SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A/A-1
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
ARGOSY GAMING COMPANY
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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ARGOSY GAMING COMPANY
219 Piasa Street
Alton, Illinois 62002
Dear Stockholder:
Reference is made to the Company's Proxy Statement dated November 9, 1998
previously sent to you for the Special Meeting of Stockholders to be held on
December 4, 1998 at 2:00 p.m., central standard time.
Please note the following changes and corrections to the Proxy Statement:
o The location of the Special Meeting has been changed from 219 Piasa
Street, Alton, Illinois, to the Alton Landing facilities for the Alton Belle
Riverboat Casino, Banquet Rooms A and B, 3rd Floor, Alton, Illinois 62002.
o Under the caption "Required Vote" on page 2 of the Proxy Statement it
incorrectly states that the affirmative vote of stockholders of the Company
owning in the aggregate at least a majority of the Company's outstanding shares
of Common Stock present in person or by proxy at the Meeting is required to
approve the Proposal. Rather, the Proposal will become effective upon the
affirmative vote of shares of Common Stock representing a majority of the votes
cast on the Proposal (whether for or against or abstained on the Proposal);
provided, that the total vote cast represents over 50% of the outstanding shares
of Common Stock entitled to vote on the Proposal. Accordingly, the section
"Required Vote" on page 2 of the Proxy Statement should be amended and restated
in its entirety to read as follows:
"Required Vote
Only votes cast in person at the Meeting or by proxy received by the
Company before commencement of the Meeting will be counted at the Meeting.
The approval of the issuance by the Company of shares of Common Stock upon
conversion of its Series A Convertible Preferred Stock and exercise of its
Warrants to Purchase Common Stock to insure compliance with (a) the
provisions of that certain Securities Purchase Agreement dated June 12,
1998 and (b) Rule 312 of the New York Stock Exchange (the "Proposal") will
become effective only upon the affirmative vote of shares of Common Stock
representing a majority of votes cast on the Proposal (whether for or
against or abstained on such Proposal), provided that the total vote cast
on the Proposal represents over 50% of the outstanding Common Stock
entitled to vote on the Proposal. Votes cast as abstentions will not be
counted as a vote for or against the Proposal, but will nevertheless have
the effect of increasing the total votes cast on the matter and thus
increase the number of votes necessary to effectuate the Proposal. So
called "broker non-votes" (brokers failing to vote by proxy shares of the
Common Stock held in nominee name for customers) will not be counted at the
Meeting. The effect of such broker non-votes is to decrease the total votes
cast on the matter and thus decrease the number of votes necessary to
effectuate the Proposal.
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Executive officers and directors of the Company own shares, and exercisable
rights to acquire shares, representing an aggregate of 7,945,657 shares of
Common Stock or 32.4% of the outstanding shares of Common Stock (See
"Security Ownership of Certain Beneficial Owners and Management")."
As we noted in the Proxy Statement, it is important that your stock be
represented at the Meeting. If you have not returned the Proxy which was
enclosed with the Notice of Special Meeting, please complete and sign the Proxy
and send it to the Company. If you would like a new Proxy, please call
1-888-488-1998, Ext. 7667. A stockholder giving a proxy has the power to revoke
it at any time prior to its exercise by voting in person at the Meeting, by
giving written notice to the Secretary of the Company prior to the Meeting, or
by giving a later dated proxy.
We apologize for any inconvenience.
Very truly yours,
/s/ James B. Perry
James B. Perry
President
November 19, 1998
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ARGOSY GAMING COMPANY
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
December 4, 1998
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A Special Meeting of Stockholders of Argosy Gaming Company ("Argosy" or the
"Company") will be held at the offices of the Company, 219 Piasa Street, Alton,
Illinois 62002 on December 4, 1998, at 2:00 p.m., local time, for the following
purposes:
1. To consider and vote upon the issuance by the Company of shares of
Common Stock upon conversion of its Series A Convertible Preferred Stock and
exercise of its Warrants to Purchase Common Stock to insure compliance with (a)
the provisions of that certain Securities Purchase Agreement dated June 12, 1998
and (b) Rule 312 of the New York Stock Exchange; and
2. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The close of business on October 19, 1998 has been fixed as the record date
for the meeting. Only stockholders of record at that time are entitled to notice
of and to vote at the meeting and any adjournment or postponement thereof.
All stockholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, the Board of Directors of Argosy urge
you to date, execute 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.
JAMES B. PERRY
President
November 9, 1998
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ARGOSY GAMING COMPANY
219 Piasa Street
Alton, Illinois 62002
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PROXY STATEMENT
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Solicitation and Revocability of Proxies
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Argosy Gaming Company ("Argosy" or the
"Company") for use in voting at a Special Meeting of Stockholders (the
"Meeting") to be held at the offices of the Company, 219 Piasa Street, Alton,
Illinois 62002 on December 4, 1998, at 2:00 p.m. local time, and at any
postponement or adjournment thereof, for the purpose set forth in the attached
notice. This proxy statement, the attached notice and the enclosed proxy are
being sent to stockholders on or about November 9, 1998.
The Board of Directors does not intend to bring any matter before the
Meeting except that indicated in the notice. If any other matter properly comes
before the Meeting, however, the persons named in the enclosed proxy, or their
duly constituted substitutes acting at the Meeting, will be authorized to vote
or otherwise act thereon in accordance with their judgment on such matters.
If proxies are properly dated, executed and returned, the shares they
represent will be voted at the Meeting in accordance with the instructions of
the stockholder. If no specific instructions are given, the shares will be voted
FOR the proposal to approve the issuance by the Company of shares of the
Company's common stock, par value $.01 per share ("Common Stock") in order to
comply with (a) the provisions of that certain Securities Purchase Agreement
dated June 12, 1998 and (b) Rule 312 of the New York Stock Exchange, and with
respect to any other matter that may properly come before the Meeting, in the
discretion of the persons voting the respective proxies.
A stockholder giving a proxy has the power to revoke it at any time prior
to its exercise by voting in person at the Meeting, by giving written notice to
the Secretary of the Company prior to the Meeting, or by giving a later dated
proxy.
The Company will bear the cost of this solicitation of proxies, including
expenses in connection with the preparing, assembling and mailing of proxy
solicitation materials and the charges and expenses of brokerage firms and
others for forwarding solicitation materials to beneficial owners. In addition
to solicitation by mail, proxies may be solicited personally or by telephone or
telegraph by Directors, Officers or employees of the Company, who will receive
no additional compensation for such services.
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Record Date and Outstanding Shares
At the close of business on October 19, 1998, the record date fixed for the
determination of stockholders entitled to notice of and to vote at the Meeting,
there were outstanding 24,498,333 shares of Common Stock, the only class of the
Company's voting securities outstanding. Only the record holders of Common Stock
as of the close of business on October 19, 1998 will be entitled to vote. The
presence at the Meeting, in person or by proxy, of stockholders entitled to cast
a majority of the votes which all stockholders are entitled to cast will
constitute a quorum. Each share of Common Stock is entitled to one vote.
In addition, there are outstanding $115,000,000 of the Company's
Convertible Subordinated Notes Due 2001 (the "Convertible Notes"), which are
convertible into Common Stock of the Company at any time prior to maturity at a
conversion price of $17.70 per share. Although no Convertible Notes have been
converted into Common Stock as of the record date, these securities represent an
additional 6,497,175 shares of Common Stock that may be outstanding in the
future.
As discussed below, the Company has issued a series of preferred stock,
which may be converted into shares of Common Stock, and Warrants (as defined
hereinafter), which may be exercised to purchase shares of Common Stock. The
Company has been informed by the New York Stock Exchange that, under its rules,
any shares of Common Stock issued prior to the Meeting, upon such conversion or
exercise, will not be entitled to vote on the Proposal (as defined hereinafter)
at the Meeting.
Required Vote
Only votes cast in person at the Meeting or by proxy received by the
Company before commencement of the Meeting will be counted at the Meeting. The
approval of the issuance by the Company of shares of Common Stock upon
conversion of its Series A Convertible Preferred Stock and exercise of its
Warrants to Purchase Common Stock to insure compliance with (a) the provisions
of that certain Securities Purchase Agreement dated June 12, 1998 and (b) Rule
312 of the New York Stock Exchange (the "Proposal") will become effective only
upon the affirmative vote of stockholders of the Company owning in the aggregate
at least a majority of the Company's outstanding shares of Common Stock present
in person or by proxy at the Meeting. Votes cast as abstentions will not be
counted as a vote for or against the Proposal, but will nevertheless have the
effect of increasing the total votes cast on the matter and thus increase the
number of votes necessary to effectuate the Proposal. So called "broker
non-votes" (brokers failing to vote by proxy shares of the Common Stock held in
nominee name for customers) will not be counted at the Meeting. The effect of
such broker non-votes is to decrease the total votes cast on the matter and thus
decrease the number of votes necessary to effectuate the Proposal. Executive
officers and directors of the Company own shares, and exercisable rights to
acquire shares, representing an aggregate of
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7,945,657 shares of Common Stock or 32.4% of the outstanding shares of Common
Stock (See "Security Ownership of Certain Beneficial Owners and Management").
PROPOSAL
TO APPROVE THE ISSUANCE BY THE COMPANY
OF SHARES OF COMMON STOCK IN ORDER TO COMPLY
WITH (A) THE PROVISIONS OF THAT CERTAIN SECURITIES
PURCHASE AGREEMENT DATED JUNE 12, 1998 AND
(B) RULE 312 OF THE NEW YORK STOCK EXCHANGE
The Board of Directors has designated 1,600 shares of the Company's
10,000,000 authorized shares of Preferred Stock as Series A Convertible
Preferred Stock (the "Series A Shares"). On June 16, 1998, the Company issued
and sold to eight investors who, together with the Company, are parties to a
Securities Purchase Agreement, dated June 12, 1998 (the "Agreement"), a total of
800 Series A Shares and related Warrants to Purchase Common Stock ("Warrants").
Subject to the fulfillment of certain terms and conditions set forth in the
Agreement, the holders of the Series A Shares have the right to purchase, and
the Company has the right to require the holders of the Series A Shares to
purchase, up to an additional 800 Series A Shares and related Warrants in the
aggregate. The purchase price for each Series A Share and related Warrant is
$10,000.
The Agreement provides, among other things, that if, on any date (a "Proxy
Statement Trigger Date") after June 16, 1998 the average of the closing bid
prices of the Common Stock for the five consecutive trading days immediately
preceding such date is equal to or less than $2.75, the Company shall provide
each stockholder entitled to vote at the next meeting of stockholders of the
Company, which meeting shall not be later than 75 days after the Proxy Statement
Trigger Date (the "Stockholder Meeting Deadline"), a proxy statement, which has
been previously reviewed by the investors and a counsel of their choice,
soliciting each such stockholder's affirmative vote at such stockholder meeting
for approval of the Company's issuance of all of the securities as described in
the Agreement, and the Company shall use its best efforts to solicit its
stockholders' approval of such issuance and cause the Board of Directors of the
Company to recommend to the stockholders that they approve such proposal. If the
Meeting is not held by the Stockholder Meeting Deadline, the Company is subject
to monetary penalties. The Company has been notified by the investors that the
Proxy Statement Trigger Date occurred on August 14, 1998. The investors have
agreed, subject to certain conditions, to extend the Stockholder Meeting
Deadline from October 28, 1998 to December 5, 1998. Accordingly, this Meeting is
being held in order to comply with such provision of the Agreement. If
stockholders do not approve the issuance by the Company of all shares of Common
Stock issuable upon conversion of 1,600 Series A Shares and upon exercise of the
related Warrants, each holder of Series A Shares has the right, subject to
limitations set forth in the Certificate of Designation (as hereinafter
defined), to require the Company to redeem all or a portion of such holder's
Series A Shares or purchase marketable securities having a value equal to the
redemption price for exchange with the Investors for the Series A Shares. The
Company is
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prohibited by the terms of the Convertible Notes and First Mortgage Notes (as
hereinafter defined) from redeeming any portion of the Series A Shares or
exchanging marketable securities therefor, and thus could be liable for damages
to the holders of the Series A Shares if the stockholders fail to approve the
Proposal.
Rule 312 of The New York Stock Exchange, Inc. ("NYSE") requires, as a
prerequisite to the listing of common stock on such Exchange, specific
stockholder authorization in connection with the issuance of shares of common
stock or securities convertible into or exercisable for common stock if the
number of shares of common stock to be issued is or will be equal to or in
excess of 20% of the number of shares of common stock outstanding before the
issuance of the stock. Accordingly, this Meeting is also being held in order to
comply with such Rule.
On June 16, 1998 the number of shares of the Company's Common Stock that
were outstanding was 24,498,333. If 1,600 Series A Shares and related Warrants
are sold, the maximum number of shares of common stock which would be issuable
upon conversion of the Series A Shares and exercise of the Warrants is likely to
exceed 4,899,666 shares (i.e. 20% of 24,498,333). The Company is obligated under
the Agreement to seek listing approval for all shares issuable upon conversion
of the Series A Shares and the exercise of the Warrants.
Each of the Series A Shares is convertible into the number of shares of
Common Stock determined by dividing the conversion amount by the conversion
price. The conversion amount is equal to $10,000 plus accrued premium from the
date of issuance at 4% per annum. The conversion price is equal to the lower of
the fixed conversion price and the floating conversion price. The fixed
conversion price is currently $3.89 per share. Pursuant to the Warrants, the
holders thereof may purchase upon exercise up to 292,612 shares of Common Stock
at the warrant exercise price. The warrant exercise price is currently $3.89 per
share. Both the fixed conversion price and the warrant exercise price are
subject to adjustment to prevent dilution and may be reset downward 270 days
after issuance of the Series A Shares. If during such 270 day period (the 270th
day after issuance of the Series A Shares is hereinafter referred to as the
"Adjustment Day"), neither (A) the closing bid price of Common Stock on each day
during any period of 20 consecutive trading days beginning on the 21st day after
issuance of the Series A Shares nor (B) the closing price of the Common Stock on
the 269th day after issuance of the Series A Shares is greater than the fixed
conversion price, then the fixed conversion price and warrant exercise price
shall be adjusted to the lesser of (i) the average of the closing bid prices of
the Common Stock for the 20 consecutive trading days immediately preceding the
Adjustment Date or (ii) the fixed conversion price of the Series A Shares in
effect on the Adjustment Date. The fixed conversion price is also subject to
adjustment upon the occurrence of certain other events. The floating conversion
price is determined by the average of the five lowest consecutive closing bid
prices of Common Stock during the 30 consecutive trading days immediately
preceding conversion. Assuming for purposes of an example that (i) the
conversion amount is $10,300 (representing $10,000 plus 270 days of premium at
4% per annum); (ii) the floating conversion price is $2.00 per share; and (iii)
the fixed conversion price is $3.89 per share, then each Series A Share would be
convertible into 5,150 shares of Common Stock. If, under those assumptions, all
of the 800 Series A Shares were converted and all of the Warrants
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were exercised, a total of 4,120,000 shares of Common Stock would be issuable
upon conversion of the Series A Shares and 292,612 shares of Common Stock would
be issuable upon exercise of the Warrants for an aggregate total of 4,412,612
shares of Common Stock so issued, which would represent approximately 18% of the
currently outstanding shares of Common Stock. Due to the indeterminate nature of
the floating conversion price and the possibility of adjustments to the fixed
conversion price and the warrant exercise price, the number of shares of Common
Stock referred to above as being issuable is illustrative and may not set forth
the total number of shares actually issued upon conversion of the Series A
Shares and the exercise of the Warrants, in full.
Subject to fulfillment of certain terms and conditions, the holders of the
Series A Shares have the right to purchase, and the Company has the right to
require the holders of the Series A Shares to purchase, up to an additional 800
Series A Shares and related Warrants in the aggregate. The fixed conversion
price for those Series A Shares and the exercise price for those Warrants would
be determined at the time of their issuance; however, the Company believes that
it is likely that the total number of shares of Common Stock issuable upon their
conversion or exercise, as the case may be, would not be less than is the case
with the 800 Series A Shares and related Warrants outstanding on October 19,
1998.
The Company has granted registration rights to the holders of the Series A
Shares and the Warrants with respect to all of the shares of Common Stock
issuable upon their conversion or exercise, as the case may be. By exercising
their registration rights, converting the Series A Shares into Common Stock and
purchasing Common Stock upon exercise of the Warrants, the holders of the Series
A Shares and Warrants can cause a large number of shares of Common Stock to be
registered and become freely tradeable without restrictions under the Securities
Act of 1933. Such sales may have an adverse effect on the market price of the
Common Stock and could impair the Company's ability to raise additional capital.
Stockholders are being asked to approve the issuance of all shares of
Common Stock issuable upon conversion of the 1,600 Series A Shares and upon
exercise of the related Warrants in accordance with the respective terms
thereof. Although the NYSE authorized, upon official notice of issuance, the
listing of 4,897,215 shares of Common Stock issuable upon conversion of the
Series A Shares and upon exercise of the Warrants, it requested that the Company
seek stockholder approval for the issuance of all shares of Common Stock that
may be issued under the respective terms of the Series A Shares and the
Warrants. If so approved, the Company will apply to list such number of
additional shares of Common Stock as may become issuable under the respective
terms of the Series A Shares and the Warrants. If not so approved, the Company
would not be able to obtain the listing of such number of additional shares of
Common Stock which may become issuable under the respective terms of the Series
A Shares and the Warrants. In such event, the Company could be liable to the
holders of the Series A Shares for damages since it would be prohibited by the
terms of its public debt indentures from redeeming the Series A Shares which it
would be required to do if the Proposal is not approved by the stockholders.
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SEE DISCUSSION BELOW CONCERNING POSSIBLE DELISTING BY THE NYSE OF ALL SECURITIES
OF THE COMPANY.
Under the provisions of the Certificate of Designations, Preferences and
Rights of the Series A Shares (the "Certificate of Designations"), the Company
is not required to issue shares of Common Stock upon conversion of Series A
Shares if such issuance would exceed the number of shares of Common Stock which
the Company may issue without breaching its obligations under the rules of the
NYSE (the "Exchange Cap"). The Warrants do not contain a similar provision. The
Certificate of Designations also provides that until approval of stockholders is
obtained, no purchaser of Series A Shares pursuant to the Agreement shall, upon
conversion thereof, be issued shares of Common Stock in an amount greater than
the product of (i) the Exchange Cap multiplied by (ii) a fraction, the numerator
of which is the number of Series A Shares issued to such purchaser and the
denominator is the aggregate number of all Series A Shares issued. However, in
the event that the Company is prevented by the Exchange Cap from issuing all of
the shares of Common Stock required in accordance with the provisions of a
holder's conversion notice, the Certificate of Designations provides that the
holder may, with respect to the unconverted shares, (a) require the Company,
subject to certain terms and conditions, to redeem such shares or exchange
marketable securities equal to the redemption value for such shares or (b) void
the conversion notice and retain such shares. The Company is prohibited by the
terms of the Convertible Notes and First Mortgage Notes (as hereinafter defined)
from redeeming any portion of the Series A Shares or exchanging marketable
securities therefor, and thus could be liable for damages to the holders of the
Series A Shares if the stockholders fail to approve the Proposal.
In the spring of 1998, the Company determined that it required additional
funds for the operation of its business; however, the Company could not, because
of provisions in the Indenture dated June 5, 1996, under which its 13 1/4% First
Mortgage Notes due 2004 (the "First Mortgage Notes") were issued, borrow the
additional funds. The Company's only significant source of liquidity was cash
flow from operations which was being used for debt service on its publicly-held
debt, working capital, capital expenditures and contingent liabilities.
Accordingly, it sought the assistance of an investment banking firm with regard
to structuring an equity financing. After discussions with several prospects,
the Company concluded that the transaction contemplated by the Agreement and
related documents was the only feasible opportunity to raise funds at that time.
Therefore, the Board of Directors approved the execution of the Agreement and
authorized the creation of the Series A Shares and the issuance of the Warrants.
The Company received $8,000,000 from the sale of 800 Series A Shares and related
Warrants which it used for general corporate purposes. Proceeds derived from the
sale of additional Series A Shares and related Warrants would also be used for
general corporate purposes. None of the purchasers of the Series A Shares and
Warrants had any affiliation with the Company prior to such transaction.
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RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE PROPOSAL TO APPROVE ISSUANCE BY
THE COMPANY OF SHARES OF COMMON STOCK IN ORDER
TO COMPLY WITH (A) THE PROVISIONS OF THE AGREEMENT
AND (B) RULE 312 OF THE NEW YORK STOCK EXCHANGE
EXCHANGE LISTING
The Company has been advised by the NYSE that it does not currently meet
the NYSE's requirements for continued listing. Specifically, the Company does
not meet the NYSE's net tangible asset requirement of at least $12 Million or
the requirement that it have a three (3) year average net income of at least
$600,000. The Company has met with the staff of the NYSE and presented the
Company's plan for complying with the NYSE's requirements for continued listing.
On September 11, 1998 the Company was informed by the NYSE that the Company will
continue to be listed on the NYSE, but that the NYSE will review on a quarterly
basis the Company's progress with the plan submitted by the Company to comply
with the NYSE continued listing criteria. In the event the NYSE decides to
de-list the Company, the Company intends to apply for listing on the American
Stock Exchange ("ASE") or the NASDAQ National Market ("NASDAQ"); however, the
Company does not currently meet all of the listing requirements of either the
ASE or NASDAQ. No assurance can be given that the Company will continue to be
listed on the NYSE or that, if the Company is de-listed from the NYSE, the
Company will be listed on either the ASE or NASDAQ.
In addition to their respective financial criteria for listing, both the
ASE and NASDAQ have a requirement similar to Rule 312 of the NYSE. Thus,
approval by the stockholders of the issuance by the Company of shares of Common
Stock in order to comply with Rule 312 of the NYSE should satisfy the
requirement of ASE or NASDAQ for stockholder approval in that regard. In the
event the Company is unable to list its Common Stock on ASE or NASDAQ,
quotations for the Common Stock would most likely occur through the
over-the-counter "pink sheets" which would limit the marketability of the Common
Stock. Further, the failure of the Common Stock to trade on a national exchange
or market would (a) give the holders of the Series A Shares the right, subject
to limitations set forth in the Certificate of Designations, to require that
Company to redeem the Series A Shares and (b) likely result in a default by the
Company under its Convertible Notes and First Mortgage Notes which would have a
material adverse effect on the Company.
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DESCRIPTION OF PREFERRED STOCK
The Board of Directors of the Company is authorized, without further
stockholder action, to divide any or all shares of the authorized Preferred
Stock into one or more series and to fix and determine the designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereon, of any series so
established, including voting powers, dividend rights, liquidation preferences,
redemption rights and conversion privileges.
The Board of Directors has designated 1,600 of shares of Preferred Stock as
Series A Convertible Preferred Stock (the "Series A Shares"). As of September
30, 1998, 800 Series A Shares were outstanding. Following is a description of
certain provisions of the Certificate of Designations.
Stated Value - The stated value of the Series A Shares is $10,000 per share.
Dividends - The Series A Shares do not bear any dividends, however they do have
a premium rate of 4% per annum, payable in cash or in kind at the time of
conversion or redemption.
Voting - The holders of the Series A Shares have no voting rights except as
required by law or upon any proposal to change any of the powers, preferences
and rights of the Series A Shares.
Redemption - The Company may redeem all Series A Shares which are outstanding
seven years after the date of original issue at their stated value plus accrued
premium. Each holder of Series A Shares has the right, subject to limitations
set forth in that Certificate of Designations, to require the Company to redeem
all or a portion of such holder's Series A Shares upon the happening of certain
extraordinary events at a price per share equal to the greater of (i) 120% of
stated value plus accrued premium or (ii) the product of the conversion rate at
such time and the closing bid price per share set forth in the Certificate of
Designations, to redeem any or all Series A Shares at any time at a price per
share equal to the product of the conversion rate at such time and the closing
bid price per share of Common Stock at such time.
Liquidation - The preference of the Series A Shares over the Common Stock in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company is the stated value of such shares plus accrued premium.
Sinking Fund - None
Conversion - The Series A Shares are convertible into shares of Common Stock at
a price per share equal to the lesser of (i) 120% of the average closing bid
prices for the Common Stock for the five trading days immediately preceding the
original issuance date thereof, which was $3.89 (the "Fixed Conversion Price"),
or (ii) 100% of the average of the five lowest consecutive closing bid prices
during the period of 30 consecutive trading days immediately preceding
conversion (the "Floating Conversion Price"). The Series A Shares are
convertible at any time at the Fixed Conversion Price.
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The Series A Shares are not convertible at the Floating Conversion Price during
the period of 120 days following the original issuance date. Thereafter, they
are convertible in increasing increments up to 211 days following the original
issuance date at which time they become fully convertible. The Company has the
right, subject to the satisfaction of conditions set forth in the Certificate of
Designations, to require the conversion of any or all Series A Shares at any
time at a price per share equal to the lesser of the Fixed Conversion Price or
the Floating Conversion Price. The conversion rate for each Series A Share is
determined by dividing (i) its stated value plus accrued premium by (ii) the
applicable conversion price. To protect against dilution, the Fixed Conversion
Price is subject to adjustment in certain events, including stock dividends,
stock splits and the issuance of Common Stock for cash at less than the Fixed
Conversion Price then in effect. The Fixed Conversion Price is subject to
adjustment upon the happening of certain extraordinary events or the failure or
inability of the Company to take certain action or in the event that closing bid
prices for the Common Stock during specified periods ending 270 days following
the original issuance date of such Shares is less than the Fixed Conversion
Price. If the Company issues a convertible security with a variable price which
uses a formula different from the one used to calculate the Floating Conversion
Price, the Floating Conversion Price then in effect may be replaced by the other
formulation.
DESCRIPTION OF WARRANTS
The Warrants may be exercised at any time. The number of shares of Common
Stock purchasable upon exercise is determined by the warrant value as of the
date of issuance of the Warrant and the exercise price in effect from time to
time. The warrant value is determined as of the applicable issuance date using
the Black-Scholes valuation method. The initial exercise price is based upon
120% of the average closing bid prices for the Common Stock for the five trading
days immediately preceding the applicable issuance date. Thereafter, the
exercise price is subject to adjustment to prevent dilution and may be reset 270
days after the applicable issuance date if closing bid prices for the Common
Stock on specified dates are lower than the initial exercise price. The Warrants
expire five years from the applicable issuance date. On June 16, 1998, the
Company issued, in connection with the issuance of the Series A Shares, warrants
exercisable for an aggregate of 292,612 shares of Common Stock with an initial
exercise price of $3.89 per share, subject to adjustment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of the close of business on October 19,
1998, certain information with respect to the beneficial ownership of Common
Stock and shares of Common Stock represented by the Convertible Notes
beneficially owned by (i) each director of the Company, (ii) the five (5) most
highly compensated executive officers of the Company (collectively, the "named
officers"), (iii) all executive officers and directors as a group and (iv) each
stockholder who is known to the Company to be the beneficial owner, as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of more than 5% of the outstanding Common Stock.
9
<PAGE>
Each of the persons listed below has sole voting and investment power with
respect to such shares, unless otherwise indicated.
<TABLE>
<CAPTION>
Shares of
Common Stock
Represented by
Convertible Notes
Common Stock Beneficially Percent
Name of Beneficial Owner Beneficially Owned Owned (a) of Class
------------------------ ------------------ ----------------- --------
<S> <C> <C> <C>
Directors and Named Officers:
William F. Cellini 1,846,456(b)(c)(d) 31,075 7.6%
219 Piasa Street
Alton, IL 62002
Edward F. Brennan 22,000(b) -- *
219 Piasa Street
Alton, IL 62002
George L. Bristol 3,000(b) -- *
219 Piasa Street
Alton, IL 62002
F. Lance Callis 1,540,778(b) 17,512 6.3%
219 Piasa Street
Alton, IL 62002
Jimmy F. Gallagher 1,340,778(b) -- 5.5%
219 Piasa Street
Alton, IL 62002
William J. McEnery 1,530,778(b) -- 6.2%
219 Piasa Street
Alton, IL 62002
John B. Pratt, Sr 1,327,124(b)(e) -- 5.4%
219 Piasa Street
Alton, IL 62002
James B. Perry 200,000(b)(f) -- *
219 Piasa Street
Alton, IL 62002
James A. Gulbrandsen 75,000(b)(g) -- *
219 Piasa Street
Alton, IL 62002
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Represented by
Convertible Notes
Common Stock Beneficially Percent
Name of Beneficial Owner Beneficially Owned Owned (a) of Class
------------------------ ------------------ ----------------- --------
<S> <C> <C> <C>
John Pavone -- -- *
219 Piasa Street
Alton, IL 62002
Arnold Block 10,156(b) -- *
219 Piasa Street
Alton, IL 62002
Brenda Bauer 1,000 -- *
219 Piasa Street
Alton, IL 62002
All directors and executive officers 7,897,070(b) 48,587 32.4%
as a group (12 persons) (h)
Principal Stockholders:
Kornitzer Capital Management, 242,000(i) 1,420,749 6.4%
Inc.
P.O. Box 918
Shawnee Mission, Kansas 66201
Dimensional Fund Advisors, Inc. 1,660,800(j) -- 6.8%
1299 Ocean Ave., 11th Floor
Santa Monica, California 90401
James S. Connors 2,291,667(k) -- 9.4%
219 Piasa Street
Alton, Illinois 62002
Stephanie Pratt 1,124,125(e) -- 5.4%
Box 104 Moro Road
Moro, IL 62067
</TABLE>
- ----------
*Less than 1%
(a) Shares of Common Stock represented by such person's ownership of
Convertible Notes, which are convertible into Common Stock of the Company
at any time prior to maturity at
11
<PAGE>
a conversion price of $17.70 per share.
(b) Amounts shown include 3,000 shares of Common Stock for William F. Cellini,
3,000 shares of Common Stock for Edward F. Brennan, 3,000 shares of Common
Stock for George L. Bristol, 3,000 shares of Common Stock for F. Lance
Callis, 3,000 shares of Common Stock for Jimmy F. Gallagher, 3,000 shares
of Common Stock for William J. McEnery, 3,000 shares of Common Stock for
John B. Pratt, Sr., 10,156 shares of Common Stock for Arnold Block, 100,000
shares of Common Stock for James B. Perry, 35,000 shares of Common Stock
for James A. Gulbrandsen and 166,156 shares of Common Stock for all
directors and executive officers as a group represented by stock options
exercisable within 60 days of October 19, 1998.
(c) Includes 381,945 shares held in Trust for William F. Cellini, Jr., as
beneficiary with an independent third party as sole trustee and 381,944
shares held in Trust for William F. Cellini, Jr., as beneficiary, with
William F. Cellini, Jr. and William F. Cellini, father of William F.
Cellini, Jr., as co-trustees. Mr. William F. Cellini disclaims beneficial
ownership of the 381,945 shares of Common Stock held in the William F.
Cellini, Jr. Trust by an independent third party as sole trustee.
(d) Includes 381,945 shares held in Trust for Claudia Marie Cellini, as
beneficiary, with an independent third party as sole trustee and 381,944
shares held in Trust for Claudia Marie Cellini as beneficiary with Claudia
Marie Cellini and William F. Cellini, father of Claudia Marie Cellini, as
co-trustees. Mr. William F. Cellini disclaims beneficial ownership of the
381,945 shares of Common Stock held in the William F. Cellini, Jr. Trust by
an independent third party as sole trustee.
(e) Includes 1,124,125 shares of Common Stock held by Mr. Pratt as Trustee
pursuant to a Voting Trust Agreement with Stephanie Pratt, his
sister-in-law, over which Mr. Pratt exercises sole voting power.
(f) Represents 100,000 shares of restricted Common Stock issued pursuant to an
Employment Agreement dated April 14, 1997 and governed by the terms of a
Restricted Stock Award Certificate and Deposit Agreement.
(g) Represents 40,000 shares of restricted Common Stock issued pursuant to an
Employment Agreement dated May 21, 1997 and governed by the terms of a
Restricted Stock Award Certificate and Deposit Agreement.
(h) The amounts shown do not include a total of 1,592,266 shares of Common
Stock beneficially owned, and a total of 13,842 shares of Common Stock
represented by Convertible Notes beneficially owned, as of February 27,
1998 by four former executive officers who were listed in the executive
compensation table included in the Company's proxy statement for its 1998
annual meeting of stockholders.
12
<PAGE>
(i) According to a Schedule 13G filed with the Securities and Exchange
Commission under the Exchange Act, Kornitzer Capital Management, Inc. has
shared voting power with respect to such shares.
(j) According to a Schedule 13G filed with the Securities and Exchange
Commission under the Exchange Act, Dimensional Fund Advisors, Inc. has sole
voting power with respect to such shares.
(k) From February 25, 1993 until September 8, 1994 Mr. James S. Connors was a
director of the Company.
OTHER MATTERS
The Company knows of no other matters to be submitted to the stockholders
at the Meeting. If any other matters properly come before the Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote the shares
they represent in accordance with the judgments of the persons voting the
proxies.
Upon written request by any stockholder entitled to vote at the Meeting,
the Company will furnish that person without charge a copy of the Company's 1997
Annual Report to Stockholders, its Annual Report on Form 10-K and 10-K/A for the
year ended December 31, 1997 and its Quarterly Report on Form 10-Q for the
quarterly period ending March 31, 1998 and its Quarterly Report on Form 10-Q and
10-Q/A for the quarterly period ending June 30, 1998. Requests should be
addressed to James B. Perry, Argosy Gaming Company, 219 Piasa Street, Alton,
Illinois 62002.
By Order of the Board of Directors
JAMES B. PERRY
President
13
<PAGE>
PROXY PROXY
ARGOSY GAMING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS, December 4, 1998
The undersigned hereby appoints James B. Perry and Dale R. Black, and each
of them, attorneys and proxies, with the power of substitution in each of them,
to vote for and on behalf of the undersigned at the Special Meeting of
Stockholders of the Corporation to be held on December 4, 1998, and at any
adjournment thereof, upon matters properly coming before the meeting, as set
forth in the related Notice of Meeting and Proxy Statement, both of which have
been received by the undersigned. Without otherwise limiting the general
authorization given hereby, said attorneys and proxies are instructed to vote as
follows:
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
ARGOSY GAMING COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. |X|
1. Proposal to approve issuance of Common Stock in order to comply with
provisions of a Securities Purchase Agreement and Rule 312 of the New York
Stock Exchange.
FOR |__| AGAINST |__| ABSTAIN |__|
2. In their discretion, the proxies, are authorized to vote upon any other
business as may properly come before the meeting.
FOR |__| AGAINST |__| ABSTAIN |__|
Mark here if you plan to attend the meeting. |__|
The Board of Directors
recommends a vote FOR items 1
and 2.
THIS SPACE RESERVED FOR ADDRESSING This proxy will be voted in
(key lines do not print) accordance with specification
made.
If no choices are indicated,
this Proxy will be voted FOR
items 1 and 2.
Date:
---------------------
Signature(s)
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign this proxy and return it promptly whether or not you expect to
attend the meeting. You may nevertheless vote in person if you attend. Please
sign exactly as your name appears herein. Give full title if an Attorney,
Executor, Administrator, Trustee, Guardian, etc. For an account in the name of
two or more persons, each should sign, or if one signs he should attach evidence
of his authority.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN AND DATE THIS PROXY AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
