegate, III 10,000(13) *
Patrick Madamba, Jr. 3,000(14) *
All directors and executive
officers as a group (12 persons) 4,748,750(15) 13.98%
Legg Mason, Inc.......... 2,521,500(16) 7.74%
Neuberger & Berman, LLC 1,631,300(17) 5.01%
* Less than 1%.
(1) The address of The Griffin Group, Inc. ("Griffin Group") is
780 Third Avenue, Suite 1801, New York, New York 10017. The
address for Thomas Gallagher is c/o Hilton Hotels
Corporation, The Beverly Hilton Hotel, 9876 Wilshire
Boulevard, Beverly Hills, California. The address for
Lawrence Cohen is c/o The Griffin Group, Inc., 780 Third
Avenue, Suite 1801, New York, New York 10017. The address
for Edward Fishman, Howard Goldberg, John Groom, Peter
Aranow, Henry M. Applegate, III and Patrick Madamba, Jr., is
c/o Players International, Inc., 1300 Atlantic Avenue, Suite
800, Atlantic City, New Jersey 08401. The address for
Marshall Geller is c/o Geller & Friend Capital Partners,
Inc., 1875 Century Park East, #2300, Los Angeles, California
90067. The address for Lee Seidler is c/o Bear Stearns &
Co. Inc., 12th Floor - Research, 245 Park Avenue, New York,
New York 10167. All of the individuals named in the table,
except John Groom, Peter J. Aranow, Henry M. Applegate, III
and Patrick Madamba, Jr. are directors of the Company as of
July 10, 1997. The address for Legg Mason is 111 South
Calvert Street, Baltimore, Maryland 21202. The address for
Neuberger & Berman, LLC is 605 Third Avenue, New York, New
York 10158-3698.
(2) Based upon information contained in Amendment No. 3 to
Schedule 13D, dated January 31, 1997, as filed with the SEC.
The holdings do not include the holdings of Lawrence Cohen,
President and Chief Executive Officer of The Griffin Group.
(3) Includes 150,000 shares that are subject to options that are
exercisable within 60 days of July 10, 1997 ("currently
exercisable") and 60,000 shares held in trust in the name of
Edward Fishman's children.
(4) Includes 135,000 shares that are subject to currently
exercisable options.
(5) Includes 36,717 shares held in trust and in the name of Mr.
Goldberg's family members and 476,250 shares that are
subject to currently exercisable options.
(6) Includes 285,000 shares that are subject to currently
exercisable options.
(7) Includes 11,250 shares that are subject to currently
exercisable options.
(8) Includes 152,877 shares that are subject to currently
exercisable options.
(9) Includes 135,000 shares that are subject to currently
exercisable options.
(10) Includes 20,000 shares that are subject to currently
exercisable options and 10,000 shares held in trust for
Mr. Groom's children.
(11) Includes 11,250 shares that are subject to currently
exercisable options.
(12) Includes 11,250 shares that are subject to currently
exercisable options.
(13) Includes 10,000 shares that are subject to currently
exercisable options.
(14) Includes 3,000 shares that are subject to currently
exercisable options.
(15) Includes 1,400,877 shares that are subject to currently
exercisable options.
(16) Reflects holdings as of December 31, 1996 reported in
Schedule 13G filed with the SEC. The beneficial owner's address
is 111 South Calvert Street, Baltimore, Maryland 21202.
Of the shares listed, 2,400,000 shares are held by Legg
Mason Special Investment Trust, Inc., with Legg Mason Fund
Advisor, Inc. having power to dispose
thereof. The remaining shares are held by various clients of
Legg Mason Managed Investment Portfolio and Legg Mason Capital
Management, Inc., which have power to dispose thereof.
(17) Reflects holdings as of December 31, 1996 reported in
Amendment No. 1 to Schedule 13G filed with the SEC. The
beneficial owner's address is 605 Third Avenue, New York, New
York 10158-3698. Includes 49,000 shares subject to sole voting
power, 1,545,000 shares subject to shares voting power and
1,631,000 shares subject to sole dispositive power.
Item 13. Certain Relationships and Related Transactions
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On December 31, 1996, a license (the "Griffin License")
expired between the Company and The Griffin Group, a company
controlled by Mr. Merv Griffin, a major stockholder of the
Company, under which Mr. Griffin acted as the public
representative for all of the Company's riverboat and dockside
casinos. In addition, Mr. Griffin provided other services,
principally of a promotional nature. The Company's right to Mr.
Griffin's services was exclusive in the riverboat and dockside
casino industry, with certain exceptions related to Mr. Griffin's
other casino interests.
In consideration of Mr. Griffin's services under the Griffin
License, the Company, in 1992, issued to The Griffin Group
warrants to purchase 2.1 million shares of Common Stock at an
exercise price of $2.67 per share (on a split-adjusted basis).
The warrants were exercised in November and December, 1996. In
addition, the Griffin License required the Company to pay annual
fees to The Griffin Group for each riverboat casino facility tied
to the respective casino's earnings fiscal year before
depreciation, interest and taxes ("EBDIT") for the year. The fee
was not payable with respect to the Metropolis facility and the
Company's original riverboat at the Lake Charles facility, the
Players Lake Charles Riverboat, through December 31, 1996. The
Griffin Group was also entitled to reimbursement of certain
expenses and indemnification against certain claims. Mr. Griffin
was also entitled to additional compensation, as negotiated in
good faith, if he hosted, produced or performed in any shows at a
Company casino.
Subsequent to the end of fiscal year 1996, the Company and
The Griffin Group entered into an agreement to modify the Griffin
License to reflect the extension of its terms to the Company's
second riverboat casino in Lake Charles, the Star Riverboat, and
its land-based casino in Mesquite effective as of the opening of
each facility. The EBDIT fees that would have been payable with
respect to these two additional facilities were replaced with one
lump-sum payment of approximately $300,000 for Mr. Griffin's
services at these facilities through the period ending December
31, 1996.
CERTAIN TRANSACTIONS
During the year ended March 31, 1997, the Company purchased
approximately $312,000 in merchandise from Marketing Innovations
International, Inc. ("MII"). Edward and David Fishman, along
with their brother, Stanley Fishman (who resigned as a director
of the Company effective March 31, 1994), own a majority of the
common stock of MII. In the opinion of the Company, the
merchandise purchased from MII, was acquired in arms-length
transactions at prices comparable to that which could have been
obtained from unaffiliated vendors for comparable merchandise.
