<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM____________TO___________
COMMISSION FILE NUMBER 0-25244
TRANS WORLD GAMING CORP.
(Exact name of registrant as specified in its charter)
NEVADA 13-3738518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE PENN PLAZA, NEW YORK, NEW YORK 10119
(Address of principal executive offices) (Zip code)
(212) 563-3355
(Issuer's telephone number including area code)
Check whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 .
----- -----
Shares of the Registrant's Common Stock , par value $.001, outstanding as of
June 30, 1996: 2,544,286
<PAGE>
TRANS WORLD GAMING CORP.
FORM 10-QSB
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PAGE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 3
(UNAUDITED) AND DECEMBER 31, 1995
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) 4
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) 5
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATIONS 7 TO 9
PART II - OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURE 12
2
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FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED STATEMENTS
TRANS WORLD GAMING CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
ASSETS
June 30, December 31,
1996 1995
----------- ------------
CURRENT ASSETS (unaudited)
Cash $ 392 $ 216
Accounts/Notes Receivable 314 282
Inventories 134 43
Other current assets 77 56
------- -------
Total current assets 917 597
------- -------
PROPERTY AND EQUIPMENT, net 1,356 1,413
------- -------
OTHER ASSETS
Investment at equity 75 75
Deferred facility cost - net 10,118 10,425
Goodwill - net 658 676
Other deferred costs - net 36 40
Deferred income tax 283 320
------- -------
Total other assets 11,170 11,536
------- -------
TOTAL ASSETS $13,443 $13,546
------- -------
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES
Current portion of long-term debt $ 3,272 $ 3,913
Accounts payable and accrued expenses 629 334
------- -------
Total current liabilities 3,901 4,247
------- -------
LONG-TERM DEBT, net of current portion 1,677 1,178
------- -------
STOCKHOLDERS' EQUITY
Capital stock 3 3
Additional paid-in-capital 8,600 8,600
Accumulated deficit (738) (482)
------- -------
Total stockholders' equity 7,865 8,121
------- -------
TOTAL LIABILITIES/STOCKHOLDERS' EQUITY $13,443 $13,546
------- -------
See accompanying notes to the financial statements
3
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TRANS WORLD GAMING CORP.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands except per share data)
(Unaudited)
Six Months Ended Three months ended
June 30 June 30,
----------------- ------------------
1996 1995 1996 1995
----------------- ------------------
REVENUES $3,261 $2,978 $1,594 $1,470
COSTS AND EXPENSES
Cost of revenue 1,594 1,358 760 708
Administrative 1,175 534 547 269
Depreciation and amortization 388 307 194 159
------ ------ ------ ------
TOTAL COSTS AND EXPENSES 3,157 2,199 1,501 1,136
------ ------ ------ ------
EARNINGS FROM OPERATIONS 104 779 93 334
Interest Expense 315 287 158 149
------ ------ ------ ------
EARNINGS/(LOSS) BEFORE TAXES (211) 492 (65) 185
Provision for taxes 44 147 22 35
------ ------ ------ ------
NET EARNINGS/(LOSS) $ (255) $ 345 $ (87) $ 150
------ ------ ------ ------
Earnings/(Loss) per share $(0.10) $ 0.14 ($0.03) $ 0.06
------ ------ ------ ------
Common shares used in computing
earnings per share 2,544 2,544 2,544 2,544
See accompanying notes to the financial statements
4
<PAGE>
TRANS WORLD GAMING CORP.
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June 30
------------------------
1996 1995
------ -----
Cash flows from operating activities $ 321 $230
Cash flows from investing activities (4) (378)
Cash flows from financing activities
Repayment of Debt (1016) (457)
Proceeds from Short Term Notes 875 135
----- ----
Net Cash used by financing activities (141) (322)
Net increase/(decrease) in cash 176 (470)
Cash - beginning of period 216 812
----- ----
Cash - end of period $ 392 $342
----- ----
See accompanying notes to the financial statements
5
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TRANS WORLD GAMING CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Unaudited Statements.
The accompanying consolidated financial statements for the three
and six months ended June 30, 1996 and June 30, 1995 are unaudited
and reflect all adjustments of a normal and recurring nature to
present fairly, and not misleading, the financial position and
results of operation and cash flows for the interim periods. These
unaudited statements have been prepared by the Company in
accordance with generally accepted accounting principles, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Pursuant to such rules and regulations, certain
financial information and footnote disclosures normally included in
such financial statements have been condensed or omitted.
These financial statements should be read in conjunction with the
financial statements and notes thereto, together with management's
discussion and analysis of financial condition and results of
operations, contained in the Company's Annual Report on Form
10K-SB/A for the year ended December 31, 1995. The results of
operations for the six months ended June 30, 1996 are not
necessarily indicative of the results for the entire year ending
December 31, 1996.
2. Earnings/(loss) per share were calculated based on 2,544,286 shares
of common stock outstanding for the three and six months ended
June 30, 1996 and 1995 respectively.
3. In October 1995, the Financial Accounting Standards Board issued
SFAS No. 123, "Accounting for Stock-Based Compensation", which
encourages companies to recognize compensation expense in the
income statement based on the fair value of the underlying common
stock at the date the awards are granted. However, it will permit
continued accounting under APB Option 25, "Accounting for Stock
Issued to Employees". accompanied by disclosure of the pro forma
effects on net income and earnings per share had the new accounting
rules been applied. The statement is effective for calendar year
1996. The Company has not yet determined which method it will
follow for measuring compensation cost attributed to stock options
or the impact of the new standard on its consolidated financial
statements.
6
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
REVENUES. Trans World Gaming Corp.'s ("TWG" or the "Company")
revenues for the three months ended June 30, 1996 were $1,594,000,
an increase of 8% over the revenues for the three months ended June
30, 1995. Video poker revenues for the second quarter totaled
$955,000 representing a 10% increase over second quarter revenues
in the prior fiscal year. Seven percent of the video poker revenue
increase was due to the Toledo Palace video poker parlor located in
DeRidder, LA which opened on October 19, 1995. Video poker
revenues from the Company's other video poker parlor, the Gold
Nugget located in Lafayette, LA, increased 4% to $896,000 in 1996
from the similar period in 1995. Revenues from fuel, food and
beverage and convenience store operations at the Woodlands Truck
Plaza located in DeRidder, LA in the second quarter of 1996
increased 6% to $677,000 over the revenues for the second quarter
1995.
The Company believes that the revenues at the Gold Nugget will
continue to be higher than the average video poker parlor at truck
stops in Louisiana. Revenues at the Toledo Palace have increased
steadily from an average daily revenue per device of $50 in the
fourth quarter 1995 to an average of $66 during the second quarter
1996. Pending approval by the Louisiana authorities, which
approval cannot be assured, the Company has submitted an
application in July 1996 for the installation of eighteen (18)
additional devices at the Toledo Palace to be added to the video
parlor. Act 7 of the First Extraordinary Session of 1996,
effective May 1, 1996, created the Louisiana Gaming Control Board
(the "LGCB") with all regulatory authority, control and
jurisdiction including investigation, licensing and enforcement
pursuant to provisions of, among other things, the Video Draw Poker
Devices Control Law. Further, Act 7 provided that all powers,
duties, functions and responsibilities of, among other things, the
Video Gaming Division of State Police be transferred to the LGCB.
Act 7 also provided that the State Police, the former licensor, may
only issue certain limited licenses and renewals which created a
significant backlog of applications for additional devices and
license renewals. The Company cannot therefore, predict when, if
at all, the application will be approved. The Toledo Palace
currently has fifteen devices installed and is licensed for up to
fifty.
COST OF REVENUE. Cost of Revenue as a percentage of revenues
remained virtually unchanged at 48% in the second quarter 1996 from
the similar period in 1995.
ADMINISTRATIVE. Administrative expenses in the first quarter 1996
were $547,000 which is an increase of $278,000 over the second
quarter 1995. This increase is comprised of the following expense
items: commissions of approximately $20,000 and expenses of
approximately $230,000 in connection with the Company's recently
completed financings.
INTEREST AND OTHER INCOME. Interest expense increased by 6% in the
second quarter 1996 to $158,000 over the second quarter 1995. The
increase is due primarily to a contractual increase in the interest
due on the Chrysolith Note from 12% to 15% ($17,000) effective July
1995, plus interest incurred in connection with the 1996 bridge
financings ($15,000). This was partially offset by a decrease in
interest expense ($23,000) on the declining principal balance of
the Prime Properties Note.
7
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RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
REVENUES. The Company's revenues for the six months ended June
30, 1996 were $3,261,000 which is a 10% increase over the revenues
for the six months ended June 30, 1995. Video poker revenues for
the six months ended June 30, 1996 totaled $1,945,000 representing
a 9% increase over six months revenues in the corresponding prior
fiscal year. Seven percent of this video poker revenue increase
was due to the Toledo Palace video poker parlor located in
DeRidder, LA, which opened on October 19, 1995. Video poker
revenues from the Company's other video poker parlor, the Gold
Nugget located in Lafayette, LA, increased 2% to $1,820,000 in 1996
over the corresponding six months of 1995. Revenues from fuel,
food and beverage and convenience store operations at the Woodlands
Truck Plaza located in DeRidder, LA for the six months ended June
30, 1996 increased 11% to $1,315,000 over the revenues for the six
months of 1995.
COST OF REVENUE. Cost of Revenue as a percentage of revenues
increased to 49% in the six months of 1996 from 46% in the first
six months of 1995 with approximately one-third of the increase due
to costs associated with the operation of the Toledo Palace, which
opened in October 1995.
Administrative. Administrative expenses for the first six months
of 1996 were $1,175,000 which is an increase of $641,000 over the
first six month of 1995. This increase is comprised of the
following expense items: severance costs of $38,000 in connection
with the resignation of the Company's Chief Executive Officer in
March, 1996; financing, legal and accounting costs of approximately
$175,000 in connection with an unsuccessful effort to complete a
proposed underwritten secondary offering of securities in March
1996; consulting fees for exploring potential acquisitions of
approximately $50,000; and fees of approximately $43,000 and
expenses of approximately of $230,000 in connection with the
Company's efforts to refinance the Chrysolith Note, the Monarch
Note and the Woodlands Note.
INTEREST AND OTHER INCOME. Interest expense increased by 10% to
$28,000 in the first six months of 1996 to $315,000 over the first
six months of 1995.
YEAR-TO-DATE RESULTS. The Company's earnings before interest,
taxes, depreciation and amortization ("EBITDA") was $0.11 per
common share outstanding after absorbing significant financing and
severance costs for the six months ended June 30, 1996 as compared
to $0.19 per common share for the corresponding period in 1995.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The level of cash increased by $176,000 for the six months ended
June 30, 1996 due primarily to the proceeds of financings recently
completed.
As of June 30, 1996, the Company's outstanding indebtedness
included a principal amount of $2,075,000 under the Chrysolith Note
and $75,000 under the Monarch Note both due in its entirety on June
30, 1996. Additional indebtedness included a note payable to Prime
Properties in the principal amount of $1,610,000 (after applying
the quarterly payment of June 22, 1996 of $292,000), with principal
and interest at 10% per annum payable quarterly through December
21, 1997, which was incurred in connection with the Gold Nugget
transaction. With respect to the Woodlands Plaza transaction, the
Company's remaining indebtedness is $435,000 payable on December
30, 1996 with interest payable monthly at 10% (the "Note"). Also,
the balance due as of June 30, 1996 for the Bridge financings was
$220,000 and trade payables amounted to approximately $300,000.
In March, 1996 the Company retained C.P. Baker & Co., LTD.
("Baker") for a period of one year as placement agent to arrange
bridge and convertible debt financings. From March 25, 1996
through June 5, 1996, the Company completed bridge financings (the
"Bridge") in the form of unsecured loans in the aggregate principal
amount of $375,000, bearing interest at the rate of 10% per annum
payable at maturity. The Company agreed to repay the principal
amount in twenty weekly installments starting April 1, 1996 with
the balance due at maturity. The net proceeds of the Bridge,
approximately $315,000, were used to pay the scheduled principal
and interest payment to Prime Properties of $292,000 on March 21,
1996. In connection with the Bridge, the Company issued to the
lenders warrants to purchase 499,875 shares of the Company's common
stock at an exercise price of $.01 per share. As compensation to
the placement agent, the Company paid a cash commission of 15% of
the aggregate Bridge proceeds or $56,250. All these warrants carry
demand registration rights commencing in July 1996.
In June 1996, the Company privately offered to selected accredited
investors a minimum of 7 units and a maximum of 12 units, each unit
(the "Unit") consisted of one $500,000 principal amount 12% secured
convertible senior bonds due June 30, 1999 (the "Bond(s)") and a
warrant to purchase 100,000 shares of common stock, par value $.001
per share of the Company (the "Common Stock") at an exercise price
of $1.00 per share (the "Warrant(s)"). The Warrants are
exercisable at any time until June 30, 2001. The Bonds are
convertible at the option of the holder thereof at a conversion
price of $5.00 per share of TWG common stock. The Company may at
its option, redeem the bonds, in whole but not in part, at 100% of
principal amount together with interest accrued thereon through the
date fixed for redemption, within six months following a public
offering by the Company of common stock that raises not less than
$6,000,000 in gross proceeds. Holders of the Bonds, Warrants and
Shares of common stock issued upon conversion of the Bonds and
exercise of the Warrants are entitled to have their shares
registered as part of the next registered public offering of the
common stock of the Company as permitted under the rules of the
Securities Exchange Commision. If no public offering of common
stock has occurred by December 31, 1997, then upon written request
of the holders of Warrants issued in connection with the Bonds and
exercisable for not less than 700,000 shares of common stock, the
Company will be obligated to file and use its reasonable efforts to
cause to be declared effective a registration statement or
post-effective amendment as permitted under the Securities Act of
1933. Interest on the Bonds is payable by the Company
semi-annually with the first payment due on December 15, 1996. The
Company
9
<PAGE>
and Baker have agreed to extend the offering through August 31,
1996. As compensation to Baker, the Company paid a cash commission
of 10% and a non-accountable expense allowance of 3% of the gross
proceeds raised in this offering.
Through July 24, 1996 the Company had issued Bonds and received
gross proceeds of $4.8 million, of which $4.0 million was closed on
July 2, 1996. The net proceeds to the Company from the private
placement of the Bonds, after deducting commissions,
non-accountable expenses, and offering expenses of $120,000 were
approximately $4.1 million. The proceeds were used to retire the
Chrysolith and Monarch Notes ($2.1 million), to repay the
outstanding balance of the Bridge ($220,000), pay the scheduled
quarterly payments of June 21, 1996 on the Prime Note ($292,000),
to retire the Woodlands Note ($435,000) to pay or trade payables
($300,000) and general corporate purposes ($700,000).
The Company believes, although there can be no assurance, that
existing cash and anticipated cash flow from current operations
will be sufficient to satisfy its liquidity and capital
requirements for the next twelve months.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On July 16, 1996, the Company paid the outstanding indebtedness on
the Woodlands property of $435,017.77 and is also in the process of preparing
a Motion for Dismissal with Prejudice to have the mortgage canceled and the
legal action brought by Sam Jones dismissed.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 28, 1996, the Company held its annual meeting of
shareholders for the following purposes, all of which were approved by the
requisite shareholder vote:
1. The election of two new directors:
Broker
For Against Abstentions Non-Vote
----- ------- ----------- --------
Stanley Kohlenberg 1,904,925 163,750 - 0 - - 0 -
Dominick Valenzano 1,914,925 153,750 - 0 - - 0 -
2. Amending the Company's 1993 Incentive Stock Option Plan (i) to
provide for an automatic grant of options to purchase 1,000
shares of Common Stock to non-employee directors on a
quarterly basis, and (ii) to provide that the Compensation
Committee of the Board be comprised of only two non-employee
directors rather than three.
Broker
For Against Abstentions Non-Vote
----- ------- ----------- --------
1,831,925 127,450 109,300 - 0 -
Item 5. OTHER INFORMATION
On July 10, 1996 the Company announced the
appointment of Mr. Roy Student and Mr. Richard Taft to the
Company's Board of Directors, increasing the Board membership
to five with three independent members. Mr. Student will
serve on the Audit Committee and Mr. Taft on the Compensation
Committee along with Mr. Andrew Tottenham who will serve on
both committees.
Item 6. EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits
Exhibit No. Item No. Description
----------- -------- ------------
10 10.1 Management Agreement as Amended
on July 15, 1996 between the
Company and Lee J. Young
relating to the Gold Nugget.
(b) Reports on Form 8-K
None
11
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Signature:
TRANS WORLD GAMING CORP.
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.
TRANS WORLD GAMING CORP.
August 8, 1995 /s/ Dominick J. Valenzano
-------------------------
Dominick J. Valenzano
Chief Financial Officer & Treasurer
12
<PAGE>
CONSULTING AGREEMENT
BETWEEN
CHRYSOLITH, L.L.C.
AND
LEE YOUNG
<PAGE>
1. ENGAGEMENT...............................................................1
2. TERM.....................................................................1
3. COMPENSATION.............................................................1
4. DUTIES...................................................................1
5. CONSULTANT'S INDEPENDENCE................................................2
6. REPORTING................................................................2
7. EXTENT OF SERVICES.......................................................2
8. ETHICAL CONDUCT..........................................................2
9. WORKING FACILITIES.......................................................2
10. DISCLOSURE OF INFORMATION...............................................2
11. EXPENSES................................................................2
12. UNAVAILABILITY..........................................................3
13. DISABILITY..............................................................3
14. TERMINATION WITH CAUSE..................................................3
<PAGE>
15. DEATH DURING ENGAGEMENT.................................................3
16. ARBITRATION.............................................................3
17. NOTICES.................................................................4
18. WAIVER OF BREACH........................................................4
19. ASSIGNMENT..............................................................4
20. AMENDMENT...............................................................4
21. BINDING ON SUCCESSORS AND ASSIGNS.......................................4
22. GOVERNING LAW...........................................................4
23. ENTIRE AGREEMENT........................................................4
<PAGE>
CONSULTING AGREEMENT
Chrysolith, L.L.C. (THE COMPANY), a Louisiana limited liability company,
represented by its manager whose signature is authorized by TransWorld Gaming
Corporation as evidenced by the countersignature of its President, Stanley
Kohlenberg, and Lee J. Young (CONSULTANT) agree as follows:
1. ENGAGEMENT. The Company engages Consultant and the Consultant accepts
engagement upon the terms and conditions of this Agreement.
2. TERM. The term of this Agreement begins on January 1, 1997.
Consultant's engagement shall continue until December 31, 2001; provided
however, that in the event the Company's video gaming license is terminated
during the term of this agreement as a result of revision in State or Local
gaming laws, this Agreement shall terminate on the last day the Company
operates its video draw poker parlor.
3. COMPENSATION. The Company shall pay Consultant a basic fee of $8,333.33
each month during the Agreement's term.
4. DUTIES. Consultant shall serve as the Company's principal advisor on
the Louisiana gaming industry, identify and engage personnel, identify and
engage bookkeepers, identify and engage attorneys, supervise and direct the
activities of all consultants, and perform all other duties appropriate to
advancing the Company's affairs. The Company may extend or curtail from time to
time Consultant's precise services. Consultant shall determine his times
of availability to the Company, but shall devote such time as required to
successfully complete the engagement.
5. CONSULTANT'S INDEPENDENCE.
(a) The Company recognizes that Consultant may perform services for
others or for his personal benefit concurrently with his performance under this
Agreement.
(b) The Company shall direct and control the assignment of tasks to
Consultant, subject to Consultant's right to perform services at his own
premises and during such hours as he may select.
1
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(c) Consultant shall exercise his own professional judgement in the
performance of his services.
(d) Consultant shall use his best efforts to advance the Company's
goals.
6. REPORTING. Consultant shall make periodic reports on the Company's
operations and progress to its members.
7. EXTENT OF SERVICES. Consultant shall devote a reasonable portion of his
vocational time, attention, and energies to the Company's business. Consultant
shall have the right to delegate a portion of his duties to an assistant of his
own choosing and make a concomitant reduction of his time devoted to the
Company's affairs. Should Consultant take this step, the Company shall pay the
assistant as directed by Consultant, reducing Consultant's compensation in the
same amount.
8. ETHICAL CONDUCT. Consultant represents that no prior contract prohibits
his execution of this Agreement or impedes the performance of the duties herein
undertaken. Consultant agrees that he will not offer or employ in the course of
his services to the Company confidential information wrongfully obtained from
others.
9. WORKING FACILITIES. The Company shall provide Consultant with an
office, stenographic assistance, and such other facilities and services
ordinarily required for a person in his position and appropriate for the
performance of his duties. In addition, the Company shall provide Consultant
with a vehicle of his choice for his use during the term of this Agreement.
The Company shall also pay for Consultant's hospitalization and medical expense
or premiums to the extent it provides such benefits to any other consultant or
employee.
10. DISCLOSURE OF INFORMATION. Consultant shall preserve all trade
secrets of the Company.
11. EXPENSES. Consultant may incur reasonable expenses for promoting the
Company's business, including expenses for travel and similar items. The
Company will reimburse Consultant for all such expenses authorized by the
Company upon Consultant's periodic presentation of an itemized account of these
expenditures.
12. UNAVAILABILITY. Consultant shall be entitled to a period during the
calendar year in which he will be unavailable to consult with or otherwise
perform services for the
2
<PAGE>
Company. This period shall extend for eight (8) weeks, during which time he
shall receive full compensation. Consultant shall co-ordinate this
unavailability period with the managing partners. Unavailability time not
claimed or fully utilized during any year shall accrue and carry forward to
the following year or years. Consultant may, with the consent of the Company's
managing partners, make himself unavailable for longer periods of time; but
his compensation shall be reduced in such event in proportion to the ratio
that the number of working days bears to the number of days actually worked.
Consultant will make himself available for service to the Company on weekends
and during the evenings as required.
13. DISABILITY. The Company shall reduce in half Consultant's compensation
payable thereafter if he cannot perform his services by reason of illness or
other incapacity for a period of more than thirty (30) consecutive days. The
Company shall reinstate Consultant's basic compensation upon his return to
full engagement and discharge of his full duties.
14. TERMINATION WITH CAUSE. The Company may terminate Consultant in the
event of (a) continued insubordination, (b) habitual intemperance,
(c) persistent inattention to business, (d) commission of a crime involving
moral turpitude, and (e) disability continuing for more than one hundred
twenty (120) days during the calendar year.
15. DEATH DURING ENGAGEMENT. Should Consultant die during the term of
engagement, the Company shall pay to his widow, if any, the basic compensation
otherwise payable to Consultant for a period of three (3) months. No portion of
this widow's benefit shall inure to the benefit of Consultant's estate or any
heir or survivor other than his widow.
16. ARBITRATION. Any controversy or claim between the parties arising out
of, or relating to this Agreement, or the breach thereof shall be settled by
arbitration in the City of Lake Charles, Louisiana in accordance with the
rules then obtaining of the American Arbitration Association, and judgement
upon the award rendered may be entered and enforced in any court having
jurisdiction thereof.
17. NOTICES. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing sent by certified mail to Post
Office Box 1418, Lake Charles in the case of Consultant, or to its principal
office in case of the Company.
18. WAIVER OF BREACH. The waiver by the Company of a breach of any
provision of this Agreement by Consultant shall not operate or be construed as
a waiver of any subsequent breach by Consultant. No waiver shall be valid
unless in writing and signed by an authorized officer of the Company.
3
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19. ASSIGNMENT. Consultant acknowledges that the services to be rendered
by him are unique and personal. Accordingly, Consultant may not assign any of
his rights or delegate any of his duties or obligations under this Agreement.
20. AMENDMENT. No modification, amendment, addition to, or termination of
this Agreement, nor waiver of any of its provisions, shall be valid or
enforceable unless in writing and signed by both parties.
21. BINDING ON SUCCESSORS AND ASSIGNS. The agreement shall be binding on
the parties, their distributees, legal representatives or successors.
22. GOVERNING LAW. This agreement shall be governed by the laws of the
State of Louisiana.
23. ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties. It supercedes all prior negotiations or understandings between the
parties.
In witness whereof the parties have executed the Agreement of the 15th day
of July, 1996.
CHRYSOLITH, L.L.C.
BY: /s/ Lee J. Young
-----------------------------------
Lee J. Young, Manager
/s/ Lee J. Young
-----------------------------------
LEE J. YOUNG, CONSULTANT
TRANSWORLD GAMING CORPORATION
BY: /s/ Stanley Kohlenberg
-----------------------------------
Stanley Kohlenberg, President
4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENT OF EARNINGS FOUND ON
PAGE 3 AND 4 OF THE COMPANY'S FORM 10QSB/A FOR THE YEAR TO DATE, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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0
0
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