EMPIRE
RESORTS, INC.
c/o
Monticello Casino and Raceway
Route
17B, P.O. Box 5013
Monticello,
New York, 12701
To the
Stockholders of Empire Resorts, Inc.:
You are
cordially invited to attend the annual meeting (the “Meeting”) of the
stockholders of Empire Resorts, Inc. (the “Company”), to be held at the offices
of Olshan Grundman Frome Rosenzweig & Wolosky LLP, located at Park Avenue
Tower, 65 East 55th Street, New York, New York 10022, on June 16, 2009, at 10:00
a.m. local time for the following purposes:
1. To
elect two (2) Class III directors to serve on the Company’s Board of Directors
until the stockholders’ annual meeting in 2012;
2. To
approve the amendment of the Company’s 2005 Equity Incentive Plan, as amended
(the “2005 Equity Incentive Plan”) to increase the number of shares of our
Common Stock subject to the 2005 Equity Incentive Plan by 5,000,000 shares to
8,500,000 shares; and
3. To
transact such other business as may properly be brought before the Meeting or
any adjournment or postponement thereof.
The Board
of Directors of the Company has fixed May 11, 2009 as the record date (the
“Record Date”) for the determination of stockholders entitled to notice of, and
to vote at, the Meeting or any postponement or adjournment thereof. Accordingly,
only stockholders of record at the close of business on the Record Date are
entitled to notice of, and shall be entitled to vote at, the Meeting or any
postponement or adjournment thereof.
We are
asking for you to elect two (2) Class III directors to serve on our Board
of Directors until the stockholders’ annual meeting in 2012.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES.
We are
also asking you to approve the amendment of the Company’s 2005 Equity Incentive
Plan to increase the number of shares of our Common Stock subject to the 2005
Equity Incentive Plan by 5,000,000 shares to 8,500,000 shares.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” THE APPROVAL OF THE AMENDMENT OF THE COMPANY’S 2005 EQUITY INCENTIVE
PLAN.
Please
review in detail the attached proxy statement for a more complete statement
regarding the proposal for the election of two (2) Class III directors to
serve on our Board of Directors until the stockholders’ annual meeting in 2012
(Proposal 1 in the proxy statement) and the proposal for the approval of the
amendment of the Company’s 2005 Equity Incentive Plan to increase the number of
shares of our Common Stock subject to the 2005 Equity Incentive Plan by
5,000,000 shares to 8,500,000 shares (Proposal 2 in the proxy
statement).
Your vote
is very important to us regardless of the number of shares you
own. Whether or not you are able to attend the Meeting in person,
please complete, sign and date the enclosed proxy card and return it in the
envelope provided as soon as possible. Granting a proxy by mail will
not limit your right to vote in person if you wish to attend the Meeting and
vote in person.
The
notice and proxy statement are first being mailed to our stockholders on or
about May 15, 2009.
On behalf
of our Board of Directors, we thank you for your support and urge you to vote
“FOR” each of the proposals described in this proxy statement.
By Order
of the Board of Directors,
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James
Simon
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Robert
H. Friedman
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Lead
Director
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Secretary
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May 15,
2009
EMPIRE
RESORTS, INC.
c/o
Monticello Casino and Raceway
Route
17B, P.O. Box 5013
Monticello,
New York, 12701
NOTICE
OF MEETING OF STOCKHOLDERS
TO
BE HELD ON JUNE 16, 2009
To the
Stockholders of Empire Resorts, Inc.:
This
proxy statement is furnished in connection with the solicitation of proxies by
the Board of Directors of Empire Resorts, Inc. (the “Company”) for use at the
annual meeting of stockholders of the Company and at all adjournments and
postponements thereof (the “Meeting”). The Meeting will be held at
the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP, located at
Park Avenue Tower, 65 East 55th Street, New York, New York 10022, for the
following purposes:
1. To
elect two (2) Class III directors to serve on our Board of Directors until
the stockholders’ annual meeting in 2012;
2. To
approve the amendment of the Company’s 2005 Equity Incentive Plan, as amended
(the “2005 Equity Incentive Plan”) to increase the number of shares of our
Common Stock subject to the 2005 Equity Incentive Plan by 5,000,000 shares to
8,500,000 shares; and
3. To
transact such other business as may properly be brought before the Meeting or
any adjournment or postponement thereof.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES
AND RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT OF THE COMPANY’S 2005
EQUITY INCENTIVE PLAN.
Holders
of record of our Common Stock, Series B Preferred Stock and Series E Preferred
Stock at the close of business on May 11, 2009, will be entitled to notice of
and to vote at the Meeting or any adjournment thereof. Each share of
Common Stock entitles the holder thereof to one vote, each share of Series B
Preferred Stock entitles the holder thereof to eight-tenths (.8) of a vote and
each share of Series E Preferred Stock entitles the holder thereof to twenty
five hundredths (.25) of a vote.
Your vote
is important, regardless of the number of shares you own. A plurality
of the votes cast will be sufficient to elect the two (2) Class III
director nominees. A majority of the votes cast is necessary to
approve the amendment of the Company’s 2005 Equity Incentive Plan.
Even if
you plan to attend the Meeting in person, we request that you complete, sign,
date and return the enclosed proxy to ensure that your shares will be
represented at the Meeting if you are unable to attend. Your prompt
cooperation will be greatly appreciated.
You are
urged to review carefully the information contained in the enclosed proxy
statement prior to deciding how to vote your shares.
The
notice and proxy statement are first being mailed to stockholders on or about
May 15, 2009.
Please follow the voting instructions
on the enclosed proxy card to vote by mail.
By Order
of the Board of Directors,
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James
Simon
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Robert
H. Friedman
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Lead
Director
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Secretary
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May 15,
2009
Internet Availability of
Proxy Materials
Under
rules recently adopted by the Securities and Exchange Commission, we are now
furnishing proxy materials on the Internet in addition to mailing paper copies
of the materials to each stockholder of record. This Proxy Statement and our
2008 Annual Report on Form 10-K to stockholders are available at:
http://www.cstproxy.com/empireresorts/2009.
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A-1
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T
HE
ANNUAL MEETING
We are
furnishing this proxy statement to you, as a stockholder of Empire Resorts,
Inc., as part of the solicitation of proxies by our Board of Directors for use
at the Meeting of stockholders. In this proxy statement, the terms
“Empire,” “Company,” “we,” “our,” “ours,” and “us” refer to Empire Resorts,
Inc., a Delaware corporation, and its subsidiaries.
D
at
e, Time, Place and Purpose of the Meeting
This
proxy statement is being furnished to our stockholders in connection with the
solicitation of proxies by our Board of Directors for use at the annual meeting
to be held at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP,
located at Park Avenue Tower, 65 East 55th Street, New York, New York 10022 (the
“Meeting”). The purpose of the Meeting is:
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·
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To
elect two (2) Class III directors to serve on our Board of Directors
until the stockholders’ annual meeting in
2012;
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·
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To
approve the amendment of the Company’s 2005 Equity Incentive Plan to
increase the number of shares of our Common Stock subject to the 2005
Equity Incentive Plan by 5,000,000 shares to 8,500,000 shares;
and
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·
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To
transact such other business as may properly be brought before the Meeting
or any adjournment or postponement
thereof.
|
Our Board
of Directors recommends that our stockholders vote “FOR” the election of the
Class III director nominees and “FOR” the amendment of the Company’s 2005
Equity Incentive Plan.
Re
cord Date, Voting and Quorum
Our Board
of Directors fixed the close of business on May 11, 2009, as the record date for
the determination of holders of our outstanding shares entitled to notice of and
to vote on all matters presented at the Meeting. As of the record
date, there were 34,037,961 shares of Common Stock, 44,258 shares of Series B
Preferred Stock, and 1,730,697 shares of Series E Preferred Stock issued and
outstanding and entitled to vote. Each share of Common Stock entitles
the holder thereof to one vote, each share of Series B Preferred Stock entitles
the holder thereof to eight-tenths (.8) of a vote and each share of Series E
Preferred Stock entitles the holder thereof to twenty-five hundredths (.25) of a
vote. Accordingly, a total of 34,506,041 votes may be cast at the
Meeting.
The
holders of shares of Common Stock, Series B Preferred Stock and Series E
Preferred Stock entitled to cast a majority of all votes that could be cast by
the holders of all of the outstanding shares of Common Stock, Series B Preferred
Stock and Series E Preferred Stock, present in person or represented by proxy at
the Meeting, constitute a quorum.
Shares
that are voted “FOR,” or “AGAINST” a proposal or marked “ABSTAIN” or “WITHHOLD”
are treated as being present at the Meeting for purposes of establishing a
quorum and are also treated as shares entitled to vote at the Meeting with
respect to such proposal. Broker “non-votes” are included for
purposes of determining whether a quorum of shares is present at the
Meeting. A broker “non-vote” occurs when a nominee holding shares for
the beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner.
R
eq
uired Vote
The
proposal to elect the two (2) Class III director nominees requires a
plurality of the votes cast. Votes withheld in the election of
directors and broker non-votes, if any, will not be counted towards the election
of any person as director. The proposal to approve the amendment of
the Company’s 2005 Equity Incentive Plan to increase the number of shares of our
Common Stock subject to the 2005 Equity Incentive Plan by 5,000,000 shares to
8,500,000 shares requires a majority of the votes cast on the
matter. Abstentions and broker non-votes will have no effect on the
proposal to approve the amendment of the Company’s 2005 Equity Incentive
Plan.
Failure
to vote by proxy (by returning a properly executed proxy card) or to vote in
person will not count as votes cast or shares voting on the
proposals.
Vot
ing
Stockholders
may vote their shares:
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·
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by
attending the Meeting and voting their shares in person;
or
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·
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by
completing the enclosed proxy card, signing and dating it and mailing it
in the enclosed post-prepaid
envelope.
|
Our Board
of Directors is asking for your proxy. Giving the Board of Directors
your proxy means you authorize it to vote your shares at the Meeting in the
manner you direct. You may vote for or against the proposals, abstain
from voting or withhold your vote for the election of any or all of the
Class III director nominees. All valid proxies received prior to
the Meeting will be voted. All shares represented by a proxy will be
voted, and where a stockholder specifies by means of the proxy a choice with
respect to any matter to be acted upon, the shares will be voted in accordance
with the specification so made. If no choice is indicated on the
proxy, the shares will be voted “FOR” the election of the Class III
director nominees, “FOR” the amendment of the Company’s 2005 Equity Incentive
Plan to increase the number of shares of our Common Stock subject to the 2005
Equity Incentive Plan by 5,000,000 shares to 8,500,000 shares and as the proxy
holders may determine in their discretion with respect to any other matters that
properly come before the Meeting.
Stockholders
who have questions or requests for assistance in completing or submitting proxy
cards should contact us at (845) 807-0001.
Stockholders
who have their shares in “street name”, meaning the name of a broker or other
nominee who is the record holder, must either direct the record holder of their
shares to vote their shares or obtain a proxy from the record holder to vote
their shares at the Meeting.
Revo
cability of Proxies
Any proxy
may be revoked by the person giving it at any time before it is
voted. A proxy may be revoked by filing with our Secretary
(Monticello Gaming and Raceway, PO Box 5013, Route 17B, Monticello, New York
12701) either (i) a written notice of revocation bearing a date later than
the date of such proxy or (ii) a subsequent proxy relating to the same
shares, or (iii) by attending the Meeting and voting in person.
Simply
attending the Meeting will not constitute revocation of your
proxy. If your shares are held in the name of a broker or other
nominee who is the record holder, you must follow the instruction of your broker
or other nominee to revoke a previously given proxy.
The form
of proxy accompanying this proxy statement confers discretionary authority upon
the named proxy holders with respect to amendments or variations to the matters
identified in the accompanying Notice of Annual Meeting and with respect to any
other matters which may properly come before the Meeting. As of the
date of this proxy statement, management knows of no such amendment or variation
or of any matters expected to come before the Meeting which are not referred to
in the accompanying Notice of Annual Meeting.
At
tendance at the Meeting
Only
holders of Common Stock, Series B Preferred Stock and Series E Preferred Stock,
their proxy holders and guests we may invite may attend the
Meeting. If you wish to attend the Meeting in person but you hold
your shares through someone else, such as a broker, you must bring proof of your
ownership and identification with a photo at the Meeting. For
example, you may bring an account statement showing that you beneficially owned
shares of Empire as of the record date as acceptable proof of
ownership.
Sol
icitation of Proxies
The cost
of preparing, assembling, printing and mailing this proxy statement and the
accompanying form of proxy, and the cost of soliciting proxies relating to the
Meeting, will be borne by the Company. Some banks and brokers have
customers who beneficially own Common Stock listed of record in the names of
nominees. The Company intends to request banks and brokers to solicit such
customers and will reimburse them for their reasonable out-of-pocket expenses
for such solicitations. If any additional solicitation of the holders of the
Company’s outstanding shares of Common Stock, Series B Preferred Stock and
Series E Preferred Stock is deemed necessary, the Company (through its directors
and officers) anticipates making such solicitation directly. The solicitation of
proxies by mail may be supplemented by telephone, telegram and personal
solicitation by officers, directors and other employees of the Company, but no
additional compensation will be paid to such individuals.
Oth
er Business
We are
not currently aware of any business to be acted upon at the Meeting other than
the matters discussed in this proxy statement. If other matters do
properly come before the Meeting, or at any adjournment or postponement of the
Meeting, we intend that shares of our Common Stock, Series B Preferred Stock and
Series E Preferred Stock represented by properly submitted proxies will be voted
in accordance with the recommendations of our Board of Directors.
PRO
POSAL ONE:
ELECTION
OF DIRECTORS
Pursuant
to Proposal No. 1, the nominees listed below have been nominated to serve as
Class III directors until the 2012 annual meeting of stockholders (subject
to their respective earlier removal, death or resignation) and until their
successors are elected and qualified. Unless such authority is
withheld, proxies will be voted for the election of the persons named below,
each of whom has been designated as a nominee. If, for any reason not
presently known, any person is not available to serve as director, another
person who may be nominated will be voted for in the discretion of the
proxies.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE
NOMINEES
No
minee Information
BRUCE M.
BERG. Bruce M. Berg, 49, has served as Chief Executive Officer of
Fuller Development Company, the real estate development subsidiary of Cappelli
Enterprises, Inc., since 2000. Prior to joining Cappelli Enterprises,
Inc., he served as Director of Development for Disney Development Company, the
corporate real estate arm of The Walt Disney Company. Prior to that,
Mr. Berg was a Project Manager for Xerox Realty Corporation. Mr. Berg
has an M.B.A. from Columbia Business School and an undergraduate degree from
Trinity College. Mr. Berg became a director in June
2008.
JAMES
SIMON. James Simon, 62, has served as President and Chief Executive
Officer of J. Simon & Associates Inc., a management and marketing consulting
firm, since 1992. He has also served as President and Chief Executive
Officer of Strategic Marketing Consultants, Inc., a management and marketing
consulting firm that he co-founded in 1994. Mr. Simon has a BGS
undergraduate degree from University of Nebraska and an MS graduate degree from
University of Kansas. Mr. Simon became a director in August
2007.
Cla
ss I Directors
(term to end 2010)
RALPH J.
BERNSTEIN. Ralph J. Bernstein, 51, is a co-founder and general
partner of Americas Partners, an investment firm. Mr. Bernstein also
serves as a director for Air Methods Corporation. Mr. Bernstein
received a B.A. in economics from the University of California at
Davis. Mr. Bernstein has served as a director since August
2003.
PAUL A.
DEBARY. Paul A. deBary, 62, is a managing director at Marquette
deBary Co., Inc., a New York based broker-dealer, where he serves as a financial
advisor for state and local government agencies, public and private corporations
and non-profit organizations. Prior to assuming his current position,
Mr. deBary was a managing director in the Public Finance Department of
Prudential Securities from 1994 to 1997. Mr. deBary was also a
partner in the law firm of Hawkins, Delafield & Wood in New York from 1975
to 1994. Mr. deBary received an AB in 1968, and an M.B.A. and J.D. in
1971 from Columbia University. Mr. deBary is a member of the American
Bar Association, the New York State Bar Association, the Association of the Bar
of the City of New York and the National Association of Bond
Lawyers. Mr. deBary is also a member of the Board of Managers of
Teleoptic Digital Imaging, LLC, and serves as a director of several non-profit
organizations, including New Neighborhoods, Inc., AA Alumni Foundation and the
Society of Columbia Graduates. Mr. deBary also serves as Chairman of
the Board of Ethics of the Town of Greenwich, Connecticut. Mr. deBary
has served as a director since March 2002.
Cla
ss II
Directors
(term to end 2011)
LOUIS R.
CAPPELLI. Louis R. Cappelli, 58, is the managing member of Convention Hotels,
LLC. Mr. Cappelli has been active in the real estate development and
construction business for over 30 years. Between 1995 and 2000, Mr. Cappelli
developed the Stamford Ridgeway Mall, Stamford Greyrock Towers, New Roc City,
1166 Avenue of the Americas, Talleyrand Apartments, The Landing @ Dobbs Ferry,
Ridgeview Apartments, 140 Grand Street and 360 Hamilton Avenue. Between 2001 and
2009, Mr. Cappelli developed, and is currently developing, White Plains City
Center, Trump Plaza New Rochelle, The Ritz-Carlton Hotel, The Residences at The
Ritz-Carlton, Westchester, and The Lofts at New Roc. Mr. Cappelli
received a Bachelor of Science in Civil Engineering from The University of Notre
Dame in 1973 and is a Professional Engineer in the State of New York. Mr.
Cappelli has served as a director since March 2009.
Dir
ector Independence
The Board
of Directors evaluates the independence of each nominee for election as a
director in accordance with the Marketplace Rules of the NASDAQ Stock Market LLC
(“Nasdaq”). Pursuant to these rules, a majority of our Board of
Directors must be “independent directors” within the meaning of the Nasdaq
listing standards, and all directors who sit on our Corporate Governance and
Nominating Committee, Audit Committee and Compensation Committee must also be
independent directors.
The
Nasdaq definition of independent director includes a series of objective tests,
such as the director is not, and was not during the last three years, an
employee of the Company and has not received certain payments from, or engaged
in various types of business dealings with, the Company. Under the
director independence guidelines, the Board of Directors must affirmatively
determine that a director has no relationship that would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director. To facilitate this determination, annually each director is
asked to complete a questionnaire that provides information about relationships
that might affect the determination of independence. Based on the
review and recommendation of the Corporate Governance and Nominations Committee,
the Board of Directors analyzed the independence of each director and, as
further required by the Nasdaq Marketplace Rules, has made a subjective
determination as to each director as to whether any relationships exist which,
in the opinion of the Board of Directors, would interfere with such individual’s
exercise of independent judgment in carrying out his or her responsibilities as
a director. In making these determinations, the Board of Directors
reviewed and discussed information provided by the directors with regard to each
director’s business and personal activities as they may relate to the Company
and its management, including all transactions in which the Company and any
director had any interest, including those discussed under “Certain
Relationships and Related Transactions” below.
The Board
of Directors has affirmatively determined that none of our directors has a
material relationship with the Company other than Bruce M. Berg and Louis R.
Cappelli. Mr. Berg is a member of Cappelli Resorts LLC. Cappelli
Resorts LLC is the managing member of Catskill Resort Group LLC, which is the
sole member of Convention Hotels LLC, which is the general partner of Concord
Associates, L.P. (“Concord”). Mr. Cappelli is the managing member of
Cappelli Resorts LLC, which is the managing member of Catskill Resort Group LLC,
which is the sole member of Convention Hotels LLC, which is the general partner
of Concord. The Board of Directors has also affirmatively determined that all
members of our Audit Committee, Compensation Committee and Corporate Governance
and Nominating Committee are independent directors.
The Board
of Directors had previously determined Frank Catania, Richard Robbins and
Kenneth Dreifach, who served as directors in fiscal 2008 but who are no longer
members of the Board of Directors, were independent. The Board of Directors had
previously determined that David P. Hanlon, John Sharpe and Robert H. Friedman,
who served as directors in fiscal 2008 but who are no longer members of the
Board of Directors, were not independent.
Secu
rity Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The
following table sets forth information concerning beneficial ownership of our
capital stock outstanding at May 11, 2009 by (i) each director and director
nominee as of May 11, 2009; (ii) each executive officer of the Company as
of May 11, 2009; (iii) each current and former executive officer of the Company
included in the Summary Compensation Table below; (iv) each stockholder
known to be the beneficial owner of more than five percent of any class of the
Company’s voting securities; and (v) all directors and executive officers
of the Company, as a group.
The
information regarding beneficial ownership of our Common Stock has been
presented in accordance with the rules of the Securities and Exchange Commission
(“SEC”). Under these rules, a person may be deemed to beneficially
own any shares of capital stock as to which such person, directly or indirectly,
has or shares voting power or investment power, and to beneficially own any
shares of our capital stock as to which such person has the right to acquire
voting or investment power within 60 days through the exercise of any stock
option or other right. The percentage of beneficial ownership as to
any person as of a particular date is calculated by dividing
(a) (i) the number of shares beneficially owned by such person plus
(ii) the number of shares as to which such person has the right to acquire
voting or investment power within 60 days by (b) the total number of shares
outstanding as of such date, plus any shares that such person has the right to
acquire from us within 60 days. Including those shares in the tables
does not, however, constitute an admission that the named stockholder is a
direct or indirect beneficial owner of those shares. Unless otherwise
indicated, each person or entity named in the table has sole voting power and
investment power (or shares that power with that person’s spouse) with respect
to all shares of capital stock listed as owned by that person or
entity.
|
Name
and Address of Beneficial Owner(1)
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Common
Stock
Beneficially
Owned
|
|
Series
B Preferred
Stock
Beneficially Owned
|
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Series
E Preferred
Stock
Beneficially Owned
|
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Shares
|
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Percentage
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Shares
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Percentage
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Shares
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Percentage
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David
P. Hanlon
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1,327,614
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(2)
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3.8
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%
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--
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--
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--
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--
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Paul
A. deBary
|
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225,508
|
(3)
|
|
|
*
|
|
|
|
--
|
|
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|
--
|
|
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|
--
|
|
|
|
--
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Ralph
J. Bernstein
|
|
|
2,288,743
|
(4)
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|
|
6.7
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%
|
|
|
--
|
|
|
|
--
|
|
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|
--
|
|
|
|
--
|
|
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James
Simon
|
|
|
57,020
|
(5)
|
|
|
*
|
|
|
|
--
|
|
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|
--
|
|
|
|
--
|
|
|
|
--
|
|
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|
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|
|
|
|
|
|
|
|
Ronald
J. Radcliffe
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|
|
223,333
|
(6)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clifford
A. Ehrlich
|
|
|
125,592
|
(7)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Degliomini
|
|
|
162,769
|
(8)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
M. Berg
|
|
|
35,000
|
(9)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilda
Manuel
|
|
|
82,666
|
(10)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
Reehl
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louis
R. Cappelli
c/o
Cappelli Enterprises, Inc.
115
Stevens Avenue
Valhalla,
NY 10595
|
|
|
5,374,512
|
(11)
|
|
|
15.8
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
and Officers as a Group
|
|
|
9,902,757
|
|
|
|
28.6
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia
Cohen
6138
S. Hampshire Ct.
Windermere,
FL 34786
|
|
|
124,610
|
|
|
|
*
|
|
|
|
44,258
|
|
|
|
100
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryanston
Group, Inc.
2424
Route 52
Hopewell
Junction, NY 12533
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
1,551,213
|
|
|
|
89.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley
Tollman
c/o
Bryanston Group, Inc.
2424
Route 52
Hopewell
Junction, NY 12533
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
152,817
|
|
|
|
8.8
|
%
|
_______________
* less
than 1%
|
|
(1)
|
Unless
otherwise indicated, the address of each stockholder, director, and
executive officer listed above is Empire Resorts, Inc., c/o Monticello
Casino and Raceway, Route 17B, P.O. Box 5013, Monticello, New York,
12701.
|
|
|
(2)
|
Consists
of 261,023 shares of restricted stock and options that are currently
exercisable into 1,066,591 shares of Common Stock. On April 13, 2009, Mr.
Hanlon entered into a separation agreement with the Company pursuant to
which Mr. Hanlon’s employment with the Company terminated as of April 13,
2009.
|
|
|
(3)
|
Includes
82,913 shares of Common Stock owned directly by Paul deBary, 12,595 shares
of Common Stock held in an individual retirement account for Mr. deBary’s
benefit and options that are currently exercisable into 130,000 shares of
Common Stock.
|
|
|
(4)
|
Includes
2,221,243 shares of Common Stock owned directly by Ralph J. Bernstein and
options that are currently exercisable into 67,500 shares of Common
Stock.
|
|
|
(5)
|
Includes
18,270 shares of Common Stock owned directly by James Simon and options
that are currently exercisable into 38,750 shares of Common
Stock.
|
|
|
(6)
|
Consists
of options that are currently exercisable into 223,333 shares of Common
Stock. On April 14, 2009, Mr. Radcliffe tendered his resignation,
effective June 30, 2009. Mr. Radcliffe and the Company entered
into a separation agreement with respect to Mr. Radcliffe’s
resignation.
|
|
|
(7)
|
Includes
80,592 shares of Common Stock owned directly by Clifford A. Ehrlich and
options that are currently exercisable into 45,000 shares of Common
Stock.
|
|
|
(8)
|
Includes
62,769 shares of Common Stock owned by Fox-Hollow Lane LLC, of which
Charles Degliomini is the managing member, and options that are currently
exercisable into 100,000 shares of Common
Stock.
|
|
|
(9)
|
Consists
of options that are currently exercisable into 35,000 shares of Common
Stock.
|
|
|
(10)
|
Consists
of options that are currently exercisable into 82,666 shares of Common
Stock. On April 30, 2009 Ms. Manuel entered into a separation agreement
with the Company pursuant to which Ms. Manuel’s employment with the
Company terminated as of April 30,
2009.
|
|
|
(11)
|
According
to a Schedule 13D/A filed by Louis R. Cappelli, LRC Acquisition LLC
(“LRC”) and Cappelli Resorts LLC on March 25, 2009, Mr. Cappelli has an
indirect ownership interest in an aggregate of 5,374,512 shares consisting
of (i) 811,030 shares of Common Stock purchased by LRC on April 29, 2008,
(ii) 1,174,512 shares of Common Stock distributed to Cappelli Resorts LLC
by Concord, effective as of May 1, 2008, (iii) 811,030 shares of Common
Stock purchased by LRC on June 2, 2008, (iv) 811,030 shares of Common
Stock purchased by LRC on June 30, 2008, and (v) 1,766,910 shares of
Common Stock purchased by LRC on July 31, 2008. Mr. Cappelli has the
shared power to dispose of or direct the disposition of 5,374,512 shares
of Common Stock held of record by Cappelli Resorts LLC and by
LRC.
|
C
omm
ittees and Meetings of the Board of Directors
The Board
of Directors met on 25 occasions during the fiscal year ended December 31,
2008. During the time served as a director during 2008, each of the
directors attended at least 75% of the meetings held by the Board of
Directors. There are three permanent committees of the Board of
Directors: the Audit Committee, the Compensation Committee and the Corporate
Governance and Nominations Committee.
Our last
annual meeting of stockholders was held on November 11, 2008, and all of the
then members of the Board attended that meeting. All members of Board of
Directors are expected to attend each annual meeting of
stockholders.
Au
dit Committee
We have a
separately-designated standing Audit Committee as defined in Section 3(a)(58)(A)
of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). In addition, our Board of Directors adopted a written charter
for the Audit Committee, a copy of which was included as Appendix A to our proxy
statement for the 2007 annual meeting of stockholders, and which is available,
free of charge, from the Company by writing to Investor Relations at Empire
Resorts, Inc., c/o Monticello Casino and Raceway, Route 17B, P.O. Box 5013,
Monticello, New York, 12701 or calling (845) 807-0001.
The
members of the Audit Committee are Paul A. deBary (chairman of the committee),
James Simon and Ralph J. Bernstein. Messrs. Simon and Bernstein
became members of the Audit Committee on April 15, 2009. Each of Messrs.
deBary, Simon and Bernstein is independent from the Company, as independence is
defined in Rule 5605(a)(2) of the listing standards of the National Association
of Securities Dealers (the “NASD”). Our Board of Directors believes
that Mr. Paul A. deBary is an Audit Committee financial expert, as such term is
defined in Item 407(d)(5) of Regulation S-K.
The
primary purpose of the Audit Committee is to assist the Board of Directors in
fulfilling its responsibility to oversee our financial reporting
activities. The Audit Committee is responsible for reviewing with
both our independent certified public accountants and management, our accounting
and reporting principles, policies and practices, as well as our accounting,
financial and operating controls and staff. The Audit Committee has
reviewed and discussed our audited financial statements with management, and has
discussed with the independent registered public accounting firm the matters
required to be discussed by SAS 61, as amended. Additionally, the
Audit Committee has received the written disclosures and the letter from the
independent registered public accounting firm required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees) and has discussed with the independent
registered public accounting firm the independent registered public accounting
firm’s independence. Based upon such review and discussion, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in our Annual Report on Form 10-K for the last fiscal
year for filing with the SEC.
The Audit
Committee met on 7 occasions during the fiscal year ended December 31,
2008. Each of the members of the Audit Committee attended each of the
meetings held by the Audit Committee during the time he served as a member of
the committee, other than one member who did not attend one
meeting.
Audit
Committee:
Paul A.
deBary, Chairman
Ralph J.
Bernstein
James
Simon
Cor
porate Governance and Nominations Committee
The
Corporate Governance and Nominations Committee recommends appropriate governance
practices, recommends criteria for service as a director and reviews candidates
to serve as directors. The Corporate Governance and Nominations
Committee has adopted a written charter, a copy of which was included as
Appendix B to our proxy statement for the 2007 annual meeting of
stockholders. The members of the Corporate Governance and Nominations
Committee are James Simon (chairman of the committee), Paul A. deBary and Ralph
J. Bernstein. Mr. Simon serves as chairman of the Corporate
Governance and Nominations Committee. Each of Messrs. Simon, deBary
and Bernstein is independent from the Company, as independence is defined in
Rule 5605(a)(2) of the NASD listing standards.
The
Corporate Governance and Nominations Committee develops, recommends and oversees
implementation of corporate governance principles for the Company. In
addition, it considers recommendations for director nominees from a wide variety
of sources, including members of our Board of Directors, business contacts,
community leaders, third-party advisory services and members of
management. The corporate governance and nominations also considers
stockholder recommendations for director nominees that are properly received in
accordance with applicable rules and regulations of the SEC.
The Board
of Directors believes that all of its directors should have the highest personal
integrity and have a record of exceptional ability and judgment. The
Board of Directors also believes that its directors should ideally reflect a mix
of experience and other qualifications. There is no firm requirement
of minimum qualifications or skills that candidates must possess. The
Corporate Governance and Nominations Committee evaluates director candidates
based on a number of qualifications, including their independence, judgment,
leadership ability, expertise in the industry, experience developing and
analyzing business strategies, financial literacy, risk management skills, and,
for incumbent directors, his or her past performance. In making its
recommendations, the Corporate Governance and Nominations Committee seeks out
outstanding talent among minority groups and women.
Stockholders
wishing to nominate a candidate for director at the annual stockholders meeting
must give written notice to Empire Resorts, Inc., c/o Monticello Casino and
Raceway, Route 17B, P.O. Box 5013, Monticello, New York, 12701, Attention:
Investor Relations either by personal delivery or by United States mail, postage
prepaid. The stockholder’s notice must be received by us not less
than 120 or more than 180 days prior to the first anniversary (the
“Anniversary”) of the date on which the Company first mailed its proxy materials
for the preceding year’s annual meeting of stockholders. However, if
the date of the annual meeting is advanced more than 30 days prior to or delayed
by more than 30 days after the Anniversary of the preceding year’s annual
meeting, then notice by the stockholder to be timely must be delivered not later
than the close of business on the later of (i) the 90th day prior to such annual
meeting or (ii) the 15th day following the day on which public announcement of
the date of such meeting is first made. To be in proper form a
stockholder’s notice to the Secretary shall be in writing and shall set forth
(i) the name and address of the stockholder who intends to make the
nomination(s) and of the person or persons to be nominated, (ii) a
representation that the stockholder is a holder of record of stock of the
Company, that the stockholder intends to vote such stock at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice, (iii) a description of all arrangements or
understandings between the stockholder and each nominee or any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder, (iv) such other information
regarding each nominee as would be required to be included in a proxy statement
filed pursuant to Regulation 14A of the Exchange Act, had the nominee been
nominated, or intended to be nominated, by the Board of Directors of the
Company, (v) the class and number of shares of the Company which are owned of
record and beneficially owned by the stockholder and (vi) the written consent of
each nominee to serve as a director of the Company if so elected.
The
Corporate Governance and Nominations Committee initially evaluates a prospective
nominee on the basis of his or her resume and other background information that
has been made available to the committee. A member of the Corporate
Governance and Nominations Committee will contact for further review those
candidates who the committee believes are qualified, who may fulfill a specific
board need and who would otherwise best make a contribution to the Board of
Directors. If, after further discussions with the candidate, and
other further review and consideration as necessary, the Corporate Governance
and Nominations Committee believes that it has identified a qualified candidate,
it will make a recommendation to the Board of Directors.
The
Corporate Governance and Nominations Committee met on 9 occasions during the
fiscal year ended December 31, 2008. Each of the members of the
Corporate Governance and Nominations Committee attended each of the meetings
held by the Corporate Governance and Nominations Committee during the time each
director served as a member of the committee.
Each of
the nominees up for election at the Meeting was recommended to the Board of
Directors by the Corporate Governance and Nominations Committee.
Com
pensation Committee
The
Compensation Committee, which is comprised of James Simon (chairman of the
committee), Ralph J. Bernstein and Paul A. deBary, is responsible for
establishing and reviewing the appropriate compensation of our directors and
officers, for reviewing employee compensation plans and for considering and
making grants and awards under, and administering, our equity incentive
plans. The Compensation Committee has adopted a written charter, a
copy of which was included as Appendix C to our proxy statement for the 2007
annual meeting of stockholders. The Compensation Committee met on 9
occasions and acted by unanimous written consent on 2 occasions during fiscal
2008. Each of the members of the Compensation Committee attended each
of the meetings held by the Compensation Committee during the time such director
served as a member of the committee, other than one member who did not attend
one meeting.
Co
de of Ethics
We
adopted a code of ethics that is available on the Company’s internet website
(www.empireresorts.com) and will be provided in print without charge to any
stockholder who submits a request in writing to Empire Resorts, Inc., c/o
Monticello Casino and Raceway, Route 17B, P.O. Box 5013, Monticello, New York,
12701, Attention: Investor Relations. The code of ethics applies to
each director and officer, including the Chief Financial Officer and Chief
Executive Officer, and all of our other employees and our
subsidiaries. The code of ethics provides that any waiver of the code
of ethics may be made only by the Board of Directors.
P
roce
dures for Contacting Directors
The Board
of Directors has established a process for stockholders to send communications
to the Board of Directors. Stockholders may communicate with the
Board of Directors generally or a specific director at any time by writing to:
Empire Resorts, Inc., c/o Monticello Casino and Raceway, Route 17B, P.O. Box
5013, Monticello, New York, 12701, Attention: Investor Relations. The
Company reviews all messages received, and forwards any message that reasonably
appears to be a communication from a stockholder about a matter of stockholder
interest that is intended for communication to the Board of
Directors. Communications are sent as soon as practicable to the
director to whom they are addressed, or if addressed to the Board of Directors
generally, to the chairman of the Corporate Governance and Nominations
Committee. Because other appropriate avenues of communication exist
for matters that are not of stockholder interest, such as general business
complaints or employee grievances, communications that do not relate to matters
of stockholder interest are not forwarded to the Board of
Directors.
Exe
cutive Officers
The
executive officers of the Company are:
|
|
Ronald
J. Radcliffe
|
Chief
Financial Officer
|
|
|
|
|
|
|
Clifford
A. Ehrlich
|
President
and General Manager of Monticello Raceway Management,
Inc.
|
|
|
|
|
|
|
Charles
Degliomini
|
Senior
Vice President of Governmental Relations and Corporate
Communications
|
|
|
|
|
|
|
Eric
Reehl
|
Chief
Restructuring Officer
|
RONALD J.
RADCLIFFE. Ronald J. Radcliffe, 65, joined us as our Chief Financial
Officer in May 2005. Mr. Radcliffe was previously Chief Financial
Officer, Treasurer and Vice President of the Rio Suites Hotel & Casino in
Las Vegas from 1996-2000, where he negotiated the sale of the company to
Harrah’s Entertainment, Inc. He was also the lead company
representative in the company’s $125 million secondary public offering,
negotiating a $300 million revolving line of credit, and a public offering of
$125 million in subordinated debt. In 2001, Mr. Radcliffe started a
gaming consultancy business, and in 2002 became Chief Financial Officer,
Treasurer, Vice President and Principal of Siren Gaming, LLC, a management
company for an Indian Class III casino. From 1993 to 1995, Mr.
Radcliffe was Chief Financial Officer, Treasurer and Vice President of Mikohn
Gaming Corporation, Las Vegas, NV. Prior to this, he was Vice
Chairman, President, Chief Operating Officer and Chief Financial Officer for
Sahara Resorts, Las Vegas, NV. Mr. Radcliffe is a licensed C.P.A. and
received a B.S. in business administration in 1968 from the University of
Nevada.
CLIFFORD
A. EHRLICH. Clifford A. Ehrlich, 49, has been an employee of the
Company since 1995. In April 2009, he was promoted to President and
General Manager of Monticello Raceway Management, Inc. Prior to his
promotion, he most recently served as Executive Vice President and General
Manager of Monticello Raceway Management, Inc. since February
2008. From 1994 through February 2008, he served as Senior Vice
President of our subsidiary, Monticello Raceway Management, Inc. From
1981 to 1994, Mr. Ehrlich served as Vice President and an owner of the Pines
Resort Hotel & Conference Center in the Catskills. Mr. Ehrlich
has also held the position of executive committee member of the Sullivan County
Tourism Advisory Board and served as President of the Catskill Resort
Association. Mr. Ehrlich received a bachelor’s degree in business
administration with an emphasis in management and marketing from the University
of Colorado Business School in 1981.
CHARLES
DEGLIOMINI. Charles Degliomini, 50, has been an employee or
consultant of the Company since 2004. In February 2008, he was
promoted to Senior Vice President of Governmental Relations and Corporate
Communications. Previously, he was Senior Vice President of Sales and
Marketing of eLottery, Inc., the first firm to advance the technology to
facilitate the sales and marketing of governmental lottery tickets on the
Internet. Before taking the position at eLottery, Mr. Degliomini was
President and founder of Atlantic Communications, a New York-based corporate and
government affairs management company. Mr. Degliomini served in the
General Services Administration (GSA) as Chief of Staff to the Regional
Administrator from 1985 to 1998, and was the New York State Communications
Director for Reagan-Bush in 1984. Mr. Degliomini has a B.A. in
political science from Queens College and is an M.A. candidate at the New York
University School of Public Administration.
ERIC
REEHL. Eric Reehl, 48, joined the Company in April 2009 as our Chief
Restructuring Officer. Mr. Reehl is the Founder and Managing Member
of Nima Asset Management LLC (“Nima”), a consulting and advisory firm formed in
November 2008, specializing in distressed investment situations and emerging
markets. Mr. Reehl is currently serving as the Acting Chief Financial
Officer for Park Avenue Bancorp, Inc., a New York domiciled commercial
bank. Prior to the formation of Nima, Mr. Reehl served as a Managing
Director of Plainfield Asset Management LLC, a registered investment adviser,
from March 2006 until September 2008. Prior to joining Plainfield
Asset Management LLC, he led the New York office of the Direct Lending group of
CSG Investments, Inc, the investment affiliate for Beal Bank, a privately held
Texas state savings bank, from April 2004 until March 2006. Prior to
CGS Investments, Mr. Reehl was a Bankruptcy and Restructuring advisor with Ernst
and Young Corporate Finance LLC.
Ex
ecutive Compensation
C
omp
ensation Discussion and Analysis
Objectives
of Our Compensation Program
Our
compensation programs are intended to encourage executives and other key
personnel to create sustainable growth in value for our
stockholders. In particular, the objectives of our programs are
to:
|
|
·
|
attract,
retain, and motivate superior
talent;
|
|
|
·
|
ensure
that compensation is commensurate with our performance and stockholder
returns;
|
|
|
·
|
provide
performance awards for the achievement of strategic objectives that are
critical to our long term growth;
and
|
|
|
·
|
ensure
that our executive officers and key personnel have financial incentives to
achieve sustainable growth in stockholder
value.
|
Business
Strategy
Our 2009
business strategy for building sustainable growth in stockholder value remains
similar to the strategy we have employed for the past few years. Key
components of the strategy are as follows:
|
|
·
|
Improve
our operating efficiencies to the point where we are once again
profitable;
|
|
|
·
|
Enter
into strategic joint ventures which help drive our
growth;
|
|
|
·
|
Secure
a Class III gaming license for a facility to be part of our existing New
York operation; and
|
|
|
·
|
Take
advantage of opportunities which can help us
grow.
|
Elements
of Our Executive Compensation Structure
Our
compensation structure consists of two tiers of remuneration. The
first tier consists of base pay, and a suite of retirement, health, and welfare
benefits. The second tier consists of both short and long term
incentive compensation.
Base pay
and benefits are designed to be sufficiently competitive to attract and retain
world class executives.
Our short
term incentive plan provides for cash bonuses to be paid to executives based on
individual and corporate performance.
Commencing
in 2008, the Compensation Committee began to implement preset goals, and amounts
of short term incentive which will be paid for achieving those goals. Efforts to
establish such goals and incentives are continuing.
No
bonuses were paid with respect to the 2007 or 2008 fiscal years. A bonus of
$10,000 was paid in 2007 to our Chief Compliance Officer with respect to the
2006 fiscal year. No other bonuses were paid with respect to the 2006
fiscal year.
Our long
term incentive plan provides for awards of stock options, restricted stock, and
other equity based incentives. These are designed to reward executives for the
achievement of longer term objectives which result in an increase in share
value.
Reasons
for the Current Incentive Plan Structure
In 2009,
the Company will continue to focus on our racing and video gaming businesses and
we will continue to pursue property development opportunities through strategic
alliances. In addition, we will continue to pursue a Class III gaming
license. If successfully pursued, this strategy will eventually
result in the creation of additional and sustainable share value.
Our short
term incentive plan will reward executives for the achievement of milestones
which are critical to our business strategy, coupled with cost cutting and other
ways of improving our operating efficiency. Bonuses will only be paid
to the extent objectives are achieved and the operating performance of the
Company so warrants.
Awards
outstanding under the long term incentive plan currently consist of stock
options, as well as restricted stock. In future years, we may also
make grants of other equity based awards. The long term incentive
plan is designed to reward executives for increasing long term share
value. This will be accomplished by the successful execution of the
Company’s business objectives, coupled with the consistent achievement of
profitability goals. The long term incentive plan will keep
executives focused on both revenue and profit growth, and it can potentially be
a very significant source of compensation for executive officers in the long
term.
How
We Determine to Pay What We Pay
Our cash
compensation policy is based on:
|
|
·
|
The
Company’s philosophy of providing significant pay at
risk
|
|
|
·
|
Individual
and corporate performance
|
In
setting base pay, the Compensation Committee pays at a level which is necessary
to attract and retain the level of talent it needs. Compensation for
the Company’s chief executive officer (“CEO”), whose employment with the Company
terminated on April 13, 2009, and chief financial officer (“CFO”), whose
employment with the Company will terminate on June 30, 2009, was first set in
their three year employment contracts, entered into on May 23,
2005. The employment contracts state that the Compensation Committee
shall review base pay annually, and make upward adjustments, as it deems
appropriate. The CEO’s salary was set at $500,000, and it stayed at
that level since the inception of the employment contract. The CFO’s
salary was set at $275,000 in his employment contract. In 2007, the
Compensation Committee exercised its discretion and raised the CFO’s base pay
from $275,000 to $310,000. These employment agreements expired on
June 23, 2008.
Exceptional
individual and corporate performance is rewarded via the annual bonus program,
and is not reflected in base pay. The Compensation Committee pays
close attention to internal equity when it sets pay. In particular,
it takes into account the relative value of its individual executive officer
jobs, as well as the value of the jobs immediately below the executive officer
level. Periodically, the Compensation Committee references base pay
practices at public companies of a similar size, to help ensure base pay remains
broadly within a competitive range.
In the
future, the Compensation Committee intends to set annual cash bonus opportunity
by (1) setting predetermined goals connected to the Company’s business strategy,
and (2) specifying the amount of bonus which will be paid if the Company
achieves some or all of those goals. In setting the annual cash bonus
opportunity, the Compensation Committee will abide by the philosophy that cash
bonuses might be substantial if individual and corporate performance reaches
predetermined levels. In recent years, material cash bonuses have not
been paid, because corporate performance has not warranted it.
Overall,
our cash compensation practices reflect our long held philosophy that annual
cash compensation shall consist of (1) base pay at the level to attract and
retain the caliber of talent we need and (2) bonus compensation which is
entirely performance based.
Our
Compensation Committee takes into account several factors in determining the
level of long term incentive opportunity to grant to our executive
officers. In 2008, the Compensation Committee took the following
factors into account:
|
|
·
|
Individual
executive performance;
|
|
|
·
|
Equity
compensation grants which have been granted
previously;
|
|
|
·
|
The
effect of equity compensation grants on fully diluted earnings per
share;
|
|
|
·
|
Each
executive officer’s portion of the total number of options being granted
to employees in fiscal 2008; and
|
|
|
·
|
The
level of grants necessary to keep our executive officers focused and
motivated in the coming year.
|
In
considering the level of option grants required to keep our executive officers
focused and motivated, the Compensation Committee periodically makes reference
to equity compensation practices at similar sized public
companies. However, no effort is made to make grants at a particular
percentile of the market range.
In
February 2008, the Compensation Committee retained Denver Management Advisors,
Inc. to provide market data and recommendations to the Compensation Committee
regarding compensation for executive officer positions.
Policy
for Allocating Between Long Term and Current Compensation
Our
policy for allocating between long term and current compensation for our
executive officers is as follows:
|
|
·
|
We
expect that in the long run the bulk of total compensation paid to
executive officers will come from stock options and other equity based
long term incentives. Executive officers would only enjoy
rewards to the extent they create commensurate value for stockholders.
This would be in keeping with our philosophy of utilizing executive
compensation to create sustained increases in value for our
stockholders.
|
|
|
·
|
We
recognize that to create sustainable increases in share value, increases
in growth and profitability are necessary. Accordingly, it is
our intention to provide competitive cash bonus
opportunities. However, annual bonuses will only be paid to the
extent short term objectives are achieved or
exceeded.
|
|
|
·
|
Finally,
we recognize that in order to attract and retain the kind of talent
necessary to build share value, we must pay competitive base salary and
benefits.
|
Benchmarking
of Compensation
Our
compensation philosophy does not include an effort to pay executive officers at
a particular percentile of the market range. Accordingly, we did not
select a group of peer companies with an eye toward using their executive
officer pay as a benchmark against which to set our compensation. As
stated above, we take several factors into account in determining base pay,
short term incentive opportunity, and long term incentive opportunity, including
individual and corporate performance, changes in position responsibility, and
internal equity.
Nevertheless,
we understand that there are several companies which are competitors for
executive officer talent, and we view it as useful to examine their pay
practices from time to time. In the course of determining cash
compensation for our executive officers in 2008, we looked at publicly traded
gaming companies. For purposes of determining long term
incentive grants, we looked at practices in a wide variety of companies, both in
and outside of the industry. For the limited purpose of the analysis
set forth below, the compensation paid to the executive officers of these
positions is referred to as “market”.
Based on
our review of the data, it appeared that all of our executive officers, other
than our former CEO, were at, or slightly below, the midpoint of the market
range, when base salary, bonus opportunity, and long term incentives were taken
into account.
Long
Term Incentive Opportunity – Basis for Reward and Downside Risk
To date,
the Compensation Committee has awarded stock options and restricted stock under
our 2004 Stock Option Plan and the 2005 Equity Incentive Plan. The
Compensation Committee may consider using other equity based incentives in the
future. Options bear a relationship to the achievement of our long
term goals in that they increase in value as our stock increases in
value.
Our
executive officers are exposed to downside risk through the shares of the
Company they own outright and/or through the options they
hold. Declines in the stock price will result in the shares they hold
outright becoming less valuable, and the options becoming less valuable, or
worthless.
The
Compensation Committee carefully evaluates the cost of options and restricted
stock it grants to its executive officers, in terms of their impact on fully
diluted earnings per share. The Compensation Committee will continue
to evaluate the cost of options and other forms of equity compensation against
the benefit those vehicles are likely to yield in building sustainable growth in
stockholder value.
Equity
Grants and Market Timing
We do not
grant options in coordination with the release of material, non-public
information, and we do not intend to adopt such a practice in the
future. During 2008, annual awards of stock options to our executive
officers and key employees were usually made at regularly scheduled Compensation
Committee meetings. Exceptions would include grants made to new
hires, grants made as a result of promotions, and other extraordinary
circumstances.
We have
properly accounted for all of our option grants. When we award
options and set the exercise price, the exercise price is based on the fair
market value of our stock on the grant date. Our 2005 Equity
Incentive Plan defines “fair market value” as the closing price of publicly
traded shares of Stock on the principal securities exchange on which shares of
stock are listed, or on the NASDAQ Stock Market (if shares are regularly quoted
on the NASDAQ Stock Market), or, if such bid and asked prices shall not be
available, as reported by any nationally recognized quotation service selected
by the Company or as determined by the Compensation Committee in a manner
consistent with the provisions of United States Internal Revenue Code of 1986,
as amended (the “Code”).
Specific
Forms of Compensation and the Role of Committee Discretion
In the
past, the Compensation Committee has retained the discretion to review executive
officer base pay, and to make increases based on executive performance and
market norms. The Compensation Committee has also recommended increases when
executives have been promoted, or their responsibilities have otherwise been
expanded. In addition, the Compensation Committee has retained
the discretion to make long term incentive grants based on several factors
detailed in this Compensation Discussion and Analysis. The
Compensation Committee intends to retain the discretion to make decisions about
executive officer base compensation and certain levels of stock option grants
and restricted stock grants without predetermined performance goals or
metrics.
The
Compensation Committee retains its right to make future grants of options,
restricted stock, or other equity compensation based on Company and individual
performance. At this time, it has not been determined whether it
would exercise discretion to increase or reduce the size of an award or payout
if the performance goals are met, or pay all or any portion of an award or
payout despite the performance goals not being met.
In the
past, the Compensation Committee has retained the discretion to pay individual
bonuses to the Chief Executive Officer and Named Executive Officers, based on
corporate and individual performance. The determination whether a
bonus was paid, as well as the amount, was left to the discretion of the
Compensation Committee. The Chief Compliance Officer was paid $10,000
for her 2006 individual performance. No bonuses were paid to the
Chief Executive Officer or to Named Executive Officers with respect to the 2008
or 2007 fiscal years.
In the
future, the Compensation Committee intends to set predetermined goals, as well
as predetermined bonus amounts for achieving such goals. These goals
will be set as early as possible in the fiscal year for which the bonus is to be
paid.
How
Individual Forms of Compensation are Structured and Implemented to Reflect the
Named Executive Officers’ Individual Performance and Contribution.
We are
engaged in a concerted strategic effort to increase revenue, profit, and
operating efficiency. The CEO and the Named Executive Officers work
as a team to accomplish these goals. Their base pay, annual bonus
opportunity, and respective long term incentive opportunity reflect their
individual contribution to the Company and market practices.
In July
2008, the CFO received an option grant for 50,000 shares which vest over a three
year period and the Chief Compliance Officer received an option grant for 12,500
shares which vest over three years. These grants were made pursuant
to the Company’s 2005 Equity Incentive Plan, as amended. The amount
of each individual grant reflects the Compensation Committee’s assessment of
each individual’s contribution. As of the end of fiscal 2008, none of the July
2008 option grants were in the money.
Policies
and Decisions Regarding Adjustment or Recovery of Awards or Payments if Relevant
Performance Measures are Restated or Adjusted
We have
not previously needed to adjust or recover awards or payments because relevant
performance measures were restated or adjusted. If this occurred, we
expect that we would take steps legally permissible to adjust or recover awards
or payments in the event relevant performance measures upon which they were
based were restated or otherwise adjusted in a manner that would reduce the size
of an award or payment.
Factors
Considered in Decisions to Increase or Decrease Compensation
Materially
During
the tenure of the current Compensation Committee, the Company has not previously
materially increased or decreased compensation. We expect that the
primary factor we would consider in such a case is a clear, sustained market
trend.
Impact
that Amounts Received or Realizable From Previously Earned Compensation Have on
Other Compensation
We
maintain no compensation plan programs where gains from prior compensation would
directly influence amounts currently earned. The only factor where
gains from prior awards are considered is where the Compensation Committee
determines the appropriate size of long term incentive grants.
Impact
of Accounting and Tax Treatment on Various Forms of Compensation
We take
the impact of accounting and tax treatment on each particular form of
compensation into account. Our incentive payments are designed so
that they are deductible under Section 162(m) of the Code. We closely
monitor the accounting treatment of our equity compensation plans, and in making
future grants, we expect to take the accounting treatment into
account.
Ownership
Requirements and Policies Regarding Hedging Risk in Company’s Equity
Securities
Since a
significant ownership stake in the Company by its directors and executive
officers leads to a stronger alignment of interests with stockholders, the Board
has encouraged stock ownership by non-employee directors and executive officers.
However, there are currently no share ownership guidelines in
place.
Our
executive officers are not allowed to make a short sale of stock, which we
define as any transaction whereby one may benefit from a decline in our stock
price.
The
Role of Executive Officers in Determining Compensation
In early
2008, our CEO supplied the Compensation Committee with his thoughts on what the
personal goals of the Named Executive Officers should be, for purposes of the
2008 annual incentive plan. The CEO also apprised the Compensation
Committee with his assessment of the performance of the Named Executive Officers
in 2007, and the Committee took this information into account, among other
information, in setting their base pay for 2008.
At the
close of 2008, the CEO supplied the Compensation Committee with similar input,
regarding 2008 performance of the Named Executive Officers, as well the CEO’s
thoughts on individual objectives for the 2009 annual incentive
plan.
Other
than the input supplied above, neither the CEO nor any Named Executive Officer
has played any role in determining executive officer compensation.
Summary
Compensation Table
The
following table sets forth all information concerning the compensation received,
for the fiscal year ended December 31, 2008, for services rendered to us by
David P. Hanlon, our former chief executive officer, Ronald J. Radcliffe, our
chief financial officer, and each of our three other most highly compensated
executive officers.
SUMMARY
COMPENSATION TABLE
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other Compen-
sation
($) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
P. Hanlon (3)
Chief
Executive Officer
|
2008
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,875
|
|
|
|
530,875
|
|
|
|
2007
|
|
|
500,000
|
|
|
|
-
|
|
|
|
109,411
|
|
|
|
389,762
|
|
|
|
9,000
|
|
|
|
1,008,173
|
|
|
|
2006
|
|
|
500,000
|
|
|
|
-
|
|
|
|
529,633
|
|
|
|
1,377,829
|
|
|
|
8,800
|
|
|
|
2,416,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cliff
A. Ehrlich
President
and Gen. Mgr. – MRMI
|
2008
|
|
|
178,077
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,854
|
|
|
|
7,123
|
|
|
|
235,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
J. Radcliffe (4)
Chief
Financial Officer
|
2008
|
|
|
310,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
169,902
|
|
|
|
9,200
|
|
|
|
489,102
|
|
|
|
2007
|
|
|
295,596
|
|
|
|
-
|
|
|
|
-
|
|
|
|
324,766
|
|
|
|
9,000
|
|
|
|
629,362
|
|
|
|
2006
|
|
|
275,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
352,269
|
|
|
|
8,800
|
|
|
|
636,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilda
Manuel (5)
Sr.
VP for Native American Affairs
|
2008
|
|
|
180,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
69,333
|
|
|
|
5,200
|
|
|
|
254,533
|
|
|
|
2007
|
|
|
180,000
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
146,272
|
|
|
|
5,400
|
|
|
|
341,672
|
|
|
|
2006
|
|
|
160,192
|
|
|
|
-
|
|
|
|
-
|
|
|
|
159,724
|
|
|
|
2,000
|
|
|
|
321,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Degliomini
Senior
Vice President of
Governmental
Relations and Corporate Communications
|
2008
|
|
|
220,000
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
174,274
|
|
|
|
-
|
|
|
|
394,274
|
|
|
(1)
|
These
amounts represent the dollar amount recognized for financial reporting
purposes for the years ended December 31, 2008, December 31, 2007 and
December 31, 2006, as applicable, for the value of prior year and current
year grants of restricted stock and stock options allocable to that year
and are computed in accordance with SFAS No. 123R. Please see
Notes B and I to our consolidated financial statements contained in our
Form 10-K for the fiscal year ended December 31, 2008 for more information
on these issues.
|
|
(2)
|
These
amounts reflect the Company matching contributions associated with amounts
contributed by the individuals to our 401(k) benefit plan and the cost of
a life insurance policy for Mr. Hanlon in 2008. See Note L to
our consolidated financial statements contained in our Form 10-K for the
fiscal year ended December 31, 2008 for more information on the 401(k)
plan.
|
|
(3)
|
On
April 13, 2009, Mr. Hanlon entered into a separation agreement with the
Company pursuant to which Mr. Hanlon’s employment with the Company
terminated as of April 13, 2009.
|
|
(4)
|
On
April 14, 2009, Mr. Radcliffe tendered his resignation, effective June 30,
2009. Mr. Radcliffe and the Company entered into a separation
agreement with respect to Mr. Radcliffe’s
resignation.
|
|
(5)
|
On
April 30, 2009, Ms. Manuel entered into a separation agreement with the
Company pursuant to which Ms. Manuel’s employment with the Company
terminated as of April 30, 2009.
|
|
(6)
|
Represents
payments made to Mr. Degliomini pursuant to a consulting
agreement.
|
Grant
of Plan-Based Awards
The
following table sets forth information concerning grants of plan-based awards
made by us during 2008, to each of the named executive officers:
|
|
|
|
|
|
All
Other Option Awards:
Number
of Securities Underlying Options
|
|
|
Exercise
or Base Price of Option Awards ($)
|
|
|
Grant
Date Fair Value of Stock and Option Awards ($) (1)
|
|
|
David
P. Hanlon
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
J. Radcliffe
|
|
7/21/08
|
|
|
|
50,000
|
|
|
|
2.98
|
|
|
|
116,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilda
Manuel
|
|
7/21/08
|
|
|
|
12,500
|
|
|
|
2.98
|
|
|
|
29,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Degliomini
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cliff
A. Ehrlich
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
These
amounts reflect the aggregate grant date fair value of options granted in
the year ended December 31, 2008 under our 2005 Equity Incentive Plan, as
amended, computed in accordance with SFAS No. 123R. Please see
Notes B and I to our consolidated financial statements contained in our
Form 10-K for the fiscal year ended December 31, 2008 for more
information.
|
Narrative
Disclosure to Summary Compensation Table and Grants of Plan-Based Awards
Table
Employment
Agreements
On May
23, 2005, we entered into an employment agreement with David P. Hanlon which set
forth terms and provisions governing Mr. Hanlon’s employment as our former Chief
Executive Officer and President. This agreement provided for an
initial term of three years at an annual base salary of $500,000. In
addition, Mr. Hanlon was entitled to participate in any annual bonus plan or
equity based incentive programs maintained by us for our senior
executives. In connection with his employment, Mr. Hanlon received an
option grant of a 10-year non-qualified stock option to purchase 1,044,092
shares of our Common Stock pursuant to the 2005 Equity Incentive Plan, as
amended, subject to stockholder approval, at an exercise price per share of
$3.99, vesting 33% 90 days following the grant date, 33% on the first
anniversary of the grant and 34% on the second anniversary of the grant, which
approval was received on August 17, 2005. We also granted Mr. Hanlon
261,023 restricted shares, pursuant to our 2005 Equity Incentive Plan, as
amended, vesting 33% on the grant date, 33% on the first anniversary of grant,
and 34% on the second anniversary of the grant. We agreed to provide
certain benefits to Mr. Hanlon, including maintaining a term life insurance
policy on the life of Mr. Hanlon in the amount of $2,000,000 and reimbursement
for relocation expenses and expenses for temporary housing.
On May
23, 2005, we entered into an employment agreement with Ronald J. Radcliffe which
set forth terms and provisions governing Mr. Radcliffe’s employment as our Chief
Financial Officer. This agreement provided for an initial term of
three years at an annual base salary of $275,000. In addition, Mr.
Radcliffe was entitled to participate in any annual bonus plan or equity based
incentive programs maintained by us for our senior executives. In
connection with his employment, Mr. Radcliffe received an option grant of a
10-year non-qualified stock option to purchase 150,000 shares of our Common
Stock pursuant to our 2005 Equity Incentive Plan, as amended, subject to
stockholder approval, at an exercise price per share of $3.99, vesting 33% 90
days following the grant date, 33% on the first anniversary of the grant and 34%
on the second anniversary of the grant, which approval was obtained on August
17, 2005.
On May
23, 2008, we entered into amendments to the employment agreements with Mr.
Hanlon and Mr. Radcliffe, pursuant to which the initial term of each agreement
was extended from May 23, 2008 to June 23, 2008. The agreements expired on June
23, 2008.
On April
13, 2009, Mr. Hanlon entered into a separation agreement with the Company
pursuant to which Mr. Hanlon’s employment with the Company terminated as of
April 13, 2009. On April 14, 2009, Mr. Radcliffe tendered his resignation,
effective June 30, 2009.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information concerning the outstanding equity awards
of each of the named executive officers as of December 31, 2008:
|
|
|
|
|
|
|
Number
of Securities Underlying Unexercised Options:
Exercisable
|
|
|
Number
of Securities Underlying Unexercised
Options:
Unexercisable
|
|
|
Option
Exercise Price ($)
|
|
|
|
David
P. Hanlon
|
|
|
7,500
|
|
|
|
-
|
|
|
|
7.00
|
|
8/4/13
(1)
|
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
11.97
|
|
3/23/14
(2)
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
8.51
|
|
1/6/15
(3)
|
|
|
|
|
1,044,092
|
|
|
|
-
|
|
|
|
3.99
|
|
4/13/12
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
J. Radcliffe
|
|
|
120,000
|
|
|
|
-
|
|
|
|
3.99
|
|
6/30/12
(5)
|
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
5.53
|
|
6/30/12
(6)
|
|
|
|
|
26,667
|
|
|
|
13,333
|
|
|
|
7.40
|
|
6/30/12
(10)
|
|
|
|
|
16,667
|
|
|
|
33,333
|
|
|
|
2.98
|
|
6/30/12
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilda
Manuel
|
|
|
30,000
|
|
|
|
-
|
|
|
|
8.26
|
|
4/30/12
(8)
|
|
|
|
|
8,500
|
|
|
|
-
|
|
|
|
6.75
|
|
4/30/12
(7)
|
|
|
|
|
33,334
|
|
|
|
-
|
|
|
|
5.53
|
|
4/30/12
(9)
|
|
|
|
|
3,333
|
|
|
|
6,667
|
|
|
|
8.74
|
|
4/30/12
(11)
|
|
|
|
|
4,167
|
|
|
|
8,333
|
|
|
|
2.98
|
|
4/30/12
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clifford
A. Ehrlich
|
|
|
25,000
|
|
|
|
-
|
|
|
|
6.75
|
|
12/16/15
(7)
|
|
|
|
|
20,000
|
|
|
|
10,000
|
|
|
|
5.53
|
|
8/10/16
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Degliomini
|
|
|
50,000
|
|
|
|
-
|
|
|
|
6.75
|
|
12/16/15
(7)
|
|
|
|
|
25,000
|
|
|
|
50,000
|
|
|
|
7.40
|
|
5/24/17
(14)
|
Unless
otherwise noted, option grants have a term of ten years. Grants to
Mr. Hanlon prior to May 23, 2005 were made to him in his capacity as a
Director.
|
(1)
|
Granted
and vested 8/5/03.
|
|
(2)
|
Granted
and vested 3/24/04.
|
|
(3)
|
Granted
and vested 1/7/05 – five year term.
|
|
(4)
|
Grant
date 5/23/05 effective upon stockholder approval received on 8/17/05;
vesting 33% 90 days after grant, 33% one year after grant and 34% two
years after grant.
|
|
(5)
|
Total
options granted 5/23/05 – 150,000 effective upon stockholder approval
received on 8/17/05; vesting 33% 90 days after grant, 33% one year after
grant and 34% two years after grant. Options for 30,000 shares
exercised on December 20, 2006.
|
|
(6)
|
Grant
date 8/10/06; vesting 33.3% 90 days after grant, 33.3% one year after
grant and 33.4% two years after
grant.
|
|
(7)
|
Grant
date 12/16/05; vesting 33.3% one year after grant, 33.3% two years after
grant and 33.4% three years after
grant.
|
|
(8)
|
Grant
date 3/18/05; vesting one year after
grant.
|
|
(9)
|
Grant
date 8/10/06; vesting 33.3% 90 days after grant, 33.3% one year after
grant and 33.4% two years after
grant.
|
|
(10)
|
Grant
date 5/24/07; vesting 33.3% on date of grant, 33.3% one year after grant
and 33.4% two years after grant.
|
|
(11)
|
Grant
date 1/30/07; vesting 33.3% one year after grant, 33.3% two years after
grant and 33.4% three years after
grant.
|
|
(12)
|
Grant
date 7/21/08; vesting 33.3% 90 days after grant, 33.3% one year after
grant and 33.4% two years after
grant.
|
|
(13)
|
Grant
date 8/10/06; vesting 33.3% one year after grant; 33.3% two years after
grant and 33.4% three years after
grant.
|
|
(14)
|
Grant
date 5/24/07; vesting 33.3% one year after grant; 33.3% two years after
grant and 33.4% three years after
grant.
|
Option
Exercises and Stock Vested
The
following table sets forth information concerning the exercising of stock
options of each of the named executive officers in the fiscal year ended
December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares Acquired on Exercise
|
|
|
Value
Realized on Exercise ($)
|
|
|
Number
of Shares Acquired on Vesting
|
|
|
Value
Realized on Vesting ($)
|
|
|
David
P. Hanlon
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
J. Radcliffe
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Degliomini
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clifford
A. Ehrlich
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilda
Manuel
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Director
Compensation
Directors
who are also our officers are not separately compensated for their service as
directors. Our non-employee directors received the following
aggregate amounts of compensation for 2008.
|
|
|
|
|
|
|
|
|
|
|
John
Sharpe
|
|
|
56,500
|
|
|
|
22,445
|
(1)(2)
|
|
|
78,945
|
|
|
Bruce
Berg (6)
|
|
|
2,000
|
|
|
|
51,976
|
(1)(3)
|
|
|
53,976
|
|
|
Ralph
J. Bernstein
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Frank
Catania
|
|
|
26,500
|
|
|
|
22,445
|
(1)(2)
|
|
|
48,945
|
|
|
Paul
A. deBary
|
|
|
46,750
|
|
|
|
22,445
|
(1)(2)
|
|
|
82,662
|
|
|
|
|
|
|
|
|
|
13,467
|
(1)(4)
|
|
|
|
|
|
Robert
H. Friedman
|
|
|
13,500
|
|
|
|
22,445
|
(1)(2)
|
|
|
35,945
|
|
|
Richard
L. Robbins
|
|
|
27,000
|
|
|
|
22,445
|
(1)(2)
|
|
|
49,445
|
|
|
James
Simon
|
|
|
27,000
|
|
|
|
22,445
|
(1)(2)
|
|
|
49,445
|
|
|
Kenneth
Dreifach (7)
|
|
|
-
|
|
|
|
32,063
|
(1)(5)
|
|
|
32,063
|
|
|
(1)
|
Grant
date aggregate fair value of options granted in the year ended December
31, 2008 under our 2005 Equity Incentive Plan, as amended, computed in
accordance with SFAS No. 123R. Please see Notes B and I to our
consolidated financial statements contained in our Form 10-K for the
fiscal year ended December 31, 2008 for more
information.
|
|
(2)
|
Grant
date 1/15/08; securities underlying options – 10,000 with 10 year term and
15,000 with a 5 year term.
|
|
(3)
|
Grant
date 7/02/08; securities underlying options – 15,000 with 10 year term and
7,500 with a 5 year term.
|
|
(4)
|
Grant
date 1/15/08; securities underlying options – 15,000 with 10 year
term.
|
|
(5)
|
Grant
date 11/10/08; securities underlying options - 15,000 with 10 year term
and 3,750 with a 5 year term.
|
|
(6)
|
Bruce
Berg joined the Board on July 2,
2008.
|
|
(7)
|
Kenneth
Dreifach joined the Board on November 11,
2008.
|
Cash
Compensation
During
2008, each non-employee member of the Company’s Board of Directors received
$1,000 per meeting attended in person and $500 per meeting attended
telephonically. Directors that also serve on committees of the Board
of Directors receive an additional $1,000 per committee meeting attended in
person and $500 per meeting attended telephonically. The chairman of
the audit committee receives an additional annual payment of
$25,000.
Stock
Compensation
Each
non-employee member of the Company’s Board of Directors receives an annual grant
of options to purchase 25,000 shares of the Company’s Common Stock at the Common
Stock’s then current fair market value, and since August 2003 each newly elected
or appointed non-employee director received a one time grant of an option to
purchase 15,000 shares of the Company’s Common Stock at the Common Stock’s then
current fair market value. For 2008, Ralph J. Bernstein waived his
right to receive such options. All stock options granted to the
members of the Company’s Board of Directors vest immediately, except for the
options issued in lieu of the annual cash compensation in 2008, where such
options vested 25% on the grant date, 25% three months after the grant date, 25%
six months after the grant date and 25% nine months after the grant
date. The chairman of the audit committee receives an additional
annual grant of an option to purchase 15,000 shares of the Company’s Common
Stock.
Chairman
Compensation
On May
23, 2005, the Company’s Board of Directors ratified the compensation committee’s
approval of compensation of $50,000 per year for the position of non-executive
Chairman of the Board and a grant of an option to purchase 50,000 shares of the
Company’s Common Stock vesting immediately with a term of 10 years at the
initiation of service for any new non-executive Chairman of the
Board. John Sharpe, who became the Company’s Chairman of the Board on
such date, abstained from all votes of the Board of Directors related to the
establishment of this compensation. On March 20, 2009, the Company received
notice from John Sharpe of his resignation from his positions as a member and
Chairman of the Board of the Company, effective immediately.
Compensation
Committee Interlocks and Insider Participation
There
were no transactions between any member of the Compensation Committee and the
Company during the fiscal year ended December 31, 2008. No member of
the Compensation Committee was an officer or employee of the Company or any
subsidiary of the Company during fiscal 2008.
Compensation
Committee Report
The
Compensation Committee of the Company has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K
with management and, based on such review and discussions, the Compensation
Committee recommended to the Board that the Compensation Discussion and Analysis
be included in this proxy statement.
Compensation
Committee Members:
James
Simon, Chairman
Ralph J.
Bernstein
Paul A.
deBary
Sec
tion 16(a) Beneficial Ownership Reporting
Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
officers and directors, and persons who beneficially own more than ten percent
of our Common Stock, to file initial reports of ownership and reports of changes
in ownership with the SEC. Executive officers, directors and greater than ten
percent beneficial owners are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. Based upon a review of
the copies of such forms furnished to us and written representations from our
executive officers and directors, we believe that during the year ended December
31, 2008 there were no delinquent filers.
C
ert
ain Relationships and Related Transactions
On
February 8, 2008, we entered into an Agreement to Form Limited Liability Company
and Contribution Agreement with Concord (the “Original Contribution Agreement”),
pursuant to which we and Concord, a stockholder that owned more than 5% of our
Common Stock, agreed to form a limited liability company and enter into an
Operating Agreement in connection therewith. Pursuant to the Original
Contribution Agreement, we, together with our subsidiaries, agreed to contribute
our gaming and racing licenses and operations at Monticello Casino and Raceway
and Concord agreed to contribute 160 acres of land located in Kiamesha Lake, New
York (the “Concord Property”). Together, we and Concord agreed to
develop a hotel, convention center, gaming facility and harness horseracing
track on the Concord Property. It was estimated that our initial capital
contribution and Concord’s initial capital contribution were each valued at not
less than $50 million, subject to an appraisal process. On December
30, 2008, we entered into an amendment (the “First Amendment”) to the Original
Contribution Agreement. The First Amendment, dated as of December 30,
2008, among other things, extended the termination date of the Original
Contribution Agreement from December 31, 2008 to January 30, 2009, and deleted
all other termination provisions. On January 30, 2009, we entered into an
amendment (the “Second Amendment”) to the Original Contribution
Agreement. The Second Amendment, dated as of January 30, 2009,
extended the termination date of the Original Contribution Agreement from
January 30, 2009 to February 28, 2009, and deleted all other termination
provisions.
On March
23, 2009, we entered into a new agreement (the “Management Agreement”), with
Concord, pursuant to which we (or a wholly-owned subsidiary of the Company
reasonably acceptable to Concord) shall be retained by Concord Empire Raceway
Corp. (“Raceway Corp.”), a subsidiary of Concord, to provide advice and general
managerial oversight with respect to the operations at the harness track (the
“Track”) to be constructed at that certain parcel of land located in the Town of
Thompson, New York and commonly known as the Concord Hotel and Resort
(“Thompson Property”). As a result of the execution of the
Management Agreement, the Original Contribution Agreement terminated and became
of no further force and effect. The Management Agreement has a term
of forty years (the “Term”).
The
closing of the transactions contemplated by the Management Agreement is to take
place on the date that Concord or its subsidiary secures and closes on (but not
necessarily funds under) financing (the “Financing”) in the minimum aggregate
amount of $500 million (including existing equity) from certain third-party
lenders in connection with the development of the Track and certain gaming
facilities (the “Concord Gaming Facilities”) on the Thompson Property (the
“Closing Date”).
Upon the
commencement of operations at the Concord Gaming Facilities (the “Operations
Date”) and for the duration of the Term, Concord shall cause Raceway Corp. to
pay to the Company an annual management fee in the amount of $2 million such
management fee to be increased by 5% on each 5 year anniversary of the
Operations Date (the “Empire Management Fee”).
In
addition to the Empire Management Fee, commencing on the Operations Date and for
the duration of the Term, Concord shall cause Raceway Corp. to pay to the
Company an annual fee in the amount of 2% of the total revenue wagered with
respect to video gaming machines and/or other alternative gaming located at the
Thompson Property after payout for prizes, less certain fees payable to the
State of New York State, the Monticello Harness Horsemen’s Association, Inc. and
the New York State Horse Breeding Fund (“Adjusted Gross Gaming Revenue
Payment”). Commencing upon the Operations Date and for the duration
of the Term, in the event that the Adjusted Gross Gaming Revenue Payment paid to
the Company is less than $2 million per annum, Concord shall guaranty and pay to
the Company the difference between $2 million and the Adjusted Gross Gaming
Revenue Payment distributed to the Company with respect to such calendar
year.
Bruce M.
Berg, a member of our Board of Directors, is a member of Cappelli Resorts
LLC. Cappelli Resorts LLC is the managing member of Catskill Resort
Group LLC, which is the sole member of Convention Hotels LLC, which is the
general partner of Concord. Louis R. Cappelli, a member of our Board
of Directors and an individual that beneficially owns more than 10% of our
Common Stock, is the managing member of Cappelli Resorts LLC, which is the
managing member of Catskill Resort Group LLC, which is the sole member of
Convention Hotels LLC, which is the general partner of Concord.
On March
31, 2008, we entered into a Stock Purchase Agreement with LRC Acquisition
(“LRC”), which was amended on April 28, 2008 and June 26, 2008 (as amended, the
“Stock Purchase Agreement”). The managing member of LRC is Louis R.
Cappelli, who is also the managing member of Convention Hotels, LLC, Concord’s
general partner. Pursuant to the Stock Purchase Agreement, we agreed,
subject to certain conditions, to issue and sell to LRC, 4,200,000 shares of our
Common Stock for an aggregate purchase price of $5,178,600. In
accordance with the Stock Purchase Agreement, LRC purchased 811,030 shares of
our Common Stock on each of April 29, 2008, May 30, 2008 and June 30, 2008 and
an additional 1,766,910 shares of our Common Stock on July 31,
2008.
Olshan
Grundman Frome Rosenzweig & Wolosky, LLP received fees for legal services of
$992,684 in 2008 and $594,898.50 in 2009. Robert H. Friedman, our
Secretary and a former member of our Board of Directors, is a member of such law
firm.
The
Company’s written Audit Committee charter provides that the Audit Committee will
review and approve all transactions between the Company and its officers,
directors, director nominees, principal stockholders and their immediate family
members. The Company intends that any such transactions will be on
terms no less favorable to it than it could obtain from unaffiliated third
parties.
INDE
PENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board
of Directors has selected Friedman LLP (“Friedman”) as the Company’s independent
registered public accounting firm for the fiscal year ending December 31,
2009.
The Audit
Committee reviews and approves the audit and non-audit services to be provided
by the Company’s independent registered public accounting firm during the year,
considers the effect that performing those services might have on audit
independence and approves management’s engagement of the Company’s independent
registered public accounting firm to perform those services. The
Audit Committee reserves the right to appoint a different independent registered
public accounting firm at any time during the year if the Board of Directors and
the Audit Committee believe that a change is in the best interest of the Company
and its stockholders.
Friedman
was originally engaged as the Company’s independent registered public accounting
firm in February 2002. Friedman has audited the Company’s financial
statements for the fiscal years ended December 31, 2001 through December 31,
2008. A representative of Friedman will be present at the Meeting,
will have an opportunity to make a statement if he or she desires to do so, and
will be available to respond to questions.
Fees
Billed to Empire by Friedman During Fiscal 2008 and
2007
Audit
Fees
The
aggregate fees billed by Friedman for professional fees rendered in connection
with the audit of our annual financial statements and its review of our
financial statements included in our quarterly reports on Forms 10-Q, including
services related thereto, were approximately $534,000 for the fiscal year ended
December 31, 2008 and approximately $682,000 for the fiscal year ended December
31, 2007.
Audit-Related
Fees
The
aggregate fees billed by Friedman for assurance and related services that are
reasonably related to the performance of the audit or review of our financial
statements and are not reported as “Audit Fees,” including services rendered in
connection with capital raising efforts, preparation of registration statements,
consultations regarding financial accounting and reporting, audits of the
Company’s employee benefit plan and statutory audits were approximately $58,000
for the fiscal year ended December 31, 2008 and approximately $21,000 for the
fiscal year ended December 31, 2007.
Tax
Fees
The
aggregate fees billed by Friedman for professional services rendered for tax
compliance and tax preparation were approximately $54,000 for the fiscal year
ended December 31, 2008 and approximately $45,000 for the fiscal year ended
December 31, 2007.
All
Other Fees
Other
than the fees described above, there were no other fees billed by Friedman for
products and services rendered to us for the fiscal years ended December 31,
2008 or December 31, 2007.
Pre-
approval Policies and Procedures
All audit
and non-audit services to be performed by our independent registered public
accounting firm must be approved in advance by the Audit
Committee. Consistent with applicable law, limited amounts of
services, other than audit, review or attest services, may be approved by one or
more members of the Audit Committee pursuant to authority delegated by the Audit
Committee, provided each such approved service is reported to the full Audit
Committee at its next meeting.
All of
the engagements and fees for our fiscal year ended December 31, 2008 were
approved by the Audit Committee. In connection with the audit of our
financial statements for the fiscal years ended December 31, 2008 and December
31, 2007, Friedman only used full-time, permanent employees.
The Audit
Committee of the Board of Directors considered whether the provision of
non-audit services by Friedman was compatible with its ability to maintain
independence from an audit standpoint and concluded that Friedman’s independence
was not compromised.
PRO
POSAL TWO:
APPROVAL
OF THE AMENDMENT OF THE COMPANY’S 2005 EQUITY INCENTIVE PLAN
The
Company’s 2005 Equity Incentive Plan was approved by the Company’s Board of
Directors in May 2005 and by its stockholders in August 2005. An amendment to
amend and restate the Company’s 2005 Equity Incentive Plan in order to allow for
the grant of stock appreciation rights and other equity incentives or stock or
stock based awards, including but not limited to, restricted stock units, was
approved by the Company’s Board of Directors on May 19, 2008 and by its
stockholders on November 11, 2008. On May 4, 2009, subject to stockholder
approval, the Board of Directors approved a proposal to amend the 2005 Equity
Incentive Plan in order to increase the number of shares of our Common Stock
subject to the 2005 Equity Incentive Plan by 5,000,000 shares to 8,500,000
shares (as amended, the “Amended Plan”).
Purpose
of the Amendment
The
purpose of the amendment to the 2005 Equity Incentive Plan is to increase the
number of the number of shares of our Common Stock subject to the 2008 Equity
Incentive Plan from 3,500,000 shares to 8,500,000 shares.
General
The 2005
Equity Incentive Plan authorizes a total of 5,000,000 shares of our Common Stock
be subject to the Plan, which may be allocated at the discretion of our Board of
Directors between Options, Stock Appreciation Rights, Restricted Stock and
Equity Incentives grants. If the proposal for the amendment of the 2005 Equity
Incentive Plan is approved, then the Amended Plan will authorize the issuance of
8,500,000 shares of our Common Stock.
As of May
11, 2009, 2,833,508 shares had been authorized for issuance pursuant to option
grants, 261,023 shares had been issued upon the vesting of restricted stock and
405,469 shares remained available for award grants under the 2005 Equity
Incentive Plan. As of May 11, 2009, 34,037,961 shares of our Common Stock were
issued and outstanding. The closing sale price of our Common Stock on
May 11, 2009 was $2.19.
All
awards under the 2005 Equity Incentive Plan are within the discretion of the
Compensation Committee and, therefore, future awards under the 2005 Equity
Incentive Plan, or, if approved, the Amended Plan, are generally not
determinable.
A summary
of the Amended Plan is set forth below, and its full text is attached hereto as
Appendix A. The following discussion is qualified in its entirety by reference
to Appendix A.
Administration
of the Amended Plan
The
purpose of the Amended Plan will continue to be to advance the interests of the
Company and its subsidiaries by improving their ability to attract and retain
employees whose services are valuable to the Company. The Company believes that
this result can be achieved by rewarding such employees’ contributions to the
success of the Company through ownership of shares of the Company’s Common
Stock.
The
Amended Plan will be administered by the Compensation Committee of the Board of
Directors of the Company which shall have full power and authority to designate
recipients of options and grantees of stock appreciation rights, restricted
stock and other equity incentives and to determine the terms and conditions of
respective option, stock appreciation rights and restricted stock and equity
incentive agreements and to interpret the provisions and supervise the
administration of the Amended Plan. Any decision made by all of the members of
the Compensation Committee regarding the Amended Plan shall be final for all
involved parties.
Section
162(m) of the Code places annual limitations on the deductibility by public
companies of compensation in excess of $1,000,000 paid to the chief executive
officer, and to the other four most highly compensated officers. However, these
limitations are not imposed if certain requirements are met. One major
requirement is that the compensation be based on performance. With respect to
the issuance of options or stock appreciation rights under the Amended Plan
intended to be performance based, the Amended Plan must state a maximum number
of shares with respect to options or stock appreciation rights granted to an
individual during a specified period and must be approved by the Company’s
stockholders, which Plan provides for a maximum of 2,500,000 options or stock
appreciation rights during any calendar year. The grant of restricted stock
under the Amended Plan is not required to be performance based and therefore may
be subject to the limitations imposed by Section 162(m) of the
Code.
Designation
of Participants
Persons
eligible to participate in the Amended Plan include employees, officers and
directors of, as well as, consultants and advisors to, the Company or any
subsidiary. In selecting participants, and in determining the number of shares
to be covered by each option granted to optionees or stock appreciation rights,
restricted stock or equity incentive grants, the Compensation Committee may
consider any factors it considers relevant, including the office or position
held by the participant and the participants’ degree of responsibility for and
contribution to the success of the Company. There are currently
approximately 351 employees, four officers and five directors who are eligible
to participate in the Amended Plan.
Stock
Reserved for the Amended Plan
The
Amended Plan provides that a total of 8,500,000 shares of the Company’s Common
Stock shall be subject to the Amended Plan, which shares may be allocated, at
the discretion of the Company, between options, stock appreciation rights,
restricted stock and equity incentives. This discretion is subject only to the
occurrence of certain events that require the Compensation Committee to fairly
and appropriately adjust the number of shares to be allocated. Such events
include a merger, reorganization, consolidation, recapitalization, stock
dividend, or other change in the Company’s corporate structure that affects the
Company’s Common Stock. This adjustment is necessary so that the occurrence of
the event does not affect each participant’s proportionate interest in the
Company prior to such event.
Terms
and Conditions of Stock Appreciation Rights
Exercise
Stock
appreciation rights are to be granted with an exercise price that is not less
than 100% of the fair market value of a share of Common Stock on the date the
stock appreciation right is granted and shall be exercisable at such time or
times and subject to such other terms and conditions as shall be determined by
the Compensation Committee. Unless otherwise provided, stock appreciation rights
shall become immediately exercisable and shall remain exercisable until
expiration, cancellation or termination of the award. Such rights may
be exercised in whole or in part by giving written notice to the
Company. Stock appreciation rights to the extent then exercisable may
be exercised for payment in cash, shares of Common Stock or a combination of
both, as the Compensation Committee shall deem desirable, equal to: (i) the
excess of the fair market value of a share of Common Stock on the date of
exercise over (ii) the exercise price of such stock appreciation
right.
Restrictions on Transfer of
Stock Appreciation Rights
Stock
appreciation rights cannot be transferred, and are exercisable only by the
grantee during his lifetime. After the grantee’s death, stock appreciation
rights are assignable only by will, or through the laws of descent and
distribution. Any attempt to transfer, assign, pledge, or in any other way
dispose of a stock appreciation right contrary to these provisions will be
void.
Termination
Except as
otherwise provided by the Compensation Committee, if a grantee dies, a stock
appreciation right exercisable immediately prior to death may be exercised by
the grantee’s executor, administrator, or transferee for a period ending on the
earlier of one year thereafter, or at the time when the stock appreciation right
otherwise would have expired.
Except as
otherwise provided by the Compensation Committee, if a grantee’s employment is
terminated for reasons other than death (disability or retirement), a stock
appreciation right exercisable immediately prior to termination may be exercised
for a period ending on the earlier of thirty days thereafter, or at the time
when the stock appreciation rights otherwise would have expired.
Equity
Incentives
The
Compensation Committee may grant equity incentives (including unrestricted
shares) to such persons, in such amounts and subject to such terms and
conditions, as it may in its discretion determine, subject to the provisions of
the Amended Plan. Such awards may entail the transfer of actual
shares of Common Stock to participants, or payment in cash or otherwise of
amounts based on the value of shares of Common Stock.
Rights
as a Stockholder
No
participant under the Amended Plan is to have any of the rights of a stockholder
of the Company with respect to shares subject to such award until the issuance
of a stock certificate to such person for such shares. Except as
otherwise provided in the Amended Plan, no adjustments are to be made for
dividends, distributions or other rights (whether ordinary or extraordinary, and
whether in cash, securities or other property) for which the record date is
prior to the date such stock certificate is issued.
Terms
and Conditions of Options
Option
Price
The
exercise price of each option shall be determined by the Compensation Committee,
but may not be less than 100% of the fair market value of the underlying Common
Stock on the option grant date. If an incentive stock option is granted to an
employee who owns more than 10% of the total combined voting power of the
Company’s capital stock, then its exercise price may not be less than 110% of
the fair market value of the underlying Common Stock on the option grant
date.
Term of
Options
The
Compensation Committee shall fix the term of each option; provided, however,
that the maximum term for which any option is exercisable shall not exceed ten
years. Moreover, the maximum term of incentive stock options granted to
employees who own more than 10% of the total combined voting power of the
Company’s capital stock shall not exceed five years. The Amended Plan provides
for the earlier expiration of options of a participant in the event of certain
terminations of employment or engagement or, if the Compensation Committee so
determines, in the event of a change in control.
Restrictions on Transfer and
Exercise of Options
Options
cannot be transferred, and are exercisable only by the optionee during his
lifetime. After the optionee’s death, options are assignable only by will, or
through the laws of descent and distribution. Any attempt to transfer, assign,
pledge, or in any other way dispose of an option contrary to these provisions
will be void.
Additionally,
the aggregate fair market value of the shares (as determined at the time the
stock option is granted) for which an employee may first exercise incentive
stock options for the calendar year under the Amended Plan, cannot exceed
$100,000. The Compensation Committee may impose any other conditions to exercise
as it deems appropriate.
Termination
Except as
otherwise provided by the Compensation Committee, if an optionee dies, an option
exercisable immediately prior to death may be exercised by the optionee’s
executor, administrator, or transferee for a period ending on the earlier of one
year thereafter, or at the time when the options otherwise would have
expired.
Except as
otherwise provided by the Compensation Committee, if an optionee’s employment is
terminated for reasons other than death (disability or retirement), an option
exercisable immediately prior to termination may be exercised for a period
ending on the earlier of thirty days thereafter, or at the time when the options
otherwise would have expired.
Terms
and Conditions of Restricted Shares
Shares of
restricted stock issued by the Company cannot be sold, transferred, pledged,
assigned, or similarly disposed of, until one of several specified events occur.
A share of restricted stock becomes freely transferable by the grantee either at
the end of the restricted period, at the end of a period established by the
Compensation Committee, or when and if the Compensation Committee waives the
restrictions. During the restricted period, holders of restricted stock may
exercise full voting rights and receive regular cash dividends paid with respect
to such shares. In addition, any holder making an election under Section 83(b)
of the Code, must provide a copy of such election to the Company within 10 days
of the filing.
Change
of Control
The
Compensation Committee has the sole discretion to reduce the period that an
optionee or grantee of restricted stock must wait to exercise his
option/restricted stock, where there is a change of control. A change of control
occurs where there is a major corporate event, such as a successful tender
offer, merger, consolidation, sale of substantially all of a corporation’s
assets, or where a “person” (where “person” is given a special meaning by the
Exchange Act) acquires 50% of the Company’s outstanding voting
securities.
Amendment
and Termination
The Board
of Directors may generally amend, suspend or terminate the Amended Plan, except
that the Amended Plan cannot be changed in a way that would impair the rights of
any participant without the participant’s consent. The Amended Plan also cannot
be amended without stockholder consent where doing so would result in a major
change, such as substantially increasing the benefits that participants are to
receive, or decreasing the exercise price beneath certain specified
thresholds.
The
Amended Plan and any award thereunder may be amended to comply with the rules
applicable to deferred compensation as set forth in Section 409A of the
Code.
Registration
of Shares
No option
may be exercised unless and until the Common Stock to be issued upon the
exercise thereof has been registered under the Securities Act of 1933, as
amended, and applicable state securities laws, or are, in the opinion of counsel
to the Company, exempt from such registration in the United
States. The Company shall not be under any obligation to register
under applicable federal or state securities laws any Common Stock to be issued
upon the exercise of an option granted under the Amended Plan in order to permit
the exercise of an option and the issuance and sale of the Common Stock subject
to such option, although the Company may in its sole discretion register such
Common Stock at such time as the Company determines. If the Company
chooses to comply with such an exemption from registration, the Common Stock
issued under the Amended Plan may, at the direction of the Compensation
Committee, bear an appropriate restrictive legend restricting the transfer or
pledge of the Common Stock represented thereby, and the Compensation Committee
may also give appropriate stop transfer instructions with respect to such Common
Stock to the Company’s transfer agent.
Rule 16b-3
Compliance
In all
cases, the terms, provisions, conditions and limitations of the Amended Plan
shall be construed and interpreted so as to be consistent with the provisions of
Rule 16b-3 of the Exchange Act.
Recent
Grants
On April
15, 2009, in connection with his respective service as a director in lieu of
cash compensation, each of Bruce Berg, Ralph Bernstein, Louis Cappelli and James
Simon was granted a five-year stock option to purchase 75,000 shares of common
stock pursuant to the 2005 Equity Incentive Plan at an exercise price of $1.23
per share, all such options vesting on the grant date.
On April
15, 2009, in connection with his respective service as a member of a special
committee of the Board of Directors, each of Ralph Bernstein and Paul deBary was
granted a five-year stock option to purchase 72,000 shares of common stock
pursuant to the 2005 Equity Incentive Plan at an exercise price of $1.23 per
share, all such options vesting on the grant date.
On April
23, 2009, in connection with his employment as Senior Vice President of
Governmental Relations and Corporate Communications, Charles Degliomini was
granted a five-year stock option to purchase 300,000 shares of common stock
pursuant to the 2005 Equity Incentive Plan at an exercise price of $1.11 per
share, one-third vesting as of the grant date, one-third on the first
anniversary of the grant date and the remaining one-third on the second
anniversary of the grant date.
On April
23, 2009, in connection with his employment as President and General Manager,
Clifford A. Ehrlich was granted a five-year stock option to purchase 300,000
shares of common stock pursuant to the 2005 Equity Incentive Plan at an exercise
price of $1.11 per share, one-third vesting as of the grant date, one-third on
the first anniversary of the grant date and the remaining one-third on the
second anniversary of the grant date.
On April
23, 2009, in connection with his respective services as a member of a special
committee of the Board of Directors and in lieu of cash compensation, each of
Bruce Berg and Ralph Bernstein was granted a five-year stock option to purchase
100,000 shares of common stock pursuant to the 2005 Equity Incentive Plan at an
exercise price of $1.11 per share, one-fourth vesting as of the grant date,
one-fourth vesting as of May 1, 2009, one-fourth vesting as of June 1, 2009 and
the remaining one-fourth vesting on July 1, 2009; provided that the special
operating committee is in existence in each such date.
On April
27, 2009, in connection with the special and extraordinary services provided by
Joseph Bernstein to the Company including in connection with the transaction
with Concord, Joseph Bernstein was granted a five-year stock option to purchase
250,000 shares of common stock pursuant to the 2005 Equity Incentive Plan at an
exercise price of $1.14 per share, vesting immediately upon stockholder approval
of the Amended Plan.
On April
27, 2009, in connection with the special and extraordinary services provided by
Joseph Bernstein to the Company in connection with the Company’s restructuring
of its indebtedness, Joseph Bernstein was granted a five-year stock option to
purchase 250,000 shares of common stock pursuant to the 2005 Equity Incentive
Plan at an exercise price of $1.14 per share, vesting upon the public
announcement by the Company of a binding agreement with a majority of
bondholders of the $65 million second mortgage facility necessary to effectuate
the Company’s achievement, exchange or other modification or resolution
conclusively of all first and second mortgage indebtedness of the Company before
July 31, 2009.
All
grants described above are subject to stockholder approval. If the Amended Plan
is not approved, all such grants would become void.
New
Plan Benefits
Benefits
under the Plan to the named executive officers (as previously defined) and the
Company’s other executive officers, non-employee directors and other employees
are not currently determinable because other grants under the Plan are
discretionary. All grants under the Plan have been and will be made in
consideration of services rendered or to be rendered to the Company or any of
its subsidiaries by the recipients. The following table sets forth the options
that have been granted subject to stockholder approval of the Amended Plan and
the estimated dollar value of such options. If the Amended Plan is
not approved, all such grants would become void.
2005 Equity Incentive
Plan
|
Name and Position
|
|
Estimated Dollar
Value($) (1)
|
|
Number of Options
|
|
Bruce
Berg
|
|
157,250
(2)
|
|
175,000
|
|
Joseph
Bernstein
|
|
440,000
(3)
|
|
500,000
|
|
Ralph
Bernstein
|
|
225,650
(4)
|
|
247,000
|
|
Louis
Cappelli
|
|
71,250
(5)
|
|
75,000
|
|
Paul
deBary
|
|
68,400
(6)
|
|
72,000
|
|
Charles
Degliomini
|
|
258,000
(7)
|
|
300,000
|
|
Clifford
A. Ehrlich
|
|
258,000
(8)
|
|
300,000
|
|
James
Simon
|
|
71,250
(9)
|
|
75,000
|
|
Executive
Group
|
|
516,000
|
|
600,000
|
|
Non-Executive
Director Group
|
|
593,800
|
|
644,000
|
|
Non-Executive
Officer Employee Group
|
|
--
|
|
--
|
__________
|
|
(1)
|
Assumes
that all options are fully vested.
|
|
|
(2)
|
75,000
options valued using $1.23 per share exercise price. 100,000 options
valued using $1.11 per share exercise
price.
|
|
|
(3)
|
$1.14
per share exercise price.
|
|
|
(4)
|
147,000
options valued using $1.23 per share exercise price. 100,000 options
valued using $1.11 per share exercise
price.
|
|
|
(5)
|
$1.23
per share exercise price.
|
|
|
(6)
|
$1.23
per share exercise price.
|
|
|
(7)
|
$1.11
per share exercise price.
|
|
|
(8)
|
$1.11
per share exercise price.
|
|
|
(9)
|
$1.23
per share exercise price.
|
Federal
Tax Effects
Tax Treatment of Incentive
Stock Options
In
general, no taxable income for regular federal income tax purposes will be
recognized by an option holder upon receipt or exercise of an incentive stock
option, and the Company will not then be entitled to any tax deduction. Assuming
that the option holder does not dispose of the option shares before the later of
(i) two years after the date of grant or (ii) one year after the exercise of the
option, upon any such disposition, the option holder will recognize capital gain
equal to the difference between the sale price on disposition and the exercise
price.
If,
however, the option holder disposes of his option shares prior to the expiration
of the required holding period, he will recognize ordinary income for federal
income tax purposes in the year of disposition equal to the lesser of (i) the
difference between the fair market value of the shares at the date of exercise
and the exercise price, or (ii) the difference between the sale price upon
disposition and the exercise price. Any additional gain on such
disqualifying disposition will be treated as capital gain. In addition, if such
a disqualifying disposition is made by the option holder, the Company will be
entitled to a deduction equal to the amount of ordinary income recognized by the
option holder provided that such amount constitutes an ordinary and reasonable
expense of the Company.
Tax Treatment of
Nonqualified Stock Options
No
taxable income will be recognized by an option holder upon receipt of a
nonqualified stock option, and the Company will not be entitled to a tax
deduction for such grant.
Upon the
exercise of a nonqualified stock option, the option holder will include in
taxable income, for federal income tax purposes, the excess in value on the date
of exercise of the shares acquired pursuant to the nonqualified stock option
over the exercise price. Upon a subsequent sale of the shares, the option holder
will derive short-term or long-term gain or loss, depending upon the option
holder’s holding period for the shares (commencing upon the exercise of the
option) and upon the subsequent appreciation or depreciation in the value of the
shares.
The
Company generally will be entitled to a corresponding deduction at the time that
the participant is required to include the value of the shares (less the
exercise price) in his or her income.
Tax Treatment of Restricted
Stock
A
recipient of a restricted stock grant will not, except as provided below,
recognize income upon the receipt of a grant of restricted stock. The recipient
will recognize taxable income at such time as the restricted stock vests in an
amount equal to the fair market value of the stock upon the vesting date. A
recipient may elect pursuant to Section 83(b) of the Code to treat the
restricted stock as vested on the grant date, if certain conditions are met, in
which case the recipient may recognize taxable income upon the date of grant.
Unless the limitations set forth in Section 162(m) are applicable, the Company
generally will be entitled to a corresponding tax deduction at the time the
recipient is required to include the fair market value of the restricted stock
in his or her taxable income.
Tax Treatment of Stock
Appreciation Rights
No
taxable income will be recognized by a participant upon receipt of a stock
appreciation right and the Company will not be entitled to a tax deduction upon
the grant of such right.
Upon the
exercise of a stock appreciation right, the participant will include in taxable
income, for federal income tax purposes, the fair market value of the cash and
other property received with respect to the stock appreciation right on such
date and the Company will generally be entitled to a corresponding tax
deduction.
Withholding of
Tax
The
Company is permitted to deduct and withhold or make provision for amounts
required to satisfy its withholding tax liabilities with respect to its
employees.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ADOPTION OF OUR
AMENDED 2005 EQUITY INCENTIVE PLAN
S
TOC
KHOLDER PROPOSALS
We expect
that our 2010 annual meeting of stockholders will be held on or about June 16,
2010, The SEC has adopted regulations that govern the inclusion of stockholder
proposals in the Company's annual proxy materials. For a stockholder
proposal to be included in the proxy statement for the Company’s 2010 annual
meeting of stockholders, as applicable, including a proposal for the election of
a director, the proposal must have been received by the company at its principal
offices no later than January 15, 2010. Any notice of stockholder proposals
received after that date will be considered untimely. To be included in our
proxy materials, your proposal must also comply with the Company’s bylaws and
SEC regulations under Rule 14a-8 of the Exchange Act regarding the inclusion of
stockholder proposals in company-sponsored proxy materials. If we change the
date of the 2010 annual meeting of stockholders by more than 30 days from the
anniversary of this year’s Annual Meeting, stockholder proposals must be
received not later than the close of business on the later of (i) the 90th day
prior to such annual meeting or (ii) the 15th day following the day on which
public announcement of the date of such meeting is first made. In order to
curtail any controversy as to the date on which a stockholder proposal was
received by the company, it is suggested that stockholder proposals be submitted
by certified mail, return receipt requested, and be addressed to Empire Resorts,
Inc., c/o Monticello Casino and Raceway, Route 17B, P.O. Box 5013, Monticello,
New York, 12701, Attention: Investor Relations. Notwithstanding, the foregoing
shall not affect any rights of stockholders to request inclusion of proposals in
the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act
nor grant any stockholder a right to have any nominee included in the
Corporation’s proxy statement.
OT
HER MATTERS
As of the
date of this proxy statement, our Board of Directors does not know of any matter
that will be presented for consideration at the meeting other than as described
in this proxy statement.
Robert H.
Friedman
Secretary
May 15,
2009
AP
PENDIX A
EMPIRE
RESORTS, INC.
AMENDED
AND RESTATED
2005
EQUITY INCENTIVE PLAN
(as
amended November 2008 and June 2009)
1.
Purpose of the
Plan
.
This 2005
Equity Incentive Plan (the “Plan”) is intended as an incentive to retain in the
employ of and as directors, consultants and advisors to EMPIRE RESORTS, INC., a
Delaware corporation (the “Company”) and any Subsidiary of the Company, within
the meaning of Section 424(f) of the United States Internal Revenue Code of
1986, as amended (the “Code”), persons of training, experience and ability, to
attract new employees, directors, consultants and advisors whose services are
considered valuable, to encourage the sense of proprietorship and to stimulate
the active interest of such persons in the development and financial success of
the Company and its Subsidiaries.
It is
further intended that certain options granted pursuant to the Plan shall
constitute incentive stock options within the meaning of Section 422 of the Code
(the “Incentive Options”) while certain other options granted pursuant to the
Plan shall be nonqualified stock options (the “Nonqualified
Options”). Incentive Options and Nonqualified Options are hereinafter
referred to collectively as “Options.” Stock granted pursuant to the
Plan is hereinafter referred to as “Restricted Stock.”
The
Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”)
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and that transactions of the type specified in subparagraphs (c) to (f)
inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the
Plan will be exempt from the operation of Section 16(b) of the Exchange
Act. Further, the Plan is intended to satisfy the performance-based
compensation exception to the limitation on the Company’s tax deductions imposed
by Section 162(m) of the Code with respect to those Options for which
qualification for such exception is intended. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company’s intent as stated in this Section
1.
2.
Administration of the
Plan
.
The Plan
shall be administered by the Compensation Committee (the “Committee”) of the
Board of Directors of the Company (the “Board”), which shall consist of three or
more directors who are “Non-Employee Directors” (as such term is defined in Rule
16b-3) and “Outside Directors” (as such term is defined in Section 162(m) of the
Code) serving at the pleasure of the Board. The Committee, subject to
Sections 3, 5, 6, 7 and 8 hereof, shall have full power and authority to
designate recipients of Options and grantees of stock appreciation rights
(“Stock Appreciation Rights”), Restricted Stock and other equity incentives or
stock or stock based awards, including, but not limited to, restricted stock
units (“Equity Incentives”) and to determine the terms and conditions of
respective Option, Stock Appreciation Rights, Restricted Stock and Equity
Incentives agreements (which need not be identical) and to interpret the
provisions and supervise the administration of the Plan. The
Committee shall have the authority, without limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
Nonqualified Options. To the extent any Option does not qualify as an
Incentive Option, it shall constitute a separate Nonqualified
Option.
Subject
to the provisions of the Plan, the Committee shall interpret the Plan, all
Options, Stock Appreciation Rights, Restricted Stock and Equity Incentives
grants under the Plan, shall make such rules as it deems necessary for the
proper administration of the Plan, shall make all other determinations necessary
or advisable for the administration of the Plan and shall correct any defects or
supply any omission or reconcile any inconsistency in the Plan or in any
Options, Stock Appreciation Rights, Restricted Stock or Equity Incentives grants
under the Plan in the manner and to the extent that the Committee deems
desirable to carry into effect the Plan or any Options, Stock Appreciation
Rights, Restricted Stock or Equity Incentives grants. The act or
determination of a majority of the Committee shall be the act or determination
of the Committee and any decision reduced to writing and signed by all of the
members of the Committee shall be fully effective as if it had been made by a
majority at a meeting duly held. Subject to the provisions of the
Plan, any action taken or determination made by the Committee pursuant to this
and the other Sections of the Plan shall be conclusive on all
parties.
In the
event that for any reason the Committee is unable to act or if the Committee at
the time of any grant, award or other acquisition under the Plan of Options or
Stock (as hereinafter defined) does not consist of two or more Non-Employee
Directors, or if there shall be no such Committee, then the Plan shall be
administered by the Board, and references herein to the Committee (except in the
proviso to this sentence) shall be deemed to be references to the Board, and any
such grant, award or other acquisition may be approved or ratified in any other
manner contemplated by subparagraph (d) of Rule 16b-3; provided, however, that
grants to the Company’s Chief Executive Officer or to any of the Company’s other
four most highly compensated officers that are intended to qualify as
performance-based compensation under Section 162(m) of the Code may only be
granted by the Committee.
3.
Designation of
Participants
.
The
persons eligible for participation in the Plan as recipients of Options (the
“Optionees”) and grantees of Stock Appreciation Rights, Restricted Stock or
Equity Incentives (respectively, the “Grantees” and, collectively with the
Optionees, the “Participants”) shall include employees, officers and directors
of, and consultants and advisors to, the Company or any Subsidiary; provided
that Incentive Options may only be granted to employees of the Company and the
Subsidiaries. In selecting Participants, and in determining the
number of shares to be covered by each Option granted to Optionees or Stock
Appreciation Rights, Restricted Stock or Equity Incentives grants, the Committee
may consider any factors it deems relevant, including without limitation, the
office or position held by the Participant or the Participant’s relationship to
the Company, the Participant’s degree of responsibility for and contribution to
the growth and success of the Company or any Subsidiary, the Participant’s
length of service, promotions and potential. An Optionee who has been
granted an Option hereunder may be granted an additional Option or Options, if
the Committee shall so determine. A Grantee who has been granted
Stock Appreciation Rights, Restricted Stock or Equity Incentives hereunder may
be granted additional Stock Appreciation Rights, Restricted Stock or Equity
Incentives, if the Committee shall so determine.
4.
Stock Reserved for the
Plan
.
Subject
to adjustment as provided in Section 11 hereof, a total of 8,500,000 shares of
the Company’s Common Stock, $0.01 par value per share (the “Stock”), shall be
subject to the Plan which may be allocated, at the discretion of the Company,
between Options, Stock Appreciation Rights, Restricted Stock and Equity
Incentives grants. The maximum number of shares of Stock that may be
subject to Options or Stock Appreciation Rights granted under the Plan to any
individual in any calendar year shall not exceed 2,500,000 (subject to
adjustment pursuant to Section 11 hereof) and the method of counting such shares
shall conform to any requirements applicable to performance-based compensation
under Section 162(m) of the Code.
The shares of Stock
subject to the Plan shall consist of unissued shares, treasury shares or
previously issued shares held by any Subsidiary of the Company, and such amount
of shares of Stock shall be and is hereby reserved for such
purpose. Any of such shares of Stock that may remain unsold and that
are not subject to outstanding Options, Stock Appreciation Rights, Restricted
Stock or Equity Incentives grants at the termination of the Plan shall cease to
be reserved for the purposes of the Plan, but until termination of the Plan the
Company shall at all times reserve a sufficient number of shares of Stock to
meet the requirements of the Plan. Should any Option, Stock
Appreciation Rights, Restricted Stock or Equity Incentives expire or be canceled
prior to its exercise in full or should the number of shares of Stock to be
delivered upon the exercise in full of an Option, Stock Appreciation Right,
Restricted Stock or Equity Incentives be reduced for any reason, the shares of
Stock theretofore subject to such Option may be subject to future grants under
the Plan, except where such reissuance is inconsistent with the provisions of
Section 162(m) of the Code where qualification as performance-based compensation
under Section 162(m) of the Code is intended.
5.
Terms and Conditions of
Options
.
Options
granted under the Plan shall be subject to the following conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:
a.
Option
Price
. The purchase price of each share of Stock purchasable
under an Option shall be determined by the Committee at the time of grant, but
shall not be less than 100% of the Fair Market Value (as defined below) of such
share of Stock on the date the Option is granted; provided, however, that with
respect to an Optionee who, at the time such Incentive Option is granted, owns
(within the meaning 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 of any
Subsidiary, the purchase price per share of Stock under an Incentive Option
shall be at least 110% of the Fair Market Value per share of Stock on the date
of grant. The purchase price of each share of Stock purchasable under
a Nonqualified Option shall not be less than the Fair Market Value of such share
of Stock on the date the Option is granted; provided, however, that if an option
granted to the Company’s Chief Executive Officer or to any of the Company’s
other four most highly compensated officers is intended to qualify as
performance-based compensation under Section 162(m) of the Code, the exercise
price of such Option shall not be less than 100% of the Fair Market Value (as
such term is defined below) of such share of Stock on the date the Option is
granted. The exercise price for each Option shall be subject to
adjustment as provided in Section 11 below. “Fair Market Value” means
the closing price of publicly traded shares of Stock on the principal securities
exchange on which shares of Stock are listed (if the shares of Stock are so
listed), or on the NASDAQ Stock Market (if the shares of Stock are regularly
quoted on the NASDAQ Stock Market), or, if not so listed or regularly quoted,
the mean between the closing bid and asked prices of publicly traded shares of
Stock in the over-the-counter market, or, if such bid and asked prices shall not
be available, as reported by any nationally recognized quotation service
selected by the Company, or as determined by the Committee in a manner
consistent with the provisions of the Code. Anything in this Section
5(a) to the contrary notwithstanding, in no event shall the purchase price of a
share of Stock be less than the minimum price permitted under the rules and
policies of any national securities exchange on which the shares of Stock are
listed.
b.
Option
Term
. The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than ten years after the date such
Option is granted and in the case of an Incentive Option granted to an Optionee
who, at the time such Incentive Option is granted, owns (within the meaning 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 of any Subsidiary, no such Incentive
Option shall be exercisable more than five years after the date such Incentive
Option is granted.
c.
Exercisability
. Except
as may be provided in Section 11, Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at the time of grant.
d.
Method of
Exercise
. Options to the extent then exercisable may be
exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the purchase price, in cash, or by
check or such other instrument as may be acceptable to the
Committee. As determined by the Committee, in its sole discretion, at
or after grant, payment in full or in part may be made at the election of the
Optionee (i) in the form of Stock owned by the Optionee (based on the Fair
Market Value of the Stock on the trading day before the Option is exercised)
which is not the subject of any pledge or security interest, (ii) in the form of
shares of Stock withheld by the Company from the shares of Stock otherwise to be
received with such withheld shares of Stock having a Fair Market Value on the
date of exercise equal to the exercise price of the Option, or (iii) by a
combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the Fair Market Value of any shares surrendered to the
Company is at least equal to such exercise price and except with respect to (ii)
above, such method of payment will not cause a disqualifying
disposition of all or a portion of the Stock received upon exercise of an
Incentive Option. An Optionee shall have the right to dividends and
other rights of a stockholder with respect to shares of Stock purchased upon
exercise of an Option at such time as the Optionee has given written notice of
exercise and has paid in full for such shares and has satisfied such conditions
that may be imposed by the Company with respect to the withholding of
taxes.
e.
Limit on Value of Incentive
Option
. The aggregate Fair Market Value, determined as of the
date the Incentive Option is granted, of Stock for which Incentive Options are
exercisable for the first time by any Optionee during any calendar year under
the Plan (and/or any other stock option plans of the Company or any Subsidiary)
shall not exceed $100,000.
f.
Incentive Option
Shares
. A grant of an Incentive Option under this Plan shall
provide that (a) the Optionee shall be required as a condition of the exercise
to furnish to the Company any payroll (employment) tax required to be withheld,
and (b) if the Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any share or
shares of Stock issued to him upon exercise of an Incentive Option granted under
the Plan within the two year period commencing on the day after the date of the
grant of such Incentive Option or within a one year period commencing on the day
after the date of transfer of the share or shares to him pursuant to the
exercise of such Incentive Option, he shall, within 10 days after such
disposition, notify the Company thereof and immediately deliver to the Company
any amount of United States federal, state and local income tax withholding
required by law.
6.
Terms and Conditions of
Stock Appreciation Rights
.
Stock
Appreciation Rights shall granted with an exercise price that is not less than
100% of the Fair Market Value (as defined in Section 5(a) herein) of a share of
Common Stock on the date the Stock Appreciation Right is granted and shall be
exercisable at such time or times and subject to such other terms and conditions
as shall be determined by the Committee. Unless otherwise provided, Stock
Appreciation Rights shall become immediately exercisable and shall remain
exercisable until expiration, cancellation or termination of the
award. Such rights may be exercised in whole or in part by giving
written notice to the Company. Stock Appreciation Rights to the
extent then exercisable may be exercised for payment in cash, shares of Common
Stock or a combination of both, as the Committee shall deem desirable, equal to:
(i) the excess of the Fair Market Value as defined in Section 5(a) herein of a
share of Common Stock on the date of exercise over (ii) the exercise price of
such Stock Appreciation Right.
7.
Terms and Conditions of
Restricted Stock
.
a.
Grant of Restricted
Stock
. Subject to the terms and provisions of the Plan, the Committee may
grant shares of Restricted Stock in such amounts and upon such terms and
conditions as the Committee shall determine subject to the restrictions
described below.
b.
Restricted Stock
Agreement
. The Committee may require, as a condition to the grant of
Restricted Stock, that a Grantee enter into a Restricted Stock agreement,
setting forth the terms and conditions of the grant. In lieu of a
Restricted Stock Agreement, the Committee may provide the terms and conditions
of a grant in a notice to the Grantee of the grant, on the stock certificate
representing the Restricted Stock, in the resolution approving the grant, or in
such other manner as it deems appropriate.
c.
Transferability
.
Except as otherwise provided in this Section 7, the shares of Restricted Stock
granted herein may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable vesting period or
periods established by the Committee and the satisfaction of any other
conditions or restrictions established by the Committee (such period during
which a share of Restricted Stock is subject to such restrictions and conditions
is referred to as the "Restricted Period").
During the Restricted Period with
respect to any shares of Restricted Stock, the Company shall have the right to
retain in the Company's possession the certificate or certificates representing
such shares.
d.
Removal of
Restrictions
. Except as otherwise provided in this Section 7 and Section
17, a share of Restricted Stock covered by a Restricted Stock grant shall become
freely transferable by the Grantee upon completion of the Restricted Period,
including the passage of any applicable period of time and satisfaction of any
conditions to vesting. The Committee, in its sole discretion, shall have the
right at any time immediately to waive all or any part of the restrictions and
conditions with regard to all or any part of the shares held by any
Grantee.
e.
Voting Rights; Dividends and
Other Distributions
. During the Restricted Period, Grantees holding
shares of Restricted Stock granted hereunder may exercise full voting rights and
shall receive all regular cash dividends paid with respect to such shares.
Except as the Committee shall otherwise determine, any other cash dividends and
other distributions paid to Grantees with respect to shares of Restricted Stock,
including any dividends and distributions paid in shares, shall be subject to
the same restrictions and conditions as the shares of Restricted Stock with
respect to which they were paid.
f.
Notice of Section 83(b)
Election
. Any Participant making an election under Section 83(b) of the
Code with respect to Restricted Stock must provide a copy thereof to the Company
within 10 days of filing such election with the Internal Revenue
Service.
8.
Other Equity Incentives or
Stock Based Awards
.
The
Committee may grant Equity Incentives (including the grant of unrestricted
shares) to such persons, in such amounts and subject to such terms and
conditions, as the Committee shall in its discretion determine, subject to the
provisions of the Plan. Such awards may entail the transfer of actual
shares of Common Stock to Participants, or payment in cash or otherwise of
amounts based on the value of shares of Common Stock.
9.
Change of
Control
.
Upon the
occurrence of a “Change in Control” (as hereinafter defined), the Committee may
accelerate the vesting of Restricted Stock and the vesting and exercisability of
outstanding Options, in whole or in part, as determined by the Committee in its
sole discretion. In its sole discretion, the Committee may also
determine that, upon the occurrence of a Change in Control, each outstanding
Option shall terminate within a specified number of days after notice to the
Optionee thereunder, and each such Optionee shall receive, with respect to each
share of Company Stock subject to such Option, an amount equal to the excess of
the Fair Market Value of such shares immediately prior to such Change in Control
over the exercise price per share of such Option; such amount shall be payable
in cash, in one or more kinds of property (including the property, if any,
payable in the transaction) or a combination thereof, as the Committee shall
determine in its sole discretion.
For
purposes of the Plan, a Change in Control shall be deemed to have occurred
if:
i. a
tender offer (or series of related offers) shall be made and consummated for the
ownership of 50% or more of the outstanding voting securities of the Company,
unless as a result of such tender offer more than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the shareholders of the Company (as of the time immediately prior
to the commencement of such offer), any employee benefit plan of the Company or
its Subsidiaries, and their affiliates;
ii. the
Company shall be merged or consolidated with another corporation, unless as a
result of such merger or consolidation more than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the shareholders of the Company (as of the time immediately prior
to such transaction), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates;
iii. the
Company shall sell substantially all of its assets to another corporation that
is not wholly owned by the Company, unless as a result of such sale more than
50% of such assets shall be owned in the aggregate by the shareholders of the
Company (as of the time immediately prior to such transaction), any employee
benefit plan of the Company or its Subsidiaries and their affiliates;
or
iv. a
Person (as defined below) shall acquire 50% or more of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially or of
record), unless as a result of such acquisition more than 50% of the outstanding
voting securities of the surviving or resulting corporation shall be owned in
the aggregate by the shareholders of the Company (as of the time immediately
prior to the first acquisition of such securities by such Person), any employee
benefit plan of the Company or its Subsidiaries, and their
affiliates.
For
purposes of this Section 9, ownership of voting securities shall take into
account and shall include ownership as determined by applying the provisions of
Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange
Act. In addition, for such purposes, “Person” shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; however, a Person shall not include (A) the Company or
any of its Subsidiaries; (B) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its Subsidiaries; (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities; or (D) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportion as their
ownership of stock of the Company.
10.
Term of
Plan
.
No
Option, Stock Appreciation Rights, Restricted Stock or Equity Incentives shall
be granted pursuant to the Plan on or after May 23, 2015, but Options, Stock
Appreciation Rights or Equity Incentives theretofore granted may extend beyond
that date.
11.
Capital Change of the
Company
.
In the
event of any merger, reorganization, consolidation, recapitalization, stock
dividend, or other change in corporate structure affecting the Stock, the
Committee shall make an appropriate and equitable adjustment in the number and
kind of shares reserved for issuance under the Plan and in the number and option
price of shares subject to outstanding Options granted under the Plan, to the
end that after such event each Optionee’s proportionate interest shall be
maintained as immediately before the occurrence of such event. The
Committee shall, to the extent feasible, make such other adjustments as may be
required under the tax laws so that any Incentive Options previously granted
shall not be deemed modified within the meaning of Section 424(h) of the
Code. Furthermore, the adjustments described above shall be made in a
manner consistent with Sections 162(m) and 409A of the
Code. Appropriate adjustments shall also be made in the case of
outstanding Stock Appreciation Rights and Restricted Stock granted under the
Plan.
12.
Purchase for
Investment
.
Unless
the Options and shares covered by the Plan have been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or the Company has
determined that such registration is unnecessary, each person exercising or
receiving Options, Stock Appreciation Rights, Restricted Stock or Equity
Incentives under the Plan may be required by the Company to give a
representation in writing that he is acquiring the shares for his own
account for investment and not with a view to, or for sale in connection with,
the distribution of any part thereof.
13.
Taxes
.
a. The
Company may make such provisions as it may deem appropriate, consistent with
applicable law, in connection with any Options, Stock Appreciation Rights,
Restricted Stock or Equity Incentives granted under the Plan with respect to the
withholding of any taxes (including income or employment taxes) or any other tax
matters.
b. If
any Grantee, in connection with the acquisition of Restricted Stock, makes the
election permitted under section 83(b) of the Code (that is, an election to
include in gross income in the year of transfer the amounts specified in section
83(b)), such Grantee shall notify the Company of the election with the Internal
Revenue Service pursuant to regulations issued under the authority of Code
section 83(b).
c. If
any Grantee shall make any disposition of shares of Stock issued pursuant to the
exercise of an Incentive Option under the circumstances described in section
421(b) of the Code (relating to certain disqualifying dispositions), such
Grantee shall notify the Company of such disposition within 10 days
hereof.
14.
Public
Offering
.
As a
condition of Participation in this Plan, each Participant shall be obligated to
cooperate with the Company and the underwriters in connection with any public
offering of the Company’s securities and any transactions relating to a public
offering, and shall execute and deliver any agreements and documents, including
without limitation, a lock-up agreement, that may be requested by the Company or
the underwriters. The Participants’ obligations under this Section 14
shall apply to any Stock issued under the Plan as well as to any and all other
securities of the Company or its successor for which Stock may be exchanged or
into which Stock may be converted.
15.
Effective Date of
Plan
.
The Plan
shall be effective on May 23, 2005, provided however that the Plan shall
subsequently be approved by majority vote of the Company’s stockholders not
later than May 22, 2006.
16.
Amendment and
Termination
.
The Board
may amend, suspend, or terminate the Plan, except that no amendment shall be
made that would impair the rights of any Participant under any Option
theretofore granted or any Stock Appreciation Right, Restricted Stock or Equity
Incentive grant without the Participant’s consent, and except that no amendment
shall be made which, without the approval of the stockholders of the Company,
would:
a. materially
increase the number of shares that may be issued under the Plan, except as is
provided in Section 11;
b. materially
increase the benefits accruing to the Participants under the Plan;
c. materially
modify the requirements as to eligibility for participation in the
Plan;
d. decrease
the exercise price of an Incentive Option to less than 100% of the Fair Market
Value per share of Stock on the date of grant thereof or the exercise price of a
Nonqualified Option to less than 80% of the Fair Market Value per share of Stock
on the date of grant thereof; or
e. extend
the term of any Option beyond that provided for in Section 10.
The Committee may amend the terms of
any Option, Stock Appreciation Right, Restricted Stock or Equity Incentive grant
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any Optionee or Grantee without the Optionee or Grantee’s
consent. The Committee may also substitute new Options, Stock
Appreciation Rights, Restricted Stock or Equity Incentives for previously
granted Options, Stock Appreciation Rights, Restricted Stock or Equity
Incentive, including options granted under other plans applicable to the
participant and previously granted Options having higher option prices, upon
such terms as the Committee may deem appropriate.
Notwithstanding the foregoing, it is
the intention of the Board that the Plan comply strictly with the provisions of
Section 409A of the Code and Treasury Regulations and other Internal Revenue
Service guidance promulgated thereunder (the “Section 409A Rules) and the
Committee shall exercise its discretion in granting Options, Stock Appreciation
Rights, Restricted Stock or Equity Incentives hereunder (and the terms of such
grants), accordingly. The Plan and any grant of an award hereunder
may be amended from time to time (without the consent of the Participant) as may
be necessary or appropriate to comply with the Section 409A Rules.
17.
Government
Regulations
.
The Plan,
and the grant and exercise of Options, Stock Appreciation Rights, Restricted
Stock or Equity Incentives hereunder, and the obligation of the Company to sell
and deliver shares under such Options Stock, Appreciation Rights, Restricted
Stock or Equity Incentives, shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies, national
securities exchanges and interdealer quotation systems as may be
required.
18.
General
Provisions
.
a.
Certificates
. All
certificates for shares of Stock delivered under the Plan shall be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, or other securities commission having jurisdiction, any
applicable Federal or state securities law, any stock exchange or interdealer
quotation system upon which the Stock is then listed or traded and the Committee
may cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions.
b.
Employment
Matters
. The adoption of the Plan shall not confer upon any
Participant of the Company or any Subsidiary any right to continued employment
or, in the case of an Participant who is a director, continued service as a
director, with the Company or a Subsidiary, as the case may be, nor shall it
interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any of its employees, the service of any of its
directors or the retention of any of its consultants or advisors at any
time.
c.
Limitation of
Liability
. No member of the Board or the Committee, or any
officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.
d.
Registration of
Stock
. Notwithstanding any other provision in the Plan, no
Option may be exercised unless and until the Stock to be issued upon the
exercise thereof has been registered under the Securities Act and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration in the United States. The Company shall not be
under any obligation to register under applicable federal or state securities
laws any Stock to be issued upon the exercise of an Option granted hereunder in
order to permit the exercise of an Option and the issuance and sale of the Stock
subject to such Option, although the Company may in its sole discretion register
such Stock at such time as the Company shall determine. If the
Company chooses to comply with such an exemption from registration, the Stock
issued under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the transfer or pledge of the Stock
represented thereby, and the Committee may also give appropriate stop transfer
instructions with respect to such Stock to the Company's transfer
agent.
e.
Non-transferability of
Options
. Options and Stock Appreciation Rights are not
transferable and may be exercised solely by the Optionee or Grantee during his
lifetime or after his death by the person or persons entitled thereto
under his will or the laws of descent and distribution. The
Committee, in its sole discretion, may permit a transfer of a Nonqualified
Option to (i) a trust for the benefit of the Optionee or (ii) a member of the
Optionee’s immediate family (or a trust for his or her benefit). Any
attempt to transfer, assign, pledge or otherwise dispose of, or to subject to
execution, attachment or similar process, any Option or Stock Appreciation Right
contrary to the provisions hereof shall be void and ineffective and shall give
no right to the purported transferee.
f.
No rights as a
Stockholder
. No Optionee or Grantee (or other person having the right to
exercise such award) shall have any of the rights of a stockholder of the
Company with respect to shares subject to such award until the issuance of a
stock certificate to such person for such shares. Except as otherwise
provided herein, no adjustment shall be made for dividends, distributions or
other rights (whether ordinary or extraordinary, and whether in cash, securities
or other property) for which the record date is prior to the date such stock
certificate is issued.
g.
Termination by
Death
. Unless otherwise determined by the Committee at grant
or at the time of such termination, if any Optionee or Grantee’s employment with
or service to the Company or any Subsidiary terminates by reason of death, the
Option or Stock Appreciation Right may thereafter be exercised, to the extent
then exercisable (or on such accelerated basis as the Committee shall determine
at or after grant), by the legal representative of the estate or by the legatee
of the Optionee or Grantee under the will of the Optionee or Grantee, for a
period of one year after the date of such death or until the expiration of the
stated term of such Option or Stock Appreciation Right as provided under the
Plan, whichever period is shorter.
h.
Termination by Reason of
Disability
. Unless otherwise determined by the Committee at
grant or at the time of such termination, if any Optionee or Grantee’s
employment with or service to the Company or any Subsidiary terminates by reason
of total and permanent disability, any Option or Stock Appreciation Right held
by such Optionee or Grantee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on such accelerated
basis as the Committee shall determine at or after grant), but may not be
exercised after 30 days after the date of such termination of employment or
service or the expiration of the stated term of such Option or Stock
Appreciation Right, whichever period is shorter; provided, however, that, if the
Optionee or Grantee dies within such 30-day period, any unexercised Option or
Stock Appreciation Right held by such Optionee or Grantee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one year after the date of such death or for the stated term of such
Option or Stock Appreciation Right, whichever period is shorter.
i.
Termination by Reason of
Retirement
. Unless otherwise determined by the Committee at
grant or at the time of such termination, if any Optionee or
Grantee’s employment with or service to the Company or any Subsidiary
terminates by reason of Normal or Early Retirement (as such terms are defined
below), any Option or Stock Appreciation Right held by such Optionee or Grantee
may thereafter be exercised to the extent it was exercisable at the time of such
Retirement (or on such accelerated basis as the Committee shall determine at or
after grant), but may not be exercised after 30 days after the date of such
termination of employment or service or the expiration of the stated term of
such Option and Stock Appreciation Right, whichever period is shorter; provided,
however, that, if the Optionee or Grantee dies within such 30-day period, any
unexercised Option or Stock Appreciation Right held by such Optionee or Grantee
shall thereafter be exercisable, to the extent to which it was exercisable at
the time of death, for a period of one year after the date of such death or for
the stated term of such Option or Stock Appreciation Right, whichever period is
shorter.
For purposes of this paragraph (i)
“Normal Retirement” shall mean retirement from active employment with the
Company or any Subsidiary on or after the normal retirement date specified in
the applicable Company or Subsidiary pension plan or if no such pension plan,
age 65, and “Early Retirement” shall mean retirement from active employment with
the Company or any Subsidiary pursuant to the early retirement provisions of the
applicable Company or Subsidiary pension plan or if no such pension plan, age
55.
j.
Other
Termination
. Unless otherwise determined by the Committee at
grant or at the time of such termination, if any Optionee or Grantee’s
employment with or service to the Company or any Subsidiary terminates for any
reason other than death, Disability or Normal or Early Retirement, the Option or
Stock Appreciation Right shall thereupon terminate, except that the portion of
any Option or Stock Appreciation Right that was exercisable on the date of such
termination of employment or service may be exercised for the lesser of 30 days
after the date of termination or the balance of such Option or Stock
Appreciation Right’s term if the Optionee’s employment or service with the
Company or any Subsidiary is terminated by the Company or such Subsidiary
without cause (the determination as to whether termination was for cause to be
made by the Committee). The transfer of an Optionee or Grantee from
the employ of or service to the Company to the employ of or service to a
Subsidiary, or vice versa, or from one Subsidiary to another, shall not be
deemed to constitute a termination of employment or service for purposes of the
Plan.
EMPIRE
RESORTS, INC.
June 16,
2009