SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 Section240.14a-11(c) or
Section240.14a-12
CASINO RESOURCE CORP.
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(Name of Registrant as Specified In Its Charter)
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(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 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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CASINO RESOURCE CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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TO BE HELD ON MAY 26, 1998
TO THE SHAREHOLDERS OF CASINO RESOURCE CORPORATION:
Notice is hereby given to the holders of common shares of Casino Resource
Corporation that the Annual Meeting of Shareholders of the Company will be held
at Casino Resource Corporation, 707 Bienville Boulevard, Ocean Springs,
Mississippi 39564 on May 26, 1998 at 2:00 p.m., Central Daylight Time, to
consider and act upon the following matters:
1. To elect two Class B directors, to serve for a term of three years.
2. To ratify the appointment of BDO Seidman, LLP as independent
auditors for the current fiscal year.
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 April 17, 1998 as
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
April 27, 1998
CASINO RESOURCE CORPORATION
707 BIENVILLE BOULEVARD
OCEAN SPRINGS, MISSISSIPPI 39564
PROXY STATEMENT
ANNUAL MEETING OF THE SHAREHOLDERS
MAY 26, 1998
GENERAL INFORMATION
This 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 May 26, 1998 at Casino Resource Corporation located at 707 Bienville
Boulevard, Ocean Springs, Mississippi, 39564 at 2:00 p.m., Central Daylight Time
for the purposes set forth in the Notice of Annual Meeting of Shareholders. This
Proxy Statement and the accompanying proxy form are furnished in connection with
the proxy solicitation and are first being mailed to shareholders on or about
April 27, 1998.
Shares may not be voted unless the signed proxy card is returned or other
specific arrangements are made to have shares represented at the Meeting. Any
shareholder of record giving a proxy may revoke it at any time before it is
voted by filing with the Secretary of the Company a notice in writing revoking
it, by duly executing a proxy bearing a later date, or by attending the Meeting
and expressing a desire to revoke the proxy and vote the shares in person.
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 card will be
voted as directed by the shareholder on the proxy card. IF NO CHOICE IS
SPECIFIED, PROXIES WILL BE VOTED "FOR" THE PERSONS NOMINATED BY THE BOARD OF
DIRECTORS AND "FOR" THE SHAREHOLDER RATIFICATION OF THE APPOINTMENT OF BDO
SEIDMAN AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 1998.
A copy of the Company's Annual Report for the fiscal year ended September
30, 1997 is enclosed herewith. The Annual Report describes the financial
condition of the Company as of September 30, 1997. 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,
1997 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.
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The Company will pay all expenses incurred in
connection with the solicitation of proxies. Proxies are being solicited by mail
and may also be solicited personally, by telephone or telefax by directors,
officers and other employees of the Company without additional compensation to
them. The Company has requested brokerage houses, nominees, custodians, and
fiduciaries to forward solicitation materials to the beneficial owners of the
common stock, $.01 par value, of the Company (the "Common Stock") and will
reimburse such persons for their expenses. The Company may reimburse banks,
brokerage firms, and other custodian's nominees or fiduciaries for reasonable
expenses incurred by them in sending proxy materials to beneficial owners of the
Common Stock.
Shareholders of record on April 17, 1998 are the only persons entitled to
notice of and to vote at the Meeting. As of the record date, 9,648,464 shares of
the Common Stock were outstanding, which constituted all of the outstanding
voting securities of the Company. Each share is entitled to one vote on each
matter. Forty percent of the outstanding shares of Common Stock will constitute
a quorum for the
1
Meeting. 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.
John J. Pilger, the Chief Executive Officer and a director of the Company,
beneficially owns 856,768 shares of the Common Stock and holds proxies to vote
an additional 1,505,944 shares of Common Stock. Mr. Pilger intends to vote all
such shares in favor of the persons nominated by the Board of Directors. In
addition, each of Noreen Pollman and Robert J. Allen, directors of the Company,
intend to vote the 6,000 outstanding shares of Common Stock beneficially owned
by each of them in favor of all Board nominees. Maurice Gaudet, Chief Financial
Officer, owns 1,000 of common shares and intends to vote his shares in favor of
all Board nominees. The foregoing 2,375,712 shares represent an aggregate of
24.6% of the voting power of the Company.
ITEM 1. ELECTION OF DIRECTORS
INFORMATION CONCERNING THE NOMINEES
The Company's restated Articles of Incorporation, as amended, provides for
the election of a Board of Directors which has been separated into three
classes, as nearly equal in number as possible, each of which, after a
transitional period, is serving for three years, with one class being elected
each year. As a result, the Board was divided into three classes of directors,
two Class A directors, two Class B directors and three Class C directors, which
began staggered terms of one, two and three years, respectively. Robert J. Allen
and John W. Steiner are Class A Directors and were elected on April 3, 1997 to
serve a three-year term until the 2000 annual meeting. Noreen Pollman and Dr.
Timothy Murphy are Class B directors, elected to serve until the 1998
Shareholders' Meeting; and John J. Pilger, Dennis Evans and John Ferrucci were
elected to serve until the 1999 Shareholders' Meeting. Mr. Ferrucci was elected
by the Board to fill the vacancy created by William Lund's resignation. Mr. Lund
tendered his resignation February 12, 1998 citing that his expanded personal
business interests no longer allowed him the discretionary time required to
serve as a director of the Company. Commencing with this 1998 annual meeting of
shareholders, the Class B directors will be elected to serve a three-year term.
THE BOARD RECOMMENDS THE ELECTION OF NOREEN POLLMAN AND DR. TIMOTHY MURPHY
AS CLASS B DIRECTORS, TO SERVE UNTIL THE ANNUAL MEETING OF SHAREHOLDERS IN THE
YEAR 2001.
Both 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 of
the Common Stock 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 B NOMINEES TO THE BOARD OF DIRECTORS.
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information as of April 7, 1998 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 51, 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
2
July 1994 and resumed such role in April 1995. Mr. Pilger oversees all Company
activities including operations, acquisitions, development and construction.
JOHN FERRUCCI, age 47, 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 the 1999 Shareholder Meeting filling 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 providing consulting services to the gaming industry. 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 55, 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.
DR. TIMOTHY MURPHY, age 37, was elected by the Board to serve as a director
on March 17, 1997. Dr. Murphy is a Chiropractic doctor maintaining his own
practice. Dr. Murphy serves as a trustee on the Board of Parker College, as well
as its finance chairman. Additionally, Dr. Murphy is a member of the American
Chiropractic Association; serves on the Council of Diagnostic Imaging and
Council on Sports Injury. Dr. Murphy serves as team Chiropractor for the
Mississippi Sea Wolves Professional Hockey Team.
DENNIS EVANS, age 51, 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 has acted as President
of several large sales and marketing firms, as well as consultant to several
mid-western development companies. Mr. Evans has acted as a marketing consultant
to the Country Tonite Theatres in Branson and Pigeon Forge and is currently
acting as a marketing consultant to Casino Caraibe, the Company's casino
development in Tunisia, North Africa.
NOREEN POLLMAN, age 49, 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 38, was named Vice President of Entertainment of the
Company on August 1, 1994. He has 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.
MAURICE P. GAUDET, age 46, was named Chief Financial Officer on January 30,
1996. He had previously served as Controller since April of 1995. Prior thereto,
he was Chief Financial Officer of a privately owned company since March 1991. He
was also Controller of a savings and loan and a freight forwarding firm, and
spent nine years with an international CPA firm. Mr. Gaudet is a certified
public accountant.
Officers serve at the discretion of the Board of Directors.
3
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Messrs. Steiner, Murphy, Lund, (who served until February 12, 1998) and Mr.
Ferrucci (who replaced Mr. Lund) 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 and
comment letters. The Audit Committee held one meeting during fiscal 1997.
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 1997.
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 1997.
The Company does not have a nominating or similar committee.
During fiscal 1997, the Board of Directors met ten times.
Each director either attended all of the meetings held by the Board of
Directors and each Committee thereof on which directors served during such
period; or the directors received minutes and resolutions from meetings and
committees, and have reviewed and approved by resolution business transactions
conducted therein. All directors attended 90% or more of the 10 Board meetings
held during 1997.
DIRECTOR COMPENSATION
The Company's outside directors receive $10,000 per year for serving as
directors. Messrs. Murphy and Evans were elected by the Board to serve as
outside directors on March 17, 1997. Mr. Evans' status changed to that of an
inside director July 26, 1997 because of business affiliations with the Company.
Additionally, Messrs. Lund, Steiner and Evans received $500 for each meeting
which was attended in person, as well as reimbursement of travel costs. All
outside directors receive an annual grant of Options to purchase 10,000 shares
of Common Stock, which are fully vested, at the prevailing market price 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 INDEPENDENT AUDITORS
Subject to shareholder ratification, the Board of Directors has appointed
the firm of BDO Seidman, LLP as independent auditors for the fiscal year ending
September 30, 1998 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,
will be required to approve this item proposed by the Board of Directors.
4
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 3, 1998, certain information
with respect to each shareholder known to the Company to be the beneficial owner
of more than 5% of its Common Stock, each director, each Named Executive
Officer, 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 Common Stock shown. All officers and directors have
an address of 707 Bienville Boulevard, Ocean Springs, MS 39564.
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) SHARES
- ------------------------------------------------------------------- --------------------- ---------------
John J. Pilger..................................................... 1,026,768(2)(10) 9.9%
Noreen Pollman..................................................... 125,000(3)(10) 1.2%
John W. Steiner.................................................... 66,000(4) 0.60%
Dr. Timothy Murphy................................................. 318 0.00%
Dennis Evans....................................................... 24,100(5) 0.20%
Robert J. Allen.................................................... 125,000(6)(10) 1.20%
Maurice P. Gaudet.................................................. 21,000(7) 0.20%
John Ferrucci...................................................... 30,000(8) 0.30%
Kevin M. Kean...................................................... 1,400,944(9) 13.50%
All Directors and Executive Officers as a group (8 Persons)........ 1,418,186(11) 14.25%
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(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 170,000 shares deemed beneficially owned pursuant to options, which
are immediately exercisable. 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. The above table does not reflect an additional 65,000 options which
were granted April 3, 1997 but do not vest until April 3, 1999. In addition,
Mr. Pilger holds proxies to vote 1,330,944 shares owned by Kevin M. Kean
(see Note 9 below) and 175,000 shares owned by Richard A. Howarth, Jr., a
former officer of the Company. Mr. Pilger has the right to vote a total of
2,362,712 outstanding shares or 24.5% of the shares outstanding.
(3) Includes 119,000 shares deemed beneficially owned pursuant to options, which
are immediately exercisable. The above table does not reflect an additional
30,000 options which were granted April 3, 1997 but do not vest until April
7, 1999.
(4) Includes 60,000 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 119,000 shares deemed beneficially owned pursuant to options, which
are immediately exercisable. The above table does not reflect an additional
30,000 options which were granted April 3, 1997 but do not vest until April
7, 1999.
5
(7) Includes 20,000 shares deemed beneficially owned pursuant to options, which
are immediately exercisable.
(8) Includes 30,000 shares deemed beneficially owned pursuant to options, which
are immediately exercisable.
(9) Includes 70,000 shares of Common Stock deemed beneficially owned pursuant to
options which are immediately exercisable. Mr. Kean has granted an
irrevocable proxy with respect to 1,330,944 shares of the Company's common
stock 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) The stock table does not reflect shares of stock owned by officers who
participated in the Company's 401(k) plan which began July 1, 1997. Matching
contributions of Company stock issued by the Company under the plan through
September 30, 1997 are immaterial.
(11) Excludes 1,505,944 proxies held by Mr. Pilger described in footnote (2).
6
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 (as defined), for services rendered in all
capacities to the Company for the fiscal years ended September 30, 1997, 1996
and 1995.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
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OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND FISCAL SALARY BONUS COMP. AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION(1) YEAR ($) ($) ($) ($) (#) ($)
- ------------------------------------------ ------ -------- ------ ------ ---------- ---------- ------------
John J. Pilger, 1997 255,763(4) -0- -0- (5) -0- 195,000 -0-
Chief Executive 1996 203,435(2) -0- -0- (5) -0- 20,000 -0-
Officer 1995 178,426(3) -0- -0- (5) -0- 20,000 59,482(9)
Noreen Pollman, Executive Vice President, 1997 128,583 20,000 -0- -0- 90,000 -0-
Operations 1996 129,005(6) -0- -0- -0- 20,000 -0-
1995 109,546 -0- -0- -0- -0- -0-
Robert Allen, Executive Vice President, 1997 116,583 -0- -0- -0- 90,000 -0-
Entertainment 1996 116,507(7) -0- -0- -0- 20,000 -0-
1995 -0- (8) -0- -0- -0- -0- -0-
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(1) Under Securities and Exchange Commission rules, the "Named Executive
Officers" include (i) each person who served as Chief Executive Officer
during fiscal 1997, (ii) each person who (a) served as an executive officer
at September 30, 1997, (b) was among the four most highly paid executive
officers of the Company, not including the Chief Executive Officer, during
fiscal 1997 and (c) earned total annual salary and bonus compensation in
fiscal 1997 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, 1997.
(2) Includes $17,308 in unused vacation time and $16,636 in wages earned prior
to fiscal 1996 not paid until fiscal 1996.
(3) Includes $10,368 in unused vacation time.
(4) Includes $12,942 in unused vacation time.
(5) During fiscal 1997, 1996 and 1995, 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 $5,001 of wages earned in 1995 paid in 1996.
(8) Compensation level did not meet disclosure requirements.
(9) Reflects a bonus paid to compensate for extraordinary services performed for
the period from March 1994 through March 1995 and with respect to certain
liabilities incurred in connection with the trading of Company stock.
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OPTION GRANTS AND EXERCISES
The following table sets forth information with respect to stock options
granted to the Named Executive Officers during fiscal 1997. No stock
appreciation rights were granted by the Company in fiscal 1997.
OPTION GRANTS IN FISCAL 1997
NUMBER OF SECURITIES % OF TOTAL OPTIONS
UNDERLYING OPTIONS GRANTED TO EXERCISE PRICE EXPIRATION
NAME GRANTED (#) EMPLOYEES IN FISCAL 1997 ($/SHARE) DATE
- ---------------------------------- --------------------- --------------------------- --------------- ----------
John J. Pilger.................... 195,000(1) 38.0% 1.4800 4/3/2007
Noreen Pollman.................... 90,000(1) 18.0% 1.3400 4/3/2007
Robert Allen...................... 90,000(1) 18.0% 1.3400 4/3/2007
- ------------------------
(1) The Executives' options were granted under the Company's 1997 Long-Term
Incentive and Stock Option Plan. The grants were made on April 3, 1997. The
options vested one-third immediately, and one-third on April 3, 1998 and the
remaining one-third will vest on April 3, 1999.
The following table sets forth with respect to the Named Executive Officers
information concerning the exercise of stock options during fiscal 1997 and
unexercised options held as of the end of fiscal 1997. The Company has never
granted stock appreciation rights.
AGGREGATED OPTION EXERCISES
AND FISCAL 1997 YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 9/30/97(#) OPTIONS AT 9/30/97($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- ---------------------------------------- ----------- ----------- ------------- ----------- ------------- -----------
John J. Pilger.......................... -0- -0- 130,000 105,000 35,100 17,600
Noreen Pollman.......................... -0- -0- 60,000 89,000 24,600 12,300
Robert Allen............................ -0- -0- 60,000 89,000 24,600 12,300
EMPLOYMENT AGREEMENTS
The Company entered into an Employment 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 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
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
8
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
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 Employment 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
On October 16, 1997, John J. Pilger received a $150,000 payment from the
Company for services to be rendered to CRC Tunisia in fiscal 1998. Under a Board
approved resolution Mr. Pilger will receive an additional $125,000 compensation
in fiscal 1999 and fiscal 2000. Under Tunisian law, John J. Pilger is required
to sign, in his personal capacity, all documents necessary for the Company to
conduct operations in Tunisia. These payments are in consideration for the
additional risk of personal liability assumed by Mr. Pilger under Tunisian law.
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 Common Stock 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, 1997, all Section 16(a) filing requirements were complied with and filed in
a timely fashion.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
COMPANY LOANS
As of April 3, 1998, John J. Pilger was indebted to the Company in the
amount of $525,909 including principal and interest. Such obligations accrue
interest at rates between 7% and 9.5% per year, mature from December 31, 1998 to
October 1, 1999 and require monthly payments of $4,500 beginning April 1, 1998.
Mr. Pilger is current on his required obligations to the Company. The loans
include $150,000 advanced for the purchase by Mr. Pilger of a Mississippi
residence and a $357,461 in other advances.
Through September 30, 1997, the Company has made a loan to Noreen Pollman
totaling $100,000, which had an outstanding balance of $82,378 including
interest. Under terms of her Consulting Agreement, Ms. Pollman is applying a
prorata share of moneys earned per month to satisfy the obligation to the
Company. The Agreement provides for full repayment of Company loan by September
30, 1998.
Through September 30, 1997, the Company has advanced $10,677 including
interest to Robert Allen. This note which bears a 9.25% interest rate is due on
demand.
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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 Company's common stock were cancelled 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, 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 an
irrevocable proxy for 1,330,944 shares of the Company's common stock owned by
Mr. Kean but pledged to a commercial bank.
FORMER OFFICE AND TELEPHONE LEASES
The Company previously leased furnished corporate offices in Elkhorn,
Wisconsin, from a partnership owned by Messrs. Pilger and Richard Howarth
pursuant to a five-year lease commencing June 1, 1992, which interests Mr.
Pilger sold to Mr. Howarth on August 7,1995. The lease was terminated early on
June 30, 1995 and the Company continued to pay monthly rental charges at a
reduced rate of $3,000 plus property taxes (prorated through May 31, 1997), to
Mr. Howarth net of a security deposit, through the expiration of the lease on
May 31, 1997.
An aggregate of $8,704 and $11,262 was paid by the Company pursuant to the
leases for each of fiscal 1997 and 1996, respectively.
MISSISSIPPI RESIDENCE
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 has provided the tenant the opportunity to purchase this residence
contingent upon the tenant, Mr. Smith, fulfilling certain obligations due the
Company.
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.
The Company has executed a Consulting Agreement with Monarch Casinos, Inc.
("Monarch") which was subsequently assigned to Willard E. Smith, requiring the
Company to (i) pay monthly fees commencing (retroactively) January 1995 at
various rates from $3,000 to $14,250 per month; (ii) loan an aggregate of
$250,000 (all of which has been advanced as of September 30, 1997), which may be
forgiven in part or in whole upon the occurrence of certain events; (iii)
reimburse pre-approved travel expenses and (iv) lease to Mr. Smith the Company's
Ocean Springs, Mississippi residence at a below market lease rate. The
Consulting Agreement extends for the duration of the Management and Development
Agreement between the Pokagon Indians and an affiliate of Harrah's Casinos,
unless canceled earlier based on certain non-performance provisions. In
addition, the Company issued an aggregate of 100,000 registered shares of Common
Stock during fiscal 1995 which were subsequently sold. An additional 400,000
shares of Common Stock may be granted upon the groundbreaking for the first
Pokagon casino, subject to certain conditions, and 1,500,000 shares of Common
Stock may be granted upon the opening of a Pokagon casino. Monarch has granted
John J. Pilger an irrevocable proxy with
10
regard to all shares owned by Monarch. Pilger has assigned this proxy to the
Company's Board of Directors. The Company cancelled Willard Smith's Consulting
Agreement, as per contract, due to certain criterion set out in contract not
being met this September 1997.
Ms. Pollman terminated her employment relationship in February 1998 and
entered into a 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. The Consulting Agreement anticipates Ms. Pollman will work
approximately 25 hours per week at an hourly rate of $67.00, thus reducing the
Company's long term out-of-pocket expenses associated with Ms. Pollman's salary.
The Board approved Agreement features Change of Control provisions where upon
termination of this Agreement Ms. Pollman will receive 2.99 times her average
annual compensation which moneys will be payable in thirty days. Additionally,
this Agreement provides for a one-time bonus of up to $156,000 in stock or cash
payable in full 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 July 1998
in order 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.
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, including payment of illegal dividends, acts not in
good faith, and acts resulting in an improper personal benefit to the director.
SHAREHOLDERS PROPOSALS AND OTHER MATTERS
Any shareholder proposals for the Company's Annual Meeting of the fiscal
year ending September 30, 1998 must be received by the Company 120 calendar days
prior to the date the proxy statement is mailed 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 Annual 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 their unanimous discretion. If
the proxy holders are divided on a particular matter to be voted on with respect
to their discretionary voting, the shares subject to such proxy shall not be
voted.
11
REVOCABLE PROXY
CASINO RESOURCE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS--MAY 26, 1998
The undersigned shareholder(s) of Casino Resources 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 of the Company to be held at Casino Resource Corporation, 707
Bienville Blvd., Ocean Springs, MS 39564 at 2:00 p.m. (Central Daylight Time) on
Tuesday, May 26, 1998, and any and all adjournments or postponements thereof,
which 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 two Class / / AUTHORITY GIVEN / / WITHHOLD
B Directors to vote for the nominees AUTHORITY
listed below (EXCEPT AS to vote for
INDICATED TO THE CONTRARY the nominees
BELOW) listed below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR A NOMINEE, STRIKE A LINE
THROUGH THE NAME BELOW.)
Class B Dr. Timothy Murphy Noreen Pollman
2. Proposal to ratify the appointment of BDO Seidman, LLP as independent
auditors for the Company for the year ended September 30, 1998.
/ / 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 TWO DIRECTORS AND "FOR" THE RATIFICATION OF THE SELECTION OF
INDEPENDENT AUDITORS. THE PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED
"AUTHORITY GIVEN" FOR THE ELECTION OF TWO DIRECTORS AND "FOR" THE RATIFICATION
OF THE SELECTION OF INDEPENDENT AUDITORS 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:
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(Please print name)
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(Signature of Stockholder)
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(Please print name)
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(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:
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PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY.