Consequences If Stockholder Approval Is Not
Obtained
Approval
of the Au Issuance Proposal is conditioned upon approval of each of Au Issuance
Sub-Proposal (A), Au Issuance Sub-Proposal (B) and Au Issuance Sub-Proposal
(C). If stockholder approval for any one of the Au Issuance
Sub-Proposals is not obtained (even if approval of one or both of the other Au
Issuance Sub-Proposals is obtained), the Au Issuance Proposal will not
pass.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF AU
ISSUANCE SUB-PROPOSAL (C).
EXECUTIVE
COMPENSATION
Compensation 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 terminated 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 1998 Stock Option Plan, 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 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,
as of 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 as of December 31, 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 (the
“Hanlon Separation Agreement”) pursuant to which Mr. Hanlon’s employment with
the Company terminated as of April 13, 2009. The Hanlon Separation
Agreement provides that Mr. Hanlon was to be paid a lump sum payment of
$100,000. In addition, the Hanlon Separation Agreement provides for
the extension of the expiration dates of options to purchase common stock
previously granted to Mr. Hanlon. Mr. Hanlon will continue to receive
health insurance through the end of 2009. Under the terms of the
Hanlon Separation Agreement, Mr. Hanlon has provided the Company with a general
release from any and all claims related to his employment. Further,
until January 13, 2010, Mr. Hanlon has agreed not to compete with the Company in
the State of New York or any other jurisdiction that directly competes with the
Company. The Hanlon Separation Agreement also includes
confidentiality, non-disparagement and non-disclosure obligations. In
connection with the Hanlon Separation Agreement, the Company entered into a
consulting agreement with Mr. Hanlon pursuant to which Mr. Hanlon will provide
consulting services to the Company with respect to historical Company and
predecessor issues for a period of nine months. Mr. Hanlon will be
paid an aggregate of $100,000 for his consulting services in equal monthly
payments.
On April
16, 2009, the Company entered into an agreement a Separation and Release
Agreement with Mr. Radcliffe, dated as of April 14, 2009 (the “Radcliffe
Separation Agreement”) in connection with Mr. Radcliffe’s resignation effective
June 30, 2009. The Radcliffe Separation Agreement, provides that Mr.
Radcliffe was to be paid a lump sum payment not later than April 25, 2009 in the
amount of fifty-one thousand six hundred sixty-seven dollars ($51,667),
representing two month’s salary. In addition, the Radcliffe
Separation Agreement provides for the extension of the expiration dates of
options to purchase common stock previously granted to Mr. Radcliffe for three
years from June 30, 2009. Under the terms of the Radcliffe Separation
Agreement Mr. Radcliffe has provided the Company with a general release from any
and all claims related to his employment. Further, until March 30,
2010, Mr. Radcliffe has agreed not to compete with the Company in the State of
New York or any other jurisdiction that directly competes with the
Company. The Radcliffe Separation Agreement also includes
confidentiality, non-disparagement and non-disclosure
obligations. Mr. Radcliffe has agreed to make himself available to
consult with the Company after June 30, 2009 on a per diem basis.
On June
29, 2009, the Company entered into an employment agreement with Charles
Degliomini, to continue to serve as the Company’s Executive Vice President (the
“Degliomini Agreement”). The Degliomini Agreement provides for a term
ending on June 29, 2012 (the “Degliomini Term”) unless Mr. Degliomini’s
employment is terminated by either party in accordance with the provisions
thereof. Mr. Degliomini is to receive a base salary at the annual
rate of $225,000 for the first year of the Degliomini Term, $243,500 for the
second year of the Degliomini Term and $250,000 for the third year of the
Degliomini Term and such incentive compensation and bonuses, if any, (i) as the
Compensation Committee of the Board of Directors in its discretion may
determine, and (ii) to which the Mr. Degliomini may become entitled pursuant to
the terms of any incentive compensation or bonus program, plan or agreement from
time to time in effect in which he is a participant. The first year
salary represents a pay reduction of 10% from the previously agreed upon salary
for Mr. Degliomini, consistent with the salary reduction imposed upon all
employees. As an additional incentive for entering into the
agreement, Mr. Degliomini received an option to purchase 300,000 shares of the
Company’s common stock on April 23, 2009 pursuant to the Company’s 2005 Equity
Incentive Plan. In the event that the Company terminates Mr.
Degliomini's employment with Cause (as defined in the Degliomini Agreement) or
Mr. Degliomini resigns without Good Reason (as defined in the Degliomini
Agreement), the Company's obligations are limited generally to paying Mr.
Degliomini his base salary through the termination date. In the event
that the Company terminates Mr. Degliomini's employment without Cause or Mr.
Degliomini resigns with Good Reason, the Company is generally obligated to
continue to pay Mr. Degliomini's compensation for the lesser of (i) 18 months or
(ii) the remainder of the term of the Degliomini Agreement and accelerate the
vesting of the options granted in contemplation of the Degliomini Agreement,
which options shall remain exercisable through the remainder of its original 5
year term. In the event that the Company terminates Mr. Degliomini's
employment without Cause or Mr. Degliomini resigns with Good Reason on or
following a Change of Control (as defined in the Degliomini Agreement), the
Company is generally obligated to continue to pay Mr. Degliomini's compensation
for the greater of (i) 24 months or (ii) the remainder of the term of the
Degliomini Agreement and accelerate the vesting of the options granted in
contemplation of the Degliomini Agreement, which options shall remain
exercisable through the remainder of its original 5 year term.
On
June 29, 2009, the Company also entered into an employment agreement with
Clifford Ehrlich, to continue to serve as the President and General Manager of
Monticello Raceway Management, Inc., the Company’s operating subsidiary (the
“Ehrlich Agreement”). The Ehrlich Agreement provides for a term ending on June
29, 2012 (the “Ehrlich Term”) unless Mr. Ehrlich’s employment is terminated by
either party in accordance with the provisions thereof. Mr. Ehrlich
is to receive a base salary at the annual rate of $225,000 for the first year of
the Ehrlich Term, $243,500 for the second year of the Ehrlich Term and $250,000
for the third year of the Ehrlich Term and such incentive compensation and
bonuses, if any, (i) as the Compensation Committee of the Board of Directors in
its discretion may determine, and (ii) to which the Mr. Ehrlich may become
entitled pursuant to the terms of any incentive compensation or bonus program,
plan or agreement from time to time in effect in which he is a
participant. The first year salary represents a pay reduction of 10%
from the previously agreed upon salary for Mr. Ehrlich, consistent with the
salary reduction imposed upon all employees. As an additional
incentive for entering into the agreement, Mr. Ehrlich received an option to
purchase 300,000 shares of the Company’s common stock on April 23, 2009 pursuant
to the Company’s 2005 Equity Incentive Plan. In the event that the
Company terminates Mr. Ehrlich's employment with Cause (as defined in the
Ehrlich Agreement) or Mr. Ehrlich resigns without Good Reason (as defined in the
Ehrlich Agreement), the Company's obligations are limited generally to paying
Mr. Ehrlich his base salary through the termination date. In the
event that the Company terminates Mr. Ehrlich's employment without Cause or Mr.
Ehrlich resigns with Good Reason, the Company is generally obligated to continue
to pay Mr. Ehrlich's compensation for the lesser of (i) 18 months or (ii) the
remainder of the term of the Ehrlich Agreement and accelerate the vesting of the
options granted in contemplation of the Ehrlich Agreement, which options shall
remain exercisable through the remainder of its original 5 year
term. In the event that the Company terminates Mr. Ehrlich's
employment without Cause or Mr. Ehrlich resigns with Good Reason on or following
a Change of Control (as defined in the Ehrlich Agreement), the Company is
generally obligated to continue to pay Mr. Ehrlich's compensation for the
greater of (i) 24 months or (ii) the remainder of the term of the Ehrlich
Agreement and accelerate the vesting of the options granted in contemplation of
the Ehrlich Agreement, which options shall remain exercisable through the
remainder of its original 5 year term.
Outstanding Equity Awards as of
December 31, 2008
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 as of 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 as of December 31, 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:
Nancy
Palumbo, Chairperson
James
Simon
Paul A.
deBary
SECURITY 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 September 30, 2009 by: (i) each
stockholder known to be the beneficial owner of more than five percent of any
class of the Company’s voting securities then outstanding; (ii) each of our
directors; (iii) each of our “named executive officers” as defined in Item
402(a)(3) of Regulation S-K promulgated under the Exchange Act; and (iv) our
current directors and executive officers, as a group.
The
information regarding beneficial ownership of our Common Stock has been
presented in accordance with the rules of the 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)
|
|
Common
Stock Beneficially
Owned
|
|
|
Series
B Preferred Stock
Beneficially
Owned
|
|
|
Series
E Preferred Stock
Beneficially
Owned
|
|
|
|
Shares
|
|
|
Percentage
|
|
|
Shares
|
|
|
Percentage
|
|
|
Shares
|
|
|
Percentage
|
|
Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
E. Bernstein
|
|
|
1,586,229
|
(2)
|
|
|
3.9
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
A. D’Amato
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Degliomini
|
|
|
247,769
|
(3)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clifford
A. Ehrlich
|
|
|
155,000
|
(4)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
P. Hanlon
|
|
|
1,066,592
|
(5)
|
|
|
2.5
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilda
Manuel
|
|
|
70,167
|
(6)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
J. Radcliffe
|
|
|
270,000
|
(7)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Au
Fook Yew
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ralph
J. Bernstein
|
|
|
2,548,243
|
(8)
|
|
|
6.2
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G.
Michael Brown
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louis
R. Cappelli
c/o
Cappelli Enterprises, Inc.
115
Stevens Avenue
Valhalla,
NY 10595
|
|
|
5,449,512
|
(9)
|
|
|
13.3
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
A. deBary
|
|
|
317,508
|
(10)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nancy
Palumbo
|
|
|
29,583
|
(11)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Simon
|
|
|
159,520
|
(12)
|
|
|
*
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and Officers as a
Group
|
|
|
11,900,123
|
|
|
|
27.4
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kien
Huat Realty III Limited
c/o
Kien Huat Realty Sdn Bhd.
22nd
Floor Wisma Genting
Jalan
Sultan Ismail
50250
Kuala Lumpur
Malaysia
|
|
|
6,804,188
|
|
|
|
16.6
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert
Nasser
c/o
Patterson
,
Belknap
,
Webb
&
Tyler
1133
Avenue
of
The
Americas
New
York,
NY
10036
|
|
|
2,781,544
|
(13)
|
|
|
6.8
|
%
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
%
|
Name
and Address of Beneficial Owner(1)
|
|
Common
Stock Beneficially Owned
|
|
Series
B Preferred Stock Beneficially Owned
|
|
Series
E Preferred Stock Beneficially Owned
|
|
|
Shares
|
Percentage
|
|
Shares
|
Percentage
|
|
Shares
|
Percentage
|
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 (i) 1,332,229 shares of Common Stock owned directly by Mr. Bernstein
(ii) 2,500 shares of Common Stock held by Mr. Bernstein's wife, Nora
Bernstein, as custodian for Mr. Bernstein's children, (iii) 1,500 shares
of Common Stock held by Bernstarz LLC (Mr. Bernstein is the sole member of
and holds 100% of the membership interests of Bernstarz LLC) and (iv)
250,000 shares of Common Stock that are issuable upon the exercise of
options that are currently
exercisable.
|
(3)
|
Includes
47,769 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 200,000 shares of Common
Stock.
|
(4)
|
Consists
of 10,000 shares of Common Stock owned directly by Clifford A. Ehrlich and
options that are currently exercisable into 145,000 shares of Common
Stock.
|
(5)
|
Consists
of options that are currently exercisable into 1,066,592 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.
|
(6)
|
Consists
of options that are currently exercisable into 70,167 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.
|
(7)
|
Consists
of options that are currently exercisable into 270,000 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.
|
(8)
|
Consists
of 2,221,243 shares of Common Stock owned directly by Ralph J. Bernstein
and options that are currently exercisable or exercisable within sixty
days of the date of this proxy statement into 327,000 shares of Common
Stock.
|
(9)
|
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. Mr. Cappelli also holds options that are currently
exercisable into 75,000 shares of Common
Stock.
|
(10)
|
Consists
of 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 or exercisable
within sixty days of the date of this proxy statement into 222,000 shares
of Common Stock.
|
(11)
|
Consists
of options that are currently exercisable or exercisable within sixty days
of the date of this proxy statement into 29,583 shares of Common
Stock.
|
(12)
|
Consists
of 18,270 shares of Common Stock owned directly by James Simon and options
that are currently exercisable or exercisable within sixty days of the
date of this Proxy statement into 141,250 shares of Common
Stock.
|
(13)
|
Based
upon information provided to the Company in connection with the Voting
Agreement, Mr. Nasser has voting and dispositive power over: (i) 954,994
shares of Common Stock owned by Emerita, S.A., a Panamanian corporation;
and (ii) 1,826,550 shares of Common Stock owned by Garland Business
Corporation.
|
CHANGES IN CONTROL
As set
forth in the table above, the Investor is the beneficial owner of 6,804,188
shares of Common Stock, or approximately 16.6% of our currently outstanding
Common Stock, which were issued to the Investor upon the initial closing of the
Investment Agreement on August 19, 2009. Under the terms of the
Investment Agreement, we have agreed to issue to the Investor an additional
27,701,852 shares of Common Stock, subject to and following stockholder
approval. In the event that the KHRL III Share Issuance Sub-Proposals
are approved but the required vote in favor of the Certificate Amendment is not
obtained, the Investor will be entitled to receive a combination of Common Stock
and Preferred Stock in the amounts and upon the terms set forth in the
Investment Agreement, as discussed in more detail elsewhere in this proxy
statement. In either case, if the KHRL III Share Issuance
Sub-Proposals are approved by our stockholders, upon the closing of the
Investment Agreement the Investor would own one share less than 50% of the
voting power of the Company (assuming the Investor exercises all Option Matching
Rights that it is entitled to exercise as of the closing of the Second
Tranche). Similarly, following any purchase by the Investor pursuant
to the Option Matching Right, the Investor will own no more than one share less
than 50% of the voting power of the Company, given the issuance of shares upon
exercise of the option or warrant that triggered the Option Matching
Right.
Additionally,
under the terms of the Investment Agreement, the Investor is entitled to
recommend three directors whom the Company is required to cause to be elected or
appointed to its Board of Directors, subject to the satisfaction of all legal
and governance requirements regarding service as a director of the Company and
to the reasonable approval of the Governance Committee of the Board of
Directors. The Investor will be entitled to recommend three directors
for so long as it owns at least 24% of the voting power of the Company
outstanding at such time, after which the number of directors whom the Investor
will be entitled to designate for election or appointment to the Board of
Directors will be reduced proportionally to the Investor’s percentage of
ownership. Under the Investment Agreement, for so long as the
Investor is entitled to designate representatives to the Company’s Board of
Directors, among other things, the Investor will have the right to nominate one
of its director designees to serve as the Chairman of the Board of
Directors. Following the closing of the Investment Agreement, which
is subject to, among other customary closing conditions, stockholder approval of
the KHRL III Share Issuance Sub-Proposals, and until such time as the Investor
ceases to own capital stock with at least 30% of the voting power of the Company
outstanding at such time, the Board of Directors will be prohibited under the
terms of the Investment Agreement from taking certain actions relating to
fundamental transactions involving the Company and its subsidiaries and certain
other matters without the affirmative vote of the directors designated by the
Investor. See the section of this proxy statement entitled “Proposal
One: KHRL III Share Issuance Proposal” for additional information.
The
consummation of the transactions contemplated by the Investment Agreement will
not constitute a “change of control” under the Indenture.
STOCKHOLDER 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, stockholder
proposals 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 Special 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 Company’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 Company’s proxy statement.
OTHER 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 Special Meeting other than as
described in this proxy statement.
INCORPORATION BY REFERENCE
The
SEC allows us to “incorporate by reference” information into this proxy
statement. This means that we can disclose important information to
you by referring you to those documents. The information incorporated
by reference is considered to be part of this proxy statement. Any
statement contained in a document that is incorporated by reference into this
proxy statement is automatically updated and superseded if information contained
in this proxy statement, or information that we later file with the SEC,
modifies or replaces the information. We are incorporating by
reference the following items in documents filed by the Company with the
SEC:
|
·
|
Part
II, Items 7, 7A, 8 and 9 of the Company’s Annual Report on Form 10-K for
the year ended December 31, 2008;
|
|
·
|
Part
I, Items 1, 2 and 3 of the Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2009; and
|
|
·
|
Part
I, Items 1, 2 and 3 of the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2009.
|
We will
provide to each person, including any beneficial owner of our stock, to whom
this proxy statement is delivered, a free copy of any or all of the information
that has been incorporated by reference into this proxy statement but not
delivered with this proxy statement. Please direct your written
request to: Empire Resorts, Inc. c/o Monticello Casino and Raceway, Route 17B,
P.O. Box 5013, Monticello, New York 12701, Attention: Investor
Relations. A copy of the annual report on Form 10-K for the year
ended December 31, 2008 and the quarterly reports on Form 10-Q are also
available on the SEC’s Internet site at http://www.sec.gov and on our website at
www.empireresorts.com.
Robert H.
Friedman
Secretary
APPENDIX A
CERTIFICATE
OF AMENDMENT
TO
THE
CERTIFICATE
OF INCORPORATION
OF
EMPIRE
RESORTS, INC.
Pursuant
to Section 242 of the
General Corporation Law of
the State of Delaware
EMPIRE
RESORTS, INC. (the “Corporation”), a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, does
hereby certify as follows:
1. The
name of the corporation is Empire Resorts, Inc.
2. The
Certificate of Incorporation of the Corporation is hereby amended so that
Article FOURTH of the Certificate of Incorporation reads as
follows:
"FOURTH: The
total number of shares of stock that the Corporation shall have the authority to
issue is one hundred million (100,000,000), consisting of ninety-five million
(95,000,000) shares of Common Stock, each such share having a par value of $.01,
and five million (5,000,000) shares of Preferred Stock, each such share having a
par value of $.01. The Board of Directors is expressly authorized to issue
Preferred Stock without stockholder approval, in one or more series, and to fix
for each such series such voting powers, full or limited, and such designations,
preferences and relative, participating, optional or special rights and such
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issue of such series and as may be permitted by the Delaware
General Corporation Law."
3. The
Amendment to the Certificate of Incorporation of the Corporation effected by
this Certificate was duly authorized by the Board of Directors of the
Corporation in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware, and by the affirmative vote of the
holders of a majority of the Corporation’s outstanding capital stock entitled to
vote thereon.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be
executed on this ___th day of ___________, 2009.
|
EMPIRE
RESORTS, INC.
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
APPENDIX B
EMPIRE
RESORTS, INC.
SECOND
AMENDED AND RESTATED
2005
EQUITY INCENTIVE PLAN
(as
amended August 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 Special 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 10,500,000 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 stockholders 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 stockholders 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 stockholders 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 stockholders 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
stockholders 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.
August
12, 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 is available at:
http://www.cstproxy.com/empireresorts/specialmeeting2009/.
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Please
mark
your
votes
like
this
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x
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PROXY
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EMPIRE
RESORTS, INC.
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PROXY
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THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE KHRL III SHARE
ISSUANCE SUB-PROPOSALS, “FOR” THE CERTIFICATE AMENDMENT, “FOR” THE 2005
EQUITY PLAN AMENDMENT AND “FOR” EACH OF THE AU ISSUANCE
SUB-PROPOSALS.
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Please
specify your vote by checking the box below your choice for each of
the proposals.
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1.
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To
approve the issuance of 27,701,852 shares of the Company’s common stock,
par value $0.01 per share (“Common Stock”), to Kien Huat Realty III
Limited, a corporation organized under the laws of the Isle of Man (the
“Investor”), for consideration of $44 million, pursuant to that certain
Investment Agreement, dated August 19, 2009, by and between the Company
and the Investor (the “Investment Agreement”), as well as the issuance of
any additional shares of Common Stock to the Investor as may be necessary
pursuant to certain matching rights provided for under the Investment
Agreement (the “KHRL III Share Issuance Proposal”), consisting of the
following sub-proposals:
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(A)
To approve the KHRL III Share Issuance for the purposes of NASDAQ
Marketplace Rule 5635(b).
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FOR
o
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AGAINST
o
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ABSTAIN
o
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(B)
To approve the KHRL III Share Issuance for the purposes of NASDAQ
Marketplace Rule 5635(d).
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FOR
o
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AGAINST
o
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ABSTAIN
o
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2.
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To
approve an amendment to the Company’s Certificate of Incorporation, as
amended, to increase the Company’s authorized capital stock from
80,000,000 shares, consisting of 75,000,000 shares of Common Stock and
5,000,000 shares of preferred stock, par value $0.01 per share (“Preferred
Stock”), to a total of 100,000,000 shares, consisting of 95,000,000 shares
of Common Stock and 5,000,000 shares of Preferred Stock (the “Certificate
Amendment”).
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FOR
o
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AGAINST
o
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ABSTAIN
o
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3.
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To
approve an amendment of the Company’s Amended and Restated 2005 Equity
Incentive Plan (the “2005 Equity Incentive Plan”) to increase the number
of shares of our Common Stock subject to the 2005 Equity Incentive Plan by
2,000,000 shares to 10,500,000 shares (the “2005 Equity Plan
Amendment”).
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FOR
o
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AGAINST
o
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ABSTAIN
o
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â
FOLD AND INSERT
IN ENVELOPE PROVIDED
â
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4.
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To
approve the grant to Au Fook Yew of an option to purchase 750,000 shares
of Common Stock and the issuance of up to 250,000 shares of Common Stock
to Mr. Au pursuant to certain matching rights provided for under the
Investment Agreement in accordance with the applicable NASDAQ Marketplace
Rules (the “Au Issuance Proposal”), consisting of the following
sub-proposals:
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(A)
To approve the Au Issuance for the purposes of NASDAQ Marketplace Rules
5635(b).
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FOR
o
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AGAINST
o
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ABSTAIN
o
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(B)
To approve the Au Issuance for the purposes of NASDAQ Marketplace Rules
5635(d).
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FOR
o
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AGAINST
o
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ABSTAIN
o
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(C)
To approve the Au Issuance for the purposes of NASDAQ Marketplace Rules
5635(c).
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FOR
o
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AGAINST
o
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ABSTAIN
o
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This
proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted
FOR all of the Proposals set forth above. In their discretion, the proxies
are authorized to vote upon such other matters as may properly come before
the Special Meeting or any adjournments of the Special Meeting. If you
wish to vote by telephone or via the Internet, please read the directions
on the reverse side.
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Label
Area 4” x 1 1/2”
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PLEASE
MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY
USING THE ENCLOSED ENVELOPE.
COMPANY ID:
PROXY
NUMBER:
ACCOUNT
NUMBER:
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Signature
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Signature
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Date
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,
2009.
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Please
sign exactly as your name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
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EMPIRE
RESORTS, INC.
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VOTE
BY INTERNET OR TELEPHONE
QUICK EASY IMMEDIATE
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As a
stockholder of Empire Resorts, Inc, you have the option of voting your shares
electronically through the Internet or on the telephone, eliminating the need to
return the proxy card. Your electronic vote authorizes the named proxies to vote
your shares in the same manner as if you marked, signed, dated and returned the
proxy card. Votes submitted electronically over the Internet or by telephone
must be received by 7:00 p.m., Eastern Time, on November 9, 2009.
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Vote Your
Proxy on the Internet
:
Go
to www.continentalstock.com
Have
your proxy card available when you access the above website. Follow the
prompts to vote your shares.
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OR
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Vote Your Proxy by Phone:
Call
Toll -Free 1 (866) 894-0537
Use
any touch-tone telephone to vote your proxy. Have your proxy card
available when you call. Follow the voting instructions to vote your
shares.
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OR
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Vote Your Proxy by Mail:
Mark,
sign, and date your proxy card, then detach it, and return it in the
postage-paid envelope provided.
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PLEASE
DO NOT RETURN THE PROXY CARD IF YOU ARE
VOTING
ELECTRONICALLY OR BY PHONE
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â
FOLD AND DETACH
HERE AND READ THE REVERSE SIDE
â
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PROXY
EMPIRE
RESORTS, INC.
c/o
Monticello Casino and Raceway
Route
17B, P.O. Box 5013
Monticello,
New York 12701
THIS
PROXY IS SOLICITED
BY
THE BOARD OF
DIRECTORS
The
undersigned hereby appoints Ralph Bernstein, Paul A. deBary and James Simon as
proxies, each with the power to appoint his substitute, and hereby authorizes
them, and each of them acting singly, to represent and vote, as designated
below, all the shares of Common Stock, Series B Preferred Stock and Series E
Preferred Stock of Empire Resorts, Inc. (the “Company”) held of record by the
undersigned at the close of business on October 6, 2009 at the Special Meeting
of Stockholders 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 November 10, 2009, at 10:00 a.m., local time, or any
adjournment or postponement thereof (the “Special Meeting”), and authorizes and
instructs said proxies to vote in the manner directed below.
Approval of the KHRL III Share Issuance
Proposal is conditioned upon the approval of each of the KHRL III Share Issuance
Sub-Proposals. If stockholder approval for either of the Sub-Proposals is not
obtained, the KHRL Share Issuance Proposal will not pass. Likewise, approval of
the Au Issuance Proposal is conditioned upon approval of each of the Au Issuance
Sub-Proposals. If stockholder approval for any one of the Au Issuance
Sub-Proposals is not obtained, the Au Issuance Proposal will not
pass.
(Continued,
and to be marked, dated and signed, on the other side)