SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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
Section 240.14a-12
LADY LUCK GAMING CORPORATION
------------------------------------------------------------
(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
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pursuant to the Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it is
determined:)
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or Form or Schedule and the date of its filing:
(1) Amount previously paid:
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<PAGE>
[LOGO]
206 North Third Street
Las Vegas, Nevada 89101
April 30, 1998
TO OUR STOCKHOLDERS:
You are cordially invited to attend the annual meeting of stockholders of
Lady Luck Gaming Corporation, which will be held on June 3, 1998 at Lady Luck
Rhythm & Blues in Coahoma County, Mississippi, at 10:00 a.m. local time.
At the meeting you will be asked to vote upon proposals to elect two Class
II directors, each to serve until the 2001 Annual Meeting of Stockholders, and
to approve an amendment to the Certificate of Incorporation of the Company in
order to enable the Company to effect a one-for-six reverse stock split and an
increase in the par value of the Company's Common Stock from $0.001 to $0.006
per share.
By attending the annual meeting you will have an opportunity to hear the
plans for our Company's future, meet your officers and directors and participate
in the business of the meeting. Whether or not you expect to attend the meeting,
please sign, date and return the enclosed proxy at your earliest convenience to
ensure that your shares will be voted. You may attend and vote in person at the
meeting even after having returned an executed proxy, and in such case, your
vote in person shall count instead of your proxy.
Sincerely,
Andrew H. Tompkins
Chairman of the Board and
Chief Executive Officer
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[LOGO]
206 North Third Street
Las Vegas, Nevada 89101
_________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 3, 1998
__________________________
TO THE STOCKHOLDERS OF LADY LUCK GAMING CORPORATION:
The 1998 Annual Meeting of Stockholders of Lady Luck Gaming Corporation
(the "Company") will be held on June 3, 1998 at 10:00 a.m. local time at Lady
Luck Rhythm & Blues in Coahoma County, Mississippi, for the following purposes:
1. To elect two Class II directors to hold office until the 2001 Annual
Meeting of Stockholders or until their successors are duly elected and
qualified;
2. To consider and vote upon a proposal to approve an amendment to the
Certificate of Incorporation of the Company in order to enable the
Company to effect a one-for-six reverse stock split and an increase in
the par value of the Company's Common Stock from $0.001 to $0.006 per
share; and
3. To transact such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) thereof.
All stockholders of record on the Company's transfer books as of the close
of business on April 15, 1998, are entitled to notice of, and to vote at, the
annual meeting or any adjournment thereof. A complete list of stockholders
entitled to vote at the annual meeting will be available for examination by any
Company stockholder at Lady Luck Rhythm & Blues in Coahoma County, Mississippi,
for purposes relevant to the annual meeting, during normal business hours for a
period of ten days prior to the annual meeting and at the annual meeting during
the entire time thereof.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY AND
MAIL IT IN THE ENCLOSED STAMPED ENVELOPE.
By the Order of the Board of Directors,
Rory J. Reid
Senior Vice President, Secretary
and General Counsel
Las Vegas, Nevada
April 30, 1998
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PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
JUNE 3, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the board of directors (the "Board of Directors") of Lady Luck Gaming
Corporation, a Delaware corporation (the "Company"), for use at the Company's
1998 Annual Meeting of Stockholders (the "Annual Meeting"), and at any and all
adjournments of such meeting. The Annual Meeting will be held on June 3, 1998.
This Proxy Statement and the accompanying proxy card are first being sent to
stockholders on or about April 30, 1998. The Annual Report of the Company for
the fiscal year ended December 31, 1997, is being mailed to stockholders with
this Proxy Statement and the accompanying proxy card.
The entire cost of preparing, assembling, printing and mailing the Notice
of Meeting, this Proxy Statement, and the accompanying proxy card, and the cost
of soliciting proxies relating to the Annual Meeting, if any, will be borne by
the Company. In addition to use of the mails, proxies may be solicited by
officers, directors and other regular employees of the Company by telephone,
telegraph or personal solicitation, and no additional compensation will be paid
to such individuals. The Company, if requested, will reimburse banks, brokerage
houses and other custodians, nominees and certain fiduciaries for their
reasonable expenses incurred in mailing proxy material to their principals.
The Board of Directors has fixed April 15, 1998 as the record date (the
"Record Date") for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting or any adjournments thereof. Only holders of
record of the Company's common stock, par value $.001 per share ("Common
Stock"), issued and outstanding at the close of business on the Record Date will
be entitled to vote at the Annual Meeting. As of the Record Date, there were
29,285,698 shares of Common Stock issued and outstanding. Each share of Common
Stock is entitled to one vote on any matter which properly comes before the
Annual Meeting. There is no right to cumulative voting as to any matter.
Directors will be elected by a plurality of the shares present in person or
represented by proxy at the Annual Meeting. The adoption of the proposal to
approve the one-for-six reverse stock split and to increase the par value of
Common Stock from $0.001 to $0.006 per share (the reverse stock split and the
increase in par value are hereinafter referred to collectively as the "Reverse
Stock Split") requires the affirmative vote of seventy-five percent (75%) of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting.
Andrew H. Tompkins, Chairman of the Board and Chief Executive Officer of the
Company, controls approximately 45.6% of the outstanding Common Stock. Mr.
Tompkins has indicated his intention to vote FOR the election to the Board of
Directors of the individuals named as nominees herein and FOR the adoption of
the proposal to approve the Reverse Stock Split.
The presence in person or by proxy of the holders of at least a majority of
the outstanding shares of Common Stock entitled to be voted at the Annual
Meeting will constitute a quorum for the transaction of business at the Annual
Meeting. Abstentions and broker non-votes will be included in the computation of
the number of shares that are present for purposes of determining the presence
of a quorum at the Annual Meeting. Abstentions will be counted as part of the
total number of votes cast on any proposal submitted to the stockholders for
their consideration in determining whether such proposal has received the
requisite number of favorable votes, whereas broker non-votes will not be
counted as part of the total number of votes cast on such proposal. Thus,
abstentions will have the same effect as a vote cast against any given proposal,
whereas broker non-votes will have no effect in determining whether any given
proposal which requires the vote of a majority of those voting has been approved
by the stockholders as compared to those proposals (including the Reverse Stock
Split) where broker non-votes will have the same effect as a vote cast against
such proposal.
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If a quorum is not present at the time the Annual Meeting is convened, or,
if for any other reason, the Company believes that additional time should be
allowed for the solicitation of proxies, a majority of the voting stock
represented in person or by proxy may adjourn or postpone the Annual Meeting. If
the Company proposes to adjourn the Annual Meeting by a vote of the
stockholders, the persons named in the enclosed proxy will vote all shares for
which they have voting authority in favor of such adjournment.
Stockholders who execute proxies retain the right to revoke them at any
time by giving written notice of revocation to the Secretary of the Company, by
executing and delivering to the Secretary a proxy bearing a later date or by
voting in person at the Annual Meeting. Unless so revoked, the shares
represented by the proxies solicited by the Company will be voted in accordance
with the directions given therein by the stockholder. If no specific
instructions are given, the shares represented by a signed proxy will be voted
FOR the election of Alain Uboldi and Minxin Pei as Class II directors and FOR
the adoption of the proposal to approve the Reverse Stock Split. The Board of
Directors of the Company currently does not know of any matters, other than the
election of directors or the adoption of the proposal to approve the Reverse
Stock Split that will come before the Annual Meeting. As to any other matter
which may properly come before the Annual Meeting or any adjournments thereof,
the persons named in the accompanying proxy card will vote thereon in accordance
with their judgment.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors consists of seven members. The directors of the
Company are divided into three classes, designated as Class I, Class II and
Class III. Each class of directors serves for a three year term, and the
election of each class of directors occurs at the annual meeting of stockholders
of the Company succeeding the annual meeting of stockholders of the Company at
which the previous class of directors had been elected. For example, Class II
directors are elected at the annual meeting succeeding the annual meeting at
which Class I directors were elected, and preceding the annual meeting at which
Class III directors shall be elected. At each annual meeting of stockholders of
the Company, the successors of the class of directors whose term expires at that
annual meeting are elected for a three-year term. Approval of all governing
gaming authorities ("Gaming Authority Approval") is required for each director
under the gaming laws of certain jurisdictions in which the Company conducts
gaming operations. All directors have received all required Gaming Authority
Approvals. All directors serve until their successors are duly elected and
qualified or until an earlier resignation, removal from office or death. Rory J.
Reid, James H. Bilbray and Charles B. Brewer are presently serving as Class I
directors and their terms expire at the annual meeting of stockholders of the
Company to take place in 2000. Alain Uboldi and Minxin Pei are presently serving
as Class II directors and their terms expire at the Annual Meeting. Andrew H.
Tompkins and Anthony J. Drexel Biddle III are presently serving as Class III
directors and their terms expire at the annual meeting of the stockholders of
the Company to take place in 1999.
The Board of Directors has nominated Alain Uboldi and Minxin Pei to serve
as Class II directors until the annual meeting of stockholders of the Company to
take place in 2001 or until their successors are duly elected and qualified.
Each nominee to serve as a Class II director has agreed to serve if elected
at the Annual Meeting. In the event one or more of the nominees should become
unable to serve as a director for any reason at the time of the Annual Meeting,
votes will be cast for a substitute nominee, if any, designated by the Board of
Directors, or, if none, the size of the Board will be reduced. The Company knows
of no reason why any of the nominees will be unavailable or unable to serve at
the time of the Annual Meeting.
The following sets forth certain biographical information, present
occupation and business experience for the past five years for each director,
nominee for director and executive officer of the Company as of March 31, 1998.
Directors:
Andrew H. Tompkins, age 66, has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since February 1993. Mr. Tompkins has
been the sole shareholder, President and Chief Executive Officer of Gemini,
Inc., the operator of the Lady Luck Casino/Hotel in Las Vegas, Nevada ("Lady
Luck Nevada"), since 1964. Mr. Tompkins purchased the original location of Lady
Luck Nevada, which consisted of a newsstand and smokeshop with 17 slot machines,
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and has developed the casino and hotel into its current state. Mr. Tompkins has
been a director of the Company since February 1993.
Alain Uboldi, age 51, has been President and Chief Operating Officer of the
Company since June 1993. Mr. Uboldi was the General Manager of Lady Luck Nevada
from 1982 until June 1993. Mr. Uboldi has been a director of the Company since
January 1994 and is standing for election as a Class II director at the Annual
Meeting.
Rory J. Reid, age 35, has been Senior Vice President, Secretary and General
Counsel of the Company since December 1994. From June 1993 to December 1994, he
was Vice President, Secretary and General Counsel of the Company. From January
1993 to June 1993, Mr. Reid served as General Counsel of Lady Luck Nevada. Mr.
Reid has been a director of the Company since January 1994.
Minxin Pei, age 40, has been an Assistant Professor in the Politics
Department of Princeton University since September 1992. Since September 1994,
he also served as a fellow of the Hoover Institute at Stanford University.
Dr. Pei has been a director of the Company since October 1994 and is standing
for election as a Class II director at the Annual Meeting.
Anthony J. Drexel Biddle III, age 49, has been Managing Director of Zolfo
Cooper Capital, L.L.C. ("Zolfo Cooper") since December 1997. As Managing
Director, he is responsible for project and corporate financing for
environmental technologies of Zolfo Cooper. From 1988 to 1997, Mr. Biddle was a
Vice President of Chase Manhattan Bank. From 1990 to 1997, Mr. Biddle was
responsible for Chase Manhattan's Global Power Division, which provides project
financing for sovereignties and their agencies in the Middle East, Africa and in
the former Soviet Union. Mr. Biddle has been a director of the Company since
October 1994.
James H. Bilbray, age 60, has been an attorney and lobbyist with Alcalde &
Fay, government and public affairs consultants, since 1995. From 1987 to 1995,
he represented the State of Nevada in the United States House of
Representatives. Mr. Bilbray has been a director of the Company since June 1996.
Charles B. Brewer, age 48, has been employed by Southmark Corporation
("Southmark") since July 1989 and currently serves as a director, Chief
Executive Officer and President of Southmark. Prior to being promoted to his
current position with Southmark in August of 1996, he served as its Executive
Vice President, Chief Operating Officer and General Counsel. Mr. Brewer has been
a director of the Company since July 1997.
Executive Officers:
Lawrence P. Tombari, age 39, has been Chief Financial Officer of the
Company since February 1996. He was Senior Vice President of Development of the
Company from July 1993 to February 1996. From 1985 to July 1993, Mr. Tombari was
Senior Manager and the Western Region Director of Real Estate Valuation at Ernst
& Young.
James Bowen, age 36, has been Vice President of Finance for the Company
since April 1995. From January 1995 to April 1995, Mr. Bowen was Corporate
Director of Finance and Accounting for the Company. From July 1991 until January
1995, Mr. Bowen served as Director of International Gaming Consulting and Senior
Audit Manager for KPMG Peat Marwick in Las Vegas.
Meetings and Committees of the Board of Directors:
The Board of Directors has two standing committees, the audit committee
(the "Audit Committee") and the compensation committee (the "Compensation
Committee"). The Company does not have a nominating committee.
The Audit Committee has three members, Mr. Biddle, Mr. Uboldi and Dr. Pei.
Mr. Biddle and Dr. Pei are independent directors. The functions of the Audit
Committee are to review and approve the selection of, and all services performed
by, the Company's independent accountants, to meet and consult with, and to
receive reports from, the Company's independent accountants, and to review and
act or report to the Board of Directors with respect to the scope of audit
procedures, accounting practices, and internal accounting and financial controls
of the Company.
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The Compensation Committee has three members, Mr. Tompkins, Mr. Biddle and
Dr. Pei. The functions of the Compensation Committee are to review and approve
annual salaries and bonuses for all executive officers and review, approve and
recommend to the Board of Directors the terms and conditions of all employee
benefit plans or changes thereto and administer the 1993 Employee Stock Option
Plan (the "Plan"), the Director Stock Option Plan (the "Director Plan") and any
bonus plans.
During the fiscal year ended December 31, 1997, the Board of Directors held
6 meetings. In 1997, the Audit Committee held 2 meetings and the Compensation
Committee met on one occasion. Each director attended more than 75% of all
meetings of the Board and the committees on which he served.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of March 31, 1998 by (i) each person who is known
by the Company to beneficially own 5% or more of the Common Stock, (ii) each
director and each Named Executive Officer (as hereinafter defined) of the
Company and (iii) all directors and executive officers of the Company as a
group. Unless otherwise indicated, all persons listed have sole voting power and
investment power with respect to such shares. The address of all persons other
than The Equitable Companies Incorporated and the State of Wisconsin Investment
Board is Lady Luck Gaming Corporation, 206 North Third Street, Las Vegas, Nevada
89101. The address of The Equitable Companies Incorporated is 787 Seventh
Avenue, New York, New York 10019 and the address of the State of Wisconsin
Investment Board is P.O. Box 7842, Madison, Wisconsin 53707.
<TABLE>
<CAPTION>
Amount and Nature of
Name Beneficial Ownership Percent of Class
<S> <C> <C>
Andrew H. Tompkins 13,358,455 (a) 45.6%
Alain Uboldi 170,436 (a)(b) *
Rory Reid 70,000 (c) *
Lawrence P. Tombari 58,000 (d) *
James Bowen 13,500 (e) *
Anthony J. Drexel Biddle III 6,000 (f) *
Minxin Pei 1,000 (g) *
James H. Bilbray 34,885 *
Charles Brewer -- *
The Equitable Companies 2,168,477 (h) 7.4%
Incorporated
State of Wisconsin Investment Board 2,505,000 (i) 8.6%
All executive officers and directors 13,641,840 46.6%
as a group (9 persons)
</TABLE>
*Less than 1%
(a) Including 70,436 shares of Common Stock which Mr. Tompkins has agreed to
transfer to Mr. Uboldi and which shares will be subject to an agreement
between Mr. Uboldi and Mr. Tompkins whereby Mr. Tompkins has the right to
vote such shares, and under certain circumstances, reacquire such shares.
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(b) Includes 100,000 shares of Common Stock which Mr. Uboldi has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 50,000 shares of Common Stock are subject to options held by Mr.
Uboldi which are not exercisable currently or within the next 60 days.
(c) Includes 70,000 shares of Common Stock which Mr. Reid has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 35,000 shares of Common Stock are subject to options held by Mr.
Reid which are not exercisable currently or within the next 60 days.
(d) Includes 48,000 shares of Common Stock which Mr. Tombari has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 22,000 shares of Common Stock are subject to options held by Mr.
Tombari which are not exercisable currently or within the next 60 days.
(e) Includes 12,000 shares of Common Stock which Mr. Bowen has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 13,000 shares of Common Stock are subject to options held by Mr.
Bowen which are not exercisable currently or within the next 60 days.
(f) Includes 1,000 shares of Common Stock which Mr. Biddle has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 4,000 shares of Common Stock are subject to options held by Mr.
Biddle which are not exercisable currently or within the next 60 days.
(g) Includes 1,000 shares of Common Stock which Mr. Pei has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 4,000 shares of Common Stock are subject to options held by Mr.
Pei which are not exercisable currently or within the next 60 days.
(h) Based solely upon a Schedule 13G/A filed on February 17, 1998, which states
that the following entities share in the beneficial ownership of such
shares of Common Stock: Alpha Assurances Vie Mutuelle, AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle and AXA Courtage Assurance
Mutuelle, as a group; AXA-UAP; and The Equitable Companies Incorporated
(collectively, "Equitable").
(i) Based solely upon a Schedule 13G/A filed on January 26, 1998.
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EXECUTIVE COMPENSATION
The following table sets forth the compensation of Andrew Tompkins,
Chairman of the Board and Chief Executive Officer of the Company, and the four
most highly compensated executive officers of the Company other than the Chief
Executive Officer (collectively, the "Named Executive Officers") for each of the
Company's last three fiscal years:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
Stock Underlying
Stock All Other
Name and Principal Position Year Salary($) Bonus($) Options(#)(a) Compensation
<S> <C> <C> <C> <C> <C>
Andrew H. Tompkins 1997 $700,000 $45,000 - $4,474(b)
Chairman and Chief 1996 676,926 100,000 - 1,900(c)
Executive Officer 1995 660,005(d) - - 4,287
Alain Uboldi 1997 576,154 37,000 - 4,474(e)
President and Chief 1996 553,263 50,000 50,000 1,909
Operating Officer 1995 538,451 - - 3,462
Rory J. Reid 1997 263,461 20,000 - 4,315(f)
Senior Vice President, 1996 249,962 25,000 35,000 2,068(g)
Secretary and General 1995 226,536 - - 3,853
Counsel
Lawrence P. Tombari, 1997 237,115 15,000 - 4,235(h)
Chief Financial Officer 1996 226,846 5,000 20,000 2,239(i)
1995 201,154 - - 3,654
James Bowen, 1997 145,292 7,800 - 2,867(j)
Vice President of Finance 1996 134,681 5,000 15,000 1,978(k)
1995 105,481 2,500 10,000 1,065
</TABLE>
____________________
(a) The options granted in 1995 and 1996 are options which do not qualify under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and which are not designated as an incentive stock option by the Committee
(each, a "Non-Statutory Option").
(b) $959 consists of premiums paid by the Company for long term disability
insurance policies, $1,140 consists of premiums paid by the Company for
life insurance policies and $2,375 consists of contributions by the Company
to its 401(k) plan on behalf of Mr. Tompkins for the last completed fiscal
year.
(c) Such figure is shown net of $505 that was refunded to the Company in 1997
with respect to excess matching contributions for the 1996 fiscal year with
regard to Mr. Tompkins.
(d) Pursuant to a former management agreement between the Company and
International Marco Polo Services, Inc., formerly known as Lady Luck
Casino, Inc. ("IMPSI"), a corporation owned and controlled by Andrew
Tompkins, Chairman of the Board and Chief Executive Officer of the Company,
the Company, in partial consideration of the payment of a management fee
under such agreements, has been reimbursed by IMPSI for Mr. Tompkins'
salary and benefits and the Company's costs associated with such salary and
benefits (taxes and insurance) incurred in 1995.
(e) $959 consists of premiums paid by the Company for long term disability
insurance policies, $1,140 consists of premiums paid by the Company for
life insurance policies and $2,375 consists of contributions by the Company
to its 401(k) plan on behalf of Mr. Uboldi for the last completed fiscal
year.
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(f) $800 consists of premiums paid by the Company for long term disability
insurance policies, $1,140 consists of premiums paid by the Company for
life insurance policies and $2,375 consists of contributions by the Company
to its 401(k) plan on behalf of Mr. Reid for the last completed fiscal
year.
(g) Such figure is shown net of $707 that was refunded to the Company in 1997
with respect to excess matching contributions for the 1996 fiscal year with
regard to Mr. Reid.
(h) $720 consists of premiums paid by the Company for long term disability
insurance policies, $1,140 consists of premiums paid by the Company for
life insurance policies and $2,375 consists of contributions by the Company
to its 401(k) plan on behalf of Mr. Tombari for the last completed fiscal
year.
(i) Such figure is shown net of $989 that was refunded to the Company in 1997
with respect to excess matching contributions for the 1996 fiscal year with
regard to Mr. Tombari.
(j) $448 consists of premiums paid by the Company for long term disability
insurance policies, $798 consists of premiums paid by the Company for life
insurance policies and $1,621 consists of contributions by the Company to
its 401(k) plan on behalf of Mr. Bowen for the last completed fiscal year.
(k) Such figure is shown net of $355 that was refunded to the Company in 1997
with respect to excess matching contributions for the 1996 fiscal year with
regard to Mr. Bowen.
Remuneration of Directors:
Directors who are also employees of the Company are not currently paid
director's fees, but are reimbursed for travel expenses incurred in connection
with attending board meetings. Generally, outside directors are paid $20,000
annually, and, if they attend more than four meetings, they will be paid $3,000
for each such meeting following the fourth meeting. In the year ended
December 31, 1997, Dr. Pei, Mr. Biddle and Mr. Bilbray each received $23,000 and
Mr. Brewer received $18,000 as compensation for their services as directors as
well as reimbursement of certain expenses incurred in connection with attending
board meetings.
Pursuant to the Director Plan, each member of the Board of Directors who is
not an employee of the Company, and who has served on the Board of Directors for
one year (an "Eligible Director"), may participate in the Director Plan. The
Director Plan provides for the grant of options to purchase a total of 5,000
shares of Common Stock of the Company to each Eligible Director. The Director
Plan also sets forth the price, vesting period and expiration of such options.
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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's Compensation Committee has three members, Mr. Tompkins,
Mr. Biddle and Dr. Pei. The functions of the Compensation Committee are to
review and approve annual salaries and bonuses for all executive officers and
review, approve and recommend to the Board of Directors the terms and conditions
of all employee benefit plans or changes thereto and administer the Plan and
bonus plan, if any.
General. The Company's compensation program is designed to attract and
retain high quality executive management, to give management incentives that
motivate superior performance on behalf of the Company and to align the
interests of management with those of the Company's stockholders. Executive
compensation is composed of base salary, incentive bonuses and long-term
incentives in the form of stock options. The objective of the Compensation
Committee is to establish executive compensation levels which are competitive
with other similar companies in the gaming industry, but which are also linked
to the Company's performance and stockholder return. The Compensation Committee
believes that the compensation level of its executive officers are generally
comparable to those for similar positions at other companies within the gaming
industry. The compensation of each executive officer is based upon an annual
review of such officer's performance by the Chief Executive Officer and his
recommendations to the Compensation Committee. In establishing and administering
the variable elements in the compensation of the Company's executive officers,
the Compensation Committee tries to recognize individual contributions, as well
as overall business results.
1997 Executive Officer Compensation. Among the factors considered by the
Compensation Committee in determining 1997 compensation were (a) the Company's
goal of attracting and retaining qualified executives, (b) compensation levels
of executives at other companies in the gaming industry with similar
responsibilities and (c) the financial condition of the Company. The 1997
compensation of the Company's executive officers, including Mr. Tompkins, was
determined subjectively by the Compensation Committee and was not based upon
objective performance targets.
1997 Chief Executive Officer Compensation. The Compensation Committee
applied the same subjective standards in establishing the 1997 compensation of
the Company's Chief Executive Officer as were used for other executives.
THE COMPENSATION COMMITTEE
Andrew H. Tompkins
Anthony J. Drexel Biddle III
Minxin Pei
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EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
On October 24, 1994, the Company entered into Letter Agreements (the
"Agreements") with Alain J. Uboldi, President, Chief Operating Officer and a
director of the Company, and Rory J. Reid, Senior Vice President, General
Counsel, Secretary and a director of the Company. The Agreements provide that in
the event of a Change of Control, as defined in the Agreements, and the
subsequent termination of the employment of Mr. Uboldi or Mr. Reid, as the case
may be, under certain circumstances, the Company would be required to pay to
Mr. Uboldi or Mr. Reid, as the case may be, a lump sum severance payment equal
to 2.99 times the sum of their respective annual base salary plus the amount of
any bonus paid in the year immediately preceding such termination. In the event
of such termination, Mr. Uboldi or Mr. Reid, as the case may be, also would be
entitled to receive, in cash, an amount equal to the difference between the
exercise price of each option held by Mr. Uboldi or Mr. Reid (whether or not
fully exercisable) and the current price of Common Stock. Further, Mr. Uboldi or
Mr. Reid, as the case may be, would be entitled to receive, for a 36-month
period after such termination, life, disability, accident and health insurance
benefits substantially similar to those they are receiving immediately prior to
their termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company currently consists of
Mr. Tompkins, Mr. Biddle and Dr. Pei. Mr. Tompkins is the Company's Chief
Executive Officer and Chairman of the Board. Mr. Tompkins is the sole director
and sole shareholder of Gemini, Inc., the operator of Lady Luck Nevada; the sole
director and sole stockholder of IMPSI, the management entity for the Company's
casinos; and the sole director and sole stockholder of Marco Polo International
Marketing, Inc., a company that provides marketing assistance to IMPSI. See
"Certain Relationships and Related Transactions."
RECOMMENDATION AND VOTE
The Board of Directors recommends a vote FOR the election of Alain Uboldi
and Minxin Pei as Class II directors, which is included as Item 1 on the
accompanying proxy card. Stockholders may (a) vote in favor of both nominees,
(b) withhold their vote as to both nominees or (c) withhold their vote as to
specific nominees by so indicating in the appropriate space on the enclosed
proxy card. Unless marked to the contrary, proxies received will be voted in
accordance with the Board of Directors' recommendation.
ITEM 2. PROPOSAL TO APPROVE AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF
THE COMPANY EFFECTING A REVERSE STOCK-SPLIT AND AN INCREASE IN PAR VALUE OF
COMMON STOCK
Summary of the Reverse Stock Split
The Board of Directors of the Company has unanimously adopted resolutions
to approve, and submit to the stockholders of the Company for approval,
amendments to the Company's Certificate of Incorporation (the "Amendment") to
effect the Reverse Stock Split. The principal effects of the Reverse Stock Split
will be to reduce the number of issued and outstanding shares of Common Stock
from 29,285,698 to approximately 4,880,950 and to increase the par value of
Common Stock from $0.001 to $0.006 per share. The Reverse Stock Split will not
change the number of authorized shares of Common Stock or change the number of
authorized shares or par value of the Company's preferred stock, $25.00 par
value per share (the "Preferred Stock"), of which 433,638 shares were issued and
outstanding on March 31, 1998.
If the Reverse Stock Split is approved by the affirmative vote of the
holders of seventy-five percent (75%) of the outstanding shares of Common Stock,
upon filing of the Amendment with the Delaware Secretary of State, the Reverse
Stock Split will be effective. At such time, shares of Common Stock owned by a
stockholder immediately prior to the Reverse Stock Split (the "Old Shares") will
be automatically converted, without any action on the part of the stockholder,
the Company or any other party, into the number of shares of Common Stock equal
to the number of Old Shares divided by six (the "New Shares"). Each stockholder
9
<PAGE>
whose Old Shares are not evenly divisible by six will receive from the Exchange
Agent (as defined below) a cash payment in an amount equal to such holders'
proportionate interest in the net proceeds from the sale or sales in the open
market by the Fractional Shares Sales Agent (as defined below), on behalf of all
such holders, of the aggregate fractional shares of New Shares for the
fractional New Share that such stockholder would be otherwise entitled to
receive as a result of the Reverse Stock Split.
The complete text of the Amendment effecting the Reverse Stock Split is set
forth in Appendix A to this Proxy Statement.
Reasons For the Reverse Stock Split
The Board of Directors, after considering the effects of the relatively low
current price per share of Common Stock, has determined that the Reverse Stock
Split is advisable and in the best interests of the Company and its
stockholders. The reduction in the number of issued and outstanding shares of
Common Stock caused by the Reverse Stock Split is expected to increase the
market price of Common Stock, thereby reducing the negative attributes
traditionally associated with a low per share market price. The Board of
Directors anticipates that the higher share price expected to result from the
Reverse Stock Split will enhance the Company's ability to comply with continued
listing requirements established by The Nasdaq Stock Market.
As of March 31, 1998, the Company was not in compliance with the continued
listing requirements established by The Nasdaq Stock Market. The bid price of
Common Stock was below the $5.00 minimum bid price set forth in such continued
listing requirements. The Board of Directors believes that the expected increase
in share price of Common Stock resulting from the Reverse Stock Split should
allow the Company to comply with such minimum bid price continued listing
requirement.
A low per share market price often adversely effects the marketability of a
stock. Certain institutional investors have internal policies preventing the
purchase of low-priced stocks, and many brokerage houses do not permit
low-priced stocks to be used as collateral for margin accounts or to be
purchased on margin. Further, certain brokerage houses have adopted
time-consuming practices and procedures which act to discourage individual
brokers from dealing in low-priced stocks because such practices and procedures
make the handling of low-priced stocks economically unattractive. A low stock
price also has the effect of increasing the amount and percentage of transaction
costs paid by individual investors. Because brokers' commissions on low-priced
stocks generally represent a higher percentage of the stock price than
commissions on higher priced stocks, a low stock price can result in individual
stockholders paying transaction costs (commissions, markups or markdowns) which
are a higher percentage of their total share value than would be the case with
stock with a higher share price. The Board of Directors believes that the
expected increase in share price of Common Stock resulting from the Reverse
Stock Split should reduce the effect of these negative attributes traditionally
associated with a low per share price, thereby enhancing the acceptability of
the Common Stock with the financial community and the investing public and
resulting in a broader market for Common Stock than currently exists.
There can be no assurance that the Reverse Stock Split will increase the
current market price per share, or that any increase in market price of Common
Stock after the Reverse Stock Split will be maintained. The Reverse Stock Split
could result in an increase in market price for Common Stock which is
proportionately less than the decrease in the number of shares outstanding.
Additionally, there can be no assurances that any of the effects described above
will be achieved.
Certain Effects of the Reverse Stock Split
The Reverse Stock Split will be effected by means of filing the Amendment
with the Delaware Secretary of State. If the Amendment is approved by the
requisite vote of the stockholders at the Annual Meeting, upon filing of the
Amendment with the Delaware Secretary of State each certificate representing Old
Shares will automatically, without any action on part of the stockholders, the
Company or any other party, represent the number of New Shares into which such
Old Shares have been reclassified and changed pursuant to the Reverse Stock
Split.
The principal effects of the Amendment are to reduce the number of issued
and outstanding shares of Common Stock and to increase the par value of Common
Stock from $0.001 to $0.006 per share. The Company has authorized capital stock
of 75,000,000 shares of Common Stock and 4,000,000 shares of Preferred Stock.
The number of shares of authorized capital stock will not be changed by reason
10
<PAGE>
of the Reverse Stock Split. As of March 31, 1998, the number of issued and
outstanding Old Shares was 29,285,698 shares and there were 433,638 shares of
Preferred Stock issued and outstanding. The aggregate number of New Shares that
will be issued and outstanding following the Reverse Stock Split will be
approximately 4,880,950.
As of March 31, 1998, under the Plan there were outstanding options to
purchase an aggregate of 435,000 shares of Common Stock at exercise prices of
between $2.50 and $12.00 per share. In addition, an aggregate of 565,000 shares
remain available for grant pursuant to the Plan. The Plan provides that in the
event of a change in capitalization of the Company, such as the Reverse Stock
Split, the number of shares covered by each outstanding option and the purchase
price under each option shall be adjusted so as to maintain the optionee's
proportionate interest as before the Reverse Stock Split. Additionally, the Plan
provides that the total shares subject to options to be issued under the Plan
will be appropriately adjusted. Further, the various stock option agreements
provide that no fractional shares may result from any such adjustments. In lieu
of fractional New Shares, each holder of an outstanding option under the Plan
whose shares covered by each such option are not evenly divisible by six will
receive one additional New Share subject to such option for the fractional New
Share subject to such option that such option holder would be otherwise entitled
to receive as a result of the Reverse Stock Split. If the Reverse Stock Split is
approved, the number of New Shares issuable upon the exercise of outstanding
options and the number of New Shares available for grant under the Plan will be
adjusted to approximately 72,500 and 94,167, respectively, and the exercise
prices of outstanding options will be adjusted to exercise prices of between $15
and $72 per share.
As of March 31, 1998, under the Director Plan there were outstanding
options to purchase an aggregate of 10,000 shares of Common Stock at exercise
prices of $3.00 per share. In addition, an aggregate of 90,000 shares remain
available for grant pursuant to the Director Plan. The Director Plan provides
that in the event of a change in capitalization of the Company, such as the
Reverse Stock Split, the number of shares covered by each outstanding option and
the purchase price under each option shall be adjusted so as to maintain the
optionee's proportionate interest as before the Reverse Stock Split.
Additionally, the Director Plan provides that the total shares subject to
options to be issued under the Director Plan will be appropriately adjusted. In
lieu of fractional New Shares, each holder of an outstanding option under the
Director Plan whose shares covered by each such option are not evenly divisible
by six will receive one additional New Share subject to such option for the
fractional New Share subject to such option that such option holder would be
otherwise entitled to receive as a result of the Reverse Stock Split. If the
Reverse Stock Split is approved, the number of New Shares issuable upon the
exercise of outstanding options and the number of New Shares available for grant
under the Director Plan will be adjusted to approximately 1,667 and 15,000,
respectively, and the exercise prices of outstanding options will be adjusted to
exercise prices of $18 per share.
11
<PAGE>
The following table sets forth the effects of the Reverse Stock Split on
Common Stock and certain financial data:
<TABLE>
<CAPTION>
December 31, 1997
----------------------------------------------------------
As Adjusted for
Actual Reverse Stock Split
------------ -----------------------
Common Stock:
<S> <C> <C>
Authorized 75,000,000 75,000,000
Issued and outstanding 29,285,698 4,880,950
Reserve for issuance 655,000 109,167
Available for issuance 45,059,302 70,009,883
Par value per common share $0.001 $0.006
Other Effects of
the Reverse Stock Split:
Stated capital 29,285 29,285
Retained earnings (deficit) (63,579,000) (63,579,000)
Total stockholders' equity (32,168,000) (32,168,000)
Net loss per common share
(for the year ended
December 31, 1997) ($1.31) ($7.86)
</TABLE>
If approved, the Reverse Stock Split may result in some stockholders owning
"odd-lots" of less than 100 shares of Common Stock. Brokerage commissions and
other costs of transaction in odd-lots are generally higher than the costs of
transactions in "round-lots" of even multiples 100 shares.
Dissenting stockholders have no special rights under Delaware law or the
Company's Certificate of Incorporation or By-Laws with respect to, and are
subject to the effects of, the Reverse Stock Split.
Common Stock is currently registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as a result the
Company is subject to the periodic reporting and other requirements of the
Exchange Act. The proposed Reverse Stock Split will not affect the registration
of Common Stock under the Exchange Act.
Exchange of Stock Certificates
If stockholders of the Company approve the Reverse Stock Split, upon the
filing of the Amendment each certificate representing Old Shares will
automatically, without any action on part of the stockholders the Company or any
other party, represent the number of New Shares into which such Old Shares have
been reclassified and changed pursuant to the Reverse Stock Split. In order to
receive stock certificates representing New Shares and a cash payment in lieu of
fractional New Shares, stockholders will be required to submit their stock
certificates representing Old Shares to American Security Transfer & Trust,
Inc., 938 Quail Street, Suite 101, Lakewood, CO 80215-5513, the Company's
exchange agent for the Reverse Stock Split (the "Exchange Agent"). The Exchange
Agent shall cause any fractional New Shares resulting from the Reverse Stock
Split to be issued to the Fractional Shares Sales Agent. Donaldson, Lufkin &
Jenrette Securities Corporation (the "Fractional Shares Sales Agent") shall sell
such fractional New Shares on the open market, and shall forward the proceeds
therefrom to the Exchange Agent. The Exchange Agent shall forward such proceeds
to the shareholders in accordance with the procedures set forth herein. As soon
as is practicable after the effective date of the Reverse Stock Split, the
Company will forward a letter of transmittal to each holder of record of Old
Shares outstanding on the effective date of the Reverse Stock Split. The letter
of transmittal will contain instructions for the surrender of certificates
representing Old Shares to the Exchange Agent. Upon proper completion and
execution of the letter of transmittal and return thereof to the Exchange Agent,
together with the certificate(s) representing Old Shares and any other
documentation required to be submitted therewith, a stockholder will be entitled
to receive a certificate representing the number of New Shares and, upon the
12
<PAGE>
sale by the Fractional Shares Sales Agent of the aggregate fractional New
Shares, a cash payment in lieu of fractional New Shares into which such
stockholder's Old Shares have been reclassified and changed as a result of the
Reverse Stock Split.
Stockholders should not submit any certificates until requested to do so.
No certificates for New Shares or cash payments in lieu of fractional New Shares
will be issued to a stockholder until the stockholder has surrendered to the
Exchange Agent his or her outstanding certificate(s) for Old Shares together
with a properly completed and executed letter of transmittal.
Federal Income Consequences of the Reverse Stock Split
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the Reverse Stock Split. The following description of federal
income tax consequences is based upon the Code, the applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date hereof. This
discussion is for general information only and does not discuss consequences
which may apply to special classes of taxpayers (e.g., non-resident aliens,
broker-dealers or insurance companies). STOCKHOLDERS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS TO DETERMINE THE PARTICULAR CONSEQUENCES TO THEM.
The receipt of New Shares for Old Shares will not result in recognition of
gain or loss by a stockholder for federal income tax purposes and will not be
treated as a modification of existing options under Section 424 of the Code. The
holding period of the New Shares will include a stockholder's holding period for
the Old Shares in respect of which the New Shares are received, provided that
the Old Shares were held as a capital asset. The adjusted basis of the New
Shares will be the same as the adjusted basis of the Old Shares in respect of
which the New Shares are received. The receipt of a cash payment in lieu of a
fractional New Share will result in recognition of gain or loss by a stockholder
for federal income tax purposes. For the purposes of calculating such gain or
loss, the basis of the New Shares shall be allocated among the fractional New
Shares proportionately. The Company will not recognize any gain or loss as a
result of the Reverse Stock Split.
RECOMMENDATION AND VOTE
The affirmative vote of the holders of seventy-five percent (75%) of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required to approve the Amendment. The members of the Board of Directors, who
hold in the aggregate approximately 46.6% of the outstanding shares of Common
Stock, have advised the Company that they intend to vote their shares of Common
Stock FOR the proposal. The Board of Directors of the Company recommends a vote
FOR the proposal to approve the Reverse Stock Split which is included as Item 2
on the accompanying proxy card. Unless directed otherwise, the persons named in
the accompanying proxy will vote the shares represented thereby FOR the proposal
to approve the Reverse Stock Split.
13
<PAGE>
PERFORMANCE GRAPH
Company Stock Price Performance
The following graph shows a comparison of the cumulative total return
(equal to dividends plus stock appreciation) for Common Stock, the Selected
Comparable Casino Companies Index (including Argosy Gaming Company, Casino
America, Inc., Casino Magic Corp., Players International, Inc. and President
Riverboat Casinos, Inc.), the Standard & Poor's 500 Stock Index and the Nasdaq
Industrial Index for the interim period beginning October 1, 1993 and ending on
December 31, 1993, and the four full years ending December 31, 1994, 1995, 1996
and 1997, respectively, assuming the investment of $100 in Common Stock, the
Selected Comparable Casino Companies Index, the Standard & Poor's 500 Stock
Index and the Nasdaq Industrial Index, and the reinvestment of all dividends.
Total stockholder returns for prior periods are not an indication of future
investment returns.
Comparison of Cumulative Total Stockholder Return
[Graph not included]
<TABLE>
<CAPTION>
09/29/93 12/30/94 12/29/95 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C>
A Lady Luck 100 16 10 11 6
B Selected 100 47 25 14 9
Casino Index
C Standard & 100 100 134 161 211
Poor's Index
D NASDAQ 100 97 135 165 201
Industrial Index
</TABLE>
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective January 1, 1996, the Company entered into several agreements with
certain entities controlled by Mr. Tompkins. Under a marketing agreement (the
"Marketing Agreement") with IMPSI, the Company pays an annual licensing fee with
respect to the Lady Luck name and the mailing list developed by Gemini, Inc.
("Gemini"), a subchapter S corporation wholly owned by Mr. Tompkins which does
business as Lady Luck Casino/Hotel in Las Vegas, Nevada, to IMPSI. The licensing
fee is equal to the greater of (a) 9% of the Company's EBITDA (calculated as
EBITDA of the Company and all its subsidiaries and joint ventures (multiplied,
in the case of the Company's Bettendorf, Iowa joint venture (the "Bettendorf
Joint Venture") and the Kimmswick, Missouri joint venture (the "Kimmswick Joint
Venture") by the interest owned by the Company in such joint ventures),
excluding, among other things, all revenues and expenses arising from any casino
or casino/hotel for which the Company is not the operator and which does not
utilize the mailing list or Lady Luck name and excluding revenues from the lease
of equipment owned by the Company to third parties), and (b) $1,700,000 per year
(as adjusted based on the U.S. Consumer Price Index Urban Annual Percent Change
as published by the U.S. Department of Labor Bureau of Labor and Statistics from
year to year (the "Consumer Price Index"). The Company has agreed to use the
Lady Luck name on all existing and future casinos which it operates. The
Marketing Agreement provides that during any period of default in the payment of
principal of or interest on the Company's 11 7/8% First Mortgage Notes due 2001,
the Company will not pay (but will accrue on its books) any licensing fee due to
IMPSI. During the year ended December 31, 1997, the licensing fees payable to
IMPSI by the Company were approximately $2,989,000.
Pursuant to an office lease with Gemini, the Company will pay Gemini the
sum of $300,000 per year as adjusted based on the Consumer Price Index for
corporate office facilities and certain services with respect to such corporate
office facilities. In addition, the Company reimburses Gemini for the
approximate retail value of rooms, food and beverages, and other items provided
to the Company by Gemini. Total payments to Gemini during the year ended
December 31, 1997 were $457,000.
Marco Polo International Marketing, Inc. ("MPIM"), a wholly owned
corporation of Mr. Tompkins, provides marketing services to the Company pursuant
to a services agreement between MPIM and the Company. Mr. Uboldi is the
president of MPIM. The Company paid $788,000 to MPIM during the year ended
December 31, 1997 for certain allocated payroll, overhead, direct advertising
and marketing costs.
With respect to the Bettendorf Joint Venture, pursuant to an assignment and
assumption agreement between IMPSI and the Company, IMPSI is obligated to assign
to the Company its rights to receive a management fee for services performed for
the Bettendorf Joint Venture and to assign its obligation to pay part of that
fee to its joint venture partner.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of any class of
the Company's equity securities registered under the Exchange Act (collectively,
"Reporting Persons"), to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten percent stockholders also
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms that are filed with the SEC. Based solely on a review of the copies
of such reports furnished to the Company, representations that no other reports
were required and director and officer questionnaires furnished to the Company,
the Company believes that all Reporting Persons complied with all Section 16(a)
filing requirements for the fiscal year ended December 31, 1997, except that Mr.
Tombari inadvertently neglected to file a timely Form 4 upon the purchase of
Common Stock on November 3, 1997 (such transaction was reported by Mr. Tombari
on a Form 4 mailed for filing on April 15, 1998).
15
<PAGE>
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1997, FILED BY THE COMPANY WITH THE SEC WITHOUT EXHIBITS,
WILL BE FURNISHED TO ANY PERSON REQUESTING A COPY THEREOF IN WRITING AND STATING
THAT SUCH PERSON IS A BENEFICIAL HOLDER OF SHARES OF COMMON STOCK OF THE COMPANY
ON THE RECORD DATE FOR THE ANNUAL MEETING OF STOCKHOLDERS. REQUESTS AND
INQUIRIES SHOULD BE ADDRESSED TO LADY LUCK GAMING CORPORATION AT 220 STEWART
AVENUE, LAS VEGAS, NEVADA 89101; ATTENTION: INVESTOR RELATIONS.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP ("Arthur Andersen") served as the Company's
independent public accountants for 1997 and has been selected by the Board of
Directors to continue in such capacity during fiscal year 1998. Representatives
of Arthur Andersen are not expected to be present at the Annual Meeting.
OTHER MATTERS
The Board of Directors knows of no business other than as described herein
that will be presented for consideration at the Annual Meeting. If, however,
other business shall properly come before the Annual Meeting, the persons named
in the enclosed form of proxy intend to vote the shares represented by said
proxies on such matters in accordance with their judgment.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the 1999 Annual
Meeting must be received by the Company at the address appearing on the first
page of this proxy statement by January 6, 1999, in order to be considered for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
By Order of the Board of Directors,
Rory J. Reid
Senior Vice President, Secretary
and General Counsel
16
<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
OF LADY LUCK GAMING CORPORATION
Lady Luck Gaming Corporation (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
1. That the Board of Directors of the Corporation, acting in accordance
with Section 242 of the General Corporation Law of the State of Delaware,
approved a resolution recommending to the stockholders of the Corporation that
the Certificate of Incorporation of the Corporation be amended in the following
respects:
2. Article IV, Paragraph A of the Corporation's Certificate of
Incorporation is hereby amended to increase the par value of the Common Stock
from $0.001 per share to $0.006 per share in order to effectuate a one-for-six
reverse stock split, such Article IV, Paragraph A (excluding subparagraph 1) to
be amended to read in its entirety as follows:
"A. Capital Stock. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is Seventy-Nine Million
(79,000,000) shares consisting of (1) Sixty Million (60,000,000) shares of Class
A common stock, par value $0.006 per share (the "Class A Common Stock"); (2)
Fifteen Million (15,000,000) shares of Class B common stock, par value $0.006
per share (the "Class B Common Stock") (the Class A and Class B Common Stock
collectively are referred to as the "Common Stock"); and (3) Four Million
(4,000,000) shares of Preferred Stock, par value $25.00 per share (the
"Preferred Stock").
Upon the foregoing becoming effective pursuant to the General Corporation
Law of the State of Delaware, the Corporation shall effect a one-for-six reverse
stock split (the "Reverse Stock Split") pursuant to which every six (6) shares
of the Corporation's Common Stock, par value of $0.001 per share (the "Old
Common Shares"), outstanding on the effective date of this Article IV, Paragraph
A will be exchanged for one new share of the Corporation's Common Stock, par
value $0.006 per share (the "New Common Shares").
Stockholders whose Old Common Shares are not evenly divisible by six (6)
will receive from American Security Transfer & Trust Inc., the Company's
exchange agent for the Reverse Stock Split, a cash payment in an amount equal to
such holder's proportionate interest in the net proceeds from the sale or sales
in the open market by such exchange agent, on behalf of all such holders, of the
aggregate fractional shares of New Common Shares for the fractional New Common
Share that such stockholder would be otherwise entitled to receive as a result
of the Reverse Stock Split."
3. That said resolutions were duly approved by the stockholders of the
Corporation at the annual meeting of the stockholders in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, this Certificate of Amendment to the Certificate of
Incorporation of the Corporation has been executed by the undersigned, who
affirm that, under penalties of perjury, this instrument is the act of the
Corporation and the facts stated herein are true, this 30th day of April, 1998.
LADY LUCK GAMING CORPORATION
By:____________________________________________
Name: Andrew H. Tompkins
Title: Chairman and Chief Executive Officer
By:____________________________________________
Name: Rory Reid
Title: Senior Vice President, Secretary
and General Counsel
17
<PAGE>
PROXY
LADY LUCK GAMING CORPORATION
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Stockholders to be held at Lady Luck Rhythm & Blues in Coahoma
County, Mississippi on June 3, 1998 at 10:00 a.m. local time, and the Proxy
Statement related thereto, each dated April 30, 1998, and constitutes and
appoints Andrew H. Tompkins, Alain Uboldi, Rory J. Reid and Lawrence P. Tombari,
and each of them, with the power of substitution as proxy or proxies, to
represent and to vote on behalf of the undersigned all of the shares of common
stock, par value $.001 per share, of Lady Luck Gaming Corporation (the
"Company") which the undersigned held of record on April 15, 1998, hereby
revoking all proxies heretofore given with respect to such shares, upon the
following proposals more fully described in the Notice of the Annual Meeting of
Stockholders, the Proxy Statement for the meeting and the related proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL (1)
1. Election of Alain Uboldi and Minxin Pei as Class II Directors -- Term
expiring at 2001 Annual Meeting.
|_| FOR election of Alain Uboldi and Minxin Pei.
|_| WITHHOLD AUTHORITY to vote for both director nominees listed below:
Class II Alain Uboldi
Class II Minxin Pei
(Instruction: To withhold authority for an individual director nominee,
write the name of such director nominee in the space provided below.)
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL (2)
2. Proposal to approve an amendment to the Certificate of Incorporation of the
Company in order to enable the Company to effect a one-for-six reverse
stock split and to increase the par value of the Company's Common Stock
from $0.001 to $0.006 per share.
|_| FOR |_| AGAINST |_| ABSTAIN
3. The authority of the proxies, in their discretion, upon such other matters
as may properly come before the Annual Meeting, or any adjournments or
postponements thereof.
<PAGE>
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy will
be voted FOR the election of Alain Uboldi and Minxin Pei and FOR the proposal to
approve the amendment to the Certificate of Incorporation of the Corporation in
order to effect the one-for-six reverse stock split and to increase the par
value of the Company's Common Stock. PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
Please date and sign this Proxy exactly as your name appears on this Proxy.
Joint owners each should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
DATED:__________________________________________
__________________________________________
Signature
DATED:__________________________________________
__________________________________________
Signature if held jointly
