<PAGE> 1
FITZGERALDS GAMING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 1, 1997
To the Stockholders of
Fitzgeralds Gaming Corporation:
The Annual Meeting of Stockholders of Fitzgeralds Gaming Corporation
will be held on Friday, August 1, 1997, at 11:00 a.m., local time, in Limerick's
Pub & Grille, located on the third floor of Fitzgeralds Hotel/Casino, 255 N.
Virginia Street, Reno, Nevada, 89501, for the following purposes:
1. To elect three directors to serve until the next annual meeting of
stockholders and until their respective successors are duly
elected and qualified;
2. To consider and act on a proposal to approve the Company's Stock
Option Incentive Plan, pursuant to which options to purchase up
to 1,000,000 shares of common stock may be granted; and
3. To transact any other business which may properly come
before the meeting and any adjournments or postponements thereof.
A proxy statement containing information for stockholders is annexed
hereto and a copy of the Annual Report of the Company on Form 10-K for the
fiscal year ended December 31, 1996 is enclosed herewith.
The Board of Directors has fixed the close of business, July 16, 1997,
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE DATE
AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE
ENCLOSED FOR THAT PURPOSE.
By the order of the Board of Directors
Philip D. Griffith
Chairman of the Board and President
Las Vegas, Nevada
July 21, 1997
<PAGE> 2
FITZGERALDS GAMING CORPORATION
301 FREMONT STREET
LAS VEGAS, NEVADA 89101
(702) 388-2400
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Fitzgeralds Gaming Corporation ("FGC" or the
"Company"), a Nevada corporation, for use only at its Annual Meeting of
Stockholders to be held on Friday, August 1, 1997, and any adjournments or
postponements thereof (the "Annual Meeting").
Shares may not be voted unless the signed proxy card is returned, the
Stockholder attends the Annual Meeting in person or other specific arrangements
are made to have shares represented at the meeting. Any stockholder of record
giving a proxy may revoke it at any time before it is voted by filing with the
Secretary of FGC a notice in writing revoking it, by duly executing a proxy
bearing a later date, or by attending the Annual Meeting and expressing a desire
to revoke the proxy and vote the shares in person. Stockholders whose shares are
held in street name should consult with their brokers or other nominees
concerning procedures for revocation. Subject to such revocation, all shares
represented by a properly executed proxy card will be voted as directed by the
stockholder on the proxy card. IF NO CHOICE IS SPECIFIED, PROXIES WILL BE VOTED
FOR THE PERSONS NOMINATED BY THE BOARD OF DIRECTORS FOR ELECTION AS DIRECTORS
AND FOR THE APPROVAL OF THE STOCK OPTION INCENTIVE PLAN.
In addition to soliciting proxies by mail, Company directors, officers and other
regular employees, without additional compensation, may solicit proxies
personally or by other appropriate means. The total cost of solicitation of
proxies will be borne by FGC. Although there are no formal agreements to do so,
it is anticipated that FGC will reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
any proxy soliciting materials to their principals.
Only stockholders of record at the close of business on July 16, 1997 are
entitled to receive notice of and to vote at the Annual Meeting. On July 16,
1997, FGC had outstanding 4,012,846 shares of common stock (the "Common Stock"),
which constituted all of the outstanding voting securities of FGC. Each share is
entitled to one vote. A majority of the outstanding shares of Common Stock will
constitute a quorum. Abstentions and broker non-votes are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business but will not be counted for purposes of determining whether a proposal
has been approved, and thus will have the effect of a "No" vote. Directors are
elected by a plurality of votes cast. Stockholders may not cumulate their votes
for any one or more nominees for election. The affirmative vote of a majority of
the shares present and voting at the Annual Meeting will be required to approve
the Stock Option Incentive Plan. The same vote would be required for any other
items which might be submitted for consideration at the Annual Meeting.
It is anticipated that this proxy statement and accompanying proxy card will
first be mailed to stockholders on or about July 21, 1997.
ITEM 1. ELECTION OF DIRECTORS
NOMINEES AND VOTING
Directors of the Company are elected annually to serve until the next annual
meeting of stockholders and until their respective successors are duly elected
and qualified. The Company's Articles of Incorporation, as amended, provide that
the Board of Directors shall consist of not fewer
<PAGE> 3
than three and not more than nine directors. By action of the Board of
Directors, the number of directors comprising the Board of Directors has been
set at three. The Board of Directors has nominated each of the following
incumbent directors for re-election as directors at the Annual Meeting:
Philip D. Griffith Michael A. Ficaro Patricia W. Becker
Information concerning the nominees for election as directors is set forth under
the caption "Management Directors and Executive Officers."
The Board of Directors has no reason to believe that its nominees will be unable
or unwilling to serve if elected. However, should any nominee named herein
become unable or unwilling to accept nomination or election, the proxies
solicited by the Board will vote instead for such other person as the Board of
Directors may recommend.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
ELECTION OF THE ABOVE-MENTIONED NOMINEES AS DIRECTORS.
ITEM 2. STOCK OPTION INCENTIVE PLAN
The Stockholders are asked to approve the adoption of the Fitzgeralds Gaming
Corporation Stock Option Incentive Plan (the "Plan").
On September 8, 1995, the Board of Directors of the Company approved an
Incentive Option Plan (the "1995 Incentive Option Plan"), subject to approval of
the Stockholders. Such approval was inadvertently not obtained, and the 1995
Incentive Option Plan never became effective. The Board of Directors of the
Company has adopted the Plan described below, subject to Stockholder approval,
as a replacement for the 1995 Incentive Option Plan. If Stockholders approve the
Plan, options under the Plan would be issued to replace certain options which
were granted in 1995, as described more fully below.
DESCRIPTION OF THE PLAN
The following summary of the Plan is qualified by reference to the full text of
the Plan, which is attached as Exhibit A to this Proxy Statement.
The Plan provides for the grant of options to purchase Common Stock that are
either intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
that are not intended to so qualify ("non-qualified stock options"). All
officers, directors, employees, consultants, advisors, independent contractors
and agents of the Company and its subsidiaries are eligible to receive options
under the Plan, except that only employees may receive incentive stock options.
The maximum number of shares available for issuance under the Plan is 1,000,000.
No person eligible to receive options under the Plan may receive options for the
purchase of more than an aggregate of 100,000 shares in any calendar year.
The Plan is administered by the Board of Directors or, in its discretion, by a
committee of the Board of Directors appointed for that purpose (the
"Committee"), which, subject to the terms of the Plan, has the authority in its
sole discretion to interpret the Plan and to determine: (a) the individuals to
whom options shall be granted; (b) the time or times at which options may be
exercised; (c) the number of shares subject to each option; (d) the option price
and the duration of each option granted; and (e) all of the other terms and
conditions of options granted under the Plan.
-2-
<PAGE> 4
The exercise price of incentive stock options granted under the Plan must be at
least equal to the fair market value of the shares on the date of grant (110% of
fair market value in the case of participants who own shares possessing more
than 10% of the combined voting power of the Company) and may not have a term in
excess of 10 years from the date of grant (five years in the case of
participants who are more than 10% stockholders). In no event may the aggregate
fair market value (determined as of the time the Option is granted) of the
shares with respect to which incentive stock options (granted under the Plan and
all other plans of the Company or any of its subsidiaries) are exercisable for
the first time by an optionee in any calendar year exceed $100,000.
Options granted under the Plan are not transferable other than by will or the
laws of descent and distribution. Unless otherwise determined by the Board of
Directors or the Committee, all stock options granted under the Plan terminate
(i) immediately upon the optionee's termination of employment (or other
relationship) with the Company for cause, (ii) one year after the optionee's
termination of employment (or other relationship) by reason of death or
permanent disability, and (iii) 90 days after of the optionee's termination of
employment (or other relationship) for any other reason, but in no case later
than the scheduled expiration date. Unless otherwise determined by the Board of
Directors or the Committee, the number of shares with respect to which a stock
option may be exercised following the optionee's termination of employment or
other relationship is limited to that number of shares which could have been
purchased pursuant to the option had the option been exercised by the optionee
on the date of such termination.
Payment of the exercise price upon exercise of an option must be made in cash
or, in the discretion of the Board or Committee, in shares of Common Stock.
Where payment is made in Common Stock, such Common Stock shall be valued for
such purpose at the fair market value of such shares (determined as specified in
the Plan) on the date of exercise.
If the number of outstanding shares of Common Stock is increased or decreased,
or if such shares are exchanged for a different number or kind of shares through
reorganization, merger, recapitalization, stock dividend, stock split, or other
transaction where the Board determines that an adjustment is appropriate, the
aggregate number of shares available for issuance under the Plan, the number of
shares subject to outstanding options, the per share exercise price of
outstanding options and the aggregate number of shares with respect to which
options may be granted to a single participant will be appropriately adjusted by
the Board of Directors.
No grant of options may be made under the Plan more than 10 years after its date
of adoption. The Board of Directors has authority to terminate or to amend the
Plan. Amendments may be made without the approval of the Company's stockholders
unless such approval is required by law or stock exchange requirement. No
amendment or termination may impair the rights of any holder of outstanding
options without the consent of such holder. The terms and conditions of
outstanding options may be amended by written agreement between the optionee and
the Company.
-3-
<PAGE> 5
BENEFITS UNDER THE PLAN
On June 26, 1997, the Board of Directors authorized the grant of two classes of
stock options to the respective persons and groups set forth below. The grant of
all such options was made effective as of the day of the Annual Meeting, subject
to approval of the Plan by Stockholders. The grant of the Group I options was
also made subject to the cancellation by the prospective optionees of options
granted to them under the 1995 Incentive Option Plan.
<TABLE>
<CAPTION>
Number of Stock Options
-----------------------
Name and Position Group I Group II
----------------- ------- --------
<S> <C> <C>
Philip D. Griffith, 75,000 100,000
President and Chief Executive Officer
Jerome H. Turk, 75,000 0
Chairman(1)
Terrance W. Oliver, 0 0
Executive Vice President and Chief Operating
Officer(2)
Fernando Bensuaski, 50,000 0
Executive Vice President and Chief Financial
Officer(3)
Executive Group 200,000 100,000
(4 persons)
Non-Executive Director Group 10,000 18,000
(2 persons)
Non-Executive Employee Group 158,000 189,000
(48 persons)
</TABLE>
- ------------------------------------
(1) Mr. Turk resigned as an officer and director of the Company effective
January 1, 1997 and as an employee effective June 27, 1997. These
options will terminate on September 25, 1997, unless previously
exercised.
(2) Mr. Oliver resigned as an officer and director of the Company as of
June 30, 1996.
(3) Pursuant to a termination agreement between Mr. Bensuaski and the
Company, entered into July 14, 1997, 33,332 of these options will be
vested and the remainder forfeited upon his termination of employment
on September 7, 1997.
The above table does not reflect future awards which may be granted under the
Plan. The size of future awards and the identity of the recipients of such
awards cannot be determined at this time.
The options referred to in the above table will have the following terms and
conditions. They will have an option price equal to the fair market value of the
Common Stock on the effective date of grant, which is expected to be $1.00 per
share, except that the options to be granted to Philip D. Griffith and Jerome H.
Turk will be at 110% of fair market value (expected to be $1.10 per share). The
Group I options will become exercisable one-third on the effective date of
grant, one-third on September 30, 1997 and the remainder on September 30, 1998,
and will expire on December 31,
-4-
<PAGE> 6
1999. The Group II options will become exercisable one-third on December 31,
1997, one-third on December 31, 1998 and the remainder on December 31, 1999, and
will expire December 31, 2000. All options will terminate before their
expiration date as follows: (i) immediately on the optionee's termination of
employment for cause (as defined in the Plan); (ii) one year after the
optionee's death or permanent disability; and (iii) 90 days after the optionee's
termination of employment for any other reason unless the optionee enters into a
consulting or similar arrangement with the Company during such 90-day period.
The options are intended to be incentive stock options.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax aspects of options
granted under the Plan, based upon the laws in effect on the date hereof.
Non-Qualified Stock Options. With respect to non-qualified stock options: (a) no
income is recognized by the participant at the time the option is granted; (b)
upon exercise of the option, the participant recognizes ordinary income in an
amount equal to the excess of the fair market value of the shares on the date of
exercise over the option price; and (c) at disposition, any appreciation or
depreciation after the date of exercise is treated either as long-term or
short-term capital gain or loss, depending on whether the shares were held by
the participant for more than one year.
Incentive Stock Options. Generally, no taxable income is recognized by the
participant upon the grant of an incentive stock option or upon the exercise of
an incentive stock option during the period of his or her employment with the
Company or one of its subsidiaries or within three months (12 months, in the
event of permanent and total disability, or the term of the option, in the event
of death) after termination. However, the exercise of an incentive stock option
may result in an alternative minimum tax liability to the participant. If the
participant continues to hold the shares acquired upon exercise of an incentive
stock option for at least two years from the date of grant and one year from the
date of exercise, upon the sale of the shares, any amount realized in excess of
the option price will be taxed as long-term capital gain. If Common Stock
acquired upon the exercise of an incentive stock option is disposed of prior to
the expiration of the one-year and two-year holding periods, the participant
will generally recognize ordinary income in an amount equal to the excess, if
any, of the fair market value of the shares on the date of exercise (or, if
less, the amount realized on the disposition of the shares) over the option
price. Any further gain recognized by the participant on such disposition will
be taxed as short-term or long-term capital gain, depending on whether the
shares were held for more than one year.
Company Deductions. As a general rule, the Company will be entitled to a
deduction for federal income tax purposes at the same time and in the same
amount that a participant recognizes ordinary income under the Plan, to the
extent such income is considered reasonable compensation under the Code. As a
result, the Company generally will not be entitled to a deduction with respect
to incentive stock options. In addition, the Company will not be entitled to a
deduction with respect to payments to employees which are contingent upon a
change of control if such payments are deemed to constitute "excess parachute
payments" under Section 280G of the Code and do not qualify as reasonable
compensation pursuant to that Section; such payments will subject the recipients
to a 20% excise tax.
ADDITIONAL INFORMATION
The Company's Common Stock is registered under the Securities Exchange Act of
1934, but there is no public trading market for the Common Stock. The fair
market value of the Common Stock on March 31, 1997, as determined by the Board
of Directors, was $1.00 per share.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND A VOTE "FOR"
APPROVAL OF THE STOCK OPTION INCENTIVE PLAN.
-5-
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of July 16, 1997 with
regard to the beneficial ownership of Common Stock by (i) each person who, to
the knowledge of the Company, beneficially owns more that 5% of the outstanding
Common Stock, (ii) each director of the Company, (iii) each other person named
in the Summary Compensation Table (see "Management-Executive Compensation"), and
(iv) all executive officers and directors of the Company as a group.
SHARES OWNED BENEFICIALLY
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENTAGE
- ---- ---------------- ----------
<S> <C> <C>
Philip D. Griffith(1)(2) 2,586,023 64.0%
Jerome H. Turk(1)(3) 858,948 21.4%
Fernando Bensuaski(4) 33,332 *
Michael A. Ficaro(4) 1,667 *
Patricia W. Becker(5) 29,142 *
All directors and executive officers 2,650,164 65.0%
as a group (4 persons)
</TABLE>
- ------------------------------------
(1) The address of Messrs. Griffith and Turk is 301 Fremont Street, Las Vegas,
Nevada 89101.
(2) Mr. Griffith's stock is held by the Philip D. Griffith Gaming Trust, of
which Mr. Griffith is the sole trustee.
(3) Mr. Turk's stock is held by the Jerome Hervey Turk Gaming Properties Trust,
of which Mr. Turk is the sole trustee.
(4) Represents shares which may be acquired upon exercise of options
exercisable within 60 days.
(5) Includes 1,667 shares which may be acquired upon exercise of options
exercisable within 60 days.
-6-
<PAGE> 8
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following tables set forth certain information as of July 16, 1997 with
regard to (i) each director, including the three nominees (who currently serve
as directors), (ii) each executive officer of the Company who is neither a
director nor a nominee and (iii) certain significant employees of the Company.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
- ---- --- ----------------
<S> <C> <C>
Philip D. Griffith 52 President, Chief Executive Officer and Director
Fernando Bensuaski 47 Executive Vice President, Chief Financial Officer, Treasurer and
Secretary
Michael A. Ficaro 50 Director
Patricia W. Becker 45 Director
</TABLE>
SIGNIFICANT EMPLOYEES
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
- ---- --- ----------------
<S> <C> <C>
Michael E. McPherson 46 Senior Vice President of Operations
Cara L. Brown 34 Vice President and General Counsel
Max L. Page 47 Executive Vice President and Director of FRI and General Manager of
Fitzgeralds Reno; President, Chief Financial Officer, Treasurer
and Secretary of NCI and General Manager of Nevada Club
Paul H. Manske 52 Senior Vice President of Corporate Marketing and Executive Vice
President of FRI
James O. Buchanan 48 Vice President and Director of FMI and General Manager of
Fitzgeralds Tunica
William J. Noonan, III 45 Vice President and Director of FLVI and General Manager of
Fitzgeralds Las Vegas
Joe C. Collins 57 Vice President and Director of FBHI and General Manager of
Fitzgeralds Black Hawk
</TABLE>
PHILIP D. GRIFFITH, has been president, chief executive officer and a director
of the Company since its inception and an officer and director of certain of its
subsidiaries since 1984. Mr. Griffith serves as president and chief executive
officer of each significant subsidiary of the Company. Prior to his involvement
with the Fitzgeralds group of companies, Mr. Griffith was active in the gaming
industry in a variety of positions, serving as chief financial officer and then
president of Harolds Club in Reno from 1973 to 1984 and president of the Sands
Hotel and Casino in Las Vegas from 1982 to 1984. From 1968 to 1973, Mr. Griffith
was a certified public accountant with the St. Louis, Missouri and Las Vegas
offices of Deloitte Haskins & Sells.
FERNANDO BENSUASKI joined the Company as executive vice president, treasurer and
chief financial officer of the Company in September 1995, and was appointed
secretary on December 1, 1995.
-7-
<PAGE> 9
Since 1980, Mr. Bensuaski had been the president and sole stockholder of
Bensuaski & Co., Inc., a Las Vegas-based financial consulting firm providing
advisory services to the gaming and certain specialized industries, and, in
addition, since 1986, Mr. Bensuaski had been the president and sole stockholder
of Kahala Development Corporation, a developer of condominium and commercial
real estate properties in the greater Las Vegas area. In September 1991, a
partnership of which Kahala Development Corporation was a general partner filed
for protection under Chapter 11 of the federal Bankruptcy Act, which petition
was dismissed in December 1991. Mr. Bensuaski holds a degree in physics from
Northwest Nazarene College and graduated from Columbia University's Executive
Management Program, the Pacific Coast Banking School at the University of
Washington and the National Commercial Lending School at the University of
Oklahoma. Mr. Bensuaski and the Company have entered into a termination
agreement pursuant to which Mr. Bensuaski's employment with the Company will end
on September 7, 1997. Thereafter, Mr. Bensuaski has agreed to provide consulting
services from time to time as requested by the Company.
MICHAEL A. FICARO joined the Company as a director in December 1995. Mr. Ficaro
has been a partner in the Chicago law firm of Hopkins & Sutter since 1989. Mr.
Ficaro has been an adjunct faculty member at John Marshall Law School since 1986
and the National College of District Attorneys since 1978. From 1990 to 1992,
Mr. Ficaro was appointed to the position of Special States Attorney of Cook
County, Illinois. From 1981 to 1989, Mr. Ficaro served in the office of the
Attorney General of Illinois as First Assistant Attorney General (1988-1989),
Charitable Trust Division Chief (1987-1989) and Director of Enforcement
(1986-1989). From 1982 to 1984, he was appointed Special Assistant United States
Attorney. From 1978 to 1981, Mr. Ficaro was Deputy States Attorney of Cook
County, after serving since 1972 as Assistant States Attorney of Cook County.
PATRICIA W. BECKER joined the Company as a director in December 1995. Ms. Becker
is a self-employed consultant and served as Chief of Staff to Nevada Governor
Bob Miller from October 1993 to January 1995. From September 1984 to October
1993, Ms. Becker was a senior vice president, general counsel and secretary for
Harrah's Casino Hotels, where she was responsible for all legal affairs of the
company and was a member of the senior strategic management group. From January
1983 to September 1984, Ms. Becker was a member of the Nevada State Gaming
Control Board. From July 1979 to January 1983, Ms. Becker was a deputy and chief
deputy attorney general assigned to the Nevada Gaming Division. Ms. Becker is a
vice chair for the Gaming Law Section of the American Bar Association, a past
president of the Nevada Trial Lawyers Association of Gaming Attorneys and a
director of VLT, Inc.
MICHAEL E. MCPHERSON was named senior vice president of operations for the
Company in September 1995. From November 1994 to September 1995, Mr. McPherson
was the vice president of finance for the Company. He is an associate member of
the Nevada Society of Certified Public Accountants.
CARA L. BROWN joined the Company as Vice President and General Counsel in May
1996. For the three years prior to May 1996, she was an associate general
counsel at Harrah's Las Vegas and for the three years prior thereto she was a
staff attorney at Jones, Jones, Close & Brown in Las Vegas. Ms. Brown has a B.A.
degree from the University of North Carolina at Chapel Hill and holds a law
degree from the Marshall-Wythe School of Law at the College of William and Mary
in Williamsburg, Virginia.
MAX L. PAGE has served as executive vice president of certain subsidiaries of
the Company since September, 1988. He has also served as general manager of
Fitzgeralds Reno and Nevada Club since November 1994. From October 1987 to
January 1989, Mr. Page was vice president of operations of Fitzgeralds Reno; as
of January 1997, Mr. Page was elected to serve as president, secretary and
treasurer of Nevada Club. Mr. Page holds a B.A. in Political Science and a
Masters in Public Administration from Brigham Young University.
-8-
<PAGE> 10
PAUL H. MANSKE was a founder in 1984 and has served as executive vice president
since September 1988 of a subsidiary of the Company. As of January 1997, Mr.
Manske was named senior vice president of marketing for the Company. Prior to
joining the Company, Mr. Manske served as vice president of marketing for
Harolds Club and Sands Hotel/Casino with the Howard Hughes organization and
prior to that, from 1964 to 1978 as a marketing executive with the Ford Motor
Company. Mr. Manske holds a degree in Business Administration from Jacksonville
University.
JAMES O. BUCHANAN was named vice president of a subsidiary of the Company and
general manager of Fitzgeralds Tunica in January 1995, after serving first as
senior director of gaming, then as senior director of operations and then as
acting general manager of Fitzgeralds Tunica for the preceding 13 months. Prior
to moving to Fitzgeralds Tunica, Mr. Buchanan was employed at Fitzgeralds Reno
as corporate director of slot products from July 1987 to August 1990 and
director of slots from August 1990 to December 1993.
WILLIAM J. NOONAN, III was named vice president of a subsidiary of the Company
and general manager of Fitzgeralds Las Vegas in May 1994. He was first employed
by a subsidiary of the Company in January 1994 as vice president of that
subsidiary and project director for Fitzgeralds Sugar Creek. Prior to joining
the Company, Mr. Noonan was employed as a city manager for six years, serving in
such capacity in Cape Coral, Florida, from September 1987 to January 1991, and
in Las Vegas, Nevada, from February 1991 to July 1993. Mr. Noonan was also
engaged in business and consulting services from August 1993 to January 1994.
JOE C. COLLINS became vice president of a subsidiary of the Company and general
manager of Fitzgeralds Black Hawk in January 1995. Prior to that time, Mr.
Collins had been hotel director at Fitzgeralds Reno from April 1985 to December
1994.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has established an Audit Committee and a Compensation
Committee. The Audit Committee is charged with reviewing the audited financial
statements of the Company and making recommendations to the full Board on
matters concerning the Company's audits and the selection of independent public
accountants. The Compensation Committee is responsible for establishing
salaries, bonuses and other compensation for the Company's executive officers.
The Audit Committee is comprised of Patricia Becker and Michael Ficaro, as
chairperson. The Compensation Committee is comprised of Michael Ficaro and
Patricia Becker, as chairperson.
Directors who are also employees of the Company do not receive any compensation
for their services as Directors. The Company has adopted a policy, effective
December 13, 1995, to pay to Directors who are not employees of the Company fees
of $25,000 per year, which fees were increased to $40,000 per year effective May
2, 1997, and $1,000 per Board meeting attended in person. The two outside
directors of the Company have each received five-year options to purchase 14,000
shares of the Common Stock, exercisable at a price equal to the fair market
value of the Common Stock on the dates of grant. No fee will be payable for
participation in Board committee meetings. However, Ms. Becker will be paid, as
chairperson of the Company's Gaming Compliance Committee (a non-Board
committee), an additional fee of $30,000 per year and will participate in all
health insurance plans available to the Company's employees generally. The
Company reimburses each Director for reasonable out-of-pocket expenses incurred
in his or her capacity as a member of the Board of Directors. No payments are
made for actions taken in writing. Each Director attended at least 75% of the
total number of meetings of the Board of Directors and committees thereof of
which such Director was a member held during the fiscal year ended December 31,
1996.
The Company has no nominating committee or committee performing similar
functions.
-9-
<PAGE> 11
OTHER COMMITTEES
The Company has formed an Executive Committee (a non-Board committee) to provide
a forum for interaction and discussion amongst its two senior executives. The
Executive Committee consists of Messrs. Griffith and Bensuaski, with Mr.
Griffith serving as chairperson.
In 1995, the Company established a Gaming Compliance Committee (a non-Board
committee) which is responsible for establishing procedures for and monitoring
compliance with gaming regulatory requirements. The Gaming Compliance Committee
consists of Patricia Becker, as chairperson, and Fernando Bensuaski, Cara Brown,
Kathleen Bryant and Roger Odell.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to SEC rules, the Compensation Committee of the Board of Directors has
prepared the following report for inclusion in this Proxy Statement addressing
the Company's executive compensation policies for the fiscal year ended December
31, 1996 and certain subsequent developments. The Compensation Committee is
composed presently of two non-employee Directors of the Company: Patricia W.
Becker (Chairperson) and Michael A. Ficaro.
COMPENSATION POLICIES
The Company's compensation of executive officers, including its Chief Executive
Officer, consists principally of the following components (i) base cash
compensation, including performance bonuses, and (ii) stock options.
The Company's compensation policies for its executive officers, including its
Chief Executive Officer, are intended to further the interests of the Company
and its stockholders by encouraging the growth of its business and its earnings
on a stable and consistent basis through securing, retaining and motivating
management employees of high caliber who possesses skills useful to the
development and growth of the Company.
The compensation of the Company's executive officers, including its Chief
Executive Officer, during the fiscal year ended December 31, 1996 reflects the
continuing view of its Board of Directors that the Company's executive officers
work as a team, with each contributing in his or her own areas of expertise to
the Company.
BASE CASH COMPENSATION
The base cash compensation paid to the Company's executive officers is
influenced significantly by the need to attract and retain management employees
with high levels of expertise. With the advent of riverboat and dockside gaming
and the proliferation of jurisdictions in which gaming is permitted, the Company
competes with other companies (companies that often have greater resources than
the Company or locations that officers may consider more desirable for
relocation than the Company's) for a limited pool of experienced and skilled
executive officers. As employment opportunities have increased in the gaming
industry, the demand for executive officers has exceeded the supply of available
personnel. Potential executive officers are not only being sought by an
increased number of companies but also are seeking opportunities in which they
may capitalize upon the entrepreneurial nature of the gaming industry to
establish companies.
The Compensation Committee has continued to review publicly available
information in the casino industry to determine the level of base cash
compensation necessary to remain competitive and accomplish the goal of
attracting and retaining high caliber executives. Messrs. Griffith, the
-10-
<PAGE> 12
Company's Chief Executive Officer, and Bensuaski, the Company's Chief Financial
Officer, were compensated during the fiscal year ended December 31, 1996 in
accordance with existing employment agreements described elsewhere in this Proxy
Statement. During the fiscal year ended December 31, 1996, the Compensation
Committee believes that the base compensation paid to its senior executives
including its Chief Executive Officer, was in the middle range of compensation
for comparable positions in the casino industry.
PERFORMANCE BONUSES
The Company has established an Executive Bonus Plan to provide senior executive
officers, including the Chief Executive Officer, of the Company with a
performance-based compensation program. Under the Executive Bonus Plan, the
Company will set aside a portion of its annual consolidated EBITDA each year so
long as EBITDA for such year is at least $30 million. The set aside amount will
start at 1.4% of EBITDA at the $30 million level and increase by one-tenth of
one percent for each $1.0 million of EBITDA above $30 million, up to a limit of
3%. The Compensation Committee has full discretion concerning the payment of
executive bonuses. In addition, each of the Company's gaming properties accrues
1% EBITDA for a bonus pool to be shared by departmental directors and above.
Due to the levels of performance during the fiscal year ended December 31, 1996,
no bonuses were paid to executive officers of the Company.
STOCK OPTIONS
The second component of the Company's compensation package consists of stock
options. The Company believes that the granting of stock options encourages its
executive officers to achieve long-term goals and objectives that are consistent
with results that benefit the Company's stockholders. In addition, in view of
the increased entrepreneurial opportunities available to individual executives
in the casino industry, the Company believes that the grant of opportunities for
an equity stake in the Company will be increasingly important in attracting and
retaining key executives. Because the Company believes that stock options
previously granted to its executive officers, including its Chief Executive
Officer, adequately provided long-term incentives, no stock options were granted
to executive officers in the fiscal year ended December 31, 1996.
The tables that follow reflect the decisions included in this report.
THE COMPENSATION COMMITTEE
PATRICIA W. BECKER (CHAIRPERSON)
MICHAEL A. FICARO
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth the cash compensation earned for services
performed for the Company during the three fiscal years in the period ended
December 31, 1996 by the Company's Chief Executive Officer and each of its other
most highly compensated executive officers (collectively, the "named executive
officers").
-11-
<PAGE> 13
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY($) BONUS($) OPTIONS/SAR'S(#) COMPENSATION($)(2)
----------------- ---- --------- -------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Philip D. Griffith 1996 461,250 - - 76,737
President & Chief 1995 512,888 - 75,000 3,750
Executive Officer 1994 509,509 - - 7,286
Jerome H. Turk(3) 1996 461,250 - - 74,345
Chairman 1995 410,354 - 75,000 3,348
1994 350,000 - - 3,906
Terrance W. Oliver(4) 1996 192,500 - - 29,351
Executive Vice President 1995 256,021 - 50,000 3,750
& COO 1994 252,439 - - 4,903
Fernando Bensuaski(5) 1996 256,250 - - -
Executive Vice President 1995 73,090 - 50,000 -
& CFO 1994 - - - -
</TABLE>
- ------------------------------------
(1) The incremental cost to the Company of providing perquisites and other
personal benefits including health insurance and automobile lease payments
during the last three fiscal years did not exceed, as to any "named
executive officer", the lesser of $50,000 or 10% of the total salary and
bonus paid to such executive officer for any such year and, accordingly, is
omitted from the table.
(2) Amounts represent premiums on split-dollar life insurance policies and the
Company's Profit Sharing and 401(k) contributions. In the fiscal year ended
December 31, 1996, the Company's Profit Sharing and 401(k) contributions
funded were $2,375, $2,375 and $0 for Messrs. Griffith, Turk and Oliver.
During the fiscal year ended December 31, 1996, the Company paid $60,048,
$69,560 and $43,336 in premiums on split-dollar life insurance coverage for
Messrs. Griffith, Turk and Oliver, respectively.
(3) Mr. Turk resigned as an officer and director of the Company, effective
January 1, 1997, and as an employee of the Company, effective June 27,
1997.
(4) Mr. Oliver resigned as an officer and director of the Company as of June
30, 1996. His stock options expired unexercised on August 30, 1996.
(5) Mr. Bensuaski joined the Company as Executive Vice President and Chief
Financial Officer in September 1995.
OPTION GRANTS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
There were no options or SARs granted to named executive officers during the
fiscal year ended December 31, 1996.
OPTION EXERCISES AND HOLDINGS
The following table sets forth, with respect to the named executive officers,
information concerning the exercise of stock options during the fiscal year
ended December 31, 1996 and unexercised stock options held as of December 31,
1996. The Company has never granted stock appreciation rights.
-12-
<PAGE> 14
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FISCAL YEAR END(#) OPTIONS/SARS AT FISCAL YEAR END ($)(1)
ACQUIRED VALUE ---------------------------------- --------------------------------------
NAME OR EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ -------------- ----------- --------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Philip D. Griffith 0 0 25,000 50,000 0 0
Jerome H. Turk 0 0 25,000 50,000 0 0
Terrance W. Oliver(2) 0 0 0 0 0 0
Fernando Bensuaski 0 0 16,666 33,334 0 0
</TABLE>
- ------------------------------------
(1) The exercise price of the unexercised options exceeds the assigned value of
the Common Stock. The Company's Common Stock is not publicly traded.
(2) Mr. Oliver resigned as an officer and director of the Company as of June
30, 1996. His options expired on September 30, 1996.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Messrs. Griffith
and Bensuaski, to serve in their present offices for terms expiring June 30,
1998, which provide for Messrs. Griffith and Bensuaski to be paid initial base
salaries of $450,000 and $250,000, respectively, and for each to be entitled to
a 5% annual salary increase commencing on July 1, 1996. The Company had also
entered into employment agreements with each of Messrs. Turk and Oliver who
resigned their positions as officers and directors of the Company effective
January 1, 1997 and June 30, 1996, respectively. Mr. Turk remained an employee
of the Company as a consultant and advisor to the president and chief executive
officer on a reduced work schedule basis with a commensurate reduction in annual
salary to $240,000, and subsequently resigned from this position effective June
27, 1997. Messrs. Griffith and Bensuaski are entitled to participate in the
Company's Executive Bonus Plan. They are also entitled to participate in an
executive health plan and any other benefit plan established for selected
officers of the Company. The employment agreements provide that in the event of
a termination of employment without "Cause" (as defined in the agreement), such
persons will be entitled to any unpaid salary through the end of the term of his
agreement. The agreements also provide for split-dollar life insurance coverage,
except in the case of Mr. Bensuaski, whose agreement provides for term life
insurance coverage. Messrs. Griffith, Turk, and Bensuaski will receive coverage
of $5 million, $10 million, and $250,000, respectively, and all insurance
premiums paid by the Company (except with respect to Mr. Bensuaski) will be
refunded to it from the insurance proceeds when payable under the policies. The
Company is contractually obligated to continue paying the life insurance
premiums for Messrs. Oliver and Turk after their termination of employment. On
July 14, 1997, Mr. Bensuaski and the Company entered into a termination
agreement pursuant to which Mr. Bensuaski's employment by the Company will
terminate on September 7, 1997.
EXECUTIVE BONUS PLAN
The Company has established an Executive Bonus Plan to provide the senior
executive officers of the Company with a performance-based compensation program.
Under the Executive Bonus Plan, the Company will set aside a portion of its
annual consolidated EBITDA each year so long as EBITDA for such year is at least
$30 million. The set aside amount will start at 1.4% of EBITDA
-13-
<PAGE> 15
at the $30 million level and increase by one-tenth of one percent for each $1
million of EBITDA above $30 million up to a limit of 3%. The Compensation
Committee will have full discretion concerning the payment of executive bonuses.
PERFORMANCE GRAPH
The following graph presents a comparison of the Company's stock performance
with the broader base indexes indicated therein. The graph assumes $100 invested
on December 31, 1995 in the Company's common stock and $100 invested at that
time in each of the indexes shown. The comparison assumes that all dividends, if
any, are reinvested.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1996
----------------- -----------------
<S> <C> <C>
Fitzgeralds Gaming Corporation(1) $100.00 $22.22
SBI Small Cap Gaming Index(2) $100.00 $94.05
NASDAQ SIC 79XX(3) $100.00 $80.94
</TABLE>
- ------------------------------------
(1) Fitzgeralds Gaming Corporation was formed on November 10, 1994 but
registered its Common Stock pursuant to Section 13(g) and became subject to
the reporting requirements of the Securities Exchange Act of 1934 on
December 13, 1995.
(2) SBI Small Cap Gaming Index refers to the average of 13 small cap gaming
companies as published by Salomon Brothers Inc
(3) NASDAQ SIC 79XX refers to the published index covering companies bearing
Standard Industrial Classification Codes 7900-7999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 (a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more that 10% of a registered class
of the Company's equity securities, to file an initial report of ownership on
Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange
Commission (the "Commission"). Such officers, directors and 10% stockholders are
also required by the Commission rules to furnish the Company with copies of all
Section 16 (a) forms they file.
-14-
<PAGE> 16
Based solely on its review of the copies of such forms received by it, or
written representation from certain reporting persons that no Forms 4 or 5 were
required for such persons, the Company believes that during fiscal 1996 it
complied with all Section 16 (a) filing requirements applicable to its officers,
directors and 10% stockholders.
FORM 10-K
FGC will furnish without charge to each stockholder, upon written request
addressed to FGC at 301 Fremont Street, Las Vegas, Nevada 89101 Attention:
Fernando Bensuaski, Chief Financial Officer, a copy of its Annual Report on Form
10-K for the fiscal year ended December 31, 1996 (excluding the exhibits
thereto), as filed with the Securities and Exchange Commission.
CERTAIN TRANSACTIONS
All transactions between the Company and its officers, directors or any
affiliate of any such person have been, and all such future transactions will
be, on terms no less favorable to the Company than could be obtained from
unaffiliated parties.
FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 1998 Annual Meeting of
Stockholders must be submitted sufficiently far in advance so that it is
received by FGC not later than March 20, 1998.
OTHER MATTERS
The Company's independent public accountants for the fiscal year ended December
31, 1996 were Deloitte & Touche LLP, which firm has been appointed to serve in
such capacity for the current fiscal year. A representative of Deloitte & Touche
LLP is expected to be present at the meeting with the opportunity to make a
statement if he or she so desires and to respond to appropriate questions.
Neither the Company nor any of the persons named as proxies knows of matters
other than those stated above to be voted on at the Annual Meeting. However, if
any other matters are properly presented at the meeting, the persons named as
proxies are empowered to vote in accordance with their discretion on such
matters.
The Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996 accompanies this Proxy Statement, but it is not to be deemed a part of the
proxy soliciting material.
PLEASE COMPLETE, SIGN AND RETURN
THE ENCLOSED PROXY PROMPTLY.
FITZGERALDS GAMING CORPORATION
By order of the Board of Directors
Philip D. Griffith
Chairman of the Board and President
Las Vegas, Nevada
July 21, 1997
-15-
<PAGE> 17
EXHIBIT A
FITZGERALDS GAMING CORPORATION
STOCK OPTION INCENTIVE PLAN
1. PURPOSE
The purpose of the Fitzgeralds Gaming Corporation Stock Option
Incentive Plan is to further the interests of Fitzgeralds Gaming Corporation, a
Nevada corporation (the "Company"), and its Subsidiaries by encouraging and
enabling selected officers, directors, employees, consultants, advisers,
independent contractors and agents, upon whose judgment, initiative and effort
the Company is largely dependent for the successful conduct of its business, to
acquire and retain a proprietary interest in the Company by ownership of its
stock through the exercise of stock options to be granted hereunder. Options
granted hereunder are either options intended to qualify as "incentive stock
options" within the meaning of Section 422 of the Code or non-qualified stock
options.
2. DEFINITIONS
Whenever used herein the following terms shall have the following
meanings, respectively:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
(c) "Committee" shall mean the Stock Option or Compensation
Committee appointed by the Board to administer the Plan, or if no committee has
been appointed or the Board elects to retain the power to administer the Plan,
reference to "Committee" shall be deemed to refer to the Board.
(d) "Common Stock" shall mean the Company's Common Stock, $0.01
par value.
(e) "Company" shall mean Fitzgeralds Gaming Corporation, a Nevada
corporation.
(f) "Employee" shall mean, in connection with Incentive Options,
only employees of the Company or any Subsidiary or Parent Corporation of the
Company.
(g) "Fair Market Value Per Share" of the Common Stock on any date
shall mean, if the Common Stock is publicly traded, the mean between the highest
and lowest quoted selling prices of the Common Stock on such date or, if not
available, the mean between the bona fide bid and asked prices of the Common
Stock on such date. In any situation not covered above, or if there were no
sales on the date in question, the Fair Market Value Per Share shall be
determined by the Committee in accordance with Section 20.2031-2 of the Federal
Estate Tax Regulations.
(h) "Incentive Option" shall mean an Option granted under the Plan
which is designated as and qualified as an incentive stock option within the
meaning of Section 422 of the Code.
A-1
<PAGE> 18
(i) "Non-Employee Director" shall have the meaning set forth in
Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, or any successor rule.
(j) "Non-Qualified Option" shall mean an Option granted under the
Plan which does not qualify as, or is not designated as, an incentive stock
option within the meaning of Section 422 of the Code.
(k) "Option" shall mean an Incentive Option or a Non-Qualified
Option.
(l) "Optionee" shall mean any person who has been granted an
Option under the Plan.
(m) "Outside Director" shall have the meaning set forth in
Section 162(m) of the Code.
(n) "Parent Corporation" shall have the meaning set forth in
Section 424(e) of the Code.
(o) "Permanent Disability" shall mean termination of a
Relationship with the Company or any Subsidiary of the Company with the consent
of the Company or such Subsidiary by reason of permanent and total disability
within the meaning of Section 22(e)(3) of the Code.
(p) "Plan" shall mean the Fitzgeralds Gaming Corporation Stock
Option Incentive Plan, as amended from time to time.
(q) "Relationship" shall mean that the Optionee is or has agreed
to become an officer, director, employee, consultant, adviser, independent
contractor or agent of the Company or any Subsidiary of the Company.
(r) "Subsidiary" shall have the meaning set forth in
Section 424(f) of the Code.
(s) "Termination for Cause" means the termination of an employee's
employment with the Company, whether voluntary or involuntary, that is
determined by the Committee to have resulted from the discovery by the Company
of the employee's dishonesty, commission of a felony (regardless of whether or
not prosecuted) or fraud.
3. ADMINISTRATION
(a) The Plan shall be administered either (i) by the Board, or
(ii) in the discretion of the Board, by a committee of at least two directors of
the Company appointed by the Board, all of which members are both Non-Employee
Directors and Outside Directors. The Committee may delegate some or all of its
powers under the Plan to an executive officer of the Company, except with
respect to Option grants to executive officers or directors.
A-2
<PAGE> 19
(b) Any action of the Committee with respect to the administration
of the Plan shall be taken by majority vote or by unanimous written consent of
its members.
(c) Subject to the provisions of the Plan, the Committee shall
have the authority to construe and interpret the Plan, to define the terms used
therein, to determine the time or times an Option may be exercised and the
number of shares for which an Option may be exercised at any one time, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the time and nature of a participant's termination of their employment
for purposes of the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. All determinations and
interpretations made by the Committee shall be conclusive and binding on all
Optionees and on their guardians, legal representatives and beneficiaries.
(d) The Company shall indemnify and hold harmless the members of
the Board and the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act, or omission to act, in
connection with the performance of such persons' duties, responsibilities and
obligations under the Plan, other than such liabilities, costs and expenses as
may result from the negligence, bad faith, willful misconduct or criminal acts
of such persons.
(e) The Company will provide financial information to the
Optionees on the same basis as the Company provides such information to its
stockholders.
4. NUMBER OF SHARES SUBJECT TO PLAN
The aggregate number of shares of Common Stock subject to Options which
may be granted under the Plan shall not exceed 1,000,000. The shares of Common
Stock to be issued upon the exercise of Options may be authorized but unissued
shares, shares issued and reacquired by the Company or shares purchased by the
Company on the open market. If any Option granted hereunder shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject thereto shall again be available for purposes of the Plan.
5. ELIGIBILITY AND PARTICIPATION
(a) Non-Qualified Options may be granted to any person who has a
Relationship with the Company or any of its Subsidiaries. Incentive Options may
be granted to any Employee. The Committee shall determine the persons to whom
Options shall be granted, the time or times at which such Options shall be
granted and the number of shares to be subject to each Option. An Optionee may,
if he is otherwise eligible, be granted an additional Option or Options if the
Committee shall so determine. An Employee may be granted Incentive Options or
Non-Qualified Options or both under the Plan; provided, however, that the grant
of Incentive Options and Non-Qualified Options to an Employee shall be the grant
of separate Options and each Incentive Option and each Non-Qualified Option
shall be specifically designated as such.
(b) In no event shall the aggregate fair market value (determined
as of the time the Option is granted) of the shares with respect to which
Incentive Options (granted under the Plan
A-3
<PAGE> 20
or any other plans of the Company or any Subsidiary or Parent Corporation of the
Company) are exercisable for the first time by an Optionee in any calendar year
exceed $100,000.
(c) In no event shall the aggregate number of shares of Common
Stock with respect to which Options may be granted to a single Optionee during
any calendar year exceed 100,000 shares.
6. PURCHASE PRICE
The purchase price of each share covered by each Option shall be
determined by the Committee; provided, however, that in the case of an Incentive
Option such price shall not be less than 100% of the Fair Market Value Per Share
of the Common Stock on the date the Incentive Option is granted; and provided
further that if at the time an Incentive Option is granted the Optionee owns or
would be considered to own by reason of Section 424(d) of the Code more than 10%
of the total combined voting power of all classes of stock of the Company or any
Subsidiary or Parent Corporation of the Company, the purchase price of the
shares covered by such Incentive Option shall not be less than 110% of the Fair
Market Value Per Share of the Common Stock on the date the Incentive Option is
granted.
7. DURATION OF OPTIONS
The expiration date of an Option and all rights thereunder shall be
determined by the Committee; provided, however, that the expiration date of an
Incentive Option must be within 10 years from the date on which the Incentive
Option is granted, unless at the time the Incentive Option is granted the
Optionee owns or would be considered to own by reason of Section 424(d) of the
Code more than 10% of the total combined voting power of all classes of stock of
the Company or any Subsidiary or Parent Corporation of the Company, in which
case the expiration date of such Incentive Option must be within five years from
the date of grant. In the event the Committee does not specify the expiration
date of an Option, the expiration date shall be 10 years from the date on which
the Option was granted; provided, however, that if at the time an Incentive
Option is granted the Optionee owns or would be considered to own by reason of
Section 424(d) of the Code more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary or Parent Corporation of
the Company, such Incentive Option shall expire five years from the date of
grant. Options shall be subject to earlier termination as provided herein.
8. EXERCISE OF OPTIONS
An Option shall vest and become exercisable from time to time in
installments or otherwise in accordance with such schedule and upon such other
terms and conditions as the Committee shall in its discretion determine at the
time the Option is granted. An Optionee may purchase less than the total number
of shares for which the Option is exercisable, provided that a partial exercise
of an Option may not be for less than 100 shares, unless the exercise is during
the final year of the Option, and shall not include any fractional shares. As a
condition to the exercise, in whole or in part, of any Option, the Committee may
in its sole discretion require the Optionee to pay, in addition to the purchase
price of the shares covered by the Option, an amount
A-4
<PAGE> 21
equal to any federal, state or local taxes that the Committee has determined are
required to be paid in connection with the exercise of such Option in order to
enable the Company to claim a deduction or otherwise. Furthermore, if any
Optionee disposes of any shares of stock acquired by exercise of an Incentive
Option prior to the expiration of either of the holding periods specified in
Section 422(a)(1) of the Code, the Optionee shall pay to the Company, or the
Company shall have the right to withhold from any payments to be made to the
Optionee, an amount equal to any federal, state or local taxes that the
Committee has determined are required to be paid in connection with the exercise
of such Option in order to enable the Company to claim a deduction or otherwise.
9. METHOD OF EXERCISE
(a) To the extent that an Option has become exercisable, the
Option may be exercised from time to time by giving written notice to the
Company stating the number of shares with respect to which the Option is being
exercised, accompanied by payment in full, by cash or by certified or cashier's
check payable to the order of the Company or the equivalent thereof acceptable
to the Company, of the purchase price for the number of shares being purchased
and, if applicable, any federal, state or local taxes required to be paid in
accordance with the provisions of Section 8 hereof.
(b) In the Committee's discretion, payment of the purchase price
for the shares with respect to which the Option is being exercised may be made
in whole or in part with shares of Common Stock which have been held by the
Optionee (or other person entitled to exercise the Option) for at least six
months. If payment is made with shares of Common Stock, the Optionee, or other
person entitled to exercise the Option, shall deliver to the Company
certificates representing the number of shares of Common Stock in payment for
the shares being purchased, duly endorsed for transfer to the Company. If
requested by the Committee, prior to the acceptance of such certificates in
payment for such shares, the Optionee, or any other person entitled to exercise
the Option, shall supply the Committee with a representation and warranty in
writing that he has good and marketable title to the shares represented by the
certificate(s), free and clear of all liens and encumbrances. The value of the
shares of Common Stock tendered in payment for the shares being purchased shall
be their Fair Market Value Per Share on the date of the exercise.
(c) Notwithstanding the foregoing, the Company shall have the
right to postpone the time of delivery of the shares for such period as may be
required for it to comply, with reasonable diligence, with any applicable
listing requirements of any national securities exchange or automated quotation
system or any federal, state or local law. If an Optionee, or other person
entitled to exercise an Option, fails to accept delivery of or fails to pay for
all or any portion of the shares requested in the notice of exercise, upon
tender of delivery thereof, the Committee shall have the right to terminate his
Option with respect to such shares.
10. NON-TRANSFERABILITY OF OPTIONS
No Option granted under the Plan shall be assignable or transferable by
the Optionee, either voluntarily or by operation of law, otherwise than by will
or the laws of descent and
A-5
<PAGE> 22
distribution, and each Option shall be exercisable during the Optionee's
lifetime only by the Optionee.
11. CONTINUANCE OF RELATIONSHIP
Nothing contained in the Plan or in any Option granted under the Plan
shall confer upon any Optionee any rights with respect to the continuation of
his employment by or other Relationship with the Company or any Subsidiary or
Parent Corporation of the Company or interfere in any way with the right of the
Company or any Subsidiary or Parent Corporation of the Company at any time to
terminate such employment or other Relationship or to increase or decrease the
compensation of the Optionee from the rate in existence at the time of the grant
of an Option.
12. TERMINATION OF RELATIONSHIP OTHER THAN BY DEATH OR PERMANENT DISABILITY
Except as the Committee may determine otherwise at any time with
respect to any particular Option granted hereunder:
(a) If an Optionee ceases to have a Relationship for any reason
other than his death or Permanent Disability or termination for cause, any
Options granted to him shall terminate 90 days from the date on which such
Relationship terminates unless such Optionee has resumed or initiated a
Relationship and has a Relationship on such date. During such 90-day period, the
Optionee may exercise any Option granted to him but only to the extent such
Option was exercisable on the date of termination of his Relationship and
provided that such Option has not expired or otherwise terminated as provided
herein. A leave of absence approved in writing by the Company shall not be
deemed a termination of Relationship for purposes of this Section 12, but no
Option may be exercised during any such leave of absence, except during the
first 90 days thereof.
(b) For purposes hereof, termination of an Optionee's Relationship
for reasons other than death or Permanent Disability shall be deemed to take
place upon the earliest to occur of the following: (i) the date of the
Optionee's retirement from employment under the normal retirement policies of
the Company or any Subsidiary of the Company; (ii) the date of the Optionee's
retirement from employment with the approval of the Committee because of
disability other than Permanent Disability; (iii) the date the Optionee receives
notice or advice that his employment or other Relationship is terminated; or
(iv) the date the Optionee ceases to render the services which he was employed,
engaged or retained to render to the Company or any Subsidiary (absences for
temporary illness, emergencies and vacations or leaves of absence approved in
writing by the Company excepted). The fact that the Optionee may receive payment
from the Company or any Subsidiary of the Company after termination for vacation
pay, for services rendered prior to termination, for salary in lieu of notice or
for other benefits shall not affect the termination date.
A-6
<PAGE> 23
(c) No Option may be exercised or claimed following an Optionee's
termination of Relationship as a result of Termination for Cause, and no Option
may be exercised or claimed while the Optionee is being investigated for a
Termination for Cause.
13. DEATH OR PERMANENT DISABILITY OF OPTIONEE
Except as the Committee may expressly determine otherwise at any time
with respect to any particular Option granted hereunder, if an Optionee shall
die at a time when he is in a Relationship or if the Optionee shall cease to
have a Relationship by reason of Permanent Disability, any Options granted to
him shall terminate one year after the date of his death or termination of
Relationship due to Permanent Disability unless by its terms it shall expire
before such date or otherwise terminate as provided herein, and shall only be
exercisable to the extent that it would have been exercisable on the date of his
death or his termination of Relationship due to Permanent Disability. In the
case of death, the Option may be exercised by the executor or administrator of
the Optionee's estate or the person or persons to whom the Optionee's rights
under the Option shall pass by will or by the laws of descent and distribution.
14. STOCK PURCHASE NOT FOR DISTRIBUTION
Each Optionee shall, by accepting the grant of an Option under the
Plan, represent and agree, for himself and his transferees in the event of his
death, that all shares of stock purchased upon exercise of the Option will be
received and held without a view to distribution except as may be permitted by
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder. After each notice of exercise of any portion of an
Option, if requested by the Committee, the person entitled to exercise the
Option shall agree in writing that the shares of stock are being acquired in
good faith without a view to distribution.
15. PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any Option granted under the Plan shall
have any of the rights or privileges of a stockholder of the Company with
respect to any shares of Common Stock issuable upon exercise of such Option
until such person has become the holder of record of such shares. No adjustment
shall be made for dividends or distributions of rights in respect of such shares
if the record date is prior to the date on which such person becomes the holder
of record, except as provided in Section 16 hereof.
16. ADJUSTMENTS
(a) If the number of outstanding shares of Common Stock is
increased or decreased, or if such shares are exchanged for a different number
or kind of shares or securities of the Company, through reorganization, merger,
recapitalization, reclassification, stock dividend, stock split, combination of
shares or other transaction or change in corporate structure affecting the
Common Stock such that an adjustment is determined by the Board to be
appropriate under the Plan, the aggregate number of shares of Common Stock
subject to the Plan as provided in Section 4 hereof, the shares of Common Stock
subject to issued and outstanding Options under the Plan and the aggregate
number of shares of Common Stock with respect to which Options
A-7
<PAGE> 24
may be granted to a single Optionee as provided in Section 5(c) hereof shall be
appropriately and proportionately adjusted by the Board. Any such adjustment in
the outstanding Options shall be made without change in the aggregate purchase
price applicable to the unexercised portion of the Option but with an
appropriate adjustment in the price for each share or other unit of any security
covered by the Option, provided, however, that such adjustment shall not result
in the Company being required to issue or sell any fractional shares. The
Board's determination as to which adjustments shall be made and the extent
thereof shall be final, binding and conclusive.
(b) Notwithstanding the provisions of Section 16(a), upon the
dissolution or liquidation of the Company or upon any reorganization, merger or
consolidation with one or more corporations as a result of which the Company is
not the surviving corporation (or is a subsidiary of another corporation), or
upon a sale of all or substantially all of the assets of the Company to another
corporation or entity, the Board may take such action, if any, as it in its
discretion may deem appropriate to accelerate the time within which and the
extent to which Options may be exercised, to terminate Options at or prior to
the date of any such event or to provide for the assumption of Options by
surviving, consolidated, successor or transferee corporations.
(c) Adjustments under this Section 16 shall be made by the Board,
whose determination as to which adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive.
17. AMENDMENT AND TERMINATION OF PLAN
(a) The Board may from time to time suspend or terminate the Plan
with respect to any shares at the time not subject to Options, or amend or
revise the terms of the Plan. Amendments may be made without stockholder
approval, except as required to satisfy applicable laws or regulations or the
requirements of any stock exchange or automated quotation system on which the
Common Stock is listed.
(b) No amendment, suspension or termination of the Plan shall,
without the consent of the Optionee, alter or impair in a manner adverse to the
Optionee any rights or obligations under any Option theretofore granted to such
Optionee.
(c) The terms and conditions of any Option granted to an Optionee
may be modified or amended only by a written agreement executed by the Optionee
and the Company; provided, however, that if any amendment or modification of an
Incentive Option would constitute a "modification, extension or renewal" within
the meaning of Section 424(h) of the Code, such amendment shall be null and void
unless the amendment contains an acknowledgment by the parties substantially in
the following form: "The parties hereto recognize and agree that this amendment
constitutes a modification, renewal or extension within the meaning of Section
424(h) of the Code, of the option granted on __________."
A-8
<PAGE> 25
18. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon adoption by the Board and approval
by the Company's stockholders; provided, however, that prior to approval of the
Plan by the Company's stockholders, but after adoption by the Board, Options may
be granted under the Plan subject to obtaining the stockholders' approval of the
adoption of the Plan. Notwithstanding the foregoing, stockholders' approval must
occur no later than 12 months after the date of adoption of the Plan by the
Board.
19. TERM OF PLAN
No Option shall be granted pursuant to the Plan after 10 years from the
earlier of the date of adoption of the Plan by the Board or the date of approval
of the Plan by the Company's stockholders.
The date of adoption of the Plan by the Board was June 26, 1997. The
Plan will be submitted for stockholder approval at the annual meeting to be held
on August 1, 1997.
IN WITNESS WHEREOF, the undersigned have executed this Stock Option
Incentive Plan on August 1, 1997.
- ------------------------------------- --------------------------------------
Philip D. Griffith Fernando Bensuaski
President and Chief Executive Officer Executive Vice President and Secretary
A-9
<PAGE> 26
REVOCABLE PROXY
FITZGERALDS GAMING CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - AUGUST 1, 1997
The undersigned stockholder(s) of Fitzgeralds Gaming Corporation (the
"Company") hereby nominates, constitutes and appoints Philip D. Griffith and
Fernando Bensuaski, or either of them, the attorney, agent and proxy of the
undersigned, with full power of substitution, to vote all stock of Fitzgeralds
Gaming Corporation which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Company to be held in Limerick's Pub & Grille,
located on the third floor of Fitzgeralds Hotel/Casino, 255 N. Virginia Street,
Reno, Nevada, at 11:00 a.m., local time, and any and all adjournments or
postponements thereof, with respect to the matters described in the accompanying
Proxy Statement, and in their discretion, on such other matters which properly
come before the meeting, as fully and with the same force and effect as the
undersigned might or could do if personally present thereat, as follows:
1. Election of Directors:
[ ] AUTHORITY GIVEN to vote for the nominees listed below
(except as indicated to the contrary below).
[ ] WITHHOLD AUTHORITY to vote for the nominees.
(INSTRUCTIONS: To withhold authority to vote for any nominee, strike a line
through such nominee's name below.)
Patricia W. Becker; Michael A. Ficaro; Philip D. Griffith
2. Adoption of Stock Option Incentive Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the Meeting and
any adjournments or postponements thereof. Management presently knows of no
other business to be presented by or on behalf of the Company or its Board
of Directors at the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
PLEASE SIGN AND DATE ON REVERSE SIDE.
<PAGE> 27
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" FOR THE
ELECTION OF DIRECTORS AND "FOR" THE APPROVAL OF THE STOCK OPTION INCENTIVE PLAN.
THE PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED "AUTHORITY GIVEN" FOR THE
ELECTION OF DIRECTORS AND "FOR" THE APPROVAL OF THE STOCK OPTION INCENTIVE PLAN
UNLESS OTHER INSTRUCTIONS ARE INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED
IN ACCORDANCE WITH SUCH INSTRUCTIONS.
IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
Dated: ______________________
---------------------------------------------------
(Please print name)
---------------------------------------------------
(Signature of Stockholder)
---------------------------------------------------
(Please print name)
---------------------------------------------------
(Signature of Stockholder)
(Please date this Proxy and sign your name as it
appears on your stock certificates. Executors,
administrators, trustees, etc., should give their
full titles. All joint owners should sign.)
I [We] do __ do not__ expect to attend the Meeting.
Number of Persons: ______________________________
