Schedule 14A
(Rule 14a-101)
Information Required In Proxy Statement
Schedule 14A Information
Proxy Statement Pursuant to Section 14(A)
of The Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For Use of the
Commission Only (as permitted
By Rule 14a-6(e) (2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or- Rule 14a-12
CASINO RESOURCE CORPORATION
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and O-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: 5) Total fee
paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
O-11(a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
CASINO RESOURCE CORPORATION
707 BIENVILLE BLVD.
OCEAN SPRINGS, MS 39564
(228) 872-5558
March 26, 1999
Dear Shareholders:
I am pleased to invite you to attend the Annual Meeting of Shareholders (the
"Meeting") of Casino Resource Corporation (the "Company") to be held at the
offices of the Company, located at 707 Bienville Boulevard, Ocean Springs,
Mississippi, 39564, on Wednesday, April 28, 1999, at 2:00 p.m. Central Daylight
Time. At the Meeting you will be asked to consider and act upon the following
matters:
1. To elect three Class C directors to serve for a term of three
years each;
2. To ratify the appointment of BDO Seidman, LLP as independent
auditors for the current fiscal year; and
3. To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 23, 1999, as the
date of record (the "Record Date") for the determination of shareholders of the
Company (the "Shareholders") entitled to notice of and to vote at the Meeting or
any adjournments or postponements thereof.
The accompanying material contains the Notice of Annual Meeting, the Proxy
Statement, which includes information about the matters to be acted upon at the
Meeting, and the related proxy card (the "Proxy"). I hope you will be able to
attend the Meeting. Whether or not you are able to attend the Meeting in person,
I urge you to sign and date the enclosed Proxy and return it promptly in the
envelope provided. If you do attend the Meeting in person, you may withdraw your
Proxy and vote personally on all matters properly brought before the Meeting
Very truly yours,
CASINO RESOURCE CORPORATION
John J. Pilger
Chief Executive Officer
CASINO RESOURCE CORPORATION
707 Bienville Boulevard
Ocean Springs, Mississippi 39564
(228) 872-5558
---------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------------------
To Be Held on April 28, 1999
TO THE SHAREHOLDERS OF CASINO RESOURCE CORPORATION:
Notice is hereby given to the shareholders of Casino Resource
Corporation (the "Company") that the Annual Meeting (the "Meeting") of
shareholders of the Company (the "Shareholders") will be held at the offices of
the Company, located at 707 Bienville Boulevard, Ocean Springs, Mississippi
39564, on April 28, 1999, at 2:00 p.m., Central Daylight Time to consider and
act upon the following matters:
1. To elect three Class C directors to serve for a term of three years each;
2. To ratify the appointment of BDO Seidman, LLP as independent auditors for
the current fiscal year; and
3. To transact such other business as may properly come before the Meeting or
any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 23,
1999, as the date of record (the "Record Date") for the determination of
Shareholders entitled to notice of and to vote at the Meeting or any
adjournments or postponements thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. EVEN IF YOU PLAN TO
ATTEND THE MEETING, WE URGE YOU TO SIGN, DATE, AND RETURN THE PROXY AT ONCE IN
THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
Noreen Pollman, Secretary
Ocean Springs, Mississippi
March 26, 1999
CASINO RESOURCE CORPORATION
707 Bienville Boulevard
Ocean Springs, Mississippi 39564
PROXY STATEMENT
Annual Meeting of the Shareholders
April 28, 1999
GENERAL INFORMATION
This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation by the Board of Directors (the "Board") of Casino Resource
Corporation (the "Company") of proxies for use at the Annual Meeting of
Shareholders (the "Meeting") to be held on April 28, 1999, at the offices of the
Company, located at 707 Bienville Boulevard, Ocean Springs, Mississippi, 39564,
at 2:00 p.m., Central Daylight Time, or at any adjournments or postponements
thereof, for the purposes set forth in the Notice of Annual Meeting of
Shareholders. This Proxy Statement and the accompanying proxy card (the "Proxy")
are furnished in connection with the proxy solicitation and are first being
mailed to Shareholders of the Company (the "Shareholders") on or about March 26,
1999.
Shares of Common Stock of the Company (the "Shares") may not be voted
unless the signed Proxy is returned or the holder of such Shares attends the
Meeting and votes in person, or other specific arrangements are made to have the
Shares represented at the Meeting. Any Shareholder of record giving a Proxy may
revoke it at any time before it is voted by (i) filing with the Secretary of the
Company before the polls are closed with respect to the matters to be considered
at the Meeting a written notice of revocation bearing a date later than that of
the Proxy; (ii) attending the Meeting and voting in person (although attendance
at the Meeting will not in and of itself constitute a revocation of a Proxy); or
(iii) duly executing a subsequent Proxy relating to the same Shares and
delivering it to the Secretary of the Company before the polls are closed with
respect to the matters to be considered at the Meeting. Shareholders whose
Shares are held in street name should consult with their brokers or other
nominees concerning procedures for revocation. Subject to such revocation, all
Shares represented by a properly executed Proxy will be voted as directed by the
Shareholder on the Proxy. If no choice is specified, proxies will be voted "For"
the persons nominated by the Board of Directors and "For" the ratification of
the appointment of BDO Seidman, LLP as independent auditors for the fiscal year
ending September 1999 (the "Ratification").
A copy of the Company's Annual Report for the fiscal year ended
September 30, 1998, is enclosed herewith. The Annual Report describes the
financial condition of the Company as of September 30, 1998. The Company will
furnish, without charge to any person whose proxy is being solicited, a copy of
the Company's Annual Report on Form 10-KSB for the fiscal year ended September
30, 1998, as filed with the Securities and Exchange Commission, including
financial statements included therein, upon written request to Casino Resource
Corporation, 707 Bienville Boulevard, Ocean Springs, Mississippi 39564,
Attention: Robert J. Allen.
Record Date; Voting at the Meeting; Quorum
The Board has fixed March 23, 1999, as the date of record (the "Record
Date") for determination of Shareholders entitled to notice of, and to vote at
the Meeting. Accordingly, only holders of record of Shares as of the close of
business on the Record Date will be entitled to notice of, and to vote at the
Meeting, and at any and all adjournments or postponements thereof. The only
class of stock of the Company outstanding and entitled to vote at the Meeting is
the Shares. As of the Record Date, there were outstanding 11,854,700 Shares (the
"Outstanding Shares"), held by approximately 315 holders of record. Shareholders
are entitled to one vote per Share on any matter which may properly come before
the Meeting.
For purposes of the Meeting, the presence, in person or by Proxy, of 40% of
the Shares entitled to vote at a Meeting shall constitute a quorum.
Shareholders may not cumulate their votes for any nominee for election. An
affirmative vote of a majority of the Shares present at the Meeting and entitled
to vote will be required to adopt each item submitted to the Shareholders for
consideration at the Meeting. Abstentions and brokers' non-votes are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business, but will not be counted for purposes of determining whether a
proposal has been approved.
As of the Record Date, all executive officers and directors of the Company,
as a group, beneficially owned 1,615,149 Shares (an aggregate of 13% of the
Shares entitled to vote at the Meeting), and have indicated that they intend to
vote all of such Shares in favor of all Board nominees and the Ratification. In
particular, John J. Pilger, the Chief Executive Officer and a Director of the
Company, who beneficially owns 1,100,768 Shares and holds Proxies to vote an
additional 3,305,944 Shares, intends to vote all such Shares in favor of the
persons nominated by the Board and for the Ratification. See "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
Proxies
All Shares which are represented at the Meeting by properly executed
Proxies received prior to or at the Meeting and not revoked will be voted at the
Meeting in accordance with the instructions indicated on such Proxies. If no
instructions are indicated, such Proxies will be voted FOR the persons nominated
by the Board and For the Ratification.
Proxies are being solicited by and on behalf of the Board. All expenses of
this solicitation, including the cost of preparing and mailing this Proxy
Statement, will be borne by the Company. In addition to solicitation by the use
of the mails, Proxies may be solicited by
2
directors, officers, and employees of the Company in person or by telephone,
telegram, or other means of communication. Such directors, officers and
employees will not be additionally compensated, but may be reimbursed for
out-of-pocket expenses in connection with such solicitation. Arrangements will
also be made with custodians, nominees, and fiduciaries for forwarding the Proxy
solicitation materials to beneficial owners of Shares held of record by such
custodians, nominees, and fiduciaries with respect to the solicitation of their
respective beneficial holders, and the Company may reimburse such custodians,
nominees, and fiduciaries for reasonable expenses incurred in connection with
such solicitations.
If for any reason the Company believes that additional time should be
allowed for the solicitation of Proxies, the Company may postpone or adjourn the
Meeting. In such a case, the persons named in the enclosed Proxy will cast votes
in respect of any Shares for which they have voting authority pursuant to such
Proxies in favor of such postponement or adjournment.
Any Proxy given may be revoked by the person giving it at any time before
it is voted. Proxies may be revoked by (i) filing with the Secretary of the
Company before the polls are closed with respect to the matters to be considered
at the Meeting a written notice of revocation bearing a date later than that of
the Proxy, (ii) attending the Meeting and voting in person (although attendance
at the Meeting will not in and of itself constitute a revocation of a Proxy), or
(iii) duly executing a subsequent Proxy relating to the same Shares and
delivering it to the Secretary of the Company before the polls are closed with
respect to the matters to be considered at the Meeting. Any written notice
revoking a Proxy should be sent to Casino Resource Corporation, 707 Bienville
Boulevard, Ocean Springs, Mississippi 39564, Attn.: Noreen Pollman, Secretary.
Shareholders are urged to read this Proxy Statement carefully before
deciding how to vote their Shares.
ITEM 1. ELECTION OF DIRECTORS
Information Concerning the Nominees
The Company's Articles of Incorporation, provide for the election of a
Board of Directors which has been divided into three classes, as nearly equal in
number as possible. Each director serves for three years, with a different class
of directors being elected each year. There are two Class A directors, two Class
B directors, and three Class C directors, which originally began staggered terms
of one, two and three years, respectively. Robert J. Allen and John W. Steiner
are Class A directors and were elected to serve a three-year term until the 2000
Annual Meeting. Noreen Pollman and Dr. Timothy Murphy are Class B directors, and
were elected to serve a three-year term until the 2001 Annual Meeting. John J.
Pilger, Dennis Evans and John Ferrucci were elected to serve until this Meeting
(the 1999 Annual Meeting). Mr. Ferrucci was elected by the Board to fill the
vacancy created by William Lund's resignation.
3
The Board recommends the election of John J. Pilger, Dennis Evans and
John Ferrucci as Class C directors, to serve until the 2002 Annual Meeting.
All the nominees are currently directors of the Company. Nominees have
agreed to serve if elected and the Company knows of no reason why the nominees
would be unavailable to serve. Biographical information concerning the nominees
and the other directors is set forth below under the caption "Directors and
Executive Officers." Information concerning the nominees' ownership of Shares is
set forth below under the caption "Security Ownership of Certain Beneficial
Owners and Management."
The Board of Directors recommends, that the Shareholders vote FOR the
foregoing Class C nominees to the Board of Directors.
Directors and Executive Officers
Set forth below is information as of March 23, 1999, regarding the
directors and executive officers of the Company, including information as to
their principal occupations for the last five years, certain other directorships
held by them, and their ages as of the date hereof.
John J. Pilger, age 52, has been the Chief Executive Officer and a
director of the Company since 1984, and served as President from 1984 to 1993.
Mr. Pilger was previously Chairman of the Board until July 1994, and resumed
such role in April 1995. Mr. Pilger oversees all Company activities including
operations, acquisitions, development and construction and is currently serving
as Chief Financial Officer of the Company.
John Ferrucci, age 48, was elected to serve as a director February 16,
1998, by the Company's Board of Directors. Mr. Ferrucci will serve as a Class C
director until this Meeting, and has filled the vacancy created by William
Lund's resignation. Mr. Ferrucci recently served as General Manager of New
Palace Casino, Biloxi, Mississippi, which features 700 slot machines, 35 table
games, a 500-seat show room and multi-food and beverage venues. Currently Mr.
Ferrucci is General Manager and Chief Operations Officer of Akwesasne Mohawk
Casino, Hogansburg, New York. Mr. Ferrucci served as Senior Vice President and
Assistant Manager from 1994 to 1996, of Grand Casino Biloxi and as Casino
Manager in 1993 of Grand Casino Gulfport. Mr. Ferrucci's experience includes
various casino management positions with Lucayan Beach Resort and Casino,
Freeport, Grand Bahama and various administrative and casino positions with
Harrah's Casino, Atlantic City, New Jersey.
John W Steiner, age 56, has been a director of the Company since
January 1994. Since 1990, he has served as Chairman of the Board of the Ace
Worldwide Group of Companies, a leading provider of moving, trucking,
warehousing and overall logistics services. Mr. Steiner also serves on the Board
of Directors and Executive Committee of Atlas World Group, Inc. Mr. Steiner is
President of the Associate Board of the Milwaukee County Zoological Society, a
Board member of the Metropolitan Milwaukee Association of Commerce and the
Better Business Bureau of Wisconsin.
4
Dr. Timothy Murphy, age 38, was elected by the Board to serve as a director
on March 17, 1997. Dr. Murphy is a Chiropractic doctor maintaining his own
practice in Biloxi, Mississippi for over the last 5 years. Dr. Murphy serves as
a trustee on the Board of Parker College, and is its Finance Chairman.
Additionally, Dr. Murphy is a member of the American Chiropractic Association
and serves on the Council of Diagnostic Imaging and the Council on Sports
Injury. Dr. Murphy serves as team Chiropractor for the Mississippi Sea Wolves, a
Professional Hockey Team.
Dennis Evans, age 52, was elected by the Board to serve as a director on
March 17, 1997. Mr. Evans brings 30 years of sales and marketing business
experience to the Board. Mr. Evans is an entrepreneur who was President of Evans
Enterprise, as well as consultant to several mid-western development companies
including Silverleaf Resorts and NACO. For the last five years Mr. Evans has
acted as a marketing consultant to the Country Tonite Theatres in Branson and
Pigeon Forge. Currently he is the marketing consultant to Casino Caraibe, the
Company's casino development in Tunisia, North Africa.
Noreen Pollman, age 50, has served as Secretary of the Company since March
1995, and as a director since March 1995, and also from 1987 to 1993. Ms.
Pollman currently acts as a business consultant to the Company. From 1984 to
February 1998, Ms. Pollman was Vice President of Operations for each of the
Company's operating businesses with responsibility for the development and
implementation of operating budgets.
Robert J. Allen, age 39, was named Vice President of Entertainment of the
Company in 1994. He has also served as a director of the Company since March
1995, and from 1987 to 1993. Mr. Allen served as Executive Vice President of
Recreational Property Consultant Management Inc., and Chief Marketing Officer of
the Company's former Recreational Property Management, Inc., subsidiary from
1986 to 1987. He also previously served as Vice President of Telecommunications.
Officers serve at the discretion of the Board.
Committees and Meetings of the Board of Directors
Messrs. Steiner, Murphy, and Ferrucci are the current members of the Audit,
Executive, and Compensation Committees of the Board of Directors and serve on
the non-employee directors committee of the Company's Incentive and Stock Option
Plans.
The Audit Committee represents the Board in discharging its
responsibilities relating to the accounting, reporting and financial control
practices of the Company. The Committee has general responsibility for the
review with management of the financial controls, accounting, audit and
reporting activities of the Company. The Committee annually reviews the
qualifications and objectivity of the Company's independent auditors; makes
recommendations to the Board as to their selection; and reviews the scope, fees,
audit results, and management comment letters. The Audit Committee held three
meetings during fiscal 1998.
5
The Executive Committee, which oversees the Company's 1993 Long-Term
Incentive and Stock Option Plan, and the 1997 Long-Term Incentive and Stock
Option Plan, held two meetings during fiscal 1998.
The Compensation Committee, which reviews and makes recommendations to the
Board with respect to executive compensation levels and the compensation
structure of the Company, held two meetings during fiscal 1998.
The Company does not have a nominating or similar committee.
Each director either attended all of the meetings held by the Board and
each Committee thereof on which such director served during such period or the
directors received minutes and resolutions from meetings and committees, and
reviewed and approved by resolution business transactions conducted therein. All
directors attended 100% of the five board meetings and all meetings of the Board
committees on which they served, held during 1998, with the exception of John
Steiner who attended fewer than 75% of the board meetings and meetings of the
Board committees on which he served.
Director Compensation
The Company's outside directors, Messrs. Murphy, Ferrucci, Steiner and Ms.
Pollman, receive $10,000 per year for serving as directors. Additionally,
Messrs. Steiner, Evans and Ferrucci received $500 for each meeting which was
attended in person, as well as reimbursement of travel costs. Messrs. Steiner,
Ferrucci, Evans and Murphy receive an annual grant of Options to purchase 10,000
Shares, which are fully vested at the prevailing market price of the Shares as
of the date of grant. The directors who serve as officers of the Company do not
receive any cash fees.
ITEM 2. RATIFICATION OF APPOINTMENT OF BDO SEIDMAN, LLP AS
INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR
Subject to Shareholder ratification, the Board has appointed the firm of
BDO Seidman, LLP as independent auditors for the fiscal year ending September
30, 1999, and until their successors are selected. The appointment was made upon
the recommendation of the Audit Committee.
The Board of Directors considers BDO Seidman, LLP to be well qualified and
recommends that the Shareholders vote FOR Ratification.
The affirmative vote of the Shares representing a majority of the Shares
present at the Meeting in person or represented by Proxy and entitled to vote,
is required to approve the Ratification.
6
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 23, 1999, certain information
with respect to each Shareholder known to the Company to be the beneficial owner
of more than 5% of its Shares, each director, each named executive officer (as
defined below), and all directors and officers of the Company as a group. Unless
otherwise indicated, each person named in the table has sole voting and
investment power as to the Shares shown. All officers and directors have an
address of 707 Bienville Boulevard, Ocean Springs, Mississippi 39564.
======================================================================================================================
Name and Address Of Beneficial Owner Number of Shares Percentage of
Beneficially Owned(1) Outstanding Shares
======================================================================================================================
John J. Pilger 1,100,768(2)(11) 9.1%
Noreen Pollman 155,000(3)(11) 1.3%
John W. Steiner 76,000(4) *
Dr. Timothy Murphy 15,781(5) *
Dennis Evans 70,100(6) *
Robert J. Allen 157,500(7)(11) 1.3%
John Ferrucci 40,000(8) *
Kevin M. Kean 1,400,944(9) 11.7%
Roy Anderson Holding Corp. 2,152,250(10) 18.2%
All directors and executive officers
as a group (7 Persons) 1,615,149(12) 13%
======================================================================================================================
* less than 1%
======================================================================================================================
(1) Shares not outstanding but deemed beneficially owned by virtue of the right
of a person or member of a group to acquire them within 60 days upon
exercise of options or warrants are treated as outstanding only when
determining the amount and percent owned by such person or group.
(2) Includes 235,000 Shares deemed beneficially owned pursuant to options which
are immediately exercisable or which will be exercisable within 60 days. Of
the Shares reflected above 11,000 are owned by Mr. Pilger's wife, and
11,000 Shares are owned by minor children of Mr. Pilger. In addition, Mr.
Pilger holds proxies to vote 1,330,944 Shares owned by Kevin M. Kean (see
Note 9 below), 175,000 Shares owned by Richard A. Howarth, Jr. (a former
officer of the Company), and 1,800,000 Shares held in escrow to satisfy
certain obligations under an Amended and Restated Debenture held by Roy
Anderson Holding Corp. (see Note 10 below). Mr. Pilger, his wife and
children have the right to vote a total of 4,406,712 Shares or 36.5% of the
Outstanding Shares.
(3) Includes 149,000 Shares deemed beneficially owned pursuant to options,
which are immediately exercisable or which will be exercisable within 60
days.
7
(4) Includes 70,000 Shares deemed beneficially owned pursuant to options, which
are immediately exercisable.
(5) Includes 10,000 Shares deemed beneficially owned pursuant to options, which
are immediately exercisable.
(6) Includes 20,000 Shares deemed beneficially owned pursuant to options, which
are immediately exercisable.
(7) Includes 149,000 Shares deemed beneficially owned pursuant to options,
which are immediately exercisable or which will be exercisable within 60
days.
(8) Includes 40,000 Shares deemed beneficially owned pursuant to options, which
are immediately exercisable.
(9) Includes 70,000 Shares deemed beneficially owned pursuant to options which
are immediately exercisable. Mr. Kean has granted an irrevocable proxy with
respect to 1,330,944 Shares to John J. Pilger until such time as Mr. Kean
sells or transfers such Shares to an unaffiliated third party in a bona
fide transaction. Mr. Kean's address is 2644 E. Lakeshore Drive, Baton
Rouge, Louisiana 70808.
(10) Includes 1.8 million Shares being held in escrow to satisfy certain
obligations of the Company under an Amended and Restated Debenture. Mr.
Pilger holds a proxy for these Shares until they are released from escrow.
Roy Anderson Holding Corp.'s address is: P.O. Box 2, Gulfport, Mississippi
39502.
(11) The stock table does not reflect Shares owned by officers who participated
in the Company's 401(k) plan which began July 1, 1997. Matching
contributions of Shares issued by the Company under the plan through
September 30, 1998, totaling 6,093 Shares.
(12) See Notes 2,3,4,5,6,7,8 and 11.
8
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the annual and
long-term compensation earned by John J. Pilger, Noreen Pollman, and Robert
Allen (the "Named Executive Officers"), for services rendered in all capacities
to the Company for the fiscal years ended September 30, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
========================================================================================================================
Long-Term
Annual Compensation Compensation Awards
Other Restricted Securities All
Annual Stock Underlying Other
Salary Bonus Comp. Awards Options Comp.
Name and Principal Position(1) Fiscal
Year ($) ($) ($) ($) (#) ($)
========================================================================================================================
John J. Pilger, 1998 421,747(2) -0- -0-(5) -0- 195,000 -0-
Chief Executive Officer 1997 255,763(4) -0- -0-(5) -0- -0- -0-
1996 203,435(3) -0- -0-(5) -0- 20,000 -0-
========================================================================================================================
Noreen Pollman, 1998 126,233 81,530 -0- -0- 90,000 -0-
Secretary 1997 128,583 20,000 -0- -0- -0- -0-
1996 129,055(6) -0- -0- 20,000 -0-
========================================================================================================================
Robert Allen, 1998 119,412 -0- -0- -0- 90,000 -0-
Executive Vice President, 1997 116,583 -0- -0- -0- -0- -0-
Entertainment 1996 116,807(7) -0- -0- -0- 20,000 -0-
========================================================================================================================
(1) Under Securities and Exchange Commission rules, the "Named Executive
Officers" include (i) each person who served as Chief Executive Officer
during fiscal 1998, (ii) each person who (a) served as an executive officer
at September 30, 1998, (b) was among the four most highly paid executive
officers of the Company, not including the Chief Executive Officer, during
fiscal 1998, and (c) earned total annual salary and bonus compensation in
fiscal 1998, in excess of $100,000 and (iii) up to two persons who would be
included under clause (ii) above had they served as an executive officer at
September 30, 1998.
(2) Includes contractual compensation and $150,000 fee paid for services
rendered for CRC Tunisia, S.A., and unrepaid advances totaling $25,158.
(3) Includes $17,308 in unused vacation time and $16,636 in wages earned prior
to fiscal 1996, not paid until fiscal 1996.
(4) Includes $12,942 in unused vacation time.
9
(5) During fiscal 1998, 1997 and 1996, Mr. Pilger received personal benefits,
the aggregate amounts of which did not exceed the lesser of $50,000 or 10%
of the total of the annual salary and bonus reported for Mr. Pilger in such
years.
(6) Includes $5,499 of wages earned in 1995 paid in 1996.
(7) Includes $5,001 of wages earned in 1995 paid in 1996.
Option Grants and Exercises
The following table sets forth information with respect to stock
options granted to the Named Executive Officers during fiscal 1998. No stock
appreciation rights were granted by the Company in fiscal 1998.
OPTION GRANTS IN FISCAL 1998(1)
========================================================================================================================
Total Options
Number of Securities Granted to Exercise
Underlying Options Employees In Price Expiration
Name Granted (#) Fiscal 1998 (%) ($/Share) Date
========================================================================================================================
John J. Pilger 195,000(1) 46.4% 1.0300 4/7/2008
========================================================================================================================
Noreen Pollman 90,000(1) 21.4% .9375 4/7/2008
========================================================================================================================
Robert Allen 90,000(1) 21.4% .9375 4/7/2008
========================================================================================================================
(1) The Executives' options were originally granted under the Company's 1997
Long-Term Incentive and Stock Option Plan and were implemented on April 3,
1997, but were canceled and reissued April 7, 1998, with 2/3 vesting
immediately and the balance to vest April 7, 1999.
The following table sets forth with respect to the Named Executive Officers
information concerning the exercise of stock options during fiscal 1998, and
unexercised options held as of the end of fiscal 1998. The Company has never
granted stock appreciation rights.
10
OPTION EXERCISES IN FISCAL 1998 AND FISCAL YEAR-END OPTION VALUES
========================================================================================================================
Shares Number of Securities Value of Unexcercised
Acquired on Value Underlying Unexercised In-the-Money
Name Exercise (#) Realized ($) Options at 9/30/98(#) Options at 9/30/98 ($)
========================================================================================================================
Unexercisable Exercisable Unexercisable Exercisable
========================================================================================================================
John J. Pilger -0- -0- 65,000 170,000 0 0
========================================================================================================================
Noreen Pollman -0- -0- 30,000 119,000 0 0
========================================================================================================================
Robert Allen -0- -0- 30,000 119,000 0 0
========================================================================================================================
Employment Agreements
The Company entered into an Employment Agreement (the "Agreement") with
John J. Pilger on May 20, 1996, providing for an annual salary of $225,000,
subject to annual cost of living adjustments. The Agreement also provides for
use of an automobile and payment of insurance premiums the value of which does
not exceed 10% of his annual salary. The Agreement also provides for bonuses if
certain financial performance guidelines are met. This Agreement was amended
April 3, 1998, to extend the expiration date from July 19, 1999, to September
30, 1999, to correspond to the Company's fiscal year. Additionally, the
Agreement provides that if either party wishes to terminate the Agreement a
written notice of intent must be delivered to the other party one year prior to
the employment expiration date and in the absence of such notice the Agreement
renews automatically from year to year.
The Company entered into a Supplementary Employment Agreement (the
"Supplemental Agreement") with John J. Pilger which provides Mr. Pilger with
certain benefits upon a Change of Control Event, which is defined therein as:
(a) the acquisition after the date of this Supplemental Agreement by an
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), (a "Person") of beneficial
ownership of 20% or more of either (i) the issued and outstanding shares of
common stock of the Company or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors; or (b) if any two or more members within a class of the
staggered Board of seven or more directors, as constituted on the date hereof,
are removed without the express approval or consent of the CEO and Chairman of
the Board, or if two or more members of the Board assume office within any
period of eighteen months after one or more contested elections; or (c) a
hostile reorganization, merger or consolidation which results from either an
actual or threatened election contest or actual or threatened solicitation of
proxies; or (d) a complete liquidation or dissolution of the Company, or the
sale or other disposition of all or substantially all of the assets of the
Company, which liquidation, sale or dissolution occurs as a result of either
actual or threatened solicitation of proxies or consents by or on behalf of
persons other than the incumbent Board. The benefits which inure to Mr. Pilger
upon a voluntary termination under a Change of Control include: 2.99
11
times his annual average salary and bonuses and all taxes including income taxes
and any excise tax which may be imposed.
The Company entered into an agreement with Robert J. Allen, where upon
a Change of Control Event, which is substantially similar to that defined in Mr.
Pilger's Supplementary Agreement and set out above, Mr. Allen has the right to
receive upon termination 2.99 times his average annual salary including bonuses
payable within 30 days plus other benefits.
Other
John J. Pilger was prepaid $150,000 in August of 1997 for services
which were rendered in fiscal 1998 to CRC Tunisia, S.A. Additionally Mr. Pilger,
under this same agreement, was paid $125,000 in August of 1998 for services he
is rendering in fiscal 1999 to CRC Tunisia, S.A. Additionally, Mr. Pilger is
entitled to receive $125,000 in compensation in August 1999, for services he
will render to CRC Tunisia, S.A. during fiscal 2000. Mr. Pilger has relinquished
this anticipated compensation in consideration of the forgiveness of his
indebtedness to the Company described below and the application of $21,000 owed
to him by the Company for the balance due on the two properties described below.
Such forgiveness shall be treated as a bonus paid in three equal installments in
fiscal 1999, fiscal 2000, and fiscal 2001.
As of September 30, 1998, Mr. Pilger was indebted to the Company in the
amount of $449,461 including principal and interest. These obligations accrued
interest at rates between 7% and 9.5% per year and were scheduled to mature from
December 1998 through December 2001. The loans included $150,000 advanced for
the purchase by Mr. Pilger of a Mississippi residence in 1994, and $299,461 in
other advances made to Mr. Pilger from 1994 to present. The Board of Directors
by unanimous resolution has directed the Company to forgive Mr. Pilger's
outstanding debt in consideration of his relinquishment of the fee described in
the proceeding paragraph and the partial purchase price for the property
described below.
OTHER MATTERS
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors, and certain Shareholders to file
reports of ownership and changes in ownership of the Shares with the Securities
and Exchange Commission. To the Company's knowledge, based on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during the Company's fiscal year ended September
30, 1998, all Section 16(a) filing requirements were complied with and filed in
a timely fashion.
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of September 30, 1998, Noreen Pollman paid the Company in full for a
loan which had an outstanding balance of $83,278 by applying a pro rata share of
money earned under terms of a Consulting Agreement during fiscal 1998, to
satisfy the debt in full. The loan bore interest at an annual rate of between
8.5% and 9%.
Through September 30, 1998, the Company has advanced $10,677 including
interest to Robert Allen, which note had an outstanding balance of $7,500 plus
interest as of September 30, 1998. The loan bears interest at an annual rate of
between 8.5% and 9%.
In April, 1994, the Company purchased a residential property in Ocean
Springs from Mr. Pilger, paying him $137,000 in cash. This residence has been
leased at a below market rate since June 1995 to a principal of Monarch Casinos,
Inc. The Company had provided the tenant the opportunity to purchase this
residence contingent upon the tenant, Mr. Smith, fulfilling certain obligations
due the Company. The Company has initiated a legal action against Mr. Smith for
non-performance of his obligations and breach of his contractual obligations as
set out under agreements with the Company. Mr. Smith has responded to the
Company's suit by countersuing for breach of contract, breach of duty of fair
dealing, tortuous interference with prospective business advantage, specific
performance and fraud.
On August 11, 1998, the Board of Directors authorized the Company to
acquire from Mr. Pilger two lots which are contiguous to the residence at 303
LaSalle Court, Ocean Springs, Mississippi (the property described above, which
is currently being leased to Mr. Smith). The purchase price was $86,000, of
which $65,000 was paid in cash and $21,000 was applied to Mr. Pilger's loans due
to the Company. The Company believes that all transactions with directors
described above were effected on terms at least as favorable to the Company as
could have been obtained in arms-length transactions.
On December 31, 1997, the Company's former chairman (Kevin Kean)
defaulted on repaying $1,232,000 plus interest due the Company. The Company
filed suit against Mr. Kean which resulted in a settlement agreement. Under the
agreement, 220,000 shares of the Share were canceled along with the 150,000
Shares currently pledged to the Company, at the market price of $1.19 per Share.
The Company and Mr. Kean entered into a new note agreement. The new note in the
amount of $1,196,885, bears interest at 7% per annum and matures on January 15,
2001. The note is collateralized by Mr. Kean's 5% interest in the Company's
Pokagon management fee. Solely at the Company's discretion and at any time prior
to maturity, the Company can take the collateral as payment in full for the
note. Mr. Kean has also granted the Chairman of the Company a proxy for
1,330,944 Shares of the Shares owned by Mr. Kean but pledged to a commercial
bank. The proxy expires if Mr. Kean sells or transfers such Shares to an
unaffiliated third party in a bona fide transaction.
Effective November 30, 1994, an agreement was entered with respect to
certain transfers of Company stock between Mr. Pilger and Richard Howarth, a
former officer and director of the Company. Under the terms of the agreement,
Mr. Pilger transferred 175,000 Shares to Mr. Howarth. Additionally, Mr. Pilger
is obligated to pay to Mr. Howarth $1.50 per Share on each
13
18 of 100 Shares Mr. Pilger sells or transfer. Pursuant to the agreement, Mr.
Howarth granted to Mr. Pilger an irrevocable proxy to vote such 175,000 Shares
until such Shares are sold or transferred by Howarth to an unrelated third
party.
Relationship with Consultants
The Company has agreed to pay two consultants to the Company, who
assisted in the acquisition of certain development rights (including Kevin M.
Kean, a principal Shareholder of the Company), an aggregate of 10% of any
consulting fee income (less related direct operating costs), received by the
Company from its agreements relating to the Pokagon Indians, subject to certain
limits in the case of Mr. Kean. Similar fees may also be payable to Mr. Kean out
of revenues, if any, received by the Company from other Indian businesses,
including gaming. Mr. Kean has partially collateralized his $1,196,885 note to
the Company with his right to 5% of such consulting fee income.
Ms. Pollman terminated her employment relationship in February 1998,
and entered into a Consulting Agreement (the "Consulting Agreement") for a
two-year term to provide business and consulting services to the Company. Ms.
Pollman will continue to act as Secretary of Company with responsibility for
maintaining the Company's books and records. Pursuant to the Consulting
Agreement, Ms. Pollman receives an hourly rate of $67.00, but expects to work a
reduced number of hours, thus reducing the Company's out-of-pocket expenses
associated with Ms. Pollman's compensation. The Board approved Consulting
Agreement features Change of Control provisions where upon termination of this
Consulting Agreement Ms. Pollman will receive 2.99 times her average annual
compensation which moneys will be payable in thirty days. Additionally, this
Consulting Agreement provides for a one-time bonus of up to $156,000 payable in
Shares or cash. Of this sum, $81,530 was applied in fiscal 1998 to retire Ms.
Pollman's debt to the Company and the balance will be paid no later than
December 31, 1999.
The Company has a consulting relationship with Dennis Evans, who serves
on the Board of Directors. Mr. Evans acts as a marketing consultant to Casino
Caraibe, and he has agreed to live in Tunisia from August 1997, through April
1999, to develop and initiate marketing programs and group junket business for
the benefit of Casino Caraibe. Mr. Evans receives $10,000 monthly and 2,973
Tunisian dinars ($2,703 US dollar equivalent) monthly during his consulting
term. Mr. Evans is provided housing accommodations by the Company while in
Tunisia.
Indemnification of Directors and Officers
Under Section 302A.521 of the Minnesota Statues, the Company is
required to indemnify its directors, officers, employees, and agents against
liability under certain circumstances, including liability under the Securities
Act of 1933, as amended.
14
As permitted under the Minnesota Statues, the Restated Articles of
Incorporation of the Company provide that directors shall have no personal
liability to the Company or to its Shareholders for monetary damages arising
from breach of the Directors' duty of loyalty to the Company or with respect to
certain enumerated matters, excluding payment of illegal dividends, acts not in
good faith, and acts resulting in an improper personal benefit to the director
SHAREHOLDER PROPSALS AND OTHER MATTERS
Any Shareholder proposals for the Company's Annual Meeting of the
fiscal year ending September 30, 1999, must be received by the Company not
latter then November 26, 1999 in order to be included in the proxy statement.
The proposals also must comply with all applicable statues and regulations.
At the time this Proxy Statement was mailed, the Board was not aware of
any matters to be presented for action at the Meeting other than those discussed
in this Proxy Statement. If other matters properly come before the Meeting, the
Proxy holders have discretionary authority, unless it is expressly revoked, to
vote all Proxies in accordance with the unanimous discretion. If the Proxy
holders are divided on a particular matter to be voted on with respect to their
discretionary voting, the Share subject to such Proxy shall not be voted.
15
REVOCABLE PROXY
CASINO RESOURCE CORPORATION
Annual Meeting of Stockholders - April 28, 1999
The undersigned shareholder(s) of Casino Resource Corporation (the
"Company") hereby nominates, constitutes and appoints John J. Pilger and Noreen
Pollman, and each of them, the attorney, agent and proxy of the undersigned,
with full power of substitution, to vote all stock of Casino Resource
Corporation, which the undersigned is entitled to vote at the Annual Meeting of
Shareholders (the "Meeting") of the Company to be held at Casino Resource
Corporation, 707 Bienville Boulevard, Ocean Springs, Mississippi 39564 at 2:00
p.m. (Central Daylight Time), on Wednesday, April 28, 1999, and any and all
adjournments or postponements thereof, with respect to the matters described in
the accompanying Proxy Statement, and in their discretion, on such other matters
which properly come before the meeting, as fully and with the same force and
effect as the undersigned might or could do if personally present thereat, as
follows:
1. Election of three Class C Directors [ ] AUTHORITY GIVEN [ ] WITHHOLD AUTHORITY
to vote for the nominees listed below to vote for the nominees listed below
(except as indicated to the contrary below)
(INSTRUCTIONS: To withhold authority to vote for a nominee, strike a line through the name below.)
Class C John J. Pilger
Dennis Evans
John Ferrucci
2. Proposal to ratify the appointment of BDO Seidmen, LLP as independent auditors for the Company for the year ended
September 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the Meeting and any adjournment or adjournments or postponements
thereof. Management presently knows of no other business to be presented by or on behalf of the Company or its
Board of Directors at the Meeting.
(Continued, and to be completed and signed on the reverse side)
(Continued from the other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE. PLEASE SIGN AND DATE BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" FOR THE
ELECTION OF THREE DIRECTORS AND "FOR" THE RATIFICATION OF THE SELECTION OF
INDEPENDENT AUDITORS (THE "RATIFICATION"). THE PROXY CONFERS AUTHORITY TO AND
SHALL BE VOTED "AUTHORITY GIVEN" FOR THE ELECTION OF THREE DIRECTORS AND "FOR"
THE RATIFICATION UNLESS OTHER INSTRUCTIONS ARE INDICATED, IN WHICH CASE THE
PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS.
IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
Dated: _________________________
________________________________
(Please print name)
________________________________
(Signature of Stockholder)
________________________________
(Please print name)
________________________________
(Signature of Stockholder)
Please date this Proxy and sign your name as
it appears on your stock certificates.
Executors, administrators, trustees, etc.,
should give their full titles. (All joint
owners should sign).
I do [ ] do not [ ] expect to attend the Meeting.
Number of Persons: ____________________________
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY.