SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
CHECK THE APPROPRIATE BOX:
/X/ PRELIMINARY PROXY STATEMENT / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
/ / DEFINITIVE PROXY STATEMENT
/ / DEFINITIVE ADDITIONAL MATERIALS
/ / SOLICITING MATERIAL PURSUANT TO RULE 14a-11(c) OR RULE 14a-12
Trans World Gaming Corp.
- ------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- ------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ NO FEE REQUIRED.
/ / FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14a-6(i)(1) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION
APPLIES:
-------------------
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION
APPLIES:
-------------------
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
-------------
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
------------------------
(5) TOTAL FEE PAID:
---------------------------------------------------------
/ / FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE
0-11(a)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID
PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER,
OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
(1) AMOUNT PREVIOUSLY PAID:
----------------------------------------------
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
------------------------
(3) FILING PARTY:
--------------------------------------------------------
(4) DATE FILED:
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[TRANS WORLD GAMING CORP. LETTERHEAD]
May 19, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Trans World Gaming Corp. (the "Company"). The meeting will be held at the
Marriott Hotel, V Celnici 8, Prague 1, Czech Republic 11121, on Monday, June
19, 2000, at 2:00 p.m., Prague Time. The matters to be considered by
shareholders at the Annual Meeting are described in detail in the accompanying
materials.
The Board of Directors of the Company has determined that the matters to
be considered at the Annual Meeting are in the best interests of the Company
and its shareholders. For the reasons set forth in the Proxy Statement, the
Board unanimously recommends that you vote "FOR" each matter to be considered.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend
the meeting in person. I urge you to mark, sign and date your proxy card
today and return it in the envelope provided, even if you plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will
ensure that your vote is counted if you are unable to attend.
Your continued support of, and interest in, the Company is appreciated.
Sincerely,
Rami S. Ramadan
Chief Executive Officer and
Chief Financial Officer
TRANS WORLD GAMING CORP.
545 Fifth Avenue, Suite 940
New York, New York 10017
(212) 983-3355
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 19, 2000
- ------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders ("Annual
Meeting") of Trans World Gaming Corp., a Nevada corporation (the "Company"),
will be held at 2:00 p.m., Prague, Czech Republic time, on Monday June 19,
2000, at the Marriott Hotel located at V Celnici 8, Prague 1, Czech Republic
11121, for the following purposes as described in more detail in the
accompanying Proxy Statement:
1. To elect four (4) directors to hold office until the next Annual
Meeting of Shareholders or until their successors are duly elected
and qualified;
2. To ratify the appointment of Rothstein, Kass & Company as the
Company's independent accounts for the fiscal year ending December
31, 2000;
3. To amend the Company's Articles of Incorporation by changing the
name to Trans World Corporation.
4. If necessary, to adjourn the Annual Meeting to solicit additional
proxies; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof. Except with respect to
procedural matters incident to the conduct of the Annual Meeting,
management is not aware of any other matters which could come
before the Annual Meeting.
The Board of Directors has fixed May 10, 2000 as the voting record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting. Only shareholders of record at the close of business on that
date are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Rami S. Ramadan
Chief Executive Officer and Chief Financial Officer
Dated: May 19, 2000
New York, New York
- ------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN
TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU
MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU
IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- ------------------------------------------------------------------------------
TRANS WORLD GAMING CORP.
545 FIFTH AVENUE, SUITE 940
NEW YORK, NEW YORK 10017
------------------
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 2000
------------------
INTRODUCTION
This Proxy Statement is being furnished to holders of the common stock,
$.001 par value per share (the "Common Stock"), of Trans World Gaming Corp.
(the "Company"), a Nevada corporation, in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Company's
Annual Meeting of Shareholders to be held at 2:00 p.m., Prague, Czech Republic
time, on Monday, June 19, 2000, and at any adjournment thereof (the "Annual
Meeting"). The Annual Meeting will be held at the Marriott Hotel located at V
Celnici 8, Prague 1, Czech Republic 11121, for the purposes set forth in the
Notice of Annual Meeting of Shareholders and as described in detail herein.
The Company expects that this Proxy Statement, the proxy card and the Notice
of Annual Meeting of Shareholders will first be mailed to shareholders on or
about May 19, 2000.
A proxy card is enclosed for your use. You are solicited on behalf of
the Board of Directors to SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING
POSTAGE-PAID ENVELOPE. The cost of soliciting proxies, including the
preparation, assembly and mailing of the proxies and solicitation materials,
as well as the cost of forwarding such materials to the beneficial owners of
the Company's Common Stock, will be borne by the Company. Directors, officers
and regular employees of the Company may, without compensation other than
their regular compensation, solicit proxies by telephone, telegram or personal
conversation. The Company may reimburse brokerage firms and other
fiduciaries, custodians and nominees for expenses incurred in forwarding proxy
material to the beneficial owners of the Company's Common Stock.
The Company has retained ___________, New York, New York, ("_______"), a
professional proxy solicitation firm to assist in the solicitation of proxies
and for related services. The Company will pay _______ a fee of $_____ and
has agreed to reimburse it for its reasonable out-of-pocket expenses.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained on the proxy card. If no contrary instructions are
given, each proxy received will be voted FOR the nominees for director
described herein,
FOR the ratification of Rothstein Kass & Co. as the
Company's independent accountants, FOR the amendment to the Company's Articles
of Incorporation (the "Articles") changing the Company's name to Trans World
Corporation, FOR the adjournment to solicit additional proxies, if necessary,
and in the discretion of the proxy holder as to the transaction of such other
business as may properly come before the meeting. Any shareholder who returns
a signed proxy but fails to provide instructions as to the manner in which
such shares are to be voted will be deemed to have voted in favor of each of
the matters set forth in the preceding sentence.
Any shareholder giving a proxy has the power to revoke it at any time
prior to its use at the Annual Meeting by: (i) filing with the Secretary of
the Company written notice thereof (Trans World Gaming Corp., 545 Fifth
Avenue, Suite 940, New York, New York 10017); (ii) submitting a duly executed
proxy bearing a later date; or (iii) appearing at the Annual Meeting and
giving the Secretary notice of his or her intention to vote in person.
Proxies solicited hereby may be exercised only at the Annual Meeting and any
adjournment thereof and will not be used for any other meeting.
VOTING OF SHARES
Only holders of record of the Common Stock at the close of business on
May 10, 2000 (the "Voting Record Date") will be entitled to vote at the Annual
Meeting. On the Voting Record Date, the Company had 5,365,449 outstanding
shares of Common Stock, each such share entitling the holder thereof to one
vote on each matter to be voted on at the Annual Meeting, and had no other
class of equity securities outstanding. Holders of shares of Common Stock are
not permitted to cumulate their votes for the election of directors.
The holders of a majority of the shares issued and outstanding on the
records of the Company on the Voting Record Date and entitled to vote and
represented in person or by proxy at the Annual Meeting will constitute a
quorum for the transaction of business at the Annual Meeting. The withdrawal
of any shareholder after the Annual Meeting has commenced shall have no effect
on the existence of a quorum, after a quorum already has been established. In
general, shares of Common Stock represented by a properly signed and returned
proxy card will be counted as shares present and entitled to vote at the
meeting for purposes of determining a quorum, without regard to whether the
proxy card reflects abstentions (or is left blank) or reflects a "broker non-
vote" on a matter (i.e., a proxy card returned not marked by a broker because
voting instructions have not been received and the broker has no discretionary
authority to vote).
The election of a nominee for director requires approval of such nominee
by a plurality of the votes cast which are present and entitled to vote in
person or by proxy. The affirmative vote of the holders of a majority of the
total votes cast at the Annual Meeting, in person or by proxy, is required for
approval of the proposals to ratify the appointment of the Company's
independent auditors and to amend the Company's Articles by changing its name
to "Trans World Corporation". A majority of the votes cast which are
represented at the Annual Meeting, in person or by proxy, also is required for
the approval of the proposal to adjourn the Annual Meeting to solicit
additional proxies, if such action is required to be voted on. Shares
represented by proxy which are voted as abstaining on any of the proposals,
other than the election of directors, will be treated as shares present and
entitled to vote as if they were not cast in favor of a particular matter, and
thus
-2-
will be counted as votes against the matter. Under the rules of the New
York Stock Exchange, the proposals for the election of directors, to ratify
the Company's independent accountants, to amend the Articles of Incorporation
of the Company by changing its name to "Trans World Corporation", and to
adjourn the Annual Meeting to solicit additional proxies, if required, are
considered to be "discretionary" items upon which brokerage firms may vote in
their discretion on behalf of their clients if such clients have not furnished
voting instructions and for which there will not be "broker non-votes."
PROPOSAL FOR ELECTION OF DIRECTORS
Nomination
The Bylaws of the Company provide that the Board of Directors of the
Company (the "Board") shall consist of not less than three nor more than nine
members. At the present time, the Board consists of four members. The Board
has nominated the four individuals named below to serve as directors of the
Company until the next annual meeting of shareholders or until their
respective successors have been elected and qualified. All of the nominees
are members of the current Board of Directors. Except as noted below, there
are no arrangements or understandings between the persons named as nominees
for director at the Annual Meeting and any other person pursuant to which such
nominee was selected as a nominee for election as a director at the Annual
Meeting. No director or nominee for director is related to any other
director or executive officer of the Company by blood, marriage or adoption.
The election of each nominee requires the affirmative vote of a
plurality of the shares of the Common Stock represented in person or by proxy
at the Annual Meeting. The Board recommends a vote FOR the election of each
of the nominees listed below. In the absence of other instructions, the
proxies will be voted FOR the election of the nominees named below. If, prior
to the Annual Meeting, the Board should learn that any nominee will be unable
to serve by reason of death, incapacity or other unexpected occurrence, the
proxies that otherwise would have been voted for such nominee will be voted
for such substitute nominee as selected by the Board. Alternatively, the
proxies, at the Board's discretion, may be voted for such fewer number of
nominees as results from such death, incapacity or other unexpected
occurrence. The Board has no reason to believe that any of the nominees will
be unable to serve.
-3-
NOMINEES FOR A ONE YEAR TERM EXPIRING 2000
The following table provides information as of May 10, 2000 with respect to
each of the Company's directors and each Executive Officer:
<TABLE>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <S> <C> <S>
Name * Age Position with the Company as Director/Executive Officer Since
- -------------------------------------------------------------------------------------------------------------
Rami S. Ramadan 50 Chief Executive Officer, Chief Financial Officer and Director 1999
Julio E. Heurtematte, Jr. (1,2) 64 Director 1998
Malcolm M.B. Sterrett (1,2) 57 Director 1998
Geoffrey B. Baker (1,2) 50 Director 1998
- ---------------------------------------------------------------------------------------------------------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
</TABLE>
Biographical Information About Nominees
Rami S. Ramadan has served as Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO") since July 12, 1999 and was appointed as a director
on August 4, 1999. His most recent position was as Executive Vice President
of Finance for the Ian Schrager Hotels from November 1997 to July 1999. Prior
to that, Mr. Ramadan held senior financial positions with Hyatt Hotels from
January 1994 to November 1997, Euro Disney from October 1990 to December 1993
and Meridien Hotels from September 1975 to September 1990.
Julio E. Heurtematte, Jr. currently is a private consultant,
specializing in international projects, trade and investments and has acted in
such capacity since 1989. From 1963 to 1989, Mr. Heurtematte served with the
Inter-American Development Bank in several capacities, most recently as its
Deputy Manager for Project Analysis.
Malcolm M. B. Sterrett is a private investor. From 1989 to 1993, he was
a partner at the law firm of Pepper Hamilton & Scheetz, Washington, D.C. From
1988 to 1989, he served as General Counsel to the U.S. Department of Health
and Human Services and from 1982 to 1988, he was a Commissioner on the U.S.
Interstate Commerce Commission. Prior thereto, he was Vice President and
General Counsel to the United States Railway Association and served as Staff
Director and Counsel to the U.S. Senate Committee on Commerce, Science and
Transportation.
Geoffrey B. Baker is a private investor. From 1983 to the present, Mr.
Baker has been member of the private investment firm, Baker & Donaldson. From
1977 to 1982, he was
-4-
Legislative Director to U.S. Senator Lowell P. Weicker, Jr. and from 1975 to
1977, he served on the Senate Committee on Commerce as a minority staff
member for surface transportation.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR THE ELECTION OF THE ABOVE NOMINEES FOR DIRECTOR
Information About the Board and Its Committees
The business and affairs of the Company are managed by the Company's
Board of Directors. Meetings of the Board are held quarterly and on an as-
needed basis. The Board has established a number of committees, described
below, which meet on an as-required basis during the year. The Board held six
meetings during the Company's fiscal year ended December 31, 1999. All of the
directors of the Company attended 75% or more of the aggregate number of
meetings of the Board and the aggregate number of meetings of committees of
the Board during the year ended December 31, 1999. The Board of Directors has
established the following committees:
Audit Committee. The Audit Committee reviews and approves internal
accounting controls, internal audit operations and activities, the Company's
annual report and audited financial statements, the selection of the Company's
independent auditors, the activities and recommendations of the Company's
independent auditors, material changes in the Company's accounting procedures,
the Company's policies regarding conflicts of interest and such other matters
as may be delegated by the Board. The Audit Committee, composed of Messrs.
Baker, Sterrett and Heurtematte, all non-employee directors, met once in 1999.
Compensation Committee. The Compensation Committee sets the
compensation for executive officers of the Company and sets the terms of
grants of awards under the Company's 1993 Incentive Stock Option Plan (the
"1993 Plan") and the Company's 1998 Stock Option Plan (the "1998 Plan") and
any other equity-based compensation plans adopted by the Company. The
Compensation Committee, composed of Messrs. Baker, Heurtematte and Sterrett,
met once during 1999.
Directors Compensation. Non-employee directors receive a cash fee of
$2,000 for each Board meeting attended and all members of the Board are
reimbursed for out-of-pocket expenses in connection with attending Board
meetings. In addition, the members of each Committee of the Board receive a
cash fee of $1,500 for each meeting attended and reimbursement for out-of-
pocket expenses. In 1999, the Board of Directors, pursuant to the 1999 Non-
Employee Director Stock Otion Plan ("1999 Director Plan"), provided each non-
employee director with an automatic grant of a non-qualified option to
purchase 2,000 shares of Common Stock on the first business day following the
end of each fiscal quarter during which the director has served in 1999 and
thereafter. Each such option (i) has up to a ten-year term, (ii) has an
exercise price per share equal to 100% of the fair market value of one share
of Common Stock on the date of grant, and (iii) becomes fully exercisable on
the date of grant. See "1999 Non-Employee Director Stock Option Plan".
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership
of the Common Stock as of May 10, 2000, unless otherwise noted, (a) by each
shareholder who is known by the Company to own beneficially more then 5.0% of
the outstanding Common Stock, (b) by each director, (c) by each executive
officer named in the Summary Compensation Table below, and by all executive
officers and directors as a group. Unless otherwise noted, each of the
-5-
shareholders listed in the table or included within a group listed in the
table possesses sole voting and investment power with respect to the shares
indicated subject to community property laws where applicable. The business
address for each director and officer of the Company is 545 Fifth Avenue,
Suite 940, New York, New York 10017.
Number of Shares
Name of Beneficial Owner of Common Stock Percentage
Beneficially Owned(1) of Ownership(1)
- -------------------------------------------------------------------------------
Value Partners, Ltd. 8,257,452(2) 60.6%
Anasazi Partners Limited Partnership 1,525,667(3) 22.1%
Fort Pitt Fund III, L.P. 312,682(4) 5.5%
Ravich Children Permanent Trust 1,250,727(5) 18.9%
C.P. Baker & Co., Ltd. 2,186,037(6) 28.9%
U.S. Bancorp. 681,647(7) 11.2%
Stanley Kohlenberg 237,000(8) 4.2%
Andrew Tottenham 1,205,500(9) 18.3%
Rami Ramadan . 100,000(10) *
Julio Heurtematte 54,691(11) *
Malcolm M.B. Sterrett 54,691(12) *
Geoffrey B. Baker 50,691(13) *
All directors and executive officers
as a group (5 persons) 1,465,573(14) 24.2%
* Less than 1%.
- ------------------------------------------------------------------------------
(1) The percentage of outstanding shares is based on 5,365,449 shares
outstanding as of May 10, 2000 (the "Calculation Date"). A person is
deemed to be the beneficial owner of securities that can be acquired by
such person within 60 days from the Calculation Date upon the exercise of
options or warrants. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants that are held by such
person (but not those held by any other person) are exercisable within 60
days from the date of the Voting Record Date have been exercised.
Included are shares of Common Stock issuable upon the exercise of options
or warrants to purchase the Company's Common Stock.
(2) Value Partners, Ltd. is a Texas limited partnership, whose business
address is 4514 Cole Avenue, Suite 808, Dallas, Texas 75205. Includes
warrants to purchase: 600,000 shares of Common Stock at an exercise price
of $1.00, expiring December 31, 2005; 2,000,000 shares of Common Stock at
an exercise price of $1.50 per share, expiring December 31, 2005;
4,427,573 shares of Common Stock at an exercise price of $.01 per share,
expiring March 31, 2008; includes warrants to purchase 675,392 shares
from Credit Suisse First Boston Management Corporation in October 1999;
104,225 shares of Common Stock at an exercise price of $.01 per share
expiring March 31, 2008; and 1,125,654 shares of Common Stock at an
exercise price of $.01 per share, expiring March 31,2008.
(3) Anasazi Partners, Ltd. is a Massachusetts limited partnership whose
business address is 120 Boylston Street, Suite 800, Boston, Massachusetts
02116. Includes 269,000 shares of Common Stock purchased in the Company's
initial public offering ("IPO"); and warrants to purchase 250,000 shares
of Common Stock at
-6-
an exercise price of $1.00 per share, expiring
December 31, 2005; (of these warrants, 50,000 were acquired from New
Generation, Ltd. in 1999), and 1,006,667 shares of Common Stock at an
exercise price of $1.50 per share, expiring December 31, 2005 (of these
warrants 166,667 were acquired from New Generation in 1999 and 173,333
were acquired from Fundamental Investors in 1999).
(4) The business address for Fort Pitt Fund III, L.P. is P.O. Box 974,
Uniontown, Pennsylvania 15401. Includes warrants to purchase 312,682
shares of Common Stock at an exercise price of $.01 per share expiring
March 31, 2008.
(5) The business address for the Ravich Children's Permanent Trust is 8730
Wilshire Blvd., Beverly Hills, California 90021.
(6) The business address for C.P. Baker & Co. is 120 Boylston Street, Suite
800, Boston, Massachusetts 02116. Represents warrants to purchase
2,186,037 shares of Common Stock at an exercise price of $.01 per share,
expiring June 30, 2002 and held by C.P. Baker & Co., Ltd. and certain of
its affiliates.
(7) The business address for U.S. Bancorp. is 11766 Wilshire Boulevard, Suite
870, Los Angeles, California 90025. Represents warrants to purchase
681,647 shares of Common Stock at an exercise price of $.01 per share,
expiring March 31, 2008, which were acquired from Credit Suisse First
Boston Management Corporation in October 1999.
(8) Does not include 929,500 shares (187,500 of which are immediately
exercisable warrants and 107,000 of which are immediately exercisable
options) held by Andrew Tottenham, a son-in-law of Mr. Kohlenberg, as to
which beneficial ownership is disclaimed. Includes 1,000 shares, and
25,000 shares and 1,000 shares at the end of each calendar quarter during
the quarter ended March 31, 1997 through the quarter ended September 30,
1999, respectively, subject to non-qualified options granted to Mr.
Kohlenberg under the 1993 Plan on May 22, 1995, on March 7, 1996 and
75,000 shares and 25,000 shares of Common Stock subject to incentive
options granted to Mr. Kohlenberg on December 31, 1996 and December 31,
1998 respectively, all of which fully vested on the dates of grant.
Includes 100,000 shares of Common Stock purchased in the IPO.
(9) Includes 623,500 shares of Common Stock (240,000 shares were issued to
Mr. Tottenham upon conversion of the Tottenham Notes on December 31,
1998) and 1,000 shares and 1,000 shares subject to non-qualified options
granted to Andrew Tottenham under the 1993 Plan on October 2, 1996 and on
December 31, 1996, respectively, and 100,000 shares and 25,000 shares
subject to incentive options granted to Mr. Tottenham on December 31,
1997 and December 31, 1998 respectively, all of which fully vested on the
dates of grant. Also includes 187,500 shares subject to immediately
exercisable warrants which were granted to Mr. Tottenham on January 1,
1997. Also includes 205,000 shares of Common Stock owned by Robin
Tottenham, (80,000 shares were issued to Mrs. Tottenham upon conversion
of the Tottenham Notes on December 31, 1998), the wife of Andrew
Tottenham and the daughter of Mr. Kohlenberg, and 62,500 shares subject
to immediately exercisable warrants that were granted to Mrs. Tottenham
on January 1, 1997. Does not include shares owned by Mr. Kohlenberg, as
set forth above, as to which beneficial ownership is disclaimed.
(10)Consists of shares subject to incentive options granted to Mr. Ramadan
on July 12, 1999, all of which fully vested on the date of grant.
(11)Includes warrants to purchase 41,691 shares of Common Stock at an
exercise price of $.01 per share expiring March 31, 2008; 1,000 shares of
Common Stock subject to non-qualified
-7-
options granted to Mr. Heurtematte
under the 1998 Plan at the end of each calendar quarter ended March 31,
1998 through December 31, 1998 and 2,000 shares of Common Stock subject
to non-qualified options granted at the end of each calendar quarter
ended March 31, 1999 through March 31, 2000, all of which fully vested on
the dates of grant.
(12)Includes warrants to purchase 41,691 shares of Common Stock at an
exercise price of $.01 per share expiring March 31, 2008; 1,000 shares of
Common Stock subject to non-qualified options granted to Mr. Sterrett
under the 1998 Plan at the end of each calendar quarter ended March 31,
1998 through December 31, 1998 and 2,000 shares of Common Stock, subject
to non-qualified options, granted at the end of each calendar quarter
ended since March 31, 1999 through March 31, 2000, all of which fully
vested on the dates of grant.
(13)Includes warrants to purchase 41,691 shares of Common Stock at an
exercise price of $.01 per share expiring March 31, 2008; 1,000 shares of
Common Stock subject to non-qualified options granted to Mr. Baker under
the 1993 Plan at December 31, 1998, 2,000 shares of Common Stock, subject
to non-qualified options, granted for the calendar quarter ended March
31, 1999 and 2,000 shares of Common Stock subject to non-qualified
options granted at the end of each quarter ended since September 31, 1999
through March 31, 2000, all of which fully vested on these dates.
(14)See Notes (9), (10), (11), (12), and (13) above.
Summary of Cash and Certain Other Compensation
The following table sets forth the cash and non-cash compensation paid
or earned during the fiscal years ending December 31, 19998, 1998, and 1997 by
the CEOs and CFOs of the Company (the "Named Officers") during those periods.
<TABLE>
Summary Compensation Table
- ----------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <S> <C> <S> <C>
Other Annual All Other
Year Salary Bonus(4) Compensation Stock Options(5) Compensation(6)
Rami Ramadan(1)
Chief Executive Officer 1999 $150,000 100,000 $2,200
and Chief Financial Officer
Andrew Tottenham(2)
President and Chief 1999 195,000
Operating Officer 1998 180,000 25,000 9,000
1997 150,000 $60,000 100,000 8,600
Stanley Kohlenberg(3)
Former President and 1999 180,000
Chief Executive Officer 1998 43,750 25,000 42,500
1997
Dominick J. Valenzano(7)
Former Chief Financial 1999 120,000
Officer 1998 120,000 25,000 4,300
1997 90,000 30,000 50,000 6,360
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
(1) Mr. Ramadan joined the Company as its CEO and CFO, July 12, 1999.
(2) Mr. Tottenham was elected President and CEO of the Company as of
January 1, 1997 and became President and COO on September 16, 1998.
(3) Mr. Kohlenberg served as President and CEO of the Company from March
6, 1996 to December 31, 1996 and again from September 16, 1998 to June
30, 1999, the date of his resignation. Under the terms of a severance
agreement dated May 23, 1999, Mr. Kohlenberg received six months salary
and will participate in the Company's health plan for that period.
(4) Bonus amounts shown were earned with respect to each year indicated.
(5) Amounts shown represent the number of qualified stock options granted
each year. With the exception of Mr. Valenzano's options which have
expired, options listed are exercisable; all of the options, at December
31, 1999, were issued at the fair market value of one share of the
Company's Common Stock on the date of grant.
(6) The amounts shown represent the cost of a leased automobile provided
to Messrs. Tottenham, Valenzano and Ramadan by the Company for each year
indicated and represent a consulting fee paid to Mr. Kohlenberg under
the terms of a Consulting Agreement which terminated on September 15,
1998.
(7) Mr. Valenzano resigned from the Company on August 5, 1999. Under the
terms of a severance agreement, executed on August 5, 1999, Mr.
Valenzano received six months salary and participated in the Company's
health plan for six months following such termination.
Option Grants and Exercises
The following table summarizes certain information concerning individual
grants of options during fiscal 1999 to the executive officers named in the
Summary Compensation Table above and the potential realizable value of the
options held by such persons at December 31, 1999.
<TABLE>
Options Granted in Fiscal 1999
Individual Grants
- ------------------------------------------------------------------------------------
<S> <C> <S>
Shares of Common % of Total Options
Stock Underlying Granted to Employees Exercise of Base Expiration
Options Granted in Fiscal Year Price ($/Sh) Date
Rami Ramadan 100,000 100% 0.50 07/30/08
- -------------------------------------------------------------------------------------
</TABLE>
No options were exercised by the executive officers named in the
Summary Compensation Table during fiscal 1999.
The following table summarizes the option values held by the executive
officers named in the Summary Compensation Table as of December 31, 1999.
-9-
<TABLE>
Aggregate Option Exercises in Fiscal 1999 and
Fiscal 1999 Year-End Option Value Table
- ---------------------------------------------------------------------------------------------
Number of Unexercised Options Value of Unexercised
At December 31, 1999 in-the-Money Options at
December 31, 1999
- ---------------------------------------------------------------------------------------------
Name Shares Acquired
on Exercise Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C>
Rami Ramadan 0 100,000 0 0 0
Stanley Kohlenberg 0 137,000 0 0 0
Andrew Tottenham 0 127,000 0 0 0
Dominick Valenzano 0 145,000 0 0 0
- ---------------------------------------------------------------------------------------------
</TABLE>
Employment/Severance Agreements
Rami S. Ramadan. Effective July 12, 1999, the Company entered into a three
year employment agreement with Mr. Ramadan pursuant to which he will serve as
the Company's Chief Executive Officer and Chief Financial Officer at an annual
salary of $300,000. Mr. Ramadan is eligible to participate in the 1998 Plan,
Executive Compensation Plan and any present or future employee benefit plans.
He also will be reimbursed for reasonable travel and out-of-pocket expenses
necessarily incurred in the performance of his duties. Mr. Ramadan will also
receive three separate equal annual installments of options to acquire the
Company's Common Stock, each of which shall have a five-year term commencing
upon the date on which each installment is granted. Upon commencement of the
employment agreement, Mr. Ramadan received 100,000 options exercisable at
$0.50 per share; upon commencement of the second year of the employment
agreement an additional 100,000 options exercisable at $0.55 per share will be
granted; and upon commencement of the third year of the employment agreement
the final installment of 100,000 options exercisable at $0.61 per share will
be granted. Upon commencement of the second and third year of the employment
agreement, the exercise price for all unexercised options granted in the
preceding year will be increased to the current year's exercise price up to
$0.61. In the event the employment agreement is terminated other than for
cause, as defined in the agreement, within six months of the commencement
date, the Company shall pay to Mr. Ramadan one year's salary in a lump sum
within 30 days of the notice of termination. If the agreement is terminated
other than for cause at anytime after six (6) months following commencement of
the employment agreement, Mr. Ramadan will receive two years' salary.
Andrew Tottenham. Effective as of January 1, 1997, the Company entered into a
five-year employment agreement with Mr. Tottenham pursuant to which he serves
as the Company's President and Chief Operating Officer at an annual salary of
$150,000. On June 1, 1999, Mr. Tottenham's salary was increased to $180,000.00
and on November 1, 1999, it was increased to $200,000. Mr. Tottenham will be
eligible for participation in the Company's 1993 Plan, 1998
-10-
Plan, the
Executive Compensation Plan, and any present or future employee benefit plans.
He also will be reimbursed for reasonable travel and out-of-pocket expenses
necessarily incurred in the performance of his duties. The Company is entitled
to terminate Mr. Tottenham's employment, and its salary obligation to him,
upon 30 days written notice in the event of (i) disability (assuming there is
disability insurance sufficient to pay Mr. Tottenham his full salary for the
remaining term of the employment agreement), (ii) conviction of a felony, or
(iii) a breach of the employment agreement. If Mr. Tottenham dies during the
term of the employment agreement, his estate is entitled to three months'
salary at his base salary rate on the date of death. If Mr. Tottenham is
terminated for any other reason, he is entitled to three months' severance pay
at his base salary rate in effect on the date of such termination.
Stanley Kohlenberg. Effective July 12, 1999, the Company and Mr. Kohlenberg
entered into a severance agreement, pursuant to which Mr. Kohlenberg resigned
as Chief Executive Officer of the Company on June 30, 1999. Mr. Kohlenberg
will received severance payments equal to six (6) months salary and will
continued to participate in the Company's benefit plans for six (6) months.
Mr. Kohlenberg will continued to serve as Chairman of the Company's Board of
Directors until his resignation in February 8, 2000..
Dominick J. Valenzano. The Company and Mr. Valenzano executed a severance
agreement on August 5, 1999 pursuant to which Mr. Valenzano resigned as Chief
Financial Officer of the Company. Mr. Valenzano will received severance
payments equal to six (6) months salary and will continued to participate in
the Company's benefit plans for six (6) months thereafter.
Executive Compensation
The Executive Compensation Plan (also known as the "Management Incentive
Plan") was adopted by the Board of Directors in December 1996. The Executive
Compensation Plan is administered by the Company's Chief Executive Officer and
Chief Financial Officer and subject to Board approval. It is designed to
assist the Board in determining the appropriate annual incentive payments to
be made to eligible officers, managers and key employees for the achievement
of specific, pre-established corporate and individual goals and discretionary
objectives. For participants who meet or exceed such targets, the incentive
award is designed to provide a sufficient level of competitive compensation in
order to reward and motivate current and future exceptional performance and to
retain such high performing officers, managers and other key employees and to
attract new "high talent" individuals. Eligible participants in the Executive
Compensation Plan include all employees who are in a position to make a clear,
definitive impact on the performance of the Company and/or to improve its
underlying infrastructure. Awards under the Executive Compensation Plan are
granted from a pool of funds set aside from incremental profits of the Company
to the extent of payment for the corporate or individual portions of any such
award does not come from any specific source. Payments under the Executive
Compensation Plan are based upon the employee's position within the
organization, weighting of the corporate, individual and discretionary
performance, the setting of objectives and the determination by the Board as
to whether the employee has met such objectives. The Company did not award
any compensation under the Executive Compensation Plan during 1999.
-11-
1993 and 1998 Incentive Stock Option Plan
The purpose of the 1993 and 1998 Plans is to provide incentive to
employees, to encourage employee proprietary interest in the Company, to
encourage employees to remain in the employ of the Company and to attract to
the Company individuals of experience and ability. The 1993 and 1998 Plans
provide for the grant of incentive stock options intended to comply with the
requirements of Section 422 of the Internal Revenue Code, as amended (the
"Code"), and non-qualified or compensatory options. The Company reserved
500,000 shares and 2,000,000 shares of Common Stock for issuance pursuant to
the exercise of options granted under the 1993 and 1998 Plans, respectively,
subject to adjustments. The 1993 and 1998 Plans provide that, in the event of
any reorganization, merger, recapitalization, stock dividend, stock split or
similar change in the corporate structure or shares of the Company,
appropriate adjustments will be made to the number and kind of shares reserved
under the 1993 and 1998 Plans and to the exercise price of outstanding
options. In the event of a dissolution or liquidation of the Company or a
merger or consolidation in which the Company is not the surviving corporation,
participants who have held options for at least one year shall have the right,
immediately prior to such dissolution, liquidation, merger or consolidation,
to exercise any such options in whole or in part.
The 1993 and 1998 Plans are administered and interpreted by a committee
of the Board of Directors (the "Option Committee") composed of non-employee
directors. Unless sooner terminated, the 1993 Plan will be in effect until
November 1, 2003 and the 1998 Plan will be in effect until April 10, 2008, ten
years from the respective dates of the adoption of the 1993 and 1998 Plans by
the Board of Directors.
Under the 1993 and 1998 Plans, the Option Committee will determine,
among other things, which employees will be granted options, the number of
shares subject to each option, the exercise price of the option, and whether
such options are to be incentive or non-qualified. The per share exercise
price of all incentive stock options is required by the Code to be at least
equal to the fair market value of a share of Common Stock on the date the
option is granted. The exercise price of non-qualified options may not be
less than the par value of the Common Stock. The Code also requires that the
aggregate fair market value of the Common Stock with respect to which the
options are exercisable for the first time by the optionee during any calendar
year cannot exceed $100,000. Moreover, any person who owns 10.0% or more of
the voting power of the Common Stock may not receive options whose exercise
price is less than 110.0% of the fair market value of a share of Common Stock
of the Company on the date of grant.
Options will become vested and exercisable in the manner specified by
the Option Committee. Each option or portion thereof will be exercisable at
any time on or after it vests and is exercisable until ten years after its
date of grant or three months after the date on which the optionee's
employment terminates, unless the termination is due to disability, death or,
in the case of non-qualified options, in which case the options are
exercisable twelve months after the termination of employment. However,
failure to exercise options within three months after the date on which the
optionee's employment terminates may result in adverse tax consequences to the
optionee. Options are non-transferable except by will or the laws of descent
and distribution.
-12-
Under current provisions of the Code, the federal income tax treatment
of incentive stock options is as follows. An optionee who meets certain
holding requirements will not recognize income at the time the option is
granted or at the time the option is exercised, and a federal income tax
deduction generally will not be available to the Company at any time as a
result of such grant or exercise.
At May 10, 2000, options to purchase 513,000 shares of Common Stock had
been granted under the 1993 Plan of which 16,000 have expired and, options to
purchase 3,000 shares of Common Stock remain available to be granted
thereunder. As of May 10, 2000, options to purchase 234,000 shares of Common
Stock had been granted under the 1998 Plan and options to purchase 1,766,000
shares of Common Stock remain available for grant.
1999 Non-Employee Director Stock Option Plan
The purpose of the 1999 Director Plan is to provide directors of the
Company, who are not employees ("Non-Employee Directors") with a financial
interest in the Company's performance. Under the Director Plan, each Non-
Employee Director of the Company is granted an option to purchase 2,000 shares
of the Company's Common Stock at fair market value on the first business day
following the end of the each fiscal quarter service is rendered as a director
of the Company. The aggregate number of shares reserved under the 1999
Director Plan is 250,000, subject to anti-dilution adjustments and other
capital changes affecting the Company's common stock, such as stock splits or
share exchanges.
The Options, which are non-qualified, are exercisable in whole or in
part at any time over the ten year period from the date of grant of each
option. All of the options vest immediately upon grant and are non-
transferable except in the event of death or disability in which case the
options may be exercised by the successor or representative of the deceased or
the disabled Non-Employee Director. Also, as long as an option is granted at
fair market value on the date of grant, neither the grant nor the exercise of
a non-qualified stock option under the Directors Plan currently requires any
charge against earnings under generally accepted accounting principles. If a
non-qualified option has an exercise price of less than fair market value, the
Company would be required to accrue a charge of compensation. In certain
circumstances, shares issued pursuant to outstanding options under the
Directors Plan might be considered outstanding for purposes of calculating
diluted earnings per share.
Under current provisions of the Internal Revenue Code of 1986, as
amended ("Code"), the difference between the fair market value on the date of
exercise and the option exercise price of a non-qualified option generally
will be treated as compensation income upon exercise, and the Company will be
entitled to a deduction in the amount of income so recognized by the optionee.
The foregoing description of tax consequences under federal law is necessarily
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the consequences
under applicable state and local income tax laws may not be the same under the
federal income tax laws.
-13-
At May 10, 2000, options to purchase 22,000 shares of Common Stock had
been granted under the 1999 Director Plan and options to purchase 228,000
shares of Common Stock remain available for grant.
CERTAIN RELATED TRANSACTIONS
Tottenham & Co. On January 1, 1997, the Company completed the acquisition of
Tottenham & Co. which was founded in 1988 by Andrew Tottenham, the Company's
President and COO and is engaged in providing consulting services to gaming
companies worldwide. The consideration paid for Tottenham & Co. by the Company
included 500,000 shares of the Company's Common Stock, and warrants to
purchase 250,000 shares at an exercise price of $.5938, the bid price of the
Company's Common Stock on the date of the acquisition as reported by the
Nasdaq SmallCap Market System. In addition, the Company issued two promissory
notes in the aggregate principal amount of $200,000 bearing interest at the
rate of 10% per annum and payable on January 1, 2002 (the "Tottenham Notes").
On December 31, 1998, the Company and Andrew Tottenham converted the Tottenham
Notes and accrued interest totaling $240,000 into 320,000 shares of the
Company's Common Stock. All of the Common Stock, as well as the Common Stock
underlying the warrants, carries certain "piggyback" registration rights.
Chrysolith Operating Agreement. The Company is a member under, and party to,
the Chrysolith Operating Agreement, which sets forth the rights and
obligations of the original members, all of whom are individuals (the
"Original Members"), and the Company. Under this agreement, Chrysolith
operated, serviced and maintained the VLTs at the Gold Coin and Toledo Palace
and the Company provided management, financial and consulting services. The
Chrysolith Operating Agreement will continue pending the decision of the U.S.
Supreme Court regarding the Company's appeal of the termination of the
operations at the Gold Coin and Toledo Palace.
Monarch Acquisition. In April 1994, the Company acquired for $49,000 a 49%
ownership interest in Monarch Casinos ("Monarch"), a Louisiana-licensed video
gaming device operator which was founded in December 1993. In June and August
1994, the Company loaned Monarch an aggregate of $55,000 for working capital
to manage the operations of the Woodlands under an agreement between Monarch
and the previous owner of the Woodlands. All of such loans were payable on
demand, bore interest at the rate of 10% and were evidenced by promissory
notes executed by Monarch. In October 1994, the Company credited Monarch
$25,000 against prior advances, among other things, in consideration for the
assignment by Monarch to the Company of an option to purchase the Woodlands.
Although it was originally intended that Monarch would own, operate and
maintain the VLTs at both the Toledo Palace and the Gold Coin, the Company
believed that Chrysolith was better suited to operate the video poker parlors
and thus entered into the Chrysolith Agreement. In March 1996, the Company
learned that as of June 30, 1995, Monarch had not renewed its operator's
license as required by the State of Louisiana, and as such, was no longer a
licensed video poker operator in the State. Pursuant to the management
agreements between Monarch and the Company, such a failure to renew or other
termination of the operator's license created a default under the agreements
and the agreements were terminated by the Company on March 14, 1996. On or
about November 6, 1997 Monarch and Michael Edwards, President of Monarch,
filed suit against the Company alleging, among other things,
-14-
breach of contract. The lawsuit was settled in May 1999 for a cash payment by
the Company of $100,000 and both parties released the other of any and all
further obligations. See Item 3 -"Legal Proceedings".
On October 29, 1997, the Company and Value Partners, executed a loan which was
amended on December 19, 1997, under which TWG had the ability to borrow up to
$2,538,000 (the "First Amended Loan Agreement"). As of December 31, 1998, the
Company had borrowed $1,538,000 under this loan, including the Bishkek Note
described below, of which $1,288,000 was repaid on March 31, 1998 from the
proceeds of the Private Placement.
On March 19, 1998, the Company and Value Partners executed a Lender's Waiver
and Option Agreement (the "Waiver") under which the Company borrowed $250,000
(the "Bishkek Note") to fund the Bishkek Casino transaction. In February 1999,
the Company repaid the principal and accrued interest on the Bishkek Note in
full, and it was cancelled.
On March 31, 1998, the Company, with the assistance of Libra, acting as
placement agent, borrowed $17.0 million from fourteen investors in the Private
Placement. The loan is represented by the Senior Notes issued pursuant to the
Indentures by and among TWG, TWGI, TFC and USTCT, as the case may be. The
Indentures were amended on October 29, 1998 in connection with the
restructuring of the Company's ownership of Resorts as a result of the change
in the Czech gaming law which restricted foreign ownership of Czech casinos.
The Amended Indentures, however, did not alter the underlying basis of the
Senior Notes. The Senior Notes require mandatory prepayments based upon excess
cash flow generated by TWGI from the operation of the Czech casinos acquired
in the Resorts acquisition and bear interest at the rate of 12% per annum. The
proceeds of the Senior Notes were used to pay the net acquisition costs of,
and improvements to, Resorts totaling $12.6 million, to repay the First
Amended Loan Agreement in the amount of $1.3 million, to cover costs and
expenses of $1.4 million relating to the Private Placement and to provide
working capital of $1.7 million. Interest payments under the terms of the
Senior Notes were paid when due on March 17, and September 17, 1999. The
March 17, 2000 interest payment has also been paid, and the Company was and is
current on its payments under the Senior Notes.
On May 19, 1998, the Company and Value Partners executed a Loan Agreement (the
"Loan Agreement") under which the Company borrowed $1,000,000 at 12% interest
per annum to fund the purchase of the stock of the Casino de Zaragoza (see -
"Plan of Operations"), which was payable in full on September 15,1998. The
interest rate automatically increased to 17% on September 15, 1998 which has
been accrued monthly by the Company since that date.
The Company was in technical default of, and has not timely paid the Value
Partners Loan which was due on September 15, 1998. On July 30, 1999, the
Company received from Value Partners a waiver of such default and a waiver of
the cross defaults on the Amended Indentures by the majority in interest of
the holders of the Senior Notes. Value Partners also granted an extension of
this loan until January 1, 2000.
On October 15, 1999, the Company borrowed $3.0 million ($2.7 million from
Value Partners) in the October 1999 Private Placement. The loan is
represented by the October 1999 Senior Notes
-15-
issued pursuant to indentures by and among the Company and an independent
indenture trustee. The October 1999 Senior Notes, which are due March 2005,
require mandatory prepayments based on excess cash flow generated from Resorts.
The October 1999 Senior Notes are collateralized by primarily all of Resort's
gaming equipment and a majority interest in the capital stock of all of the
Company's subsidiaries (except CDZ). In addition to the October 1999 Senior
Notes, each investor received a proportionate share of warrants to purchase
1,251,000 shares of the Company's common stock.
The proceeds of the October 1999 Senior Notes were used to retire a $1 million
short-term debt obligation related to the acquisition of the CDZ casino, to
make an interest payment of approximately $250,000 on said debt, and to
finance the equipping, working capital, and pre-opening costs associated with
the opening of a third casino in the Czech Republic on land that
had been previously purchased. That casino, located near Snojmo, opened on
December 22, 1999.
The Company has, from time to time, been in technical default of the Amended
Indentures and has relied upon the forbearance and waivers from a majority
interest of the holders of the Senior Notes. Value Partners represents a
majority in interest of the holders of the Senior Notes. The Company has
borrowed other amounts from Value Partners from time to time (some of which
have been in technical default for which forbearance or waivers have been
granted) and may seek to borrow additional funds or obtain equity investments
from Value Partners in the future. At December 31, 1999, Value Partners owned
59% of the Company's long-term debt and owned warrants to acquire 61.2% of the
Company's issued and outstanding shares of Common Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who own more than 10% of the Company's Common Stock to
file reports of ownership and changes in ownership with SEC and the National
Association of Securities Dealers, Inc. by certain dates. The Company
believes that for the fiscal year ended December 31, 1999, all of these filing
requirements were satisfied by its directors and executive officers, except
that Geoffrey B. Baker, Julio E. Heurtematte, Jr., Malcolm M.B. Sterrett,
Stanley Kohlenberg, Dominick J. Valenzano and Andrew Tottenham each were late
once in reporting one transaction, each of which was subsequently filed. In
making the foregoing statements, the Company has relied on representations of
its directors and executive officers and copies of the reports that they have
filed with the SEC.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Pannell Kerr Forster PC ("PKF") completed the Company's audit for the
fiscal year ended December 31, 1997. In August 1998, PFK informally indicated
that it did not wish to act as the Company's independent auditor for the year
ended December 31, 1998 and that it would decline to stand for reelection to
audit the Registrant's financial statements for the year ended December 31,
1999. On February 25, 1999, PKF tendered its formal resignation to the
Company without having performed an audit for the Company's fiscal year ended
December 31, 1998.
-16-
The Company began its search for a new independent accountant in
September 1998. The search was complicated by the Company's recently expanded
foreign operations, which made it difficult or impossible for many accountancy
firms to accept an engagement by the Company due to lack of personnel and/or
resources in each of the United States, Spain and the Czech Republic.
On February 19, 1999, the Company and Rothstein, Kass & Company, P.C.
("RKC") signed a letter of engagement whereby RKC agreed to perform an audit
of the Company, including its foreign operations, for the fiscal year ended
December 31, 1998 and to continue as the Company's independent accountant for
the fiscal year ending December 31, 1999, which was ratified by the
stockholders at the 1999 Annual Meeting on October 29, 1999.
The Board of Directors of the Company has reappointed RKC, to perform
the audit of the Company's financial statements for the year ending December
31, 2000, and further directed that the selection of accountants be submitted
for ratification by the shareholders at this Annual Meeting.
The Company has been advised by RKC that neither that firm nor any of
its associates has any relationship with the Company or its subsidiaries other
than the usual relationship that exists between independent accountants and
clients. RKC will have one or more representatives at the Annual Meeting who
will have an opportunity to make a statement, if they so desire, and who will
be available to respond to appropriate shareholder questions.
The Board of Directors recommends that you vote FOR the ratification of
the appointment of Rothstein, Kass & Company, P.C. as independent accountants
for the fiscal year ending December 31, 2000.
AMENDMENT TO THE ARTICLES OF
INCORPORATION TO CHANGE
THE NAME OF THE COMPANY
TO TRANS WORLD CORPORATION
The Company is seeking approval to amend its Articles of Incorporation
to change its name from Trans World Gaming Corp. to Trans World Corporation.
The character of the Company's business has been changing over the past two
years and is continuing to evolve. While the Company's existing name carries
with it a proud history, the Board believes it no longer accurately reflects
the totality of the Company's business in which the gaming industry was its
sole area of concentration. Consequently, the Board has determined to change
the Company's name to Trans World Corporation. To accomplish the proposed
name change, Nevada law requires an amendment to the Company's Articles. See
Appendix A hereto.
Reasons for the Adoption of the Name Change. The Company's name change to
Trans World Corporation is based on the importance of Company's name
accurately conveying the Company's image and identity as a proposed
owner/operator of both small to midsize boutique hotels as well as casinos.
The Company's planned expansion into the hotel industry is founded on
-17-
management's belief that hotels in the small to midsize boutique class are
complementary to the Company's brand of casinos, that opportunities in one of
these two industries often lead to or are tied to opportunities in the other
industry, and that a more diversified portfolio of assets and operations will
give the Company greater stability and make it more attractive to potential
investors. Furthermore, the foundation of Company's management experience is
in the hotel industry.
Procedure. Section 78.385 of the Nevada Law provides an outline of the scope
of amendments that a Nevada corporation can make to its Articles. These
include the Name Change as proposed. The procedure and requirements to effect
an amendment to the articles of incorporation of a Nevada corporation are set
forth in Section 78.385 of the Nevada Law. This Section provides that the
proposed amendment must first be adopted by the Board of Directors, must be
submitted to the shareholders for their consideration at a special or annual
meeting, and must be approved by persons owning a majority of the outstanding
voting securities. The Board of Directors adopted the proposal on April 26,
2000 and pursuant to Nevada Law are submitting it for shareholder approval at
this Annual Meeting.
Voting Required. An affirmative vote of the holders of at least a majority of
the votes presented in person or by proxy at the Annual Meeting is required to
approve the proposed amendment to Articles and thereby change the Company's
name. Proxies solicited by management will be voted for the proposal unless
instructed otherwise.
The Board of Directors unanimously recommends that you vote FOR approval of
the proposal to amend the Articles to change the Company's name to "Trans
World Corporation."
ADJOURNMENT OF ANNUAL MEETING
Each proxy solicited hereby requests authority to vote for an
adjournment of the Annual Meeting, if an adjournment is deemed to be
necessary. Each proxy solicited hereby, if properly signed and returned to
the Company and not revoked prior to its use, will be voted on any motion for
adjournment in accordance with the instructions contained therein. If no
contrary instructions are given, each proxy received will be voted in favor of
any motion to adjourn the meeting. Unless revoked prior to its use, any proxy
solicited for the Annual Meeting will continue to be valid for any adjournment
of the Annual Meeting, and will be voted in accordance with instructions
contained therein, and if no contrary instructions are given, for the proposal
in question.
Any adjournment will permit the Company to solicit additional proxies
and will permit a greater expression of the shareholders' views. Such an
adjournment would be disadvantageous to shareholders who are against any given
proposal, because an adjournment will give the Company additional time to
solicit favorable votes and thus increase the chances of passing such
proposal.
-18-
If a quorum is not present at the Annual Meeting, no proposal will be
acted upon and the Board of Directors of the Company will adjourn the Annual
Meeting to a later date in order to solicit additional proxies on each of the
proposals being submitted to Shareholders.
An adjournment for up to 60 days may require either the setting of a new
record date or the giving of additional notice of the adjourned meeting as in
the case of an original meeting. The Company has no reason to believe that an
adjournment of the Annual Meeting will be necessary at this time.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE POSSIBLE
ADJOURNMENT OF THE ANNUAL MEETING.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal which a shareholder wishes to have included in the proxy
solicitation materials to be used in connection with the next Annual Meeting
of Shareholders of the Company, must be received at the principal executive
offices of the Company, 545 Fifth Avenue, Suite 940, New York, New York 10017,
Attention: Secretary, no later than Monday, December 11, 2000. If such
proposal is in compliance with all of the requirements of Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), it will be included in the Company's Proxy Statement and set
forth on the form of proxy issued for the next Annual Meeting of Shareholders.
It is suggested that any such proposals be sent by certified mail, return
receipt requested.
OTHER BUSINESS
The Company knows of no business that will be presented for
consideration at the Annual Meeting other than that described in this Proxy
Statement. As to other business, if any, that may properly come before the
Annual Meeting, it is intended that proxies solicited by the Board will be
voted in accordance with the judgment of the person or persons voting the
proxies.
ANNUAL REPORT AND FINANCIAL STATEMENTS
Shareholders of the Company as of the Voting Record Date for the Annual
Meeting are being forwarded a copy of the Company's Annual Report to
Shareholders for the twelve months ended December 31, 1999 (the "Annual
Report"). Included in the Annual Report are the Annual Report on Form 10-
KSB/A (exclusive of exhibits) as filed with the Securities and Exchange
Commission, and the consolidated statements of financial condition of the
Company as of December 31, 1999 and 1998 and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1999, prepared in
accordance with generally accepted accounting principles, and the related
reports of the Company's current, former and foreign independent public
accountants. The Annual Report is not a part of this Proxy Statement.
-19-
BY ORDER OF THE BOARD OF DIRECTORS
Rami S. Ramadan
Chief Executive Officer
May 19, 2000
New York, New York
-20-
APPENDIX A
CERTIFICATE OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF TRANS WORLD GAMING CORP.
Pursuant to the provisions of the Nevada Revised Statutes, Title 7,
Chapter 78, the undersigned officers do hereby certify:
FIRST: The name of the Corporation is Trans World Gaming Corp. (the
"Corporation"). The Articles of Incorporation of the Corporation were filed
with the office of the Secretary of State of the State of Nevada on October
20, 1993, and amended December 8, 1994.
SECOND: The Board of Directors of the Corporation duly executed the
following resolutions on April 24, 2000:
RESOLVED, that Article FIRST of the Articles of Incorporation of the
Corporation be amended in its entirety to read as follows:
FIRST: The name of the Corporation is Trans World Corporation.
FURTHER RESOLVED, that the foregoing amendment to Article FIRST of the
Corporation's Articles of Incorporation be submitted to stockholders for
approval; and be it
FURTHER RESOLVED, that in the event that the holders of at least a
majority of the outstanding Common Stock of this Corporation shall adopt the
aforesaid proposed amendment in the manner prescribed by the Nevada Revised
Statutes, Title 7, Chapter 78, the Chief Executive Officer of the Corporation
and the Secretary or an Assistant Secretary of the Corporation are hereby
authorized in the name and on behalf of the Corporation to execute a
certificate setting forth said amendment and to cause the same to be filed
pursuant to the provisions of Nevada Revised Statutes, Title 7, Chapter 78.
THIRD: The total number of outstanding shares of Common Stock of the
Corporation is 5,365,449, and the total number of votes entitled to be cast by
the holders of all of said outstanding shares is 5,365,449.
FOURTH: Holders of 2,682,725 shares of Common Stock, representing at
least a majority of the outstanding shares of Common Stock of the aforesaid
total number of outstanding
A-1
shares have adopted the amendments herein at a meeting of Stockholders held
June 19, 2000, in accordance with the provisions of Nevada Revised Statutes,
Title 7, Section 78.320.
Signed on June___, 2000
TRANS WORLD CORPORATION
By: --------------------------------
Rami S. Ramadan
Chief Executive Officer
Chief Financial Officer
--------------------------------
Maureen C. Weppler
Corporate Secretary
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On June___, 2000, personally appeared before me, a Notary Public, for
the State and County aforesaid, Rami S. Ramadan, as Chief Executive Officer of
Trans World Corporation, who acknowledges that he executed the above
instrument.
_____________________________
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On June____, 2000, personally appeared before me, a Notary Public, for
the State and County aforesaid, Maureen Weppler, Corporate Secretary of Trans
World Corporation, who acknowledge that she executed the above instrument.
______________________________
Notary Public
[Notarial Seal]
A-2
REVOCABLE PROXY
TRANS WORLD GAMING CORP.
ANNUAL MEETING OF STOCKHOLDERS
June 19, 2000
The undersigned, being a stockholder of Trans World Gaming Corp.
("Company") as of May 10, 2000, hereby authorizes Rami S. Ramadan or any
successor thereto as proxy with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
the Marriott Hotel located at V Celnici 8, Prague 1, Czech Republic, on
Monday, June 19, 2000 at 2:00 p.m., Prague Time, and at any adjournment of
said meeting, and thereat to act with respect to all votes that the
undersigned would be entitled to cast, if then personally present, as follows:
1. ELECTION OF DIRECTORS
Nominees for a one-year term: Rami S. Ramadan, Julio E. Heurtematte,
Jr., Malcolm M. B. Sterrett and Geoffrey
B. Baker
/ / FOR / / WITHOUT AUTHORITY
/ / FOR ALL EXCEPT
-----------------------------------------------
NOTE: To withhold authority to vote for any
individual nominee, mark "For All Except" and
write that nominee's name in the space
provided above. Unless authority to vote for
all of the foregoing nominees is withheld,
this Proxy will be deemed to confer authority
to vote for each nominee whose name is not
written below.
2. PROPOSAL to ratify the appointment of the Board of Directors of
Rothstein, Kass & Company as the Company's independent auditors for the
fiscal year ending December 31, 2000.
/ / FOR / / AGAINST
/ / ABSTAIN
3. PROPOSAL to amend the Articles of Incorporation by changing the name to
Trans World Corporation.
/ / FOR / / AGAINST
/ / ABSTAIN
4. PROPOSAL, if necessary, to adjourn the Annual Meeting to solicit
additional proxies.
/ / FOR / / AGAINST
/ / ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 19,
2000 AND AT ANY ADJOURNMENT THEREOF.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF
RETURNED, BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR
RATIFICATION OF THE COMPANY'S INDEPENDENT AUDITORS, FOR AMENDMENT OF THE
COMPANY'S ARTICLES OF INCORPORATION, FOR ADJOURNMENT OF THE ANNUAL MEETING, IF
NECESSARY, AND OTHERWISE AT THE DISCRETION OF THE PROXIES. YOU MAY REVOKE
THIS PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED AT THE ANNUAL MEETING.
Please be sure to sign and date
this Proxy in the space below.
Date: ________________, 2000
----------------------------------
(signature)
PLEASE SIGN ABOVE EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE FULL TITLE. WHEN SHARES ARE
HELD JOINTLY, ONLY ONE HOLDER NEED SIGN.
PLEASE ACT PROMPTLY. SIGN, DATE AND MAIL YOUR PROXY CARD TODAY.
