SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1394 (AMENDMENT NO. ___)
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for use of the Commission only
(as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting material pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PRESIDENT CASINOS, INC.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or Item 22(a)(2)
of Schedule 14A.
/ / 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 the Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it is 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 Form or Schedule and the date of its filing:
(1) Amount previously paid:
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(4) Date Filed:
_________________________________________________________________
<PAGE>
PRESIDENT CASINOS, INC.
802 North First Street
St. Louis, Missouri 63102
_________________________
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 23, 1997
_________________________
The 1997 Annual Meeting of Stockholders of President Casinos, Inc. (the
"Company") will be held on July 23, 1997 at 9:30 a.m. prevailing local time at
the Broadwater Beach Resort, 2110 Beach Boulevard, Biloxi, Mississippi for the
following purposes:
1. To elect one Class II director to hold office until the 2000 Annual
Meeting of Stockholders;
2. To consider and vote upon a proposal to approve an amendment to the
Amended Certificate of Incorporation of the Company in order to enable
the Company to effect a one-for-six reverse stock split and an
increase in the par value of the Company's Common Stock from $0.01 to
$0.06 per share;
3. To consider and vote upon a proposal to adopt the President Casinos,
Inc. 1997 Stock Option Plan; and
4. To transact such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) thereof.
The close of business on June 17, 1997 has been fixed as the record date for
the meeting. Only stockholders of record at that date are entitled to notice
of and to vote at the meeting and any adjournment(s) or postponement(s)
thereof.
All stockholders are cordially invited to attend the meeting. The proxies
are solicited by the Board of Directors of the Company. The business to be
transacted at the meeting is more fully described in the attached proxy
statement, which is hereby made a part of this notice. The Board of Directors
urges you to date, sign and return promptly the enclosed proxy to give voting
instructions with respect to your shares of Common Stock. The return of the
proxy will not affect your right to vote in person if you do attend the
meeting. A copy of the Company's Annual Report is also enclosed.
TIMOTHY MURRAY
Secretary
June 27, 1997
<PAGE>
_________________________________________________________________
PRESIDENT CASINOS, INC.
802 North First Street
St. Louis, Missouri 63102
_________________________
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF STOCKHOLDERS
JULY 23, 1997
_________________________
The enclosed proxy is solicited by the Board of Directors of President
Casinos, Inc. (the "Company"), a Delaware corporation, for use at the 1997
Annual Meeting of Stockholders (the "Annual Meeting") to be held on July 23,
1997 at 9:30 a.m. prevailing local time at the Broadwater Beach Resort, 2110
Beach Boulevard, Biloxi, Mississippi and any adjournment(s) or postponement(s)
thereof. This proxy statement, the foregoing notice and the enclosed proxy
are first being mailed to stockholders on or about June 27, 1997.
The Board of Directors does not intend to bring any matter before the Annual
Meeting other than the matters specifically referred to in the notice of the
Annual Meeting, nor does the Board of Directors know of any matter which
anyone else proposes to present for action at the Annual Meeting. However, if
any other matter properly comes before the Annual Meeting, the persons named
in the accompanying proxy or their duly constituted substitutes acting at the
Annual Meeting will be deemed authorized to vote or otherwise act thereon in
accordance with their judgment on such matter.
If the enclosed proxy is properly executed and returned prior to voting at
the Annual Meeting, the shares represented thereby will be voted in the manner
indicated thereon at the Annual Meeting and any adjournment thereof. In the
absence of instructions, the shares represented at the Annual Meeting by the
enclosed proxy will be voted "FOR" the nominee of the Board of Directors in
the election of directors, "FOR" the adoption of the proposal to approve the
one-for-six stock split and "FOR" the proposal to approve the President
Casinos, Inc. 1997 Stock Option Plan. Any proxy may be revoked at any time
prior to its exercise by notifying the Secretary in writing, by delivering a
duly executed proxy bearing a later date or by attending the Annual Meeting
and voting in person. Attendance alone at the Annual Meeting will not of
itself revoke a proxy.
1
<PAGE>
VOTING SECURITIES
At the close of business on June 17, 1997, the record date fixed for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were 30,194,700 issued and outstanding shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock"). There are no
other classes of voting securities outstanding.
On all matters voted upon at the Annual Meeting and any adjournment(s) or
postponement(s) thereof, each record holder of Common Stock as of the record
date will be entitled to one vote per share. In the election of directors,
stockholders will not have cumulative voting rights. The presence, in person
or by proxy, of stockholders entitled to cast at least a majority of the votes
that all stockholders are entitled to cast on each matter to be acted upon at
the Annual Meeting shall constitute a quorum for the purposes of consideration
and action on that matter. Each matter to be voted on shall be authorized
upon receiving the affirmative vote of a majority of the votes cast by all
stockholders entitled to vote thereon.
Shares subject to abstentions will be treated as shares that are present at
the Annual Meeting for purposes of determining the presence of a quorum, and
as voted for purposes of determining the base number of shares voting on a
particular proposal. If a broker or other nominee holder indicates on the
Proxy Card that it does not have discretionary authority to vote the shares it
holds of record on a proposal, those shares will not be considered as present
at the Annual Meeting for purposes of determining a quorum or as voted for
purposes of determining the approval of the stockholders on a particular
proposal.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of June 17, 1997 (i) by each person known to
the Company to own beneficially more than 5% of the outstanding shares of the
Company's Common Stock; and (ii) by each of the Company's directors, each of
the executive officers listed in the Summary Compensation Table and by all of
such directors and executive officers as a group.
<TABLE>
<CAPTION>
Name of Beneficial Owner No. of Shares (1) % of Class
------------------------ ------------------ ----------
<S> <C> <C>
John E. Connelly 9,602,426 (2) 31.8%
John S. Aylsworth 290,000 (3) *
Karl G. Andren 121,800 (4) *
Terrence L. Wirginis 69,450 (5) *
Royal J. Walker, Jr. 22,500 (7) *
James A. Zweifel 30,000 (6) *
Boris Weinstein (resigned
December 5, 1996) 27,000 (8) *
All executive officers and
directors as a group
(8 persons (9)) 10,163,176 (10) 33.6%
</TABLE>
- - --------------------------------------------
* Less than 1%
(1) To the Company's knowledge, each of the persons named in the table has
sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, unless otherwise noted in the
footnotes to this table.
(2) Includes shares owned of record by entities controlled by Mr. Connelly
(the "Connelly Companies"). Also includes 225,000 shares beneficially
owned by Mr. Connelly but subject to purchase options granted to certain
individuals. Does not include 1,134,948 shares owned by a charitable
remainder trust of which a Connelly Company is a beneficiary. Mr.
Connelly disclaims beneficial ownership of the shares held by the trust.
Mr. Connelly's address is 2180 Noblestown Road, Pittsburgh, Pennsylvania
15205.
(3) Includes 180,000 shares issuable pursuant to stock options which are
currently exercisable or within 60 days after June 17, 1997 and 100,000
shares issuable pursuant to stock options if certain target prices are
attained within 60 days after June 17, 1997.
(4) Consists of 75,000 shares owned by New York Cruise Lines, Inc. ("NYCL"),
of which Mr. Andren is Chairman and a principal stockholder; 45,000
shares issuable pursuant to stock options which are currently
exercisable; and 1,800 shares owned by Mr. Andren's minor children.
(5) Includes 60,000 shares issuable pursuant to stock options which are
currently exercisable.
(6) Includes 20,000 shares issuable pursuant to stock options which are
currently exercisable.
3
<PAGE>
(7) Consists exclusively of shares issuable pursuant to stock options which
are currently exercisable or exercisable within 60 days after June 17,
1997.
(8) Includes 12,000 shares issuable pursuant to stock options which are
currently exercisable. Mr. Weinstein resigned as an officer of the
Company effective December 5, 1996.
(9) Does not include shares beneficially owned by Mr. Weinstein as he is no
longer an executive officer of the Company.
(10) Includes 320,000 shares issuable pursuant stock options which are
currently exercisable or exercisable within 60 days after June 17, 1997
and 100,000 shares issuable pursuant to stock options if certain target
prices are attained within 60 days after June 17, 1997.
ITEM 1. ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of three classes.
At each Annual Meeting of Stockholders, directors are elected for a term of
three years to succeed those directors whose terms are expiring.
At the Annual Meeting, one individual will be elected to serve as a Class II
director of the Company for a term of three years. The nominee receiving the
vote of holders of a majority of the shares entitled to vote and represented
in person or by proxy at the Annual Meeting will be elected. Stockholders do
not have the right to cumulate votes in the election of directors.
The persons named as proxies on the accompanying proxy card intend to vote
all duly executed proxies for the election of Terrence L. Wirginis as a Class
II director, except as otherwise directed by the stockholder on the proxy
card. Mr. Wirginis is currently a director of the Company. If for any reason
Mr. Wirginis becomes unavailable for election, which is not now anticipated,
the persons named in the accompanying proxy card will vote for such substitute
nominee as is designated by the Board of Directors.
The directors of the Company, together with certain information about them,
are set forth below.
<TABLE>
<CAPTION>
Name Age Director Since Positions with the Company
---- --- -------------- --------------------------
<S> <C> <C> <C>
John E. Connelly 71 1992 Chairman of the Board,
President and Chief
Executive Officer
(Class III)
John S. Aylsworth 47 1995 Executive Vice President and
Chief Operating Officer
(Class III)
Terrence L. Wirginis 45 1993 Vice President-Marine and
Development (Class II)
Karl G. Andren 50 1993 Director (Class I)
Royal P. Walker, Jr. 37 1996 Director (Class I)
</TABLE>
4
<PAGE>
Nominee for Term Expiring in 2000
TERRENCE L. WIRGINIS provided consulting services to the Company with
respect to the Company's marine operations and the development and improvement
of the Company's facilities since its inception. Due to Mr. Wirginis's
increased involvement with the Company he became an employee of the Company
and serves as Vice President, Marine and Development, effective August 15,
1995. The Company has been advised that Mr. Wirginis devotes an insubstantial
amount of his time to Gateway Clipper Fleet, a company in which he has an
ownership interest. Mr. Wirginis is the grandson of Mr. Connelly.
DIRECTORS CONTINUING IN OFFICE
Terms Expiring in 1998
JOHN E. CONNELLY has served as Chairman and a director of the Company and
its predecessors since their inception. Mr. Connelly has also served as Chief
Executive Officer of the Company from its inception until March 1995 and as
President and Chief Executive Officer of the Company since July 1995.
Entities controlled by Mr. Connelly have owned and operated the Gateway
Clipper Fleet in Pittsburgh from its inception in 1958 through 1996, the
Station Square Sheraton Hotel in Pittsburgh since 1981 and the Broadwater
Beach Resort since 1992. In 1984, Mr. Connelly founded World Yacht
Enterprises, a fleet of dinner cruise, sightseeing and excursion boats in New
York City. In 1985, he started Gateway Riverboat Cruises in St. Louis. Mr.
Connelly is also the founder, owner and Chief Executive Officer of J. Edward
Connelly Associates, Inc., a marketing firm based in Pittsburgh, Pennsylvania.
JOHN S. AYLSWORTH has been Executive Vice President and Chief Operating
Officer of the Company since March 1995 and a director of the Company since
July 1995. Prior to joining the Company, Mr. Aylsworth served as an executive
officer for Davis Companies, located in Los Angeles, California. From January
1992 through October 1994, Mr. Aylsworth was Chief Executive Officer of The
Sports Club Company, a company which operates premier health and fitness
facilities in Los Angeles and Irvine, California. From February 1989 through
December 1991, Mr. Aylsworth was Chief Financial Officer of SpectreVision Co.,
a Dallas, Texas based supplier of in-room entertainment and interactive
information systems in the hotel industry.
Terms Expiring in 1999
KARL G. ANDREN has been Chairman of Circle-Line Sightseeing Yachts, Inc., a
subsidiary of NYCL, which operates the leading sightseeing cruise line in New
York City, since 1981. In addition, NYCL owns World Yacht, Inc., a fleet of
luxury dinner cruise, sightseeing and excursion boats in New York City. Mr.
Andren is a principal stockholder in NYCL. Mr. Andren is a member of the
Company's Audit and Compensation Committees.
ROYAL P. WALKER, JR. became a member of the Company's Board of Directors on
June 4, 1996. Mr. Walker is an attorney from Jackson, Mississippi and since
June 1, 1992 has served on the staff of The Institute for Disability Studies
5
<PAGE>
for the State of Mississippi University System. From June 1991 through May
1992 he served as the first Executive Director of the Mississippi Gaming
Commission. Mr. Walker is a member of the Company's Audit and Compensation
Committees.
Recommendation of Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE NOMINEE OF THE BOARD OF DIRECTORS IN THE ELECTION ON DIRECTORS. The
directors and officers of the Company intend to vote their shares in favor of
this nominee.
Meetings and Committees of the Board of Directors
During fiscal 1997, the Board of Directors held 15 formal and telephonic
meetings. During fiscal 1997, all Board of Directors members attended at
least seventy-five percent of the aggregate number of meetings of the full
Board of Directors and of each committee on which such director serves.
The Audit Committee, which is currently comprised of Messrs. Andren and
Walker, and whose tasks include reviewing the Company's audited financial
statements and making recommendations to the full Board of Directors
concerning the Company's audits and selection of independent public
accountants, met one time during fiscal year 1997. In addition, the Company
has established a Compensation Committee, also currently composed of Messrs.
Andren and Walker, whose responsibilities include determining salaries,
bonuses and other compensation for the Company's executive officers and
administering the Company's stock option plan. The Company's Compensation
Committee met four times during fiscal year 1997.
Compensation of Directors
During fiscal 1997, directors who were not employees of the Company received
director's fees of $6,000 for each Board meeting attended. Directors who are
employees of the Company do not receive director's fees. Directors of the
Company are entitled to receive discretionary grants of stock options under
the Company's stock option plan. In addition, under the Company's stock
option plan, each non-employee director elected to the Board of Directors
receives a grant of non-qualified stock options to purchase 30,000 shares of
Common Stock at the fair market value of the Company's Common Stock on the
date of grant. These stock options are exercisable immediately with respect
to one-half of the shares and become exercisable with respect to the remainder
of the shares in two equal annual installments.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for making all compensation decisions with respect to the
executive officers of the Company. The Committee currently consists of Karl
6
<PAGE>
G. Andren and Royal P. Walker, Jr., both of whom were elected to the Committee
in June 1996. In addition, Floyd R. Ganassi served on the Committee from
April 1993 until June 1996, and William C. Nelson served on the Committee from
April 1993 through March 13, 1996.
Compensation Policies
Underlying the Committee's decision with respect to executive officers'
compensation is the premise that it is fundamentally important that the
Company be able to attract, retain, motivate and benefit from the guidance and
experience of suitably talented and qualified individuals. The Company's
compensation policy is based upon the principal that the financial rewards to
the executives should be aligned with the financial interests of the
stockholders of the Company. In this manner, the Committee believes that the
Company will meet its ultimate responsibility to its stockholders by striving
to create a suitable long-term return on their investment through earnings
from operations and prudent management of the Company's business and
operations. As part of the compensation policy, the Committee believes that
its executives should be encouraged to acquire equity interests in the
Company, thereby providing additional incentives, corresponding to the
interests of stockholders, to provide their maximum effort toward the success
and profitability of the Company's businesses and the achievement of increased
stockholder value. The Company's compensation packages for its executive
officers consist of three major components: base salary, annual bonus and
stock options.
Each year, the Committee conducts a full review of the Company's executive
compensation program, as well as a review of each executive's performance
during the year. As part of such review, the Committee periodically reviews
publicly available information regarding the compensation levels and policies
in the context of other companies within the gaming industry, as well as with
a broader group of companies of comparable size and complexity. In addition,
the Committee uses its discretion to set executive compensation based upon
external and internal factors and the particular executive's circumstances.
Base Salary
The base salary level for each of the Company's executives is principally
based upon the level and scope of the responsibilities of the office, the pay
levels of similarly positioned executive officers among companies competing
for the services of such executives and a consideration of the level of
experience and performance profile for the particular executive officer.
Annual adjustments to each executive officer's salary are also based on the
foregoing factors. Additionally, the Committee considers the prevailing
economic conditions, the relationship of any such adjustments to those
provided to other employees within the Company, the performance of the
executive's duties and responsibilities and other performance-related criteria
that may be relevant with respect to such executive officer at the time.
The base salaries for each of Messrs. Connelly, Aylsworth, Wirginis and
Zweifel were determined pursuant to employment agreements with the Company.
7
<PAGE>
Annual Bonus
Bonuses are viewed as a reward for individual contributions to the Company's
performance, based not only on the Company's short-term results but also on
the contributions each executive officer has made to the potential for future
growth of the Company's profits. In addition, consideration is given to the
achievement of selected financial goals and progress in meeting other long-
term objectives, as well as the executive officers' leadership role in these
activities. In light of these considerations, for fiscal 1997, Messrs.
Aylsworth, Zweifel, Wirginis and Weinstein received cash bonuses of $56,875,
$17,063, $17,063 and $6,564, respectively.
Stock Options
Pursuant to the Company's stock option plan, stock options may be granted to
the Company's executive officers. The Committee believes that long-term
incentive compensation such as stock options are the most direct way of tying
executive compensation to increases in stockholder value. The Committee
believes that awards of stock options are an important complement to the cash
elements of the Company's executive officers' compensation described above as
they align the executive's interests with those of the Company's stockholders.
Stock options granted with an exercise price are generally equal to the
market price of the Company's Common Stock on the date of grant, and typically
are subject to vesting requirements based upon the executive's continued
employment with the Company. This approach is designed to create incentives
for the executive to seek to achieve consistent improvement in the Company's
performance and creation of stockholder value over the long-term, and
additionally provides an incentive for the executive to remain in the service
of the Company.
The Committee from time to time has evaluated the level of long-term
incentives provided to each of the executive officers of the Company. When
considering whether to make grants of stock options, the Committee reviews
each officer's relative contributions to corporate performance, the practices
of other comparable companies and takes into consideration the effect such
awards might have on Company performance and stockholder value. Executive
officers who join the Company are typically granted options to purchase shares
of the Company's Common Stock based upon a consideration of such executive's
level of duties.
Mr. Connelly's Compensation
Mr. Connelly has agreed to serve as Chairman of the Board of the Company
until December 15, 1999 at an annual salary of $200,000. Prior to December
18, 1992, Mr. Connelly did not receive any salary or bonus from the Company.
In determining the appropriate compensation level for Mr. Connelly, the
Committee sought to achieve the same corporate goals as discussed above and
considered the various factors that it reviewed for the Company's other
executive officers. The Committee believes that Mr. Connelly's cash
compensation is significantly below the cash compensation paid to chief
executive officers of the Company's competitors and peer companies.
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<PAGE>
This report is submitted by the members of the Committee.
Karl G. Andren
Royal P. Walker, Jr.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information with respect to
compensation paid by the Company during the three fiscal years ended February
28/29, 1997, 1996 and 1995, respectively, to each of the named executive
officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------- ------------
Securities All
Fiscal Underlying Other
Name and Principal Position Year Salary Bonus Options/SARs Compensation (1)
- - --------------------------- ------ ------ ----- ------------ ----------------
<S> <C> <C> <C> <C> <C>
John E. Connelly (2) 1997 $200,000 $ -- -- $ 2,258
Chairman of the Board 1996 200,000 -- -- 2,660
Chief Executive Officer 1995 200,000 -- -- 2,660
and President
John S. Aylsworth (3) 1997 $299,327 $ 56,875 400,000 (4) $ 22,648 (5)
Executive Vice 1996 273,501 44,331 400,000 53,263 (5)
President and Chief 1995 -- -- -- --
Operating Officer
Terrence L. Wirginis (6) 1997 $150,000 $ 17,063 30,000 $ 2,216
Vice President-Marine 1996 157,415 -- -- 1,097
and Development 1995 120,000 -- -- --
James A. Zweifel (7) 1997 $150,000 $ 17,063 30,000 (4) $ 2,408
Vice President and 1996 53,890 -- 30,000 303
Chief Financial Officer 1995 -- -- -- --
Boris Weinstein (8) 1997 $163,270 $ 6,564 15,000 (4) $ 1,616
Former Vice President-Sales 1996 150,000 16,667 -- 2,217
& Marketing 1995 150,000 -- -- 2,128
</TABLE>
(1) Except as otherwise noted, represents contributions made to the Company's
401(k) plan for the account of the named executive.
(2) Mr. Connelly also served as Chief Executive Officer of the Company from
its inception until March 1995 and from July 1995 through the present.
(3) Mr. Aylsworth became an employee of the Company in March 1995.
(4) On June 19, 1996, the Company repriced certain outstanding stock options
with exercise prices ranging from $6.00 to $9.00 per share by amending
the terms of such options to provide for an exercise price of $1.9375 per
share. In connection with such repricing Messrs. Aylsworth, Weinstein
9
<PAGE>
and Zweifel had previously granted options for 400,000, 15,000 and 30,000
shares repriced. See "Repricing of Stock Options."
(5) Includes $20,060 (1997) and $50,000 (1996) in relocation expense
reimbursements.
(6) During fiscal 1996 and 1995, Mr. Wirginis was engaged as a consultant to
the Company. Mr. Wirginis's responsibilities included oversight and
planning with respect to the renovation of "The Admiral" and construction
of new vessels. Mr Wirginis was paid approximately $73,000 and $120,000
as a consultant during fiscal 1996 and 1995, respectively. On August 15,
1995, Mr. Wirginis became an employee of the Company.
(7) Mr. Zweifel joined the Company in November 1995.
(8) Mr. Weinstein ceased to be an employee of the Company effective December
5, 1996. Included in fiscal 1997 salary is severance payments of $35,192
pursuant to the terms of his separation agreement.
The following table contains information concerning the grant of stock
options during fiscal 1997 to the Company's executive officers named in the
Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------- Potential Realizable
Value at Assumed Annual
Number of Percent of Total Rates of Stock Price
Securities Options/SARs Exercise Appreciation for
Underlying Granted to or Base Option Term (3)
Options/SARs Employees in Price Expiration
Name Granted (1) Fiscal Year (2) ($/Sh) Date 5%($) 10%($)
- - ---- ------------- ---------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John E. Connelly -- -- -- -- -- --
John S Aylsworth 400,000 (4) 39.3% 1.9375 June 2006 $ 365,545 $1,235,150
Terrence L. Wirginis 30,000 (5) 2.9% 1.9375 June 2006 36,555 92,636
James A. Zweifel 30,000 (6) 2.9% 1.9375 June 2006 36,555 92,636
Boris Weinstein 12,000 (7) 1.5% 1.9375 Dec. 1997 14,622 37,055
</TABLE>
(1) On June 17, 1996, the Company repriced certain outstanding stock options.
Pursuant to such repricing, the exercise price of options previously granted
to Messrs. Aylsworth, Weinstein and Zweifel for 400,000, 15,000 and 30,000
shares were repriced at $1.9375. See "Repricing of Stock Options."
(2) Includes options of all employees that were granted or repriced during
fiscal 1997. See "Repricing of Stock Options."
(3) In accordance with the rules of the Securities and Exchange Commission,
"Potential Realizable Value" has been calculated assuming an aggregate ten
year appreciation of the fair market value of the Company's Common Stock on
the date of the grant, at annual compounded rates of 5% and 10%, respectively.
The market value of the Company's Common Stock on June 17, 1997 was $0.XX per
share.
10
<PAGE>
(4) Options to purchase 120,000 shares of Common Stock were vested as of
February 28, 1997. Options to purchase 60,000 shares of the Company's Common
Stock vested on March 13, 1997. Options to purchase 60,000 shares of the
Company's Common Stock will vest on each of March 13, 1998 and 1999. The
remaining 100,000 shares will become exercisable at such time as the price of
the Company's Common Stock exceeds $4.00 per share for ten consecutive trading
days.
(5) Options to purchase 15,000 shares of Common Stock were vested as of
February 28, 1997. Options to purchase 7,500 shares of the Company's Common
Stock will vest on each of June 19, 1997 and June 19, 1998.
(6) Options to purchase 20,000 shares of Common Stock were vested as of
February 28, 1997. Options to purchase 10,000 shares will vest on November 1,
1997.
(7) Options to purchase 12,000 shares of Common Stock were vested as of
February 28, 1997. 3,000 shares were forfeited in December 1996 upon the
executive's separation from the Company.
The following table sets forth information regarding the number and value of
options held by each of the Company's executive officers named in the Summary
Compensation Table during fiscal 1997. None of the named executive officers
exercised any stock options during fiscal 1997.
<TABLE>
<CAPTION>
FISCAL YEAR END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs in-the-Money Options/SARs
at Fiscal Year End (#) at Fiscal Year End ($) (1)
------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- - ---- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
John E. Connelly -- -- $ -- $ --
John S. Aylsworth 120,000 280,000 -- --
Terrence L. Wirginis 45,000 15,000 -- --
James A. Zweifel 20,000 10,000 -- --
Boris Weinstein 12,000 -- -- --
</TABLE>
(1) As of February 28, 1997 no options granted were in the money.
Repricing of Stock Options
On June 19, 1996, the Compensation Committee of the Board of Directors (the
"Committee") approved amendments to the outstanding stock option agreements of
each of the executive officers and certain other employees of the Company.
Pursuant to such amendments, options to purchase an aggregate of 766,500
shares of Common Stock at exercise prices ranging from $6.00 to $9.00 per
11
<PAGE>
share were repriced (the "Repricing") at an exercise price of $1.9375 per
share, the market value of the Common Stock on the date of the Repricing. In
addition, the trading price at which certain options granted to Mr. Aylsworth
with respect to 100,000 shares of Common Stock will vest was amended from
$14.00 to $4.00 per share. Except for such amendments, the vesting periods
and other terms of the stock options affected by the Repricing were not
changed.
The Committee believes that the Repricing was necessary and appropriate in
light of competitive conditions in the gaming industry and in order to provide
a meaningful long-term incentive compensation opportunity in light of recent
trading prices of the Common Stock to key personnel whose efforts are
essential to the Company's success.
The following table contains certain information concerning the amendments
to stock options of the executive officers of the Company pursuant to the
Repricing:
Ten-Year Option/SAR Repricings Table
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Market Price Exercise Option Term
Underlying of Stock at Price at Remaining at
Options/SARs Time of Time of New Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended(#) Amendment($)(1) Amendment($) Price($) Amendment
------ ------ ----------- ---------------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
John E. Connelly -- -- -- -- -- --
Chairman of the Board,
Chief Executive Officer
and President
John S. Aylsworth 6/19/96 400,000 (2) $1.9375 $ 6.00 $ 1.9375 8 yrs., 8 mos.
Executive Vice
President and
Chief Operating Officer
Terrence L. Wirginis -- -- -- -- -- --
Vice President-Marine
and Development
James A. Zweifel 6/19/96 30,000 1.9375 6.00 1.9375 9 yrs., 4 mos.
Vice President and
Chief Financial Officer
Boris Weinstein 6/19/96 15,000 1.9375 6.167 1.9375 6 yrs., 5 mos.
Former Vice President-
Sales and Marketing
</TABLE>
- - ---------------
(1) Based on the closing price of a share of Common Stock on June 19, 1996,
the date of amendment of the replacement stock options.
12
<PAGE>
(2) Total includes options with respect to 100,000 shares which are subject
to vesting upon achievement of certain trading prices for the Common Stock.
In connection with the Repricing described above, the trading price at which
such options shall vest was amended from $14.00 to $4.00 per share.
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Karl G. Andren
Royal P. Walker, Jr.
Employee Agreements
John E. Connelly
John E. Connelly has agreed to serve through December 15, 1999 at an annual
salary of $200,000. In connection with the formation of the Company, Mr.
Connelly and the Company entered into an agreement whereby Mr. Connelly agreed
that, other than through the Company, neither he nor his affiliates will
engage in any riverboat gaming activities other than in the area within a 100-
mile radius of Pittsburgh, Pennsylvania (the "Pittsburgh Area"). The
agreement grants to the Company an option to purchase all of Mr. Connelly's
and his affiliates' assets associated with riverboats in any portion of the
Pittsburgh Area, including all vessels, leases and rights, at the fair market
value thereof as determined by an independent appraisal, in the event that
riverboat or dockside gaming is legalized in that locality.
John S. Aylsworth
Mr. Aylsworth entered into a five-year employment agreement with the Company
effective March 13, 1995 which provides for an annual salary of $275,000
during the first year of employment and an annual salary of $300,000 for the
remainder of the term of the agreement. Mr. Aylsworth will also be eligible
to receive an annual bonus to be determined by the Committee based on the
performance of the Company and Mr. Aylsworth's contribution to such
performance. Mr. Aylsworth also received options to purchase 400,000 shares
of the Company's Common Stock. Options with respect to 60,000 shares of
Common Stock were exercisable on the date of grant and options with respect to
an additional 60,000 shares of Common Stock become exercisable on the
anniversary of March 13, 1997 through March 13, 1999, provided Mr. Aylsworth
continues to be employed by the Company. The remaining options (the
"Performance Options") for 100,000 shares of Common Stock will become
exercisable at such time as the price of the Company's Common Stock exceeds
$4.00 per share for 10 consecutive trading days.
Mr. Aylsworth's agreement provides that it may be terminated for cause in
the event (i) he willfully and materially neglects to perform his duties after
receiving notice of such neglect, (ii) any gaming commission with jurisdiction
over a facility owned or operated by the Company or over a venue into which
the Company intends to expand which requires Mr. Aylsworth's licensure refuses
to grant a license to him or suspends or revokes a license granted to him or
13
<PAGE>
(iii) he commits certain illegal acts or is convicted of any felony. In the
event Mr. Aylsworth's employment is terminated by the Company without cause,
Mr. Aylsworth shall be entitled to cash payments over a 12-month period equal
to the lower of his base salary for the remaining term of the agreement (but
not less than one year's salary) or $600,000. In addition, all of Mr.
Aylsworth's previously non-vested options (other than the Performance Options)
will vest. In the event Mr. Aylsworth elects to terminate his employment
following a change of control (as defined), Mr. Aylsworth is entitled to
receive a lump sum payment equal to his base salary for the remaining term of
the agreement and all previously non-vested options (other than Performance
Options) will vest. All non-vested Performance Options vest upon a change of
control in certain circumstances. The agreement further provides that, for a
one-year period following termination of his employment, Mr. Aylsworth will
not engage directly or indirectly in any competitive gaming ventures located
within a 150-mile radius of any gaming facility owned or operated by the
Company; provided, however, that Mr. Aylsworth shall not be subject to this
covenant not to compete upon a change of control of the Company if Mr.
Aylsworth elects to forego the severance payments to which he would otherwise
be entitled.
James A. Zweifel
Mr. Zweifel entered into a three-year employment agreement with the Company
effective November 1, 1995, which provides for an annual base salary of
$150,000. Mr. Zweifel will be eligible to receive an annual bonus to be
determined by the Company's Compensation Committee based on performance. The
agreement provides that, upon a change of control (as defined), all previously
non-vested options granted to Mr. Zweifel vest and that the agreement may be
terminated for cause only in the event that (i) any jurisdiction in which the
Company conducts gaming operations which requires Mr. Zweifel licensure
refuses to grant a license to him or suspends or revokes a license granted to
him or (ii) Mr. Zweifel materially fails to perform or fulfill his covenants,
obligations and duties (as defined) after receiving notice of such failure or
(iii) certain defined conduct which is damaging or detrimental to the Company.
Upon the termination of Mr. Zweifel's employment by the Company without cause
or by Mr. Zweifel following a change of control, he will be entitled to
severance in an amount equal to one year's salary. Mr. Zweifel is prohibited
from being employed in a competitive riverboat or dockside gaming venture
located within a 100-mile radius of any gaming facility owned by the Company
for a one-year period following termination of Mr. Zweifel's employment,
unless Mr. Zweifel waives any post-employment compensation to which he would
otherwise be entitled.
Terrence L. Wirginis
Mr. Wirginis entered into a five-year employment agreement with the Company
commencing August 15, 1995, which provides for an annual salary of $150,000.
Mr. Wirginis will be eligible to receive an annual bonus and any other form of
supplementary income that the Company may award to its senior executives to be
determined by the Company's Compensation Committee based on performance. Upon
any termination of Mr. Wirginis's employment other than by reason of his
14
<PAGE>
death, disability, voluntary resignation or for cause, Mr. Wirginis will be
entitled to severance in an amount equal to the lesser of his base salary for
the remainder of the term of the agreement or $150,000. Cause is defined in
the agreement to mean (i) any gaming commission with jurisdiction over a
facility owned or operated by the registrant which requires his licensure
refuses to grant a license to Mr. Wirginis or suspends or revokes a license
granted to Mr. Wirginis; (ii) any reasonable determination by the Chief
Operating Officer and the Chief Executive Officer, acting jointly, or in the
absence of either one of the foregoing, the single available officer acting
individually, of a material failure by Mr. Wirginis to perform his covenants,
obligations or duties under the agreement; and (iii) certain defined conduct
which is injurious to the Company. Upon the termination of Mr. Wirginis's
employment by the Company without cause or by Mr. Wirginis following a change
of control, as defined by the agreement, he will be entitled to severance in
an amount equal to the lesser of $300,000 or the product of the base salary
multiplied by the number of years remaining in the employment term subject to
a covenant not to compete for a period of one year within a 100-mile radius of
any gaming facility owned or operated by the Company, other than in the area
within a 100-mile radius of Pittsburgh, Pennsylvania. The Company has agreed
that the sole remedy for Mr. Wirginis's violation of the covenant not to
compete shall be to cease making the foregoing severance benefits.
Other Agreements
Boris Weinstein
During fiscal 1997, Mr. Weinstein and the Company entered into a separation
agreement pursuant to which Mr. Weinstein's position was eliminated effective
December 5, 1996. Pursuant to this agreement, the Company paid Mr. Weinstein
$35,192 severance and agreed to provide Mr. Weinstein certain medical and
health benefits through February 28, 1997. The Company also agreed to
indemnify Mr. Weinstein for actions taken while he was an employee of the
Company.
ITEM 2. PROPOSAL TO APPROVE AN AMENDMENT TO THE RESTATED AMENDED CERTIFICATE
OF INCORPORATION OF THE COMPANY EFFECTING A REVERSE STOCK SPLIT AND
AN INCREASE IN PAR VALUE OF COMMON STOCK
Summary of the Reverse Stock Split
The Board of Directors of the Company has unanimously adopted resolutions to
approve, and submit to the stockholders of the Company for approval, proposed
amendments to the Company's Amended Certificate of Incorporation (the
"Amendment") to: (i) effect a one-for-six reverse stock split of the presently
issued and outstanding shares of the Company's Common Stock and (ii) increase
the par value of the Company's Common Stock from $0.01 to $0.06 per share (the
reverse stock split and the increase in par value are hereinafter referred to
collectively as the "Reverse Stock Split"). The principal effect of the
Reverse Stock Split will be to reduce the number of issued and outstanding
shares of Common Stock from 30,194,700 to approximately 5,032,450. The
Reverse Stock Split will not change the number of authorized shares of Common
15
<PAGE>
Stock or change the number of authorized shares or par value of the Company's
preferred stock, $0.01 par value (the "Preferred Stock"), of which no shares
have been issued.
If the Reverse Stock Split is approved by the affirmative vote of the
holders of a majority of the Company's Common Stock, upon filing of the
Amendment with the Delaware Secretary of State the Reverse Stock Split will be
effective, shares of Common Stock owned by a stockholder immediately prior to
the Reverse Stock Split (the "Old Shares") will be deemed to be automatically
converted without any action on the part of the stockholder into the number of
shares of Common Stock equal to the number of Old Shares divided by six (the
"New Shares"); provided, however, that no fractional New Shares will be issued
as a result of the Reverse Stock Split. In lieu thereof, each stockholder
whose Old Shares are not evenly divisible by six will receive one additional
New Share for the fractional New Share that such stockholder would be
otherwise entitled to receive as a result of the Reverse Stock Split.
The complete text of the Amendment effective the Reverse Stock Split is set
forth as Appendix A to this Proxy Statement. For approval, the Amendment must
receive the affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock. The members of the Company's Board of
Directors, who hold in the aggregate approximately 32.1% of the Company's
Common Stock, have advised the Company that they intend to vote to approve the
Reverse Stock Split.
Reasons For the Reverse Stock Split
The Board of Directors, after considering the effects of the relatively low
current price per share of the Company's Common Stock, believes that the
Reverse Stock Split is advisable and in the best interests of the Company and
its stockholders. The reduction in the number of issued and outstanding
shares of the Common Stock caused by the Reverse Stock Split is expected to
increase the market price of the Common Stock, thereby reducing the negative
attributes traditionally associated with a low per share market price. The
Board of Directors anticipates that the higher share price expected to result
from the Reverse Stock Split will enhance the Company's ability to comply with
continued listing requirements established by The Nasdaq Stock Market.
A low per share market price often adversely effects the marketability of a
stock. Certain institutional investors have internal policies preventing the
purchase of low-priced stocks, and many brokerage houses do not permit low-
priced stocks to be used as collateral for margin accounts or to be purchased
on margin. Further, certain brokerage houses have adopted time-consuming
practices and procedures which act to discourage individual brokers from
dealing in low-priced stocks because such practices and procedures make the
handling of low-priced stocks economically unattractive. A low stock price
also has the effect of increasing the amount and percentage of transaction
costs paid by individual investors. Because brokers' commissions on low-
priced stocks generally represent a higher percentage of the stock price than
commissions on higher priced stocks, a low stock price can result in
individual stockholders paying transaction costs (commissions, markups or
16
<PAGE>
markdowns) which are a higher percentage of their total share value than would
be the case with stock with a higher share price. The Board of Directors
believes that the expected increase in share price of the Common Stock
resulting from the Reverse Stock Split should reduce the effect of these
negative attributes traditionally associated with a low per share price,
thereby enhancing the acceptability of the Common Stock with the financial
community and investing public and resulting in a broader market for the
Common Stock than currently exists.
There can be no assurance that the Reverse Stock Split will increase the
current market price per share, or that any increase in market price of the
Common Stock after the Reverse Split can be maintained. The Reverse Stock
Split could result in an increase in market price for Common Stock which is
proportionately less than the decrease in the number of shares outstanding.
Additionally, there can be no assurances that any of the effects described
above will be achieved.
Certain Effects of the Reverse Stock Split
The Reverse Stock Split will be effected by means of filing the Amendment
with the Delaware Secretary of State. If the Amendment is approved by the
requisite vote of the stockholders at the Annual Meeting, upon filing of the
Amendment with the Delaware Secretary of State each certificate representing
Old Shares will be deemed automatically without any action on part of the
stockholders to represent the number of New Shares into which such Old Shares
have been reclassified and changed pursuant to the Reverse Stock Split.
The principal effects of the Amendment are to reduce the number of issued
and outstanding shares of Common Stock and to increase the par value of the
Common Stock from $0.01 to $0.06 per share. The Company has authorized
capital stock of 100,000,000 shares of Common Stock and 10,000,000 shares of
Preferred Stock. The number of shares of authorized capital stock will not be
changed be reason of the Reverse Stock Split. As of June 17, 1997, the number
issued and outstanding Old Shares was 30,194,700 share and there were no
shares of Preferred Stock issued and outstanding. Based upon the Company's
best estimates, the aggregate number of New Shares that will be issued and
outstanding following the Reverse Stock Split will be approximately 5,032,450.
As of June 17, 1997, under the President Casinos, Inc. Stock Option Plan
(the "Plan") there were outstanding options to purchase an aggregate of
2,052,200 shares of Common Stock at an exercise price of $0.9375 to $9.00 per
share. In addition, an aggregate of 497,800 shares remain available for grant
pursuant to the Plan. The Plan provides that in the event of a change in
capitalization, such as a reverse stock split, the number of shares covered by
each outstanding option and the purchase price under each option shall be
adjusted so as to maintain the optionee's proportionate interest as before the
Reverse Stock Split. Additionally, the Plan provides that the total shares
subject to options to be issued under the Plan will be appropriately adjusted.
If the Reverse Stock Split is approved, the number of shares of Common Stock
issuable upon the exercise of outstanding options and the number of shares
17
<PAGE>
available for grant under the Plan will be adjusted to approximately 342,033
and 82,967, respectively, and the exercise prices of outstanding options will
be adjusted to prices of $5.625 to $54.00 per share.
In addition, non-Plan options for an aggregate of 75,000 were granted by the
Company to a consultant. If the Reverse Stock Split is approved, the number
of shares issuable upon exercise of such options will be reduced to 12,500 and
the exercise price of $25.67 will be increased to $154.02.
In connection with its 1994 private placement, the Company issued to the
purchasers of the Company's Senior Notes warrants to purchase 883,000 shares
of Common Stock at an exercise price of $7.925 per share. As a result of the
Reverse Stock Split, the number of shares issuable upon exercise of such
warrants and the exercise price per share will be adjusted to approximately
147,167 and $47.55, respectively.
The following table sets forth the effects of the Reverse Stock Split on the
Company's Common Stock and certain financial date:
<TABLE>
<CAPTION>
February 28, 1997
-----------------------------------
As Adjusted for
Actual Reverse Stock Split*
-------- -----------------------
<S> <C> <C>
Common Stock:
Authorized 100,000,000 100,000,000
Issued and outstanding 30,194,700 5,032,450
Reserve for issuance 3,508,000 584,667
Available for issuance 66,297,300 94,382,883
Par value per common share $0.01 $0.06
Other Effects of
the Reverse Stock Split:
Stated capital $ 301,947 $ 301,947
Additional paid-in capital 101,728,682 101,728,682
Retained earnings (deficit) (78,310,697) (78,310,697)
Total stockholders' equity 23,719,933 23,719,933
Net loss per common share
(for the year ended February 28, 1997) ($0.29) ($1.74)
</TABLE>
______
* Subject to further adjustments due to the settlement of fractional shares,
which adjustments are not expected to be material.
18
<PAGE>
If approved, the Reverse Stock Split will result in some stockholders owning
"odd-lots" of less than 100 shares of Common Stock. Brokerage commissions and
other costs of transaction in odd-lots are generally higher than the costs of
transactions in "round-lots" of even multiples 100 shares.
Stockholders have no right under Delaware law or the Company's Amended
Certificate of Incorporation or By-Laws to dissent from the Reverse Stock
Split.
The Common Stock is currently registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as a
result the company is subject to the periodic reporting and other requirements
of the Exchange Act. The proposed Reverse Stock Split will not affect the
registration of the Common Stock under the Exchange Act.
Exchange of Stock Certificates
If stockholders of the Company approve the Reverse Stock Split, upon the
filing of the Amendment each certificate representing Old Shares will be
deemed automatically without any action on part of the stockholders to
represent the number of New Shares into which such Old Shares have been
reclassified and changed pursuant to the Reverse Stock Split. In order to
receive stock certificates representing New Shares, stockholders will be
required to submit their stock certificates representing Old Shares to
ChaseMellon Shareholder Services, 85 Challenger Road, Overpeck Centre,
Ridgfield Park, New Jersey 07660, the Company's exchange agent for the Reverse
Stock Split (the "Exchange Agent"). As soon as is practicable after the
effective date of the Reverse Stock Split, the Company will forward a letter
of transmittal to each holder of record of Old Shares outstanding on the
effective date of the Reverse Stock Split. The letter of transmittal will
contain instructions for the surrender of certificates representing Old Shares
to the Exchange Agent. Upon proper completion and execution of the letter of
transmittal and return thereof to the Exchange Agent, together with the
certificate(s) representing Old Shares, a stockholder will be entitled to
receive a certificate representing the number of New Shares of Common Stock
into which his Old Shares have been reclassified and changed as a result of
the Reverse Stock Split.
Stockholders should not submit any certificates until requested to do so.
No certificate(s) for New Shares will be issued to a stockholder until the
stockholder has surrendered to the Exchange Agent his/her outstanding
Certificate(s) for Old Shares together with a properly completed and executed
letter of transmittal.
Federal Income Consequences of the Reverse Stock Split
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the Reverse Stock Split. The following description of federal
income tax consequences is based upon the Internal Revenue Code of 1986, as
amended, the applicable Treasury Regulations promulgated thereunder, judicial
19
<PAGE>
authority and current administrative rulings and practices as in effect on the
date hereof. This discussion is for general information only and does not
discuss consequences which may apply to special classes of taxpayers (e.g.,
non-resident aliens, broker-dealers or insurance companies). Stockholders are
urged to consult their own tax advisors to determine the particular
consequences to them.
The receipt of New Shares for Old Shares will not result in recognition of
gain or loss by a stockholder for federal income tax purposes. The holding
period of the New Shares will include a stockholder's holding period for the
Old Shares in respect of which the New Shares are received, provided that the
Old Shares were held as a capital asset. The adjusted basis of the New Shares
will be the same as the adjusted basis of the Old Shares in respect of which
the New Shares are received. The company will not recognize any gain or loss
as a result of the Reverse Stock Split.
Recommendation and Vote
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock present in person or by proxy and entitled to vote at the
Annual Meeting is required to approve the Amendment. The members of the Board
of Directors, who hold in the aggregate approximately 32.1% of the outstanding
shares of Common Stock, have advised the Company that they intend to vote
"FOR" the proposal. The Board of Directors of the Company has carefully
considered the Reverse Stock Split and recommends a vote "FOR" the proposal to
approve the Reverse Stock Split which is included as Item 2 on the
accompanying proxy card. Unless directed otherwise, the persons named in the
accompanying proxy will vote the shares represented thereby "FOR" the proposal
to approve the Reverse Stock Split.
ITEM 3. PROPOSAL TO ADOPT THE PRESIDENT CASINOS, INC. 1997 STOCK OPTION PLAN
The Board of Directors has adopted, subject to approval by the stockholders
of the Company, the President Casinos, Inc. 1997 Stock Option Plan (the
"Plan"), which provides for the granting of stock options and other stock-
based awards. The Plan is in addition to the Company's Stock Option Plan,
which authorized the issuance of up to 3,150,000 shares (525,000 shares post-
split) of Common Stock. At February 28, 1997, there were 406,400 shares
available for grant under this prior plan (67,733 shares post-split). The
total number of shares of the Company's Common Stock to be issuable under the
Plan is not to exceed 500,000 shares (assuming approval and implementation of
the one-for-six reverse stock split discussed under Item 2 of this Proxy
Statement), subject to adjustment in the event of any future change in the
outstanding shares of such stock by reason of a stock dividend, stock split,
recapitalization, merger, consolidation or other similar change generally
affecting stockholders of the Company.
The Board of Director believes that the Plan advances the interests of the
Company and its stockholders by facilitating securing, retaining and
motivating directors and management employees of high caliber and potential.
20
<PAGE>
In order to allow the continuation of stock-based incentive programs at the
Company, the Board of Directors recommends that the stockholders approve the
Plan.
The Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"), currently consisting of two directors of the
Company, each of whom is a non-employee director of the Company who qualifies
both as a "non-employee director" as contemplated by Rule 16b-3 promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and as an "outside director" as contemplated by Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The
Committee, by majority action thereof, is authorized in its sole discretion to
determine the individuals to whom the benefits will be granted, the type and
amount of such benefits and the terms of the benefit grants, as well as to
construe and interpret the Plan and decide all questions of fact arising under
its application, and to make all other determinations necessary or advisable
for the administration of the Plan.
Description of Plan
Under the terms of the Plan, directors, full-time officers and other key
executive full-time employees of the Company as determined in the sole
discretion of the Committee will be eligible to receive (a) stock appreciation
rights ("SARs"), and (b) stock options ("Stock Options") exercisable into
shares of Common Stock which may or may not qualify as incentive stock options
within the meaning of Section 422 of the Code.
Directors of the Company who are not otherwise officers or employees of the
Company shall receive an award of Five Thousand (5,000) non-qualified stock
options at the commencement of service as a director, which award shall vest
fifty percent (50%) on the date of grant and twenty-five percent (25%) on the
first and second anniversaries of grant if each director is then serving as
director; provided, however, that the director shall not be entitled to
receive such grant under the Plan if, and to the extent that, the director
received a grant under the Company's Stock Option Plan upon commencement of
service as a director.
Stock Appreciation Rights. The Committee may grant SARs giving the holder
thereof a right to receive, at the time of surrender, a payment equal to the
excess of (i) the Fair Market Value (as defined in the Plan) of a specified
number of shares of the Common Stock at the time of exercise over (ii) a
specified price which shall not be less than one hundred (100%) percent of the
Fair Market Value of the stock at the time of the right is granted, provided
that the maximum value of any SAR shall be limited to the exercise price of
the tandem option with respect to which it is issued. SARs may only be
granted in tandem with and at the same time as a non-qualified Stock Option.
A SAR or applicable portion thereof (i) shall be exercisable only at the time
and to the same extent as and (ii) shall terminate and no longer be
exercisable upon the termination or immediately after the exercise of the
tandem non-qualified Stock Option or applicable portion thereof. Unless
otherwise determined by the Committee, SARs will be exercisable only during
21
<PAGE>
the grantee's employment by the Company, except that a SAR shall be
exercisable for twelve (12) months after the grantee's employment is
terminated by reason of retirement after age 60, death or disability.
Stock Options. Stock Options granted under the Plan shall entitle the
holder to purchase Common Stock at the Fair Market Value (as defined in the
Plan) of the Company's Common Stock on the date of grant. The Committee shall
determine the term of such Stock Options and the times at, and conditions
under which, such Stock Options will become exercisable; provided that no
Stock Options will be exercisable later than ten years from the date of the
grant. Unless otherwise determined by the Committee and set forth in the
option agreement, in the event that an optionee ceases to be an employee or
director of the Company for any cause other than retirement by a full-time
employee of the Company after age 60, death or disability, or for any other
reason specified in the option award, the options shall terminate at the time
of termination. In the event that an optionee retires, dies or becomes
disabled prior to the expiration of his or her option and without having fully
exercised his or her option, the optionee the optionee's permitted transferee,
or the optionee's successor shall have the right to exercise the option during
its term within a period of twelve (12) months after termination of employment
due to death or disability to the extent that the option was exercisable at
the time of termination, or within such other period, and subject to such
terms and conditions, as may be specified by the Committee.
There is a maximum or minimum number of shares for which a Stock Option may
be granted; however, for any employee, the aggregate fair market value of
Common stock subject to the qualifying incentive Stock Options that are
exercisable for the first time in any calendar year may not exceed $100,000.
The Plan is to remain in effect until all awards under the Plan have been
satisfied by the issuance of shares, but no award shall be granted more than
ten years after the earlier of the date of the adoption of the Plan. The
Committee may terminate or amend the Plan at any time; provided, however, that
no such action of the Committee may, without the approval of the stockholders
of the Company, increase the maximum number of shares which may be issued
under the Plan, extend the period during which any award may be exercised,
extend the term of the Plan or change the minimum option price. No amendment,
modification or termination of the Plan shall adversely affect any award
theretofore granted under the Plan, without the consent of the participant
affected thereby.
Federal Income Tax Consequences
No income will be realized by a participating officer or employee on the
grant of an incentive Stock Option or a Stock Option which is not an incentive
stock option ("non-qualified option"), or the grant of a SAR, and the Company
will not be entitled to a deduction at such time. If a holder exercises an
incentive Stock Option and does not dispose of the shares acquired within two
years from the date of the grant, or within one year from the date of exercise
of the option, no income will be realized by the holder at the time of
exercise. The Company will not be entitled to a deduction by reason of the
exercise.
22
<PAGE>
If a holder disposes of the shares acquired pursuant to an incentive Stock
Option within two years from the date of the grant of the option or within one
year from the date of exercise of the option, the holder will realize ordinary
income at the time of disposition which will equal the excess, if any, of the
lessor of (a) the amount realized on the disposition, or (b) the fair market
value of the shares on the date of exercise, over the holder's basis in the
shares. The Company generally will be entitled to a deduction in an amount
equal to such income in the year of the disqualifying disposition.
Upon the exercise of a non-qualified Stock Option or the surrender of a SAR,
the excess, if any, of the fair market stock on the date of exercise over the
purchase price or Base Price, as the case may be, is ordinary income to the
holder as of the date of exercise. The Company generally will be entitled to
a deduction equal to such excess amount in the year of exercise.
The complete text of the Plan is set forth in Appendix B to this Proxy
Statement.
The vote required to approve the Plan is a majority of the shares of Common
Stock present, in person or by proxy, and voting at the Annual Meeting. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PRESIDENT
CASINOS, INC. 1997 STOCK OPTION PLAN.
STOCK PERFORMANCE GRAPH
The following table compares the cumulative total stockholder return on the
Company's Common Stock during the period from December 11, 1992 through
February 28, 1997, with the cumulative return on Dow Jones Casinos Index (the
"DJ Casinos Index") and the Standard & Poor's 500 Stock Index ("S&P 500")
assuming $100 was invested in the Company's Common Stock on December 11, 1992
and in each of the foregoing indices and assumes reinvestment of any dividends
(no dividends have been paid on the Company's Common Stock during the periods
presented). The comparisons are required by the Securities Exchange
Commission and are not intended to forecast or be indicative of possible
future performance of the Company's Common Stock.
<TABLE>
<CAPTION>
12/92 02/93 02/94 02/95 02/96 02/97
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
President Casinos, Inc. 100 222 272 105 32 10
DJ Casinos Index 100 98 167 140 194 174
S&P 500 100 103 111 119 161 203
</TABLE>
CERTAIN TRANSACTIONS
During fiscal 1997, the Company leased its Biloxi, Mississippi mooring site,
parking facilities and offices at the Broadwater Resort complex and a
warehouse from BH Acquisition Corp. ("BH"), a company controlled by Mr.
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Connelly. The initial three-year lease term for the Broadwater Resort expired
July 14, 1995 and the Company exercised the first of its nine three-year
renewal options. Under such renewal, the rent is $3,303,000 per year on a
triple net basis. The Company is required to pay for all improvements to the
leased premises and to bear the cost of all taxes, fees, assessments and
expenses. On each subsequent renewal, the rent will be increased to reflect
changes in the Consumer Price Index, unless either party requests a new
appraisal. Future renewals and any other changes to the leases are subject to
approval by the Company's independent directors.
The Company also, generally through tour operators, arranges for groups to
stay at the Broadwater Resort complex in anticipation that members of these
groups will utilize the Company's gaming facilities. Room costs, which are at
fair market value, are paid either by the group members, the tour operator,
the Company or a combination thereof. During fiscal 1997, the Company paid
approximately $863,000 to a Connelly Company to pay for, or subsidize the cost
of, room rentals and food and beverage costs.
During fiscal 1995, the Company, Mr. Connelly and certain other parties were
defendants in litigation involving the Broadwater Resort complex, known as the
"Pratt litigation". On February 17, 1995, the Company, as well as the other
parties to such litigation, entered into a settlement agreement pursuant to
which all claims in such litigation were dismissed with prejudice. In
connection with the settlement, on February 17, 1995, the Company entered into
a loan agreement with BH for the principal amount of $1,000,000 (the "Existing
Note") to fund the first of four payments for the Pratt litigation settlement.
On February 15, 1996, the Existing Note was amended and restated (the "Amended
and Restated Note") to extend the maturity date one calendar year and the
Company entered into a second loan agreement (the "New Note") with BH for
principal amount of $1,000,000 to fund the third installment of the
settlement. The Amended and Restated Note and the New Note (collectively, the
"Notes") bear interest at the rate of 13.0% per annum payable monthly.
Principal on the Amended and Restated Note is payable on the earlier of (i)
February 8, 1998 or (ii) the transfer by BH of its interest in any one or more
of the following assets: the Broadwater Hotel and Resort, the Broadwater
Towers or the Broadwater Inn. Principal on the New Note is payable August 17,
1997. The notes are secured by various assets owned by Mr. Connelly and he
has personally guaranteed the repayment of the Notes to the Company. Interest
earned on such related party borrowings was $260,000, $135,000 and $4,000 for
the years ended February 28/29, 1997, 1996 and 1995, respectively.
During fiscal 1997, the Company purchased $62,000 of promotional items from
affiliates of Mr. Connelly. These items were either sold by the Company or
given away as promotional items.
During fiscal 1997, the Company used a plane owned by an affiliate of Mr.
Connelly and reimbursed said affiliate $58,000. The amount charged by the
affiliate is based on the fair market rate charged by unrelated third parties.
Mr. Connelly and his affiliates guaranteed debt and capital leases of the
Company in fiscal 1997. The highest aggregate sum guaranteed in fiscal year
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1997 was $4,609,000. The guaranteed amount as of February 28, 1997 was
$4,200,000.
The responsibilities of the Company's executive officers require them to
spend a significant amount of time at the Company's St. Louis headquarters.
For those Company executives who do not reside in the St. Louis area, the
Company has paid for certain of the meals, lodging and entertainment of the
executives at the Drury Inn, a hotel in which a Connelly Company has an
ownership interest. During fiscal 1997, the Company paid approximately
$32,000 to such Connelly Company on account of such expenses.
GENERAL INFORMATION
Annual Report
A copy of the Company's Annual Report to Stockholders for fiscal 1997 has
been furnished to stockholders with the mailing of this Proxy Statement.
FORM 10-K REPORT
UPON WRITTEN REQUEST OF ANY PERSON WHO ON JUNE 17, 1997 WAS A RECORD OWNER
OF THE COMPANY'S COMMON STOCK OR WHO REPRESENTS IN GOOD FAITH THAT HE OR SHE
WAS ON SUCH DATE A BENEFICIAL OWNER OF SUCH COMMON STOCK ENTITLED TO VOTE AT
THE ANNUAL MEETING, THE COMPANY WILL SEND TO SUCH PERSON, WITHOUT CHARGE, A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 28,
1997 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS FOR THIS
REPORT SHOULD BE DIRECTED TO:
VALERIE HERZOG, INVESTOR RELATIONS
PRESIDENT CASINOS, INC.
802 NORTH FIRST STREET
ST. LOUIS, MISSOURI 63102
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as the Company's independent public accountants
for 1997 and has been selected by the Board of Directors to continue in such
capacity during fiscal year 1998. Representatives of Deloitte & Touche LLP
are expected to be present at the Annual Meeting to respond to appropriate
questions, and such representatives will have the opportunity to make
statements if they so desire.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 Annual Meeting of
Stockholders must be received by the Company at the address appearing on the
first page of this proxy statement by February 28, 1998, in order to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
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<PAGE>
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the Board of
Directors of the Company. The Company will bear the cost of the solicitation
of the Board of Directors' proxies for the Annual Meeting, including the cost
of preparing, assembling and mailing proxy materials, the handling and
tabulation of proxies received, and charges of brokerage houses and other
institutions, nominees and fiduciaries in forwarding such materials to
beneficial owners. In addition to mailing proxy materials, such solicitation
may be made in person or by telephone, telegraph or telecopy by directors,
officers or regular employees of the Company.
APPENDIX A
AMENDMENT TO AMENDED CERTIFICATE OF INCORPORATION
RESOLVED, that the first paragraph of Article IV of the Corporation's
Certificate of Incorporation be amended to read in its entirety as follows:
The total number of shares of stock which the Corporation is authorized to
issue is One Hundred Ten Million (110,000,000) shares, consisting of One
Hundred Million (100,000,000) shares of Common Stock having a par value of
$.06 per share, and Ten Million (10,000,000) shares of Preferred Stock having
a par value of $0.01 per share.
Upon the foregoing becoming effective pursuant to The General Corporation
Law of the State of Delaware, the Corporation shall effect a one-for-six
reverse stock split (the "Reverse Stock Split") pursuant to which every six
(6) shares of the Corporation's Common Stock, par value $0.01 per share (the
"Old Common Shares"), outstanding on the effective date of this Article IV
will be exchanged for one new share of the Corporation's Common Stock, par
value $0.06 per share (the "New Common Shares").
No fractional New Common Shares will be issued as a result of the Reverse
Stock Split. Stockholders whose Old Common Shares are not equally divisible
by six (6) will receive one additional New Common Share for the fractional New
Common Share that such stockholder would be otherwise entitled to receive as a
result of the Reverse Stock Split.
APPENDIX B
PRESIDENT CASINOS, INC.
1997 STOCK OPTION PLAN
1. Purpose.
The purpose of the President Casinos, Inc. 1997 Stock Option Plan (the
"Plan") is to further the earnings of President Casinos, Inc. (the "Company").
The Plan provides for the award of long-term incentives to those directors,
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<PAGE>
officers and other key executives who make substantial contributions to the
Company by their loyalty, industry and invention. The Company intends that
the Plan will facilitate securing, retaining and motivating directors and
management employees of high caliber and potential.
2. Administration.
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"). Each
member of the Committee shall be (1) a "non-employee director" as contemplated
by Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "Act"),
and (2) an "outside director" as contemplated by Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). Without limiting the
foregoing, the Committee shall have full and final authority in its discretion
to construe and interpret the provisions of the Plan and to decide all
questions of fact arising in its application; to determine the directors and
employees to whom awards shall be made under the Plan; to determine the type
of awards to be made and the amount, size and terms of each such award; to
determine the time when awards shall be granted; and to make all other
determinations necessary or advisable for the administration of the Plan.
3. Stock Subject to the Plan.
The shares that may be issued under the Plan shall not exceed in the
aggregate more than 500,000 (Five Hundred Thousand) shares of common stock,
par value $.06 per share, of the Company (the "Common Stock"). Such shares
may be authorized and unissued shares or treasury shares. Except as otherwise
provided herein, any shares subject to an option or right which for any reason
expires or is terminated unexercised as to such shares shall again be
available under the Plan.
4. Eligibility to Receive Awards.
Persons eligible to receive awards under the Plan shall be limited to those
full-time officers and other key executive full-time employees of the Company
who are in positions in which their decisions, actions and counsel will have a
significant impact upon the profitability and success of the Company, as well
as its directors. Directors of the Company who are not otherwise officers or
employees of the Company shall receive an award of Five Thousand (5,000) Non-
Qualified Stock Options (defined below) at the commencement of service as a
director, which award shall vest fifty (50%) percent on the date of grant and
twenty-five (25%) percent on the first and second anniversaries of grant if
each director is then serving as a director; provided, however, that such
grant shall not be made to the extent such director receives the option grant
to which he otherwise is entitled to receive under the Company's Stock Option
Plan upon commencement of service as a director. If a person who has received
an award of options as a director of the Company pursuant to the preceding
sentence is not serving as a director of the Company on the first or second
anniversary of grant of such options, then any such options that have not
previously vested shall be forfeited by that person. Any person who has been
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<PAGE>
awarded options as a director of the Company shall not be awarded options as
director of the Company at any later time if such person again commences
service as a director of the Company, regardless of whether the options that
were previously awarded vested or were forfeited. A participant in the Plan
shall not be entitled to receive an award for more than 500,000 Options in any
given Plan year.
5. Form of Awards.
Awards may be made from time to time by the Committee in the form of stock
options to purchase shares of Common Stock, stock appreciation rights or any
combination thereof. Stock options may be options which are intended to
qualify as incentive stock options within the meaning of Section 422 of the
Code, or any substitute thereto ("Incentive Stock Options"), or options which
are not intended to so qualify ("Non-Qualified Stock Options").
6. Stock Options.
Stock options for the purchase of Common Stock shall be evidenced by written
agreements in such form not inconsistent with the Plan as the Committee shall
approve from time to time, which shall contain in substance the following
terms and conditions:
(a) Type of Option. Each option agreement shall identify the options
represented thereby as Incentive Stock Options or Non-Qualified Stock Options,
as the case may be.
(b) Option Price. The purchase price of stock subject to an option
shall be the Fair Market Value of the stock at the time of grant. Fair Market
Value of Common Stock shall mean, for any particular date, (i) for any period
during with the Common Stock shall not be listed for trading on a national
securities exchange, but when the Common Stock is authorized as a Nasdaq
National Market security, the last transaction price per share as quoted by
The Nasdaq Stock Market (the "Nasdaq"), (ii) for any period during which the
Common Stock shall not be listed for trading on a national securities exchange
or authorized as a Nasdaq National Market security, the closing bid price as
reported by the Nasdaq, (iii) for any period during which the Common Stock
shall be listed for trading on a national securities exchange, the closing
price per share of Common Stock on such exchange as of the close of such
trading day or (iv) the market price per share of Common Stock as determined
by a nationally recognized investment banking firm selected by the Board of
Directors in the event neither (i), (ii) nor (iii) above shall be applicable.
If Fair Market Value is to be determined as of a day when the securities
markets are not open, the Fair Market Value on that day shall be the Fair
Market Value on the preceding day when the markets were open.
(c) Exercise Term. Each option agreement shall state the period or
periods of time within which the option may be exercised, in whole or in part,
which shall be such period or periods of time as may be determined by the
Committee, provided that no option shall be exercisable after ten (10) years
from the date of grant thereof. The Committee may, in its discretion, provide
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<PAGE>
in the option agreement circumstances under which the option shall become
immediately exercisable, and may, notwithstanding the foregoing, accelerate
the exercisability of any option at any time.
(d) Payment of Shares. The purchase price of the shares with respect
to which an option is exercised shall be payable in full at the time of
exercise in cash, Common Stock at Fair Market Value, or a combination thereof,
as the Committee may determine and subject to such terms and conditions
prescribed by the Committee for such purpose.
(e) Rights Upon Termination of Employment. Unless otherwise determined
by the Committee and set forth in the option agreement, in the event that an
optionee ceases to be an employee or director of the Company for any cause
other than retirement by a full-time employee of the Company after age 60,
death or disability, or for any other reason specified in the option award,
the options shall terminate at the time of termination. In the event that an
optionee retires, dies or becomes disabled prior to the expiration of his or
her option and without having fully exercised his or her option, the optionee
or the Permitted Transferee (as defined in Section 6(f) hereof), as the case
may be, or his or her successor shall have the right to exercise the option
during its term within a period of twelve (12) months after termination of
employment due to death or disability to the extent that the option was
exercisable at the time of termination, or within such other period, and
subject to such terms and conditions, as may be specified by the Committee.
(f) Nontransferability. Each option agreement shall state that the
option is not transferable by the participant other than by will or the laws
of descent and distribution; provided, however, the Committee may, in its sole
discretion, authorize all or a portion of a Non-Qualified Stock Option granted
or to be granted to an optionee to be on terms which permit transfer by such
optionee to a Permitted Transferee, provided that (i) there may be no
consideration for any such transfer, (ii) the stock option agreement pursuant
to which such options are granted must be approved by the Committee, and must
expressly provide for transferability in a manner consistent with this Section
or the Committee must approve any such proposed transfer, (iii) subsequent
transfers of transferred Non-Qualified Stock Options shall be prohibited
except those (x) by will or the laws of descent and distribution or (y) to any
other Permitted Transferee of the optionee, and (iv) the optionee shall remain
subject to withholding taxes upon exercise of the Non-Qualified Stock Option
by a Permitted Transferee. Following transfer, any such Non-Qualified Stock
Options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. The Company shall have no
obligation to provide a Permitted Transferee with notice of the early
termination of a Non-Qualified Stock Option. Permitted Transferee shall mean
either (i) the spouse, children or grandchildren of the optionee ("Immediate
Family Members"), (ii) a trust or trusts for the exclusive benefit of the
Immediate Family Members or (iii) a partnership in which such Immediate Family
Members are the only partners. Options granted under the Plan to an optionee
shall be exercisable, during the optionee's lifetime, only by the optionee or
a Permitted Transferee, as the case may be. In the event of the death of an
optionee, exercise shall be made only:
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<PAGE>
(i) By the Permitted Transferee, the executor or administrator of
the estate of the deceased optionee or the person or persons to whom the
optionee's rights under the Option Agreement shall pass by will or the laws of
descent and distribution; and
(ii) To the extent that the deceased optionee or the Permitted
Transferee, as the case may be, was entitled thereto at the date of the
optionee's death; provided, however, that any otherwise applicable six-month
holding period shall not be required for exercise by an executor or
administrator of the estate of a deceased optionee who was subject to Section
16 of the Act.
(g) Incentive Stock Options. In the case of an Incentive Stock Option,
each option agreement shall contain such other terms, conditions and
provisions as the Board determines necessary or desirable in order to qualify
such option as a tax favored option (within the meaning of Section 422 of the
Code, or any amendment or substitute thereof or regulation thereunder)
including, without limitation, the following:
(i) The purchase price of stock subject to an Incentive Stock
Option shall not be less than 100% of the Fair Market Value of such stock on
the date the option is granted;
(ii) The aggregate Fair Market Value (determined as of the time the
option is granted) of the stock with respect to the which Incentive Stock
Options are exercisable for the first time by any employee during any calendar
year (under all plans of the Company) shall not exceed One Hundred Thousand
($100,000.00) Dollars; and
(iii) No Incentive Stock Option shall be granted to any employee if
at the time the option is granted the individual owns stock possessing more
than ten (10%) percent of the total combined voting power of all classes of
stock of the Company or its parent or subsidiary corporations, unless at the
time such option is granted the option price is at least one hundred ten
(110%) percent of the Fair Market Value of the stock subject to the option and
such option by its terms is not exercisable after the expiration of five (5)
years from the date of grant.
7. Stock Appreciation Rights.
Stock appreciation rights shall be evidenced by written stock appreciation
rights agreements in such form not inconsistent with this Plan as the
Committee shall approve from time to time, which agreements shall contain in
substance the following terms and conditions:
(a) Award. Stock appreciation rights shall entitle the grantee,
subject to such terms and conditions determined by the Committee, to receive
upon exercise thereof all or a portion of the excess of (i) the Fair Market
Value of a specified number of shares of the Common Stock at the time of
exercise over (ii) a specified price which shall not be less than one hundred
(100%) percent of the Fair Market Value of the stock at the time the right is
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<PAGE>
granted, provided that the maximum value of any stock appreciation right shall
be limited to the exercise price of the tandem option with respect to which it
is issued. Stock appreciation rights may only be granted in tandem with and
at the same time as a Non-Qualified Stock Option. A stock appreciation right
or applicable portion thereof (i) shall be exercisable only at the same time
and to the same extent as and (ii) shall terminate and no longer be
exercisable upon the termination or immediately after the exercise of the
tandem Non-Qualified Stock Option or applicable portion thereof.
(b) Termination of Employment. Unless otherwise determined by the
Committee and set forth in the Award Agreement, stock appreciation rights will
be exercisable only during the grantee's employment by the Company except that
a stock appreciation right shall be exercisable for twelve (12) months after
the grantee's employment is terminated by reason of retirement after age 60,
death or disability.
(c) Payment. Upon exercise of a stock appreciation right, payment
shall be made in the form of Common Stock at Fair Market Value on the date of
exercise, in cash or in a combination thereof, as the Committee may determine.
(d) Other Terms. Stock appreciation rights shall be granted in such
manner and such form, and subject to such additional terms and conditions as
the Committee in its sole discretion deems necessary or desirable, including,
without limitation, any limitations necessary in order to avoid any
insider-trading liability in connection with a stock appreciation right under
Section 16(b) of the Act.
8. General Restrictions.
(a) Listings, Registrations or Consents. Each award under the Plan
shall be subject to the requirement that if at any time the Committee shall
determine that (i) the listing, registration or qualification of the shares of
Common Stock subject or related thereto upon any securities exchange or under
any state or federal law, or (ii) the consent or approval of any government
regulatory body, or (iii) an agreement by the recipient of an award with
respect to the disposition of shares of Common Stock is necessary or desirable
as a condition of or in connection with the granting of such award or the
issuance or purchase of shares of Common Stock thereunder, such award shall
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
(b) Rule 16b-3 Six-Month Limitations. To the extent required in order
to comply with Rule 16b-3 only, any equity security offered pursuant to the
Plan must be either (i) approved by the Board or the Committee or (ii) held
for at least six (6) months after the date of grant, and with respect to any
derivative security issued pursuant to the Plan, either (i) the issuance of
such derivative security was approved by the Board or the Committee or (ii) at
least six (6) months must elapse from time of acquisition of the derivative
security to the date of disposition of such derivative security (other than
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<PAGE>
upon exercise or conversion), or its underlying equity security. Terms used
in the preceding sentence shall, for the purposes of such sentence only, have
the meanings, if any, assigned or attributed to them under Rule 16b-3.
9. Single or Multiple Agreements.
Multiple forms of awards or combinations thereof may be evidenced by a
single agreement or multiple agreements, as determined by the Committee.
10. Rights of a Stockholder.
The recipient of any award under the Plan or any Permitted Transferee, as
the case may be, unless otherwise provided by the Plan, shall have no rights
as a stockholder with respect thereto unless and until the recipient becomes
entitled to receive certificates for shares of Common Stock.
11. Rights to Terminate Employment.
Nothing in the Plan or in any agreement entered into pursuant to the Plan
shall confer upon any participant the right to continue in the employment of
the Company or affect any right which the Company may have to terminate the
employment of such participant.
12. Withholding.
The Company is hereby authorized to withhold from any award, from any
payment due or transfer made under any award, or under the Plan, or from any
compensation or other amount owing to a participant the amount (in cash,
shares of Common Stock or other securities, other awards or other property) of
any applicable withholding taxes in respect of an award, its exercise, or any
payment or transfer under an award or under the Plan and to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes. In addition, if provided in the
applicable award agreement and subject to the discretion of the Committee, at
the time of award exercise, participants may elect to satisfy any tax
withholding obligations that may arise upon award exercise by directing the
Company to withhold a number of shares of Common Stock otherwise deliverable
upon such exercise having a Fair Market Value equivalent to the amount of such
obligation. In the case of any transfer by a participant of a Non-Qualified
Stock Option to a Permitted Transferee, such participant shall remain subject
to withholding taxes upon the exercise of the Non-Qualified Stock Option by
the Permitted Transferee.
13. Non-Assignability.
No award under the Plan shall be assignable or transferable by the recipient
thereof except by will or by the laws of descent and distribution or by such
other means as the Committee may approve. During the life of the recipient,
such award shall be exercisable only by such person or by such person's
guardian or legal representative.
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<PAGE>
14. Non-Uniform Determinations.
The Committee's determination under the Plan (including, without limitation,
determinations of the persons to receive awards, the form, amount and timing
of such awards, the terms and provisions of such awards and the agreements
evidencing same, and the establishment of values) need not be uniform and may
be made selectively among persons who receive, or are eligible to receive,
awards under the Plan, whether or not such persons are similarly situated.
15. Adjustments.
(a) In the event of any change in the outstanding stock of the Company,
by reason of a stock dividend or distribution, supplemental offering of
shares, recapitalization, merger, consolidation, split-up, combination,
exchange of shares or the like, the Committee may, in its discretion,
appropriately adjust the number of shares of Common Stock which may be issued
under the Plan.
(b) Notwithstanding anything to the contrary in this Plan, the number
of shares of Common Stock purchasable upon the exercise of the outstanding
stock options ("Options"), the option price and the terms of outstanding stock
appreciation rights ("SARs") shall be subject to adjustment from time to time
as provided in this paragraph 15.
(i) If the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock, the
number of shares of Common Stock purchasable upon exercise of an Option or the
number of SARs shall be increased by multiplying such number of shares or SARs
by a fraction of which the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the day immediately preceding
the date of such distribution and the numerator shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such increase to become effective immediately after the
opening of business on the date following such distribution.
(ii) If the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the number of shares of
Common Stock purchasable upon exercise of an Option or the number of SARs at
the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased, and,
conversely, if outstanding shares of Common Stock shall each be combined into
a smaller number of shares of Common Stock, the number of shares of Common
Stock purchasable upon exercise of an Option or the number of SARs at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately decreased, such increase or
decrease, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such subdivision
or combination becomes effective.
(iii) The reclassification of Common Stock into securities (other
than Common Stock) and/or cash and/or other consideration shall be deemed to
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<PAGE>
involve a subdivision or combination, as the case may be, of the number of
shares of Common Stock outstanding immediately prior to such reclassification
into the number or amount of securities and/or cash and/or other consideration
outstanding immediately thereafter and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective,"
as the case may be, within the meaning of the clause 2 above.
(iv) The Committee may make such increases in the number of shares
of Common Stock purchasable upon exercise of an Option or the number of SARs,
in addition to those required by this subparagraph (b), as shall be determined
by the Company's Board of Directors to be advisable in order to avoid taxation
so far as practicable of any dividend of stock or stock rights or any event
treated as such for federal income tax purposes to the recipients.
(c) Whenever the number of shares of Common Stock purchasable upon
exercise of an Option or the number of SARs is adjusted as provided in this
paragraph 15, the option price in the case of an Option or the Clause 7(a)(ii)
specified price, in the case of SARs, shall be adjusted by a fraction in which
the numerator is equal to the number of shares of Common Stock purchasable or
SARs granted prior to the adjustment and the denominator is equal to the
number of shares of Common Stock purchasable or SARs granted after the
adjustment.
(d) For the purpose of this Paragraph 15, the term "Common Stock" shall
include any shares of the Company of any class or series which has no
preference or priority in the payment of dividends or in the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of the Company and which is not subject to redemption by the Company.
16. Amendment.
The Committee may terminate or amend the Plan at any time, except without
shareholder approval, the Committee may not increase the maximum number of
shares which may be issued under the Plan (other than increases pursuant to
paragraph 15 hereof), extend the period during which any award may be
exercised, extend the term of the Plan or change the minimum option price
(other than pursuant to paragraph 15 hereof). The termination or any
modification or amendment of the Plan shall not, without the consent of a
participant, affect his rights under an award previously granted.
17. Effect on Other Plans.
Participation in this Plan shall not affect an employee's eligibility to
participate in any other benefit or incentive plan of the Company. Any awards
made pursuant to this Plan shall not be used in determining the benefits
provided under any other plan of the Company unless specifically provided.
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18. Duration of the Plan.
The Plan shall remain in effect until all awards under the Plan have been
satisfied by the issuance of shares, but no award shall be granted more than
ten years after the earlier of the date the Plan was first adopted by the
Company or was approved by the Company's stockholders.
19. Miscellaneous.
(a) Governing Law. Subject to the provisions of applicable federal
law, the Plan shall be administered, construed and enforced according to the
internal laws of the State of Delaware, excluding its conflict of law rules,
and applicable federal law and in courts situated in the State of Delaware.
(b) Severability. The invalidity of any particular clause, provision
or covenant herein shall not invalidate all or any part of the remainder of
the Plan, but such remainder shall be and remain valid in all respects as
fully as the law will permit.
Adopted ___________, 1997
by the Board of Directors of
President Casinos, Inc.
---------------------------
John E. Connelly, Chairman
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PRESIDENT CASINOS, INC.
FOR THE HOLDERS OF PRESIDENT CASINOS, INC. COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS
1997 ANNUAL MEETING OF STOCKHOLDERS - JULY 23, 1997
The undersigned stockholder of PRESIDENT CASINOS, INC. (the "Company"),
revoking all previous proxies, hereby appoints JOHN E. CONNELLY AND JOHN S.
AYLSWORTH and each of them acting individually, with full power of
substitution, as proxies of the undersigned, and authorizes either or both of
them to vote all shares of the Company's Common Stock held of record by the
undersigned as of the close of business on June 17, 1997 at the 1997 Annual
Meeting of Stockholders of the Company to be held July 23, 1997, at 9:30 a.m.
prevailing local time, at the Broadwater Beach Resort, 2110 Beach Boulevard,
Biloxi Mississippi and any adjournment(s) or postponements(s) thereof (the
"Annual Meeting"), according to the votes the undersigned would be entitled to
cast if then personally present.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED "FOR" THE NOMINEE FOR DIRECTOR LISTED AND "FOR" THE PROPOSAL TO
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO APPROVE THE REVERSE STOCK
SPLIT AND "FOR" THE PROPOSAL TO APPROVE THE PRESIDENT CASINOS, INC. 1997 STOCK
OPTION PLAN.
(Continued and to be signed on reverse side)
** FOLD AND DETACH HERE **
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1. Election of One Class II Director-Terrence L. Wirginis.
/ / FOR the nominee for director named above.
/ / WITHHOLD AUTHORITY to vote for nominee.
(Instruction: To withhold authority for an individual nominee, write the name
of such nominee on the space provided below.)
____________________________________________
2. Proposal to approve an amendment to the Amended Certificate of
Incorporation of the Company in order to enable the Company to effect a one-
for-six reverse stock split and increase the par value of the Company's Common
Stock for $0.01 to $0.06 per share.
/ /FOR / /AGAINST / /ABSTAIN
3. Proposal to approve President Casinos, Inc. 1997 Stock Option Plan.
/ /FOR / /AGAINST / /ABSTAIN
4. The authority of the proxies, in their discretion, to vote on such other
business as may properly come before the Annual Meeting, or any
adjournments(s) or postponement(s) thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF THE ANNUAL MEETING
AND THE PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH. The undersigned
also hereby ratifies all that the said proxies may do by virtue thereof and
hereby confirms that this proxy shall be valid and may be voted regardless of
whether the stockholder's name is signed as set forth below or a seal affixed
or the description, authority or capacity of the person signing is given or
any other defect of signature exists.
DATED:__________________________________, 1997
________________________________________
(Stockholder's Signature)
________________________________________
(Stockholder's Signature)
NOTE: PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT TO THE COMPANY.
Please sign this proxy exactly as the name appears in the address above. If
hares are registered in more than one name, all owners should sign. If
signing in a fiduciary or representative capacity, such as attorney-in-fact,
executor, administrator, trustee or guardian, please give full title and
attach evidence of authority. If signer is a corporation, please sign the
full corporate name and an authorized officer should sign his/her name and
title and affix the corporate seal.
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PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY REGARDLESS OF
WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING.
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES.
** FOLD AND DETACH HERE **
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THE ABOVE PROXY
CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
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