<PAGE> 1
CROWN CASINO CORPORATION
4040 NORTH MACARTHUR BOULEVARD, SUITE 100
IRVING, TEXAS 75038
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 4, 1996
To the Holders of Common Stock of
Crown Casino Corporation
Notice is hereby given that the Annual Meeting of Stockholders of Crown
Casino Corporation, a Texas corporation (the "Company"), will be held in
accordance with its Bylaws at the Four Seasons Hotel and Resort, 4150 North
MacArthur Boulevard, Irving, Texas 75038, on Friday, October 4, 1996, at 9:30
a.m., local time, for the following purposes:
(a) To elect seven directors to serve for a term of one year and until
their successors have been elected and qualified; and
(b) To conduct such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record as of the close of business on August 16, 1996,
will be entitled to notice of and to vote at said meeting or any adjournment
thereof.
By Order of the Board of Directors.
/s/ EDWARD R. MCMURPHY
Edward R. McMurphy
Chairman of the Board,
President and Chief Executive Officer
August 26, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU
ARE URGED TO COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE
ACCOMPANYING RETURN ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED BY THE SENDER
IF MAILED WITHIN THE UNITED STATES.
<PAGE> 2
CROWN CASINO CORPORATION
4040 NORTH MACARTHUR BOULEVARD, SUITE 100
IRVING, TEXAS 75038
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 4, 1996
---------------------
PROXY STATEMENT
---------------------
SOLICITATION OF PROXIES
This Proxy Statement, which is first being mailed to stockholders on or
about August 26, 1996, is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of Crown Casino Corporation
(the "Company"), for use at the Annual Meeting of Stockholders of the Company
(the "Annual Meeting") to be held at the Four Seasons Hotel and Resort, 4150
North MacArthur Boulevard, Irving, Texas 75038, on Friday, October 4, 1996, at
9:30 a.m., local time, and at any or all adjournments thereof. The address of
the principal executive offices of the Company is 4040 North MacArthur
Boulevard, Suite 100, Irving, Texas 75038 and the Company's telephone number at
such address is (214) 717-3423.
The total cost of this solicitation will be borne by the Company. In
addition to the U.S. mail, proxies may be solicited by officers and regular
employees of the Company, without remuneration, by personal interviews,
telephone and facsimile. It is anticipated that banks, brokerage houses and
other custodians, nominees and fiduciaries will forward soliciting material to
beneficial owners of stock entitled to vote at the Annual Meeting.
Any person giving a proxy pursuant to this Proxy Statement may revoke it at
any time before it is exercised at the Annual Meeting by notifying in writing
the Secretary of the Company, Mark D. Slusser, at the offices of the Company,
4040 North MacArthur Boulevard, Suite 100, Irving, Texas 75038, prior to the
Annual Meeting date. In addition, if the person executing the proxy is present
at the Annual Meeting, he may, but need not, revoke the proxy, by notice of such
revocation to the Secretary of the Annual Meeting, and vote his shares in
person. Proxies in the form enclosed, if duly signed and received in time for
voting, and not so revoked, will be voted at the Annual Meeting in accordance
with the instructions specified therein. Where no choice is specified, proxies
will be voted FOR the election of the nominees for director named herein and, on
any other matters presented for a vote, in accordance with the judgment of the
persons acting under the proxies. Abstentions and broker non-votes will not be
counted as votes either in favor of or against the matter with respect to which
the abstention or broker non-vote relates; however, with respect to any proposal
other than the election of directors, abstentions and broker non-votes would
have the effect of a vote against the proposal.
Only stockholders of record at the close of business on August 16, 1996
will be entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof. Each share of common stock issued and outstanding on such
record date is entitled to one vote. As of August 16, 1996, the Company had
outstanding 11,344,559 shares of common stock.
<PAGE> 3
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 16, 1996,
with respect to ownership of the outstanding common stock by (i) all persons
known to the Company to own beneficially more than five percent (5%) of the
outstanding common stock of the Company (whose address is shown), (ii) each
director and nominee for director of the Company, (iii) each of the executive
officers of the Company named in the Summary Compensation Table on page 5, and
(iv) all directors and executive officers as a group. Unless otherwise
indicated, each person possesses sole voting and investment power with respect
to the shares owned by him.
<TABLE>
<CAPTION>
Number of Shares Percent
Name Beneficially Owned of Class
---- ------------------ --------
<S> <C> <C>
Robert J. Kehl 1,061,667(1) 9.3%
Third Street, Ice Harbor
Dubuque, Iowa 52004
Edward R. McMurphy 775,476(2) 6.7%
4040 N. MacArthur Blvd
Suite 100
Irving, Texas 75038
Gerald L. Adams 557,500(3) 4.9%
Tilman J. Falgout, III 519,000(4) 4.5%
Gerard M. Jacobs 343,061(5) 3.0%
John David Simmons 42,150(6) *
David J. Douglas 35,000(7) *
Mark D. Slusser 50,000(8) *
All Directors and Executive 3,383,854(9) 27.9%
Officers as a Group (8 persons)
</TABLE>
- - ---------------
* Less than 1%.
(1) Includes 956,667 shares and 100,000 shares subject to a presently
exercisable stock purchase warrant, all issued in the name of Kehl River
Boats, Inc., of which Mr. Kehl is president and a principal shareholder.
Also includes 5,000 shares subject to non-qualified stock options.
(2) Includes 292,143 shares subject to presently exercisable incentive stock
options.
(3) Includes 7,500 shares subject to non-qualified stock options.
(4) Includes 32,500 shares subject to non-qualified stock options, 70,000
shares subject to presently exercisable incentive stock options, and
400,000 shares held in a corporation controlled by Mr. Falgout.
(5) Includes 2,300 shares held by a corporation controlled by Mr. Jacobs,
110,000 shares owned by Mr. Jacobs' spouse, 127,981 shares subject to
presently exercisable stock purchase warrants, and 5,000 shares subject to
non-qualified stock options.
(6) Includes 40,000 shares subject to non-qualified stock options.
(7) Includes 35,000 shares subject to non-qualified stock options.
(8) Includes 50,000 shares subject to presently exercisable incentive stock
options.
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(9) Includes an aggregate of 765,124 shares subject to presently exercisable
stock options and/or warrants held by certain of the Company's directors and
executive officers, or corporations over which they have significant
influence, 402,300 shares held in corporations controlled by certain
directors, 956,667 shares issued in the name of Kehl River Boats, Inc. of
which a director is president and a principal shareholder, and 110,000
shares owned by a spouse of a director.
AGENDA ITEM ONE
ELECTION OF DIRECTORS
Pursuant to the Bylaws of the Company, the Board of Directors has set the
number of directors for the ensuing year at seven, all of whom are proposed to
be elected at the Annual Meeting. In the event any nominee is unable or declines
to serve as a director at the time of the meeting, the persons named as proxies
therein will have discretionary authority to vote the proxies for the election
of such person or persons as may be nominated in substitution by the present
Board of Directors. Management knows of no current circumstances which would
render any nominee named herein unable to accept nomination or election.
Directors shall be elected by a plurality of the votes cast by the holders of
shares entitled to vote in the election of directors at a meeting of
shareholders at which a quorum is present.
Members of the Board of Directors are elected annually to serve until the
next annual meeting of stockholders and until their successors are elected and
qualified.
The following persons have been nominated for election to the Board of
Directors.
EDWARD R. MCMURPHY, age 45, has served as President of the Company since
July 1984, as Chief Executive Officer since January 1988 and as Chairman of the
Board of the Company since September 1993. He has been a director of the Company
since its inception in April 1983. Prior to and during his involvement with the
Company, Mr. McMurphy served as President of Marion Properties, Inc., a real
estate development company, from 1979 to June 1986.
TILMAN J. FALGOUT, III, age 47, has served as Executive Vice President and
General Counsel of the Company since March 1995 and as a director of the Company
since September 1992. From 1978 until June 1995, Mr. Falgout was a partner in
the law firm of Stumpf & Falgout, Houston, Texas.
JOHN DAVID SIMMONS, age 60, has served as a director of the Company since
August 1986. Since 1970, he has been President of Condomart, Inc., a marketing
consulting firm specializing in real estate marketing. Mr. Simmons is also
President of Simmons & Associates, Inc., a real estate development company, and
Management Resources Company, a management consulting firm.
DAVID J. DOUGLAS, age 32, has served as managing director of Triple S
Capital Corporation (investment banking firm) since February 1993. From July
1989 through January 1993, Mr. Douglas served as Vice President of Hatchett
Capital Group, Inc. (investment banking firm). From 1986 through 1988, Mr.
Douglas was employed by Paine Webber Incorporated, where he was promoted to
Associate in 1988. Mr. Douglas has served as a director of the Company since
September 1992.
GERALD L. ADAMS, age 61, has been an entrepreneur for the past 30 years,
starting, developing and operating a number of businesses primarily related to
the shipping, trucking, and more recently, real estate industries. Mr. Adams
currently owns and operates several companies, including TriRiver Dock, Inc.
(stevedoring), Clover Ridge Estates, Inc. (residential construction), Barge
Terminal Trucking, Inc. (trucking) and Adams Enterprises, Inc. (trucking and
crane services). Mr. Adams has served as a director of the Company since October
1993.
GERARD M. JACOBS, age 41, has been President, Chief Executive Officer and a
Director of Metal Management, Inc., a company specializing in scrap metal, since
January 1996 and has been the owner and President of Environmental Waste Funding
Corporation, a company specializing in landfill development and finance, since
1991. From 1988 to 1991, Mr. Jacobs specialized in landfill development and
finance as a sole proprietor. Mr. Jacobs is also a director and a substantial
stockholder of Casper & Associates, Inc., an engineering firm specializing in
fiber optic communications. From 1983 to 1988, Mr. Jacobs developed
3
<PAGE> 5
resource recovery, landfill and hydroelectric projects for the investment
banking firm of Russell, Rea & Zappala, Inc., Pittsburgh, Pennsylvania. From
1978 to 1983, Mr. Jacobs practiced securities, corporate and banking law with
the law firms of Reed, Smith, Shaw & McClay and Manion, Alder & Cohen, P.C.,
Pittsburgh, Pennsylvania. Mr. Jacobs has been a director of the Company since
September 1994.
ROBERT J. KEHL, age 61, has been an entrepreneur for the past 35 years,
starting, developing and operating businesses primarily in the riverboat
construction, gaming, riverboat touring and restaurant industries. Since 1993,
Mr. Kehl has served as president of Kehl River Boats, Inc., a riverboat
construction firm in Houma, Louisiana. Mr. Kehl, through companies owned or
controlled by him, has built several riverboat vessels, many of which have been
sold for use as riverboat gaming vessels. Mr. Kehl currently has interests in
several companies involved in gaming and riverboat construction or operation.
Mr. Kehl has been a director of the Company since September 1994.
COMMITTEES OF THE BOARD AND ATTENDANCE
The Board of Directors of the Company presently has the following standing
committees:
(A) the Audit Committee is currently comprised of Messrs. Douglas, Kehl and
Jacobs. The Audit Committee, which held one meeting during the Company's last
fiscal year, is authorized to nominate the Company's independent auditors and to
review with the independent auditors the scope and results of the audit
engagement.
(B) the Compensation and Stock Option Committee, currently comprised of
Messrs. Adams, Douglas and Simmons. This Committee, which held four meetings
during the Company's last fiscal year, recommends compensation levels for
executive officers of the Company, and is authorized to consider and make grants
of options pursuant to the Company's 1986 Incentive Stock Option Plan and 1991
Non-Qualified Stock Option Plan and to administer such plans.
During the Company's last fiscal year, the Board of Directors held seven
meetings and took action one time by unanimous written consent. Each incumbent
director attended at least 75% of the aggregate number of meetings held by the
Board and by the Committees of the Board on which he served.
The Company does not have a Directors Nominating Committee, such function
being reserved to the entire Board of Directors.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, certain officers, and persons who own more than 10% of the
outstanding common stock of the Company, to file with the Securities and
Exchange Commission reports of changes in ownership of the common stock of the
Company held by such persons. Officers, directors and greater than 10%
stockholders are also required to furnish the Company with copies of all forms
they file under this regulation. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company, during the fiscal
year ended April 30, 1996, all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% stockholders were complied with,
except as follows: Messrs. Douglas, Jacobs, Simmons, Adams and Kehl, directors
of the Company, each filed one report on Form 5 late, reporting one transaction
(option grant); and Mr. McMurphy, Chairman of the Board, President and Chief
Executive Officer, filed one report on Form 4 late, reporting one transaction.
4
<PAGE> 6
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the
Company to or on behalf of the Company's Chief Executive Officer and any other
executive officer whose salary and bonus, if any, for fiscal 1996 exceeded
$100,000 (the "Named Executive Officers") for the years ended April 30, 1996,
1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
- - ----------------------------------------------------------------------------------------------------
Name and Fiscal Other Annual
Principal Position Year Salary Bonus Compensation Stock Options
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward R. McMurphy 1996 $304,583 $175,000 -- --
Chief Executive Officer 1995 162,500 70,000 -- 250,000
and President 1994 156,410 100,000 -- 275,000
Tilman J. Falgout, III(1) 1996 $201,667 $225,000(2) -- --
Executive Vice President 1995 -- -- -- 125,000
and General Counsel
Mark D. Slusser 1996 $148,542 $ 87,500 -- --
Chief Financial Officer, 1995 82,500 15,000 -- 50,000
Vice President Finance 1994 80,000 20,000 -- 75,000
and Secretary
</TABLE>
- - ---------------
(1) Mr. Falgout was employed by the Company on March 9, 1995.
(2) Includes a $100,000 payment intending to reimburse Mr. Falgout for his
losses and expenses incurred in resigning from a law firm in Houston, Texas
and relocating to Dallas, Texas.
SEVERANCE AGREEMENTS
In July 1996, the Board of Directors authorized the Company to enter into
severance agreements with each of Mr. McMurphy, Mr. Falgout and Mr. Slusser,
which agreements shall provide that in the event of a sale, merger,
consolidation, change in control, or liquidation of the Company, or similar
extraordinary corporate transaction causing a change in control, each such
officer shall be entitled to 2.99 times the annual compensation paid to the
executive as well as accelerated vesting of options under the Company's
incentive stock option plan.
STOCK OPTION PLAN
In 1986 the Board of Directors adopted the Company's 1986 Incentive Stock
Option Plan ("1986 Plan") which was approved by the Company's stockholders.
Pursuant to the 1986 Plan, options to purchase shares of the Company's common
stock may be granted to employees of the Company, including the Named Executive
Officers. During the fiscal year ended April 30, 1996 no options were granted
under the 1986 Plan.
The following table provides certain information concerning each exercise
of stock options under the Company's stock option plans during the fiscal year
ended April 30, 1996, by the Named Executive Officers
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<PAGE> 7
and the fiscal year-end value of unexercised options held by such persons under
the Company's stock option plans:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised
Options at Fiscal Options at Fiscal
Year-End Year-End
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable(1)
- - ------------------- --------------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
Edward R. McMurphy -- -- 267,143/150,000 $ 202,333/$ --
Tilman J. Falgout,
III.............. -- -- 82,500/ 75,000 18,828/ --
Mark D. Slusser.... 18,000 $52,819 50,000/ -- -- / --
</TABLE>
- - ---------------
(1) The market value of the Company's common stock on April 30, 1996 was $2.00
per share, and options to purchase 194,643 shares held by the above
officers were in-the-money. The actual value, if any, an executive may
realize will depend upon the amount by which the market price of the
Company's common stock exceeds the exercise price when the options are
exercised.
DIRECTOR COMPENSATION
Effective May 1, 1995, non-employee directors of the Company receive a
$20,000 annual retainer, $1,500 per Board meeting attended in person, and $500
per Committee meeting attended in person. Directors who are also employees of
the Company do not receive separate compensation for their services as a
director. In February 1991, the Board of Directors adopted the Company's 1991
Non-Qualified Stock Option Plan ("Non-Qualified Plan"), which was approved by
the Company's stockholders in September 1991, pursuant to which options to
purchase shares of the Company's common stock may be granted to directors,
officers and key employees of the Company, including non-employee directors. On
the last business day of February in each year, each then non-employee director
of the Company is automatically granted an option to purchase 2,500 shares of
common stock at an exercise price equal to the fair market value of such stock
on the date of grant. However, pursuant to the terms of the Non-Qualified Plan,
no options may be granted after February 1996. Options granted under the Plan
are exercisable for a period of up to ten years. In the event that a director
ceases to be a director of the Company for any reason, options granted to the
director will expire upon the earlier to occur of (1) the tenth anniversary of
the date of grant of the option, or (2) ninety days following the date on which
such director ceased to be a director.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following Report of the
Compensation and Stock Option Committee on Executive Compensation and the
Stockholder Return Performance Graph shall not be incorporated by reference into
any such filings.
6
<PAGE> 8
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The Board of Directors of the Company has a Compensation and Stock Option
Committee ("Compensation Committee") which recommends compensation levels for
the executive officers of the Company, including the Chief Executive Officer,
and is authorized to consider and make grants of options pursuant to the
Company's Incentive Stock Option Plan and Non-Qualified Stock Option Plan and to
administer such plans. The Compensation Committee held four meetings during
fiscal 1996.
During fiscal 1996 the Company had three executive officers, including
Edward R. McMurphy, President and Chief Executive Officer; Tilman J. Falgout,
III, Executive Vice President and General Counsel; and Mark D. Slusser, Chief
Financial Officer, Vice President Finance and Secretary. The Company had an
employment agreement with Mr. McMurphy which terminated on December 31, 1995,
providing for an annual base salary of not less than $125,000 and awarding
incentive stock options to Mr. McMurphy to purchase 30,000 shares, which options
vested over a period of three years. The compensation of Mr. McMurphy as Chief
Executive Officer contained in his employment agreement was based upon
negotiations between Mr. McMurphy and the Board of Directors, in light of
existing economic conditions generally and with respect to the Company's
industry.
Effective September 1, 1995 Mr. McMurphy's salary was set at $350,000 per
annum by the Board of Directors, upon recommendation of the Compensation
Committee. In determining such salary the Compensation Committee reviewed
compensation levels of other chief executive officers in the gaming industry and
considered Mr. McMurphy's recent performance. In particular the Compensation
Committee considered Mr. McMurphy's success at leading the Company's Louisiana
riverboat casino project in an unstable and highly competitive environment.
Effective August 1, 1996 the Board of Directors, upon recommendation of the
Compensation Committee, adjusted Mr. McMurphy's salary to $300,000 per annum as
part of a more complete compensation package that established an ongoing bonus
program (discussed below) which is tied to financial performance of the Company.
The Compensation Committee considers from time to time the payment of
bonuses to the executive officers in light of the performance of the Company and
the effort made by the executive officers to promote the Company's business. In
July 1996, the Board of Directors, with the approval of the Compensation
Committee, approved a bonus to the Named Executive Officers in connection with
their efforts and success in completing the sale of 50% of the Company's St.
Charles Gaming Company, Inc. subsidiary ("SCGC") in June 1995 and the sale of
the remaining 50% interest in SCGC in May 1996. The bonus was equal to the then
current annual salary for each of Mr. McMurphy ($350,000), Mr. Falgout
($250,000) and Mr. Slusser ($175,000). One-half of the bonus amount was paid for
the fiscal year ended April 30, 1996 and the other 50% was earned in May 1996 at
the time of the sale of the remaining 50% interest in SCGC.
The Board of Directors further authorized and adopted an annual bonus plan
beginning with the fiscal year ending April 30, 1997 for the executive officers
of the Company. The aggregate bonus amount shall be equal to five percent of the
Company's consolidated earnings before income taxes (before the bonus
calculation), calculated in accordance with generally accepted accounting
principles. With respect to the fiscal year ending April 30, 1997, the
calculation of the bonus shall not include the May 1996 gain from the sale of
the remaining 50% interest of SCGC and the related management bonus.
In July 1996, the Board of Directors also authorized the Company to enter
into severance agreements with each of Mr. McMurphy, Mr. Falgout and Mr.
Slusser, which agreements shall provide that in the event of a sale, merger,
consolidation, change in control, or liquidation of the Company, or similar
extraordinary corporate transaction causing a change in control, each such
officer shall be entitled to 2.99 times the annual compensation paid to the
executive as well as accelerated vesting of options under the Company's
incentive stock option plan.
The Compensation Committee believes that the foregoing agreements are
reasonable and competitive compensation packages in the gaming industry
necessary in order for the Company to retain the management expertise it needs.
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<PAGE> 9
The Compensation Committee takes action from time to time, based upon
guidelines and recommendations provided by the Board of Directors, to provide
additional incentive compensation to the executive officers and other employees
through the award of stock options under the Company's existing stock option
plans. During fiscal 1996, the Company did not make an award of stock options to
purchase shares of the Company's common stock to employees of the Company.
The Company's future compensation policies will be developed in light of
the Company's financial position and results of operations and with the goal of
rewarding members of management for their contributions to the Company's
success.
DAVID J. DOUGLAS JOHN DAVID SIMMONS GERALD L. ADAMS
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<PAGE> 10
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the fiscal year end percentage
change in the cumulative total stockholder return on the Company's common stock
against (i) the cumulative total return of the CRSP Total Return Index for the
NASDAQ Stock Market (U.S. companies) and (ii) a "peer group" index created by
the Company for the period of five fiscal years commencing on May 1, 1991 and
ending on April 30, 1996. The "peer group" index consists of the common stock of
Grand Casinos, Inc., Argosy Gaming Company, Mirage Resorts, Incorporated,
Harrah's Entertainment, Inc., Players International, Inc., Casino Magic Corp.,
President Riverboat Casinos, Inc., Circus Circus Enterprises, Inc., Showboat,
Inc., and Rio Hotel & Casino, Inc. These corporations are involved in various
aspects of the gaming industry, which the Company believes is a more appropriate
comparative index. The graph assumes that the value of the investment in the
Company's common stock and each index was $100 on May 1, 1991.
[GRAPH]
<TABLE>
<CAPTION>
Measurement Period Company
(Fiscal Year Covered) Index Market Index Peer Index
<S> <C> <C> <C>
4/30/91 100.0 100.0 100.0
4/30/92 89.5 121.2 151.8
4/30/93 94.7 139.4 256.8
4/30/94 1,273.7 155.1 268.6
4/29/95 821.1 180.3 299.1
4/28/96 326.3 257.0 387.1
</TABLE>
The dollar value at April 30, 1996 of $100 invested in the Company's common
stock on May 1, 1991 was $326.32, compared to $387.14 for the peer group
described above, and $257.03 for the CRSP Total Return Index for the Nasdaq
Stock Market (U.S. companies).
9
<PAGE> 11
CERTAIN TRANSACTIONS
During fiscal 1996, Tilman J. Falgout, III, presently Executive Vice
President and General Counsel and director of the Company, was a partner in the
law firm of Stumpf & Falgout, Houston, Texas, which receives fees from the
Company for legal services rendered on its behalf. During fiscal 1996, such firm
earned fees totaling approximately $121,000 for services rendered to the
Company.
On June 11, 1996, the Company entered into a definitive Asset Purchase
Agreement to acquire the assets and operations of Mississippi Belle II, Inc.
("MBII"), which owns a riverboat casino in Clinton, Iowa, for a purchase price
of $40 million. The principal shareholders of MBII are the adult children of
Robert J. Kehl, a director of the Company. In connection with the agreement, the
Company is expected to enter into employment agreements with certain members of
the Kehl family (other than Robert J. Kehl) whereby MBII's existing management
will continue to operate the Clinton, Iowa facility. Closing of the transaction
is subject to certain conditions including obtaining the approval of the Iowa
Racing and Gaming Commission.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand L.L.P. served as the Company's independent auditors for
the fiscal year ended April 30, 1996. The Company has not as yet executed an
engagement letter with Coopers & Lybrand L.L.P. with respect to auditing the
Company's financial statements for the fiscal year ending April 30, 1997, but
expects to do so in due course.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting, will have an opportunity to make a statement, and will be
available to respond to appropriate questions which stockholders might have. The
Company knows of no direct or indirect material financial interest or
relationship that members of this firm have with the Company.
REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended April
30, 1996, as filed with the Securities and Exchange Commission, is available to
stockholders who make written request therefor to the Secretary of the Company,
Mark D. Slusser, at the offices of the Company, 4040 North MacArthur Boulevard,
Suite 100, Irving, Texas 75038. Copies of exhibits filed with that report or
referenced therein will be furnished to stockholders of record upon request and
payment of the Company's expenses in furnishing such documents.
STOCKHOLDER PROPOSALS
Any proposal to be presented at next year's Annual Meeting must be received
at the principal executive offices of the Company not later than April 27, 1997,
directed to the attention of the Secretary, for consideration for inclusion in
the Company's proxy statement and form of proxy relating to that meeting. Any
such proposals must comply in all respects with the rules and regulations of the
Securities and Exchange Commission.
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<PAGE> 12
OTHER MATTERS
Management does not know of any matter to be brought before the meeting
other than those referred to above. If any other matter properly comes before
the meeting, the persons designated as proxies will vote on each such matter in
accordance with their best judgment.
By Order of the Board of Directors.
/s/ EDWARD R. MCMURPHY
Edward R. McMurphy
Chairman of the Board,
President and Chief Executive Officer
August 26, 1996
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<PAGE> 13
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
CROWN CASINO CORPORATION
The undersigned stockholder(s) of Crown Casino Corporation, a Texas
corporation, hereby appoints Edward R. McMurphy and Mark D. Slusser, and each
of them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the 1996 Annual Meeting of Stockholders of Crown Casino
Corporation to be held on Friday, October 4, 1996 at 9:30 a.m. local time at
the Four Seasons Hotel and Resort, 4150 North MacArthur Boulevard, Irving,
Texas 75038, to vote the shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set forth
below:
(1) To elect seven directors for a term of one year and until their
successors are elected and qualified:
[ ] FOR all nominees listed below (except as indicated to
the contrary below)
[ ] AGAINST AUTHORITY to vote for all nominees
Edward R. McMurphy Tilman J. Falgout, III
John David Simmons Gerald L. Adams
David J. Douglas Gerard M. Jacobs
Robert J. Kehl
If you wish to withhold authority to vote for any individual
nominee(s), write the name(s) on the line below:
- - --------------------------------------------------------------------------------
(2) In their discretion, upon such other matter or matters which may
properly come before the meeting or any adjournment or adjournments
thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. This proxy, when
properly executed, will be voted in accordance with directions given by the
undersigned stockholder. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR
PROPOSAL 1 AND AS THE PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING.
Dated_____________________________, 1996
________________________________________
Signature
________________________________________
Signature
(This Proxy should be marked, dated, and
signed by the stockholder(s) exactly as
his or her name appears hereon, and
returned promptly in the enclosed
envelope. Persons signing in a
fiduciary capacity should so indicate.
If shares are held by joint tenants or
as community property, both should
sign.)
