-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Deegdhn74uqhnw5r9X+XWP2zLdpNgvVtMGNIKsuuJopVGu0jN2pcuWOIpz7QGkjt sZTcqqdv+kz4NNcK2GJz+A== 0000796912-99-000006.txt : 19990812 0000796912-99-000006.hdr.sgml : 19990812 ACCESSION NUMBER: 0000796912-99-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLAYERS INTERNATIONAL INC /NV/ CENTRAL INDEX KEY: 0000796912 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 954175832 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14897 FILM NUMBER: 99684410 BUSINESS ADDRESS: STREET 1: 1300 ATLANTIC AVENUE STREET 2: SUITE 800 CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 BUSINESS PHONE: 6094497777 MAIL ADDRESS: STREET 1: 1300 ATLANTIC AVE STREET 2: STE 800 CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 FORMER COMPANY: FORMER CONFORMED NAME: PLAYERS CLUB INTERNATIONAL INC DATE OF NAME CHANGE: 19861020 10-Q 1 3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 _____________ FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 ------------------------- or [ ] 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 0-14897 Players International, Inc. (Exact name of registrant as specified in its charter) Nevada 95-4175832 (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification no.) 1300 Atlantic Ave., Suite 800, Atlantic City, NJ 08401 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (609) 449-7777 (Former name, former address and former fiscal year, if changed since last report.) Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 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 APPLICABLE ONLY TO CORPORATE ISSUERS: As of August 11, 1999, there were 32,032,737 shares of the registrant's Common Stock outstanding, net of treasury stock. -1- PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES -------------------------------------------- INDEX ----- PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 Condensed Consolidated Balance Sheets at June 30, 1999 and March 31, 1999 3 Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 1999 and 1998 5 Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 1999 and 1998 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings 15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 Signature 16 -2- PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements. - ------------------------------ PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands) ASSETS ------ June 30, March 31, 1999 1999 --------- --------- (Unaudited) Current assets: Cash and cash equivalents $ 25,400 $ 25,687 Accounts receivable, net of allowance for doubtful accounts of $435 at June 30, 1999 and $461 at March 31, 1999 1,803 1,882 Notes receivable 1,500 1,500 Inventories 1,164 1,164 Deferred income tax 3,281 3,281 Prepaid expenses and other current assets 2,421 2,715 --------- --------- Total current assets 35,569 36,229 --------- --------- Property and equipment, net of accumulated depreciation and amortization of $64,261 at June 30, 1999 and $59,846 at March 31, 1999 221,909 222,437 --------- --------- Intangibles, net of accumulated amortization of $4,778 at June 30, 1999 and $4,535 at March 31, 1999 34,405 34,344 --------- --------- Investment in joint venture 89,812 91,034 --------- --------- Other assets 4,876 5,091 --------- --------- Total assets $ 386,571 $ 389,135 ========= ========= The accompanying notes are an integral part of these condensed consolidated financial statements. -3- PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except par value) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ June 30, March 31, 1999 1999 --------- --------- (Unaudited) Current liabilities: Current portion of long-term debt $ - $ 541 Accounts payable 3,820 3,627 Accrued liabilities 31,794 31,197 Other liabilities 18,926 19,555 --------- --------- Total current liabilities 54,540 54,920 --------- --------- Deferred income tax 2,959 2,959 --------- --------- Long-term debt, net of current portion 150,000 155,000 --------- --------- Other long-term liabilities 16,163 16,444 --------- --------- Stockholders' equity: Preferred stock, no par value, Authorized- 10,000,000 shares, Issued- none - - Common stock, $.005 par value, Authorized- 90,000,000 shares, Issued- 32,704,837 shares 163 163 Additional paid-in capital 132,666 132,666 Treasury stock, at cost; 672,100 shares (7,294) (7,294) Retained earnings 37,374 34,277 --------- --------- Total stockholders' equity 162,909 159,812 --------- --------- Total liabilities and stockholders' equity $ 386,571 $ 389,135 ========= ========= The accompanying notes are an integral part of these condensed consolidated financial statements. -4- PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share data) (Unaudited) For the Three Months Ended June 30, ------------------- 1999 1998 -------- -------- Revenues: Casino $ 80,255 $ 77,024 Food and beverage 2,342 2,510 Hotel 494 989 Other 959 1,042 -------- -------- 84,050 81,565 -------- -------- Costs and expenses: Casino 35,586 35,846 Food and beverage 1,973 2,111 Hotel 200 397 Other operating expenses 10,023 10,603 Selling, general and administrative 14,769 13,456 Corporate and other non-operating costs 3,778 1,854 Allocated amounts of joint venture 2,669 2,721 Depreciation and amortization 4,871 4,936 -------- -------- 73,869 71,924 -------- -------- Income before other income (expense) and provision for income taxes 10,181 9,641 -------- -------- Other income (expense): Interest income 89 60 Interest expense (4,976) (5,701) -------- -------- (4,887) (5,641) -------- -------- Income before provision for income taxes 5,294 4,000 Provision for income taxes 2,197 1,560 -------- -------- Net income $ 3,097 $ 2,440 ======== ======== Earnings per common share Basic and diluted $ 0.10 $ 0.08 The accompanying notes are an integral part of these condensed consolidated financial statements. -5- PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (Unaudited) For the Three Months Ended June 30, -------------------- 1999 1998 --------- --------- Cash flows from operating activities: Net income $ 3,097 $ 2,440 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,871 4,936 Equity in allocated amounts of joint venture 1,188 1,145 Other 25 88 Changes in assets and liabilities: Accounts and notes receivable 96 914 Inventories, prepaid expenses and other assets (334) 1,868 Accounts payable and accrued liabilities 1,424 (3,153) Other liabilities (876) 20 -------- -------- Net cash provided by operating activities 9,491 8,258 -------- -------- Cash flows from investing activities: Purchases of property and equipment (5,019) (2,123) Proceeds from disposal of property and equipment 782 24 -------- -------- Net cash used in investing activities (4,237) (2,099) -------- -------- Cash flows from financing activities: Proceeds from issuance of long-term debt 5,000 9,000 Repayments of long-term debt (10,541) (12,980) Debt issuance costs - (164) -------- -------- Net cash used in financing activities (5,541) (4,144) -------- -------- Net increase (decrease) in cash and cash equivalents (287) 2,015 Cash and cash equivalents at beginning of period 25,687 17,223 -------- -------- Cash and cash equivalents at end of period $ 25,400 $ 19,238 ======== ======== Supplemental cash flow disclosure: Interest paid $ 9,319 $ 9,280 Income taxes paid 1 2 The accompanying notes are an integral part of these condensed consolidated financial statements. -6- PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - Basis of Presentation - ------------------------------ The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Form 10-K for the year ended March 31, 1999. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows of all periods presented have been made. The results of operations for the three months ended June 30, 1999, are not necessarily indicative of the operating results for the full year. Certain reclassifications have been made to the financial statements as previously presented to conform to current classifications. Note 2 - Casino Revenues and Promotional Allowances - --------------------------------------------------- Casino revenues are the net of gaming wins less gaming losses. Revenues exclude the retail value of complimentary food and beverage, hotel accommodations and other items furnished to customers, which totaled approximately $5,802,000 and $6,126,000 for the three months ended June 30, 1999 and 1998, respectively. The estimated cost of providing such complimentary services are included in casino costs and expenses through inter- department allocations from the department granting the services as follows: For the Three Months Ended June 30, ---------------------- (dollars in thousands) 1999 1998 --------- --------- Food and beverage $ 3,970 $ 4,248 Other 414 433 --------- --------- $ 4,384 $ 4,681 ========= ========= Note 3 - Allocated Amounts of Joint Venture - ------------------------------------------- The Company owns a 50% interest in a casino entertainment facility in Maryland Heights, Missouri (the "joint venture"). The investment in the joint venture is accounted for using the equity method of accounting. Summary condensed financial information for the joint venture is as follows: For the Three Months Ended June 30, ---------------------- (dollars in thousands) 1999 1998 --------- --------- Net revenues $ 5,545 $ 4,914 Depreciation and amortization $ 2,376 $ 2,328 Net loss $ 5,338 $ 5,441 -7- PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 4 - Earnings Per Share - --------------------------- The following table illustrates the computation of basic and diluted earnings per share: For the Three Months Ended June 30, ------------------------ 1999 1998 ---------- ---------- Numerator: Net income $3,097,000 $2,440,000 Denominator: Denominator for basic earnings per share- weighted-average shares 32,032,737 31,941,579 Effect of dilutive securities-stock options 223,458 147,286 ---------- ---------- Denominator for diluted earnings per share- adjusted weighted-average shares 32,256,195 32,088,865 ========== ========== Basic earnings per share $ 0.10 $ 0.08 ========== ========== Diluted earnings per share $ 0.10 $ 0.08 ========== ========== Note 5 - Loan Modification and Forbearance Agreement - ---------------------------------------------------- On June 30, 1999, a note receivable in the amount of $1,500,000 matured without payment. On July 13, 1999, the maker of the note entered into a Loan Modification and Forbearance Agreement with the Company, under which the maker paid the Company $900,000 against the note, which payment was used to satisfy approximately $300,000 of accrued and unpaid interest, and approximately $600,000 of unpaid principal. Under the terms of the agreement, the maker was to satisfy the approximate $900,000 remaining principal balance, with interest, in three equal consecutive monthly installments, with full payment of the note to be made by September 30, 1999. The first of the three monthly installments was received on August 2, 1999. On August 9, 1999, the maker of the note accelerated the terms of the agreement and paid the remaining principal and interest due on the loan. Note 6- Contingencies - --------------------- In April, 1997, a federal investigation of former Louisiana Governor Edwin Edwards, his son Stephen Edwards, Richard D. Shetler and others with respect to their involvement in the riverboat gaming industry and other matters became public. Upon learning of the investigation, the Company immediately began cooperating with the federal authorities. (Stephen Edwards is a former outside attorney and Richard D. Shetler is a former consultant to and lobbyist for the Company in Louisiana.) In August, 1998, the Company was advised in writing by the United States Attorney that neither the Company nor its current or former employees were subjects or targets of the federal investigation. On October 9, 1998, Richard D. Shetler pleaded guilty to conspiracy to commit extortion of the Company. On November 6, 1998, a grand jury of the United States District Court for the Middle District of Louisiana returned an indictment against Edwin Edwards, Stephen Edwards, and four other defendants for matters relating to the riverboat casino industry. The indictment charges Edwin Edwards and Stephen Edwards with extorting and conspiring to extort the Company in violation of the Racketeer Influenced Corrupt Organizations Act and interstate travel in aid of racketeering. On November 12, 1998, the defendants pleaded not guilty to the allegations set forth in the indictment. The Missouri Gaming Commission, the Illinois Gaming Board and the Louisiana Gaming Control Board are each aware of and are each investigating the involvement of the Company in the Shetler and Edwards cases to determine the suitability of the Company and its subsidiaries for continued licensure. The Company has and will continue to cooperate with the gaming regulatory authorities in their investigations. To date, none of the gaming regulatory authorities has commenced any disciplinary action against the Company or any of its employees as a result of the Shetler and Edwards cases or other related matters. -8- Assurances cannot be given that disciplinary action will not be commenced or that licenses will be renewed. The Company is unable at this stage to determine the likely outcome of these gaming regulatory investigations or estimate the amount or range of potential loss, if any. In June, 1999, the Coushatta Tribe of Louisiana (the "Tribe") informed the Company of the Tribe's intention to file a civil suit. The allegation of this threatened civil action is the Company's wrongful attempt to prevent the Tribe from opening its land-based casino in Louisiana in 1993 and 1994 through the Company's association with Edwin Edwards, Stephen Edwards and Richard D. Shetler. In the opinion of management, based upon the advice of counsel, the Company has committed no wrongdoings, has valid defenses, and will vigorously defend against any claims advanced by the Tribe. The Company is unable at this stage to determine the likely outcome of this threatened civil action or estimate the amount or range of potential loss, if any. -9- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. - ---------------------------------------------------------- The Company owns and operates riverboat gaming and entertainment facilities. These include one riverboat casino in Metropolis, Illinois (the "Metropolis facility"), two riverboat casinos in Lake Charles, Louisiana (the "Lake Charles facility") and two contiguous, permanently moored, dockside riverboat casinos in Maryland Heights, Missouri (the "Maryland Heights facility"). The Company also owns and operates a harness horseracing track in Paducah, Kentucky. The Company's fiscal year ends on March 31st. Certain reclassifications have been made to the financial highlights previously presented to conform to current classifications. References to the first quarter of fiscal 2000 or fiscal 1999, mean the three month periods ended June 30, 1999, and June 30, 1998, respectively. In February, 1999, the Company entered into a definitive agreement and plan of merger with Jackpot Enterprises, Inc. ("Jackpot"). Pursuant to the terms of the agreement, Jackpot will acquire the Company for $8.25 per share, consisting of $6.75 per share in cash and $1.50 in Jackpot's common stock, subject to adjustment under certain circumstances, for each share of the Company's outstanding common stock. The completion of the merger is subject to a number of conditions, including approval by the stockholders of both companies, receipt of all necessary regulatory approvals (including the approvals of the Illinois, Louisiana, Missouri and Kentucky gaming authorities) and the financing of the transaction. A special meeting of the stockholders of the Company for the purpose of approving the merger with Jackpot and adopting the merger agreement is scheduled to be held on September 14, 1999. Results of Operations Comparison of Operating Results for the Three-Month Periods Ended June 30, 1999 and 1998 Financial Highlights For the Three Months Ended June 30, ----------------------- % Increase/ 1999 1998 Decrease ---------- ---------- ----------- (dollars in thousands, except per share data) Casino Revenues Metropolis $ 21,061 $ 19,684 7.0 Lake Charles 33,988 36,265 (6.3) Maryland Heights 25,206 21,075 19.6 ---------- ---------- ----------- $ 80,255 $ 77,024 4.2 ---------- ---------- ----------- Total Revenues Metropolis $ 21,796 $ 20,473 6.5 Lake Charles 35,817 38,904 (7.9) Maryland Heights 26,240 21,991 19.3 Other 197 197 - ---------- ---------- ----------- $ 84,050 $ 81,565 3.0 ---------- ---------- ----------- Operating Income (Loss) Metropolis $ 5,410 $ 4,888 10.7 Lake Charles 5,575 7,005 (20.4) Maryland Heights (a) 3,365 847 297.3 Corporate and other (4,169) (3,099) (34.5) ---------- ---------- ----------- $ 10,181 $ 9,641 5.6 ---------- ---------- ----------- Other Information Depreciation and amortization (b) $ 4,871 $ 4,936 (1.3) Interest expense (net) $ 4,887 $ 5,641 (13.4) Net income $ 3,097 $ 2,440 26.9 Earnings per share assuming dilution $ 0.10 $ 0.08 25.0 -10- For the Three Months Ended June 30, ----------------------- % Increase/ 1999 1998 Decrease(c) ---------- ---------- ----------- (dollars in thousands, except per share data) Operating Margin (operating income/total revenues) Metropolis 24.8% 23.9% .9 pts Lake Charles 15.6% 18.0% (2.4) pts Maryland Heights 12.8% 3.9% 8.9 pts Consolidated 12.1% 11.8% .3 pts (a) Amount includes the Company's 50% share of the Maryland Heights joint venture operating losses, which include depreciation and amortization. Such joint venture operating losses were $2.7 million for each of the three months ended June 30, 1999 and 1998. (b) Amount excludes the Company's share of the Maryland Heights joint venture depreciation and amortization of approximately $1.2 million and $1.1 million for the three months ended June 30, 1999 and 1998, respectively, which are included in the joint venture operating losses as shown above. (c) The "% Increase/(Decrease)" for operating margins represents the absolute difference in percentage points (pts) between the two periods. Increases in casino revenues and operating income experienced during the first quarter of fiscal 2000 as compared to the first quarter of fiscal 1999 were primarily attributable to the Company's Maryland Heights facility. Increases at this facility are due to the continued growth in the St. Louis gaming market. Slot revenue was the primary driver for these revenue increases. The Maryland Heights facility added approximately 150 slot machines during the first quarter of fiscal 2000. The Company's Metropolis facility also experienced improved results quarter-over-quarter. A reconfiguration of the gaming floor plus the introduction of new slot product during the quarter contributed to the 10.9% increase in slot revenue at this facility. On June 25, 1999, the Governor of Illinois signed a bill into law allowing dockside gaming for all Illinois casinos. The Metropolis facility commenced dockside gaming operations on June 26, 1999. Casino revenues and operating income at the Lake Charles facility were negatively impacted during the first quarter of fiscal 2000 by disruption associated with the demolition of the former Players Hotel and the construction of a 250-space surface parking lot on the former hotel site. In addition, the facility continued to be affected by Interstate 10 ("I-10") road construction. While the road construction has moved east of the facility, signage in the area encourages both eastbound and westbound travelers to follow alternate routes. Thus, traffic flow and access to the property continue to be impeded and will continue to be through the end of this phase of construction. This phase of construction is expected to be completed during October 1999. As a result of the I-10 road construction, coupled with competitive pressures, operating results could continue to be negatively impacted through, and perhaps beyond, the construction period. Hotel revenues decreased by approximately $500,000 quarter- to-quarter due to the November 1998 closure of the former Players Hotel in Lake Charles. The Company now operates only one hotel. Corporate and other expenses increased in the first quarter of fiscal 2000 as compared to the first quarter of fiscal 1999 by approximately $1.1 million primarily due to a $750,000 charge in conjunction with an executive severance arrangement and approximately $500,000 in merger and acquisition expenses related to the Company's anticipated merger with Jackpot Enterprises, Inc. This was partially offset by legal and consulting expenses incurred during the first quarter of fiscal 1999 related to the "boat-in-a-moat" proceedings of approximately $250,000. Net interest expense decreased approximately $750,000 in the first quarter of fiscal 2000 as compared to the first quarter of fiscal 1999, primarily due to reductions in the amounts outstanding under the Company's line of credit. -11- Additional Factors Affecting Future Operating Income On May 26, 1999, the Missouri Gaming Commission proposed a regulation change that would eliminate the existing restrictions on boarding times on riverboat casinos in the state. State regulators voted on July 28, 1999 to test "open boarding" on the eastern side of the state, including the Company's Maryland Heights facility. Effective August 16, 1999, the Company will begin its 60-day test program allowing continuous boarding. A bill that had been approved by the Missouri State Legislature that would have permitted gaming patrons to play slot machines using credits received in exchange for currency inserted into slot machine bill acceptors was vetoed by the Governor of Missouri in July, 1999. Capital Resources and Liquidity During the three months ended June 30, 1999, cash generated by operations was used to reduce the amount outstanding under the Company's line of credit from $5 million as of March 31, 1999 to $0 as of June 30, 1999. In addition, the Company's capital expenditures for the quarter totaled approximately $5 million. On June 30, 1999, a note receivable in the amount of $1,500,000 matured without payment. On July 13, 1999, the maker of the note entered into a Loan Modification and Forbearance Agreement with the Company, under which the maker paid the Company $900,000 against the note, which payment was used to satisfy approximately $300,000 of accrued and unpaid interest, and approximately $600,000 of unpaid principal. Under the terms of the agreement, the maker was to satisfy the approximate $900,000 remaining principal balance, with interest, in three equal consecutive monthly installments, with full payment of the note to be made by September 30, 1999. The first of the three monthly installments was received on August 2, 1999. On August 9, 1999, the maker of the note accelerated the terms of the agreement and paid the remaining principal and interest due on the loan. Contingencies In April, 1997, a federal investigation of former Louisiana Governor Edwin Edwards, his son Stephen Edwards, Richard D. Shetler and others with respect to their involvement in the riverboat gaming industry and other matters became public. Upon learning of the investigation, the Company immediately began cooperating with the federal authorities. (Stephen Edwards is a former outside attorney and Richard D. Shetler is a former consultant to and lobbyist for the Company in Louisiana.) In August, 1998, the Company was advised in writing by the United States Attorney that neither the Company nor its current or former employees were subjects or targets of the federal investigation. On October 9, 1998, Richard D. Shetler pleaded guilty to conspiracy to commit extortion of the Company. On November 6, 1998, a grand jury of the United States District Court for the Middle District of Louisiana returned an indictment against Edwin Edwards, Stephen Edwards, and four other defendants for matters relating to the riverboat casino industry. The indictment charges Edwin Edwards and Stephen Edwards with extorting and conspiring to extort the Company in violation of the Racketeer Influenced Corrupt Organizations Act and interstate travel in aid of racketeering. On November 12, 1998, the defendants pleaded not guilty to the allegations set forth in the indictment. The Missouri Gaming Commission, the Illinois Gaming Board and the Louisiana Gaming Control Board are each aware of and are each investigating the involvement of the Company in the Shetler and Edwards cases to determine the suitability of the Company and its subsidiaries for continued licensure. The Company has and will continue to cooperate with the gaming regulatory authorities in their investigations. To date, none of the gaming regulatory authorities has commenced any disciplinary action against the Company or any of its employees as a result of the Shetler and Edwards cases or other related matters. Assurances cannot be given that disciplinary action will not be commenced or that licenses will be renewed. The Company is unable at this stage to determine the likely outcome of these gaming regulatory investigations or estimate the amount or range of potential loss, if any. Year 2000 The "Year 2000" problem refers to the inability of computer hardware, software, and embedded chips to recognize and properly process data fields containing a two digit year. As a result, date sensitive systems may recognize dates using "00" as the year 1900 rather than the year 2000. A system which is not Year 2000 -12- compliant would not be able to correctly process date-based information, and in extreme situations, could cause entire systems to be disabled. In its initiative to become Year 2000 compliant, the Company has conducted a comprehensive review of its hardware, software, systems relying on embedded chips, and its vendor affiliates. For purposes of this process, the Company identified five phases in its Year 2000 Readiness Plan, which include awareness, assessment, renovation, testing and implementation. The awareness and assessment phases have been completed and the Company is now in the process of completing the upgrade cycle for its major Information Technology, or IT, systems. The Company does not rely on internally developed, proprietary systems, but rather on "canned" software solutions purchased from third party vendors. As part of the upgrade process, testing and implementation of new IT systems will be completed. All critical operating systems have been updated and deemed compliant with the exception of the Company's slot accounting system at its Lake Charles facility. The Lake Charles facility is currently installing a new Year 2000 compliant slot accounting system as part of its planned change in operating platforms. Installation of this new system should be complete by August 31, 1999. A complete inventory and identification of embedded systems and vendor affiliates has been completed. The Company is currently in the process of testing its embedded systems for Year 2000 compliance and performing follow-up communication with its critical vendors to assess their respective Year 2000 compliance status. The Company's current focus is on the testing phase and any necessary renovation of assets identified as critical. The Company anticipates completing its testing as well as its overall Year 2000 readiness by September 30, 1999. The Company has initiated the design of a comprehensive contingency plan to address alternative solutions for any remaining potential Year 2000 exposure or possible unforeseen system failures. Critical operating systems are backed up by detailed manual procedures that are initiated during periods of system malfunctions. Nonetheless, the Company believes there are a number of external risk factors that are out of the Company's control, which could have a material effect on results of operations or financial position. The most serious of these external risk factors include, but are not limited to, the failure of utility providers to continue service (including electricity, gas, water, sewer and similar services), the disruption of banking services (including the Company's access to cash and the ability of customers to access cash through the use of automated teller machines), and the U.S. Coast Guard imposed waterway closures. Like all other businesses, the Company's ability to predict the eventual outcome of the Year 2000 problem is hampered by the breadth and the depth of the issue and the unprecedented nature of the problem. However, the Company believes it is taking the necessary steps within its power to mitigate any potential disruption in operations and financial losses that could result. As of July 31, 1999, the Company had either expended or committed approximately $660,000 on its Year 2000 compliance efforts and expects to expend no more than $1.0 million in the aggregate. Estimated completion dates and total costs are reflective of management's best estimates; however, actual results could differ. Forward Looking Information Certain information included in this section and elsewhere in this Quarterly Report on Form 10-Q contains, and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company) contain or will contain or include, forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements address, among other things, the approval and subsequent closing of the merger between the Company and Jackpot, the effects of competition, the resolution of pending or threatened litigation or regulatory proceedings, I-10 road construction in Lake Charles, dockside gaming in Illinois, Year 2000 compliance efforts and costs, future borrowing and capital costs, plans for future expansion and property enhancements, business development activities, capital expenditure programs and requirements, financing sources and the effects of legislation and regulation (including possible gaming legislation, gaming licensure and regulation, state and local regulation, tax regulation, and the potential for regulatory reform). Forward looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "believe", or "continue" or the negative thereof or variations thereon or similar terminology. Such forward-looking information is based upon management's current plans or expectations and is subject to a number of uncertainties -13- and risks that could significantly affect current plans, anticipated actions, and the Company's future financial condition and results of operations. These uncertainties and risks include, but are not limited to, those relating to the approval and subsequent closing of the merger between the Company and Jackpot, conducting operations in an increasingly competitive environment, changes in state and local gaming laws and regulations, development and construction activities, leverage and debt service requirements (including sensitivity to fluctuation in interest rates), general economic conditions, the results of various gaming regulatory authorities' investigations as to the Company's suitability for continued licensure, changes in federal and state tax laws, the disruption to Lake Charles operations caused by road construction, dockside gaming in Illinois, Year 2000 compliance efforts and costs, action taken under applications for licenses (including renewals) and approvals under applicable laws and regulations (including gaming laws and regulations), and the legalization of gaming in certain jurisdictions. As a consequence, current plans, anticipated actions, and future financial condition and results from operations may differ from those expressed in any forward-looking statements made by or on behalf of the Company and no assurance can be given that such statements will prove to be correct. Item 3. Quantitative and Qualitative Disclosure About Market Risk. - ----------------------------------------------------------------- Not Applicable -14- PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings. - ---------------------------- Coushatta Tribe of Louisiana Threatened Action The Company received a letter from counsel purporting to represent the Coushatta Tribe of Louisiana and threatening to file on July 15, 1999, a civil action alleging restraint of trade, unfair trade practices and violations of the Racketeer Influenced Corrupt Organizations Act arising out of alleged attempts by the Company to prevent the Tribe from opening its land-based casino, which opened in 1995. The draft complaint that was included with this letter seeks damages in the amount of $30 million, plus treble damages and recovery of attorney's fees and costs. As of the date of this document, no complaint has been filed. If a complaint is eventually filed, the Company would vigorously defend the action. Item 5. Other Information. - ---------------------------- Effective July 12, 1999, Howard A. Goldberg, the Company's Acting Chairman of the Board, President and Chief Executive Officer resigned all of his positions with the Company, pursuant to an agreement between Mr. Goldberg and the Company. John Groom, the Company's Executive Vice President and Chief Operating Officer, was appointed President and Chief Executive Officer to fill the vacancies created by Mr. Goldberg's resignation. Mr. Groom joined the Company in 1996 and has over 20 years of casino management experience. Mr. Groom will continue as Chief Operating Officer and a member of the Board of Directors. Item 6. Exhibits and Reports on Form 8-K. - ------------------------------------------- Exhibits filed with this Form 10-Q: Exhibit No. Exhibit Description - ----------- ------------------- 10.1 Separation Agreement dated July 1, 1999, between Howard A. Goldberg and Players International, Inc. 27.0 Financial Data Schedule Reports on Form 8-K filed during the quarter: None -15- SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PLAYERS INTERNATIONAL, INC. Date: August 11, 1999 By: /s/ Raymond A. Spera, Jr. ------------------------------- Raymond A. Spera, Jr. Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer) -16- EX-27 2
5 1,000 3-MOS MAR-31-2000 JUN-30-1999 25400 0 3738 435 1164 35569 286170 64261 386571 54540 150000 0 0 163 162746 386571 0 84050 0 37759 36110 0 4976 5294 2197 3097 0 0 0 3097 .10 .10
EX-10 3 0616302.08 SEPARATION AGREEMENT This Separation Agreement (the "Agreement"), dated as of July 1, 1999 is entered into by and between HOWARD A. GOLDBERG (the "Executive"), and PLAYERS INTERNATIONAL, INC., on behalf of itself and all of its parents, subsidiaries, divisions, affiliates, successors and assigns (hereinafter collectively referred to as the "Company"). W I T N E S S E T H: WHEREAS: (1) The Executive and the Company entered into an amended employment agreement dated as of October 1, 1996 (which agreement, as amended and modified, is referred to herein as the "Employment Agreement"); (2) The Company and Jackpot Enterprises, Inc. and JEI Merger Corp. (the "Jackpot Entities") have previously entered into a merger agreement on February 8, 1999 (the "Merger Agreement") which calls for the resignation of the Executive upon the consummation of the merger and the payment to him of all payments required to be made upon a change in control. (3) The Executive and the Company believe a termination of the Executive's employment with the Company by mutual consent and his resignation as a director by mutual consent to be beneficial for both the Executive and the Company; (4) With the consent of the Jackpot Entities, the Executive and the Company desire to settle fully and finally any and all differences between them, including, but in no way limited to, any differences that might arise, or might have arisen, under the Employment Agreement or out of the Executive's employment with the Company and his resignation from employment with the Company. (5) The Board of Directors of the Company (the "Board") has reviewed and approved the terms of this Agreement at a meeting duly held and called for such purpose. NOW, THEREFORE, in consideration of the promises, releases, covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, it is hereby agreed as follows: 1. Termination Date. The Executive and the Company mutually agree that this Agreement shall become effective (the "Effective Date") at 5:00 p.m. E.D.T. on the last day of the Revocation Period, as hereinafter defined, and that the Executive shall resign from his employment with the Company effective as of the close of business on the second business day following the expiration of the Revocation Period (the "Termination Date"). The Executive further agrees to resign, as of the Termination Date, from any and all directorships, committee memberships, offices and any other positions with the Company. The Executive further agrees that subsequent to the Termination Date he shall not represent or hold himself out as an officer, director, employee or member of any committee of the Company. 2. Settlement Payments. (a) Upon the first business day prior to the Termination Date, the Executive shall receive a lump-sum payment equal to $495,000, representing that part of the Initial Payment referenced in Exhibit A hereto which is made in respect of bonus earned but not yet paid for the Company's fiscal year ended March 31, 1999 under paragraph 9(c)(iii) of his Employment Agreement and bonus payable in satisfaction of Paragraph 9(c)(ii) of his Employment Agreement; (b) Upon the Termination Date, the Executive shall receive (i) a lump sum payment equal to $450,000, representing the balance of the Initial Payments referenced in Exhibit A pursuant to paragraph 9(c)(i) of his Employment Agreement. (ii) the immediate vesting of all stock options held by the Executive pursuant to paragraph 9(c)(v) of his Employment Agreement notwithstanding the terms of any such grant to the contrary, with the ability to exercise any such options for 12 months following the Termination Date, or for such shorter period as is expressly permitted by the Merger Agreement, or for such longer period as will permit the Executive to exercise his options in connection with any transaction resulting from a Follow-On Agreement, as hereinafter defined, but in no event after the earlier of (A) the expiration of the originally applicable five or ten- year option term, as the same may have been previously extended, or (B) September 30, 2000; and (iii) continuation coverage rights from the Company under the Federal Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, which shall commence on the Termination Date pursuant to paragraph 9(c)(vi) of his Employment Agreement. Notwithstanding the foregoing paragraph 2(b)(ii), Executive agrees that upon a Merger, as hereinafter defined, the Company may, if required in the Follow-On Agreement, as hereinafter defined, require that Executive surrender for cancellation all of Executive's outstanding options in exchange for a cash payment equal to the amount (if any) by which the Change in Control price of the stock underlying Executive's options exceeds the applicable option price, and, in that event, all such options will be canceled (without regard to whether the fair market value of the stock exceeds the option price at such time). (c) In the event of, and immediately upon the closing of, a Merger, as hereinafter defined, the Executive or, in the event of his death, the beneficiary or beneficiaries whom the Executive has identified to the Company for this purpose, or, in the event notice from the Executive to the Company identifying his beneficiaries has not been received prior to the Executive's date of death, the Executive's estate shall receive an additional lump-sum payment, pursuant to paragraph 9(d) of his Employment Agreement, equal to $2,285,000 representing the contingent payments referenced in Exhibit A. For purposes of this paragraph 2(b), a Merger shall mean the consummation of a transaction constituting a "Change of Control", as defined under paragraph 1(g) of the Employment Agreement (a "Change in Control"), with Jackpot Enterprises, Inc., or any subsidiary thereof, occurring at any time after the Effective Date, or with any other entity identified on Exhibit B hereto, provided a definitive agreement to complete such transaction shall have been entered into by the Company with such other entity within six months following the termination of the Merger Agreement but in no event later than September 30, 2000 (a "Follow-On Agreement"). (d) The Company shall be entitled to withhold from the benefits and payments described herein (and in Exhibit A) all income and employment taxes required to be withheld by applicable law. 3. Vacation. The Executive acknowledges and agrees that, upon receipt of the amount as set forth in paragraph 2(a) hereof, the Company shall have fully satisfied its obligations to the Executive with respect to vacation days through the Termination Date and that the Executive shall not be entitled to accrue any days off in the nature of vacation days, personal days or holidays subsequent to the Termination Date. 4. Benefit Plans; Business Expenses. Any amounts to which the Executive is entitled under the Company's 401(k) Plan shall be payable in accordance with, and subject to the terms and conditions of, such plan. The Executive shall be entitled to receive reimbursement from the Company, upon submission of appropriate documentation, for all reasonable, out-of-pocket ordinary and necessary business expenses incurred by him in performing services for the Company prior to the Termination Date. 5. Release by the Executive. As a material inducement to the Company to enter into this Agreement, and in consideration of its agreements and obligations under this Agreement and for other good and valuable consideration, the receipt of which is hereby acknowledged by the Executive, the Executive hereby irrevocably, unconditionally and generally releases the Company and its respective parents, affiliates, shareholders, officers, directors, employees, lenders and attorneys, and the heirs, executors, administrators, receivers, successors and assigns of all of the foregoing (collectively, the "Company Releasees"), from, and hereby waives and/or settles, any and all, actions, causes of action, suits, debts, sums of money, agreements, promises, damages, or any liability, claims or demands, known or unknown and of any nature whatsoever and which the Executive ever had, now has or hereafter can, shall or may have, for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the date of this release (collectively, the "Executive Claims") arising directly or indirectly pursuant to or out of his employment with or service as a director of the Company, the performance of services for the Company or any Releasee or the termination of such employment or services and, specifically, without limitation, any rights and/or the Executive Claims (a) arising under or pursuant to any contract, express or implied, written or oral, including, without limitation, the Employment Agreement; (b) for wrongful dismissal or termination of employment; (c) arising under any federal, state, local or other statutes, orders, laws, ordinances, regulations or the like that relate to the employment relationship and/or that specifically prohibit discrimination based upon age, race, religion, sex, national origin, disability, sexual orientation or any other unlawful bases, including, without limitation, the Age Discrimination in Employment Act of 1967, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the New Jersey labor and employment laws, and any related New Jersey laws, and applicable rules and regulations promulgated pursuant to or concerning any of the foregoing statutes; and (d) for damages, including, without limitation, punitive or compensatory damages or for attorneys' fees, expenses, costs, wages, injunctive or equitable relief. This paragraph shall not apply to any rights or claims that the Executive may have for a breach of this Agreement, including, without limitation, paragraph 14(b) hereof. 6. Release by the Company. The Company hereby irrevocably, unconditionally and generally releases the Executive and his heirs, executors, administrators, attorneys and assigns (collectively, the "Executive Releasees") from, and hereby waives and/or settles, any and all actions, causes of action, suits, debts, sums of money, agreements, promises, damages, or any liability, claims or demands, known or unknown and of any nature whatsoever and which the Company ever had, now has or hereafter can, shall or may have, for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the date of this release (collectively, "Company Claims") arising directly or indirectly pursuant to or out of the Executive's employment with or service as a director of the Company, his performance of services for the Company or any Company Releasee or the termination of such employment or services and, including, without limitation, any rights and/or Company Claims (a) arising under or pursuant to any contract, express or implied, written or oral, including, without limitation, the Employment Agreement; and (b) for damages, including punitive or compensatory damages or for attorneys' fees, expenses, costs, injunctive or equitable relief. This paragraph shall not apply to any rights or claims that the Company may have for a breach of this Agreement, including, without limitation, the Executive's undertaking referred to in paragraph 14(b) hereof. 7. No Litigation. The Executive represents and warrants that he has not filed, commenced or participated in any way in any complaints, claims, actions or proceedings of any kind against any Company Releasee with any federal, state or local court or any administrative, regulatory or arbitration agency or body and he agrees not to file, assert or commence any complaint, claim, action or proceeding of any kind against any Releasee with any federal, state or local court or any administrative, regulatory or arbitration agency or body with respect to any matter from the beginning of the world to the Termination Date. The Company represents and warrants that it has not filed, commenced or participated in any way in any complaints, claims, actions or proceedings of any kind against the Executive Releasee with any federal, state or local court or any administrative, regulatory or arbitration agency or body and the Company agrees not to file, assert or commence any complaint, claim, action or proceeding of any kind against the Executive or any Executive Releasee with any federal, state or local court or any administrative, regulatory or arbitration agency or body with respect to any matter from the beginning of the world to the Termination Date. This paragraph shall not apply to any rights or claims that the Executive or the Company may have for a breach of this Agreement, including, without limitation, paragraph 14(b) hereof and the undertaking referred to therein. 8. No Right to Reinstatement. The Executive hereby waives any right to, and agrees not to, seek reinstatement of employment with the Company. 9. Representation by Counsel/Revocation. (a) By executing this Agreement, the Executive acknowledges that: (i) he has been advised by the Company to consult with an attorney before executing this Agreement and has consulted and been represented by Stephen T. Lindo, Esq., of Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019, and James P. Clark, Esq. of Gibson, Dunn & Crutcher LLP, 2029 Century Park East, Suite 4000, Los Angeles, California 90067- 3026 in connection therewith; (ii) he has been provided with at least a twenty-one (21) day period to review and consider whether to sign this Agreement and that by executing and delivering this Agreement to the Company, he is waiving any remaining portion of such twenty-one (21) day period; and (iii) he has been advised that he has seven (7) days following execution of the Agreement, to revoke this Agreement. Such seven day period is referred to herein as the "Revocation Period". (b) Subject to the last sentence of this subparagraph, this Agreement will not be effective or enforceable against the Executive until the Revocation Period has expired. Such revocation shall only be effective if an originally executed written notice thereof is delivered to the Company on or before 5:00 p.m. on the last day of the Revocation Period. If so revoked, this Agreement shall be deemed to be void ab initio and of no further force and effect. The parties have agreed that the Agreement (i) will be delivered for execution by the Executive only after it has been fully executed by the Company , (ii) will not be subject to revocation by the Company at any time after execution, and (iii) will be effective and fully enforceable against the Company unless the Agreement is revoked by the Executive prior to the expiration of the Revocation Period. 10. Representation. The Company hereby represents and warrants to the Executive that (i) it has received all corporate authorizations necessary for the execution of this Agreement on the terms and conditions set forth herein, (ii) there are no regulatory approvals that are necessary for the execution and performance of this Agreement by the Company (other than those conditions which are required to be satisfied under Sections 6.1(c) and 7.1(c) of the Merger Agreement, insofar as they affect the Company's obligation to make the payments due under paragraph 2(c) hereof), and (iii) its entering this Agreement and the performance of its obligations under this Agreement will not violate any agreement between the Company and any other person, firm or organization or any law or governmental regulation. 11. No Admissions. This Agreement shall not in any way be construed as an admission by the Company that the Company acted wrongfully with respect to the Executive or that the Executive has any rights whatsoever against the Company, and the Company specifically disclaims any liability for any wrongful acts against the Executive on the part of itself, its affiliates, employees, or agents. This Agreement shall not in any way be construed as an admission by the Executive that he acted wrongfully with respect to the Company or that the Company has any rights whatsoever against the Executive, and the Executive specifically disclaims any liability for any wrongful acts against the Company. 12. Non-Derogation; Public Comment. The Executive agrees that, except as required by applicable law, or compelled by process of law, neither he, nor anyone acting on his behalf, shall hereafter (a) make any derogatory, disparaging or critical statement about any Releasee or any of the Company's current officers, directors, employees, shareholders or lenders or any persons who were officers, directors, employees, shareholders or lenders of the Company since May 19, 1993, or engaged in business on behalf of the Company during the period from May 19, 1993, through the Termination Date; or (b) without the Company's prior written consent, communicate, directly or indirectly, with the press or other media, concerning the past or present employees or business of the Company or of any Releasee. The Company agrees that, except as required by applicable law, or compelled by process of law, neither it, nor anyone acting on its behalf, shall hereafter (a) make any derogatory, disparaging or critical statement about the Executive; or (b) without the Executive's prior written consent, communicate, directly or indirectly, with the press or other media, concerning the Executive. 13. Covenant Not to Compete; Covenants to Protect Confidential Information. Paragraphs 10 and 11 of the Employment Agreement shall survive the execution of this Agreement in its entirety. Unless payments are made to the Executive under paragraph 2(c) hereof, the non-competition period shall expire one year from the Termination Date. If payments are made to the Executive under paragraph 2(c) hereof, the non-competition period shall expire on the third anniversary of the Termination Date. 14. Indemnification. (a) The Company shall extend to the Executive the benefits of Section 5.9 of the Merger Agreement, provided that the merger with the Jackpot Entities occurs. If the merger with the Jackpot Entities does not occur, and a Follow-On Agreement is hereafter entered into, and a transaction constituting a Change in Control thereafter occurs, the Company shall extend to the Executive the benefits of any provision that is included in any such agreement that is similar to Section 5.9 of the Merger Agreement. (b) The Company agrees that it will continue to advance promptly to the Executive, following his termination of employment from the Company (or to pay directly), all amounts reasonably incurred by the Executive for attorney's fees and expenses in defending, or appearing as a witness in, any and all civil, criminal, administrative, or investigative actions, suits, or proceedings, including grand jury and/or regulatory proceedings, without regard to the jurisdiction(s) in which such proceedings may occur ("Proceedings"), until the final disposition of such Proceedings, in each case subject to the Executive's prior written undertaking (the "Undertaking") to repay to the Company amounts so advanced in accordance with the terms thereof. (c) The Executive agrees to cooperate fully, at reasonable times and subject to reimbursement from the Company of all related expenses, with the Company and any governmental authority regarding the Proceedings until the final disposition of the Proceedings. (d) The Company represents that (i) it has independently investigated the Company's activities from May 1993 to date in connection with the Louisiana riverboat casino complexes, (ii) as part of such investigation, the Executive has been debriefed regarding his activities in connection therewith, and (iii) it has reported the information learned from such investigation to the Board. The Executive represents that he has fully and accurately disclosed such activities to the Company. The Company agrees to use its best efforts to oppose any finding by a regulatory agency or authority that would adversely affect the Executive's ability to become licensed by the applicable gaming authorities in any jurisdiction, unless such finding was reached after a formal hearing at which the Company acted in a manner consistent with the foregoing obligations and the Executive was given an opportunity to participate in full. (e) Paragraph 12(b) and (d) of the Employment Agreement, are retained without change; Paragraphs 12(a) and (c) of the Employment Agreement are revised to read as follows (changed language in bold); the following new paragraphs (e) and (f) are added to Paragraphs 12 of the Employment Agreement at the end, and all such provisions, as so continued, modified or added, shall survive the execution of this Agreement in their entirety: (a) The Company shall indemnify the Executive to the fullest extent permitted by Nevada law in effect as of the date hereof against all costs, expenses, liabilities and losses (including, without limitation, attorneys' fees, judgments, fines, penalties, ERISA excise taxes, and amounts paid in settlement) reasonably incurred by the Executive in connection with a Proceeding. For the purposes of this Paragraph 12, "Term of Employment" shall mean the period commencing May 19, 1993, and ending on the Termination Date specified in paragraph 1 of the Agreement of which this amendment is a part, and a "Proceeding" shall mean any action, suit or proceeding, whether civil, criminal, administrative, regulatory, or investigative, in which the Executive is made, or is threatened to be made, a party to, or a witness in, such action, suit, or proceeding by reason of the fact that he is or was an officer, director, or employee of the Company, or is or was serving as an officer, director, member, employee, trustee, or agent of any other entity at the request of the Company. (c) The Executive shall not be entitled to indemnification under this Paragraph 12 unless he meets the standard of conduct specified in the Nevada General Corporation Law. Notwithstanding the foregoing, to the extent permitted by law, neither Section 78.751 of the Nevada General Corporation Law, nor any similar provision shall apply to indemnification under this Paragraph 12, so that if the Executive in fact meets the applicable standard of conduct, he shall be entitled to such indemnification whether or not the Company (whether by the board of directors, the shareholders, independent legal counsel or other party) determines that indemnification is proper because he has met such applicable standard of conduct. Neither the failure of the Company to have made such a determination prior to the commencement by the Executive of any suit or arbitration proceeding seeking indemnification, nor a determination by the Company that he has not met such applicable standard of conduct, shall create a presumption that he has not met the applicable standard of conduct. (e) The Company shall give at least three days prior notice to the Executive, and an opportunity to comment thereon and/or react thereto, before proposing or consummating any settlement for resolution of any Proceedings that adversely affect the Executive or his reputation. (f) The foregoing provisions of this Paragraph 12 shall be in addition to and shall in no way limit any rights which the Executive may have under: (i) Nevada Revised Statutes, Title 7, Chapter 78, 751; (ii) Article IX of the Company's By- laws, as in effect on the date hereof; (iii) the Undertaking; (iv) the Merger Agreement; (v) this Agreement; and (vi) directors' and officers' and all other liability insurance policies maintained by the Company." 15. Settlement of Disputes. Paragraph 20 of the Employment Agreement shall survive the execution of this Agreement in its entirety, such that this Agreement shall be treated as the "Agreement" for purposes of such Paragraph. The Company agrees that it will promptly pay all legal fees and expenses incurred by the Executive in connection with the negotiation and implementation of this Agreement. 16. Executive's Continued Availability and Cooperation; Cooperation and Consultation With The Executive By The Company; Access to Records. (a) The Executive shall continue to make himself reasonably available to the Company for a period of six months from the Termination Date to advise on transition matters as to which the Executive has knowledge; provided however that the Executive may provide such services at reasonable times so as not to interfere with his obligations resulting from employment or self-employment activities following his termination of employment from the Company. In consideration of the performance by the Company of its obligations under this Agreement, the Executive agrees to provide such services without additional compensation from the Company; provided, however, that the Company shall reimburse the Executive for his reasonable out-of- pocket expenses incurred in the performance of services rendered hereunder. (b) Without limitation on the rights set forth in Paragraph 12(e) of the Employment Agreement, as herein amended, the Company represents and warrants that it will not communicate with regulatory, civil and/or criminal agencies or authorities in any jurisdiction concerning the Executive, whether orally or in writing, without: (i) promptly, and in no event later than three business days thereafter, giving the Executive notice of the occurrence of such communications, together with copies of any such written materials furnished to such agencies and authorities, and discussing and reviewing with the Executive the nature and content of those communications; and (ii) subject to any necessary consents of the agency or authority involved, permitting the Executive and/or, at his election, his legal counsel, to take part in those communications. (c) The Company shall continue to provide the Executive with reasonable access to the Company's records, at reasonable times and subject to reasonable conditions, where relevant to any proceeding in which the Executive is a participant, to the extent such proceeding involves the Executive's employment with the Company. 17. Survival. The covenants, representations and acknowledgments contained herein shall survive the execution and delivery of this Agreement and the completion of the payments set forth in paragraph 2 hereof. The last paragraph of Paragraph 9(d) of the Employment Agreement shall survive the execution of this Agreement and the parties agree that Ernst & Young, LLP is the Accounting Firm referenced therein. Payments made under this Agreement shall be treated as "Agreement Payments" for purposes of such Paragraph 9(d). 18. Specific Performance. The parties hereto each agree that if any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or injury would be caused. It is hereby agreed that, in addition to any remedies not precluded by this Agreement, each party shall be entitled to seek an injunction restraining any violation or threatened violation of such provisions of this Agreement or to specific performance or other equitable relief with respect to any of the provisions of this Agreement. If any provision of this Agreement is found to be illegal or unenforceable by an arbitrator or by a court of competent jurisdiction, the remaining terms of the Agreement shall continue in full force and effect and the offending provision(s) shall be deemed reformed and amended to the minimum extent necessary to bring it or them within the legal requirements for enforceability. 19. Further Assurances. Each party hereto shall promptly execute, acknowledge and deliver any and all documents and take any and all actions, as any of the other party shall reasonably request in order to carry out the intent and meaning of, and to give full effect to, this Agreement and each provision hereof. 20. Assignment. This Agreement is personal to the Executive and the Executive may not assign his rights or delegate any of his duties or obligations hereunder. The Company may assign its rights and delegate its duties under this Agreement or any of its interests herein (a) to any entity which is a party to a merger or consolidation with the Company, (b) to any affiliate of the Company or (c) to any entity acquiring substantially all of the assets of the Company, provided that no such assignment shall relieve the assignor of its obligations hereunder. The Company shall give the Executive prompt notice of any such assignment. 21. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of service if served personally on the party to whom notice is to be given, (ii) on the day of transmission if sent via facsimile transmission to the facsimile numbers given below, (iii) on the day after delivery to Federal Express or similar overnight courier or the Express Mail service maintained by the U.S. Postal Service, or (iv) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid and properly addressed, to the party at the following addresses (or at such other address as a party may specify by notice to the other): (a) If to the Executive, to him at: 117 Cheltenham Avenue Linwood, NJ 08221 Telecopy: (609) 927-6077 with a copy to: Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019-6099 Attn: Stephen T. Lindo, Esq. Telecopy: (212) 728-8111 and to: Gibson, Dunn & Crutcher LLP 2020 Century Park East Suite 4000 Los Angeles, CA 90067-3026 Attn: James P. Clark, Esq. Telecopy: (310) 552-7014 (b) If to the Company, to it at: Players International, Inc. Citicenter Building Suite 800 1300 Atlantic Avenue Atlantic City, NJ 08401 Attn: Chief Financial Officer Telecopy: (609) 449-7772 with a copy to Sterns & Weinroth 2901 Atlantic Avenue Atlantic City, NJ 08401 Attn: Nicholas Casiello, Jr., Esq. Telecopy: (609) 340-8722 and to: The Bachelder Group 780 Third Avenue New York, NY 10017 Attn: Sara Champion Adams, Esq. Telecopy: (212) 319-3900 22. Miscellaneous. This Agreement: (a) constitutes the sole and complete understanding and agreement between the parties hereto with respect to the matters set forth herein and there are no other agreements or understandings, whether written or oral and whether made contemporaneously or otherwise, that are binding upon the parties hereto, other than those paragraphs of agreements which are expressly incorporated herein by reference; (b) fully supersedes the Employment Agreement except as otherwise provided for herein; (c) shall be subject to, governed by and construed and enforced in accordance with the internal laws of the State of New Jersey, without regard to New Jersey's conflict- of-laws principles; (d) shall inure to the benefit of and be binding upon the Executive and the Company and their respective heirs, devisees, legatees, executors, administrators, successors and permitted assigns and each Releasee; and (e) may not be amended or modified except by written agreement duly executed by the Company and the Executive. 23. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. /s/ Howard A. Goldberg ------------------------------- HOWARD A. GOLDBERG PLAYERS INTERNATIONAL, INC. By: /s/ Lawrence Cohen --------------------------- Name: Lawrence Cohen Title: Director Exhibit A SCHEDULE OF PAYMENT TO BE MADE PURSUANT TO SEPARATION AGREEMENT INITIAL PAYMENTS - due on first business day following expiration of Revocation Period. Payments accrued but unpaid: Mar '99 bonus $170,000 Unused Vacation 25,000 Payments under Employment Agreement Section 9(c) because of termination without cause, with agreed reductions: Settlement of salary continuation 390,000 Settlement of bonus continuation 325,000 Settlement of first year benefits continuation 35,000 -------- $945,000 ======== CONTINGENT PAYMENTS - due at closing of merger Payments under 9(d): Balance settlement of salary continuation 945,000 Balance settlement of bonus continuation 1,250,000 Balance settlement of benefit continuation 90,000 ---------- $2,285,000 ========== Total: $3,230,000 ========== Exhibit B The following is a list of enterprises with respect to which a change in control transaction has received active consideration by the Board of Directors of Players International, Inc. prior to the Termination Date: Apollo/Michael Ashner Aztar Boyd Gaming Corp. Colony Capital/Harvey's Harrah's Entertainment Hollywood Park Horseshoe Gaming, Inc./Binion Insignia Financial/Andrew Farkas Jackpot Enterprises, Inc. Jacobs Entertainment/Black Hawk Gaming Ladbroke Group/Colorado Gaming Thomas H. Lee Company MacAndrew & Forbes/Ronald Perelman North Star Capital Partners/Ed Sheetz & David Hamamoto Penn-National Gaming Sun International Note: For purposes of this Exhibit, a transaction with an affiliate of any of the above-listed companies or named individuals will be treated in the same manner as a transaction with one of the above-listed companies itself. -----END PRIVACY-ENHANCED MESSAGE-----