SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from - to -
---- --------- -
Commission file number 0-20712
CASINO MAGIC CORP.
------------------
(Exact name of registrant as specified in its charter)
MINNESOTA 64-0817483
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
711 CASINO MAGIC DRIVE, BAY ST. LOUIS, MS 39520
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(Address of principal executive offices) (Zip Code)
(228) 467-9257
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(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---------- --
Indicate the number of shares outstanding of the issuer's classes of common
stock, as of the latest practicable date. 35,722,124 shares common stock
outstanding as of May 12, 1998.
<PAGE>
CASINO MAGIC CORP. AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements.
Condensed Consolidated Statements of Operations -
For the three months ended March 31, 1998 and 1997 1
Condensed Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997 2
Condensed Consolidated Statements of Cash Flows -
For the three months ended March 31, 1998 and 1997 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
PART II OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Default Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 10
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<TABLE>
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PART I - FINANCIAL INFORMATION
CASINO MAGIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED MARCH 31,
1998 1997
----------- ------------
<S> <C> <C>
REVENUES:
Casino. . . . . . . . . . . . . . . . . . . . . . $68,172,040 $61,673,683
Food, beverage and rooms. . . . . . . . . . . . . 2,412,843 2,507,043
Royalty and management fees . . . . . . . . . . . 369,039 547,431
Other Operating revenues. . . . . . . . . . . . . 1,231,979 1,052,721
----------- ------------
72,185,901 65,780,878
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COSTS AND EXPENSES:
Casino. . . . . . . . . . . . . . . . . . . . . . 32,153,839 26,535,455
Food and beverage . . . . . . . . . . . . . . . . 2,643,148 4,889,882
Rooms . . . . . . . . . . . . . . . . . . . . . . 151,544 426,247
Other operating costs and expenses. . . . . . . . 1,008,678 1,173,317
Advertising and marketing . . . . . . . . . . . . 8,751,330 13,154,697
General and administrative. . . . . . . . . . . . 6,657,455 7,317,546
Property operation, maintenance and
energy cost . . . . . . . . . . . . . . . . . . 2,702,809 3,010,008
Rents, property taxes and insurance . . . . . . . 2,089,354 1,954,642
Development expenses. . . . . . . . . . . . . . . 78,241 282,289
Depreciation and amortization . . . . . . . . . . 4,994,990 5,039,654
----------- ------------
61,231,388 63,783,737
INCOME FROM OPERATIONS . . . . . . . . . . . . . . . 10,954,513 1,997,141
OTHER (INCOME) EXPENSE:
Interest expense, net . . . . . . . . . . . . . . 7,495,208 7,505,465
Other . . . . . . . . . . . . . . . . . . . . . . 562,057 98,387
----------- ------------
8,057,265 7,603,852
----------- ------------
INCOME (LOSS) BEFORE INCOME TAXES AND
MINORITY INTEREST IN INCOME FROM SUBSIDIARY:. 2,897,248 (5,606,711)
INCOME TAX BENEFIT . . . . . . . . . . . . . . . . . - (1,935,000)
MINORITY INTEREST. . . . . . . . . . . . . . . . . . 418,820 -
----------- ------------
NET INCOME (LOSS). . . . . . . . . . . . . . . . . . $ 2,478,428 $(3,671,711)
=========== ============
NET INCOME (LOSS) PER COMMON SHARE
BASIC . . . . . . . . . . . . . . . . . . . . . $ 0.07 $ (0.10)
=========== ============
DILUTED . . . . . . . . . . . . . . . . . . . . $ 0.07 $ (0.10)
=========== ============
AVERAGE SHARES AND EQUIVALENTS OUTSTANDING:
BASIC . . . . . . . . . . . . . . . . . . . . . 35,722,124 35,637,083
=========== ============
DILUTED . . . . . . . . . . . . . . . . . . . . 35,822,997 35,637,083
=========== ============
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
1
<TABLE>
<CAPTION>
CASINO MAGIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
MARCH 31, DECEMBER 31,
1998 1997 (*)
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . $ 22,064,678 $ 20,986,510
Other current assets including restricted marketable
securities of $10,435,816 and $10,629,405 respectively. . . 18,377,824 18,754,277
------------- -------------
Total current assets. . . . . . . . . . . . . . . . . . . 40,442,502 39,740,787
------------- -------------
Property and equipment, net . . . . . . . . . . . . . . . 269,754,860 263,993,452
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Other long-term assets. . . . . . . . . . . . . . . . . . 67,076,031 68,970,578
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$377,273,393 $372,704,817
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities . . . . . . . . . . . . . . . . . . . . . $ 49,288,007 $ 51,031,097
------------- -------------
Other long-term liabilities and minority interest. . . . . . 8,649,362 8,748,212
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Long-term debt, net of current maturities. . . . . . . . . . 257,346,153 253,471,219
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SHAREHOLDERS' EQUITY:
Common stock, $0.01 par, 50,000,000 shares authorized,
35,722,124 issued and outstanding at March 31, 1998
and outstanding at December 31, 1997. . . . . . . . . . . . 357,221 357,221
Undesignated stock, 2,500,000 shares authorized, none issued - -
Additional paid-in capital. . . . . . . . . . . . . . . . . . 67,122,856 67,122,852
Retained deficit. . . . . . . . . . . . . . . . . . . . . . . (5,283,848) (7,762,270)
Less unearned compensation. . . . . . . . . . . . . . . . . . (206,358) (263,514)
------------- -------------
Total shareholders' equity. . . . . . . . . . . . . . . . 61,989,871 59,454,289
------------- -------------
$377,273,393 $372,704,817
============= =============
<FN>
*DERIVED FROM AUDITED FINANCIAL STATEMENTS
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CASINO MAGIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
---------------------------------
1997 1996
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,478,428 $ (3,671,711)
Adjustments for non-cash charges . . . . . . . . . . . . . . . . . . 5,671,232 7,984,066
Changes in assets and liabilities. . . . . . . . . . . . . . . . . . (3,306,287) (6,923,953)
------------ -------------
Net cash used in operating activities. . . . . . . . . . . . . . . . . 4,843,373 (2,611,598)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment . . . . . . . . . . . . . (6,742,963) (15,537,976)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 702,023 2,816,685
------------ -------------
Net cash provided by (used in) investing activities . . . . (6,040,940) (12,721,291)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable and
long-term debt. . . . . . . . . . . . . . . . . . . . . . . . (1,457,535) (5,259,870)
Net procees from issuance of long-term debt . . . . . . . . . . . 3,733,270 6,350,000
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . - (117,668)
------------ -------------
Net cash provided by (used in) financing activities. . . . . 2,275,735 972,462
------------ -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . 1,078,168 (14,360,427)
------------ -------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . . . . . . 20,986,510 34,546,166
------------ -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . . $22,064,678 $ 20,185,739
============ =============
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amount capitalized) . . . . . . . . . . . . . . . 8,007,497 7,032,156
Income taxes (net of refunds). . . . . . . . . . . . . . . . . . . - -
Supplemental schedule of non-cash investing and financing activities:
Property and equipment and other asset acquisitions included in
accounts and construction payable and accrued expenses . . . . . . . 3,372,006 3,959,982
<FN>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
3
<PAGE>
CASINO MAGIC CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to the Three Months Ended March 31, 1998 and 1997
is Unaudited)
1. Summary of significant accounting policies:
Organization and basis of presentation:
Casino Magic Corp. and Subsidiaries is an international gaming company with
operations in Bay Saint Louis, Mississippi ("Casino Magic-BSL"), Biloxi,
Mississippi ("Casino Magic-Biloxi"), Bossier City, Louisiana ("Casino
Magic-Bossier City"), and the Argentina Province of Neuqu n in the cities of
Neuqu n City and San Mart n de los Andes ("Casino Magic-Neuquen").
Unless the context requires otherwise, reference in this report to the
"Company" means Casino Magic Corp. and its relevant subsidiaries, and
reference to "Casino Magic" means Casino Magic Corp.
The consolidated financial statements include the accounts of Casino Magic
Corp. and its wholly-owned and majority-owned subsidiaries.
All significant intercompany accounts and transactions have been eliminated.
The accompanying unaudited consolidated financial statements contain all
adjustments which are, in the opinion of management, necessary for a fair
statement of the results of the interim periods. The results of operations
for the interim periods are not indicative of results of operations for an
entire year. It is suggested that these consolidated financial statements be
read in conjunction with the consolidated financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
Certain reclassifications have been made to 1997 amounts to conform with the
March 31, 1998 presentation.
2. Accounting for Start-Up Costs:
During April 1998, the Accounting Standards Executive Committee of the AICPA
issued Statement of Position 98-5 ("SOP"), "Reporting on the Costs of Start-Up
Activities." The SOP requires costs of start-up activities and organization
costs to be expensed as incurred. The SOP is effective for financial
statements for fiscal years beginning after December 15, 1998. The company did
not adopt the SOP in the first quarter of 1998.
4
<PAGE>
CASINO MAGIC CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
RESULTS OF OPERATIONS
The discussions regarding proposed Company developments and operations
included in "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" contain forward looking statements that involve a
number of risks and uncertainties. These proposed developments and operations
include: (i) completion of a hotel in 1998, at Casino Magic-Bossier City and
(ii) the Company's ability to fund planned developments and debt service
obligations over the next twelve months with currently available cash and
marketable securities, and with cash flow from operations. In addition to the
risks and uncertainties discussed below, other factors that could cause actual
results to differ materially are detailed from time to time in the Company's
reports filed with the Securities and Exchange Commission, including without
limitation in Note 1 of Notes to the Consolidated Financial Statements filed
with the Annual Report on Form 10-K for Casino Magic Corp. for the year ended
December 31, 1997.
The following table sets forth for the periods indicated certain operating
information for the Company on a consolidated basis and for its existing
properties. The principal operating entities are Mardi Gras Casino Corp.
("Casino Magic-BSL") and Biloxi Casino Corp. ("Casino Magic-Biloxi") both
dockside casinos operating on the Gulf Coast of Mississippi (together referred
to collectively as the "Casino Magic-Gulf Coast"), Casino Magic of Louisiana,
Corp. ("Casino Magic-Bossier City") and Casino Magic-Neuquen SA, which
operates gaming facilities at two casino sites in Neuquen and San Martin de
los Andes, Argentina.
<TABLE>
<CAPTION>
(in thousands) Quarter ended March 31,
<S> <C> <C>
Revenues: . . . . . . . . . . . 1998 1997
--------------- -------------------------
Casino Magic-BSL (1). . . . . . $ 23,219 $ 22,066
Casino Magic-Biloxi (2) . . . . 16,250 16,092
Casino Magic Bossier City (3) . 27,928 23,206
Casino Magic-Neuquen. . . . . . 4,784 4,415
Corporate and Other . . . . . . 5 --
--------------- -------------------------
Total revenues. . . . . . . . . 72,186 65,779
Costs and expenses:
Casino Magic-BSL. . . . . . . . 18,378 18,248
Casino Magic-Biloxi . . . . . . 15,335 14,711
Casino Magic Bossier City . . . 22,735 25,305
Casino Magic-Neuquen. . . . . . 3,313 3,083
Corporate and Other . . . . . . 1,470 2,435
--------------- -------------------------
Total costs and expenses. . . . 61,231 63,782
Income (loss) from operations:
Casino Magic-BSL. . . . . . . . 4,841 3,818
Casino Magic-Biloxi . . . . . . 915 1,381
Casino Magic Bossier City . . . 5,193 (2,099)
Casino Magic-Neuquen. . . . . . 1,471 1,332
Corporate and Other . . . . . . (1,465) (2,435)
--------------- -------------------------
Total income from operations. . $ 10,955 $ 1,997
=============== =========================
<FN>
(1) Began operations September 30, 1992; expanded casino capacity December 31,
1992.
(2) Began operations June 5, 1993; expanded casino capacity December 16, 1993.
(3) Began operations October 4, 1996; opened permanent facility on December
31, 1996.
</TABLE>
5
<PAGE>
CASINO MAGIC CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Three months ended March 31, 1998 compared to three months ended March 31,
1997.
Consolidated revenues increased $6.4 million, or 9.7%, to $72.2 in the first
quarter of 1998, compared to $65.8 million in the first quarter of 1997. The
increase in consolidated revenues is attributable to increased revenues at all
five casinos operated by the Company. The largest individual increase of $4.7
million, between the comparable periods, occurred at Casino Magic-Bossier
City. The increase at Casino Magic-Bossier City is attributable to improved
marketing efforts and an overall increase in the Bossier City/Shreveport,
Louisiana gaming market of $18.5 million, to $150.7 million or 14%, between
the comparable periods. In addition, Casino Magic-Bossier City's market share
for the first quarter of 1998 was 18.5% compared to 17% in the first quarter
of 1997. The increased revenues at the Company's other domestic locations are
due to improved amenities or increased hold percentages between 1998 and 1997.
At the Company's operations in Argentina, slot machine revenues continue to
improve due to an increase in the number of slot machines and continued
popularity of slot machines and American style gaming. Management
anticipates that after the opening of the 378 room hotel at Casino
Magic-Biloxi, revenues at Casino Magic-Biloxi, both gaming and non-gaming,
will increase. The hotel opened May 1, 1998.
Operating costs and expenses decreased $2.6 million, or 4.0%, to $61.2 million
in the first quarter of 1998 as compared to $63.8 million in the first quarter
of 1997. Casino expenses increased by $5.6 million, or 21.1%, due to
increases in gaming taxes related to increased gaming revenues, increased
personnel costs related to the increased gaming volume and an increase in
slot point redemption values. Food and beverage costs declined $2.3 million
or 45.9%, to $2.6 million in the first quarter of 1998 due to a reduction in
the use of complimentaries as a promotional tool. Approximately half of this
reduction occurred at Casino Magic-Bossier City. Advertising and marketing
costs declined $4.4 million, or 33.5%, to $8.8 million in the first quarter of
1998, compared to $13.2 million in the first quarter of 1997. During the
first quarter of 1997 at Casino Magic-Bossier City the Company attempted to
increase market share and revenue with expensive promotions which were
significantly less successful than anticipated. In May 1997 the promotional
programs at Casino Magic-Bossier City were significantly reduced. Corporate
expenses declined by $0.9 million in the first quarter of 1998, as compared to
the first quarter of 1997. The decline is the result of a reduction in
corporate officer's salaries and development efforts.
Other (income) expense (non-operating income and expenses) increased to a net
expense of $8.1 million in the first quarter 1998 as compared to $7.6 million
in the first quarter of 1997. This increase in net expense is due $0.5
million in expenses related to the proposed merger between Casino Magic Corp
and Hollywood Park, Inc. There were no expenses in the first quarter of 1997
relating to merger costs.
There was no income tax expense recorded in the first quarter of 1998 due to
the use of net operating loss carryforwards and related reductions in
allowances against deferred tax assets.
Liquidity and Capital Resources
At March 31, 1998, the Company had unrestricted cash of $22.0 million compared
to unrestricted cash of $21.0 million at December 31, 1997. In addition, the
Company had $10.4 million and $10.7 million in cash and marketable securities
at March 31, 1998 and December 31, 1997, respectively, which is restricted as
to its use under the indenture relating to $115,000,000 of First Mortgage
Notes issued by Jefferson Casino Corp. The restricted cash and securities held
as of March 31, 1998 were received from the sale of the Crescent City
Riverboat for $11.7 million. For the quarter ended March 31, 1998, the
Company expended $4.8 million of cash flow from operating activities and
received $3.7 million of proceeds from the incurrence of long term debt. The
Company spent $6.7 million for the acquisitions of property, equipment and
other long-term assets, and reduced long term debt by $1.5 million, for a net
increase of $2.2 million.
The Company expended approximately $6.2 million for capital improvements at
its Gulf Coast properties and $5.0 million for capital improvements at Casino
Magic-Bossier City during the first quarter of 1998. The Company
6
CASINO MAGIC CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
plans additional capital improvements in 1998 at its Gulf Coast properties
and at Casino Magic-Bossier City, much of which is subject to the cash flows
of the Company or the availability of financing. There are no assurances that
adequate funding will be available for these planned investments.
At Casino Magic-Bossier City , the Company plans to expand the land based
pavilion and construct a 188-room convention hotel, including restaurants,
and a swimming pool. The construction of the hotel is expected to be funded
primarily by $10.4 million of restricted cash obtained as a result of the sale
of the Crescent City Riverboat, current unrestricted cash on hand, future
operating cash flow of Casino Magic-Bossier City and lease financing for
furniture, fixtures and equipment. No assurances can be given that the cash
on hand and the cash flow from the operations of Casino Magic-Bossier City
will be sufficient to complete such hotel and related facilities or that these
improvements will ever be developed.
The Company has completed a hotel tower at Casino Magic-Biloxi above the
eight-story parking garage adjacent to the casino. The hotel consists of
378 rooms, including 86 suites, and includes a health spa, beauty salon,
swimming pool and conference space. The hotel opened on May 1, 1998, with
only 16 suites not available for use. These rooms should be available by the
end of May 1998. The hotel construction costs have been funded out of the
cash flow of Casino Magic-BSL and Casino Magic-Biloxi, and the $7.0 million in
proceeds from the sale of a 49% ownership interest in Casino Magic-Neuquen.
The Company has also obtained debt financing of the furniture, fixtures and
equipment for the Casino Magic-Biloxi hotel in the amount of $6.5 million.
Under the terms of the Indenture associated with the $135,000,000 First
Mortgage Notes, Casino Magic Corp., Mardi Gras Casino Corp., Biloxi Casino
Corp. and Casino Magic Finance Corp. have certain restrictions relative to
additional borrowings and guarantees. Jefferson Casino Corp and Casino Magic
of Louisiana, Corp. have certain restrictions relative to additional
borrowings and cash flow under the terms of the Louisiana Indenture associated
with the $115,000,000 First Mortgage Notes.
The Company's operations in Argentina subjects it to certain risks including
foreign currency exchange, repatriation of earnings and profits, and adverse
foreign tax treatment. In addition, the Company will incur the general
business risk associated with operating in a foreign county where culture and
business practices may vary significantly from that in the United States.
Such risks could have a material impact on the operating results and liquidity
of the Company.
The Company will have a significant need for cash in 1998 and beyond in order
to continue its planned development of its existing properties. The Company
believes that cash and restricted marketable securities at March 31, 1998, and
cash flows from operations will be sufficient to service its operating and
debt service requirements, through at least the next twelve months, including
planned improvements at Casino Magic-Biloxi and the commencement of the
construction of the Casino Magic-Bossier City hotel, but are not anticipated
to be sufficient to engage in any other development activities.
7
<PAGE>
CASINO MAGIC CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 on file with the Securities and Exchange Commission.
During the quarter ended March 31, 1998, the Company was not a party to any
newly instituted legal proceedings and there have been no material
developments during such period to existing legal proceedings.
Item 2. Changes in Securities
None.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On February 19, 1998, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Hollywood Park, Inc. ("Hollywood"), a Delaware
corporation and HP Acquisition II, Inc. ("HP"), a Minnesota corporation and
the wholly owned subsidiary of Hollywood. Under the Merger Agreement, the
Company has agreed, subject to approval of the Company's shareholders, to
merge "(the "Merger") with HP. Upon such Merger, the Company shall be the
surviving entity and will become the wholly owned subsidiary of Hollywood. The
separate existence of HP will then cease. Upon the Merger, the shareholders
of the Company will be entitled to receive $2.27 for each share of the
Company's common stock held. All shareholders of the Company will be entitled
to dissent from the Merger in accordance with the provisions of Minnesota law.
The Merger is subject to the approval of the Company's shareholders prior to
October 31, 1998, and to the approval of the Mississippi Gaming Commission,
the Nevada Gaming Commission, and the Louisiana Gaming Control Board. The
Merger is also contingent upon other matters, including a requirement that
neither the Company nor Hollywood has materially breached any warranty,
representation or covenant contained in the Merger prior to the time of the
Merger. If the Merger Agreement is terminated for certain reasons, including a
voluntary termination by the Company should the Board of Directors of the
Company determine to accept a proposal of another party to merge with or
acquire the Company on terms which it believes to be superior to those
contained in the Merger Agreement, the Company will be required to pay
Hollywood $3,500,000.
The Proposed Merger was reported in, and the Merger Agreement was provided as
an exhibit to, the Company's Form 8K filed on March 4, 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Change in Control Severance Plan for Officers of Casino Magic,
amending and superceding the Change in Control Severance Plan filed as exhibit
10.113 to the Registrants Annual Report on Form 10k for the year ended
December 31, 1997.
10.2 1998 Executive Officer Bonus Plan
10.3 Executive Officer Salary/Bonus Agreement dated March 1, 1998, between
the Registrant and James E. Ernst.
10.4 Executive Officer Salary/Bonus Agreement dated March 1, 1998, between
the Registrant and Marlin F. Torguson.
8
<PAGE>
CASINO MAGIC CORP. AND SUBSIDIARIES
10.5 Executive Officer Salary/Bonus Agreement dated April 15, 1998,
between the Registrant and Jay S. Osman
10.6 Executive Officer Salary/Bonus Agreement dated April 29, 1998,
between the Registrant and Robert A. Callaway
10.7 Executive Officer Salary/Bonus Agreement dated April 29, 1998,
between the Registrant and Kenneth N. Schultz
27 Financial data schedule (filed electronically only)
(b) Reports on Form 8-K:
None.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASINO MAGIC CORP.
Date: May 14, 1998 /s/ James E. Ernst
---------------------
James E. Ernst, President and Chief Executive Officer
Date: May 14, 1998 /s/ Jay S. Osman
-------------------
Jay S. Osman, Chief Financial Officer and Treasurer (principal financial
and accounting officer)
10
CHANGE IN CONTROL SEVERANCE PLAN
This Severance Plan (the "Plan") of Casino Magic Corp. has been
established effective January 23, 1998, to encourage the continued employment
of certain employees up to and beyond the effective date of any Change in
Control, and to alleviate their concerns about a possible loss of employment
following a Change in Control, on the terms and subject to the conditions set
forth herein. This Plan may be referred to as the "Senior Management Change
in Control Severance Plan." Initially capitalized words and phrases are
defined herein.
1. ELIGIBLE EMPLOYEES. Each Full-time employee of Casino Magic Corp.
------------------
or any of its subsidiaries (collectively hereafter, the "Company") on the
Effective Date who (i) is an "officer" as that term is defined under Rule
16a-1 of the Securities Exchange Act of 1934, or (ii) holds the position of
general manager of one of the Company's operating casinos is eligible to
participate in and receive benefits under this Plan, unless such employee
elects to be covered under a contract with the Company that provides for
benefits upon termination of employment (eligible employees are hereafter
referred to as "Participants").
2. TRIGGERING EVENTS. No benefits are provided under this Plan for
-----------------
Participants who leave the employ of the Company for any reason prior to the
Effective Date. After the Effective Date, no benefits are provided under the
Plan to any Participant unless one of the following events ("Triggering
Events") have occurred with respect to such Participant:
a. The termination of the Participant's employment by the Company without
Cause at any time within two years immediately following the Effective Date,
or
b. The Participant's voluntary termination of employment, if Cause
does not then exist for the termination of the Participant's
employment by the Company, for Good Reason at any time within two years
immediately following the Effective Date.
3. OBLIGATIONS OF COMPANY UPON OCCURRENCE OF TRIGGERING EVENT. A
----------------------------------------------------------
Participant whose employment with the Company is terminated under
circumstances constituting a Triggering Event shall be entitled to the
following:
a. Payment in cash, payable within 30 days of Participant's
termination, of the sum of (i) accrued Annual Base Salary through the date of
termination, (ii) a pro rata portion of the Annual Bonus, (iii) any
compensation previously deferred by him or cash compensation awarded but
payment of which was deferred by the Company until a subsequent event,
including the passage of time, (iv) any accrued vacation pay, and (v) a
multiple, to be established by the Compensation Committee of the Board of
Directors, of Participant's Annual Base Salary and the Annual Bonus; provided
that the amount payable
2
under this phrase (v) shall not equal or exceed an amount which would be
defined as in "excess parachute payment" under Section 280G of the Internal
Revenue Code of 1986.
If no Compensation Committee has been established, then the multiple will be
established by the Board of Directors. In the event a Participant holds more
than one office with the Company, the Participant will be entitled to the
highest multiple applicable.
b. For twenty-four months from the date of termination as the result
of a Triggering Event, or such longer period as may be provided by the terms
of the appropriate program, the Company shall continue so-called "fringe
benefits" to the Participant and/or the family of the Participant at least
equal to those which would have been provided in accordance with the programs
in effect on the date of termination if employment of the Participant had not
been terminated or, if more favorable to Participant, as in effect generally
at the time thereafter with respect to other peer employees of the Company and
their families; provided, however, that if the Participant obtains other
employment and is eligible to receive medical or other fringe benefits under
another employer-provided plan, the medical and other fringe benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility; and provided further that if the
application of this sentence would result in material adverse tax consequences
to the Company, the Company may, in lieu thereof, make cash payments to the
Participant sufficient to allow Participant to obtain equivalent coverage for
Participant and the family of Participant (including to the extent necessary
the election of COBRA coverage and the maintenance of duplicate coverage
during any pre-existing condition exclusion), and pay any additional cash
payments necessary so that Participant will receive the full pre-tax benefit
of the cash payments in lieu of coverage. For purposes of determining
eligibility (but not the time of commencement of benefits) of the Participant
for retiree benefits pursuant to such programs, a Participant shall be
considered to have remained employed for two years after the date of
termination and to have retired on the last day of such period.
c. For a period ending on the earlier of six months from the date of
termination or Participant's obtaining other full-time permanent employment,
the Company shall, at its sole expense as incurred, provide the Participant
with outplacement services that are reasonable in scope and cost in relation
to Participant's position.
d. The Company will reimburse Participant for reasonable moving
expenses, not to exceed $25,000, if Participant moves his or her principal
residence with 24 months of termination as the result of a Triggering Event,
and Participant either (i) moves to another state, or (ii) has obtained
permanent full-time employment at a location which requires that Participant
travel at least 15 miles from Participant's principal residence to
Participant's new place of employment, more than the distance traveled from
Participant's principal residence to Participant's work location with the
Company immediately prior to termination.
3
e. To the extent not theretofore paid or provided, the Company shall
timely
pay or provide to the Participant any other amounts or benefits required to be
paid or provided or which he or she is eligible to receive under any other
program.
4. MISCELLANEOUS.
-------------
a. Exclusion of Payments for Benefit Determination. Except for
------------------------------------------------
payments made pursuant to subsection 3a, phrases (i) through (iv) of this
Plan, no payment or other benefits provided shall be deemed to be compensation
for purposes of calculating benefits of the Participant under any of the
Company's pension or retirement plans, nor shall such payment or the value of
any other benefit hereunder that is provided solely by virtue of this Plan be
included in calculating such benefits.
b. No Transferability of Benefits. The right to receive benefits
------------------------------
under this Plan shall not be transferred, assigned, pledged or otherwise
disposed of, except by will or under the laws of descent or distribution.
c. Taxes. The Company may withhold from any payment due under this
-----
Plan any taxes required to be withheld under applicable federal, state or
local tax laws or regulations, and the Participant, prior to payment, shall
execute and deliver all applicable withholding election forms required by the
Company.
d. Only One Benefit. Participants are not eligible to receive any
----------------
additional benefits under any other severance plans applicable to any other
groups of employees. To the extent that any other plans require payment of
benefits, the amount or fair value of such benefits shall reduce any benefits
payable hereunder.
e. Disqualification for Benefits. A Participant will receive no
-----------------------------
benefits under this Plan (except as provided under subsection 3a phrases (i),
(ii) and (iv)) under the following circumstances:
(i) The Participant resigns voluntarily without Good Reason;
(ii) The Participant is terminated for Cause; or
(iii) The Participant is terminated for a condition that would entitle the
Participant to receive benefits under any long-term disability insurance
policy or program of the Company.
f. Death. A Participant will receive no benefits under subsection 3a
-----
phrase (v) of this Plan if termination of Participant's employment with the
Company is the result of his or her death.
5. AMENDMENT, TERMINATION AND LIMITATION. Although the Company
--------------------------------------
presently intends to continue this Plan unchanged, it reserves the right to
amend or terminate the Plan, and
4
the Compensation Committee may limit or restrict the benefits provided to any
Participant under the Plan, upon six months notice without the consent of any
Participant. However, the Company may not terminate or reduce the benefits
provided for under this Plan after the Effective Date, or after a definitive
agreement is entered into that, if consummated, would result in a Change in
Control, until such time as such agreement is terminated or abandoned. The
power to amend or terminate the Plan as provided in this Section is reserved
to the Board of Directors of Casino Magic Corp.
6. DEFINITIONS. The definitions provided in this Section shall apply
-----------
for purposes of this entire Plan. Other terms are defined elsewhere in this
Plan.
"Annual Base Salary," with respect to any Participant, means a salary at
least equal to either (i) the base salary paid in the calendar year
immediately preceding the Effective Date, or (ii) the annualized rate of the
base salary which was being paid from the beginning of the current calendar
year through the month immediately preceding the month in which the Effective
Date occurs, or (iii) any annual base salary awarded (on an annualized basis)
for any calendar year after the Effective Date, as selected by the
Participant.
"Cause" with respect to the termination of a Participant, means:
a. willful and continued failure to perform substantially the duties
assigned to the Participant (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to Participant by the Board of Directors
or the Chief Executive Officer of the Company which specifically identifies
the manner in which it is believed that the Participant has not substantially
performed Participant's duties, or
b. commission by the Participant of fraud, misappropriation,
embezzlement or other acts of dishonesty, alcoholism, drug addiction or
dependency, or conviction for any crime punishable as a felony or as a gross
misdemeanor involving moral turpitude, which actions or occurrences the Board
of Directors determines have a material adverse effect upon the Participant's
ability to perform the duties which have been assumed by or assigned to
Participant, or determines are materially adverse to the interests of the
Company, or
c. Participant is found not to be suitable, or a similar finding is
made, by any state gaming commission or similar agency which regulates gaming.
No act or failure to act, on the Participant's part shall be considered
"willful" unless it is done, or omitted to be done, by him in bad faith or
without reasonable belief that his action or omission was in the Company's
best interests. Any act, or failure to act, based upon authority given
pursuant to a resolution of the Board of Directors or instructions of the
Chief Executive Officer or the advice of counsel for the Company shall be
conclusively presumed to be in good faith and in the Company's best interests.
5
"Change in Control" means
a. the acquisition by any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "34 Act") (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 under the 34 Act) of 25% or more of either (i) the
Casino Magic Corp.'s then outstanding common stock ("Outstanding Stock") or
(ii) the combined voting power of Casino Magic Corp.'s then outstanding voting
securities entitled to vote generally in the election of directors
("Outstanding Voting Securities") other than any acquisition (i) by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any entity controlled by it or (ii) by any entity pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of subsection (c)
of this definition; or
b. Individuals who as of the date hereof constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof; provided, however, that any individual becoming a director subsequent
to the date hereof whose election or nomination was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be
considered as a member of the Incumbent Board unless his initial assumption of
office occurs as a result of an actual or threatened contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies by or on behalf of a Person other than the Board; or
c. Consummation of a reorganization, merger of consolidation, share
exchange or sale or other disposition of all or substantially all of the
Company's assets (a "Combination") unless immediately thereafter (i) all or
substantially all of the beneficial owners of the Outstanding Stock and
Outstanding Voting Securities immediately prior to such Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the entity resulting from such
Combination (including, without limitation, any entity which as a result of
such transaction owns the Company or all or substantially all of its assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such Combination of the
Outstanding Stock and Outstanding Voting Securities, as the case may be, (ii)
no Person (excluding any entity resulting from such Combination or any
employee benefit plan (or related trust) of the Company or such resulting
entity) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the resulting
entity or the combined voting power of the then outstanding voting securities
of such entity except to the extent that such ownership existed prior to the
Combination and (iii) at least a majority of the members of the board of
directors of the resulting entity were members of the Incumbent Board at the
time of the execution of the initial agreement or of the action of the Board
providing for such Combination; or
d. Approval by the shareholders of the Company's complete liquidation
or dissolution.
6
"Effective Date" means the date of any Change in Control, or, if a
Participant was terminated at the request of a third person in connection with
an anticipated Change in Control, the date immediately prior to such
termination.
"Employment Period Benefits" means:
(i) either, as selected by Participant:
(A). a base salary equal to Annual Base Salary, plus an annual bonus at
least equal to the average of the bonuses payable to Participant with respect
to the last three calendar years prior to the termination of Participant's
employment (including the year of termination and annualized if the
Participant was not employed by the Company for the whole of any such calendar
year); or
(B). an annual base salary equal to that payable in 1998, and the right to
participate in a bonus program substantially similar to that established for
Participant in 1998, with reasonably attainable goals established to earn such
bonus;
(ii) participation in all programs applicable generally to peer
employees;
(iii) prompt reimbursement of expenses;
(iv) fringe benefits equivalent to those provided peer employees; and
(v) paid vacation comparable to that provided to peer employees.
"Full-time" means not less than 30 hours per week. For purposes of
eligibility to participate in this Plan, an employee will be considered a
Full-time employee if, during the three months preceding the Effective Date,
the employee worked, on average, at least 30 hours per week.
"Good Reason" means
a. assignments of the Participant to any duties or responsibilities
that in any material respect are inconsistent with or result in a diminution
of Participant's Role with the Company immediately prior to the Effective
Date, excluding an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of
notice thereof given by the Participant;
6
b. any failure by the Company to provide the Employment Period
Benefits, other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Participant;
c. a requirement imposed by the Company (i) that Participant's
principal functions be performed at any office or location outside the
corporate limits of the county or province within which said Participant's
principal function was performed immediately prior to the Effective Date, or
(ii) that Participant travel on Company business to a substantially greater
extent that reasonably required for the performance of his or her duties; or
d. any purported termination by the Company of his employment
otherwise than as expressly permitted by this Plan.
"Role" means a position with the Company in an executive capacity and
substantially comparable to the position, authority and responsibilities held,
exercised and assumed by Participant with the Company immediately prior to the
Effective Date.
"Annual Bonus" means, with respect to any Participant, the bonus payable
with respect to the calendar year selected by Participant as the Annual Base
Salary year (annualized if the Participant was not employed by the Company for
the whole of any calendar year.
7. ADDITIONAL PROVISIONS.
----------------------
a. No Right to Continued Employment. This Plan does not create any
--------------------------------
contract of employment or restrict in any way the right of the Company to
terminate the employment of any Participant at any time, with or without
Cause, subject to the rights of the Participant, if any, to receive benefits
under this Plan.
b. Construction, Governing Laws. Whenever the context may require,
----------------------------
pronouns used in this Plan shall include the corresponding masculine, feminine
or neuter forms, and the singular form of nouns, pronouns and verbs shall
include the plural and vice versa. This Plan shall be governed by the laws of
the state of Minnesota, except those dealing with choice of law.
c. Severability. The invalidity of any provision or portion of this
------------
Plan shall not affect the remainder of the Plan, which shall remain in full
force and effect.
d. Successors. This Plan shall be binding and inure to the benefit
----------
of the Company, its successors and assigns, and the Participants and their
respective heirs and successors.
7
e. Legal Fees. The Company agrees to reimburse the Participant for
----------
all legal fees incurred in enforcing the Plan where the courts find favor of
the Participant.
The Company has caused this Plan to be adopted and execute by its duly
authorized officer effective as of the date first set forth above.
CASINO MAGIC CORP.
_______________________________________
Marlin F. Torguson, Chairman of theBoard
8
CASINO MAGIC CORP.
1998 EXECUTIVE OFFICER BONUS PLAN
This Bonus Plan (the "Plan") of Casino Magic Corp. (the "Company") has
been established effective as of January 1, 1998, to provide an incentive for
the executive officers of the Company to achieve, and to cause the Company to
achieve, certain goals established by the Board of Directors of the Company
and the Company's chief executive officer, including specific financial goals
of the Company.
1. Administration. The Compensation Committee shall administer the
--------------
Plan, and shall be the final arbitrator as to whether a Bonus is or is not
payable in accordance with the Plan and any resolution adopted under the Plan.
2. Participants. Each executive officer of the Company as designated
------------
by the Compensation Committee and who enters into an agreement with the
Company in such form and content as shall be determined by the Compensation
Committee (hereunder referred to as a "Participant").
3. Definitions. The following words and phrases when used herein
-----------
shall have the meanings set forth below:
a. "Bonus" shall mean all cash amounts paid or payable to a person in
addition to any duly authorized salary paid or payable to such person.
b. "Net Income" shall mean the net income of the Company, before
provision for income taxes (including the effect of the payment of Bonuses),
for any designated period as determined in accordance with generally accepted
accounting principals, consistently applied, and as presented in the Company's
Forms 10-Q and 10-K filed with the Securities and Exchange Commission, less
the amount (if any) by which extraordinary gains (including income tax
benefits with respect to prior years) for the period exceed extraordinary
losses or write-offs, and prior to the deduction of expenses (if any) related
to the negotiation and consummation of a transaction in which there is a
Change in Control or contemplated Change in Control of the Company.
c. "Target Net Income" for each calendar quarter shall mean the
following:
(i) Net Income of $0 in the first quarter of 1998;
(ii) Net Income of $370,623 in the second quarter of 1998;
(iii) Net Income of $5,344,738 in the third quarter of 1998; and
(iv) Net Income of $919,250 in the fourth quarter of 1998.
d. "Target Net Income for 1998" shall mean Net Income of $6,634,611
calendar year 1998.
e. "Maximum Bonus" shall mean the maximum Bonus payable under the
Plan, and shall equal four times the Quarterly Maximum Bonus established for
each Participant by the Compensation Committee.
f. "Quarterly Maximum Bonus" shall mean the maximum Bonus payable
with respect to and following the end of each calendar quarter as established
for each Participant by the Compensation Committee.
g. "Cause" with respect to the termination of a Participant, means:
(i) willful and continued failure to perform substantially the duties
assigned to the Participant (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to Participant by the Board of Directors
or the Chief Executive Officer of the Company which specifically identifies
the manner in which it is believed that the Participant has not substantially
performed Participant's duties, or
(ii) commission by the Participant of fraud, misappropriation,
embezzlement or other acts of dishonesty, alcoholism, drug addiction or
dependency, or conviction for any crime punishable as a felony or as a gross
misdemeanor involving moral turpitude, which actions or occurrences the Board
of Directors determines have a material adverse effect upon the Participant's
ability to perform the duties which have been assumed by or assigned to
Participant, or determines are materially adverse to the interests of the
Company, or
(iii) Participant is found not to be suitable, or a similar finding is
made, by any state gaming commission or similar agency which regulates gaming.
No act or failure to act, on the Participant's part shall be considered
"willful" unless it is done, or omitted to be done, by him in bad faith or
without reasonable belief that his action or omission was in the Company's
best interests. Any act, or failure to act, based upon authority given
pursuant to a resolution of the Board of Directors or instructions of the
Chief Executive Officer or the advice of counsel for the Company shall be
conclusively presumed to be in good faith and in the Company's best interests.
h. "Change in Control" means:
(i) the acquisition by any individual, entity or group within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "34 Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 under the 34 Act) of 25% or more of either (A) the
Company's then outstanding common stock ("Outstanding Stock") or (B) the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors
2
<PAGE>
("Outstanding Voting Securities") other than any acquisition (A) by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any entity controlled by it or (B) by any entity pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection (iii)
of this definition; or
(ii) Individuals who as of the date hereof constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof; provided, however, that any individual becoming a director subsequent
to the date hereof whose election or nomination was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be
considered as a member of the Incumbent Board unless his initial assumption of
office occurs as a result of an actual or threatened contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies by or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger of consolidation, share
exchange or sale or other disposition of all or substantially all of the
Company's assets (a "Combination") unless immediately thereafter (A) all or
substantially all of the beneficial owners of the Outstanding Stock and
Outstanding Voting Securities immediately prior to such Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the entity resulting from such
Combination (including, without limitation, any entity which as a result of
such transaction owns the Company or all or substantially all of its assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such Combination of the
Outstanding Stock and Outstanding Voting Securities, as the case may be, (B)
no Person (excluding any entity resulting from such Combination or any
employee benefit plan (or related trust) of the Company or such resulting
entity) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the resulting
entity or the combined voting power of the then outstanding voting securities
of such entity except to the extent that such ownership existed prior to the
Combination and (C) at least a majority of the members of the board of
directors of the resulting entity were members of the Incumbent Board at the
time of the execution of the initial agreement or of the action of the Board
providing for such Combination; or
(iv) Approval by the shareholders of the Company's complete
liquidation or dissolution.
i. "Good Reason" means:
(i) assignments of the Participant to any duties or responsibilities
that in any material respect are inconsistent with or result in a diminution
of Participant's Role with the Company immediately prior to the Effective
Date, excluding an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of
notice thereof given by the Participant;
3
(ii) any failure by the Company to provide the salary and benefits
specified at the adoption of this Plan for each Participant, other than as
agreed to by the Participant, and other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Participant;
(iii) a requirement imposed by the Company (A) that Participant's
principal functions be performed at any office or location outside the
corporate limits of the county or province within which said Participant's
principal function was performed immediately prior to the Effective Date, or
(B) that Participant travel on Company business to a substantially greater
extent that reasonably required for the performance of his or her duties; or
(iv) any purported termination by the Company of his employment
otherwise than as expressly permitted by this Plan.
4. Miscellaneous.
-------------
a. No Transferability of Benefits. The right to receive benefits
------------------------------
under this Plan shall not be transferred, assigned, pledged or otherwise
disposed of, except by will or under the laws of descent or distribution.
b. Taxes. The Company may withhold from any payment due under this
-----
Plan any taxes required to be withheld under applicable federal, state or
local tax laws or regulations, and the Participant, prior to payment, shall
execute and deliver all applicable withholding election forms required by the
Company.
c. Disqualification for Bonus. A Participant will receive no payment
--------------------------
under this Plan after and under the following circumstances:
(i) The Participant resigns voluntarily without Good Reason; or
(ii) The Participant is terminated for Cause.
d. Change in Control. In the event of a Change in Control during any
-----------------
calendar quarter, the Quarterly Maximum Bonus for that quarter will be deemed
to be fully earned by Participant for that calendar quarter, and shall be
payable upon the effectiveness of the Change in Control.
e. Payment Times. Any Bonuses earned under this Plan will be due and
-------------
payable within 45 days following the end of each calendar quarter for which
said Bonus is earned; provided that any Bonus earned with respect to the
fourth quarter or the full calendar year of 1998 will be payable within 90
days following the end of such calendar year.
4
f. Compensation Committee Discretion. Nothing under this Plan is
---------------------------------
intended to limit the amount of Bonus or other compensation which the
Compensation Committee may authorize to be paid to any Participant.
Specifically, but not in limitation of the foregoing, the Compensation
Committee may authorize a Bonus with respect to any calendar quarter of 1998,
wherein the Compensation Committee determines that the Target Net Income was
favorably exceeded by 10% or more, or may apply lesser percentages to the
Quarterly Maximum Bonus when the Target Net Income was not achieved.
5. ADDITIONAL PROVISIONS.
----------------------
a. No Right to Continued Employment. This Plan does not create any
--------------------------------
contract of employment or restrict in any way the right of the Company to
terminate the employment of any Participant at any time, with or without
Cause, subject to the rights of the Participant, if any, to receive benefits
under this Plan.
b. Construction, Governing Laws. Whenever the context may require,
----------------------------
pronouns used in this Plan shall include the corresponding masculine, feminine
or neuter forms, and the singular form of nouns, pronouns and verbs shall
include the plural and vice versa. This Plan shall be governed by the laws of
the state of Minnesota, except those dealing with choice of law.
c. Severability. The invalidity of any provision or portion of this
------------
Plan shall not affect the remainder of the Plan, which shall remain in full
force and effect.
d. Successors. This Plan shall be binding and inure to the benefit
----------
of the Company, its successors and assigns, and the Participants and their
respective heirs and successors.
The Company has caused this Plan to be adopted and executed by each
member of the Compensation Committee.
CASINO MAGIC CORP.
COMPENSATION COMMITTEE
_______________________________________
E. Thomas Welch
_______________________________________
Roger H. Frommelt
5
EXECUTIVE OFFICER SALARY/BONUS AGREEMENT
This Agreement is entered into this 1 day of March, 1998, effective as of
the 1st day of January, 1998, by and between Casino Magic Corp. (the
"Company") and James E. Ernst (the "Employee").
RECITALS
--------
A. The Employee is employed by the Company as its President and Chief
Executive Officer.
B. The Company and the Employee are parties to an Employment
Agreement dated December 20, 1995, as amended on April 1, 1997, which provides
for termination without cause upon 30 days notice (the "Employment
Agreement").
C. Under the Employment Agreement, Employee is entitled to a salary
at the annual rate of $425,000 beginning January 1, 1998.
D. Employee is desirous of participating in the Company's 1998
Executive Officer Bonus Plan (the "Plan"), a copy of which has been provided
to Employee.
E. The Compensation Committee has adopted resolutions regarding the
payment of bonuses to Employee under the Plan.
AGREEMENT
---------
Accordingly, the Company and Employee agree as follows:
1. Bonus Plan. Employee shall be a Participant in the Plan, based
----------
upon the resolutions of the Compensation Committee adopted on March 20, 1998
(the "Resolutions"), a copy of which Resolutions has been provided to
Employee.
2. Salary. The Company shall pay and the Employee will accept a
------
salary at the annual rate of $375,000 in semi-monthly installments, commencing
January 1, 1998, through December 31, 1998.
3. Superseding Effect. This Agreement shall amend and supersede the
------------------
provisions of all other agreements between the Company and Employee relating
to the amount of Employee's base salary, including that contained in the
salary provision of the Employment Agreement. Except for provisions relating
to salary, all written agreements between the Company and Employee shall
remain in full force and effect.
4. Acknowledgement by Employee. Employee acknowledges that by
-----------------------------
executing this Agreement, Employee may be accepting a salary payable at a
lower rate than he would otherwise be entitled, and that the criteria for the
payment of a Bonus under the Plan and Resolutions may not be met at one or
more times for the calendar year 1998, and that as a result, Employee's
compensation in 1998 may be less than that which he would have gotten had he
not executed this Agreement.
5. No Guaranty of Employment. Nothing in this Agreement, the Plan or
-------------------------
the Resolutions shall be construed as an agreement for continued employment of
Employee, and Employee acknowledges that, except as may be provided under any
other written agreement between the Company and Employee, Employee is an
at-will employee of the Company subject to termination with or without cause
upon notice.
6. Waiver. No waiver of any term, condition or covenant of this
------
Agreement by a party shall be deemed to be a waiver of any subsequent breaches
of the same or other terms, covenants or conditions hereof by such party.
7. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, and all such counterparts
shall constitute one instrument.
8. Construction. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective or valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
9. Applicable Law. This Agreement shall be governed by, and
---------------
construed in accordance with, the laws of the state of Mississippi.
10. Attorneys Fees. In the event a judgment is entered against any
--------------
party hereto in a court of competent jurisdiction based upon a breach of the
terms of this Agreement, the prevailing party shall be entitled to receive, as
part of any award, the amount of reasonable attorney's fees and expenses
incurred by the prevailing party in such action. A party shall be deemed to
have prevailed if the judgment entered (without including attorney's fees and
expenses) is more favorable to that party than any offer of settlement made to
that party within twenty days after the services of the complaint in such
action.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
CASINO MAGIC CORP. EMPLOYEE
By: _________________________________
_________________________________
James E. Ernst, President James E. Ernst
EXECUTIVE OFFICER SALARY/BONUS AGREEMENT
This Agreement is entered into this 1 day of March, 1998, effective as of
the 1st day of January, 1998, by and between Casino Magic Corp. (the
"Company") and Marlin F. Torguson (the "Employee").
RECITALS
--------
A. The Employee is employed by the Company as its Chairman of the
Board.
B. The Company and the Employee are parties to an Employment
Agreement dated June 1, 1992, as amended on August 26, 1992, August 26, 1994
and May 29, 1997, which provides for termination without cause upon four weeks
notice (the "Employment Agreement").
C. By resolution of the Compensation Committee, Employee is entitled
to a salary at the annual rate of $200,000 in 1998.
D. Employee is desirous of participating in the Company's 1998
Executive Officer Bonus Plan (the "Plan"), a copy of which has been provided
to Employee.
E. The Compensation Committee has adopted resolutions regarding the
payment of bonuses to Employee under the Plan.
AGREEMENT
---------
Accordingly, the Company and Employee agree as follows:
1. Bonus Plan. Employee shall be a Participant in the Plan, based
----------
upon the resolutions of the Compensation Committee adopted on March 20, 1998
(the "Resolutions"), a copy of which Resolutions has been provided to
Employee.
2. Salary. The Company shall pay and the Employee will accept a
------
salary at the annual rate of $200,000 in semi-monthly installments, commencing
January 1, 1998, through December 31, 1998.
3. Superseding Effect. This Agreement shall amend and supersede the
------------------
provisions of all other agreements between the Company and Employee relating
to the amount of Employee's base salary, including that contained in the
salary provision of the Employment Agreement. Except for provisions relating
to salary, all written agreements between the Company and Employee shall
remain in full force and effect.
4. No Guaranty of Employment. Nothing in this Agreement, the Plan or
-------------------------
the Resolutions shall be construed as an agreement for continued employment of
Employee, and Employee acknowledges that, except as may be provided under any
other written agreement between the Company and Employee, Employee is an
at-will employee of the Company subject to termination with or without cause
upon notice.
5. Waiver. No waiver of any term, condition or covenant of this
------
Agreement by a party shall be deemed to be a waiver of any subsequent breaches
of the same or other terms, covenants or conditions hereof by such party.
6. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, and all such counterparts
shall constitute one instrument.
7. Construction. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective or valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
8. Applicable Law. This Agreement shall be governed by, and
---------------
construed in accordance with, the laws of the state of Mississippi.
9. Attorneys Fees. In the event a judgment is entered against any
--------------
party hereto in a court of competent jurisdiction based upon a breach of the
terms of this Agreement, the prevailing party shall be entitled to receive, as
part of any award, the amount of reasonable attorney's fees and expenses
incurred by the prevailing party in such action. A party shall be deemed to
have prevailed if the judgment entered (without including attorney's fees and
expenses) is more favorable to that party than any offer of settlement made to
that party within twenty days after the services of the complaint in such
action.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
CASINO MAGIC CORP. EMPLOYEE
By: _________________________________
_________________________________
James E. Ernst, President Marlin F. Torguson
EXECUTIVE OFFICER SALARY/BONUS AGREEMENT
This Agreement is entered into this 15 day of April, 1998, effective as
of the 1st day of January, 1998, by and between Casino Magic Corp. (the
"Company") and Jay S. Osman (the "Employee").
RECITALS
--------
A. The Employee is employed by the Company as its Treasurer and Chief
Financial Officer.
B. The Company and the Employee are parties to an Employment
Agreement dated October 2, 1995, which has an initial termination date (as
extended) of October 10, 1998 (the "Employment Agreement").
C. Under the Employment Agreement, Employee is entitled to a salary
at the annual rate of $200,000 in 1998, and is currently being paid a salary
at the annual rate of $210,000.
D. Employee is desirous of participating in the Company's 1998
Executive Officer Bonus Plan (the "Plan"), a copy of which has been provided
to Employee.
E. The Compensation Committee has adopted resolutions regarding the
payment of bonuses to Employee under the Plan.
AGREEMENT
---------
Accordingly, the Company and Employee agree as follows:
1. Bonus Plan. Employee shall be a Participant in the Plan, based
----------
upon the resolutions of the Compensation Committee adopted on March 20, 1998
(the "Resolutions"), a copy of which Resolutions has been provided to
Employee.
2. Salary. The Company shall pay and the Employee will accept a
------
salary at the annual rate of $178,500 in semi-monthly installments, commencing
April 1, 1998, through December 31, 1998.
3. Maximum Compensation. Employee shall be entitled to retain all
--------------------
amounts of salary paid through March 31, 1998 based upon the annual rate set
forth in paragraph C of the Recitals; provided that no amount of Bonus (as
defined under the Plan) shall be paid to Employee which would result in
Employee receiving, at any time for the calendar year 1998, an amount which
exceeded (i) the salary payable at the rate set forth in paragraph 2, as if
paid in semi-monthly installments commencing January 1, 1998, plus (ii) the
amount of any Bonus earned under the Plan.
4. Superseding Effect. This Agreement shall amend and supersede the
------------------
provisions of all other agreements between the Company and Employee relating
to the amount of Employee's base salary, including that contained in the
salary provision of the Employment Agreement, and eliminates and voids Section
1(c) of the Employment Agreement relating to a two year renewal of Employee's
employment. Except for provisions relating to salary and Section 1(c) of the
Employment Agreement, all written agreements between the Company and Employee
shall remain in full force and effect.
5. Acknowledgement by Employee. Employee acknowledges that by
-----------------------------
executing this Agreement, Employee is accepting a salary payable at a lower
rate than he would otherwise be entitled, and that the criteria for the
payment of a Bonus under the Plan and Resolutions may not be met at one or
more times for the calendar year 1998, and that as a result, Employee's
compensation in 1998 may be less than that which he would have gotten had he
not executed this Agreement.
6. No Guaranty of Employment. Nothing in this Agreement, the Plan or
-------------------------
the Resolutions shall be construed as an agreement for continued employment of
Employee, and Employee acknowledges that, except as may be provided under any
other written agreement between the Company and Employee, Employee is an
at-will employee of the Company subject to termination with or without cause
upon notice.
7. Waiver. No waiver of any term, condition or covenant of this
------
Agreement by a party shall be deemed to be a waiver of any subsequent breaches
of the same or other terms, covenants or conditions hereof by such party.
8. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, and all such counterparts
shall constitute one instrument.
9. Construction. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective or valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
10. Applicable Law. This Agreement shall be governed by, and
---------------
construed in accordance with, the laws of the state of Mississippi.
11. Attorneys Fees. In the event a judgment is entered against any
--------------
party hereto in a court of competent jurisdiction based upon a breach of the
terms of this Agreement, the prevailing party shall be entitled to receive, as
part of any award, the amount of reasonable attorney's fees and expenses
incurred by the prevailing party in such action. A party shall be deemed to
have prevailed if the judgment entered (without including attorney's fees and
expenses) is more favorable to that party than any offer of settlement made to
that party within twenty days after the services of the complaint in such
action.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
CASINO MAGIC CORP. EMPLOYEE
By: _________________________________
_________________________________
James E. Ernst, President Jay S. Osman
EXECUTIVE OFFICER SALARY/BONUS AGREEMENT
This Agreement is entered into this 29 day of April, 1998, effective as
of the 1st day of January, 1998, by and between Casino Magic Corp. (the
"Company") and Robert A. Callaway (the "Employee").
RECITALS
--------
A. The Employee is employed by the Company as its Vice
President/General Counsel.
B. The Company and the Employee are parties to an Employment
Agreement dated June 3, 1997, which had an initial termination date (as
extended) of September 18, 1997, and is terminable without cause upon 30 days
prior notice (the "Employment Agreement").
C. Employee has been receiving a salary at the annual rate of
$200,000 in 1998.
D. Employee is desirous of participating in the Company's 1998
Executive Officer Bonus Plan (the "Plan"), a copy of which has been provided
to Employee.
E. The Compensation Committee has adopted resolutions regarding the
payment of bonuses to Employee under the Plan.
AGREEMENT
---------
Accordingly, the Company and Employee agree as follows:
1. Bonus Plan. Employee shall be a Participant in the Plan, based
----------
upon the resolutions of the Compensation Committee adopted on March 20, 1998
(the "Resolutions"), a copy of which Resolutions has been provided to
Employee.
2. Salary. The Company shall pay and the Employee will accept a
------
salary at the annual rate of $178,500 in semi-monthly installments, commencing
April 1, 1998, through December 31, 1998.
3. Maximum Compensation. Employee shall be entitled to retain all
--------------------
amounts of salary paid through March 31, 1998 based upon the annual rate set
forth in paragraph C of the Recitals; provided that no amount of Bonus (as
defined under the Plan) shall be paid to Employee which would result in
Employee receiving, at any time for the calendar year 1998, an amount which
exceeded (i) the salary payable at the rate set forth in paragraph 2, as if
paid in semi-monthly installments commencing January 1, 1998, plus (ii) the
amount of any Bonus earned under the Plan.
4. Superseding Effect. This Agreement shall amend and supersede the
------------------
provisions of all other agreements between the Company and Employee relating
to the amount of Employee's base salary, including that contained in the
salary provision of the Employment Agreement. Except for provisions relating
to salary, all written agreements between the Company and Employee shall
remain in full force and effect.
5. Acknowledgement by Employee. Employee acknowledges that by
-----------------------------
executing this Agreement, Employee is accepting a salary payable at a lower
rate than he would otherwise be entitled, and that the criteria for the
payment of a Bonus under the Plan and Resolutions may not be met at one or
more times for the calendar year 1998, and that as a result, Employee's
compensation in 1998 may be less than that which he would have gotten had he
not executed this Agreement.
6. No Guaranty of Employment. Nothing in this Agreement, the Plan or
-------------------------
the Resolutions shall be construed as an agreement for continued employment of
Employee, and Employee acknowledges that, except as may be provided under any
other written agreement between the Company and Employee, Employee is an
at-will employee of the Company subject to termination with or without cause
upon notice.
7. Waiver. No waiver of any term, condition or covenant of this
------
Agreement by a party shall be deemed to be a waiver of any subsequent breaches
of the same or other terms, covenants or conditions hereof by such party.
8. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, and all such counterparts
shall constitute one instrument.
9. Construction. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective or valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
10. Applicable Law. This Agreement shall be governed by, and
---------------
construed in accordance with, the laws of the state of Mississippi.
11. Attorneys Fees. In the event a judgment is entered against any
--------------
party hereto in a court of competent jurisdiction based upon a breach of the
terms of this Agreement, the prevailing party shall be entitled to receive, as
part of any award, the amount of reasonable attorney's fees and expenses
incurred by the prevailing party in such action. A party shall be deemed to
have prevailed if the judgment entered (without including attorney's fees and
expenses) is more favorable to that party than any offer of settlement made to
that party within twenty days after the services of the complaint in such
action.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
CASINO MAGIC CORP. EMPLOYEE
By: _________________________________
_________________________________
James E. Ernst, President Robert A. Callaway
EXECUTIVE OFFICER SALARY/BONUS AGREEMENT
This Agreement is entered into this 29 day of April, 1998, effective as
of the 1st day of January, 1998, by and between Casino Magic Corp. (the
"Company") and Kenneth N. Schultz (the "Employee").
RECITALS
--------
A. The Employee is employed by the Company as its Vice
President/Construction and Development.
B. The Company and the Employee are parties to an Employment
Agreement dated June 3, 1997, which has an initial termination date of
December 31, 1998 (the "Employment Agreement").
C. Under the Employment Agreement, Employee is entitled to a salary
at the annual rate of $200,000 in 1998.
D. Employee is desirous of participating in the Company's 1998
Executive Officer Bonus Plan (the "Plan"), a copy of which has been provided
to Employee.
E. The Compensation Committee has adopted resolutions regarding the
payment of bonuses to Employee under the Plan.
AGREEMENT
---------
Accordingly, the Company and Employee agree as follows:
1. Bonus Plan. Employee shall be a Participant in the Plan, based
----------
upon the resolutions of the Compensation Committee adopted on March 20, 1998
(the "Resolutions"), a copy of which Resolutions has been provided to
Employee.
2. Salary. The Company shall pay and the Employee will accept a
------
salary at the annual rate of $170,000 in semi-monthly installments, commencing
April 1, 1998, through December 31, 1998.
3. Maximum Compensation. Employee shall be entitled to retain all
--------------------
amounts of salary paid through March 31, 1998 based upon the annual rate set
forth in paragraph C of the Recitals; provided that no amount of Bonus (as
defined under the Plan) shall be paid to Employee which would result in
Employee receiving, at any time for the calendar year 1998, an amount which
exceeded (i) the salary payable at the rate set forth in paragraph 2, as if
paid in semi-monthly installments commencing January 1, 1998, plus (ii) the
amount of any Bonus earned under the Plan.
4. Superseding Effect. This Agreement shall amend and supersede the
------------------
provisions of all other agreements between the Company and Employee relating
to the amount of Employee's base salary, including that contained in the
salary provision of the Employment Agreement. Except for provisions relating
to salary, all written agreements between the Company and Employee shall
remain in full force and effect.
5. Acknowledgement by Employee. Employee acknowledges that by
-----------------------------
executing this Agreement, Employee is accepting a salary payable at a lower
rate than he would otherwise be entitled, and that the criteria for the
payment of a Bonus under the Plan and Resolutions may not be met at one or
more times for the calendar year 1998, and that as a result, Employee's
compensation in 1998 may be less than that which he would have gotten had he
not executed this Agreement.
6. No Guaranty of Employment. Nothing in this Agreement, the Plan or
-------------------------
the Resolutions shall be construed as an agreement for continued employment of
Employee, and Employee acknowledges that, except as may be provided under any
other written agreement between the Company and Employee, Employee is an
at-will employee of the Company subject to termination with or without cause
upon notice.
7. Waiver. No waiver of any term, condition or covenant of this
------
Agreement by a party shall be deemed to be a waiver of any subsequent breaches
of the same or other terms, covenants or conditions hereof by such party.
8. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, and all such counterparts
shall constitute one instrument.
9. Construction. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective or valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
10. Applicable Law. This Agreement shall be governed by, and
---------------
construed in accordance with, the laws of the state of Mississippi.
11. Attorneys Fees. In the event a judgment is entered against any
--------------
party hereto in a court of competent jurisdiction based upon a breach of the
terms of this Agreement, the prevailing party shall be entitled to receive, as
part of any award, the amount of reasonable attorney's fees and expenses
incurred by the prevailing party in such action. A party shall be deemed to
have prevailed if the judgment entered (without including attorney's fees and
expenses) is more favorable to that party than any offer of settlement made to
that party within twenty days after the services of the complaint in such
action.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
CASINO MAGIC CORP. EMPLOYEE
By: _________________________________
_________________________________
James E. Ernst, President Kenneth N. Schultz
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
MARCH 31, 1998, CONSOLIDATED FINANCIAL STATEMENTS OF CASINO MAGIC CORP.
AND ITS SUBIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 22,064,684
<SECURITIES> 10,430,049
<RECEIVABLES> 4,023,672
<ALLOWANCES> 0
<INVENTORY> 1,041,420
<CURRENT-ASSETS> 40,442,502
<PP&E> 331,912,738
<DEPRECIATION> 62,157,877
<TOTAL-ASSETS> 377,273,393
<CURRENT-LIABILITIES> 49,288,077
<BONDS> 257,346,153
0
0
<COMMON> 357,221
<OTHER-SE> 61,632,650
<TOTAL-LIABILITY-AND-EQUITY> 377,273,393
<SALES> 72,185,901
<TOTAL-REVENUES> 72,185,901
<CGS> 0
<TOTAL-COSTS> 61,231,388
<OTHER-EXPENSES> 562,057
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,495,208
<INCOME-PRETAX> 2,478,429
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,478,429
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,478,429
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
