<PAGE>
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:
[_] 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 (S)240.14a-11(c) or (S)240.14a-12
CASINO AMERICA, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] 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>
CASINO AMERICA, INC.
711 WASHINGTON LOOP
BILOXI, MISSISSIPPI 39530
(601) 436-7000
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on November 14, 1996
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Casino America, Inc., a Delaware corporation (the "Company"),
will be held on Thursday, November 14, at 10:00 a.m., Pompano Beach, Florida
time, at Pompano Park, 1800 S.W. 3rd Street, Pompano Beach, Florida, 33069,
for the following purposes, all of which are set forth more completely in the
accompanying proxy statement:
(1) To elect six persons to the Company's Board of Directors;
(2) To approve an amendment to the Company's 1992 Stock Option Plan to
increase the number of shares of the Company's common stock reserved for
issuance thereunder from an aggregate of 708,750 shares to an aggregate of
1,058,750 shares;
(3) To approve an amendment to the Company's 1993 Stock Option Plan to
increase the number of shares of the Company's common stock reserved for
issuance thereunder from an aggregate of 850,000 shares to an aggregate of
1,200,000 shares;
(4) To approve the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending April 30, 1997; and
(5) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Pursuant to the Company's by-laws, the Board of Directors has fixed the
close of business on October 15, 1996, as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting. A proxy statement with respect to the Annual Meeting accompanies and
forms a part of this Notice. The Annual Report of the Company for the fiscal
year ended April 30, 1996 also accompanies this Notice.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH
DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS,
Bernard Goldstein, Chairman and
Chief Executive Officer
Biloxi, Mississippi
October 17, 1996
<PAGE>
CASINO AMERICA, INC.
711 WASHINGTON LOOP
BILOXI, MISSISSIPPI 39530
(601) 436-7000
----------------
PROXY STATEMENT
----------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Casino America, Inc., a Delaware corporation (the
"Company"), of proxies for use at the Annual Meeting of Stockholders of the
Company to be held on November 14, 1996, beginning at 10:00 a.m., Pompano
Beach, Florida time, at Pompano Park, 1800 S.W. 3rd Street, Pompano Beach,
Florida, 33069, and at any adjournment(s) thereof. The approximate date on
which this Proxy Statement and the enclosed proxy are first being mailed to
stockholders is October 17, 1996.
VOTING RIGHTS AND PROCEDURES
The Company's common stock, $.01 par value per share (the "Common Stock"),
is the only issued and outstanding class of stock. At the close of business on
July 31, 1996, the Company had outstanding 22,572,751 shares of Common Stock
(each, a "Share"). Each Share entitles the holder thereof to one vote on each
matter submitted to a vote of stockholders. Only holders of record of the
Common Stock on October 15, 1996 (the "Record Date"), are entitled to notice
of and to vote at the Annual Meeting or any adjournment(s) thereof.
Shares represented by an effective proxy given by a stockholder will be
voted as directed by the stockholder. A stockholder who submits a proxy on the
accompanying form has the right to revoke it at any time prior to its use by
(i) delivering a written notice to the Secretary of the Company, (ii)
executing a later-dated proxy or (iii) attending the Annual Meeting and voting
in person. The form of proxy provides a space for stockholders to withhold
their vote for any proposal. Stockholders are urged to indicate their vote on
each matter in the space provided. If a properly executed proxy form is
returned to the Company and no space is marked, it will be voted by the
persons therein named at the meeting: (i) for the election of the directors
recommended by the Board of Directors; (ii) to approve an amendment to the
Company's 1992 Stock Option Plan (the "1992 Plan") to increase the number of
shares of the Company's common stock reserved for issuance thereunder from an
aggregate of 708,750 shares to an aggregate of 1,058,750 shares; (iii) to
approve an amendment to the Company's 1993 Stock Option Plan (the "1993 Plan"
and together with the 1992 Plan, the "Option Plans") to increase the number of
shares of the Company's common stock reserved for issuance thereunder from an
aggregate of 850,000 shares to an aggregate of 1,200,000 shares; (iv) for the
selection of Ernst & Young LLP ("Ernst & Young") as the Company's independent
auditors for the fiscal year ending on April 30, 1997 and (v) in their
discretion, upon such other business as may properly come before the meeting.
Whether or not you plan to attend the meeting, please fill in, sign and return
your proxy card to the transfer agent in the enclosed envelope, which requires
no postage if mailed in the United States.
A majority of the outstanding Shares entitled to vote, represented either in
person or by proxy, will constitute a quorum at the Annual Meeting. Directors
will be elected by a plurality of the votes present in person or represented
by proxy at the Annual Meeting and voting for the election of directors,
provided a quorum is present. Stockholders are not allowed to cumulate their
votes in the election of directors. Approval of the selection of Ernst & Young
as the Company's independent auditors for the fiscal year ending on April 30,
1997 will require an affirmative vote of the holders of a majority of the
Shares present or represented at the Annual Meeting and voting on such
proposal, provided a quorum is present. Approval of the amendments to the
Option Plans will require an affirmative vote of the holders of a majority of
the Shares present or represented at the Annual Meeting and entitled to vote
thereon, provided a quorum is present.
<PAGE>
In all cases, abstentions will be treated as Shares that are present or
represented and entitled to vote for purposes of determining the presence of a
quorum. In the case of electing directors and approving the selection of Ernst
& Young, abstentions will be treated as not voting on such matters.
Accordingly, abstentions will have no effect on the number of votes necessary
to elect directors or to approve the selection of the independent auditors. In
the case of approving the amendments to the Option Plans, however, abstentions
will count as votes against the amendments to the Option Plans.
In instances where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not returned a proxy (so-called
"broker non-votes"), those Shares will not be treated as present or represented
and entitled to vote for purposes of determining the presence of a quorum and
will not be treated as present or represented and voting for purposes of
determining the number of votes necessary for the approval of any matter on
which they do not have discretionary authority to vote. Accordingly, broker
non-votes will have no effect on the number of votes necessary to elect
directors or to approve the amendments to the Option Plans or the selection of
the independent auditors. In the event that there are not sufficient votes for
approval of any of the matters to be voted upon at the meeting, the meeting may
be adjourned in order to permit further solicitation of proxies.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the Annual Meeting and such election
inspectors will determine whether or not a quorum is present.
The Company will bear all costs of soliciting proxies including charges made
by brokers and other persons holding stock in their names or in the names of
nominees for reasonable expenses incurred in sending proxy material to
beneficial owners and obtaining their proxies. In addition to solicitation by
mail, directors, officers and employees of the Company may solicit proxies
personally and by telephone and telegraph, all without extra compensation. The
Company has retained D. F. King & Co., Inc. to assist in the solicitation of
proxies. The fee to be paid to such firm for such services will be borne by the
Company and is not expected to exceed $2,500 plus reasonable expenses.
1. ELECTION OF DIRECTORS
The Company currently has six directors. Each director of the Company holds
office until his successor is elected and qualified or until his earlier death,
resignation, removal or disqualification. Mr. Martin Greenberg, a director of
the Company since 1993, will not be standing for re-election.
The six nominees for whom the enclosed proxy is intended to be voted are set
forth below. All nominees are now serving as directors of the Company. Each of
these nominees has indicated his willingness to serve if elected, and the Board
of Directors has no reason to believe that any of these nominees will be
unavailable for election, but if such a situation should arise, the proxy will
be voted in accordance with the best judgment of the proxyholder for such
person or persons as may be designated by the Board of Directors, unless the
stockholder has directed otherwise.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- ----------
<S> <C> <C>
Bernard Goldstein................... 67 Chairman, Chief Executive Officer
and Director
John M. Gallaway.................... 57 President, Chief Operating Officer
and Director
Allan B. Solomon.................... 60 Executive Vice President, Secretary,
General Counsel and Director
Robert S. Goldstein................. 41 Director
Emanuel Crystal..................... 69 Director
Alan J. Glazer...................... 55 Director
</TABLE>
2
<PAGE>
Bernard Goldstein has been Chairman of the Board of the Company since June
1992 and Chief Executive Officer of the Company since December 1995. From June
1992 until February 1993, Mr. Goldstein was also President and Chief Executive
Officer of the Company. Mr. Goldstein has been active in the development of
the riverboat gaming industry in a number of states and was Chairman of the
Board of Steamboat Development Corporation and Steamboat Southeast, Inc.
(collectively, the "Steamboat Companies"), companies involved in the first
legalized riverboat gaming ventures in the United States. In addition to his
involvement in the riverboat gaming industry, Mr. Goldstein has been involved
in scrap metal recycling since 1951 and barge-line transportation since 1960.
Mr. Goldstein is the father of Robert Goldstein.
John M. Gallaway has been President of the Company since December 1995,
Chief Operating Officer since July 1996 and a director since April 1996. From
July 1995 to November 1995, Mr. Gallaway was a professor at the University of
Houston. Mr. Gallaway was Deputy Managing Director, Gaming, of Sun
International, a company engaged in owning and operating casinos and resorts,
from September 1992 to August 1994. Prior to that, from 1984 to 1992, Mr.
Gallaway was President and General Manager of TropWorld Casino Resort in
Atlantic City and, from 1981 to 1984, he was President and General Manager of
the Tropicana Casino Hotel in Las Vegas.
Allan B. Solomon has been Secretary and a director of the Company since June
1992, served as the Chief Financial Officer and Treasurer of the Company from
June 1992 to October 6, 1993, and was Chairman of the Executive Committee from
January 1993 to April 1995. Mr. Solomon became General Counsel of the Company
in May 1994 and became Executive Vice President in April 1995. Mr. Solomon is
President of Allan B. Solomon, P.A., which was a partner in the Florida law
firm of Broad and Cassel from 1986 to May 1994.
Robert S. Goldstein has been a director of the Company since February 1993.
Mr. Goldstein is the President of Alter Trading Corporation, a company engaged
in the business of scrap metal recycling, and has been associated with that
company since 1977. Additionally, Mr. Goldstein is a director, officer and
stockholder of the Steamboat Companies and has been an officer of several
affiliated river transportation companies engaged in stevedoring and equipment
leasing since 1980. Mr. Goldstein is the son of Bernard Goldstein.
Emanuel Crystal has been a director of the Company since October 1993, and
is currently the Chief Executive Officer of Jackson Iron & Metal Company in
Jackson, Mississippi. He has held that position for over five years and has
served in various positions with that company since 1949. Mr. Crystal serves
on the Board of Trustees of Tougaloo College in Mississippi.
Alan J. Glazer is a nominee for director and has been for more than five
years the Vice President and Regional Managing Director of Morris Anderson &
Associates, Ltd., a management consulting firm. Mr. Glazer also serves as a
director of Alter Barge Lines, Inc., a private company owned by Bernard
Goldstein and members of his family.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has three standing committees: the Executive
Committee, the Compensation Committee and the Audit Committee. The Board of
Directors does not have a Nominating Committee or any committee performing
similar functions. During the fiscal year ended April 30, 1996 ("fiscal
1996"), the Board of Directors met 12 times, the Audit Committee met one time
and the Compensation Committee met two times. During fiscal 1996, the
Executive Committee did not hold any formal meetings, but instead met
informally and by telephone approximately semi-monthly. During fiscal 1996,
all directors attended at least 75% of the meetings of the Board of Directors
and the committees thereof on which they served.
3
<PAGE>
Messrs. Bernard Goldstein, Allan B. Solomon and Martin Greenberg are members
of the Executive Committee. The Executive Committee has the authority to act
for the Board in the event Board approval is necessary and time constraints do
not accommodate a meeting of the full Board. The Executive Committee also
oversees the day-to-day operations of the Company.
Messrs. Martin Greenberg, Robert S. Goldstein and Emanuel Crystal are members
of the Compensation Committee. Mr. Greenberg acts as chairman of the
Compensation Committee. The Compensation Committee acts as an advisory
committee to the full Board with respect to matters of compensation, including
option grants and bonuses, with respect to the officers and other employees of
the Company.
Messrs. Emanuel Crystal, Martin Greenberg and Robert S. Goldstein are members
of the Audit Committee. Mr. Crystal acts as chairman of the Audit Committee.
The Audit Committee's responsibilities include recommending to the Board the
selection of the Company's independent certified public accountants, reviewing
the arrangements and the scope of the independent audit and reviewing all
financial statements.
EXECUTIVE OFFICERS
Set forth below is a table identifying the executive officers of the Company
other than Messrs. Goldstein, Gallaway and Solomon who are identified in the
section entitled "Election of Directors."
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Rexford A. Yeisley............ 49 Vice President and Chief Financial Officer
Robert Boone.................. 47 Vice President
Edward Reese, Jr.............. 61 Vice President
</TABLE>
Rexford A. Yeisley has been Chief Financial Officer of the Company since
December 1995. Mr. Yeisley was Senior Vice President and Chief Financial
Officer of Six Flags Theme Parks, Inc. from 1991 to 1995, and from 1987 to
1991. Mr. Yeisley was Vice President and Chief Financial Officer of that
company.
Robert Boone has been Vice President in charge of human resources and risk
management since August 1994. From 1991 to 1994, Mr. Boone was the Director,
Human Resources and Administration for Simon MOA Management Company, the
managing general partner at Mall of America, the nation's largest retail and
entertainment complex. From 1986 to 1991, Mr. Boone served as Director of Human
Resources for IDS American Express in Minneapolis, Minnesota.
Edward Reese, Jr. has been Vice President in charge of Construction and
Design since August 1996. From January 1996 to August 1996, Mr. Reese was the
Vice President, Construction for H.W.C.C. Development Corporation, a subsidiary
of a casino operator. From October 1986 to January 1996, Mr. Reese was the Vice
President-Design and Construction for Aztar Corporation, a company engaged in
gaming, and the gaming division of its predecessor, Ramada, Inc.
COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, officers and certain stockholders to file
with the Securities and Exchange Commission (the "Commission") an initial
statement of beneficial ownership and certain statements of changes in
beneficial ownership of equity securities of the Company. Based solely upon a
review of Forms 3 and 4 and amendments thereto furnished to the Company during
fiscal 1996, Forms 5 and amendments thereto furnished with respect to fiscal
1996, and certain written representations received by the Company from certain
reporting persons in regard to filing requirements, the Company has determined
that all such filings were made on a timely basis.
4
<PAGE>
OWNERSHIP OF THE CAPITAL STOCK OF THE COMPANY
The following table sets forth certain information with respect to the
beneficial ownership of the outstanding Common Stock as of July 31, 1996
(unless otherwise indicated) by (i) each director and nominee for director of
the Company, (ii) the individuals serving as the Company's chief executive
officer during fiscal 1996 and each of the four individuals serving as
executive officers of the Company as of April 30, 1996 named in the table under
"Compensation of Directors and Executive Officers--Summary Compensation Table,"
(iii) all directors and officers of the Company as of July 31, 1996 as a group
and (iv) based on information available to the Company and a review of
statements filed with the Commission pursuant to Sections 13(d) and 13(g) of
the Exchange Act, each person that owned beneficially (directly or together
with affiliates) more than 5% of the Common Stock. Unless otherwise indicated,
all persons listed have sole voting and dispositive power over the shares
beneficially owned.
<TABLE>
<CAPTION>
NAME AND SHARES OF PERCENTAGE OF
ADDRESS OF COMMON STOCK OUTSTANDING
5% BENEFICIAL BENEFICIALLY SHARES
OWNERS OWNED(1) OWNED(1)
------------- ------------ -------------
<S> <C> <C>
Bernard Goldstein(2)
2200 Corporate Boulevard, N.W.
Boca Raton, Florida 33431.......................... 2,743,000 12.1%
Crown Casino Corporation(3)
4040 North MacArthur Boulevard, Suite 100
Irving, Texas 75038................................ 2,683,334 11.5%
Robert S. Goldstein(4).............................. 820,530 3.6%
Allan B. Solomon(5)................................. 364,920 1.6%
Martin Greenberg(6)................................. 91,677 *
Emanuel Crystal(7).................................. 51,593 *
Alan J. Glazer...................................... -- *
Juris Basens(8)..................................... 45,125 *
David L. Paltzik(9)................................. 32,829 *
John M. Gallaway(10)................................ 15,000 *
James E. Ernst...................................... 2,375 *
Kenneth N. Schultz.................................. -- *
All Officers and Directors as a Group (9
persons)(11)....................................... 4,099,595 18.0%
</TABLE>
- --------
* Less than 1%.
(1) Calculated pursuant to Rule 13d-3 under the Exchange Act. Under Rule 13d-
3(d), shares not outstanding that are subject to options, warrants, rights
or conversion privileges exercisable within 60 days of July 31, 1996, are
deemed outstanding for the purpose of calculating the number and percentage
owned by such person, but are not deemed outstanding for the purpose of
calculating the percentage owned by each other person listed.
(2) Does not include an aggregate of 3,041,590 shares (including 68,875 shares
issuable upon exercise of stock options and warrants that are exercisable
within 60 days) that are beneficially owned by members of Bernard
Goldstein's family. Bernard Goldstein disclaims beneficial ownership of the
shares owned by members of his family. Includes 24,375 shares issuable upon
exercise of stock options that are exercisable within 60 days.
(3) Includes 833,334 shares issuable upon exercise of warrants that are
exercisable within 60 days, but does not include 684,786 shares of Common
Stock issued to Crown Casino Corporation in August 1996 in connection with
the Company's rights offering. Crown Casino Corporation granted to the
Company an irrevocable proxy to vote all of such shares of Common Stock.
See "Certain Relationships and Related Transactions."
5
<PAGE>
(4) Does not include an aggregate of 4,964,060 shares (including 49,375 shares
issuable upon exercise of stock options and warrants that are exercisable
within 60 days) that are beneficially owned by members of Robert
Goldstein's family. Robert Goldstein disclaims beneficial ownership of the
shares owned by members of his family. Includes 43,875 shares issuable
upon exercise of stock options that are exercisable within 60 days.
(5) Includes 82,500 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(6) Includes 56,375 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(7) Includes 21,375 shares issuable upon exercise of stock options that are
exercisable within 60 days and 1,976 shares owned by Mr. Crystal's wife.
(8) Includes 33,313 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(9) Includes 24,563 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(10) Includes 15,000 shares issuable upon exercise of stock options that are
exercisable within 60 days.
(11) Information provided is for the individuals who were officers and
directors of the Company on July 31, 1996 and includes 256,375 shares
issuable upon exercise of stock options that are exercisable within 60
days. The amount does not include 2,221,060 shares (including 25,000
shares issuable upon exercise of warrants that are exercisable within 60
days) beneficially owned by relatives of Bernard Goldstein and Robert S.
Goldstein, other than them, the beneficial ownership of which is
disclaimed by Bernard Goldstein and Robert S. Goldstein. If such shares
were included in the category "All Officers and Directors as a Group,"
the number of shares of Common Stock beneficially owned by such group as
of July 31, 1996 would have been 6,320,655, and the percentage of
outstanding shares of Common Stock owned by such group as of July 31,
1996 would have been 27.7%. In addition, the amount does not include
shares owned by Messrs. Ernst, Schultz, Basens and Paltzik, each of whom
had resigned from the Company prior to July 31, 1996.
6
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the annual, long-term and other
compensation for services rendered to the Company by the two individuals
serving as the Company's Chief Executive Officer during fiscal 1996 and the
four most highly compensated executive officers (other than the chief
executive officer) during fiscal 1996 (the "Named Executive Officers") for the
years indicated.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ---------------
SECURITIES
NAME AND PRINCIPAL YEAR ENDED OTHER ANNUAL UNDERLYING ALL OTHER
POSITION APRIL 30, SALARY(1) BONUS(1) COMPENSATION (2) OPTIONS (#) (3) COMPENSATION (4)
- ------------------ ---------- -------- ------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Bernard Goldstein 1996 $189,231 $50,000 -- 15,000 $50,705
Chairman and 1995 129,271 90,000 -- 10,000 50,000
Chief Executive 1994 122,020 50,000 -- 22,500 50,000
Officer
James E. Ernst (5) 1996 180,404 -- -- -- --
President and Chief 1995 261,765 180,000 -- 20,000 52,310
Executive Officer 1994 213,618 200,000 -- 37,500 52,310
Allan B. Solomon 1996 232,563 140,000 -- 15,000 50,000
Executive Vice 1995 221,962 50,000 -- 17,500 50,000
President 1994 13,169 -- -- 22,500 50,000
General Counsel and
Secretary
Juris Basens (5) 1996 158,438 32,500 -- 15,000 2,310
Vice President and 1995 150,509 76,500 -- 27,500 2,310
Chief Operating 1994 125,555 63,000 -- 12,000 2,310
Officer
David L. Paltzik (5) 1996 138,905 27,500 $21,363 15,000 2,053
Vice President 1995 126,098 67,500 -- 15,000 1,490
1994 111,234 75,000 -- 12,000 910
Kenneth N. Schultz (5) 1996 125,056 25,000 18,489 30,000 --
Vice President 1995 -- -- -- -- --
1994 -- -- -- -- --
</TABLE>
- --------
(1) Mr. Goldstein receives his salary and bonus in shares of Common Stock. Mr.
Goldstein's salary is paid in the number of shares equal to his net
monthly salary based on the closing price of the Company's Common Stock,
as reported on the Nasdaq National Market, on the 15th day of that month
(or the last preceding trading day if the 15th is a Saturday, Sunday or
holiday).
(2) Includes $15,548 in relocation costs paid by the Company and a $5,815 auto
allowance for Mr. Paltzik and a $13,412 housing allowance and a $5,077
auto allowance for Mr. Schultz.
(3) Messrs. Basens, Paltzik and Schultz forfeited 12,000, 12,000 and 30,000
options, respectively, of the options awarded in fiscal 1996 and a total
of 43,125, 33,187 and 30,000 options, respectively, as a result of
resigning from their positions with the Company.
(4) Includes the Company's matching contribution to the Company's 401(k)
deferred compensation plan during fiscal 1996 for the accounts of Messrs.
Goldstein, Basens and Paltzik of $705, $2,310 and $2,053, respectively,
and the $50,000 annual retainer paid to all directors for Messrs.
Goldstein and Solomon during fiscal 1996.
(5) Effective September 9, 1995, Mr. Ernst resigned as President, Chief
Executive Officer and as a director of the Company; effective July 24,
1996, Messrs. Basens and Paltzik resigned as Vice President and Chief
Operating Officer and Vice President, respectively; and effective June 24,
1996, Mr. Schultz resigned as Vice President of the Company. See
"Executive Officers" for information concerning the Company's current
executive officers.
7
<PAGE>
OPTION GRANTS FOR LAST FISCAL YEAR
The following table sets forth information concerning options granted during
fiscal 1996 to the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
OF ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
FOR OPTION TERM
INDIVIDUAL GRANTS (1)
--------------------------- ----------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR $/SHARE DATE 5% ($) 10% ($)
- ---- ---------- --------------- ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Bernard Goldstein....... 15,000 3.0% $6.25 4/10/06 $58,959 $149,413
James E. Ernst.......... -- -- -- -- -- --
Allan B. Solomon........ 15,000 3.0 6.25 4/10/06 58,959 149,413
Juris Basens............ 15,000 3.0 6.25 4/10/06 58,959 149,413
David L. Paltzik........ 15,000 3.0 6.25 4/10/06 58,959 149,413
Kenneth N. Schultz...... 30,000 6.1 6.25 11/22/05 117,918 298,827
</TABLE>
- --------
(1) The potential realizable dollar value of a grant is the product of: (a)
the difference between (i) the product of the per-share market price at
the time of the grant and the sum of 1 plus the stock appreciation rate
compounded annually over the term of the option (here, 5% and 10%) and
(ii) the per-share exercise price of the option and (b) the number of
securities underlying the grant at fiscal year-end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning the number and value
of shares acquired on the exercise of options and exercisable and
unexercisable stock options at the end of fiscal 1996 for the Named Executive
Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES ACQUIRED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ON EXERCISE VALUE YEAR END FISCAL YEAR END ($)
NAME (#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Bernard Goldstein....... -- -- 16,750/30,750 $ 4,688/18,750
James E. Ernst.......... 76,500 $164,906 -- --
Allan B. Solomon........ -- -- 74,875/92,625 144,141/158,203
Juris Basens............ 11,812 162,251 33,313/43,125 65,421/29,906
David L. Paltzik........ 9,000 123,625 29,063/37,687 65,130/28,510
Kenneth N. Schultz...... -- -- -- /30,000 -- /46,875
</TABLE>
COMPENSATION OF DIRECTORS
All directors of the Company are compensated by a $50,000 annual retainer,
and directors who are not employed by the Company receive additional
compensation of $1,000 per day for Board meetings attended and other services
performed. All directors are reimbursed for travel and other expenses incurred
in connection with attending Board meetings. In addition, upon the initial
election or appointment of any person to the Board of Directors, such director
receives options to acquire 22,500 shares of Common Stock pursuant to the
provisions of the Company's 1993 Stock Option Plan.
8
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In December 1995, the Company entered into separate employment agreements
with John M. Gallaway, President and Chief Operating Officer (as of July
1996), Allan B. Solomon, Executive Vice President, General Counsel and
Secretary, and Rexford A. Yeisley, Vice President and Chief Financial Officer
(collectively, the "Employment Agreements"). Pursuant to the Employment
Agreements, Messrs. Gallaway, Solomon and Yeisley receive an initial annual
base salary of $300,000, $235,000 and $160,000, respectively, subject to
increases as may be determined by the Company's Board of Directors from time
to time. In addition, Messrs. Gallaway and Yeisley received options to
purchase 50,000 and 30,000 shares of Common Stock, respectively, at the fair
market price of shares at the date of issuance. Each of Messrs. Gallaway,
Solomon and Yeisley are entitled to participate in any stock option or other
benefit plans of the Company. The Employment Agreements are each for an
initial term of three years, and are automatically renewable for successive
one-year periods thereafter, unless 90 days' written notice is given by either
party. If the Company terminates the employment of the respective party to the
Employment Agreement without "cause" (as defined in the Employment
Agreements), either during the initial term or any renewal term or by written
notice of nonrenewal, such person would be entitled, upon releasing the
Company and its affiliates from any and all claims, to receive his salary and
employee benefits for the greater of (i) one year or (ii) 50% of the salary
and employee benefits for the remaining term of employment. In August 1996,
the Company entered into an employment agreement with Edward F. Reese, Jr.,
Vice President in charge of Construction and Design, with terms substantially
similar to the Employment Agreements described above. Mr. Reese will receive
an initial annual base salary of $150,000, subject to increases as may be
determined by the Company's Board of Directors from time to time. In addition,
Mr. Reese received options to purchase a total of 25,000 shares of Common
Stock, vesting at a rate of 5,000 options per year, except, in the event of a
change in management, buyout or takeover, all of such options will become
vested.
In June 1992, the Company entered into an employment agreement with James E.
Ernst pursuant to which he was employed as President and Chief Executive
Officer of the Company from February 24, 1993, the date upon which the
Mississippi gaming authorities issued a finding of suitability with respect to
him, until September 9, 1995, the date on which Mr. Ernst resigned as
President, Chief Executive Officer and as a director of the Company. Under the
agreement, Mr. Ernst received an initial annual base salary of $200,000,
subject to annual increases after the first full year of the term of
employment as determined by the Company's Board of Directors, plus bonuses
determined by the Board of Directors from time to time. In addition, Mr. Ernst
was entitled to participate in any stock option or other benefit plans of the
Company as determined by the Board. Mr. Ernst's agreement was for an initial
term of three years that began on June 2, 1992, and was automatically
renewable for successive one-year periods thereafter, unless 90 days' prior
written notice was given by either party. The agreement was automatically
renewed on June 2, 1995. The agreement provided that if the Company were to
terminate Mr. Ernst's employment without cause, either during the initial term
or any renewal term of the employment agreement or by written notice of
nonrenewal, Mr. Ernst would be entitled, if he released the Company and its
affiliates from any and all claims, to continue to receive his salary and
employee benefits for a period of 12 months after the date of termination.
Following Mr. Ernst's resignation as President, Chief Executive Officer and a
director of the Company, the Company entered into a consulting agreement (the
"Consulting Agreement") with Mr. Ernst, pursuant to which he was to remain a
consultant to the Company through September 30, 1996 under the terms of his
employment agreement. Under the Consulting Agreement, Mr. Ernst was to
continue to receive the salary and employee benefits he had been receiving
under his employment agreement until September 30, 1996, and all of Mr.
Ernst's stock options, to the extent not vested, would have vested on
September 30, 1996. On December 19, 1995, the Company, Mr. Ernst and Casino
Magic Corp. entered into an agreement whereby, inter alia, the Company
released Mr. Ernst from the terms of his non-competition agreement to allow
Mr. Ernst to accept a position as President and Chief Executive Officer of
Casino Magic Corp. As a result, Mr. Ernst forfeited all of his stock options
and, effective December 31, 1995, no longer received any benefits under the
Consulting Agreement.
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Martin Greenberg, Robert S. Goldstein and Emanuel Crystal are members
of the Company's Compensation Committee. Mr. Greenberg acts as chairman of the
Compensation Committee.
Mr. Greenberg is the Chairman of the Board of Directors of P.P.I., Inc., a
wholly-owned subsidiary of the Company which operates Pompano Park, a harness
racing track in Pompano Beach, Florida. Mr. Greenberg is compensated for his
services as the Chairman of P.P.I., Inc. as follows: (i) the aggregate exercise
price of Mr. Greenberg's options to purchase 50,000 shares of Common Stock,
issued in 1995, is reduced at the rate of $50,000 per year and (ii) Mr.
Greenberg is eligible for a bonus to be paid from a pool equal to 20% of the
net income before interest and taxes of Pompano Park and any gain realized in
the event Pompano Park is sold, which bonus also shall reduce the aggregate
exercise price of the options described in (i). During fiscal 1996, Mr.
Greenberg earned $41,667 for such services.
Mr. Robert S. Goldstein is the son of Bernard Goldstein, the Chairman and
Chief Executive Officer of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee advises the Board of Directors concerning
executive compensation, including base salaries, bonuses and the bases for
their award, stock option plans and health, life insurance and other benefits.
Compensation Committee recommendations concerning executive compensation are
reviewed and approved by the Board. Board members who are also executive
officers of the Company do not participate in the deliberations of the Board
concerning their respective compensation and benefits and do not vote on such
matters.
The Company's objective concerning executive compensation is to design an
executive compensation program that attracts and retains qualified executives
and aligns executives' interests with those of the Company and its stockholders
in achieving the Company's operating goals and business objectives and
increasing stockholder value. The principal components of the Company's
executive compensation program are base salary, bonus and stock options. In
light of the Company's objective concerning executive compensation, a
substantial portion of the executive compensation above the base salary is
generally provided through bonuses tied to certain indicators of Company
performance and through the grant of stock options.
The Compensation Committee's determinations of overall executive compensation
for the fiscal year ended April 30, 1996, which includes salary, bonus, certain
benefits and stock option awards, were generally subjective based upon
consideration of, among other factors, the performance of the Company during
the fiscal year, the individual executive officer's contribution to the
achievement of operating goals and business objectives and levels of
compensation in comparable companies at similar stages of development, with
particular emphasis on those operating in the gaming industry.
During the fiscal year ended April 30, 1996, Mr. Ernst served as Chief
Executive Officer ("CEO") until he resigned on September 9, 1995. During this
period, Mr. Ernst was compensated as indicated in the Summary Compensation
Table, in accordance with the terms of an employment agreement with the Company
effective as of June 2, 1992. Pursuant to this employment agreement, Mr. Ernst
was entitled to annual salary increases above his initial base salary of
$200,000 as determined by the Board of Directors. See "Employment Contracts,
Termination of Employment and Change-in-Control Arrangements."
Mr. Goldstein succeeded Mr. Ernst on September 9, 1995 as CEO of the Company.
Mr. Goldstein serves as CEO at the will of the Board and has not entered into
an employment agreement with the Company. The Board of Directors, with Mr.
Goldstein abstaining from the deliberations, determined to compensate Mr.
Goldstein for his services as CEO with an annual salary of $300,000. This
salary level was set based on a general review of compensation levels of other
chief executive officers in comparable companies. Mr. Goldstein's pro rata
portion of salary is paid at the end of each month in shares of Common Stock,
based on the closing price of Common Stock on the 15th day of that month (or
the last preceding trading day if the 15th is a Saturday, Sunday or holiday).
In formulating Mr. Goldstein's bonus and stock option awards, the Board
principally considered the difficulty and additional effort required of him in
replacing Mr. Ernst and Mr. Goldstein's valuable experience from being involved
in the formation of the Company and all stages of the Company's development. In
that regard, Mr. Goldstein received a bonus of $50,000 in fiscal 1996, paid in
shares of Common Stock, and options to purchase 15,000 shares of Common Stock.
10
<PAGE>
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
limits the Company's deduction for compensation paid to the executive officers
named in the Summary Compensation Table to $1 million unless certain
requirements are met. The policy of the Compensation Committee with respect to
section 162(m) is to establish and maintain a compensation program which will
optimize the deductibility of compensation. In that regard, no executive
officer received compensation in excess of $1 million during fiscal 1996. The
Compensation Committee, however, reserves the right to use its judgment, where
merited by the Compensation Committee's need for flexibility to respond to
changing business conditions or by an executive officer's individual
performance, to authorize compensation which may not, in a specific case, be
fully deductible by the Company.
By The Compensation Committee:
Martin Greenberg
Robert S. Goldstein
Emanuel Crystal
STOCK PERFORMANCE GRAPH
The following graph compares the total return on the Common Stock with the
cumulative total return on the Nasdaq Market Index (a broad market index) and
the Media General Industry Group 241--Hotels, Motels and Resorts Index (an
industry index) for the period from August 19, 1992, the date upon which the
Common Stock was registered pursuant to Section 12 of the Exchange Act, through
April 30, 1996. The comparison reflects the investment of $100 on August 19,
1992, and the reinvestment of dividends (if paid), in each of the Company's
Common Stock (for which no dividends have been paid), the NASDAQ Market Index
and the Media General Industry Group 241--Hotels, Motels and Resorts Index. The
stock price performance of the Company reflected in this comparison is not
necessarily indicative of the future stock price performance of the Company's
Common Stock.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CASINO AMERICA, INC., NASDAQ INDEX AND MEDIA
GENERAL INDUSTRY GROUP 241 HOTELS, MOTELS AND RESORTS INDEX
<CAPTION>
MEDIA GENERAL INDUSTRY GROUP 241
Measurement Period CASINO AMERICA NASDAQ HOTELS, MOTELS, AND RESORTS
(Fiscal Year Covered) TICKER: CSNO INDEX INDEX
- ------------------- -------------- ------- ---------------------------
<S> <C> <C> <C>
Measurement Pt-
08/12/92 $100 $100 $100
FYE 04/30/93 $373.30 $119.36 $146.53
FYE 04/30/94 $558.14 $133.97 $169.48
FYE 04/30/95 $457.00 $146.29 $197.12
FYE 04/30/96 $234.12 $204.20 $278.09
</TABLE>
11
<PAGE>
CERTAIN TRANSACTIONS
In June 1995, Louisiana Riverboat Gaming Partnership ("LRGP"), of which the
Company owned a 50% interest at such time (and of which the Company now owns a
100% interest), acquired a 50% interest in St. Charles Gaming Company, Inc.
("SCGC") from Crown Casino Corporation ("Crown Casino"), a beneficial owner of
more than 5% of the Company's Common Stock, for $21 million. The consideration
for such purchase consisted of $1 million in cash and a $20 million promissory
note bearing interest at 11 1/2%. In addition, the Company issued a warrant to
Crown Casino to purchase 416,667 shares of Common Stock at $12 per share by
converting up to $5 million in principal of such note. In May 1996, the
Company acquired the remaining 50% interest in SCGC from Crown Casino in
exchange for 1,850,000 shares of Common Stock and a five-year warrant to
purchase an additional 416,667 shares of Common Stock at $12 per share by
converting up to $5 million in principal of one of the two $10 million
promissory notes that replaced the original $20 million note held by Crown
Casino from the June 1995 acquisition. In connection with the May 1996
transaction, Crown Casino granted the Company an irrevocable proxy to vote all
shares issued, or to be issued, to Crown Casino pursuant to both of the June
1995 and May 1996 transactions.
In December 1995, the Company established a $2 million line of credit at an
interest rate of 11 1/2% with Alter Barge Line, Inc., a company affiliated
with Alter Trading Corporation of which Mr. Robert S. Goldstein is the
president. During fiscal 1996, the maximum amount outstanding at any one time
was $1 million. All borrowings were repaid and the line of credit was
terminated in March 1996 in connection with the Goldstein Family Equity
Purchase (as defined).
On March 11, 1996, the Company sold an aggregate of 1,020,940 shares of its
Common Stock, at a price of $5.875 per share, to Bernard Goldstein, the
Chairman and Chief Executive Officer of the Company, and three members of his
family (the "Goldstein Family Equity Purchase"). Proceeds from the sale
totaled approximately $6.0 million. A portion of the proceeds was used to
retire approximately $1.6 million in loans payable to Mr. Goldstein and a
related party, which amount includes accrued interest. In connection with the
Company's rights offering, Mr. Solomon, the Executive Vice President, General
Counsel and Secretary of the Company, acquired 57,240 shares of Common Stock
at a price of $5.875 per share in July 1996.
In connection with the Company's acquisition of Grand Palais Riverboat, Inc.
("GPRI") on May 3, 1996, Bernard Goldstein, the Chairman and Chief Executive
Officer, and three of his sons (including Robert Goldstein, a director of the
Company) pledged certain of their assets for the issuance of a letter of
credit to secure the repayment of a portion of the principal of certain notes
issued by the Company to effect the acquisition of GPRI. Pursuant thereto, the
Company issued to each of the two sons (excluding Robert Goldstein) a five-
year warrant to purchase 12,500 shares at an exercise price of $5.875 per
share.
Mr. Glazer, a nominee for director, is a Vice President and Regional
Managing Director of Morris Anderson & Associates, Ltd. ("Morris Anderson"), a
management consulting firm retained by the Company for various consulting
services. During fiscal 1996 and to date through fiscal 1997, the amount paid
or accrued by the Company to Morris Anderson for consulting services and
reimbursement of expenses was approximately $191,000.
2. APPROVAL OF AMENDMENT TO THE 1992 STOCK OPTION PLAN
On May 18, 1992, the Casino America 1992 Stock Option Plan (the "1992 Plan")
was adopted by the Company's Board of Directors (hereinafter referred to as
the "Board") and approved by the Company's shareholders on June 2, 1992. The
1992 Plan was adopted to promote the success of the Company and its
subsidiaries by facilitating the employment and retention of competent
personnel and by furnishing incentives to directors, officers, employees,
consultants and advisors upon whose efforts the success of the Company and its
subsidiaries will depend to a large degree.
Initially, 300,000 shares of Common Stock were reserved for issuance under
the 1992 Plan, subject to adjustment for corporate transactions and changes
that affect the Company, its share price or share status. In the event that
any outstanding option under the Plan for any reason expires or is terminated
prior to the exercise thereof, the shares of Common Stock allocable to the
unexercised portion of such option shall continue to be
12
<PAGE>
reserved for options under the 1992 Plan. On February 10, 1993, the Board
amended the 1992 Plan to increase the number of shares authorized for issuance
to 315,000, which amendment was approved by the Company's stockholders.
Pursuant to the provisions of the 1992 Plan, the number of shares available for
issuance under the 1992 Plan were adjusted to account for a three-for-two stock
dividend distributed in June 1993 and again in April 1994. On March 5, 1996,
the Board amended the 1992 Plan to reserve an additional 350,000 shares of
Common Stock for issuance under the 1992 Plan, subject to stockholder approval,
making a total of 1,058,750 shares available for issuance under the 1992 Plan.
Such shares shall consist of authorized and unissued shares of Common Stock.
Pursuant to the provisions of the 1992 Plan, the Board of Directors is
submitting the amendment to the 1992 Plan to the stockholders for approval of
the increase in shares of Common Stock available for issuance. The following
summary of the 1992 Plan is qualified in its entirety by reference to the
complete text of the 1992 Plan, which is set forth in Exhibit A to this Proxy
Statement.
General Description
Participants in the Plan shall consist of such directors, officers,
consultants or advisors of the Company or any subsidiary as selected from time
to time by the Board or by a committee appointed by the Board to administer the
Plan (referred to hereinafter as the "Committee"); provided, however, that
consultants or advisors may not receive awards of stock options under the 1992
Plan unless the consultant or advisor renders bona fide services to the Company
or subsidiaries and such services are not in connection with the offer or sale
of securities in a capital-raising transaction. The number of shares of Common
Stock subject to any stock option granted under the 1992 Plan is subject to the
discretion of the Board or the Committee.
The Board or the Committee has the general authority to administer the 1992
Plan. The Board may amend the 1992 Plan in any respect; provided, however,
that, except in limited circumstances, no amendment may be made which would
impair the terms and condition of any stock option which is outstanding on the
date of the amendment to the material detriment of the option holder without
the option holder's consent. In addition, no amendment which materially
increases the number of shares subject to the 1992 Plan, changes the class of
eligible employees, decreases the price at which options may be granted,
materially increases the benefits to participants in the 1992 Plan or would
cause incentive stock options to fail to meet the applicable requirements of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code") may
be made without the approval of the stockholders of the Company.
At June 30, 1996, the Company had approximately 5,950 employees and, at July
31, 1996, approximately 38 employees were participants in the 1992 Plan. As of
July 31, 1996, 349,000 shares of Common Stock were subject to outstanding
awards under the 1992 Plan and 71,187 shares of Common Stock were available for
issuance. The closing price per share of Common Stock on September 16, 1996 was
$6.50, as reported on the Nasdaq National Market.
Awards Under the 1992 Plan
Options to purchase shares of Common Stock of the Company, including
incentive stock options within the meaning of section 422 of the Code, may be
awarded under the 1992 Plan; provided, however, that incentive stock options
may only be granted to employees of the Company and its subsidiaries. The Board
or the Committee will determine the number of shares subject to each stock
option and the manner and time of exercise. No option, however, shall be
exercisable more than 10 years after the date of grant (5 years in the case of
an incentive stock option granted to a ten percent owner) and the Board or the
Committee may accelerate the exercise date of any option that is immediately
exercisable as of the date of grant. Unless otherwise specified by the Board or
the Committee, the per share option price shall not be less than 100% of the
fair market value of a share of Common Stock at the date of grant; provided,
however, that in no event may the option price for an incentive stock option be
less than 100 percent of the fair market value at the date of grant (110
percent in the case of a ten percent owner). Upon exercise, the option price
(and any applicable withholding taxes) may be paid in cash, in shares of Common
Stock having a fair market value equal to the option price, or in a combination
thereof. The agreement or instrument evidencing the grant of a stock option may
contain such other terms, provisions and conditions not inconsistent with the
1992 Plan as the Board or the Committee may determine.
13
<PAGE>
Federal Income Tax Consequences of Awards
An optionee generally will not recognize taxable income upon the grant of a
stock option, and neither gain nor loss will be recognized as a deduction by
the Company. Upon the exercise of a nonqualified stock option, the optionee
will recognize ordinary income in an amount equal to the difference between the
option price and the fair market value of the underlying shares on the date of
the exercise, and the Company generally will be entitled to a deduction for the
amount recognized as ordinary income by the optionee. Generally, an optionee
will not be deemed to have received taxable income upon the exercise of an
incentive stock option. Any gain realized upon a disposition of shares received
pursuant to the exercise of an incentive stock option will be taxed as a long-
term capital gain or loss, assuming the optionee holds the shares for at least
two years after the date of grant and for at least one year after the date of
exercise. If shares of Common Stock acquired upon the exercise of an incentive
stock option are disposed of prior to satisfaction of the holding periods
described above, the optionee will generally recognize ordinary income, and the
Company will be allowed to deduct an amount, equal to lesser of (i) the excess
of the market value of the shares at the date of exercise over the option price
or (ii) the excess of the amount realized upon disposition of the shares over
the option price. If an optionee pays the exercise price of any option by
delivery of shares of Common Stock, the exchange of shares generally will be
treated as a non-taxable transaction (provided, in the case of an incentive
stock option, that the shares delivered in payment are not shares acquired upon
exercise of an incentive stock option which has not satisfied the holding
period requirements discussed above).
CASINO AMERICA 1992 STOCK OPTION PLAN FISCAL 1996 AND 1997 AWARDS
No decision has yet been made regarding total awards under the 1992 Plan for
fiscal 1997 or subsequent years. The following table sets forth the number of
options to purchase shares of the Company's Common Stock made under the 1992
Plan during fiscal 1997 (to date) and fiscal 1996 to the individuals and groups
presented.
<TABLE>
<CAPTION>
OPTION AWARDS
--------------------------------------------------------
SHARES UNDERLYING EXERCISE OR BASE PRICE EXPIRATION
NAME OPTIONS GRANTED (#)(1) PER SHARE(2) DATES
- ---- ---------------------- ---------------------- ----------
<S> <C> <C> <C>
Bernard Goldstein....... 15,000 $6.25 4/10/2006
10,000 7.50 5/10/2006
Allan B. Solomon........ 15,000 6.25 4/10/2006
10,000 7.50 5/10/2006
Juris Basens............ 15,000 6.25 4/10/2006
David L. Paltzik........ 15,000 6.25 4/10/2006
Kenneth N. Schultz...... 30,000 6.25 11/22/2005
Executive Officers as a 245,000 6.22 11/22/2005
Group.................. to
5/10/2006
Directors as a Group 155,000 6.55 12/22/2005
(Excluding Executive to
Officers).............. 5/10/2006
All Employees as a Group
(Excluding Executive 83,275 6.25 11/22/2005
Officers).............. to
4/10/2006
</TABLE>
- --------
(1) Option awards granted to the individuals in the table become vested as
follows: one-fifth at the date of grant and one-fifth on each anniversary
of the date of grant. Messrs. Basens, Paltzik and Schultz forfeited 12,000,
12,000 and 30,000 of such options, respectively, as a result of resigning
from their positions with the Company. No awards were made to Mr. Ernst,
who resigned from the Company effective September 9, 1995.
(2) The exercise price reflected for Executive Officers as a Group, Directors
as a Group (Excluding Executive Officers) and All Employees as a Group
(Excluding Executive Officers) is a weighted average of the exercise prices
of the options awarded to members of each designated group.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE 1992 STOCK OPTION PLAN.
14
<PAGE>
3. APPROVAL OF THE AMENDMENT TO THE 1993 STOCK OPTION PLAN
Effective as of January 14, 1993, the Casino America 1993 Stock Option Plan
(the "1993 Plan") was adopted by the Board and approved by the Company's
stockholders on November 17, 1993. The 1993 Plan was adopted to further the
growth of the Company and its subsidiaries by offering an incentive to
officers, directors and other key employees of the Company to continue in the
employ of the Company, and to increase the interest of these individuals in the
Company through additional ownership of its Common Stock.
Initially, 200,000 shares were reserved for issuance under the 1993 Plan,
subject to adjustment for corporate transactions and changes that affect the
Company, its share price or share status. If an award expires unexercised or is
cancelled without being exercised in full, the number of shares of Common Stock
previously reserved for such award will be available for future awards under
the 1993 Plan. Pursuant to the provisions of the 1993 Plan, the number of
shares available for issuance under the 1992 Plan were adjusted to account for
a three-for-two stock dividend distributed in June 1993 and again in April
1994. On August 22, 1994, the Board amended the 1993 Plan to increase the
number of shares reserved for issuance to 850,000 shares and such amendment was
approved by the Company's stockholders. On March 5, the Board amended the 1993
Plan to reserve an additional 350,000 shares for issuance under the 1993 Plan,
subject to stockholder approval, making a total of 1,200,000 shares available
for issuance under the 1993 Plan. Such shares may consist in whole or in part
of authorized and unissued shares or shares that have been issued and
reacquired by the Company. Pursuant to the provisions of the 1993 Plan, the
Board is submitting the amendment to the 1993 Plan to the stockholders for
approval of the increase in shares of Common Stock available for issuance. The
following summary of the 1993 Plan is qualified in its entirety by reference to
the complete text of the 1993 Plan, which is set forth in Exhibit B to this
Proxy Statement.
General Description
Participants in the 1993 Plan shall consist of any employee, officer or
director of the Company. Except for mandatory grants to certain directors and
reload options, participants in the 1993 Plan are selected from time to time by
the Board or by a committee of at least two members appointed by the Board to
administer the 1993 Plan (referred to hereinafter as the "1993 Plan
Committee"). The number of shares of Common Stock subject to any stock option
granted under the 1993 Plan is subject to the discretion of the Board or the
1993 Plan Committee.
The Board or the 1993 Plan Committee has the general authority to administer
the 1993 Plan. The Board may amend the 1993 Plan in any respect; provided,
however, that, no amendment which materially increases the number of shares
subject to the 1993 Plan, changes the class of eligible participants, extends
the period during which options may be exercised, changes the provisions
relating to the minimum option price or changes the provisions relating to
termination of options granted under the 1993 Plan may be made without the
approval of the stockholders of the Company. In addition, termination of the
1993 Plan may not adversely affect the rights of any holder of an outstanding
option under the 1993 Plan as of the date of termination.
At June 30, 1996, the Company had approximately 5,950 employees and, at July
31, 1996, approximately 64 employees were participants in the 1993 Plan. As of
July 31, 1996, 490,062 shares of Common Stock were subject to outstanding
awards under the 1993 Plan and 93,500 shares remained available for issuance.
The closing price per share of Common Stock on September 16, 1996 was $6.50, as
reported on the Nasdaq National Market.
Awards Under the 1993 Plan
In General. Options to purchase shares of Common Stock of the Company,
including incentive stock options, may be awarded under the 1993 Plan;
provided, however, that incentive stock options may only be granted to
employees of the Company and its subsidiaries. Except for mandatory grants of
stock options to directors who are members of the 1993 Plan Committee and
reload options, each as described below, the Board
15
<PAGE>
or the 1993 Plan Committee will determine the number of shares subject to each
stock option and the manner and time of exercise. No option, however, shall be
exercisable more than 10 years after the date of grant (5 years in the case of
an incentive stock option granted to a ten percent owner) and all outstanding
options will become fully vested upon a Change in Control of the Company (as
defined in the 1993 Plan). Additional rules are set forth in the 1993 Plan for
exercises of stock options in the event of the retirement, disability or death
of employees who are option holders.
Unless otherwise specified by the Board or the 1993 Plan Committee, the per
share option price shall not be less than 100% of the fair market value of a
share of Common Stock at the date of grant; provided, however, that in no event
may the option price for an incentive stock option be less than 100 percent of
the fair market value at the date of grant (110 percent in the case of a ten
percent owner). Upon exercise, the option price (and any applicable withholding
taxes) may be paid in cash, in shares of Common Stock having a fair market
value equal to the option price, or in a combination thereof. The agreement or
instrument evidencing the grant of a stock option may contain such other terms,
provisions and conditions not inconsistent with the 1993 Plan as the Board or
the 1993 Plan Committee may determine.
Mandatory Grant of Director Options. From and after August 15, 1994, upon the
initial election or appointment of any person to the Board, such director shall
be granted as compensation for serving as a director, options to acquire 22,500
shares of Common Stock. One-half of the options granted to directors shall vest
immediately and one-half of such options shall vest one year from the date of
grant, and shall be granted for a term of five years.
Reload Options. Whenever a participant holding any option outstanding
pursuant to the 1993 Plan exercises the option and makes payment of the
exercise price in whole or in part, by tendering Common Stock previously held
by the participant, then the participant shall automatically be granted a
"Reload Option" with respect to the number of shares of Common Stock that is
equal to the number of shares tendered by the participant on payment of the
option price of the option being exercised. The option price of the Reload
Option shall be an amount equal to the fair market value per share of Common
Stock, determined as of the date of receipt by the Company of the notice by the
participant to exercise the option. The exercise period of the Reload Option
shall expire, and the Reload Option shall no longer be exercisable, on the
later to occur of (i) the expiration date of the originally surrendered option
or (ii) one year from the date of grant of the Reload Option. Any Reload Option
granted shall vest immediately upon grant. All other terms of the Reload
Options granted under the 1993 Plan shall be identical to the terms and
conditions of the original option, the exercise of which gives rise to the
grant of the Reload Option.
Federal Income Tax Consequences of Awards. An optionee generally will not
recognize taxable income upon the grant of a stock option, and neither gain nor
loss will be recognized as a deduction by the Company. Upon the exercise of a
nonqualified stock option, the optionee will recognize ordinary income in an
amount equal to the difference between the option price and the fair market
value of the underlying shares on the date of the exercise, and the Company
generally will be entitled to a deduction for the amount recognized as ordinary
income by the optionee. Generally, an optionee will not be deemed to have
received taxable income upon the exercise of an incentive stock option. Any
gain realized upon a disposition of shares received pursuant to the exercise of
an incentive stock option will be taxed as a long-term capital gain or loss,
assuming the optionee holds the shares for at least two years after the date of
grant and for at least one year after the date of exercise. If shares of Common
Stock acquired upon the exercise of an incentive stock option are disposed of
prior to satisfaction of the holding periods described above, the optionee will
generally recognize ordinary income, and the Company will be allowed to deduct
an amount, equal to lesser of (i) the excess of the market value of the shares
at the date of exercise over the option price or (ii) the excess of the amount
realized upon disposition of the shares over the option price. If an optionee
pays the exercise price of any option by delivery of shares of Common Stock,
the exchange of shares generally will be treated as a non-taxable transaction
(provided, in the case of an incentive stock option, that the shares delivered
in payment are not shares acquired upon exercise of an incentive stock option
which has not satisfied the holding period requirements discussed above).
16
<PAGE>
CASINO AMERICA 1993 STOCK OPTION PLAN FISCAL 1996 AWARDS
No decision has yet been made regarding total awards under the 1993 Plan for
fiscal 1997 or subsequent years. No named Executive Officer, executive officer
or director received any awards under the 1993 Plan during fiscal 1996. During
fiscal 1996, options to acquire 71,000 shares were awarded to all employees as
a group (excluding executive officers), all at an exercise price of $6.25 per
share and an expiration date of November 22, 2005, and 171,000 shares were
awarded to all eligible participants in the 1993 Plan at a weighted average
exercise price of $6.03 per share and expiration dates ranging from March 4,
2001 to November 22, 2005.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE 1993 STOCK OPTION PLAN.
4. APPROVAL OF SELECTION OF AUDITORS
Unless marked to the contrary, proxies will be voted for the selection of
Ernst & Young as the Company's independent auditors for the fiscal year ending
on April 30, 1997. Ernst & Young was engaged as the Company's independent
auditors effective June 1993 and has audited the Company's consolidated
financial statements for the years ended April 30, 1993, April 30, 1994, April
30, 1995 and April 30, 1996.
Representatives of Ernst & Young are expected to appear at the Annual
Meeting, will have an opportunity to make a statement, if they wish to do so,
and will be available to answer appropriate questions from stockholders at that
time.
The firm of McGladrey & Pullen had previously served as the Company's
auditors from June 8, 1992 until June 1993, at which time pursuant to a
recommendation of the Board, they were dismissed. McGladrey & Pullen's report
on the financial statements of the Company for each of the years ended December
31, 1991 and 1990, and for the four-month period ended April 30, 1992, did not
contain an adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope, or accounting principles. Through the
date of dismissal, there were no disagreements with McGladrey & Pullen on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure. Furthermore, there were no "reportable events,"
as defined in Item 304(a)(1)(v) of Regulation S-K promulgated by the
Commission, through the date of dismissal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
SELECTION OF ERNST & YOUNG AS THE COMPANY'S INDEPENDENT AUDITORS.
OTHER MATTERS
The Board of Directors is not aware of any other business that may come
before the Annual Meeting. However, if additional matters properly come before
the meeting, proxies will be voted at the discretion of the proxy-holders.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 Annual Meeting of
Stockholders must be received by the Company not later than June 19, 1997, at
its principal executive offices, Attention: Bernard Goldstein, Chairman and
Chief Executive Officer, in order to be considered for inclusion in the
Company's proxy statement and form of proxy relating to that annual meeting.
17
<PAGE>
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to Stockholders for fiscal 1996 is
being provided to stockholders with this Proxy Statement.
BY ORDER OF THE BOARD OF
DIRECTORS,
Bernard Goldstein, Chairman and
Chief Executive Officer
October 17, 1996
Biloxi, Mississippi
18
<PAGE>
CASINO AMERICA, INC.
PROXY
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING TO BE HELD NOVEMBER
14, 1996
The undersigned hereby appoints Bernard Goldstein, John M. Gallaway and Allan
B. Solomon, and each of them, the proxy or proxies of the undersigned with full
power of substitution to vote all shares of the common stock of Casino America,
Inc., a Delaware corporation (the "Company"), that the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Company to be held on
November 14, 1996, or adjournments thereof, with all powers the undersigned
would possess if personally present, on the following as specified and, in
their discretion, on such other matters as may properly come before the meeting
Proposal 1: Elect Directors.
Bernard Goldstein John M. Gallaway
Allan B. Solomon Robert S. Goldstein
Alan J. Glazer Emanuel Crystal
[_] FOR All Nominees listed above (except as marked to the contrary
below)
[_] WITHHOLD AUTHORITY to vote for
All Nominees listed above
- --------------------------------------------------------------------------------
(To withhold your vote for any nominee or nominees, print the name(s) above.)
Proposal 2: Approve Amendment to the Company's 1992 Stock Option Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
Proposal 3: Approve Amendment to the Company's 1993 Stock Option Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
(Please sign on reverse side.)
<PAGE>
Proposal 4: Ratify Selection of Ernst & Young as Independent Auditors.
[_] FOR [_] AGAINST [_] ABSTAIN
When properly executed, this proxy will be voted as directed. If no direction
is given, this proxy will be voted FOR Proposals 1, 2, 3 and 4 and in the
discretion of the proxies nominated hereby on any other business as may
properly come before the meeting.
Please sign exactly as name appears
below.
Dated: _____________________ , 1996
-----------------------------------
Signature
-----------------------------------
Signature, if held jointly
Please sign exactly as your name
appears on this Proxy. If shares
are registered in more than one
name, the signatures of all such
holders are required. A
corporation should sign in its
full corporate name by a duly
authorized officer, stating such
officer's title and official
capacity, giving the full title as
such. A partnership should sign in
the partnership name by an
authorized person, stating such
person's title and relationship to
the partnership.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE.
<PAGE>
EXHIBIT A
CASINO AMERICA, INC.
1992 STOCK OPTION PLAN
AS AMENDED, MARCH 5, 1996
----------------
1. DEFINITIONS. As used herein, the following terms shall have the meanings
indicated below:
(a) The "Company" shall mean CASINO AMERICA, INC., a Delaware
corporation.
(b) A "Subsidiary" shall mean any corporation of which fifty percent
(50%) or more of the total voting power of outstanding stock is owned,
directly or indirectly in an unbroken chain, by the Company.
(c) "Option Stock" shall mean Common Stock of the Company (subject to
adjustment as described in Section 12) reserved for options pursuant to
this Plan.
(d) The "Plan" means the Casino America, Inc. 1992 Stock Option Plan, as
amended hereafter from time to time, including the form of Option
Agreements as they may be modified by the Board from time to time.
(e) The "Optionee" for purposes of Section 9 is an employee of the
Company or any Subsidiary to whom an incentive stock option has been
granted under the Plan. For purposes of Section 10, the "Optionee" is the
consultant or advisor to or officer or director of the Company or any
Subsidiary to whom a nonqualified stock option has been granted.
(f) "Committee" shall mean a Committee of two or more directors who shall
be appointed by and serve at the pleasure of the Board.
(g) The "Internal Revenue Code" is the Internal Revenue Code of 1986, as
amended from time to time.
2. PURPOSE. The purpose of the Plan is to promote the success of the Company
and its subsidiaries by facilitating the employment and retention of competent
personnel and by furnishing incentive to directors, officers, employees,
consultants, and advisors upon whose efforts the success of the Company and
its subsidiaries will depend to a large degree.
It is the intention of the Company to carry out the Plan through the
granting of stock options which will qualify as "Incentive Stock Options"
under the provisions of Section 422 of the Internal Revenue Code, and through
the granting of "Nonqualified Stock Options" pursuant to Section 10 of this
Plan. Adoption of this Plan shall be and is expressly subject to the condition
of approval by the shareholders of the Company within twelve (12) months
before or after the adoption of the Plan by the Board of Directors.
3. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of the date it is
adopted by the Board of Directors of the Company.
4. ADMINISTRATION. The Plan shall be administered by the Board of Directors
of the Company (hereinafter referred to as the "Board") or by a Stock Option
Committee (hereinafter referred to as the "Committee" and as defined in
Section 1(f) of this Plan) which may be appointed by the Board from time to
time. The Board or the Committee, as the case may be, shall have all of the
powers vested in it under the provisions of the Plan, including but not
limited to exclusive authority (where applicable and within the limitations
described herein) to determine, in its sole discretion, whether an incentive
stock option or nonqualified stock option shall be granted, the individuals to
whom, and the time or times at which, options shall be granted, the number of
shares subject to each option and the option price and terms and conditions of
each option. The Board, or the Committee, shall have full power and authority
to administer and interpret the Plan, to make and amend rules, regulations and
guidelines for administering the Plan, to prescribe the form and conditions of
the respective stock option agreements (which may vary from Optionee to
Optionee) evidencing each option and to make all other determinations
necessary or advisable for the administration of the Plan. The Board's, or the
Committee's,
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<PAGE>
interpretation of the Plan, and all actions taken and determinations made by
the Board or the Committee pursuant to the power vested in it hereunder, shall
be conclusive and binding on all parties concerned. No member of the Board or
the Committee shall be liable for any action taken or determination made in
good faith in connection with the administration of the Plan.
In the event the Board appoints a Committee as provided hereunder, any action
of the Committee with respect to the administration of the Plan shall be taken
pursuant to a majority vote of the Committee members or pursuant to the written
resolution of all Committee members.
5. PARTICIPANTS. The Board or the Committee, as the case may be, shall from
time to time, at its discretion and without approval of the shareholders,
designate those directors, officers, consultants or advisors of the Company or
of any Subsidiary to whom nonqualified stock options shall be granted under
this Plan; provided, however, that consultants or advisors shall not be
eligible to receive stock options hereunder unless such consultant or advisor
renders bona fide services to the Company or Subsidiary and such services are
not in connection with the offer or sale of securities in a capital-raising
transaction. The Board or the Committee, as the case may be, shall, from time
to time, at its discretion and without approval of the shareholders, designate
those employees of the Company or any Subsidiary to whom incentive stock
options shall be granted under this Plan.
The Board or the Committee may grant additional incentive stock options or
nonqualified stock options under this Plan to some or all participants then
holding options or may grant options solely or partially to new participants.
In designating participants, the Board or the Committee shall also determine
the number of shares to be optioned to each such participant. The Board may
from time to time designate individuals as being ineligible to participate in
the Plan.
6. STOCK. The Stock to be optioned under this Plan shall consist of
authorized but unissued shares of Option Stock. One Million Fifty-Eight
Thousand Seven Hundred and Fifty (1,058,750) shares of Option Stock shall be
reserved and available for options under the Plan; provided, however, that the
total number of shares of Option Stock reserved for options under this Plan
shall be subject to adjustment as provided in Section 12 of the Plan. In the
event that any outstanding option under the Plan for any reason expires or is
terminated prior to the exercise thereof, the shares of Option Stock allocable
to the unexercised portion of such option shall continue to be reserved for
options under the Plan and may be optioned hereunder.
7. DURATION OF PLAN. Incentive stock options may be granted pursuant to the
Plan from time to time during a period of ten (10) years from the earlier of
the date the Plan is approved by the Board or the date it is approved by the
shareholders of the Company. Nonqualified stock options may be granted pursuant
to the Plan from time to time after the Plan is adopted by the Board and until
the Plan is discontinued or terminated by the Board.
8. PAYMENT. Optionees may pay for shares upon exercise of options granted
pursuant to this Plan with cash, certified check, Common Stock of the Company
valued at such stock's then "fair market value" as defined in Section 9 below,
or such other form of payment as may be authorized by the Board or the
Committee.
9. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS. Each incentive stock
option granted pursuant to the Plan shall be evidenced by a written stock
option agreement (the "Option Agreement"). The Option Agreement shall be in
such form as may be approved from time to time by the Board or the Committee
and may vary from Optionee to Optionee; provided, however, that each Optionee
and each Option Agreement shall comply with and be subject to the following
terms and conditions:
(a) Number of Shares and Option Price. The Option Agreement shall state
the total number of shares covered by the incentive stock option. The
option price per share shall not be less than one hundred percent (100%) of
the fair market value of the Common Stock per share on the date the Board
or the Committee, as the case may be, grants the option; provided, however,
that if an Optionee owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or
of its parent or any Subsidiary, the option price per share of an incentive
stock option granted to such Optionee shall not
A-2
<PAGE>
be less than one hundred ten percent (110%) of the fair market value of the
Common Stock per share on the date of the grant of the option. For purposes
hereof, if such stock is then reported in the national market system or is
listed upon an established exchange or exchanges, "fair market value" of
the Common Stock per share shall be the highest closing price of such stock
in such national market system or on such stock exchange or exchanges on
the date the option is granted or, if no sale of such stock shall have
occurred on that date, on the next preceding day on which there was a sale
of stock. If such stock is not so reported in the national market system or
listed upon an exchange, "fair market value" shall be the mean between the
"bid" and "asked" prices quoted by a recognized specialist in the Common
Stock of the Company on the date the option is granted, or if there are no
quoted "bid" and "asked" prices on such date, on the next preceding date
for which there are such quotes. If such stock is not publicly traded as of
the date the option is granted, the "fair market value" of the Common Stock
shall be determined by the Board, or the Committee, in its sole discretion
by applying principles of valuation with respect to all such options. The
Board or the Committee, as the case may be, shall have full authority and
discretion in establishing the option price and shall be fully protected in
so doing.
(b) Term and Exercisability of Incentive Stock Option. The term during
which any incentive stock option granted under the Plan may be exercised
shall be established in each case by the Board or the Committee, as the
case may be, but in no event shall any incentive stock option be
exercisable during a term of more than ten (10) years after the date on
which it is granted; provided, however, that if an Optionee owns stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of its parent or any Subsidiary,
the incentive stock option shall be exercisable during a term of not more
than five (5) years after the date on which it is granted. The Option
Agreement shall state when the incentive stock option becomes exercisable
and shall also state the maximum term during which the option may be
exercised. In the event an incentive stock option is exercisable
immediately, the manner of exercise of the option in the event it is not
exercised in full immediately shall be specified in the Option Agreement.
The Board or the Committee, as the case may be, may accelerate the exercise
date of any incentive stock option granted hereunder which is not
immediately exercisable as of the date of grant.
(c) Other Provisions. The Option Agreement authorized under this Section
9 shall contain such other provisions as the Board or the Committee, as the
case may be, shall deem advisable. Any such Option Agreement shall contain
such limitations and restrictions upon the exercise of the option as shall
be necessary to ensure that such option will be considered an "Incentive
Stock Option" as defined in Section 422 of the Internal Revenue Code or to
conform to any change therein.
10. TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS. Each nonqualified
stock option granted pursuant to the Plan shall be evidenced by a written
Option Agreement. The Option Agreement shall be in such form as may be approved
from time to time by the Board or the Committee and may vary from Optionee to
Optionee; provided, however, that each Optionee and each Option Agreement shall
comply with and be subject to the following terms and conditions:
(a) Number of Shares and Option Price. The Option Agreement shall state
the total number of shares covered by the nonqualified stock option. Unless
otherwise determined by the Board or the Committee, as the case may be, the
option price per share shall be equal to one hundred percent (100%) of the
fair market value of the Common Stock per share on the date the Board or
the Committee grants the option. For purposes hereof, the "fair market
value" of a share of Common Stock shall have the same meaning as set forth
under Section 9(a) herein.
(b) Term and Exercisability of Nonqualified Stock Option. The term during
which any nonqualified stock option granted under the Plan may be exercised
shall be established in each case by the Board or the Committee, as the
case may be, but in no event shall any option be exercisable during a term
of more than ten (10) years after the date on which it was granted. The
Option Agreement shall state when the nonqualified stock option becomes
exercisable and shall also state the maximum term during which the option
may be exercised. In the event a nonqualified stock option is exercisable
immediately, the manner of exercise of the option in the event it is not
exercised in full immediately shall be specified in the Option
A-3
<PAGE>
Agreement. The Board or the Committee, as the case may be, may accelerate
the exercise date of any nonqualified stock option granted hereunder which
is not immediately exercisable as of the date of grant.
(c) Withholding. In the event the Optionee is required under the Option
Agreement to pay the Company, or make arrangements satisfactory to the
Company respecting payment of, any federal, state, local or other taxes
required by law to be withheld with respect to the option's exercise, the
Board or the Committee, as the case may be, may, in its discretion and
pursuant to such rules as it may adopt, permit the Optionee to satisfy such
obligation, in whole or in part, by electing to have the Company withhold
shares of Common Stock otherwise issuable to the Optionee as a result of
the option's exercise equal to the amount required to be withheld for tax
purposes. Any stock elected to be withheld shall be valued at its "fair
market value," as provided under Section 9(a) hereof, as of the date the
amount of tax to be withheld is determined under applicable tax law. The
Optionee's election to have shares withheld for this purpose shall be made
on or before the date the option is exercised or, if later, the date that
the amount of tax to be withheld is determined under applicable tax law.
Such election shall also comply with such rules as may be adopted by the
Board or the Committee to assure compliance with Rule 16b-3, as then in
effect, of the General Rules and Regulations under the Securities Exchange
Act of 1934, if applicable.
(d) Other Provisions. The Option Agreement authorized under this Section
10 shall contain such other provisions as the Board, or the Committee, as
the case may be, shall deem advisable.
11. TRANSFER OF OPTION. No option shall be transferable, in whole or in part,
by the Optionee other than by will or by the laws of descent and distribution
and, during the Optionee's lifetime, the option may be exercised only by the
Optionee. If the Optionee shall attempt any transfer of any option granted
under the Plan during the Optionee's lifetime, such transfer shall be void and
the option, to the extent not fully exercised, shall terminate.
12. RECAPITALIZATION, SALE, MERGER, EXCHANGE OR LIQUIDATION. In the event of
an increase or decrease in the number of shares of Common Stock resulting from
a subdivision or consolidation of shares or the payment of a stock dividend or
any other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company, the number of shares of Option
Stock reserved under Section 6 hereof and the number of shares of Option Stock
covered by each outstanding option and the price per share thereof shall be
adjusted by the Board to reflect such change. Additional shares which may be
credited pursuant to such adjustment shall be subject to the same restrictions
as are applicable to the shares with respect to which the adjustment relates.
Unless otherwise provided in the Option Agreement, in the event of the sale
by the Company of substantially all of its assets and the consequent
discontinuance of its business, or in the event of a merger, exchange,
reorganization, reclassification, extraordinary dividend, divestiture
(including a spin-off), or liquidation of the Company, the Board may, in
connection with the Board's adoption of the plan for sale, merger, exchange or
liquidation, provide for one or more of the following: (i) the equitable
acceleration of the exercisability of any outstanding options hereunder; (ii)
the complete termination of this Plan and cancellation of outstanding options
not exercised prior to a date specified by the Board (which date shall give
Optionees a reasonable period of time in which to exercise the options prior to
the effectiveness of such sale, merger, exchange, reorganization,
reclassification, extraordinary dividend, divestiture (including a spin-off),
or liquidation); and (iii) the continuance of the Plan with respect to the
exercise of options which were outstanding as of the date of adoption by the
Board of such plan for sale, merger, exchange, reorganization,
reclassification, extraordinary dividend, divestiture (including a spin-off),
or liquidation and provide to Optionees holding such options the right to
exercise their respective options as to an equivalent number of shares of stock
of the corporation succeeding the Company by reason of such sale, merger,
exchange, reorganization, reclassification, extraordinary dividend, divestiture
(including a spin-off), or liquidation. The grant of an option pursuant to the
Plan shall not limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, exchange or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
A-4
<PAGE>
13. INVESTMENT PURPOSE. No shares of Common Stock shall be issued pursuant to
the Plan unless and until there has been compliance, in the opinion of
Company's counsel, with all applicable legal requirements, including without
limitation those relating to securities laws and stock exchange listing
requirements. As a condition to the issuance of Option Stock to an Optionee,
the Board or the Committee may require the Optionee to (a) represent that the
shares of Option Stock are being acquired for investment and not resale and to
make such other representations as the Board, or the Committee, as the case may
be, shall deem necessary or appropriate to qualify the issuance of the shares
as exempt from the Securities Act of 1933 and any other applicable securities
laws, and (b) represent that Optionee shall not dispose of the shares of Option
Stock in violation of the Securities Act of 1933 or any other applicable
securities laws. The Company reserves the right to place a legend on any stock
certificate issued upon exercise of an option granted pursuant to the Plan to
assure compliance with this Section 13.
14. RIGHTS AS A SHAREHOLDER. An Optionee (or the Optionee's successor or
successors) shall have no rights as a shareholder with respect to any shares
covered by an option until the date of the issuance of a stock certificate
evidencing such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property), distributions or
other rights for which the record date is prior to the date such stock
certificate is actually issued (except as otherwise provided in Section 12 of
the Plan).
15. AMENDMENT OF THE PLAN. The Board may from time to time, insofar as
permitted by law, suspend or discontinue the Plan or revise or amend it in any
respect; provided, however, that no such revision or amendment, except as is
authorized in Section 12, shall impair the terms and conditions of any option
which is outstanding on the date of such revision or amendment to the material
detriment of the Optionee without the consent of the Optionee. Notwithstanding
the foregoing, no such revision or amendment shall (i) materially increase the
number of shares subject to the Plan except as provided in Section 12 hereof,
(ii) change the designation of the class of employees eligible to receive
options, (iii) decrease the price at which options may be granted, or (iv)
materially increase the benefits accruing to Optionees under the Plan, unless
such revision or amendment is approved by the shareholders of the Company.
Furthermore, the Plan may not, without the approval of the shareholders, be
amended in any manner that will cause incentive stock options to fail to meet
the requirements of Section 422 of the Internal Revenue Code.
16. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall impose
no obligation upon the Optionee to exercise such option. Further, the granting
of an option hereunder shall not impose upon the Company or any subsidiary any
obligation to retain the Optionee in its employ for any period.
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EXHIBIT B
CASINO AMERICA, INC.
1993 STOCK OPTION PLAN
AS AMENDED, MARCH 5, 1996
----------------
1. PURPOSE OF THE PLAN
The purpose of this Plan is to further the growth of Casino America, Inc.
("Casino") and its Subsidiaries (Casino and its Subsidiaries together being
the "Company") by offering an incentive to officers, directors and other key
employees of the Company to continue in the employ of the Company, and to
increase the interest of these employees in Casino, through additional
ownership of its common stock.
2. DEFINITIONS
Whenever used in this Plan, the following terms shall have the meanings set
forth in this Section:
(a) "Board of Directors" means the Board of Directors of Casino.
(b) "Change of Control" means the acquisition by any person or group (as
that term is defined in the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules promulgated pursuant to that act) in a
single transaction or a series of transactions of 30% or more in voting
power of the outstanding stock of Casino and a change of the composition of
the Board of Directors so that, within two years after the acquisition took
place, a majority of the members of the Board of Directors of Casino, or of
any corporation with which Casino may be consolidated or merged, are
persons who were not directors or officers of Casino or one of its
Subsidiaries immediately prior to the acquisition, or to the first of a
series of transactions which resulted in the acquisition of 30% or more in
voting power of the outstanding stock of Casino.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee referred to in Section 5.
(e) "Common Stock" means the common stock, par value $.01 per share, of
Casino.
(f) "Corporate Transaction" means any (i) reorganization or liquidation
of Casino, (ii) reclassification of Casino's capital stock, (ii) merger of
Casino with or into another corporation, or (iv) the sale of all or
substantially all the assets of Casino, which results in a significant
number of Employees being transferred to a new employer or discharged or in
the creation or severance of a parent-subsidiary relationship.
(g) "Date of Grant" means, as the case may be: (i) the date fixed in this
Plan for mandatory grants of Options; (ii) the date the Committee approves
the grant of an Option pursuant to this Plan; or (iii) such later date as
may be specified by the Committee as the date a particular Option granted
pursuant to this Plan will become effective.
(h) "Exercise Price" means the price per share which must be paid upon
exercise of an Option. The Exercise Price may be paid in cash, property
(including Common Stock) or a combination of both cash and property, as
determined by the Employee upon exercise of the Option and as set forth in
Section 9(c) hereof.
(i) "Fair Market Value" means: (i) if the Common Stock is traded in a
market in which actual transactions are reported, the mean of the high and
low prices at which the Common Stock is reported to have traded on the
relevant date in all markets on which trading in the Common Stock is
reported or, if there is no reported sale of the Common Stock on the
relevant date, the mean of the highest reported bid price and lowest
reported asked price for the Common Stock on the relevant date; (ii) if the
Common Stock is Publicly Traded but only in markets in which there is no
reporting of actual transactions, the mean of the highest reported bid
price and the lowest reported asked price for the Common Stock on the
relevant date; or (iii) if the Common Stock is not Publicly Traded, the
value of a share of Common Stock as determined by the most recent valuation
prepared by an independent expert at the request of the Committee.
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(j) "Incentive Stock Option" means any Option which, at the time of the
grant, is an incentive stock option within the meaning of Section 422 of
the Code.
(k) "Non-Qualified Option" means any Option that is not an Incentive
Stock Option pursuant to the terms of this Plan.
(l) "Option" means any option granted pursuant to this Plan, including
any Reload Options as defined herein.
(m) "Participant" means any person employed by the Company within the
meaning of Section 3401(c) of the Code and the regulations promulgated
thereunder; and any officer or director of the Company even if he is not an
employee within the meaning of the first clause of this subsection.
(n) "Publicly Traded" means that a class of stock is required to be
registered pursuant to Section 12 of the Exchange Act, or that stock of
that class has been sold within the preceding 12 months in an underwritten
public offering, or stock that is regularly traded in a public market.
(o) "Reload Option" means an Option granted to a Participant equal to the
number of shares of already owned Common Stock delivered by the Participant
to pay for the exercise of an Option, as more fully described in Section 15
below.
(p) "Retirement" means a Termination of Employment by reason of a
Participant's retirement at a time when the Participant is at least 65
years old, other than by reason of a termination by resignation, discharge,
death or Total Disability or the resignation, failure to stand for re-
election or dismissal from the Board of Directors.
(q) "Subsidiary" means any corporation that is a subsidiary with regard
to Casino as that term is defined in Section 424(f) of the Code.
(r) "Termination of Employment" means the time when the employee-employer
relationship between an employee-Participant and the Company ceases to
exist for any reason including, but not limited to, a termination by
resignation, discharge, death, Total Disability or Retirement or the
resignation, failure to stand for re-election or dismissal from the Board
of Directors.
(s) "Total Disability" means the inability of a Participant to perform
the material duties of his or her job by reason of a medically determinable
physical or mental impairment that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not
less than 12 months. All determinations as to the date and extent of
disability of a Participant will be made in accordance with the written
policy pertaining to Participant disability, if any, of the Company by
which an employee-Participant is employed. In the absence of a written
policy pertaining to Participant disability, all determinations as to the
date and extent of disability of a Participant will be made by the
Committee in its sole and absolute discretion. In making its determination,
the Committee may consider the opinion of the personal physician of the
Participant or the opinion of an independent licensed physician of the
Company's choosing.
3. EFFECTIVE DATE OF THE PLAN
The "Effective Date" of this Plan is January 14, 1993. This Plan shall
become effective on the Effective Date, subject to approval of the Plan not
later than 12 months from the Effective Date, by the affirmative vote of the
holders of a majority of the shares of voting stock of Casino present, or
represented, and entitled to vote at a meeting duly held in accordance with
the laws of the State of Delaware. The Plan was approved by the shareholders
of Casino on November 17, 1993.
4. ADMINISTRATION OF THE PLAN
The Committee shall be responsible for the administration of this Plan, and
shall grant Options pursuant to this Plan. Subject to the express provisions
of this Plan, the Committee shall have full authority to interpret this Plan,
to prescribe, amend and rescind rules and regulations relating to it, and to
make all other determinations which it believes to be necessary or advisable
in administering this Plan. The determinations of the Committee on the matters
referred to in this Section shall be conclusive. The Committee may not amend
this Plan. No
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member of the Committee shall be liable for any act or omission in connection
with the administration of this Plan unless it resulted from the member's
willful misconduct.
5. THE COMMITTEE
The Committee shall be the Board of Directors of Casino or a committee of
the Board consisting of not fewer that two members of the Board of Directors.
Unless the Board of Directors appoints a Committee, the Board of Directors
itself shall be the Committee. If the Committee is the Board of Directors, it
shall hold meetings and act as provided in Casino's bylaws. If the Committee
is other than the Board of Directors: (a) the Committee shall hold its meeting
at such times and places as it may determine and shall maintain written
minutes of its meetings; (b) a majority of the members of the Committee shall
constitute a quorum at any meeting of the Committee; (c) all determinations of
the Committee shall be made by the vote of a majority of the members who
participate in a meeting; (d) the members of the Committee may participate in
a meeting of the Committee in person or by conference telephone or similar
communications equipment by means of which all members can hear each other;
and (e) any decision or determination by written consent of all of the members
of the Committee shall be as effective as if it had been made by a vote of a
majority of the members who participate in a meeting.
6. STOCK SUBJECT TO THE PLAN
From and after March 5, 1996, the maximum number of shares of Common Stock
as to which Options may be granted pursuant to this Plan is One Million Two
Hundred Thousand (1,200,000) shares. The maximum number of shares of such
Common Stock shall be reduced each year by the required or discretionary grant
of Options as provided herein (including Reload Options as described in
Section 15 below). If any Option expires or is canceled without being
exercised in full, the number of shares as to which the Option is not
exercised will once again become shares as to which new Options may be
granted. The Common Stock that is issued on exercise of Options may be
authorized but unissued shares or shares that have been issued and reacquired
by Casino.
7. PERSONS ELIGIBLE TO RECEIVE OPTIONS
Options may be granted only to Participants, as defined in Section 2(m)
above.
8. GRANTS OF OPTIONS
(a) In General. Except as otherwise provided herein (including but not
limited to subsection (b) of this Section 8 and Section 15 hereof, pertaining
to Reload Options), the Committee shall have complete discretion to determine
when and to which Participants Options are to be granted, the number of shares
of Common Stock as to which Options granted to each Participant will relate,
whether Options granted to a Participant will be Incentive Stock Options or
Non-Qualified Options or partly Incentive Stock Options and partly Non-
Qualified Options and, subject to the limitations in Sections 9 and 10 below,
the Exercise Price and the term of Options granted to a Participant. Any
Options that are not designated as Incentive Stock Options when they are
granted shall be Non-Qualified Options. No grant of an Incentive Stock Option
may be conditioned upon a Non-Qualified Option's having yet been exercised in
whole or in part, and no grant of a Non-Qualified Option may be conditioned
upon an Incentive Stock Options's having not been exercised in whole or in
part. Notwithstanding the foregoing, directors who are members of the
Committee shall not receive options pursuant to the Plan other than pursuant
to subsection (b) below, so long as they are serving on the Committee, and may
not have received options pursuant to the Plan other than pursuant to
subsection (b) below, or pursuant to any other plan of the Company, during the
twelve month period immediately prior to their becoming a member of the
Committee.
(b) Mandatory Grant of Director Options. From and after August 15, 1994,
upon the initial election or appointment of any person to the Board of
Directors of Casino, such director shall be granted (whether or not he or she
would otherwise be a Participant, as defined in Section 2(m) hereof) as
compensation for serving as a
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director, Options to acquire Twenty-Two Thousand Five Hundred (22,500) shares
of Common Stock. Notwithstanding any vesting provisions provided elsewhere in
this Plan or in the Stock Option Agreement, one-half of the Options granted to
directors hereunder shall vest immediately and one-half of such Options shall
vest one year from the Date of Grant, and shall be granted for a term of five
years.
9. OPTION PROVISIONS
(a) Exercise Price. The Exercise Price of each Option shall be as determined
by the Committee; provided, however, that in the case of Incentive Stock
Options, the Exercise Price shall not be less than 100% of the Fair Market
Value of the Common Stock on the Date of Grant of the Option; and, provided
further, however, that notwithstanding the foregoing, the Exercise Price of
both Incentive Stock Options and Non-Qualified Options for directors granted
pursuant to Section 8(b) above shall be 100% of the Fair Market Value of the
Common Stock on the Date of Grant of the Option. The Exercise Price of any
Reload Options shall be as determined pursuant to Section 15 of this Plan.
(b) Term. The term of each Option shall be as determined by the Committee,
but in no event shall the term of an Option (whether or not an Incentive Stock
Option) be longer than ten (10) years from the Date of Grant; provided,
however, that the term of any Reload Options shall be determined as provided
in Section 15 of this Plan.
(c) Manner of Exercise. An Option that has vested pursuant to the terms of
this Plan may be exercised in whole or in part, in increments of a minimum of
100 shares, at any time, or from time to time, during its term. To exercise an
Option, the Participant exercising the Option must deliver to Casino, at its
principal office:
(i) a written notice of exercise of the Option, which states the extent
to which the Option is being exercised and which is executed by the
Participant;
(ii) a certified or bank cashier's check in an amount, or Common Stock
with a Fair Market Value, equal to the Exercise Price of the Option times
the number of shares as to which it is being exercised, or a combination of
the foregoing; and
(iii) a certified or bank cashier's check equal to any withholding taxes
the Company is required to pay as a result of the exercise of the Option by
the Participant.
The day on which Casino receives all of the items specified in this
subsection shall be the date on which the Option is exercised to the extent
described in the notice of exercise.
(d) Delivery of Stock Certificates. As promptly as practicable after an
Option is exercised, Casino shall cause the transfer agent to deliver to the
Participant who exercises the Option certificates, registered in that person's
name, representing the number of shares of Common Stock that were purchased by
the exercise of the Option. Each certificate may, if applicable, bear a legend
to indicate that, the Common Stock represented by the certificate was issued
in a transaction which was not registered pursuant to the Securities Act of
1933, as amended (the "Act"), and may only be sold or transferred in a
transaction that is registered pursuant to the Act or is exempt from the
registration requirements of the Act.
(e) Vesting of Options. Except as otherwise provided in this Plan, the
Options granted hereunder to Participants shall be subject to such conditions
as to vesting as shall be determined by the Committee, in its sole and
absolute discretion, at the Date of Grant of the Option, and the terms of such
vesting shall be clearly set forth in the instrument granting the Option;
provided, however, that upon a Change of Control, any Options that have not
yet vested in accordance with the terms of this Plan and the Stock Option
Agreement shall vest upon such Change of Control. An Option shall "vest" at
such time as it becomes exercisable in accordance with this Plan and the Stock
Option Agreement. Upon exercise of an Option and the delivery of the stock
certificates as provided herein, the Common Stock acquired upon exercise of
the Option shall not be subject to forfeiture by the Participant for any
reason whatsoever. Notwithstanding any of the foregoing, an officer, director
or person who beneficially owns ten percent (10%) or more of the Common Stock
(including Options to acquire Common
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Stock) shall not sell or otherwise dispose of Common Stock acquired upon
exercise of an Option granted hereunder until at least six months shall elapse
from latter of (i) the Effective Date of the Plan, or (ii) the Date of Grant
of the Option to the date of sale or other disposition of the Common Stock
acquired upon exercise of the Option.
(f) Nontransferability of Options. During the lifetime of a person to whom
an Option is granted pursuant to this Plan, the Option may be exercised only
by that person or by his or her guardian or legal representative. An Option
may not be assigned, transferred, sold, pledged or hypothecated in any way;
shall not be subject to levy or execution or disposition under the Bankruptcy
Code of 1978, as amended, or any other state or federal law granting relief to
creditors, whether now or hereafter in effect; and shall not be transferable
otherwise than by will or the laws of descent and distribution. Casino will
not recognize any attempt to assign, transfer, sell, pledge, hypothecate or
otherwise dispose of an Option contrary to the provisions of this Plan, or to
levy an attachment, execution or similar process upon any Option and, except
as expressly stated in this Plan, Casino shall not be required to, and shall
not, issue Common Stock on the exercise of an Option to anyone who claims to
have acquired that Option from the person to whom it was granted in violation
of this subsection.
(g) Retirement of Holder of Option. If there is a Termination of Employment
of an employee-Participant to whom an Option has been granted due to
Retirement, each Incentive Stock Option held by the retired Participant,
whether or not then vested, may be exercised until the earlier of: (x) the end
of the three (3) month period immediately following the date of such
Termination of Employment; or (y) the expiration of the term specified in the
Option. In the case of a Non-Qualified Option, there shall be substituted the
words, "the end of the twelve (12) month period" for the words "the end of the
three (3) month period" in the immediately preceding sentence.
(h) Total Disability of Holder of Option. If there is a Termination of
Employment of an employee-Participant to whom an Option has been granted by
reason of his or her Total Disability, each Option held by the Participant,
whether or not then vested, may be exercised until the earlier of: (x) the end
of the twelve (12) month period immediately following the date of such
Termination of Employment; or (y) the expiration of the term specified in the
Option.
(i) Death of Holder of Option. If there is a Termination of Employment of a
Participant to whom an Option has been granted by reason of (i) his or her
death, or (ii) the death of a former Participant within three (3) months
following the date of his or her Retirement (or, in the case of a Non-
Qualified Option, within twelve (12) months following the date of his or her
Retirement), or (iii) the death of a former Participant within twelve (12)
months following the date of his or her Termination of Employment by reason of
Total Disability, then each Option held by the person at the time of his or
her death, whether or not then vested, may be exercised by the person or
persons to whom the Option shall pass by will or by the laws of descent and
distribution (but by no other persons) until the earlier of: (x) the end of
the twelve (12) month period immediately following the date of death (or such
longer period as is permitted by the Committee); and (y) the expiration of the
term specified in the Option, provided, however, that in no event is the term
of the Option to be deemed to expire prior to the end of three (3) months from
the date of death of the Participant.
(j) Termination of Employment Other Than for Retirement, Death or
Disability. If there is a Termination of Employment of an employee-Participant
to whom an Option has been granted pursuant to this Plan for any reason other
than the Retirement, death or Total Disability of the employee-Participant,
then all Options held by such employee-Participant which are then vested may
be exercised until the earlier of: (x) the three (3) month period immediately
following the date of such Termination of Employment; or (y) the expiration of
the term specified in the Option.
(k) Stock Option Agreement. As promptly as practicable after a Participant
is granted an Option pursuant to this Plan, the Committee shall send the
Participant a document setting forth the terms and conditions of the grant.
The form of grant document shall be substantially as set forth in Exhibit "A"
attached hereto. Each Option granted pursuant to this Plan must be clearly
identified as to whether it is or is not an Incentive Stock Option
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and shall set forth all other terms and conditions relating to the exercise
thereof. In the case of an Incentive Stock Option, the document shall include
all terms and provisions that the Committee determines to be necessary or
desirable in order to qualify the Option as an Incentive Stock Option within
the meaning of Section 422 of the Code. If a Participant is granted an
Incentive Stock Option and a Non-Qualified Option at the same time, the
Committee shall send the Participant a separate document relating to each of
the Incentive Stock Option and the Non-Qualified Option.
10. SPECIAL PROVISIONS RELATING TO INCENTIVE STOCK OPTIONS
No Incentive Stock Option may be granted pursuant to this Plan after ten
(10) years from the first to occur of: (i) the date this Plan is adopted by
the Board of Directors; or (ii) the date this Plan is approved by the
stockholders of Casino. No Incentive Stock Option may be exercised after the
expiration of ten (10) years from the Date of Grant or such shorter period as
is provided herein. Notwithstanding Sections 8(b) and 15 hereof, Incentive
Stock Options may not be granted to a Participant who, at the time the Option
is granted, owns more than ten percent (10%) of the total combined voting
power of the stock of Casino, unless: (i) the purchase price of the Common
Stock pursuant to the Incentive Stock Option is at least one hundred ten
percent (110%) of the Fair Market Value of the Common Stock on the Date of
Grant; and (ii) the Incentive Stock Option by its terms is not exercisable
after the expiration of five (5) years from the Date of Grant. The Committee
is authorized, pursuant to the last sentence of Section 422(b) of the Code, to
provide at the time an Option is granted, pursuant to the terms of such
Option, that such Option shall not be treated as an Incentive Stock Option
even though it would otherwise qualify as an Incentive Stock Option. The terms
of any Incentive Stock Option granted hereunder shall, in the hands of any
individual grantee thereof, be subject to the dollar limitations set forth in
Section 422(d) of the Code (pertaining to the $100,000 per year limitation).
11. RECAPITALIZATION
(a) In General. If Casino increases the number of outstanding shares of
Common Stock through a stock dividend or a stock split, or reduces the number
of outstanding shares of Common Stock through a combination of shares or
similar recapitalization then, immediately after the record date for the
change: (i) the number of shares of Common Stock issuable on the exercise of
each outstanding Option granted pursuant to this Plan (whether or not then
vested) shall be increased in the case of a stock dividend or a stock split,
or decreased in the case of a combination or similar recapitalization that
reduces the number of outstanding shares, by a percentage equal to the
percentage change in the number of outstanding shares of Common Stock as a
result of the stock dividend, stock split, combination or similar
recapitalization; (ii) the Exercise Price of each outstanding Option granted
pursuant to this Plan (whether or not then vested) shall be adjusted so that
the total amount to be paid upon exercise of the Option in full will not
change; and (iii) the number of shares of Common Stock that may be issued on
exercise of Options granted pursuant to this Plan (whether or not then vested)
and that are outstanding or remain available for grant shall be increased or
decreased by a percentage equal to the percentage change in the number of
outstanding shares of Common Stock.
(b) Corporate Transactions. If, as a result of a Corporate Transaction while
an Option granted pursuant to this Plan is outstanding (whether or not then
vested), and the holders of the Common Stock become entitled to receive, with
respect to their Common Stock, securities or assets other than, or in addition
to, their Common Stock, then upon exercise of that Option the holder shall
receive what the holder would have received if the holder had exercised the
Option immediately before the first Corporate Transaction that occurred while
the Option was outstanding and as if the Company had not disposed of anything
the holder would have received as a result of that and all subsequent
Corporate Transactions. Casino shall not agree to any Corporate Transaction
unless the other party to the Corporate Transaction agrees to make available,
on exercise of the Options granted pursuant to this Plan that are outstanding
at the time of the Corporate Transaction, the securities or other assets the
holders of those Options are entitled pursuant to this subsection to receive.
12. RIGHTS OF OPTION HOLDER
(a) Stockholder. The holder of an Option (whether or not then vested) shall
not have any rights as a stockholder by reason of holding that Option. Upon
exercise of an Option granted pursuant to this Plan, the
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holder shall be deemed to acquire the rights of a stockholder when, but not
before, the issuance of Common Stock as a result of the exercise is recorded
in the stock transfer records of Casino.
(b) Employment. Nothing in this Plan or in the grant of an Option shall
confer upon any Participant the right to continue in the employ of the Company
or shall interfere with or restrict in any way the rights of the Company to
discharge any Participant at any time for any reason whatsoever, with or
without cause.
13. LAWS AND REGULATIONS
The obligation of Casino to sell and deliver shares of Common Stock on
vesting and exercise of Options granted pursuant to this Plan shall be subject
to the condition that counsel for Casino be satisfied that the sale and
delivery thereof will not violate the Act or any other applicable laws, rules
or regulations. In addition, the Company may, as a condition to such sale and
delivery, require the Participant to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for Casino, such a representation is required pursuant to
such securities laws.
This Plan is intended to meet the requirements of Rule 16b-3 in order to
provide directors and executive officers with certain exemptions from the
application of Section 16(b) of the Exchange Act.
14. WITHHOLDING OF TAXES
(a) In General. In addition to the requirement set forth in Section 9(c)
above that, in order to exercise an Option granted pursuant to this Plan, a
person must make a payment to Casino or authorize withholding in order to
enable the Company to pay any withholding taxes due as a result of the
exercise of that Option, if an employee-Participant who exercised an Incentive
Stock Option disposes of shares of Common Stock acquired through exercise of
that Incentive Stock Option either (x) within two years after the Date of
Grant of the Incentive Stock Option or (y) within one year after the issuance
of the shares on exercise of the Incentive Stock Option then, promptly
thereafter, the Participant shall notify the Company of the occurrence of the
event and the amount realized upon the disposition of such Common Stock by the
Participant, and pay any federal, state and other taxes due as a result
thereof.
(b) Withholding of Taxes. If, whether because of a disposition of Common
Stock acquired on exercise of an Incentive Stock Option, the exercise of a
Non-Qualified Option or otherwise, the Company becomes required to pay
withholding taxes to any federal, state or other taxing authority and the
employee-Participant fails to provide the Company with the funds with which to
pay that withholding tax, then the Company may withhold, subject to applicable
state law, up to fifty percent (50%) of each payment of salary or bonus to the
Participant (which will be in addition to any other required or permitted
withholding), until the Company has been reimbursed for the entire withholding
tax it was required to pay.
15. RELOAD OPTIONS
(a) Grant. Whenever a Participant holding any Option outstanding pursuant to
this Plan (including Reload Options previously granted pursuant to this
Section 15) exercises the Option and makes payment of the Exercise Price
pursuant to Section 9(c)(ii) hereof, in whole or in part, by tendering Common
Stock previously held by the Participant, then the Company shall grant to the
Participant a Reload Option for the number of shares of Common Stock that is
equal to the number of shares tendered by the Participant on payment of the
Exercise Price of the Option being exercised.
(b) Reload Option Exercise Price. Subject to Section 10 hereof, the Reload
Option Exercise Price per share shall be an amount equal to the Fair Market
Value per share of the Company's Common Stock, determined as of the date of
receipt by the Company of the notice by the Participant to exercise the
Option.
(c) Term of Reload Option. Subject to Section 10 hereof, the exercise period
of the Reload Option shall expire, and the Reload Option shall no longer be
exercisable, on the later to occur of (i) the expiration date of the
originally surrendered Option or (ii) one year from the date of grant of the
Reload Option.
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(d) Restriction on Exercise. Any Reload Option granted pursuant to this
Section 15 shall vest immediately upon grant pursuant to Subsection (a) above.
(e) Other Terms of Reload Options. All other terms of the Reload Options
granted hereunder shall be identical to the terms and conditions of the
original Option, the exercise of which gives rise to the grant of the Reload
Option.
16. RESERVATION OF SHARES
Casino shall at all times keep reserved for issuance on exercise of Options
granted pursuant to this Plan a number of authorized but unissued or
reacquired shares of Common Stock equal to the maximum number of shares Casino
may be required to issue on exercise of outstanding Options (whether or not
then vested) granted pursuant to this Plan.
17. AMENDMENT OF THE PLAN
The Board of Directors may, at any time and from time to time, modify or
amend this Plan in any respect effective at any date the Board of Directors
determines; provided, however, that, without the approval of the stockholders
of Casino the Board of Directors may not: (i) increase the maximum number of
shares of Common Stock that may be issued on exercise of Options (whether or
not then vested) granted pursuant to this Plan; (ii) change the categories of
Participants eligible to receive Options; (iii) extend the period during which
Options (whether or not then vested) may be exercised; (iv) change the
provisions fixing the minimum Exercise Price; or (v) change the provisions as
to termination of Options. No modification or amendment of this Plan shall,
without the consent of the holder of an outstanding Option (whether or not
then vested), adversely affect the holder's rights pursuant to that Option.
18. TERMINATION OF THE PLAN
The Board of Directors may suspend or terminate this Plan at any time or
from time to time, but no such action shall adversely affect the rights of a
person holding an outstanding Option, whether or not then vested, granted
pursuant to this Plan prior to that date.
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