<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
April 17, 1998
(Date of earliest event reported)
Trans World Gaming Corp.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 0-25244 13-3738518
-------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
One Penn Plaza, Suite 1503 New York, New York 10119-0002
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 563-3355
---------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year, if changed since last
report)
Page 1 of 30 Pages
Exhibit Index appears on Page 3
1
<PAGE>
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
On April 17, 1998, Trans World Gaming Corp. ("TWG" or the "Company")
acquired 90% of the shares of Casino de Zaragoza, S.A., a company incorporated
in Zaragoza, Spain which owns an exclusive casino license in the Region of
Aragon ("CDZ"). The total consideration for the shares in CDZ was $985,000 (150
million pesetas "ptas") with $235,000 (36 million ptas) previously paid as a
deposit and the final payment of $750,000 (115 million ptas) made on May 18,
1998. The underlying assets acquired include furniture, fixtures, gaming
equipment and inventories. In addition, the liabilities of CDZ, principally tax
debts totaling approximately $7.5 million (1,148 million ptas) were restructured
to a total of $4.8 million (734 million ptas) to be paid by CDZ over the next
eight years. In connection with the acquisition of CDZ, TWG agreed to pay a
total of $650,000 (99 million ptas) for professional and legal expenses,
$435,000 (66 million ptas) of which was due and payable on June 30, 1998 with
the balance of $215,000 (33 million ptas) payable when the permission to move
the license to downtown Zaragoza is received by the Company. The Company plans
to operate the casino in its existing location until permission is granted by
the government authorities to move to a more favorable location. The Company is
taking steps to request that such move be permitted as soon as possible.
On May 28, 1998, the Company and Value Partners, Ltd., a Texas limited
partnership ("Value Partners"), executed a loan agreement under which TWG
borrowed $1 million. The loan is evidenced by an Unsecured Senior Promissory
Note (the "Note") in favor of Value Partners, for $1 million due September 24,
1998 with simple interest at the rate equal to 12% per annum. The Company is
currently seeking private equity financing from private investors of up to $4
million to repay the Note, recapitalize CDZ and to fund the projected operating
losses of CDZ over the next eighteen months. The recapitalization of CDZ in the
amount of approximately $1.5 million, which should occur before or during the
fourth quarter of 1997, will effectively dilute the 10% of the shares of CDZ not
owned by TWG and, as such, TWG will own close to 100% following the
recapitalization. There can be no assurances that such financing will be
available on terms favorable to TWG, if at all. In the event that financing is
unavailable, TWG will be required to repay the Note from cash flows and/or the
liquidation of the assets of CDZ.
(The description of the agreements set forth above are, by necessity, only
summarizes thereof and do not purport to be complete. The full text of such
agreements are filed herewith, pursuant to the guidelines set forth in Item 7
(a) (4) of the instructions to Form 8-K.)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following financial statements, pro forma financial information and exhibits
are filed as part of this report.
(a) Financial Statements of the business acquired, prepared pursuant to
Regulation S-B and provided to Trans World Gaming Corp. by CDZ.
Item Page
---- ----
Report of Arthur Andersen, Certified Public Accountants 5
Consolidated Statement of Shareholders' equity for the 15
year ended December 31, 1997 and unaudited for the three
month period ended March 31, 1998 of CDZ
2
<PAGE>
Consolidated Statement of Operations for the year ended 16
December 31, 1997 and unaudited for the interim three-month
period ended March 31, 1998 of CDZ
Consolidated Statement of Cash Flows for the year ended 17
December 31, 1997 and unaudited for the interim three-month
period ended March 31, 1998 of CDZ
Consolidated Balance Sheets as of December 31, 1997 18
and March 31, 1998 (unaudited) of CDZ
(b) Pro forma financial statements required pursuant to
Regulation S-B
ITEM
Trans World Gaming Corp. and Casino de Zaragoza, S.A. Group 19
Pro Forma Condensed Consolidated Financial Statements
Pro Forma Condensed Consolidated Statement of Operations - 20
Three-Months ended March 31, 1998
Pro Forma Condensed Consolidated Statement of Operations -
Year Ended December 31, 1997 21
Pro Forma Condensed Consolidated Balance Sheet as of 22
March 31, 1998
Notes to Pro Forma Condensed Consolidated Financial
Statements 23
EXHIBITS DESCRIPTION
Exhibit 2 (iii) Deed of Sale of the Shares of Casino 24
de Zaragoza between Alfonso Fuentes
Barrau and Gumarcon S.L. in favor
of Trans World Gaming Corp.
dated April 17, 1998.
Exhibit 20 (iii) Press Release issued by the Company
on April 21, 1998 with respect to the
acquisition. (Incorporated by reference
to the Company's Current Report,
Form 8-K filed with the Securities and
Exchange Commission on May 4, 1998.)
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANS WORLD GAMING CORP.
Date: July 1, 1998 By: /s/ Dominick J. Valenzano
-------------------------
Dominick J. Valenzano
Chief Financial Officer
4
<PAGE>
CASINO DE ZARAGOZA, S.A.
FINANCIAL STATEMENTS AS OF DECEMBER 31,1997
AND MARCH 31, 1998
TOGETHER WITH AUDITORS' REPORT
5
<PAGE>
NOTE: THIS REPORT IS SUBJECT TO CHANGES ACCORDING TO THE DELIVERY AND EXAM OF
THE OUTSTANDING DOCUMENTATION REQUESTED IN THE ATTACHED LIST.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Casino de Zaragoza, S.A.:
1. We have audited the accompanying balance sheet of Casino de Zaragoza, S.A.
as of December 31, 1997, and the accompanying balance sheet as of March 31,
1998, and the related statements of income, shareholder's equity and cash
flows for the year ended December 31, 1997 and for the three-month period
ended March 31, 1998. These financial statements are the responsibility of
Casino de Zaragoza, S.A.'s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
2. We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
3. The Company has yet to sign the collective agreement with the workers for
the years 1994 through 1998, inclusive, and this matter must be arranged
with the Works' Committee. In addition, the last collective agreement
signed by the Company provided for the payment of retirement bonuses to
employees who retire before age 65.
The balance sheets as of December 31, 1997 and March 31, 1998 do not
include any provision for the liabilities that could result from pay
raises, the aforementioned retirement bonus or any other item that could
come to light once the collective agreements have been settled.
4. In 1997 the Company dismissed some employees, as a result of which it is
now involved in various legal actions that have been brought against it.
The balance sheets as of December 31, 1997 and March 31, 1998 do not
include any provision for the liability which may result from the outcome
of these claims.
5. As a result of the different interpretations to which ruling tax
legislation lends itself and the Company's tax treatment of certain
transactions, tax contingencies that
6
<PAGE>
cannot be objectively quantified could arise in respect of the years still
open to inspection.
6. Net worth as per the accompanying balance sheets as of December 31, 1997
and March 31, 1998 is negative by Ptas. 1,055 million and Ptas. 1,086
million, respectively. This situation constitutes a cause for compulsory
dissolution unless capital is increased or decreased accordingly, pursuant
to the Revised Spanish Corporations Law.
In addition, as indicated in Note 11, in the first few months of 1998 the
Company signed a composition with creditors in connection with the
application for temporary receivership that Casino de Zaragoza, S.A. filed
in January 1997. Note 11 indicates the sums and terms agreed for the
partial acquittance and deferral with the Company's creditors. In addition,
as indicated in Note 7, most of the Company's capital stock was purchased
in April 1998 by a new shareholder, who plans to recapitalize the Company.
The accompanying financial statements as of December 31, 1997 and March 31,
1998 were prepared on a going-concern basis, although, considering the
above circumstances, the Company's ability to continue as a going concern
is dependent on the success of its future operations and on the continued
support of its shareholders so as to enable it to realize its assets and
settle its liabilities for the amounts and according to the classification
in the financial statements referred to above, which have been prepared
assuming that the Company will continue as a going concern.
7. In our opinion, except for the effects of such adjustments, if any, as
might have been required had the outcome of the uncertainties described in
paragraphs 3 to 6 above been known, the financial statements referred to
above present fairly, in all material respects, the financial position of
Casino de Zaragoza, S.A. as of December 31, 1997 and March 31, 1998, and
the results of its operations and its cash flows for the year ended
December 31, 1997 and the three-month period ended March 31, 1998, in
accordance with generally accepted accounting principles in the United
States of America.
7
<PAGE>
CASINO DE ZARAGOZA, S.A.
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTON OF BUSINESS
Casino de Zaragoza, S.A. (hereinafter referred to as the Casino) was founded in
1978, and since then, is located in Alfajarin (Zaragoza). The second article of
the Casino's bylaws defines its corporate purpose, basically, as the operation
of a gambling casino and appurtenant services, namely bar, restaurant, sitting
rooms, show halls, night clubs, athletic facilities and shopping establishments
located in the casino's building complex.
Since 1992 Casino de Zaragoza, S.A. has owned all of the capital stock of
Catering y Gestion, S.L. (see Note 6), which manages the hotel and restaurant
located adjacent to the Casino.
Up until October 1997, the properties and other assets needed to manage Catering
y Gestion, S.L. were owned by and included in the book fixed assets of Casino de
Zaragoza, S.A., which did not charge Catering y Gestion, S.L. for the use of
those assets. In October 1997, Diputacion General de Aragon (the Aragon
Provincial Council) acquired all of the properties that belonged to Casino de
Zaragoza, S.A. through an auction (see Note 5).
The Casino is subject to the regulations set forth in the Ministerial Order of
January 9, 1979, which approved the Gambling Casino Regulations.
The Casino obtained a ten-year extension of its business license, valid until
December 23, 2000.
(2) BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS
The accompanying financial statements as of December 31, 1997 and March 31, 1998
were obtained from the accounting records and are presented in accordance with
accounting principles generally accepted in the United States, which required
certain adjustments and reclassifications to adapt the financial statements to
US GAAP.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
8
<PAGE>
b) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand and cash in bank current
accounts, with original maturities of three months or less.
c) TANGIBLE FIXED ASSETS
Tangible fixed assets are shown at cost.
Expenditure on expansion, modernization or improvement is capitalized as an
increased cost of the related assets provided that it increases
productivity, capacity or efficiency, or extends the useful lives of these
assets.
Upkeep and maintenance costs are expensed currently.
The Company depreciates its tangible fixed assets on a straight-line basis
over the years of estimated useful life of each asset as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Years of
estimated useful
life
-----------------------------------------------------------------
<S> <C>
Buildings 50
Technical and commercial installations 8 to 40
Machinery 10 to 12
Tools 6 to 8
Furniture 10 to 15
Data processing equipment 4
Vehicles 7
-----------------------------------------------------------------
</TABLE>
d) MARKETABLE SECURITIES AND OTHER SIMILAR INVESTMENTS
The criteria applied by the Casino in recording shareholdings in Group
companies are at the lower of cost or underlying book value.
The Casino has a majority holding in the capital stock of certain companies
(see Note 6). The accompanying financial statements do not reflect the
movement in the value of these investments which would arise from applying
consolidation criteria to majority shareholdings and the equity accounting
method to the other shareholdings, the effect of which on the accompanying
financial statements would be immaterial.
e) INCOME TAXES
Period corporate income tax is computed on the basis of book income before
tax adjusted by the corresponding permanent differences with regard to the
income for tax purposes, i.e. the corporate income tax base, less any
abatements and tax credits, excluding withholdings and payments on account.
The Casino accounts for income taxes in accordance with Statement of
Financial Accounting Standards ('SFAS') No. 109 'Accounting for Income
Taxes'. SFAS 109 requires an asset and liability approach for financial
accounting and reporting for
9
<PAGE>
income tax purposes. Under the asset and liability method, deferred income
taxes are recognized on account of the consequences of timing differences
and net operating carryforwards by applying the statutory tax rates
applicable to future years. Valuation allowances are recorded when it is
determined that realization of such amounts are deemed more likely than not
to be realized.
f) DEFERRED INDEMNITIES
The Casino is obligated to compensate employees whom it dismisses, in
certain circumstances, pursuant to ruling labor legislation. In 1997 the
Casino dismissed some employees, as a result of which it is involved in
various legal actions.
The balance sheets as of December 31, 1997 and March 31, 1998 do not
include any provision for the liability which may result from the aforesaid
dismissals, due to the Casino expects to succesfully defend itself.
(4) GROUP ACCOUNTS RECEIVABLE, NET
Group accounts receivable consist of the following:
<TABLE>
<CAPTION>
----------------------------------------------------------
Thousands of Pesetas
-----------------------
31-12-97 31-3-98
----------------------------------------------------------
<S> <C> <C>
Catering y Gestion, S.L. 55,345 63,331
Los Albares, S.A. 2,330 2,330
Less Provisions (55,345) (63,331)
----------------------------------------------------------
Net 2,330 2,330
----------------------------------------------------------
</TABLE>
The Company has booked an allowance covering the Catering y Gestion, S.L.'s
account receivable as of December 31, 1997 and March 31, 1998, considering the
financial situation of the company (see Note 6).
(5) PROPERTY AND EQUIPMENT
At the end of 1997 and of March 1998, property and equipment at cost and
accumulated depreciation were as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------
Thousands of Pesetas
--------------------------
31-12-97 31-3-98
---------------------------------------------------------------
<S> <C> <C>
Machinery 47,569 47,569
Accumulated depreciation (29,904) (30,532)
--------------------------
17,665 17,037
--------------------------
Tools 22,508 22,508
Accumulated depreciation (20,567) (20,789)
--------------------------
1,941 1,719
--------------------------
Furniture 178,469 178,469
Accumulated depreciation (168,087) (168,656)
--------------------------
10,382 9,813
--------------------------
Data Processing Equipment 19,315 19,315
Accumulated depreciation (17,944) (18,186)
--------------------------
1,371 1,129
--------------------------
Other 71 71
Accumulated depreciation (70) (71)
--------------------------
1 -
--------------------------
Total tangible assets - Cost 267,932 267,932
Total tangible assets -
Accumulated depreciation (236,572) (238,234)
---------------------------------------------------------------
TOTAL TANGIBLE ASSETS - NET 31,360 29,698
---------------------------------------------------------------
</TABLE>
10
<PAGE>
In October 1997 Diputacion General de Aragon (the Aragon Provincial Council)
auctioned off all the properties of the Casino, that had been mortgaged or which
secured its debt in respect of gambling tax. The properties were auctioned off
to settle debt for Ptas. 865 million, while their net book value for the Casino
was Ptas. 396 million. Ptas. 469 million in extraordinary revenues obtained on
the auction were recorded in the "Other, net" caption (see Note 10).
(6) FINANCIAL INVESTMENTS
The "Financial investments" caption comprises the following:
<TABLE>
<CAPTION>
Thousands of Pesetas
--------------------------------
31-12-97 31-3-98
--------------------------------
--------------------------------------------------------
<S> <C> <C>
Shareholding 123,634 123,634
Other Securities 328 328
Less - Provisions (111,162) (111,162)
--------------------------------------------------------
NET 12,800 12,800
--------------------------------------------------------
</TABLE>
Set out below is a detail of Group companies (figures in thousands of pesetas):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Name Catering y Gestion, S.L. Los Albares, S.A.
Location Ctra. Nacional II Ctra. Nacional II
Km. 343,250 Km. 343,250
Alfajarin (Zaragoza) Alfajarin (Zaragoza)
Line of business Lodging Inoperative
- ---------------------------------------------------------------------------------------------------------------------
Proportion of stock held as of
December 31, 1997 100% 50,31%
Capital stock as of
December 31, 1997 76,000 74,250
Net equity as of
December 31, 1997 (97,009) 24,789
Net book value of holding as of
December 31, 1997 - 12,472
- ---------------------------------------------------------------------------------------------------------------------
Proportion of stock held as of
March 31, 1998 100% 50,31%
Capital stock as of March 31, 1998 76,000 74,250
Net equity as of March 31, 1998 (103,444) 24,789
Net book value of holding as of
March 31, 1998 - 12,472
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
In addition, the "Provisions" caption under liabilities in the accompanying
balance sheets as of December 31, 1997 and March 31, 1998 reflects the effect of
assuming Ptas. 41.7 million and Ptas. 40.1 million in accumulated losses,
respectively, from Catering y Gestion, S.L. (see Note 9).
11
<PAGE>
(7) CAPITAL STOCK
As of December 31, 1997 and March 31, 1998 the Company's capital stock
consisted of 2,500 fully subscribed and paid registered shares of Ptas. 100,000
par value each. As of December 31, 1997 and March 31, 1998, the following
companies or individuals had interests of 10% or more in the Company's
subscribed capital stock:
<TABLE>
<CAPTION>
----------------------------------------------
Percentage
Shareholding
----------------------------------------------
<S> <C>
Gumarcon, S.L. 45%
Alfonso Fuentes Barrau 45%
Pedro Trapote Avecilla 10%
----------------------------------------------
</TABLE>
On April 15, 1998, Trans World Gaming Corp. purchased the shares that Gumarcon,
S.L. and Alfonso Fuentes Barrau held in Casino de Zaragoza, S.A.
(8) TAX MATTERS
Set out below are the balances payable to the Spanish tax authorities:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Thousands of Pesetas
-------------------------------------------------------------------------------
31/12/97 31/3/98
-------------------------------------------------------------------------------
Temporary Temporary
receivership Rest Total receivership Rest Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Diputacion General de Aragon:
-Gambling tax 504,563 250,076 754,639 504,563 287,764 792,327
City Council of Alfajarin
(Tax on business activities,
property tax) 50,590 30,342 80,932 50,590 26,293 76,883
Central tax authorities:
-Personal income tax - 48,239 48,239 - 62,265 62,265
-Value added tax - 3,074 3,074 - 3,127 3,127
Social Security authorities 119,194 69,090 188,284 119,194 85,205 204,399
Other - 983 983 - 1,001 1,001
-------------------------------------------------------------------------------
674,347 401,804 1,076,151 674,347 465,655 1,140,002
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
On April 17, 1998, the Company signed a composition with creditors (Diputacion
General de Aragon, the Social Security authorities and the City Council of
Alfajarin) which set the terms of payment for the Casino's debts as of January
25, 1997, which is the date of the Company's application for temporary
receivership (see Note 11).
Corporate income tax is calculated on the basis of book income, which is
determined in accordance with generally accepted accounting principles. Such
income need not be equal to the income for tax purposes, i.e. the corporate
income tax base.
The tax loss carryforwards and maximum terms (under Spanish tax legislation)
allowed for offset are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Year Thousands of Pesetas Last year for off offset
<S> <C> <C>
- ----------------------------------------------------------------------------
1992 27,580 1999
1994 181,717 2001
1995 201,199 2002
1996 165,328 2003
-------
575,824
- ----------------------------------------------------------------------------
</TABLE>
12
<PAGE>
The tax base for 1997 and the three first months of 1998 has still to be
calculated, but the Company believes that it will have a tax loss which would be
available for offset until the year 2004.
Under current legislation, losses incurred in a given year can be offset against
taxable income in the following seven years. However, the ultimate amount to
carry forward may depend on the outcome of a tax inspection of the years in
which losses were incurred. The accompanying balance sheet does not reflect the
possible impact of offsetting such tax losses.
The last five years are open for review of all applicable taxes by the tax
authorities.
(9) PROVISIONS
At the end of 1997 and of March 1998, provisions consist of the following:
<TABLE>
<CAPTION>
- ---------------------------------------------- ------------------------------
Thousands of Pesetas
------------------------------
31-12-97 31-3-98
- ---------------------------------------------- -------------- ---------------
<S> <C> <C>
Provisions for subsidiaries' losses (Note 6) 41,664 40,113
Other 18,000 18,000
- ---------------------------------------------- -------------- ---------------
59,664 58,113
- ---------------------------------------------- -------------- ---------------
</TABLE>
Provisions for subsidiaries' losses reflect the difference between the Casino's
interest in the Catering y Gestion, S.L.'s net equity (see Note 6) and its
related account receivable (see Note 4) as of December 31, 1997 and March 31,
1998.
(10) REVENUES AND EXPENSES
Net sales and operating results were obtained entirely from the Casino's
gambling business.
The "Other, net" caption is broken down below:
<TABLE>
<CAPTION>
- ------------------------------------------------- --------------------------------------
Thousands of Pesetas
--------------------------------------
31-12-97 31-3-98
- ------------------------------------------------- ------------------- ------------------
<S> <C> <C>
Auction of properties (Note 5) 469,280 -
Depreciation of assets used by Catering y
Gestion, S.L. (Note 1) (21,524) (1,662)
Variations in securities price fluctuation
allowance and assumption of losses of
Catering y Gestion, S.L. (Notes 6 and 9)
(64,538) (2,397)
Fees paid to receivers and court solicitor for
temporary receivership (45,058) (5,336)
Other items (28,156) 106
------------------- ------------------
310,004 (9,289)
- ------------------------------------------------- ------------------- ------------------
</TABLE>
13
<PAGE>
(11) TEMPORARY RECEIVERSHIP
On January 25, 1997, the directors of the Company filed an application in Court
of First Instance number 11 of Zaragoza to declare Casino de Zaragoza, S.A. in
temporary receivership, which was granted on June 23, 1997.
On April 17, 1998, the secondary creditors listed as such in the list of
creditors approved by the court and the preferred creditors who attended the
Meeting of Creditors voted for the proposed composition, in which Casino de
Zaragoza, S.A. agreed to make the following payments:
<TABLE>
<CAPTION>
---------------------------------------------------------------- ------------------
Thousands of
Pesetas
---------------------------------------------------------------- ------------------
<S> <C>
Social Security authorities 119,194
Partial acquittance of 35.75% of the credits of the rest of
the creditors of the composition 206,529
Repayment schedule for the remaining 64.25%
Of the credits of the rest of the
creditors of the composition:
Year 1 -
Year 2 -
Year 3 37,117
Year 4 37,117
Year 5 37,118
Year 6 37,118
Year 7 111,352
Year 8 111,353
---------------------------------------------------------------- ------------------
Total credit of the creditors who signed the composition 696,898
---------------------------------------------------------------- ------------------
</TABLE>
The balance due to the Social Security authorities will be paid according to the
amounts, terms, methods and other terms expressly agreed by the parties, in
accordance with the composition with creditors. On April 28, 1998 the Company
submitted a proposal for a composition with the Provincial Directorate of the
Social Security Treasury establishing payment terms similar to those set forth
in the composition reached with the Company's other creditors.
14
<PAGE>
- -------------------------------------------------------------------------------
CASINO DE ZARAGOZA, S.A.
- -------------------------------------------------------------------------------
STATEMENT OF SHAREHOLDERS'EQUITY
- -------------------------------------------------------------------------------
(THOUSANDS OF PESETAS)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
SUBSCRIBED INCOME
- ------------------------------------------------------------------------------------
CAPITAL ACCUMULATED FOR THE
- ------------------------------------------------------------------------------------
STOCK LOSSES YEAR
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
OPENING BALANCE AS OF
- ------------------------------------------------------------------------------------
JANUARY 1, 1997 250,000 (1,438,636) -
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Income for the year - - 133,560
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
CLOSING BALANCE AS OF
- ------------------------------------------------------------------------------------
DECEMBER 31, 1997 250,000 (1,438,636) 133,560
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Transfer to retained earnings - 133,560 (133,560)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Income for the year - - (31,304)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
CLOSING BALANCE AS OF
- ------------------------------------------------------------------------------------
MARCH 31, 1998 250,000 1,305,076 (31,304)
- ------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
CASINO DE ZARAGOZA, S.A.
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
AND FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1998
(Thousands of Pesetas)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
12/31/97 3/31/98
(12 MONTHS) (3 MONTHS)
- --------------------------------------------------------------------------------
<S> <C> <C>
REVENUES (NOTE 10) 529.887 135.505
COSTS AND EXPENSES (647.627) (149.034)
Operating departments (472.316) (114.522)
Selling, general and administrative (175.311) (34.512)
INCOME (LOSS) FROM OPERATIONS (117,740) (13.529)
OTHER INCOME (EXPENSE) 251,300 (17,775)
Interests (58,704) (8.486)
Other, net (Note 10) 310.004 (9.289)
PROVISION FOR TAXES ON INCOME - -
NET INCOME (LOSS) 133.560 (31.304)
EARNINGS/(LOSS) PER SHARE 53.42 (12.52)
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
16
<PAGE>
- --------------------------------------------------------------------------------
CASINO DE ZARAGOZA, S.A.
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
(Thousands of Pesetas)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
31-12-97 31-3-98
- -------------------------------------------------------------------------------------------------------
(12 months) (3 months)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Cash received from customers and other accounts receivable 518,133 131,749
- -------------------------------------------------------------------------------------------------------
Cash paid to suppliers and others accounts payable (444,477) (120,003)
- -------------------------------------------------------------------------------------------------------
Cash received from (paid to) subsidiaries (61,729) 2,397
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 11,927 14,143
- -------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Additions to property, plant and equipment (473) 0
- -------------------------------------------------------------------------------------------------------
Proceeds from asset sales 3,525 0
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 3,052 0
- -------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
(Increase) decrease in financial investments 7,320 (4,169)
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 7,320 (4,169)
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 22,299 9,974
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 12,766 35,065
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR 35,065 45,039
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Net income 133,560 (31,304)
- -------------------------------------------------------------------------------------------------------
ADJUSTMENTS:
- -------------------------------------------------------------------------------------------------------
Depreciation and amortization 38,920 1,662
- -------------------------------------------------------------------------------------------------------
Taxes not paid 279,170 55,863
- -------------------------------------------------------------------------------------------------------
Provision for bad debts - Group 64,538 2,397
- -------------------------------------------------------------------------------------------------------
Proceeds from auction of properties (469,280) 0
- -------------------------------------------------------------------------------------------------------
Other provisions 18,000 0
- -------------------------------------------------------------------------------------------------------
(Increase) decrease in accounts receivable (73,483) (4)
- -------------------------------------------------------------------------------------------------------
Increase (decrease) in trade accounts payable and other 20,502 (10,719)
current liabilities
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS TO NET INCOME 11,927 14,143
- -------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
CASINO DE ZARAGOZA, S.A.
BALANCE SHEET AS OF DECEMBER 31,
1997 & MARCH 31, 1998
(THOUSANDS OF PESETAS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS'
ASSETS 12/31/97 3/31/98 EQUITY 12/31/97 3/31/98
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS 104,123 122,022 CURRENT LIABILITIES 1,148,676 1,197,871
Cash and cash equivalents 35,065 45,039 Accounts payable, trade 33.785 22.333
Short-Term financial investments 15,423 19,592 Taxes (Notes 8 and 11) 1,076,151 1,140,002
Trade accounts receivable 50,506 54,338 Other current liabilities 38.740 35.536
(non-group)
Group accounts receivable (Note 4) 2,330 2,330
Prepaid expenses and other 799 723
receivables
LONG-TERM DEBT 2.778 2.675
Long-term debt 2.778 2.675
TOTAL NON-CURRENT ASSETS 51,919 50,257
Intangible assets 7,759 7,759 PROVISIONS (NOTE 9) 59.664 58.113
Property and equipment (Note 5) 31,360 29,698
Financial investments (Note 6) 12,800 12,800
STOCKHOLDERS' EQUITY (1,055,076) (1,086,380)
Common Stock (Note 7) 250,000 250,000
Accumulated losses (1,438,636) (1,305,076)
Profit/Loss 133.560 (31.304)
----------------------- ------------------------------------------------------------
TOTAL LIABILITIES & STOCK
TOTAL ASSETS 156,042 172,279 HOLDERS' EQUITY 156.042 172.279
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
TRANS WORLD GAMING CORP.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma financial information is based on the
most recent financial statements of the Company which were filed on June 15,
1998 on Form 8-K/a, adjusted to give effect the acquisition of CDZ and the
related financing (See ITEM 2: Acquisition and Deposition of Assets.) The pro
forma condensed consolidated balance sheet information gives effect to the
acquisition of CDZ and the relating financing as if it had occurred on January
1, 1997. The pro forma consolidated statements of operations information gives
effect to the acquisition of CDZ and the related financing as if it had occurred
at the beginning of the periods for which the statements of operations are
presented. The pro forma statements of operations give effect to the following
pro forma adjustments: (a) the change in amortization and depreciation expense
resulting from the allocation of the purchase price, direct acquisition costs
and liabilities acquired net of current assets acquired to the fixed and
intangible assets of CDZ and, (b) the change in interest expense resulting from
the issuance and repayment of the new debt used to finance the acquisition. The
pro forma adjustments are based upon currently available information and upon
certain assumptions that management of the Company believes are reasonable.
Final purchase adjustments may differ from the pro forma adjustments herein.
The following unaudited pro forma financial information should be read in
conjunction with the notes thereto includes herewith, with TWG's audited and
unaudited financial statements and notes thereto for the periods presented with
the CDZ audited and unaudited financial statements thereto for the periods
presented. The unaudited pro forma financial information is not necessarily
indicative of future operating results or of what would have occurred had the
acquisition been consummated at the time specified.
19
<PAGE>
TRANS WORLD GAMING CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
-------------------------------------------------------------------
TWG
PRO FORMA PRO FORMA
FINANCIAL CDZ PRO FORMA FINANCIAL
STATEMENTS (A) HISTORICAL ADJUSTMENTS STATEMENTS
------------------------------ --------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Gaming $9,970 $3,476 $0 $13,446
Truckstop 2,707 0 0 2,707
Consulting 84 0 0 84
------------- ----------- -------------- -------------
TOTAL REVENUES 12,761 3,476 0 16,237
------------- ----------- -------------- -------------
TOTAL COSTS AND EXPENSES
Gaming 4,932 3,098 0 8,030
Truckstop 2,333 0 0 2,333
Selling, general and 2,655 895 0 3,550
administrative
Amortization and depreciation 1,392 255 405 (B) 2,052
Gaming development 39 0 0 39
(Gain) on asset sale 0 (3,078) 0 (3,078)
Exchange loss/other expense 132 1,045 0 1,177
------------- ----------- -------------- -------------
TOTAL COSTS AND EXPENSES 11,483 2,215 405 14,103
------------- ----------- -------------- -------------
INCOME FROM OPERATIONS 1,278 1,261 (405) 2,134
INTEREST EXPENSE 3,237 385 40 (C) 3,662
------------- ----------- -------------- -------------
INCOME (LOSS) BEFORE TAXES (1,959) 876 (445) (1,528)
TAXES 296 0 0 296
------------- ----------- -------------- -------------
NET INCOME (LOSS) ($2,255) $876 ($445) ($1,824)
------------- ----------- -------------- -------------
NET INCOME (LOSS) PER
COMMON SHARE - BASIC ($0.74) (G) ($0.60)
------------- -------------
------------- -------------
COMMON SHARES OUTSTANDING 3,044 (G) 3,044
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS PRO FORMA FINANCIAL
STATEMENT
20
<PAGE>
TRANS WORLD GAMING CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,1998
-------------------------------------------------------------------
TWG
PRO FORMA PRO FORMA
FINANCIAL CDZ PRO FORMA FINANCIAL
STATEMENTS (A) HISTORICAL ADJUSTMENTS STATEMENTS
------------------------------ --------------------------------
<S> <C> <C> <C> <C>
REVENUES
Gaming $2,811 $889 $0 $3,700
Truckstop 482 0 0 482
Consulting 5 0 0 5
------------ ---------- ------------
------------ ---------- ------------- ------------
TOTAL REVENUES 3,298 889 0 4,187
------------ ---------- ------------- ------------
TOTAL COSTS AND EXPENSES
Gaming 1,562 751 0 2,313
Truckstop 509 0 0 509
Selling, general and
administrative 386 215 0 601
Amortization and depreciation 353 11 102 (B) 466
Gaming development 0 0 0 0
Exchange loss/other expense 111 61 0 172
------------ ---------- ------------
------------ ---------- ------------- ------------
TOTAL COSTS AND EXPENSES 2,921 1,039 102 4,062
------------ ---------- ------------- ------------
INCOME FROM OPERATIONS 377 (150) (102) 125
INTEREST EXPENSE 822 56 0 878
------------ ---------- ------------- ------------
INCOME (LOSS) BEFORE TAXES (445) (205) (102) (752)
TAXES 100 0 0 100
------------ ---------- ------------- ------------
NET INCOME (LOSS) ($545) ($205) ($102) ($852)
------------ ---------- ------------- ------------
------------ ---------- ------------- ------------
NET INCOME (LOSS) PER
COMMON SHARE - BASIC ($0.18) (G) ($0.28)
------------ ------------
------------ ------------
COMMON SHARES OUTSTANDING 3,044 (G) 3,044
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS PRO FORMA FINANCIAL
STATEMENT
21
<PAGE>
TRANS WORLD GAMING CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------
TRANS WORLD CASINO DE PRO FORMA
GAMING CORP ZARAGOZA ADJUSTMENTS
--------------------------------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $3,358 $295 ($1,497) (B) (C)
Accounts Receivable 458 372 0
Allowance for doubtful accounts (37) 0 0
Inventories 77 0 0
Short term investments 0 129 0
Other current assets 64 5 0
------------ ----------- -----------
TOTAL CURRENT 3,920 800 (1,497)
ASSETS
PROPERTY AND EQUIPMENT - 422 195 0
NET
OTHER ASSETS
Investment at 75 0 0
equity
Goodwill 642 51 4,983 (B) (E)
Investment - 21st Century Resorts 11,825 0 0
Deferred debt issuance 1,856 0 0
costs
Deposits and deferred costs on 389 0 (178) (F)
investments
Deferred costs and other assets 304 84 596 (B)
------------ ----------- -----------
TOTAL OTHER 15,091 135 5,401
ASSETS
------------ ----------- -----------
TOTAL ASSETS $19,433 $1,130 $3,904
------------ ----------- -----------
------------ ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY/ (DEFICIT)
CURRENT
LIABILITIES
Current portion of long term debt $2,125 $7,478 ($7,478) (D)
Accounts payable and accrued
expenses 696 380 0
------------ ----------- -----------
TOTAL CURRENT LIABILITIES 2,821 7,858 (7,478)
LONG TERM DEBT NET OF CURRENT
PORTION 20,323 18 4,802 (D)
PROVISION FOR SUBSIDIARY LOSSES 0 381 0
STOCKHOLDERS'
EQUITY/(DEFICIT)
Capital stock 3 1,640 (1,640) (E)
Additional paid-in-capital 8,896 0 0
Stock warrants outstanding 537 0 0
Accumulated deficit (13,147) (8,767) 8,767 (E)
(547) (H)
------------ ----------- -----------
TOTAL STOCKHOLDERS' EQUITY/(DEFICIT) (3,711) (7,127) 6,580
------------ ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' $19,433 $1,130 $3,904
EQUITY/(DEFICIT)
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS PRO FORMA FINANCIAL
STATEMENT
22
<PAGE>
TRANS WORLD GAMING CORP.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
A. The TWG Pro Forma Financial Statements are incorporated herein by reference
to the Company's Current Report on Form 8-K/A filed with the Securities and
Exchange Commission on June 15, 1998, which reported the acquisition of
21st Century Resorts, a.s. by the Company on March 31, 1998.
B. The excess of purchase consideration over net liabilities of CDZ along with
the related goodwill amortization is summarized as follows:
<TABLE>
<CAPTION>
Goodwill ($ IN THOUSANDS)
<S> <C>
Purchase Price $ 985
Net liabilities acquired 7,127
Reduction of Spanish tax liability (2,676)
Acquisition costs 650
---------
Excess of Purchase Price over net assets acquired (goodwill) $ 6,086
---------
</TABLE>
The excess of purchase price over net assets acquired is being amortized on
a straight-line basis over 15 years. Pro forma amortization expense
amounted to $405,000,000 and $102,000,000 for the year ended December 31,
1997 and the three months ended March 31, 1998, respectively.
C. Reflects an increase in interest expense in connection with the issuance of
a $1 million, 120-day note at 12% for the year ended December 31, 1997. On
a pro forma basis, the note is assumed to be repaid during 1997, there
would be no interest expense incurred during the three months ended March
31, 1998.
D. On April 17,1998, TWG and the major creditors of CDZ agreed to reduce the
outstanding tax liability of CDZ from $7.5 million to $4.8 million payable
over eight years commencing in 2001. The debt has been reclassified from a
current liability to a long term obligation.
E. Reflects the elimination of the equity of CDZ as a result of the
acquisition.
F. Reflects the reclassification to Goodwill of a deposit related to the
acquisition of CDZ that was paid in 1997.
G. Basic earnings per share is computed using the weighted average number of
shares outstanding during the reporting period. Diluted earnings (loss) per
share and fully diluted common shares outstanding are not presented since
the dilutive effects of stock options, warrants and convertible debt is
antidilutive.
H. Reflects the pro forma adjustments to net income (loss) for the year ended
December 31, 1997 of ($445,000) and for the three months ended March 31,
1998 of ($102,000).
23
<PAGE>
EXHIBIT 2 (iii)
DEED OF SALE
OF SHARES
AUTHENTICATED BY
MR. JOSE MARIA BADIA GASCO
NOTARY OF ZARAGOZA
Pa. De la Independencia, 8 Dpdo, 3 Dcha. - 50004 Zaragoza - Tel. 976 23 61 95 -
Fax 976 23 28 37
EXECUTED BY MR. ALFONSO FUENTES BARRUA AND
GUMARCON, S.L. IN FAVOR OF "TRANS WORLD GAMING
CORP." - AND OTHERS; 15 APRIL 1998: NOTARY
REGISTRY NO. 1.388
GP 0966411
24
<PAGE>
[Notary seal:]
JOSE MARIA BADIA GASO
Notary of Zaragoza
- ---- NUMBER ONE THOUSAND THREE HUNDRED AND EIGHTY-ONE
- ---- BILL OF SALE OF SHARES.-
- ---- In Zaragoza, at my residence, on the fifteen of April, nineteen hundred
ninety-eight.
- ---- Before me, HONORIO ROMERO HERRERO, Notary of the Illustrious College of
Zaragoza, acting in substitution of and for the registry of my colleague of this
same residence, MR. JOSE-MARIA BADIA GASCO,
- ------------------------------------APPEAR: ------------------------------------
- ---- MR. ALFONSO FUENTES BARRAU, of legal age, married, an industrialist,
resident of Zaragoza, domiciled at calle Coso No. 66; bearing National
Identification No. 17.984.306-D.
- ---- For the one party
- ---- AND,
- ---- MR. ANDREW TOTTENHAM, of legal age, married, a British citizen, domiciled
at 28 Killieser Avenue, London 8W24NT (United Kingdom), bearing a valid passport
with the number 500076155.
- ---- For the other party,
- ---- AND MR. ALBERTO CUARTERO RIOS, of legal age, married, an attorney, resident
of Zaragoza, domiciled at calle del Doctor Cerrado, number 24, 4th floor left;
bearing National Identification Document number 25.140.154-N.
- ---- NOW COME:
- ---- 1. MR. ALFONSO FUENTES BARRAU, participating on his own behalf and also
in his capacity as Single Administrator and in the name of the corporation
'GUMARCON, S.L., domiciled in Madrid, calle de Maldonado, number 4; incorporated
for an indefinite period by mans of an instrument authorized by the Madrid
notary Mr. Jose-Luis Alvarez Alvarez on March 7,1996, Notary registry number
922; registered in Commercial Registry of Madrid at Volume 10.858, Folio 175,
Section 8, page number M-171456, entry 2. - Its assigned Tax Identification
Document Number is B-81410300.
I hereby transcribe the following excerpts from the Articles of Incorporation of
said Company: "...Article 18 - The Company shall be governed and administered
by a Single Administrator - ...Article 20 - The Single Administrator shall
be responsible for representing the Company in and out of court and in acts and
contracts, operations and business transaction of any type. - As such, the
Single Administrator may undertake with any individual or legal entity..., acts
and contracts of any type, whether concerned with management, ordinary or
extraordinary administrative issues, encumbrances, acquisitions, arrangement and
sales, transactions, loans, credits, collections and payments, regardless of
their nature and consequence, involving either real or personal rights,
25
<PAGE>
relative to movable or immovable property,..., with such powers as may be
necessary to best accomplish the foregoing, signing for this purpose the
appropriate notarized or un-notarized documents, all without prejudice to the
specific competencies that the Law accords the General Meeting of Shareholders.
- ---- - Any limitation of the representational powers of the administrative body,
whether imposed by the corporate bylaws or by decisions of the General Meeting
of Shareholders, shall be null and void vis-a-vis third parties, without
prejudice to the validity and liability that the Single Administrator may incur
with respect to the Company in the case of abuse or misuse of powers or for
performing acts not included in the corporate purpose of a binding nature for
the Company pursuant to what is set forth in the Joint-stock Companies
Act.----"/.
The transcribed portions are a faithful copy of the contents of the authorized
copy, which I have before me, of the aforesaid Articles of Incorporation, and
nothing of what has been omitted restricts, modifies or qualifies what has been
inserted.
Said gentlemen was named Single Administrator for a term of five years, pursuant
to a decision adopted by the General Shareholders Meeting held on 26 August,
1997, which was converted into a public instrument by means of a document
authenticated by my absent colleague on 5 September 1997, under Notary Registry
number 2.860, which resulted in the aforesaid entry 2 of the above-referenced
page number M-171456 in the Commercial Registry of Madrid.
He declares that he currently continues to perform the functions of said office.
2. MR. ANDREW TOTTENHAM, participating in his own behalf as well as in the
name of the U.S. corporation called "TRANS WORLD GAMING CORP.", domiciled at One
Penn Plaza, Suite 1503, New York, 10119 (U.S.A.); incorporated on 20 October,
1993, under registration number 133,738,518.
Said gentlemen declares that at this time he is unable to show proof of the
aforesaid representation, whereupon the other participants agree that it should
be verified at a later time following this proceeding; in my capacity as notary,
however, I advise the participants, at whose insistence the execution proceeding
is being continued, that the full effectiveness of this instrument remains
subject to presentation of the documental proof of the alleged representation
or, if available, the confirmation of the aforesaid Entity represented.
3. AND MR. ALBERTO CUARTERO RIOS on behalf of MR. JAIME VACA DE ARRAZOLA
BANOS, of legal age, married under the regime of separation of marital property,
a resident of Madrid, domiciled at calle de Magallanes, number 1, 9th; bearing
National Identification Document Number 313.531-H, who is acting in the capacity
of representative pursuant to a power of attorney certified by me today acting
in the place of my colleague, Mr. Jose-Maria Badia Gasco, a certified copy of
which they place before me. Finding it sufficient, I hereby attach it to this
principal document.
THEY HAVE, in my opinion, legal capacity for this act.
WHO STATE AS FOLLOWS:
I. That they have consented to the sale of the registered shares numbered 1
to 2,250, inclusive, of the corporation named "CASINO DE ZARAGOZA, S.A.",
domiciled at Alfajarin (province of Zaragoza) Carretera N. II, Km. 343,250;
incorporated for an indefinite period by means of an instrument certified by a
former notary of this City, Mr. Pascual Gomis Vidal, on 8 May, 1978, with bylaws
revised in accordance with the Corporations Act by means of an instrument
certified by a
26
<PAGE>
former notary of this City, Mr. Nicolas Moreno Badia, on 3 July, 1991, under
Notary Registry number 792; registered in the Commercial Registry of this
Province at Volume 1069, Folio 41, Page Number Z-2.389, entry 1. Its assigned
Tax Identification Document Number is A-500044585.
By virtue of a Court order on 25 January, 1997, the Court First Instance of
Zaragoza on 25 January, 1997, the Court acknowledged the petition requesting
that the Company be declared in SUSPENSION OF PAYMENTS.
Said shares belong to:
To the company "GUMARCON, S.L.", which owns numbers 1.126 to 2.250, inclusive.
They acquired said shares through a purchase from the company "Ibervalles,
S.L.", in an instrument certified by the Madrid notary, Mr. Luis Sanz Rodero, on
9 July, 1996, under Notary Registry number 2660, an uncertified copy of which
they place before me, which prompts me to advise the executing parties of the
necessary warnings.
They are fully paid-up.
The sellers declare that the shares forming the subject of the sale under this
bill of sale are the only ones that they own in the company "CASINO DE ZARAGOZA,
S.A.".
II. That pursuant to Article 11 of the bylaws of the company, "CASINO DE
ZARAGOZA, S.A." the shares of said company may be freely transferred,
since the content of said Article, based on the photocopy which they
place before me of the aforesaid revised bylaws, reads as follows:
"...ARTICLE 11". -TRANSFERABILITY OF SHARES. - The ownership of the shares
shall be transmitted by any of the methods established under law, and the
Company shall be immediately notified in writing thereof for its recording in
the corresponding book and regulatory notification of the competent governmental
bodies. - Pending the registration of the Company, or where applicable, of
the decision to increase the share capital in the Commercial Registry, the
shares may neither be delivered nor transferred..."
III. And that the foreign investment arising from the transfer of shares that
is formalized in this bill of sale has been authorized:
(a) By the General Delegation of Aragon, pursuant to a decision of the
Advisor for Economy, Treasury and Development, dated 15 April, 1998, as
evidenced by the document which they place before me, issued in four sheets of
ordinary paper, single-sided, which I attached hereto.
(b) By the Ministry of the Economy and Treasury, General Directorate of
Commercial Policy and Foreign Investments dispatched on 30 March, 1998.
(c) By the Council of Ministers of the Spanish State, at its meeting
held on 20 March, 1998.
The preceding authorizations are not properly evidenced, a fax being the
sole piece submitted to me, which I append hereto, while advising the executing
parties about this lack of certified documentation, which they expressly accept
and promise to deliver the original document to me as soon as they obtain it for
its subsequent annexation hereto under a separate proceeding.
IN VIEW OF THE FOREGOING STATEMENTS
27
<PAGE>
THEY HEREBY EXECUTE THE FOLLOWING,
FIRST. MR. ALFONSO FUENTES BARRAU, acting on his own behalf and in the
name of the company 'GUMARCON, S.L.", sells the aforesaid 2,250 shares, numbered
1 to 2.250, inclusive, of the company "CASINO DE ZARAGOZA, S.A.", free of
encumbrances, as follows:
1. To the company "TRANS WORLD GAMING CORP." it hereby sells two thousand
two hundred and forty-eight (2.248 shares), numbered 1 to 2.248, inclusive, and
the latter, through its designated representative at this proceeding hereby
purchases and acquires them.
2. To MR. ANDREW TOTTENHAM it hereby sells one share (1 share), number
2.249, and the latter hereby purchases and acquires it.
3. To MR. JAIME VACA DE ARRAZOLA BANOS it hereby sells one share (1
share), number 2.250, and the latter hereby purchases and acquires it through
his designated representative at this proceeding.
SECOND. The total price of three sales amounts to ONE HUNDRED TWENTY
MILLION PESETAS.
The sellers state that, of the total sales amount, they have received
before this proceeding, in accordance with their respective shares in the sale,
from the purchasers, whose payments were in accordance with their respective
shares in the purchases, the amount of FIFTY THOUSAND U.S. DOLLARS, equivalent
to SEVEN MILLION SEVEN HUNDRED SEVENTEEN THOUSAND PESETAS, a photocopy of which
I have obtained and attach to this principal document.
For said amount, the sellers issue to the purchasers a receipt of payment,
subject to full collection.
And the payment of the balance remains deferred and the purchasers pledge
and undertake to make it to the sellers before the eighteenth day of May of the
current year, which shall bear a interest of TEN THOUSAND U.S. DOLLARS.
The foreign Company certifies the provenance of the amount paid with a
certification issued on one folio of ordinary paper by the entity BANKINTER,
Paseo de la Constitucion 15, of this City, dated 15 April 1998, which
certification I append to the master document.
I, the Notary, append hereto both copies of the statements on foreign
investments made under this contract.
THIRD. The failure to pay the remaining balance of the payment due in the
manner stipulated shall entitle the sellers to rescind the sales IPSO JURE,
pursuant to the provisions of Article 1.504 of the Civil Code.
Should the sellers, in exercise of the authority reserved by them,
reacquire what was sold under this contract, the purchasers shall forfeit the
FIFTY THOUSAND DOLLARS delivered in partial payment of the price, with the said
funds to remain in the possession of the sellers.
This contract shall likewise terminate IPSO JURE should the agreement
presented by "CASINO DE ZARAGOZA, S.A." at the Creditors Meeting relative to the
said Company's
28
<PAGE>
suspension of payments not be approved, in which case the purchasers shall
forfeit the FIFTY THOUSAND DOLLARS delivered in partial payment of the price,
with the said funds to remain in the possession of the sellers, and naturally
the purchaser would not be required to pay the portion of the payment that is
deferred, and the ownership of the shares would be restored to the sellers.
FOURTH. The purchasers state that they are aware of the commercial, legal,
accounting and tax situation of the Company "CASINO DE ZARAGOZA, S.A." and its
affiliates, and indicate, in particular, that they are fully aware of the
current situation of the proceedings in the suspension of payments matter in
which it is implicated under number 1/97 before the Eleventh Court of First
Instance of Zaragoza. They further state that since before the execution of the
private document of sale of 12 September 1997, signed by the parties, they have
been receiving ample accounting documentation that exactly reflects the net
worth of the Firm, including, INTER ALIA, the balance sheet operating account,
Court decisions in the matter of suspension of payments, contracts, Social
Security contribution payment forms (TC1 and TC2), as well as a list of all
currently pending contingencies in favor or against the Company. The purchasers
acknowledge having examined all the documents they have requested to check the
accuracy of the accounting documents provided, and also to verify the
correctness of the tax, employment, administrative situation, including with the
Regional Council of Aragon, the entity which has been assigned jurisdiction over
the gaming business in which the concern "CASINO DE ZARAGOZA, S.A." is engaged.
The purchasers state the condition of the Firm conforms with the data supplied
by the sellers, without their having to make any reclamations on any account.
Any obligation derived from the private contracts subscribed between the
parties on 12 September 1997 is rescinded and void.
The sellers, in signing this contract, sever all ties with the Company
"CASINO DE ZARAGOZA, S.A.", and undertake not to exercise any type of action
before any official entity which might obstruct directly or indirectly the
effective assumption of control and authority over the Company by the
purchasers.
FIFTH. All of the expenses and taxes in connection with the execution of
this document shall be borne exclusively by the purchasers.
All statutory reservations and notices have been made including,
specifically, those of Article 52 of the Property Transfers Tax Act and
Documented Juridical Acts (Royal Legislative Decree 1/1993 of 24 September), and
those of the Assessments Act, the parties present having requested that the
exemption established under Article 108 of Law 24/1988 be applied to this
Contract.
Pursuant to the stipulations of the aforesaid Assessments Act, I shall
append hereto the corresponding settlement of fees, in a separate folio.
As MR. ANDREW TOTTENHAM does not understand Spanish and in accordance with
the provisions of Article 150 of the Notarial Regulations, this proceeding is
being attended by a sworn interpreter from Spanish into English, MRS. PATRICIA
CALLAVED BURGALETA, whose name appears on the list of sworn interpreters of this
City furnished by the Association of Notaries of Zaragoza, who is of Spanish
nationality and whose identity I verify by means of her national identification
document, no. 25,151,496-F, and who states that she translates orally into the
said English language, out loud, the reading that I, the Notary, at the election
of the parties present and of said interpreter, provide of this notarized
document, with the parties hereto indicating their
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approval of the full contents thereof and signing it thereafter; then, the
aforesaid interpreter states, on her personal recognizance, that the contents of
this instrument are faithfully represented in the English translation which she
has given thereof, and also signs.
I, the Notary, do hereby attest that I have verified the identities of the
parties hereto from their respective identification documents notes in the
introduction, containing photographs and signatures, and everything else
contained in this notarized document, which has been drawn up in nine folios of
official notarial paper, being all of the same class and series, and bearing the
number which appears hereinbelow and the eight numbers immediately preceding it.
The signatures and initials of the parties in attendance are affixed hereto.
Sealed and signed - Honorio Romero Herrero - Initialed and sealed.
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