This information is incorporated by reference from Form 10-KSB, filed
with the SEC for the year ended December 31, 2001.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
There were no grants of stock options during 2001 to purchase shares of
common stock of the Company to any of the Company's executive officers.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth the aggregate options held by certain
executive officers of the Company. No options were exercised by the specified
officers in 2001.
----------------------------------------------------------------------------------------------------------------------
SHARES NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED ON VALUE OPTIONS AT DECEMBER 31, 2001 IN-THE-MONEY OPTIONS AT
NAME EXERCISE REALIZED EXERCISABLE/ UNEXERCISABLE DECEMBER 31, 2001 EXERCISABLE/
UNEXERCISABLE
======================================================================================================================
Erwin Haitzmann, - - 1,300,000 / -0- (a) $1,224,500 / -0- (c)
Chairman of the
Board and Chief
Executive Officer
----------------------------------------------------------------------------------------------------------------------
Peter Hoetzinger, - - 793,000 / -0- (b) $774,320 / -0- (c)
Vice Chairman of
the Board and
President
----------------------------------------------------------------------------------------------------------------------
James D. Forbes, 618,000 / -0- $577,320 / -0- (c)
Director
- -
----------------------------------------------------------------------------------------------------------------------
Larry Hannappel, - - 37,500 / -0- $31,550 / -0- (c)
Chief Accounting
Officer and
Secretary
----------------------------------------------------------------------------------------------------------------------
8
(a) Includes 950,000 options held by The Haitzmann Family Foundation. See
Security Ownership of Certain Beneficial Owners and Management.
(b) Includes 543,000 options held by The Hoetzinger Family Foundation. See
Security Ownership of Certain Beneficial Owners and Management.
(c) Based on the closing bid price ($2.24) of the Company's Common Stock on the
NASDAQ Stock Market on December 31, 2001.
Directors who are employees receive no compensation for their services
as directors. With the exception of Messrs. Eichberg and Schellmann and Dr.
Corbaci, all of the Company's directors are employees.
Messrs. Eichberg and Schellmann and Dr. Corbaci, the outside directors
of the Company, are being compensated for their services as follows:
(a) Stock options - In 1998, upon joining the Board of Directors, both
Eichberg and Schellmann received options to purchase 10,000 shares of the
Company's common stock. The options have a five-year term and are exercisable at
$0.938 per share. In 1999, Both Messrs. Eichberg and Schellmann received options
to purchase an additional 10,000 shares of the Company's stock, which have a
four-year term and are exercisable at $.75 per share. In February, 2000, both
Messrs. Eichberg and Schellmann received options to purchase an additional
20,000 shares of the Company's stock; these options have a five-year term and
are exercisable at $1.00 per share. In April, 2000, Dr. Corbaci received options
to purchase 20,000 shares of the Company's stock, which have a five-year term
and are exercisable at $1.75 per share. In February 2002, both Messrs. Eichberg
and Schellmann and Dr. Corbaci received options to purchase an additional 10,000
shares of the Company's stock, which have a 5 year term and are exercisable at
$2.12 per share.
(b) Compensation, Reimbursement - The outside directors receive $1,000
per Board or committee meeting attended and the Company will pay for reasonable
expenses incurred in conjunction with those meetings. In addition, the outside
directors receive $1,000 per gaming application filed with gaming regulators to
compensate them for their time spent.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than 10% of its outstanding common stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
Officers and greater
9
than 10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file.
To the Company's knowledge (based solely on review of the copies of
such reports furnished to the Company and representations that no other reports
were required, during the fiscal year ended December 31, 2001), all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% stockholders were complied with in a timely manner.
STOCK PRICE PERFORMANCE
This information is incorporated by reference from Part II, Item 5, in
the Company's Annual Report on Form 10KSB for the year ended December 31, 2001.
TRANSACTIONS WITH MANAGEMENT, DIRECTORS AND STOCKHOLDERS
At December 31, 2001, the Company had an unsecured note payable that
matures on April 1, 2004, in the principal amount of $380,000 to Thomas Graf, a
stockholder of the Company.
On March 1, 2001, as amended on October 11, 2001, the Company entered
into separate management agreements with Focus Casino Consulting AG, a Swiss
corporation, to secure the services of Mr. Hoetzinger, and with Flyfish Casino
Consulting AG, a Swiss corporation, to secure the services of Mr. Haitzmann, to
provide executive casino management services to the Company through December 31,
2005, and for five (5) year renewable periods thereafter, unless sooner
terminated by them or by the Company. Each of these management agreements
provides for an annual base management fee of $100,000, plus such annual
increases and bonuses, and such other incentives, benefits and compensation as
may be awarded to them, respectively, by the Compensation Committee of the Board
of Directors of the Company. Payments to each of these management companies are
included in the Executive Compensation Table, Item 10 of the Company's Annual
Report on Form 10KSB for the year ended December 31, 2001. Each of the
management fees will be reviewed annually by the Compensation Committee. The
management agreements further provide for termination payments to be made for a
period of six (6) months if the management agreement is terminated by the
Company without cause, or for a payment of three times the management company's
annual fee and average bonus if the termination occurs (a) after a Change of
Control of the Company, or (b) by the management company, for cause.
Both Mr. Haitzmann and Mr. Hoetzinger are Austrian citizens, and have
established Austrian trusts (The Haitzmann Family Foundation and The Hoetzinger
Family Foundation, respectively) to hold, on behalf of their respective
families, a certain portion of their interests in the Company. (See Security
Ownership of Certain Beneficial Owners and Management)
There have been no transactions with management, except as otherwise
disclosed herein, since the date of the Company's last annual meeting on June
12, 2001, and the transactions disclosed in the Proxy Statement for that
meeting.
11
PROPOSAL 1
ELECTION OF DIRECTORS
The Board is divided into three classes of directors as nearly equal in
number as possible. Presently, the Board consists of six directors comprising
the following: (i) two Class I directors, Mr. Eichberg and Dr. Dinah Corbaci,
whose terms will expire at the 2004 Annual Meeting; (ii) two Class II directors,
Messrs. Hoetzinger and Forbes, who are standing for reelection at this meeting;
and (iii) two Class III directors, Messrs. Haitzmann and Schellmann, whose terms
will expire at the 2003 Annual Meeting. Each director who is elected at an
Annual Meeting will be elected for a three-year term expiring at the third
Annual Meeting of Stockholders after such director's election. Accordingly,
under most circumstances, directors of one Class only are elected at each year's
Annual Meeting of Stockholders. If elected, all nominees are expected to serve
until the expiration of their respective terms and until their successors are
duly elected and qualified.
At the 2002 Annual Meeting, two Class II directors will be elected. The
proxies named on the enclosed proxy intend to vote for the election of the
nominees for Class II directors, Peter Hoetzinger and James D. Forbes. Proxies
cannot be voted for a greater number of directors than the number nominated.
Peter Hoetzinger, a nominee for a Class II director, is presently a
member of the Board of Directors, having served continuously as a director since
March 1994. Mr. Hoetzinger is also presently serving as Vice Chairman of the
Board and President of the Company. He has indicated a willingness to serve;
however, in the event he should become unable to serve as a director, the proxy
will be voted in accordance with the best judgment of the persons acting under
the proxy.
James D. Forbes, a nominee for a Class II director, is presently a
member of the Board of Directors, having served continuously as a director since
March 1994. He has indicated a willingness to serve; however, in the event he
should become unable to serve as a director, the proxy will be voted in
accordance with the best judgment of the persons acting under the proxy.
The information concerning Mr. Hoetzinger and Mr. Forbes, the nominees
for the Class II directors, is set forth above under "Information Concerning
Directors and Executive Officers."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE NOMINEES.
12
INDEPENDENT ACCOUNTANTS
Grant Thornton LLP ("Grant Thornton") was the Company's independent
public accounting firm for the fiscal year ending December 31, 2001. The Audit
Committee has recommended, and the Board of Directors has selected Grant
Thornton to again be the Company's independent accountants for the fiscal year
ending December 31, 2002. A representative of Grant Thornton is expected to be
present at the Annual Meeting via telephone and/or web cast, to make a statement
and/or to respond to appropriate questions.
REPORT OF THE AUDIT COMMITTEE
Notwithstanding anything to the contrary set forth in any of the
Company's filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934, the following report of the Audit Committee shall not be
incorporated by reference into any such filings and shall not otherwise be
deemed filed under such acts.
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee assists the Board of Directors with fulfilling
its oversight responsibility regarding the quality and integrity of the
accounting, auditing and financial reporting practices of the Company.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the year ended December 31, 2001, with the
Company's management. The Committee discussed with Grant Thornton LLP, the
Company's independent auditors, the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees), as
amended by Statement on Auditing Standards No. 90 (Audit Committee
Communications).
The Committee has received the written disclosures and the letter from
Grant Thornton LLP required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and has discussed with Grant
Thornton, LLP, its independence.
Based upon the review and discussions noted above, the Audit Committee
recommended to the Board of Directors that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 2001, which was filed with the Securities and Exchange
Commission on March 28, 2002.
The Board of Directors and the Audit Committee believe that the Audit
Committee's current member composition (three independent directors) satisfies
the
13
rule of the National Association of Securities Dealers, Inc. ("NASD") that
governs audit committee composition, Rule 4310(c)(26)(B)(i), including the
requirement that audit committee members all be "independent directors" as that
terms is defined by NASD Rule 4200(a)(15).
Audit Committee:
Robert S. Eichberg, Chairman
Gottfried Schellmann
Dinah Corbaci
The following table sets forth the aggregate fees billed to the Company
for the year ended December 31, 2001, by Grant Thornton and its foreign
affiliate Grant Thornton Kessel Feinstein:
Audit fees.................................................. $ 85,365
Financial information systems design
and implementation fees................................... -
All other fees.............................................. 37,322
---------
$ 122,687
=========
The amounts shown above include out-of-pocket expenses incurred by
Grant Thornton in connection with the provision of such services in the amount
of $1,211. Audit fees also include fees relating to quarterly reviews of
unaudited financial statements. Audit fees of $ 49,838 had been billed through
December 31, 2001, and the remaining $72,849 was billed subsequent to December
31, 2001. The amount shown for all other fees also includes fees relating to tax
returns and benefit plan audits. The audit committee of the board of directors
concluded Grant Thornton's provision of the services generating all other fees
is compatible with maintaining Grant Thornton's independence.
14
PROXY PROXY
CENTURY CASINOS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Century Casinos, Inc. acknowledges receipt of the
Notice of Annual Meeting of Stockholders, to be held on Friday, July 5, 2002, at
the Administrative Offices of the Company, 157 East Warren Ave., Cripple Creek,
CO USA at 10:00 AM Mountain Daylight Time, (18:00 Central European Time), and
hereby appoints Erwin Haitzmann or Peter Hoetzinger, or either of them, each
with the power of substitution, as attorneys and proxies to vote all the shares
of the undersigned at said Annual Meeting and at all adjournments thereof,
hereby ratifying and confirming all that said attorneys and proxies may do or
cause to be done by virtue hereof. The above-named attorneys and proxies are
instructed to vote all of the undersigned's shares as follows:
(1) To elect two Class II directors to the Board of Directors:
PETER HOETZINGER [ ] FOR [ ] WITHHOLD
JAMES D. FORBES [ ] FOR [ ] WITHHOLD
(2) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on reverse side)
Side Two
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE NOMINEES IN PROPOSAL I.
Dated this ______day of ______________, 2002
Signature___________________________________
Signature___________________________________
Please sign your name exactly as it appears
on your stock certificate. If shares are
held jointly, each holder should sign.
Executors, trustees, and other fiduciaries
should so indicate when signing.
[ ] I plan to attend the meeting.
Note: Securities dealers please state the
number of Shares voted by this proxy
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