-----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, RQkwBC2UO6RWTsMTr9nS06v7FHNNNbtHWz78Sj/8+HqIjpl1zJa0WKO7L8/YRY1f tiU2beFYF2BYK9krSjpbiA== 0000891105-98-000016.txt : 19980518 0000891105-98-000016.hdr.sgml : 19980518 ACCESSION NUMBER: 0000891105-98-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASINO MAGIC CORP CENTRAL INDEX KEY: 0000891105 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 640817483 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20712 FILM NUMBER: 98622731 BUSINESS ADDRESS: STREET 1: 711 CASINO MAGIC DR CITY: BAY ST LOUIS STATE: MS ZIP: 39520 BUSINESS PHONE: 2284679257 MAIL ADDRESS: STREET 1: PO BOX 3150 CITY: BAY ST LOUIS STATE: MS ZIP: 39521 10-Q 1 CASINO MAGIC CORP. & SUBSIDIARIES 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 --------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 711 CASINO MAGIC DRIVE, BAY ST. LOUIS, MS 39520 ------------------------------------------------- (Address of principal executive offices) (Zip Code) (228) 467-9257 -------------- (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. 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
PART I - FINANCIAL INFORMATION CASINO MAGIC CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) THREE MONTHS ENDED MARCH 31, 1998 1997 ----------- ------------ 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 ----------- ------------ 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 =========== ============ SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
1
CASINO MAGIC CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS (Unaudited) MARCH 31, DECEMBER 31, 1998 1997 (*) ------------- ------------- 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 ------------- ------------- Other long-term assets. . . . . . . . . . . . . . . . . . 67,076,031 68,970,578 ------------- ------------- $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 ------------- ------------- Long-term debt, net of current maturities. . . . . . . . . . 257,346,153 253,471,219 ------------- ------------- 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 ============= ============= *DERIVED FROM AUDITED FINANCIAL STATEMENTS SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
2
CASINO MAGIC CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, --------------------------------- 1997 1996 ------------ ------------- 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 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3 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 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.
(in thousands) Quarter ended March 31, 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 =============== ========================= (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.
5 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 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 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 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 EX-10.01 2 CHANGE IN CONTROL SEVERANCE PLAN 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 EX-10.02 3 EXECUTIVE OFFICER BONUS PLAN 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 ("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 EX-10.03 4 OFFICER SALARY/BONUS AGREEMENT-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 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 EX-10.04 5 OFFICER SALARY/BONUS AGREEMENT-MARLIN F TORGUSON 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 EX-10.05 6 OFFICER SALARY/BONUS AGREEMENT-JAY S OSMAN 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 EX-10.06 7 OFFICER SALARY/BONUS AGREEMENT-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 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 EX-10.07 8 OFFICER SALARY/BONUS AGREEMENT-KENNETH N SCHULTZ 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 EX-27 9
5 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. 3-MOS DEC-31-1998 MAR-31-1998 22,064,684 10,430,049 4,023,672 0 1,041,420 40,442,502 331,912,738 62,157,877 377,273,393 49,288,077 257,346,153 0 0 357,221 61,632,650 377,273,393 72,185,901 72,185,901 0 61,231,388 562,057 0 7,495,208 2,478,429 0 2,478,429 0 0 0 2,478,429 .07 .07
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