<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or 240.14a-12
PRIMADONNA RESORTS, 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.
/ / 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:
------------------------------------------------------------------------
<PAGE>
PRIMADONNA RESORTS, INC.
P.O. BOX 95997
INTERSTATE 15 AT THE SOUTHERN CALIFORNIA/NEVADA BORDER
LAS VEGAS, NEVADA 89193-5997
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1997
---------------------
The Annual Meeting of Stockholders of PRIMADONNA RESORTS, INC. will be held
Tuesday, May 27, 1997 at 10 o'clock a.m., Pacific Daylight Time, at the showroom
of Whiskey Pete's Hotel & Casino, Interstate 15 at the Southern
California/Nevada Border, Primm, Nevada.
The meeting will consider and act upon the following business:
1. Election of three directors;
2. Approval of the amended and restated 1993 Incentive Plan;
3. Ratification of Arthur Andersen LLP as independent auditors of the
Company to serve for 1997; and
4. Such other business as may properly come before the meeting or any
adjournments thereof.
The Board of Directors has fixed the close of business on April 15, 1997 as
the record date for determining those stockholders who will be entitled to vote
at the meeting.
By order of the Board of Directors.
[SIGNATURE]
Robert E. Armstrong
SECRETARY
April 25, 1997
IMPORTANT: PLEASE FILL IN DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE
POST-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO,
EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
<PAGE>
PRIMADONNA RESORTS, INC.
P.O. BOX 95997
INTERSTATE 15 AT THE SOUTHERN CALIFORNIA/NEVADA BORDER
LAS VEGAS, NEVADA 89193-5997
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
MAY 27, 1997
---------------------
The accompanying Proxy is solicited by the Board of Directors of Primadonna
Resorts, Inc. (the "Company"), for use at the Annual Meeting of Stockholders to
be held on May 27, 1997 and any adjournment thereof. The close of business on
April 15, 1997 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. This Proxy
Statement and the accompanying proxy will be first mailed to stockholders on or
about April 25, 1997.
Any stockholder who gives a proxy has the power to revoke it at any time
before it is exercised by delivery of written notice of revocation to the
Secretary of the Company prior to commencement of the Annual Meeting.
Stockholders attending the Annual Meeting may vote their shares in person
whether or not a proxy has been previously executed and returned. The Company
will bear the cost of soliciting proxies.
As of April 15, 1997 there were 29,707,300 shares issued and outstanding of
Company common stock, $.01 par value ("Common Stock"), the only class of voting
securities outstanding. Each share of Common Stock is entitled to one vote;
there is no cumulative voting in the election of directors.
VOTING REQUIREMENTS AND PROCEDURES
A majority of the shares entitled to vote, present in person or represented
by proxy, will constitute a quorum at the Annual Meeting. In all matters other
than the election of directors (including Proposals Nos. 2 and 3), the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by proxy at the meeting and entitled to vote on the subject
matter will be the act of the stockholders. Directors will be elected (Proposal
No. 1) by a plurality of the votes of the shares of Common Stock present in
person or by proxy and entitled to vote in the election of directors.
If a broker or nominee has indicated on the proxy the absence of
discretionary authority to vote certain shares (i.e., "broker non-votes"), those
shares will be treated as not present and not entitled to vote with respect to
that matter (even though those shares may be considered entitled to vote for
quorum purposes and may be entitled to vote on other matters). Abstentions do
not constitute "votes cast" where the applicable vote required is expressed in
terms of "votes cast."
ANY UNMARKED PROXIES, INCLUDING THOSE SUBMITTED BY BROKERS OR NOMINEES THAT
DO NOT INDICATE AN ABSENCE OF DISCRETIONARY AUTHORITY, WILL BE VOTED IN FAVOR OF
THE PROPOSALS AND NOMINEES OF THE BOARD.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide for a three-tiered
classified Board of Directors with staggered terms of office. The Board of
Directors consists of three classes, designated as Class A, Class B and Class C.
Pursuant to the Articles of Incorporation, the term of Class A directors expires
at the 1997 Annual Meeting; the term of Class B directors expires at the 1998
Annual Meeting; and the term of Class C directors expires at the 1999 Annual
Meeting. At each Annual Meeting, only one class of directors will be elected.
Each class of directors serves a three-year term and until their successors are
elected and qualified.
INFORMATION CONCERNING NOMINEES
The nominees for election as Class A directors are Sigmund Rogich, Gary R.
Sitzmann and George C. Swarts. Set forth below is certain required biographical
information with respect to each of the nominees for election as a director.
Unless marked to the contrary, proxies received will be voted for the election
of Messrs. Rogich, Sitzmann and Swarts, each of whom currently serves as a
Company director, to serve until the 2000 Annual Meeting and until his successor
is elected and qualified. If for any reason a nominee is not available for
election or is unable to serve as a director, the accompanying Proxy will be
voted for the election of such other person, if any, as the Board of Directors
may designate. The Board has no reason to believe that any nominee will be
unavailable for election or unable to serve.
<TABLE>
<CAPTION>
YEAR
COMMENCED OTHER PUBLIC
SERVING AS A COMPANY
NAME, PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE DIRECTOR DIRECTORSHIPS
- ----------------------------------------------------------------------------- --- ------------- -------------
<S> <C> <C> <C>
SIGMUND ROGICH 52 1993 American
Mr. Rogich joined the Company as a director in 1993. Since May 1993, Mr. Bancorp of
Rogich has been employed by The Primadonna Corporation ("TPC"), a Nevada
wholly-owned subsidiary of the Company, as a marketing, political and gaming
development consultant. Mr. Rogich also owns and serves as CEO of The Rogich
Communications Group, a personal holding company that indirectly provides
services to the Company.
From 1974 until January 1993, Mr. Rogich was the owner of R&R Advertising and
served as its Chief Executive Officer from 1970 until 1989. Mr. Rogich served
as Assistant to the President of the United States from 1989 to 1992, and
also served as United States Ambassador to Iceland. Mr. Rogich has been a
member of the Board of Governors of the United Service Organizations since
January 1993.
GARY R. SITZMANN 53 1997 None
Mr. Sitzmann joined the Company as a director on April 8, 1997. Mr. Sitzmann
is an insurance broker and an insurance and benefits consultant. Since 1979,
Mr. Sitzmann has served as President and CEO of Sitzmann, Morris & Lavis,
Inc., an insurance brokerage and benefits consulting firm. From 1966 to 1979,
Mr. Sitzmann was an insurance agent for Phoenix Home Life, an insurance
company.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
YEAR
COMMENCED OTHER PUBLIC
SERVING AS A COMPANY
NAME, PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE DIRECTOR DIRECTORSHIPS
- ----------------------------------------------------------------------------- --- ------------- -------------
<S> <C> <C> <C>
GEORGE C. SWARTS* 53 1993 None
Mr. Swarts joined the Company as a director in 1993. Mr. Swarts is a
Certified Public Accountant and, since 1988, has served as an independent
gaming industry consultant. From November 1982 through April 1988, Mr. Swarts
was an audit and gaming industry partner with the accounting firm of
Laventhol & Horwath, and from September 1975 until December 1980 he served as
a member of the Nevada Gaming Commission.
</TABLE>
- ------------------------
*Member of Audit and Compensation Committees
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE ELECTION OF SIGMUND ROGICH, GARY R. SITZMANN AND GEORGE C. SWARTS FOR
DIRECTOR.
INFORMATION CONCERNING OTHER DIRECTORS
Set forth below is certain required biographical information with respect to
the Company's Class B and Class C directors.
<TABLE>
<CAPTION>
YEAR
COMMENCED OTHER PUBLIC
SERVING AS COMPANY
NAME, PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE A DIRECTOR DIRECTORSHIPS
- ------------------------------------------------------------------------------ --- ----------- --------------
<S> <C> <C> <C>
ROBERT E. ARMSTRONG** 43 1993 None
Mr. Armstrong joined the Company as a director in 1993. Mr. Armstrong has been
a consultant to TPC under consulting agreements since September 1993. Mr.
Armstrong serves, at the Company's request, on the Board of Directors of New
York-New York Hotel & Casino, LLC. Mr. Armstrong has been a partner with the
law firm of McDonald, Carano, Wilson, McCune, Bergin, Frankovich & Hicks LLP
since 1984. Mr. Armstrong is a Certified Public Accountant and holds an LL.M.
in taxation. The McDonald, Carano firm has performed legal services for the
Company in the past and is expected to do so in the future. (CLASS B)
MADISON B. GRAVES, II* 50 1994 Hotel
Mr. Graves joined the Company as a director in 1994. Mr. Graves is a licensed Broadcasting
real estate broker in Nevada. Mr. Graves has been the owner of Flamingo Corporation
Realty, Inc. since 1976, and of Falcon Development since he and others founded
the home-building company in 1986. Mr. Graves was elected to the University
and Community College System Board of Regents of Nevada in 1992, served as
Vice Chairman from June 1992 to June 1995, and since then has served as its
Chairman. (CLASS C)
- ------------------------
*Member of Audit and Compensation Committees
**Member of Audit Committee
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
YEAR
COMMENCED OTHER PUBLIC
SERVING AS COMPANY
NAME, PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE A DIRECTOR DIRECTORSHIPS
- ------------------------------------------------------------------------------ --- ----------- --------------
GARY E. PRIMM 56 1993 None
Mr. Primm has been Chairman and President of the Company since September 1996
and Chief Executive Officer and a director since its inception. Mr. Primm also
served as President of the Company from its inception to February 1995. Mr.
Primm has been President, Chief Executive Officer and a director of TPC since
1985 and also serves as Chairman of the Board of New York-New York Hotel &
Casino, LLC. Mr. Primm is the brother-in-law of H. Martin Rosa. (CLASS C)
<S> <C> <C> <C>
H. MARTIN ROSA 55 1995 None
Dr. Rosa joined the Company as a director in 1995. Dr. Rosa is an investor and
real estate developer. Dr. Rosa is President and a member of the Board of
Directors of Primrose Real Estate Co., a real estate development firm. Dr.
Rosa is the brother-in-law of Gary E. Primm. (CLASS B)
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors has an Audit Committee and a Compensation
Committee but not a Nominating Committee. The Audit Committee currently consists
of Messrs. Armstrong, Graves and Swarts. The Compensation Committee currently
consists of Messrs. Graves and Swarts. Messrs. Graves and Swarts are two of the
Company's independent, non-employee directors.
The Audit Committee monitors the Company's basic accounting policies,
reviews audit and management reports and makes recommendations regarding the
appointment of the independent auditors. The Audit Committee held 4 Meetings in
1996. The Compensation Committee is responsible for setting key executive
compensation, administering the stock incentive plan, and granting stock
options. The Compensation Committee met 5 times during 1996. The Board of
Directors met 5 times in 1996. No director attended less than 75% of the
meetings of the Board of Directors and the committees on which he served during
the fiscal year.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company (other than Mr. Armstrong) is
entitled to receive an annual fee of $24,000, plus $1,000 for each Board of
Directors meeting attended and $1,000 for each Committee of the Board of
Directors meeting attended, or $1,500 in the case of the Committee chairman.
Each director may be reimbursed for certain expenses incurred in connection with
attendance at Board and Committee meetings.
Under the 1993 Eligible Directors' Stock Option Plan (the "Director Option
Plan"), immediately following each annual meeting of stockholders each eligible
director receives an option to purchase 4,500 shares of Common Stock. An
eligible director is a director who is not either (i) an officer or employee of
the Company or the Company's wholly-owned subsidiary, The Primadonna Corporation
("TPC"), or (ii) a person who has received equity securities under the 1993 Plan
(as defined below) within the year prior to the meeting date. Messrs. Graves,
Rosa, Sitzmann and Swarts currently are eligible for these annual awards. The
options granted annually vest and become exercisable at a rate of 1,500 shares
per year commencing on the first anniversary of the grant date. An option for
4,500 shares also may be granted to persons who first become eligible directors
during the year other than by election at an annual meeting of stockholders or
by election by the Board of Directors within 90 days before the next scheduled
annual meeting of stockholders.
4
<PAGE>
On May 21, 1996, the Board of Directors amended the Director Option Plan
(the "1996 Amendments") to authorize a one-time grant of an option for 5,000
shares to each eligible director then serving on the Board of Directors and to
each eligible director who first becomes a director thereafter, exercisable at a
rate of 2,500 shares per year over a two-year period, conditioned upon
stockholder approval. On May 21, 1996, the eligible directors included Messrs.
Graves, Rosa and Swarts, each of whom received an option to purchase an
aggregate 9,500 shares at an exercise price of $24.13, the market value on that
date. In March 1997, the Board of Directors waived the stockholder approval
condition in respect of these options in light of changes to Rule 16b-3 of the
Securities and Exchange Commission (the "Commission"). As a result of these
changes, stockholder approval of the 1996 Amendments was no longer required
under the Director Option Plan.
In accordance with the 1996 Amendments, Mr. Sitzmann received an option to
purchase 5,000 shares of Common Stock at an exercise price of $20.19 per share,
upon becoming a director of the Company on April 8, 1997.
All options under the Director Option Plan expire 10 years after the date of
grant (or at earlier times following a termination of service). The exercise
price of the options is 100% of the fair market value of the Common Stock on the
date of the option grant.
Mr. Armstrong receives compensation pursuant to a consulting agreement with
the Company. See "Executive Agreements" at page 14 and the Option Grants table
at page 12 below.
Mr. Rogich is employed by TPC as a marketing, political and gaming
development consultant, for which he is paid $100,000 a year. On August 13,
1996, Mr. Rogich was granted an option to purchase 10,000 shares of Common
Stock, vesting ratably over a period of 3 years, at an exercise price of $21.75.
On February 18, 1997, Mr. Rogich was granted an option to purchase 20,000 shares
of Common Stock, vesting ratably over a period of 3 years, at an exercise price
of $18.75. Both options were granted to Mr. Rogich under the 1993 Stock
Incentive Plan, as amended, the terms of which are summarized in the notes to
the Option Grants table at page 12 below.
Mr. Rogich is the sole owner of The Rogich Communications Group ("RCG"),
which provides creative and accountancy management services to the entity that
furnishes advertising and media purchasing services to the Company. The Company
paid a total of $2,587,980 to this entity in 1996. The entity pays $6,000 per
month to RCG for the professional services it provides in connection with work
for the Company.
5
<PAGE>
INFORMATION CONCERNING EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME & OTHER INFORMATION AGE POSITIONS
- --------------------------------------------------------------- --- ------------------------------------------
<S> <C> <C>
GARY E. PRIMM 56 Chairman of the Board, President, Chief
(See "Information Concerning Other Directors," above) Executive Officer and Director
CRAIG F. SULLIVAN 50 Chief Financial Officer and Treasurer
Mr. Sullivan joined the Company in March 1995 as Chief
Financial Officer and Treasurer. Mr. Sullivan served as the
Treasurer of Aztar Corporation from 1990 to 1995, and was
Assistant Treasurer of its predecessor, Ramada, Inc., from 1982
to 1990.
CHRISTOPHER R. GIBASE 38 Vice President and Chief Operating Officer
Mr. Gibase joined the Company in November 1994 as Vice
President and General Manager and was appointed Vice President
and Chief Operating Officer in January 1996. Mr. Gibase served
as Senior Executive Vice President for Belle Casinos, Inc. in
Biloxi, Ms. from 1991 to 1994, and Regional General Manager for
Casino America, Inc. from 1989 to 1991.
MICHAEL P. SHAUNNESSY 43 Vice President of Finance and Chief
Mr. Shaunnessy joined the Company in March 1995 as Vice Accounting Officer
President of Finance and Chief Accounting Officer. Mr.
Shaunnessy served as Vice President of Finance for the
Tropicana Resort & Casino from 1990 to 1995.
ROBERT E. ARMSTRONG 43 Secretary and Director
(See "Information Concerning Other Directors," above)
</TABLE>
6
<PAGE>
OWNERSHIP OF THE COMPANY'S SECURITIES
PRINCIPAL STOCKHOLDERS AND OWNERSHIP BY MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Common Stock, as of March 15, 1997 (i) by each person who is known
by the Company to beneficially own more than 5% of Common Stock, (ii) by each of
the Company's directors and executive officers, and (iii) by all executive
officers and directors as a group. Unless listed below, no director or executive
officer owns, beneficially or otherwise, any shares of Common Stock. The Common
Stock is the only outstanding class of stock of the Company. Except as otherwise
indicated, the persons named in the table have sole voting and investment power
with respect to all shares beneficially owned, subject to community property
laws where applicable.
<TABLE>
<CAPTION>
NAME (AND ADDRESS FOR BENEFICIAL OWNERS AMOUNT %
OF GREATER THAN 5%) BENEFICIALLY OWNED OF CLASS
- ------------------------------------------------------------- ------------------ ------------
<S> <C> <C>
Gary E. Primm 9,972,462(1) 33.5%
c/o Primadonna Resorts, Inc.
P.O. Box 95997
Interstate 15 at Southern CA/NV Border
Las Vegas, Nevada 89193-5997
Judith Primm Clemetson 2,689,000(2) 9.0%
c/o Primm South Real Estate Company
100 West Liberty Street, Tenth Floor
Reno, Nevada 89501
Gregory B. Primm 2,506,815(3) 8.4%
c/o Primm South Real Estate Company
100 West Liberty Street, Tenth Floor
Reno, Nevada 89501
Roger B. Primm 2,275,000(4) 7.6%
c/o Primm South Real Estate Company
100 West Liberty Street, Tenth Floor
Reno, Nevada 89501
Janet Primm Rosa 2,571,543(5) 8.6%
c/o Primm South Real Estate Company
100 West Liberty Street, Tenth Floor
Reno, Nevada 89501
Joyce Primm Schweickert 2,211,512(6) 7.4%
c/o Primm South Real Estate Company
100 West Liberty Street, Tenth Floor
Reno, Nevada 89501
American Express Company 2,403,700(7) 8.1%
American Express Financial Corporation
IDS Tower 10
Minneapolis, Minnesota 55440
Robert E. Armstrong 202,238(8) *
Madison B. Graves, II 56,030(9) *
Christopher R. Gibase 31,650(10) *
Sigmund Rogich 146,800(11) *
H. Martin Rosa 1,109,400(12) 3.7%
Michael P. Shaunnessy 13,400(13) *
Gary R. Sitzmann 0 *
Craig F. Sullivan 46,000(14) *
George C. Swarts 9,000(15) *
All Directors and Executive Officers as a Group (10 Persons) 11,586,980 38.5%
</TABLE>
- ------------------------
- ------------------------
* Less than 1% (SEE FOOTNOTES ON NEXT PAGES)
7
<PAGE>
(Footnotes to previous page)
(1) Includes 20,000 shares of Common Stock issuable upon the exercise of
options to purchase shares of Common Stock which are exercisable within 60
days of March 15, 1997, out of stock options covering 140,000 shares of
Common Stock granted to Mr. Primm prior to that date. Also includes
8,527,462 shares of Common Stock held by the Gary Ernest Primm Family Trust
("Family Trust"), dated April 10, 1984, and 1,425,000 shares held by the
Gary E. Primm Charitable Trust ("Charitable Trust"), dated December 27,
1995. Gary E. Primm is the sole trustee of the Family Trust and co-trustee
of the Charitable Trust. Mr. Primm retains sole voting and investment power
over the shares in the Family Trust, and shares voting and investment power
over the shares in the Charitable Trust.
(2) This information was obtained from a Schedule 13G filed with the Commission
regarding ownership as of December 31, 1993: 2,668,800 of the shares of
Common Stock are held by the Clemetson Family Trust, of which Judith Primm
Clemetson and her husband are the co-trustees and over which Mrs. Clemetson
retains sole voting and investment power. Mrs. Clemetson shares voting and
investment power over the remaining 20,200 shares.
(3) This information was obtained from a Schedule 13G--Amendment No. 2 filed
with the Commission regarding ownership as of December 31, 1995: 2,505,095
of the shares of Common Stock are held by the Gregory B. Primm Family Trust
dated September 5, 1985, of which Gregory B. Primm is the sole trustee.
1,720 of the shares of Common Stock are held in trust for his children and
Mr. Primm disclaims any beneficial ownership in these shares.
(4) This information was obtained from a Schedule 13G--Amendment No. 1 filed
with the Commission regarding ownership as of December 31, 1994: the shares
of Common Stock are held by the Roger B. Primm Family Trust dated January
30, 1990, of which Roger B. Primm is the sole trustee.
(5) This information was obtained from a Schedule 13G--Amendment No. 3 filed
with the Commission regarding ownership as of December 31, 1995: Mrs. Rosa
holds 1,492,743 shares of Common Stock in her own name, with sole voting
and investment power. 703,800 of the shares of Common Stock are held by the
Marty and Janet Rosa Family Trust dated October 5, 1984 (the "Trust
Shares"), of which Mrs. Rosa and her husband, H. Martin Rosa, a director of
the Company, are the co-trustees and over which Dr. and Mrs. Rosa share
voting and investment power. Dr. and Mrs. Rosa share voting and investment
power over an additional 375,000 shares (the "Joint Shares" and,
collectively with the Trust Shares, the "Rosa Joint Shares").
(6) This information was obtained from a Schedule 13G--Amendment No. 1 filed
with the Commission regarding ownership as of December 31, 1994.
(7) This information was obtained from a Schedule 13G filed with the Commission
regarding ownership as of December 31, 1995: neither American Express
Company nor American Express Financial Corporation have either sole voting
power or sole investment power over any shares. American Express Company
and American Express Financial corporation share voting power over 453,700
shares and share investment power over 2,403,700 shares.
(8) Includes 62,000 shares issuable upon the exercise of options to purchase
shares of Common Stock which are exercisable within 60 days of March 15,
1997, out of stock options covering 165,000 shares of Common Stock granted
to Mr. Armstrong prior to that date. Also includes: (a) 650 shares owned by
Mr. Armstrong's spouse, (b) 300 shares held by The Armstrong Children's
Trust over which the trustee who is not Mr. Armstrong retains sole voting
and dispositive power, (c) 69,444 shares held by The Matthew E. Primm Trust
over which Mr. Armstrong as co-trustee shares voting and dispositive power,
and (d) 69,444 shares held by The Ashley M. Primm Trust over which Mr.
Armstrong as co-trustee shares voting and dispositive power.
(9) Includes 4,500 shares issuable upon exercise of a stock option to purchase
shares of Common Stock which is exercisable within 60 days of March 15,
1997, out of stock options covering 18,500 shares of Common Stock granted
to Mr. Graves prior to that date.
8
<PAGE>
(10) Includes 30,400 shares issuable upon exercise of stock options to purchase
shares of Common Stock which are exercisable within 60 days of March 15,
1997, out of stock options covering 197,000 shares of Common Stock granted
to Mr. Gibase prior to that date, and 550 shares owned by Mr. Gibase's
spouse.
(11) Includes 124,000 shares issuable upon the exercise of stock options to
purchase shares of Common Stock which are exercisable within 60 days of
March 15, 1997, out of stock options covering 250,000 shares of Common
Stock granted to Mr. Rogich prior to that date, and 800 shares owned by Mr.
Rogich's spouse.
(12) Includes 1,500 shares issuable upon exercise of stock options to purchase
shares of Common Stock which are exercisable within 60 days of March 15,
1997, out of stock options covering 14,000 shares of Common Stock granted
to Dr. Rosa prior to that date. Also includes: (a) 10,355 shares held by
The Janet Primm Rosa 1995 Trust over which Dr. Rosa shares voting and
dispositive power with a person other than Janet Primm Rosa, and (b) the
Rosa Joint Shares.
(13) Includes 10,400 shares issuable upon the exercise of stock options to
purchase shares of Common Stock which are exercisable within 60 days of
March 15, 1997, out of stock options covering 82,000 shares of Common Stock
granted to Mr. Shaunnessy prior to that date.
(14) Includes 40,000 shares issuable upon the exercise of stock options to
purchase shares of Common Stock which are exercisable within 60 days of
March 15, 1997, out of stock options covering 190,000 shares of Common
Stock granted to Mr. Sullivan prior to that date.
(15) Includes 9,000 shares issuable upon the exercise of stock options to
purchase shares of Common Stock which are exercisable within 60 days of
March 15, 1997, out of stock options covering 23,000 shares of Common Stock
granted to Mr. Swarts prior to that date.
Gary E. Primm, Judith Primm Clemetson, Gregory B. Primm, Roger B. Primm, Janet
Primm Rosa and Joyce Primm Schweickert are all brothers and sisters. Matthew E.
Primm and Ashley M. Primm are the children of Gary E. Primm.
9
<PAGE>
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table and accompanying notes summarize the total compensation
of the Chief Executive Officer and the four next highest paid executive officers
of the Company as of December 31, 1996, plus one executive officer who
terminated employment with the Company in 1996, for each of the last three years
in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION AWARDS
------------------------------------------------ -------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) OPTIONS (#) ($)(1)
- ----------------------------------- --------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
GARY E. PRIMM ..................... 1996 $ 850,239 $ 129,179 -- -- $ 322,719(2)
Chairman, President and 1995 826,632 20,000 -- 100,000 319,697(2)
Chief Executive Officer 1994 805,216 -- -- -- 294,026(2)
CHRISTOPHER R. GIBASE ............. 1996 245,355 50,368 -- 130,000 4,880(9)
Vice President and Chief
Operating Officer
CRAIG F. SULLIVAN ................. 1996 250,000 52,868 -- 35,000 3,450(7)
Chief Financial Officer 1995 184,918 6,250 -- 220,000(3) --
and Treasurer
MICHAEL P. SHAUNNESSY ............. 1996 148,989 32,963 -- 25,000 1,960(8)
Vice President and Chief 1995 105,000 3,500 -- 52,000(4) --
Accounting Officer
ROBERT E. ARMSTRONG ............... 1996 -- -- 150,000(5) 25,000 --
Director and Secretary 1995 -- -- 150,000(5) 70,000(10)
1994 -- -- 150,000(5) 50,000
WILLIAM J. PAULOS(6)............... 1996 406,557 30,000 -- -- 600,726(6)
1995 538,386 15,000 -- 500,000(11) --
</TABLE>
- ------------------------
(1) Where indicated by footnote for each participating executive officer, the
amount in this column includes matching contributions by the Company under
a plan which permits all Company employees to make tax-deferred
contributions of a portion of their base compensation pursuant to Section
401(k) of the Internal Revenue Code (the "401(k) Plan"). Under the 401(k)
Plan, the Company matches 50% of a participant's first 5% of tax-deferred
contributions, subject to the maximum contribution amount under the law.
Participants may allocate their contributions, subject to a maximum, among
specified investment funds.
(2) Represents the sum of the portion of premiums representing term insurance
and the benefit to Mr. Primm of the remaining premiums paid by the Company
on the split-dollar life insurance policies described below under
"Executive Agreements." The benefit portion of the reported amount is
determined for the period, projected on an annual actuarial basis, between
the date the premium was paid by the Company and the date the Company
expects to be reimbursed for the premium.
(3) Represents (a) an option for 100,000 shares granted in March 1995, (b) an
option for 80,000 shares granted in November 1995 upon the cancellation of
the option granted in March 1995, and (c) an additional option for 40,000
shares granted in November 1995.
10
<PAGE>
(Footnotes continued from previous page)
(4) Represents (a) an option for 20,000 shares granted in March 1995, (b) an
option for 20,000 shares granted in November 1995 upon the cancellation of
the option granted in March 1995, and (c) an additional option for 12,000
shares granted in November 1995.
(5) Represents amounts paid pursuant to a consulting agreement with TPC, the
material terms of which are summarized at page 14 below.
(6) Mr. Paulos resigned as a director and President of the Company on September
4, 1996. The amount reported in the last column represents $726 in life
insurance premium costs and $600,000 in accrued termination settlement
payments. Of this $600,000, $200,000 was paid through December 31, 1996 by
the Company pursuant to Mr. Paulos' employment agreement, as explained
below under "Executive Agreements."
(7) Represents Company contribution to the 401(k) Plan of $3,125 and life
insurance premium cost of $325 for Mr. Sullivan.
(8) Represents Company contribution to the 401(k) Plan of $1,960 for Mr.
Shaunnessy.
(9) Represents Company contribution to the 401(k) Plan of $4,750 and life
insurance premium cost of $130 for Mr. Gibase.
(10) Represents (a) an option for 40,000 shares granted in November 1995 upon
cancellation of the option for 50,000 shares granted in July 1994, and (b)
an additional option for 30,000 shares granted in November 1995.
(11) Represents (a) an option for 250,000 shares granted in February 1995, (b)
an option for 200,000 shares granted in November of 1995 upon cancellation
of the option for 250,000 shares granted in February 1995, and (c) an
additional option for 50,000 shares granted in November 1995. See also note
6 above.
11
<PAGE>
OPTION GRANTS FOR FISCAL 1996
The following table shows for each of the named executive officers
individual grants of stock options in 1996 and certain required information
regarding the potential realizable value (under specified assumptions) of such
stock options for the option term. The Company had not granted any stock
appreciation rights ("SARs") as of December 31, 1996.
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM(1)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME (#)(2) FISCAL YEAR(3) ($/SH) DATE 5%($) 10%($)
- ------------------------------------ ----------- ----------------- ------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
GARY E. PRIMM ...................... -- -- -- -- -- --
Chairman, President and
Chief Executive Officer
CHRISTOPHER R. GIBASE .............. 100,000 18.7 14.25 01/17/06 896,168 2,271,083
Vice President and Chief 30,000 5.6 21.75 08/13/06 410,351 1,039,917
Operating Officer
CRAIG F. SULLIVAN .................. 35,000 6.6 21.75 08/13/06 478,743 1,213,236
Chief Financial Officer
and Treasurer
MICHAEL P. SHAUNNESSY .............. 25,000 4.7 21.75 08/13/06 341,959 866,597
Vice President and Chief
Accounting Officer
ROBERT E. ARMSTRONG ................ 25,000 4.7 21.75 08/13/06 341,959 866,597
Director & Secretary
</TABLE>
- ------------------------
(1) Based upon the exercise price per share stated for each grant and an annual
appreciation of such price through the expiration date of such options at
the stated rates. These amounts represent assumed rates of appreciation
only and may not necessarily be achieved. Actual gains, if any, are
dependent on the future performance of the Common Stock, as well as the
continued employment of the executive officers through the vesting period.
The potential realizable values indicated have not taken into account
amounts required to be paid as income tax under the Internal Revenue Code
of 1986, as amended, and any applicable state tax laws.
(2) These stock options were granted under the Company's 1993 Stock Incentive
Plan, as amended (the "1993 Plan"). Options become exercisable in equal
annual increments over a 3 year period. Options under the 1993 Plan may
provide benefits following the resignation, retirement or other termination
of employment with the Company or its subsidiaries or as a result of a
change in control of the Company. Vested options under the 1993 Plan may be
exercised within a period of 1 year following a termination by reason of
death or disability, 90 days following retirement, and 45 days following a
termination for other reasons. The 1993 Plan permits the Compensation
Committee, which administers the 1993 Plan, to accelerate, extend or
otherwise modify benefits payable under the applicable awards in various
circumstances, including a termination of employment or change in control.
Under amendments to option agreements in 1996, all options become
immediately exercisable if there is a change in control of the Company (as
defined) or certain other events occur (see page 20 below), unless the
Compensation Committee otherwise provides. The 1993 Plan also permits the
Compensation Committee to amend options, subject to the consent of any
adversely affected optionees.
(3) Options to purchase an aggregate of 534,000 shares were granted in 1996.
12
<PAGE>
OPTION EXERCISES AND VALUES FOR FISCAL 1996
The following table sets forth for each of the named executive officers the
number and dollar value of the option spread (difference between the exercise
price and fair market value) of unexercised options held by the named executive
officers at the end of 1996.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND
FY-END OPTION VALUE(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END
(#) ($)
---------------------- ----------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE(2)
- --------------------------------------------- ---------------------- ----------------------
<S> <C> <C>
GARY E. PRIMM ............................... 20,000/80,000 40,000/160,000
Chairman, President and Chief
Executive Officer
CHRISTOPHER R. GIBASE ....................... 10,400/151,600 20,800/318,200
Vice President and Chief
Operating Officer
CRAIG F. SULLIVAN ........................... 24,000/131,000 48,000/192,000
Chief Financial Officer
and Treasurer
MICHAEL P. SHAUNNESSY ....................... 6,400/50,600 12,800/51,200
Vice President and Chief
Accounting Officer
ROBERT E. ARMSTRONG ......................... 52,000/93,000 104,000/136,000
Director and Secretary
WILLIAM J. PAULOS ........................... N/A(3)
</TABLE>
- ------------------------
(1) No options were exercised by an executive officer of the Company in fiscal
1996.
(2) Based on the closing price of $17.00 per share on December 31, 1996.
(3) Non-vested options granted to Mr. Paulos terminated when he ceased being an
employee of the Company. Under the terms of his stock option agreement,
vested and unexercised options were cancelled 45 days after termination of
his employment.
13
<PAGE>
EXECUTIVE AGREEMENTS
In October 1993, TPC entered into a three-year employment agreement with
Gary E. Primm to serve as President and Chief Executive Officer of the Company
and TPC. TPC has the option to renew this agreement for two successive one-year
terms, the first of which was exercised in October 1996. Contract terms provide
for an initial annual base salary of $800,000 plus annual cost of living
adjustments, currently $869,183, as well as employment related benefits.
Pursuant to this agreement, Mr. Primm is eligible for, but not guaranteed,
bonuses and stock options as TPC may award or grant. If Mr. Primm's employment
is terminated by TPC with "cause" (as such term is defined in the agreement),
Mr. Primm will be paid only such compensation TPC owes for his services rendered
to TPC before the date of termination. If Mr. Primm's employment is terminated
without "cause," TPC will pay Mr. Primm the base salary (excluding bonuses and
other compensation) during the remaining term of the agreement but in no event
will TPC be obligated for more than one year of severance pay. As of February 1,
1995, Mr. Primm was elected Chairman of the Board and resigned as President of
the Company. On September 4, 1996, Mr. Primm again became President of the
Company.
Effective September 4, 1996 the Company terminated the employment
arrangement with William Paulos, which was entered into in January 1995. This
arrangement provided that upon termination Mr. Paulos would receive his base
salary of $600,000 for one year or until earlier employed by a third party.
In September 1996, TPC entered into a new two-year agreement with Mr.
Armstrong for various consulting services (other than legal services). Contract
terms provide for a base monthly payment of $12,500, plus up to $2,400 per diem
($200/hour) for services under the agreement in excess of 700 hours per year.
These payments replace director fees to which Mr. Armstrong would otherwise be
entitled in his capacity as a director of the Company. However, he remains
eligible for discretionary stock options and other incentive compensation
payable to directors or officers. TPC has the option to renew this agreement for
one-year. During 1996, TPC paid Mr. Armstrong $150,000 which represents Mr.
Armstrong's combined compensation under the terms of the earlier agreement that
expired in September 1996 and under the new agreement. Mr. Armstrong is a
partner in the law firm of McDonald, Carano, Wilson, McCune, Bergin, Frankovich
& Hicks LLP, which provides legal services to the Company and TPC. Billings to
the Company and to TPC for legal services provided by this firm were
approximately $388,125 from January 1, 1996 to March 31, 1997.
The Company entered into agreements (commonly known as split-dollar life
insurance agreements) in January 1994 under the terms of which the Company pays
the premiums for certain survivorship life insurance policies, with an aggregate
face value of $50 million, on the lives of Mr. and Mrs. Gary E. Primm (each
policy hereinafter referred to individually as the "Second-to-Die Policy," and
collectively as the "Second-to-Die Insurance"). Insurance benefits become
payable when both have died, and the Company will have an interest in the
insurance benefits equal to the amount of unreimbursed premiums it has paid,
with the balance payable to a trust created by Mr. and Mrs. Primm for the
benefit of their children (the "Trust"). Robert E. Armstrong, a director of the
Company, is trustee of the Trust.
The Trust has also obtained individual insurance payable on the death of
each of Mr. and Mrs. Primm with an aggregate face value of $10 million each (the
"Individual Insurance"). The funding of the Individual Insurance premiums has
been effected in a manner similar to the Second-to-Die Insurance. The purpose of
the Individual Insurance is to reimburse the Company for all premiums paid prior
to death, as well as to pay future premiums on the remaining Second-to-Die
Policy from the proceeds of the Individual Insurance policy on the first-to-die.
14
<PAGE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS
PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING COMPENSATION COMMITTEE
REPORT AND THE PERFORMANCE GRAPH THAT FOLLOWS SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS OR ANY FUTURE FILINGS, EXCEPT TO THE EXTENT THE
COMPANY EXPRESSLY INCORPORATES SUCH REPORT OR GRAPH BY REFERENCE THEREIN. THE
REPORT AND GRAPH SHALL NOT BE DEEMED SOLICITING MATERIAL OR OTHERWISE DEEMED
FILED UNDER EITHER OF SUCH ACTS.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee currently consists of Messrs. Graves and Swarts,
independent, non-employee directors. The Compensation Committee has a primary
role in determining compensation levels of the executive officers of the Company
and administering the Company's stock option plans and the Company's bonus plan.
The Compensation Committee determines awards to be made under such plans to the
executive officers, as well as to other eligible individuals.
EXECUTIVE OFFICER COMPENSATION
PHILOSOPHY AND OBJECTIVES. The Compensation Committee's objectives are to
attract, retain and reward experienced, highly motivated executives.
Compensation for executive officers includes three elements: base salary,
performance-based quarterly and annual bonuses, and long-term grants of stock
options. The Compensation Committee believes that this approach best serves
stockholder interests because it permits compensation to be set at a level that
is both highly competitive within the industry and, in substantial part,
performance-based.
SALARY. The Compensation Committee reviews the aggregate of base salary and
annual bonus offered for comparable positions at other gaming companies based on
readily available information and, in doing so, considers the recommendations of
the Chief Executive Officer. Salaries are then adjusted by the Compensation
Committee to a level believed to be competitive or reflect significant changes
in responsibilities.
BONUS PLAN. In late 1995, the Compensation Committee adopted a short-term
cash incentive bonus plan for certain members of the Company's senior and middle
management. For 1996, the bonus plan provided for quarterly and annual cash
bonuses, subject to a maximum of 87.5% of a person's base salary, based
primarily upon the satisfaction of performance targets as to EBITDA and net
income. The remaining portions of the bonuses were based on subjective criteria.
The targets were set at the beginning of the quarter by the Compensation
Committee for each individual participating in the bonus plan. Annual amounts
(reduced by quarterly payments) were reviewed by the Compensation Committee
prior to payment.
The amount of bonuses actually paid to executive officers for 1996 were
significantly enhanced over formula-determined amounts under the bonus plan
based on subjective criteria, including the Compensation Committee's evaluations
of individual performance, its assessment of the competitiveness of current
salaries, and its review of individual contributions to the successful opening
of the New York-New York Hotel & Casino, which is owned and operated by an
affiliate of the Company. For 1997, certain changes were made to the annual cash
bonus plan. These changes scale benefits to increments of performance above a
specified threshold, impose a $2,000,000 individual ceiling on bonuses, and
permit reduction of the formula-determined amounts to 70%, based on subjective
factors.
STOCK OPTION GRANTS. The Compensation Committee believes that stock option
grants serve to enhance stockholder value by linking compensation to stock
performance. The Company's 1993 Stock Incentive Plan, as amended, utilizes
vesting provisions ranging from 3 to 5 years to encourage a longer-term
perspective and to retain key employees. The size of option awards generally is
based on current grant levels for comparable positions made by other companies
in the gaming industry and upon subjective criteria and recommendations of the
Chief Executive Officer.
15
<PAGE>
The compensation of Mr. Armstrong is paid pursuant to an exclusive
consulting agreement for certain services, described above under "Executive
Agreements," that was approved by the Board and based primarily upon Mr.
Armstrong's role as consultant to the firm on a part-time basis.
In his capacity as Chief Executive Officer, Mr. Primm makes recommendations
to the Compensation Committee regarding the compensation of other executive
officers and employees of the Company. However, final determination of executive
compensation resides with the Compensation Committee.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer, Gary E. Primm, was compensated during fiscal
1996 pursuant to his employment agreement described above under "Executive
Agreements," which was extended in late 1996 for an additional year. Mr. Primm's
base salary for fiscal 1996 was $850,239, reflecting only cost-of-living
adjustments since 1993. Mr. Primm was paid a bonus for fiscal 1996 of $129,179.
Of this bonus amount, $49,179 was formula-determined and the remaining $80,000
was based upon the Compensation Committee's analysis of compensation levels for
other CEO's in the industry and Mr. Primm's role in the successful opening of
the New York-New York Hotel & Casino. Mr. Primm was not granted any stock
options in fiscal 1996.
POLICY CONCERNING INTERNAL REVENUE CODE SECTION 162(m)
The Company is submitting to the stockholders at the annual meeting
revisions to the Company's 1993 Stock Incentive Plan to enable compliance with
conditions for exclusion from the $1,000,000 limit under Section 162(m) of the
Internal Revenue Code on the deductibility of certain cash and stock related
performance-based compensation. If the plan amendments are not approved, the
compensation paid under the new bonus plan and compensation related to options
and other share awards thereafter granted under the 1993 Stock Incentive Plan
(even if otherwise performance-based) may not be deductible if such
compensation, together with base salary, exceeds this limit. The Compensation
Committee, generally speaking, considers Section 162(m) as one of the factors it
reviews with respect to compensation matters. If amendments to the 1993 Stock
Incentive Plan are approved by the stockholders, the Compensation Committee
intends to structure awards or employ other means to avoid paying significant
non-deductible compensation in excess of the Section 162(m) limit. The
Compensation Committee, nevertheless, retains the authority to authorize
compensation in excess of the limit, if it believes such action to be in the
best interest of the Company or circumstances beyond the Compensation
Committee's control or foresight frustrate its intentions.
April 1997
The Compensation Committee
Madison B. Graves, II
George C. Swarts
16
<PAGE>
STOCK PRICE PERFORMANCE
The following Performance Graph compares the Company's cumulative
stockholder return on its Common Stock (i.e. change in stock price plus
reinvestment of dividends), with the Standard & Poor's 500 Stock Index and the
Dow Jones Entertainment & Leisure-Casino Industry Group Index. The Performance
Graph assumes that $100 was invested on June 22, 1993 (the date of the Company's
initial public offering) in each of the Common Stock, the Standard & Poor's 500
Stock Index and the Dow Jones Entertainment & Leisure-Casino Group Index. The
stock price performance shown in this graph is not necessarily indicative of and
not intended to suggest future stock price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS DOW JONES ENTERTAINMENT & LEISURE -
<S> <C> <C> <C>
Primadonna Resorts, Inc. S & P 500 Casino Industry Group
6/22/1993 $100 $100 $100
1993 156.94 105.25 128.13
1994 131.94 103.63 98.37
1995 81.94 138.98 130.48
1996 94.44 167.14 142.32
</TABLE>
CERTAIN TRANSACTIONS
Three of the Company's facilities are located on approximately 142 acres of
land on both sides of Interstate 15 at the California/Nevada state line,
substantially all of which are leased from a corporation owned by Gary E. Primm,
the Company's Chairman, President, and Chief Executive Officer, and his brothers
and sisters (including the wife of H. Martin Rosa, a Company director). The
lease has an expiration date of 2043 and a Company option to renew for an
additional 25 years. Rent for all properties under the lease, set by two
appraisers selected by the lessor and the Company, is approximately $441,000 per
month. Rent is to increase each year by the cost of living, but not more than 8%
in any one year. Every eight years the rent is to be reset by the appraisers in
the manner described above, or, if they are unable to agree, by another
appraiser selected by the other two appraisers. The lease provides that for a
fee of $100,000 per year, adjusted after each ten years of the lease term by the
cost of living but no more than 8% per year, the remaining acreage owned by the
lessor may not be used for any gaming activity unless operated by the Company.
In addition, the lessor has made available rent-free to the Company acreage for
a wastewater treatment plant operated by the Company and for the associated
rapid infiltration basins.
The Company and Mr. Primm own undivided interests of 75% and 25%,
respectively, in a Model 1125 Astral SP aircraft. Operational expenses of the
aircraft are borne by the parties based on actual flight hours utilized by each.
During 1996 the plane flew 225 hours of which 132 hours, or 59%, were for
Company purposes.
17
<PAGE>
As of March 31, 1997, Mr. Primm owed the Company approximately $12,728 for
expenses arising from the joint ownership of this aircraft. Additionally, in
exchange for the Company paying the monthly base salary and related benefits for
one full-time pilot for the aircraft, Mr. Primm does not charge the Company rent
for the use and occupation of the base hangar for the aircraft.
Gary E. Primm and his brothers and sisters (including Dr. Rosa's wife) own
and operate a convenience store located just south of the Primadonna Resort
across the California border. The Company provides certain services and
supplies, for $2,000 per month, which the Company believes reflects the fair
market value of such services and supplies. In addition, the Company supplies
the store with stand-by security services at its cost plus 10%, as well as water
and sewer services at the generally prevailing rates in Las Vegas.
The Company entered into a lease agreement with Hughes Parkway Associates
dated January 10, 1994, whereby the Company leased office and parking space in
the Hughes Center (the "Hughes Center Premises"), in Las Vegas for approximately
$3,300 per month for a period of 36 months beginning March 15, 1994. Shortly
after the lease began, the Company no longer had use for the Hughes Center
Premises. On June 15, 1995, The Rogich Communications Group ("RCG"), which is
owned by Mr. Rogich, and the Company entered into a sublease agreement whereby
RCG subleased the Hughes Center Premises from the Company for approximately
$2,000 per month. In November 1996, RCG purchased the office furniture located
in the Hughes Center Premises from the Company for $30,000. The Company lease
and the RCG sublease both terminated on March 15, 1997.
Mr. Rogich (and related entities) have approximately a 50% beneficial member
interest in Gotham Limited Liability Company ("Gotham") of which Mr. Rogich is
the manager. Gotham has a 30% member interest in Motown Cafe Las Vegas, LLC
("Motown"). In exchange for an exclusive right to certain generally designated
space in the hotel and casino operated by the Company's affiliate, New York-New
York Hotel & Casino, LLC ("New York-New York"), Gotham assigned to New York-New
York, in September 1996, all right, title and interest in and to all
distributions, except distributions made for the purpose of repaying certain
capital contributions, which a 5% member of Motown would be entitled to receive
in respect of certain operating profits of Motown, and a 17% interest in certain
distribution proceeds from a sale of Gotham's interests in Motown. The parties
thereafter designated the applicable space and since January 1997, Motown has
leased this space from New York-New York for the purpose of operating a cafe
(the "Cafe"). Under the lease, monthly rent includes a fixed base amount plus a
percentage of the Cafe's gross sales. As of March 31, 1997, Motown has paid
approximately $475,000 to New York-New York under the lease. The term of the
lease is 20 years and provides for 3 conditional options in favor of Motown to
extend the term, each for a period of 5 years.
18
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AMENDED AND RESTATED 1993 INCENTIVE PLAN
At the annual meeting, stockholders will be asked to approve an amended and
restated version (the "Restated Plan") of the Company's 1993 Stock Incentive
Plan, as amended (the "1993 Plan" or the "Stock Incentive Plan"). The Restated
Plan was adopted by the Company effective March 28, 1997, subject to stockholder
approval. The principal changes:
- authorize performance-based awards within the meaning of Section 162(m) of
the Internal Revenue Code ("Section 162(m)") and establish their material
terms, including the applicable performance criteria,
- authorize cash only performance-based awards in addition to share-based
awards,
- impose annual, individual grant limits on awards,
- permit limited transfers of awards, and
- make administrative and other changes in response to changes to the
Commission's rules under Section 16 of the Securities Exchange Act, as
amended.
No increase in available shares is authorized by the 1997 amendments.
Stockholder approval of the Restated Plan is sought in order to enable the
Company to continue to be able to deduct under Section 162(m) all qualifying
performance-based compensation (including "at market" option grants) awarded
pursuant to the 1993 Plan. If the Restated Plan is not approved by the
stockholders at the Annual Meeting, the amendments to the Stock Incentive Plan
reflected in the Restated Plan will not be implemented. In such event, the
Compensation Committee and the Board may, however, continue to authorize and pay
bonuses and other compensation (including, but not limited to, awards otherwise
permitted under the Stock Incentive Plan), and authorize other plan amendments,
consistent with applicable corporate authority and the Company's compensation
policies, as from time to time in effect. Such other compensation (or future
amendments to the 1993 Plan) could increase compensation cost to the Company,
without further stockholder approval. Stockholder approval of the Restated Plan,
however, will not be deemed to constitute stockholder approval of any such other
compensation or future amendments.
A summary of the material terms of the Restated Plan, including a
description of the types of awards that may be granted thereunder, is set forth
below. This summary is qualified in its entirety by the full text of the
Restated Plan. Capitalized terms used herein which are not otherwise defined are
used as defined in the Restated Plan.
A copy of the Restated Plan is available for review at the principal
executive offices of the Company and will be furnished to stockholders without
charge upon written request directed to Mr. Robert E. Armstrong, Secretary,
Primadonna Resorts, Inc., P.O. Box 95997, Interstate 15, Southern California/
Nevada Border, Las Vegas, Nevada 89193-5997. The full text of the Restated Plan
also can be reviewed on the Commission's Web site at http://www.sec.gov.
19
<PAGE>
SUMMARY DESCRIPTION OF THE RESTATED PLAN
The purpose of the Restated Plan is to attract, retain and motivate
employees and certain other eligible individuals by providing incentives related
to equity interests in, and the financial performance of, the Company.
The Restated Plan authorizes the issuance of (i) Common Stock, (ii) any
option, warrant, convertible security, SAR or similar right with an exercise or
conversion privilege at a fixed or variable price related to the Common Stock or
other equity securities of the Company and/or the passage of time, the
occurrence of one or more events or the satisfaction of performance criteria or
other conditions, or any similar security with a value derived from the value of
Common Stock or other equity securities of the Company, and (iii) to eligible
officers (whether or not also directors), certain performance-based cash awards.
The authorization of any such arrangement is referred to as an "Award."
ADMINISTRATION. The Restated Plan is administered and may be amended or
terminated by the Compensation Committee (Messrs. Graves and Swarts). The
Compensation Committee selects the eligible officers, employees,
employee-directors, consultants or advisors who will be granted Awards and
determines the amount, type, terms and conditions of Awards. The Compensation
Committee may permit any recipient of an Award to pay the purchase price of the
Common Stock or other property issuable pursuant to the Award in any lawful
manner and for any lawful consideration that the Compensation Committee
approves.
The Restated Plan provides for the issuance of Awards that are not otherwise
restricted to any specified form, structure, term or price and may include,
without limitation, sales or bonuses of stock, restricted stock, stock options
(including incentive stock options ("ISOs")), reload stock options, stock
purchase warrants, other rights to acquire stock, securities convertible into or
redeemable for stock, SARs, limited SARs, phantom stock, dividend equivalent
rights ("DERs"), performance units or performance shares. The Compensation
Committee may also grant cash-only Awards that provide for a cash payment or
benefit ("Cash-Based Awards") under the Restated Plan and may make loans to
finance or otherwise accommodate the acquisition or exercise of an Award. As of
March 31, 1997, no Cash-Based Awards had been granted under the Restated Plan,
except for the conditional grant of a 1997 bonus opportunity to Mr. Primm
described below. Cash-Based Awards may be granted in lieu of, in addition to, as
part of, or independent of any other form of Award.
The maximum number of shares of Common Stock authorized for issuance under
the Restated Plan is 3,000,000, of which 176,300 had been issued as of March 31,
1997. (At that date, 1,680,800 of the available shares were reserved for
issuance on exercise of outstanding options.) No Awards may be granted under the
Restated Plan after April 27, 2003; but Common Stock may be issued or cash may
be paid after that date pursuant to Awards then outstanding. An Award granted
prior to such date also may be amended after such date, so long as there is no
increase in the number of shares subject to or comprising that Award or the
maximum cash amount payable thereunder. Awards may be reduced by the amount
necessary to satisfy any applicable tax withholding requirements imposed on the
Company in respect of the Award. Shares of Common Stock reserved for Options
that terminate or expire (and thus are not exercised), as well as shares that
fail to vest and are reacquired by the Company, are available for additional
Awards within the overall Restated Plan limit.
In the event of a stock split, the declaration of a stock dividend, the
exchange or conversion of securities of the class subject to an Award into cash,
property or different kinds of securities pursuant to a merger, reorganization
or otherwise, or the sale of substantially all of the assets of the Company or
if an extraordinary dividend is declared, adjustments will be made in (i) the
number and type of shares or other securities or cash or other property that may
be acquired pursuant to each Award, (ii) the maximum number and type of shares
or other securities that may be issued pursuant to other Awards thereafter
granted under the Restated Plan, and (iii) any other terms as are necessarily
affected by such event.
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Upon the occurrence of certain events, any or all options granted under the
Restated Plan may, at the discretion of the Compensation Committee, become
immediately exercisable in full. The Compensation Committee has authorized
acceleration of the exercisability of all currently outstanding options upon a
Change in Control or an Event (each as defined in Section 7 of the Restated
Plan), unless prior to such event the Compensation Committee otherwise provides.
AMENDMENTS. The Board of Directors may amend or terminate the Restated Plan
at any time, but may not unilaterally change or affect any outstanding Award
that would deprive the holder of any of material benefits thereunder.
Termination of the Restated Plan would have no effect on then outstanding
options.
ELIGIBILITY. Persons eligible to receive Share-Based Awards under the
Restated Plan include any individual (including any director) who is an officer
or employee of, or a consultant or advisor to the Company (including its
subsidiaries). Although the Company has approximately 3,800 potentially eligible
persons, as a practical matter, three directors and only approximately 400
officers and employees of the Company and TPC are considered eligible under the
Restated Plan at the present time. The Compensation Committee determines all
those eligible employees and other persons to whom Awards will be granted. Only
officers and salaried employees are eligible for Performance-Based Awards (as
defined below) that are also Share-Based Awards. Only officers are eligible for
Cash-Based Awards under the Restated Plan.
NON-TRANSFERABILITY. Generally, Awards to individuals under the Restated
Plan are not transferable by a holder other than by will or the laws of descent
and distribution and are generally exercisable, during his or her lifetime, only
by the holder; and amounts payable or shares issuable pursuant to an Award will
be paid only to the holder or the holder's beneficiary or representative.
However, the Compensation Committee may establish conditions and procedures (for
example, in connection with a holder's estate or tax planning initiatives) under
which Awards may be transferred and/or payments may be made to a third party, to
the extent permitted by law.
PERFORMANCE-BASED AWARDS UNDER SECTION 162(m). In addition to Awards under
the other provisions of the Restated Plan, the Compensation Committee may grant
to eligible employees or officers performance-based awards designed to satisfy
the requirements for deductibility of compensation under Section 162(m)
("Performance-Based Awards"). Options with an exercise price and SARs with a
base price not less than fair market value on the date of grant will, generally
speaking, be considered Performance-Based Awards. Other Performance-Based Awards
must be based on the performance relative to objective preestablished goals over
performance periods not shorter than one quarter nor longer than 6 years in the
case of a Cash-Based Award.
BUSINESS CRITERIA. The business criteria on which performance goals will be
established include one or more of the following: Diluted EPS, EBITDA, Net
Income, Operating EBITDA, Operating Income, Return on Assets and Return on
Equity (each as defined in Exhibit A to this Proxy Statement), as applied to the
consolidated operations, or one or more subsidiaries or business units of the
Company. These Awards are earned and payable ONLY if performance meets the
specific, preestablished performance goals approved by the Compensation
Committee in advance of applicable deadlines under the Internal Revenue Code and
while the performance relating to the goals remains substantially uncertain.
Performance goals may be adjusted to reflect certain changes, including
reorganizations, liquidations and capitalization and accounting changes, to the
extent permitted by Section 162(m). Furthermore, the Restated Plan provides that
awards to selected eligible officers under the other bonus programs providing
for cash-only awards may be linked to and granted and qualified under the
Restated Plan as Performance-Based Awards.
INDIVIDUAL LIMITS. Performance-Based Awards may be stock-based (payable in
stock only or in cash or stock) or may be cash-based (i.e., cash only) awards.
Grants of options, SARs and other stock-related Awards in any fiscal year to any
participant may not be made with reference to more than 750,000 shares (if
Share-Based). Cash bonuses to any individual officer based on a single year's
(or four quarters') performance may not exceed $2,000,000 or, for any quarter,
$500,000. The maximum cash amount payable to any individual officer over the
six-year term of this feature is thus $12,000,000. Before any Performance-Based
Award is paid to an officer covered by Section 162(m) (other than by exercise of
a qualifying option
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or SAR), the Compensation Committee must certify that the applicable performance
goals have been satisfied. The Compensation Committee will have discretion to
determine the performance goals and restrictions or other limitations of
individual Performance-Based Awards and is expected to reserve "negative"
discretion to reduce payments of Cash-Based Awards below maximum Award limits.
OTHER INFORMATION. The Restated Plan is not exclusive. Options and other
stock or cash compensation may also be awarded to eligible persons pursuant to
other incentive plans or without reference to a plan as from time to time
authorized by the Company.
The reported closing price of the Company's Common Stock on the NASDAQ
Composite Tape on April 14, 1997 was $20 1/8.
FEDERAL INCOME TAX TREATMENT OF AWARDS UNDER THE RESTATED PLAN
NONQUALIFIED STOCK OPTIONS; ISO'S. The Company is generally entitled to
deduct an amount equal to the difference between the option exercise price and
the fair market value of the shares at the time of exercise of a nonqualified
stock option. The Company is generally not entitled to a similar deduction
either upon grant or exercise of an ISO. If ISO shares are not held for
specified qualifying periods, however, the difference between the fair market
value of the shares at the date of exercise (or, if lower, the sale price) and
the cost of such shares is taxed as ordinary income (and the Company will
receive a corresponding deduction) in the year the shares are sold.
OTHER AWARDS. The current federal income tax consequences of other Awards
authorized under the Plan generally follow certain basic patterns: SARs are
taxed and deductible in substantially the same manner as nonqualified stock
options; nontransferable restricted stock subject to a substantial risk of
forfeiture results in income recognition only at the time the restrictions lapse
(unless the recipient elects to accelerate recognition as of the date of grant);
performance share Awards and DERs generally are subject to tax at the time of
payment; unconditional stock bonuses are generally subject to tax measured by
the value of the payment received; and Cash-Based Awards generally are subject
to tax at the time of payment.
CHANGE IN CONTROL. In each of the foregoing cases, the Company will
generally have a corresponding deduction at the time the participant recognizes
income. If an Award is accelerated under the Plan, the Company may not be
permitted to deduct the portion of the compensation attributable to the
acceleration. If, as a result of the occurrence of a change in ownership,
effective control, or ownership of a substantial portion of the assets of the
Company, a participant's benefits are increased (e.g., an option holder's
options or rights become exercisable, the restrictions on Awards lapse, or
shares are issued), the participant may be deemed to have received a "parachute
payment" for purposes of Section 280G of the Code. If the additional value
received as a result of acceleration exceeds a certain threshold amount
approximating 300% of the person's average annual taxable compensation over the
five calendar years preceding the year in which the change in control occurs,
the excess of the total of such amounts over such person's average annual
taxable compensation generally will be subject to a 20% non-deductible excise
tax in addition to any income tax payable. The Company will not be entitled to a
deduction for the payments that are subject to the excise tax.
SECTION 162(m) LIMITS. Further, if the compensation attributable to Awards
to persons subject to Section 162(m) limits is not "performance-based" within
the meaning of Section 162(m), the Company may not be permitted to deduct that
compensation to the extent the individual's aggregate compensation exceeds
$1,000,000 in any year. However, in light of uncertainties regarding the
ultimate interpretation of Section 162(m), no assurances can be given that all
compensation intended to qualify as "performance-based compensation" under
Section 162(m) will in fact be deductible.
The above tax summary is based upon federal income tax laws in effect as of
March 31, 1997.
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SPECIFIC BENEFITS
The number, amount and type of Awards to be received by or allocated to
eligible persons under the additional authority of the Restated Plan cannot be
determined at this time. The Compensation Committee has not yet considered any
specific Share-Based Awards under the additional authority of the Restated Plan.
If the Restated Plan had been in effect in 1996, the Company expects that the
grants of Share-Based Awards would not have been substantially different from
those reported under the "Option Grants In The Last Fiscal Year" table at page
12 (the "Option Grants Table") and in the Summary Compensation Table at page 10.
One conditional Cash-Based Award to Mr. Primm was made, based on performance
relative to above threshold levels of Operating EBITDA, in respect of the last
three quarters in and for the year 1997. The payment of this bonus award is
conditioned, however, upon stockholder approval of the Restated Plan. Specific
targets constitute confidential business information, the disclosure of which
the Committee believes could be harmful to the Company. Specific benefits
payable cannot be determined at this time. The maximum amount of this Award is
$2,000,000.
As of March 31, 1997, the number of shares subject to Options granted under
the 1993 Plan, to current named executive officers was 140,000 for Mr. Primm,
210,000 for Mr. Sullivan, 197,000 for Mr. Gibase, 195,000 for Mr. Armstrong and
82,000 for Mr. Shaunnessy, and 824,000 shares for all executive officers as a
group; the number of shares subject to Options granted under the 1993 Plan to
all employees (and other eligible persons), including all current officers who
are not executive officers, as a group, was 876,800. No other types of Awards
had been granted under the 1993 Plan as of March 31, 1997.
THE BOARD HAS APPROVED AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RESTATED PLAN. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. ALL DIRECTORS (EXCEPT MESSRS.
GRAVES, ROSA, SITZMANN AND SWARTS) ARE ELIGIBLE FOR AWARDS UNDER THE RESTATED
PLAN.
PROPOSAL NO. 3
INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit Committee,
proposes that Arthur Andersen LLP, independent auditors of the Company during
1996, be ratified as independent auditors of the Company for 1997. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting and will be given the opportunity to make a statement if he so desires.
The representative will be available to respond to appropriate questions.
Although this appointment is not required to be submitted to a vote of the
stockholders, the Board of Directors believes it is appropriate as a matter of
policy to request that the stockholders ratify the appointment. If the
stockholders should not ratify the appointment by the affirmative vote of a
majority of the shares represented either in person or by proxy at the Annual
Meeting, the selection of another independent auditor will be considered by the
Board of Directors.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THIS PROPOSAL.
STOCKHOLDER PROPOSALS FOR 1998
Eligible stockholder proposals for the 1998 Annual Meeting of Stockholders
of the Company must be received at the Company's office at P.O. Box 95997,
Interstate 15 at the Southern California/Nevada Border, Las Vegas, Nevada
89193-5997 no later than December 26, 1997.
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MISCELLANEOUS
If other matters properly come before the meeting, it is the intention of
the proxies to vote in accordance with their best judgment on such matters.
Pursuant to the Company's bylaws, a stockholder of record may present
business or nominate a candidate for election to the Board of Directors before a
meeting of stockholders if such stockholder has provided the Secretary with a
timely written notice. To be timely, the notice must be received by the
Secretary, at the Company's offices, not less than 30 nor more than 90 days
prior to the meeting; provided, however in the event less than 40 days notice of
the meeting is given, the notice must be received not later than the close of
business on the tenth day following the mailing set forth in the Notice of
Meeting.
To present business, the notice must contain:
- a brief description of the matter to be presented;
- the stockholder's name, address and number of shares owned; and
- a brief description of any material personal interest of the stockholder
in such business.
To nominate a candidate for the Board of Directors, the notice must contain:
- the stockholder's name, address and the number of shares owned;
- the name, age, business address and residence address of the proposed
nominee;
- the principal occupation or employment of the proposed nominee;
- the number of shares of Common Stock owned by the proposed nominee; and
- any other information relating to the proposed nominee required to be
disclosed in a solicitation of proxies pursuant to SEC Regulation 14A.
The expense of preparing, assembling, printing and mailing the proxy and the
material used in the solicitation of proxies will be borne by the Company. It is
contemplated that proxies will be solicited principally through the use of the
mails, but the officers and regular employees of the Company may solicit proxies
personally or by telephone or by special letter. The Company will reimburse
banks, brokerage houses, and other custodians, nominees and fiduciaries for
their reasonable expenses in forwarding proxy material to their principals.
The Board of Directors has no present intention to present to the meeting
for action any matters other than those described above and matters incident to
the conduct of the meeting. If any other business comes before the meeting or
any adjournment thereof (including but not limited to matters of which the Board
of Directors is currently unaware) for which specific authority has not been
solicited from the stockholders, then to the extent permitted by law, including
the rules of the Commission, the proxy grants to the persons named therein the
discretionary authority to vote thereon in accordance with their best judgment.
A copy of the Annual Report of the Company to its stockholders for the year
ended December 31, 1996, including financial statements for the year then ended,
is transmitted with these materials.
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ANY PERSON WHO WAS A BENEFICIAL OWNER OF THE COMMON STOCK ON THE RECORD DATE
FOR THE 1997 ANNUAL MEETING MAY OBTAIN THE COMPANY'S REPORT ON FORM 10-K
INCLUDING THE ACCOMPANYING EXHIBITS UPON THE COMPANY'S RECEIPT OF A WRITTEN
REQUEST AND (IF EXHIBITS ARE REQUESTED) PAYMENT OF THE COPYING CHARGES FOR THE
EXHIBITS. REQUESTS SHOULD BE DIRECTED TO MR. ROBERT E. ARMSTRONG, SECRETARY,
PRIMADONNA RESORTS, INC., P.O. BOX 95997, INTERSTATE 15, SOUTHERN
CALIFORNIA/NEVADA BORDER, LAS VEGAS, NEVADA 89193-5997.
By Order of the Board of Directors
[SIGNATURE]
Robert E. Armstrong
Secretary
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EXHIBIT A
PERFORMANCE-BASED BUSINESS CRITERIA
DILUTED EPS
Diluted Earnings Per Share (EPS) calculated on a fully diluted basis as
determined in accordance with Generally Accepted Accounting Principles
("GAAP") and reflected in the Company's periodic financial reports for the
applicable period.
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) as
determined in accordance with GAAP and reflected in the Company's periodic
financial reports for the applicable periods and in the case of Cash-Based
Awards before bonus awards under the Company's annual bonus plan or the
Restated Plan.
NET INCOME
Net Income as determined in accordance with GAAP and reflected in the
Company's periodic financial reports for the applicable period.
OPERATING EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA),
before: Pre-tax Earnings (Losses) from Unconsolidated Affiliates,
Development Costs, Abandonment Losses, Pre-tax Earnings (Losses) from asset
or business unit dispositions out of the ordinary course of business in an
amount greater than $500,000, and EBITDA from business units or subsidiaries
(if any) excluded from Operating EBITDA by the Compensation Committee in
granting an award,* all as determined in accordance with GAAP and reflected
in the Company's periodic financial reports for the applicable period or, to
the extent any item is not so reflected, as reported to the Compensation
Committee by the Company's independent auditors.
OPERATING INCOME
Operating Income as determined in accordance with GAAP and reflected in the
Company's periodic financial reports for the applicable period.
RETURN ON ASSETS
Net Income for the period divided by Average Total Assets as determined in
accordance with GAAP and reflected in the Company's periodic financial
reports for the applicable period.
RETURN ON EQUITY
Net Income for the period divided by Average Total Equity as determined in
accordance with GAAP and reflected in the Company's periodic financial
reports for the applicable period.
- ------------------------
*For the 1997 annual bonus plan award under Section 6 of the Restated Plan, the
results of the business unit comprised of the golf club operations shall be
excluded in determining the Operating EBITDA.
A-1
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PRIMADONNA RESORTS, INC.
AMENDED AND RESTATED 1993 INCENTIVE PLAN
(Amended and Restated as of March 28, 1997)
1. PURPOSE OF PLAN. The purpose of this Amended and Restated 1993
Incentive Plan (referred to herein as the "PLAN" and formerly known as the 1993
Stock Incentive Plan) of Primadonna Resorts, Inc., a Nevada corporation (the
"COMPANY"), is to enable the Company and its subsidiaries to attract, retain
and motivate their employees and certain other eligible individuals by
providing incentives related to equity interests in and the financial
performance of the Company.
2. PERSONS ELIGIBLE UNDER PLAN. Except as otherwise limited for
purposes of Section 6, any individual, including any director of the Company,
who is an officer or employee of, or consultant or advisor to, the Company or
any of its subsidiaries (an "ELIGIBLE PERSON") shall be eligible to be
considered for the grant of an award ("AWARD", which term shall mean either a
Share-Based Award or a Cash-Based Award, each as defined in Section 5) or Awards
under this Plan, PROVIDED that in the case of a consultant or advisor, such
person (directly or through an entity with which he or she is associated)
renders or has rendered BONA FIDE services of a nature similar to those services
that may be rendered by employees (other than services in connection with the
offering or sale of securities in a capital raising transaction) to the Company
or a subsidiary.
3. STOCK SUBJECT TO PLAN.
(a) INCENTIVE STOCK OPTION LIMIT. The maximum number of shares of
Common Stock, $.01 par value per share, of the Company (the "COMMON SHARES")
that may be issued pursuant to options granted under this Plan and qualified as
incentive stock options ("ISOs") under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") is three million (3,000,000), subject to
adjustment as provided in or pursuant to Section 7.
(b) AGGREGATE AND INDIVIDUAL SHARE LIMITS. The maximum number of
Common Shares that may be issued pursuant to all Awards (including ISOs) granted
under this Plan is three million (3,000,000), subject to adjustment as provided
in or pursuant to Section 7, and such maximum number, as so adjusted, shall be
referred to as the "SHARE LIMIT". Common Shares that are issued pursuant to
Awards and subsequently reacquired by the Company pursuant to the terms and
conditions of such Awards
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("REACQUIRED COMMON SHARES") shall be available for reissue within the Share
Limit. The aggregate number of shares of Common Stock subject to options and
stock appreciation rights ("SARs") granted during any fiscal year to any
individual shall be limited to 750,000, and maximum limit per individual on the
number of shares in the aggregate subject to all Share-Based Awards (including
options and SARs) under this Plan that are granted during any fiscal year shall
be 750,000, subject to adjustment as provided in or pursuant to Section 7.
(c) SHARE RESERVATION. No Award may be granted under this Plan
unless, on the date of grant, the sum of (i) the maximum number of Common Shares
issuable at any time pursuant to such Award, plus (ii) the number of Common
Shares that have previously been issued pursuant to Awards granted under this
Plan, other than Reacquired Common Shares available for reissue, plus (iii) the
maximum number of Common Shares that may be issued at any time after such date
of grant pursuant to Awards that are outstanding on such date, does not exceed
the Share Limit.
(d) PROVISIONS FOR CERTAIN SHARE-RELATED CASH AWARDS. The maximum
number of Awards both related to or based upon shares and payable solely in cash
under this Plan shall be based upon the number of shares referenced for purposes
of determining the value or price of such Award and shall not, together with the
number of shares previously issued and subject to then outstanding Awards
payable (or deemed payable) in shares under this Plan, exceed the Share Limit.
(e) REISSUE OF AWARDS AND SHARES. Cash-Based Awards (as defined in
Section 5) and other Awards payable in cash or payable in cash or shares that
are forfeited or for any reason are not so paid under this Plan, as well as
Common Shares subject to Awards that expire or for any reason are terminated
and are not issued, as well as shares reacquired pursuant to the terms of an
Award, shall be available for subsequent Awards under this Plan. If an Award
under this Plan is or may be settled only in cash, such Award need not be
counted against any of the limits under this Section 3, except as may be
required by Section 3(d) or Section 6(b) of this Plan or Section 162(m) of
the Code and applicable regulations and interpretations thereunder ("SECTION
162(m)") to the extent required to preserve the status of an Award as
"performance-based compensation" under Section 162(m).
4. ADMINISTRATION OF PLAN.
(a) THE COMMITTEE. This Plan shall be administered by and Awards
shall be authorized by a committee (the "COMMITTEE") of the entire Board of
Directors of the Company (the "BOARD") or a committee consisting of two or more
directors designated by the Board for this purpose, provided that (i) with
respect to Awards intended to satisfy the requirements for performance based
compensation under Section 162(m), each member of the Committee
2
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so acting shall be an "outside director" (as such term is defined in or under
Section 162(m)), and (ii) with respect to Awards intended to be granted by a
disinterested committee for purposes of Rule 16b-3 under Section 16 ("SECTION
16") of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as
such rule may be amended from time to time ("RULE 16b-3"), each member acting on
the matter shall be a Non-Employee Director (as such term is defined in Rule
16b-3).
(b) POWERS OF THE COMMITTEE. Subject to the express provisions of
this Plan, the Committee shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of this Plan,
including, without limitation, the following:
(i) adopt, amend and rescind rules, regulations and procedures
relating to this Plan or its administration or the Awards granted under
this Plan;
(ii) determine which persons meet the requirements of Section 2
hereof for eligibility under this Plan and to which of such persons, if any,
Awards will be granted under this Plan;
(iii) grant Awards (including Performance-Based Awards (as such
term in defined in Section 6)) to persons determined to be Eligible Persons
and determine the terms and conditions of such Awards, including but not
limited to the number of Common Shares issuable pursuant thereto, the times
at which and conditions upon which Awards become exercisable or vest or
shall expire or terminate, the fair market value of the Common Shares or
Awards, from time to time, and/or the manner in which it will be
determined, and the consideration, if any (but subject to applicable law),
to be paid upon receipt, exercise or vesting of Awards;
(iv) with respect to Performance-Based Awards, determine the
applicable business criteria on which the grant, vesting, exercisability or
payment of such Awards are based, establish performance goals with respect
to such criteria, and determine and certify if and when such performance
goals and other material conditions have been met;
(v) determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof;
(vi) interpret and construe this Plan and the terms and
conditions of any Award granted hereunder, whether before or after the date
set forth in Section 9; and
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(vii) determine the circumstances under which, consistent with
the provisions of Section 8, any outstanding Award may be amended;
which authority (except as to clause (ii) and (iii) above) shall remain in
effect so long as any Award remains outstanding under this Plan.
(c) SPECIFIC COMMITTEE RESPONSIBILITY AND DISCRETION REGARDING
AWARDS. Subject to the express provisions of this Plan, the Committee, in its
sole and absolute discretion, shall determine all of the terms and conditions of
each Award granted under this Plan, which terms and conditions may include,
subject to such limitations as the Committee may from time to time impose, among
other things, provisions that:
(i) permit the recipient of such Award, including but not
limited to any recipient who is a director or officer of the Company, to
pay the purchase price of the Common Shares or other property issuable
pursuant to such Award, or any applicable tax withholding obligation upon
such issuance or in respect of such Award or Shares, in whole or in part,
by any one or more of the following:
(A) the delivery of previously owned shares of capital
stock of the Company (including shares acquired as or pursuant to
Awards) or other property,
(B) a reduction in the amount of Common Shares or other
property otherwise issuable pursuant to such Award, or
(C) the delivery of a promissory note, the terms and
conditions of which shall be determined by the Committee;
(ii) accelerate the receipt of benefits pursuant to such Award
upon the occurrence of specified events, including, without limitation, a
change of control of the Company (including a Change in Control or an Event
pursuant to Section 7 hereof), an acquisition of a specified percentage of
the voting power of the Company, the dissolution or liquidation of the
Company, a sale of substantially all of the property and assets of the
Company or an event of the type described in Section 7 hereof, or in other
circumstances or upon the occurrence of other events as deemed appropriate
by the Committee;
(iii) qualify such Award as an Incentive Stock Option and/or a
Performance-Based Award;
(iv) extend the exercisability or term of any or all outstanding
Awards, change the price of any or all
4
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outstanding Awards or otherwise change previously imposed terms and
conditions, in the specified events described in clause (ii) above or in
other circumstances or upon the occurrence of other events as deemed
appropriate by the Committee, in each case subject to Section 8;
(v) authorize the conversion, succession or substitution of
outstanding Awards upon the occurrence of an event of the type described in
Section 7, or in other circumstances or upon the occurrence of other events
as deemed appropriate by the Committee; and/or
(vi) provide for automatic grants of Awards or successive
Awards.
(d) BINDING DETERMINATIONS. Any action taken by, or inaction of, the
Company, the Board or the Committee relating or pursuant to this Plan shall be
within the absolute discretion of that entity or body and shall be conclusive
and binding upon all persons. No member of the Board or officer of the Company
shall be liable for any such action or inaction of the entity or body, of
another person or, except in circumstances involving bad faith, of himself or
herself.
(e) RELIANCE ON EXPERTS. In making any determination or in taking or
not taking any action under this Plan, the Board and the Committee may obtain
and may rely upon the advice of experts, including professional advisors to the
Company. No director, officer or agent of the Company shall be liable for any
such action or determination taken or made or omitted in good faith.
(f) DELEGATION. The Committee may delegate ministerial,
non-discretionary functions to individuals who are officers or employees of the
Company.
(g) BIFURCATION. Notwithstanding anything to the contrary in this
Plan, the provisions of this Plan may at any time be bifurcated by the Board
or the Committee in any manner so that certain provisions of any Award
Agreement (as defined in Section 5) (or this Plan) intended or required in
order to satisfy the applicable requirements of Rule 16b-3 or Section 162(m),
to the extent permitted thereby, are applicable only to persons subject to
those provisions and to those Awards to those persons intended to satisfy the
requirements of the applicable rule or rules thereunder.
5. AWARDS.
(a) SHARE-BASED AWARDS. The Committee, on behalf of the Company, is
authorized under this Plan to enter into any type of arrangement with an
Eligible Person that is not inconsistent with the provisions of this Plan and
that by its terms, involves
5
<PAGE>
or might involve the issuance of (i) Common Shares, (ii) an option, warrant,
convertible security, stock appreciation right or similar right with an exercise
or conversion privilege at a fixed or variable price related to the Common
Shares or other equity securities of the Company and/or the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other conditions, or (iii) any similar security with a value derived from the
value of the Common Shares or other equity securities of the Company. The
authorization of any such arrangement (including any benefits described in
Section 5(e)) is referred to herein as the "grant" of a "SHARE-BASED AWARD."
Share-Based Awards are not restricted to any specified form or structure and
may include, without limitation, sales or bonuses of stock, restricted stock,
stock options, reload stock options, stock purchase warrants, other rights to
acquire stock, securities convertible into or redeemable for stock, stock
appreciation rights, limited stock appreciation rights, phantom stock,
dividend equivalents, performance units or performance shares, and a
Share-Based Award may consist of one such security or benefit, or two or more
of them in any combination or alternative. If an option or stock
appreciation right, or other Share-Based Award satisfies the conditions of
Section 6, it shall be deemed to be granted thereunder.
(b) CASH-BASED AWARDS. The Committee, on behalf of the Company, is
authorized under this Plan to enter into any type of arrangement with any
officer of the Company that is not inconsistent with the provisions of this Plan
and that provides for a cash payment or benefit under this Plan, whether in lieu
of, in addition to, independent of, or as a component of a Share-Based Award (a
"CASH-BASED AWARD"). Without limiting the generality of the foregoing, a
Cash-Based Award may be in the form of a periodic cash bonus based upon the
attainment of established performance criteria. Cash-Based Awards that meet the
conditions of Section 6 shall be deemed to be granted thereunder.
(c) AWARD AGREEMENTS. The Committee may authorize any officer (other
than the particular recipient) to execute any or all agreements memorializing
any grant of an Award by the Committee under this Plan. All Awards shall be
evidenced by a writing executed on behalf of the Company (the "AWARD AGREEMENT")
and, if required by the Committee, by the recipient of the Award. Unless the
Committee otherwise provides, Awards to persons described in Section 6(a) that
are either granted or become vested, exercisable or payable based on attainment
of one or more of the performance goals related to business criteria (identified
in Section 6), shall be deemed Performance-Based Awards under Section 6.
(d) PRICE; CONSIDERATION. Common Shares may be issued pursuant to a
Share-Based Award for any lawful consideration as determined by the Committee,
including, without limitation,
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<PAGE>
services rendered by the recipient of such Award, but shall not be issued for
less than the minimum lawful consideration.
(e) LOANS. The Committee shall have the express authority to make or
authorize loans to finance, or to otherwise accommodate the financing of, the
acquisition or exercise of an Award, subject to Section 11(a).
(f) TRANSFER RESTRICTIONS.
(i) LIMIT ON EXERCISE AND TRANSFER. Unless otherwise expressly
provided in (or pursuant to) this Section 5(f), by applicable law or by the
Award Agreement, as the same may be amended, (A) all Awards are
non-transferable and shall not be subject in any manner to sale, transfer,
anticipation, alienation, assignment, pledge, encumbrance or charge; (B)
Awards shall be exercised only by the holder; and (C) amounts payable or
shares issuable pursuant to an Award shall be delivered only to (or for the
account of) the holder.
(ii) CERTAIN EXCEPTIONS. The Committee by express provision in
the Award or an amendment thereto may permit an Award to be transferred to,
exercised by and paid to certain persons or entities related to the
participant, including but not limited to members of the participant's
family, charitable institutions, or trusts or other entities whose
beneficiaries or beneficial owners are members of the participant's family
and/or charitable institutions, or to such other persons or entities as may
be expressly approved by the Board or the Committee, pursuant to such
conditions and procedures as the Board or the Committee may establish. Any
permitted transfer shall be subject to the condition that the Committee
receive evidence satisfactory to it that the transfer is being made for
estate and/or tax planning purposes and on a basis consistent with the
Company's registration of securities (if applicable) and the incentive
purposes of the Award and this Plan. Notwithstanding the foregoing,
Awards intended as ISOs or restricted stock Awards for purposes of the
Code shall be subject to any and all additional transfer restrictions
necessary to preserve their status as ISOs or restricted shares, as the
case may be, under the Code.
(iii) FURTHER EXCEPTIONS TO LIMITS ON TRANSFER. The exercise and
transfer restrictions in Section 5(f)(i) shall not apply to:
(A) transfers to the Company,
(B) the designation of a beneficiary to receive benefits in
the event of the participant's death or, if the participant has died,
transfers to or
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exercise by the participant's beneficiary, or, in the absence of a
validly designated beneficiary, transfers by will or the laws of
descent and distribution.
(C) transfers pursuant to a domestic relations order (if
approved or ratified by the Board or the Committee), if (in the case
of ISOs) permitted by the Code,
(D) if the participant has suffered a disability, permitted
transfers to or exercises on behalf of the holder by his or her legal
representative, or
(E) the authorization by the Board or the Committee of
"cashless exercise" procedures with third parties who finance or who
otherwise facilitate the exercise of Awards consistent with applicable
laws and the express authorization of the Committee.
(g) TAX WITHHOLDING. Upon any exercise, vesting, or payment of any
Award, the Company shall have the right at its option to (i) require the
Eligible Person (or personal representative or beneficiary, as the case may be)
to pay or provide for payment of the amount of any taxes which the Company may
be required to withhold with respect to such transaction or (ii) deduct from any
amount payable in cash the amount of any taxes which the Company may be required
to withhold with respect to such cash amount. In any case where a tax is
required to be withheld in connection with the delivery of shares of Common
Stock under this Plan, the Committee may grant (either at the time of the Award
or thereafter) to the Participant the right to elect, pursuant to such rules and
subject to such conditions as the Committee may establish, to have the Company
reduce the number of shares to be delivered by (or otherwise reacquire) the
appropriate number of shares valued at their then fair market value, to satisfy
such withholding obligation.
6. SECTION 162(m) PERFORMANCE-BASED AWARDS. Without limiting the
generality of the foregoing, options or SARs granted with an exercise or base
price not less than fair market value at the applicable date of grant to an
Eligible Person who is either a salaried employee or an officer of the Company
("ELIGIBLE EMPLOYEE"), designated herein as "PRESUMPTIVELY QUALIFYING AWARDS,"
shall be, and any of the other types of Awards listed in Section 5(a) above
and/or Cash-Based Awards, that satisfy the conditions of this Section 6 may be
granted as Awards intended to satisfy the requirements for "performance-based
compensation" within the meaning of Section 162(m) ("PERFORMANCE-BASED
AWARDS"). The grant, vesting, exercisability or payment of other
Performance-Based Awards may depend on any one or more of the following
"BUSINESS CRITERIA": Diluted EPS, EBITDA, Net Income, Operating EBITDA,
Operating Income, Return on Assets, and Return
8
<PAGE>
on Equity, each as defined further in Exhibit A, in each case relative to a
preestablished targeted level or levels (the "PERFORMANCE GOALS"), on an
absolute or relative basis, for the Company on a consolidated basis or for one
or more subsidiaries, segments or business units. (Financial terms are used as
applied under generally accepted accounting principles and reflected in the
Company's financial reporting.) The specific performance goals must be approved
by the Committee: (i) no later than the first to occur of (A) 90 days after the
commencement of the performance period (or before 25% of the performance period
has elapsed), if the performance period is one year or less, (B) the date on
which 25% of the relevant performance period has elapsed, if the performance
period is more than one year, or (C) any other applicable deadline under Section
162(m); and (ii) while the performance relating to those goals remains
substantially uncertain within the meaning of Section 162(m). The applicable
performance measurement period for a Cash-Based Award may be not less than one
fiscal quarter nor more than 6 years.
(a) ELIGIBLE CLASS. The eligible class of persons for Awards under
this Section 6 for Presumptively Qualifying Awards shall include Eligible
Employees and the eligible class of persons for other Awards under this Section
6 shall be limited to officers of the Company designated by the Committee to
receive an Award under this Section 6.
(b) MAXIMUM AWARD. In no event shall grants in any fiscal year to
any one participant under this Section 6, together with grants of options and
stock appreciation rights to the individual in that period, relate to more than
750,000 shares. Awards that are voluntarily cancelled or repriced during the
fiscal year shall be counted against this limit to the extent required by
Section 162(m). The aggregate amount of all Cash-Based Awards to be paid to any
participant in respect of any fiscal year (including awards under any cash
incentive compensation plan qualified under Section 6(f)) as Performance-Based
Awards under this Plan shall not exceed $2,000,000 or, for any quarter, $500,000
or, for the remaining term of this Plan, an aggregate amount of $12,000,000.
(c) CERTIFICATION. Except as otherwise permitted under Section
162(m), before any Performance-Based Award under this Section 6 is paid, the
Committee must certify that the performance goal and any other material terms of
the Performance-Based Award were in fact satisfied.
(d) TERMS AND CONDITIONS OF AWARDS. The Committee shall have
discretion to determine the conditions, restrictions and other limitations, in
accordance with the terms of this Plan and Section 162(m), on the payment of
individual Performance-Based Awards under this Section 6. The Committee may
reserve by express provision in any Award Agreement or authorizing resolution
the right to reduce (but not increase) the amount
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<PAGE>
payable in accordance with any standards or on any other basis (including the
Committee's sole discretion) as the Committee deems appropriate.
(e) ADJUSTMENTS FOR MATERIAL CHANGES. Performance goals or other
features of a Performance-Based Award may provide that they (a) shall be
adjusted appropriately to reflect a change in corporate capitalization, a
corporate transaction (such as a reorganization, combination, separation, or
merger) or a complete or partial corporate liquidation, (b) shall be calculated
either without regard for or to reflect any change in accounting policies or
practices affecting the Company and/or the business criteria or performance
goals or targets, and/or (c) shall be adjusted for any other circumstances or
events, but only to the extent in each case that such adjustment or
determination would be consistent with the requirements of Section 162(m) to
qualify as performance-based compensation and with Section 7 and as specifically
provided for in the applicable Award Agreement.
(f) BONUS COMPENSATION PLAN AWARDS. The Committee may grant an Award
hereunder linked to performance targets and methodologies for calculating
bonuses established under any incentive compensation plan maintained by the
Company (which may include, but shall not be limited to, quarterly incentive
compensation Awards), provided the combined Award satisfies the express
provisions of this Section 6. When an Award is made under a Company incentive
compensation plan and is granted to an officer of the Company whose compensation
is subject to the limits under Section 162(m), and when such Award is also made
under and complies with the terms of this Section 6, such Award shall be a
Performance-Based Award hereunder.
(g) LIMITATION ON AWARD ADJUSTMENTS. To the extent required in the
case of an Award intended as a Performance-Based Award for purposes of Section
162(m), the Committee shall have no discretion (i) to increase the amount of
compensation or the number of shares that would otherwise be due upon the
attainment of the applicable performance goal or the exercise of the option or
SAR or (ii) to waive the achievement of any applicable performance goal as a
condition to receiving a benefit or right under an Award.
7. ADJUSTMENTS AND ACCELERATION.
(a) ADJUSTMENTS. If (i) the outstanding securities of the class then
subject to this Plan (the "OUTSTANDING SHARES") (A) are increased, decreased,
exchanged or converted as a result of a stock split (including a split in the
form of a stock dividend), reverse stock split, or the like or (B) are exchanged
for or converted into cash, property or a different number or kind of securities
(or if cash, property or securities are distributed in respect of the
outstanding shares), as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, or
10
<PAGE>
reclassification, or (ii) all or substantially all of the business and/or assets
of the Company are sold, THEN, unless the terms of such transaction shall
otherwise provide, the Committee shall make equitable, appropriate and
proportionate adjustments in (x) the number and type of shares or other
securities or cash or other property that may be acquired pursuant to ISOs and
other Awards previously granted under this Plan, and (y) the maximum number and
type of shares or other securities that may be issued pursuant to ISOs and other
Awards thereafter granted under this Plan, and (z) such other terms as
necessarily are affected by such event.
(b) ACCELERATION. The Committee may provide in or by amendment to
any Award Agreement and on such terms and conditions as it deems appropriate
(which may include a unilateral right of the Committee to prevent such
acceleration by advance notice) that, upon the occurrence of a Change in Control
or an Event there shall be an acceleration of benefits under the Award and, more
particularly: (i) any options granted as part of such Award which have not
expired or terminated shall immediately become exercisable, (ii) any Common
Shares purchased or acquired pursuant to the Award which are subject to the
payment of consideration (if any) and conditions on vesting, transfer or other
restrictions as may be established hereunder shall immediately vest free of
restrictions, and (iii) other rights, including rights to payment, granted as or
as part of the Award shall immediately vest and become payable to the holder of
such Award. The Committee may accord any recipient of an Award which contains
such acceleration provision the right to refuse any acceleration in such
circumstances as the Committee may approve. Notwithstanding the foregoing, any
acceleration of an Award shall comply with all applicable regulatory
requirements, including without limitation Section 422 of the Code.
"CHANGE IN CONTROL" means the date on which either: (i) the Gary Primm
Group own less than fifteen percent (15%) of the total voting power of all
classes of the Company's voting stock, except as a result of sales made in order
to pay estate taxes owing as a result of the death of Gary E. Primm; (ii) any
Person other than the Gary Primm Group or the Primm Family, acting together in a
manner which would constitute a group for the purposes of Section 13(d) of the
Exchange Act (a "13(d) Group"), shall beneficially own (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) voting power of all classes of
the Company's voting stock equal to or greater than that owned by the Gary Primm
Group; (iii) a 13(d) Group succeeds in having sufficient of its directors on the
Board such that the 13(d) Group's directors will constitute a majority of the
voting power of the Board; or (iv) Gary E. Primm shall cease to be the chairman
of the Board, except as a result of his death or disability. For purposes of
the foregoing: (i) "Gary Primm Group" shall mean Gary E. Primm, his executors,
administrators, testamentary trustees, heirs, legatees and beneficiaries; (ii)
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"Person" shall mean any legal entity, including but not limited to any
individual, corporation, group or assemblage, partnership, limited partnership,
joint venture, association, joint stock company, or trust; and (iii) "Primm
Family" shall mean, collectively, Janet Primm Rosa, Judith Primm Clemetson,
Joyce Primm Schwickert, Roger B. Primm and Gregory B. Primm, their respective
executors, administrators, testamentary trustees, heirs, legatees and
beneficiaries.
An "EVENT" means approval by the stockholders of the Company of any of
the following: (i) the dissolution or liquidation of the Company; (ii) an
agreement to merge or consolidate or otherwise reorganize, with or into one or
more entities which are not Subsidiaries, as a result of which less than 50%
of the outstanding voting securities of the surviving or resulting entity
are, or are to be, owned by former stockholders of the Company; or (iii) the
sale of all or substantially all of the Company's business and/or assets to a
person or entity which is not a Subsidiary. For purposes of the foregoing,
"Subsidiary" shall mean any corporation or other entity a majority or more of
the outstanding voting power or voting stock of which is beneficially owned
directly or indirectly by the Company.
(c) TERMINATION. If any option or other right to acquire Common
Stock under this Plan has been fully accelerated as permitted by Section 7(b)
but is not exercised prior to (i) a dissolution of the Company, or (ii) an Event
after which the Company does not survive, such Option or right shall thereupon
terminate, provided that (y) the Company or a successor shall have given to the
participant at least ten (10) days notice of any such termination, and
participant shall have had the right prior to or simultaneously with the
consummation of such occurrence or transaction to exercise his or her option or
right, or (z) the Committee shall have provided for the termination of the
option or right by making an adjustment pursuant to Section 7(a).
8. AMENDMENT AND TERMINATION OF PLAN. The Board may amend or
terminate this Plan at any time and in any manner. No amendment or termination
of this Plan or change in or affecting any outstanding Award shall deprive in
any material respect the recipient, without the consent of such recipient, of
any of his or her rights or benefits under or with respect to the Award.
Adjustments contemplated by Section 7 shall not be deemed to constitute a change
requiring such consent.
9. TERM OF PLAN. No Award shall be granted under this Plan after
April 27, 2003. Although Common Shares may be and/or cash may be issued after
that date pursuant to Awards granted prior to such date, no Common Shares
otherwise shall be issued under this Plan after such date. Notwithstanding the
foregoing, any Award granted prior to such date may be amended after such date
in any manner that would have been permitted
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<PAGE>
prior to such date, except that no such amendment shall increase the number of
shares subject to or comprising such Award, or extend the final expiration date
of the Award or reduce (below the fair market value on the date of the
amendment) the exercise price of or under such Award or increase the maximum
amount of cash payable under the Award.
10. EFFECTIVE DATE OF PLAN. This Plan originally became effective as
of April 28, 1993, was amended on March 27, 1995 and (subject to approval by the
affirmative votes of the holders of at least a majority of the Common Shares of
the Company present, or represented, and entitled to vote at the 1997 annual
meeting of stockholders) amended and restated as of March 28, 1997.
11. LEGAL ISSUES.
(a) COMPLIANCE AND CHOICE OF LAW; SEVERABILITY. This Plan, the
granting and vesting of Awards under this Plan and the issuance and delivery of
shares of Common Stock and/or the payment of money under this Plan or under
Awards granted hereunder are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions as
the Company may deem necessary or desirable to assure compliance with all
applicable legal requirements. This Plan, the Awards, all documents evidencing
Awards and all other related documents shall be governed by, and construed in
accordance with the laws of the state of incorporation of the Company. If any
provision shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan (subject to Section 11(b))
shall continue in effect.
(b) PLAN CONSTRUCTION.
(i) RULE 16b-3. It is the intent of the Company that
transactions in and affecting Awards in the case of participants who are or
may be subject to Section 16 satisfy any then applicable requirements of
Rule 16b-3 so that such persons (unless they otherwise agree) will be
entitled to the benefits of Rule 16b-3 or other exemptive rules under
Section 16 in respect of those transactions and will not be subjected to
avoidable liability thereunder. If any provision of this Plan or of any
Award would otherwise frustrate or conflict with the intent expressed
above, that provision to the extent possible shall be interpreted as to
avoid such conflict. If the conflict remains irrevocable, the Committee
may disregard the provision if it concludes that to do so furthers the
interest of the Company and is
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consistent with the purposes of this Plan as to such persons in the
circumstances.
(ii) SECTION 162(m). It is the further intent of the Company
that options or stock appreciation rights granted as Awards with an
exercise price or base price not less than their fair market value on the
date of grant and Performance-Based Awards under (or, unless the Board or
the Committee otherwise providing Awards satisfying the requirements of)
Section 5 or 6 that are granted to or held by a person who is or may be
subject to Section 162(m) shall (except to the extent such Awards may be
paid in connection with the participant's death or disability, or a change
of control of the Company) qualify as "performance-based compensation" under
Section 162(m), and this Plan and the authority of the Board and the
Committee hereunder shall be interpreted consistent with such intent.
(c) NON-EXCLUSIVITY OF PLAN. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board or the Committee to grant Awards or
authorize any other compensation, with or without reference to the Common
Shares, under any other plan or authority.
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EXHIBIT A
PERFORMANCE-BASED BUSINESS CRITERIA
DILUTED EPS
Diluted Earnings Per Share calculated on a fully diluted basis as
determined in accordance with Generally Accepted Accounting Principles
("GAAP") and reflected in the Company's periodic financial reports for the
applicable period.
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) as
determined in accordance with GAAP and reflected in the Company's periodic
financial reports for the applicable period and in the case of Cash-Based
Awards before bonus awards under the Company's annual bonus plan or this
Plan.
NET INCOME
Net Income as determined in accordance with GAAP and reflected in the
Company's periodic financial reports for the applicable period.
OPERATING EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA),
before: Pre-tax Earnings (Losses) from Unconsolidated Affiliates,
Development Costs, Abandonment Losses, Pre-tax Earnings (Losses) from asset
or business unit dispositions out of the ordinary course of business in an
amount greater than $500,000, and EBITDA from business units or
subsidiaries (if any) excluded from Operating EBITDA by the Compensation
Committee in granting an award*, all as determined in accordance with GAAP
and reflected in the Company's periodic financial report for the
applicable period or, to the extent any item is not so
- -----------------
* For the 1997 annual bonus plan award under Section 6, the results of
the business unit comprised of the golf club operations shall be excluded in
determining the Operating EBITDA.
<PAGE>
reflected, as reported to the Compensation Committee by the Company's
independent auditors.
OPERATING INCOME
Operating Income as determined in accordance with GAAP and reflected in the
Company's periodic financial reports for the applicable period.
RETURN ON ASSETS
Net Income for the period divided by Average Total Assets as determined in
accordance with GAAP and reflected in the Company's periodic financial
reports for the applicable period.
RETURN ON EQUITY
Net Income for the period divided by Average Total Equity as determined in
accordance with GAAP and reflected in the Company's periodic financial
reports for the applicable period.
<PAGE>
PRIMADONNA RESORTS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Primadonna Resorts, Inc., a Nevada
corporation, acting under the Nevada Revised Statutes - Chapter 78 Private
Corporation, hereby constitutes and appoints Gary E. Primm and Craig F.
Sullivan, and each of them, the attorneys and proxies of the undersigned, each
with the power of substitution, to attend and act for the undersigned at the
Annual Meeting of Stockholders of said corporation to be held on May 27, 1997,
at 10:00 A.M., at the showroom of Whiskey Pete's Hotel and Casino, Interstate 15
Southern California/Nevada Border, Primm, Nevada, and at any adjournments
thereof in connection therewith to vote and represent all of the shares of
common stock of said corporation which the undersigned would be entitled to
vote, as follows:
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS
/ / FOR the nominees listed below / / WITHHOLD AUTHORITY to vote for the nominees listed
below
If you wish to withhold authority to vote for any individual nominee, strike a line through the nominee's
name in the list below:
SIGMUND ROGICH GARY R. SITZMANN GEORGE C. SWARTS
(2) APPROVAL OF THE AMENDED AND RESTATED 1993 INCENTIVE PLAN
/ / Approve / / Disapprove / / Abstain
(3) PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
/ / Approve / / Disapprove / / Abstain
(4) OTHER BUSINESS: In their discretion the proxies are authorized to vote upon such other business as may
properly come before the meeting or any adjournment thereof.
</TABLE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PRIMADONNA RESORTS, INC.
<PAGE>
Each of the above-named proxies present at said meeting, either in person or
by substitute, shall have and exercise all the powers of said proxies hereunder.
This proxy will be voted in accordance with the choices specified by the
undersigned on the other side of this proxy. IF NO INSTRUCTIONS TO THE CONTRARY
ARE INDICATED HEREON, THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE
FOR THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS NAMED ON THE OTHER
SIDE HEREOF AND AS A GRANT OF AUTHORITY TO VOTE FOR THE OTHER PROPOSALS STATED
ON THE OTHER SIDE HEREOF.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and Proxy Statement relating to the meeting.
----------------------------------
Signature
----------------------------------
Signature (if held jointly)
Date:
----------------------------------
Please sign your name exactly as
it appears on this Proxy. When
signing as an attorney, executor,
administrator, trustee or
guardian, please give your full
title as such.
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN, DATE
AND RETURN YOUR PROXY PROMPTLY IN THE POSTAGE PREPAID ENVELOPE PROVIDED.
I/we plan / / do not plan / / to attend the stockholders meeting.
