UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
___X___ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998.
_______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
____________ TO ___________ .
Commission file number 0-22290
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CENTURY CASINOS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 84-1271317
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(State of incorporation) (IRS Employer ID No.)
200-220 E. Bennett Ave., Cripple Creek, Colorado 80813
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(Address of principal executive offices)
(719) 689-9100
--------------
(Phone Number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes __X__ No _____
Number of shares of common stock, $.01 par value, outstanding
as of July 31, 1998:
15,316,385
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<PAGE>
CENTURY CASINOS, INC.
FORM 10-QSB
INDEX
Page Number
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet as of June 30, 1998 3
Consolidated Statements of Operations for the Three 4
Months Ended June 30, 1998 and 1997
Consolidated Statements of Operations for the Six 5
Months Ended June 30, 1998 and 1997
Consolidated Condensed Statements of Cash Flows for 6
the Six Months Ended June 30, 1998 and 1997
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis 11
PART II OTHER INFORMATION 15
SIGNATURES 16
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<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Unaudited)
June 30, 1998
ASSETS -------------
Current Assets:
Cash and cash equivalents $ 2,713,648
Short-term investments 503,895
Prepaid expenses and other 653,424
-------------
Total current assets 3,870,967
Property and Equipment, net 18,493,487
Goodwill, net 11,927,882
Other Assets 1,247,613
-------------
Total $ 35,539,949
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 904,571
Accounts payable and accrued expenses 2,138,751
-------------
Total current liabilities 3,043,322
Long-Term Debt, less current portion 13,289,896
Shareholders' Equity:
Preferred stock; $.01 par value;
20,000,000 shares authorized; no shares
issued or outstanding
Common stock; $.01 par value; 50,000,000
shares authorized; 15,861,885 shares
issued; 15,316,385 shares outstanding 158,619
Additional paid-in capital 23,302,873
Other comprehensive income - foreign
currency translation (38,665)
Accumulated deficit (3,605,354)
-------------
19,817,473
Treasury stock - 545,500 shares, at cost (610,742)
-------------
Total shareholders' equity 19,206,731
-------------
Total $ 35,539,949
=============
See notes to consolidated financial statements.
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<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
1998 1997
-----------------------------------
Operating Revenue:
<S> <C> <C>
Casino $ 4,774,000 $ 4,919,156
Food and beverage 220,483 234,474
Hotel 12,808 11,263
Other 18,747 57,372
------------- -------------
5,026,038 5,222,265
Less promotional allowances (174,862) (196,870)
------------- -------------
Net operating revenue 4,851,176 5,025,395
------------- -------------
Operating Costs and Expenses:
Casino 1,858,926 2,752,340
Food and beverage 81,151 109,152
Hotel 6,585 3,512
General and administrative 1,336,405 1,284,358
Depreciation and amortization 750,906 722,638
------------- -------------
Total operating costs and expenses 4,033,973 4,872,000
------------- -------------
Income from Operations 817,203 153,395
Other expense, net (232,116) (342,019)
------------- -------------
Income (Loss) before Income Taxes and Extraordinary Item 585,087 (188,624)
Provision for income taxes 304,000 20,000
------------- -------------
Income (Loss) before Extraordinary Item 281,087 (208,624)
Extraordinary item - debt prepayment premium, net of
income tax benefit of $40,000 (171,860)
------------- -------------
Net Income (Loss) $ 281,087 $ (380,484)
============= =============
Earnings (Loss) Per Share, Basic and Diluted:
Before extraordinary item $ 0.02 $ (0.01)
Extraordinary item (0.01)
------------- -------------
Net earnings (loss) $ 0.02 $ (0.02)
============= =============
Comprehensive Income (Loss):
Net income (loss), as reported above $ 281,087 $ (380,484)
Foreign currency translation adjustments 2,179 (3,709)
------------- -------------
Comprehensive income (loss) $ 283,266 $ (384,193)
============= =============
</TABLE>
See notes to consolidated financial statements.
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CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
-----------------------------------
1998 1997
-----------------------------------
Operating Revenue:
<S> <C> <C>
Casino $ 9,053,897 $ 9,277,773
Food and beverage 396,961 443,744
Hotel 24,685 21,371
Other 44,177 109,385
------------- -------------
9,519,720 9,852,273
Less promotional allowances (323,461) (373,694)
------------- -------------
Net operating revenue 9,196,259 9,478,579
------------- -------------
Operating Costs and Expenses:
Casino 3,587,299 5,287,547
Food and beverage 154,534 200,771
Hotel 14,013 6,735
General and administrative 2,672,129 2,594,479
Depreciation and amortization 1,517,245 1,408,139
------------- -------------
Total operating costs and expenses 7,945,220 9,497,671
------------- -------------
Income (Loss) from Operations 1,251,039 (19,092)
Other expense, net (139,628) (515,493)
------------- -------------
Income (Loss) before Income Taxes and Extraordinary Item 1,111,411 (534,585)
Income tax benefit (293,000) (102,000)
------------- -------------
Income (Loss) before Extraordinary Item 1,404,411 (432,585)
Extraordinary item - debt prepayment premium, net of
income tax benefit of $40,000 (171,860)
------------- -------------
Net Income (Loss) $ 1,404,411 $ (604,445)
============= =============
Earnings (Loss) Per Share, Basic and Diluted:
Before extraordinary item $ 0.09 $ (0.03)
Extraordinary item (0.01)
------------- -------------
Net earnings (loss) $ 0.09 $ (0.04)
============= =============
Comprehensive Income (Loss):
Net income (loss), as reported above $ 1,404,411 $ (604,445)
Foreign currency translation adjustments (10,888) (8,530)
------------- -------------
Comprehensive income (loss) $ 1,393,523 $ (612,975)
============= =============
</TABLE>
See notes to consolidated financial statements.
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CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
-----------------------------------
1998 1997
-----------------------------------
<S> <C> <C>
Cash provided by operations $ 2,003,573 $ 1,144,767
------------- -------------
Cash used in investing activities (5,375,250) (3,563,756)
------------- -------------
Cash used in financing activities 1,857,347 22,536
------------- -------------
Decrease in cash and cash equivalents (1,514,330) (2,396,453)
Cash and cash equivalents at beginning of period 4,227,978 4,556,540
------------- -------------
Cash and cash equivalents at end of period $ 2,713,648 $ 2,160,087
============= =============
</TABLE>
Supplemental Disclosure of Noncash Investing and Financing Activities:
In the six months ended June 30, 1997, the Company acquired gaming equipment
in the amount of $62,512 subject to long-term vendor financing.
Supplemental Disclosure of Cash Flow Information:
Interest paid by the Company was $474,411 and $317,007 for the six months
ended June 30, 1998 and 1997.
Income taxes paid by the Company were $324,489 and $14,080 for the six months
ended June 30, 1998 and 1997.
See notes to consolidated financial statements.
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<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Century Casinos, Inc. and subsidiaries (the "Company") own and operate a
limited-stakes gaming casino in Cripple Creek, Colorado, and are pursuing a
number of additional gaming opportunities internationally and in the United
States. Prior to July 1, 1996, the Company's operations in Cripple Creek,
Colorado, consisted of Legends Casino ("Legends"), which the Company
acquired on March 31, 1994, through a merger with Alpine Gaming, Inc.
("Alpine"). On July 1, 1996, the Company acquired the net assets of Gold
Creek Associates, L.P. ("Gold Creek"), the owner of Womack's Saloon &
Gaming Parlor ("Womacks"), which is immediately adjacent to Legends.
Following the Company's acquisition of Womacks, interior renovations were
undertaken on both properties to facilitate the operation and marketing of
the combined properties as one casino under the name Womacks/Legends
Casino.
The accompanying consolidated financial statements and related notes have
been prepared in accordance with generally accepted accounting principles
for interim financial reporting and the instructions to Form 10-QSB and
Item 310(b) of Regulation S-B. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. In the opinion of management, all adjustments
(consisting of only normal recurring accruals) considered necessary for
fair presentation of financial position, results of operations and cash
flows have been included. These consolidated financial statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the Year Ended
December 31, 1997.
2. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and display of comprehensive income and
its components. It requires that all changes in equity during a period,
except those resulting from investment by owners and distributions to
owners, be reported as a component of comprehensive income and that
comprehensive income be displayed in a financial statement with the same
prominence as other financial statements that constitute a full set of
financial statements.
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<PAGE>
3. INCOME TAXES
The income tax provision for the three-month periods ended June 30, 1998
and 1997, were based on estimated full-year income for financial reporting
purposes adjusted for permanent differences, which comprise primarily
nondeductible goodwill amortization resulting from the Alpine acquisition
and utilization of available net operating loss carryforwards ("NOLs"). The
income tax benefit of $293,000 for the six months ended June 30, 1998,
consists of (a) a nonrecurring benefit of $815,000 resulting from the
reversal of the valuation allowance previously provided against the
Company's net deferred tax assets; and (b) a provision of $522,000, based
upon estimated full-year income for financial reporting purposes adjusted
for nondeductible goodwill amortization, and utilization of available NOLs
and alternative minimum tax credit carryforwards. The income tax benefit of
$102,000 (exclusive of a $40,000 benefit associated with an extraordinary
charge) for the six months ended June 30, 1997, was based upon estimated
full-year income for financial reporting purposes adjusted for
nondeductible goodwill amortization and utilization of available NOLs.
4. EARNINGS (LOSS) PER SHARE
Basic and diluted earnings (loss) per share for the three months ended June
30, 1998 and 1997 were computed as follows:
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
1998 1997
-----------------------------------
Basic Earnings (Loss) Per Share:
<S> <C> <C>
Net income (loss) $ 281,087 $ (380,484)
============= =============
Weighted average common shares 15,343,583 15,861,885
============= =============
Basic earnings (loss) per share $ 0.02 $ (0.02)
============= =============
Diluted Earnings (Loss) Per Share
Net income (loss), as reported $ 281,087 $ (380,484)
Interest expense, net of income taxes,
on convertible debenture 8,412
------------- -------------
Net income (loss) available to common shareholders $ 289,499 $ (380,484)
============= =============
Weighted average common shares 15,343,583 15,861,885
Effect of dilutive securities:
Convertible debenture 271,739
Stock options and warrants 80,583
------------- -------------
Dilutive potential common shares 15,695,905 15,861,885
============= =============
Diluted earnings (loss) per share $ 0.02 $ (0.02)
============= =============
Excluded from computation of diluted earnings
(loss) per share due to antidilutive effect:
Options and warrants to purchase common shares 5,607,281 5,985,009
Weighted average exercise price $ 2.03 $ 2.01
</TABLE>
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<PAGE>
Basic and diluted earnings (loss) per share for the six months ended
June 30, 1998 and 1997 were computed as follows:
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
-----------------------------------
1998 1997
-----------------------------------
Basic Earnings (Loss) Per Share:
<S> <C> <C>
Net income (loss) $ 1,404,411 $ (604,445)
============= =============
Weighted average common shares 15,566,798 15,861,885
============= =============
Basic earnings (loss) per share $ 0.09 $ (0.04)
============= =============
Diluted Earnings (Loss) Per Share
Net income (loss), as reported $ 1,404,411 $ (604,445)
Interest expense, net of income taxes,
on convertible debenture 16,824
------------- -------------
Net income (loss) available to common shareholders $ 1,421,235 $ (604,445)
============= =============
Weighted average common shares 15,566,798 15,861,885
Effect of dilutive securities:
Convertible debenture 271,739
Stock options and warrants 75,526
------------- -------------
Dilutive potential common shares 15,914,063 15,861,885
============= =============
Diluted earnings (loss) per share $ 0.09 $ (0.04)
============= =============
Excluded from computation of diluted earnings
(loss) per share due to antidilutive effect:
Options and warrants to purchase common shares 5,607,281 5,985,009
Weighted average exercise price $ 2.03 $ 2.01
</TABLE>
Contingent shares have been excluded from the computation of diluted earnings
per share for the three months and six months ended June 30, 1997, as their
effects would be antidilutive.
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<PAGE>
5. CRIPPLE CREEK PROPERTY ACQUISITION
On June 3, 1998, the Company acquired 22,000 square feet of land, zoned for
gaming, adjacent to Womacks/Legends Casino. A partially-completed building
structure that occupied a portion of the land was subsequently razed, and
the entire property has been improved to provide the first paved customer
parking spaces in the Cripple Creek market. The purchase price of $3.6
million was financed through the Company's $15 million revolving credit
facility with Wells Fargo Bank.
6. SHARE REPURCHASES
In February 1998 the Company's Board of Directors approved a discretionary
program to repurchase up to $1 million of the Company's outstanding common
stock. The Board believes that the Company's stock is undervalued in the
trading market in relation to both its present operations and its future
prospects. Through June 30, 1998, the Company had repurchased 545,500
shares at an average cost per share of $1.12.
7. AGREEMENT WITH FORMER PRINCIPALS OF GOLD CREEK
In connection with the acquisition of Womacks from Gold Creek on July 1,
1996, the purchase agreement provided that on July 1, 1998, the Company
would issue 1,060,000 shares of its common stock, valued for accounting
purposes at $1.8 million at July 1, 1996, to two principals of Gold Creek.
The number of shares to be issued was subject to upward adjustment,
determined by a formula, to the extent that the trading price of the
Company's stock was less than $1.58 at the time of issuance, and subject to
downward adjustment to the extent that the trading price exceeded $4.00.
During the second quarter of 1998, the Company reached agreement with the
two principals to pay them a total of $1,629,000, through a combination of
cash and unsecured notes, in lieu of issuing common stock. Cash payments of
$534,000 were made in the second quarter, with the remaining $1,095,000
evidenced by three-year, unsecured promissory notes bearing interest at
8.75%. The aggregate amount of cash and promissory notes was recorded as a
charge to additional paid-in capital.
8. SETTLEMENT OF NOTE RECEIVABLE
In March 1998 the Company negotiated an early settlement of its note
receivable from SSK Game Enterprises, Inc. ("SSK"), with respect to the
Company's casino management agreement with the Soboba Band of Mission
Indians in California, which agreement was terminated in August 1995. The
Company received cash payments, included in "other income, net," totaling
$550,000 in the first quarter of 1998. Aggregate payments received pursuant
to the note from August 1995 through date of settlement were $2,475,000, of
which $1,843,000 was applied to recovery of capitalized costs and $632,000
was recognized in income. No further payments will be received under the
note.
9. IMPAIRMENT OF EQUITY INVESTMENT
On April 21, 1998, the Gauteng Gambling and Betting Board announced the
award of the remaining two licenses for the province of Gauteng, South
Africa. Silverstar Development Ltd. ("Silverstar"), a consortium which was
one of the license applicants and in which the Company participates, was
not awarded a license. Effective March 31, 1998, the Company recorded an
impairment allowance against its entire equity investment in Silverstar in
the amount of $196,022.
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<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Forward-Looking Statements, Business Environment and Risk Factors
Information contained in the following discussion of results of operations and
financial condition of the Company contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, which can
be identified by the use of words such as "may," "will," "expect," "anticipate,"
"estimate," or "continue," or variations thereon or comparable terminology. In
addition, all statements other than statements of historical facts that address
activities, events or developments that the Company expects, believes or
anticipates, will or may occur in the future, and other such matters, are
forward-looking statements.
The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes included elsewhere herein.
The Company's future operating results may be affected by various trends and
factors which are beyond the Company's control. These include, among other
factors, the competitive environment in which the Company operates, the
Company's present dependence upon the Cripple Creek, Colorado gaming market,
changes in the rates of gaming-specific taxes, shifting public attitudes toward
the socioeconomic costs and benefits of gaming, actions of regulatory bodies,
dependence upon key personnel, the speculative nature of gaming projects the
Company may pursue, risks associated with expansion, and other uncertain
business conditions that may affect the Company's business.
The Company cautions the reader that a number of important factors discussed
herein, and in other reports filed with the Securities and Exchange Commission,
could affect the Company's actual results and cause actual results to differ
materially from those discussed in forward-looking statements.
Results of Operations
Three Months Ended June 30, 1998 vs. 1997
Net operating revenue for the second quarter of 1998 was $4,851,176 compared
with $5,025,395 for the same period in 1997, a decrease of $174,219, or 3.5%.
The decrease is primarily attributable to the expiration of the Company's two
cruise ship concession contracts in May 1997 and January 1998. Casino revenue
from Womacks/Legends Casino decreased 1.1% to $4,774,000 from $4,829,578 a year
earlier. The slight revenue decrease was in line with the decrease in casino
revenue experienced by the Cripple Creek market as a whole, as Womacks/Legends
Casino's market share held steady at 17.2% year over year. This market share was
maintained despite the discontinuation of certain marketing programs, which
translated to a substantial margin improvement. Casino gross margin for
Womacks/Legends Casino improved to 61.1% from 44.0% in the year- earlier period.
Contributing most significantly to the margin improvement was the elimination of
costs of the casino's busing and logojet marketing programs. Also contributing
to the improved margin were lower payroll costs and a lower effective tax rate
on gaming revenue. The lower effective gaming tax rate is due to a change in the
taxing authority's fiscal year end to June 30, resulting in a nine-month fiscal
year and a lower revenue base for taxing purposes. The change will not have an
effect on the effective rate for future reporting periods.
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<PAGE>
Food and beverage revenue decreased 6.0% to $220,483 versus the second quarter
of 1997. The cost of food and beverage promotional allowances, which is included
in casino costs, decreased to $247,460 in the second quarter of 1998 as compared
with $260,506 in the prior year. The decrease in other revenue resulted
principally from a decline in concession fees from the cruise ships coincident
with the expiration of those agreements.
General and administrative expense as a percentage of net operating revenue was
27.5% for the second quarter of 1998 as compared with 25.6% for 1997. The
increase was due primarily to a higher headcount in the administrative
departments. The cost of this headcount increase, however, was more than offset
by lower payroll costs of casino operations.
Depreciation expense increased to $415,530 from $387,262, while amortization of
goodwill remained unchanged at $335,376 for both periods. The increase in
depreciation expense is primarily attributable to ongoing property improvements
at Womacks/Legends Casino.
Other expense, net, for the second quarter of 1998 comprised $233,715 of
interest expense, $28,874 of interest income, a loss of $2,594 from the disposal
of fixed assets, and amortization of deferred costs of $24,681 related to the
Wells Fargo refinancing. Other expense, net, for the prior year period consisted
of $315,861 of interest expense, $40,956 of interest income, a loss of $45,373
from the disposal of fixed assets, and amortization of deferred costs of
$21,741.
The income tax provision for both periods is based upon estimated full-year
income for financial reporting purposes adjusted for permanent differences and
utilization of available net operating loss carryforwards and alternative
minimum tax credit carryforwards. The income tax provision of $20,000 for the
1997 period excludes a benefit of $40,000 associated with an extraordinary
charge that is reported as a separate component of operations.
Six Months Ended June 30, 1998 vs. 1997
Net operating revenue decreased by $282,320 to $9,196,259 for the six months
ended June 30, 1998, as compared with the 1997 period, principally due to the
expiration of the Company's two cruise ship concession contracts. Casino revenue
from Womacks/Legends Casino decreased slightly to $9,019,653, which represents a
16.8% share of the Cripple Creek market as compared with 17.2% in 1997. The
year-to-date decrease is mainly attributable to the first quarter of 1998, when
the casino discontinued its busing and logojet marketing programs. Casino margin
for the current year period was 60.4% versus 43.0% in 1997. In addition to the
elimination of the busing and logojet programs, payroll costs decreased, and the
effective gaming tax rate was lower as a result of the change in the taxing
authority's fiscal year.
Food and beverage revenue decreased from $443,744 to $396,961, a decrease of
10.5% from the prior year. The decrease corresponds to a decrease in the level
of promotional meals and drinks. The cost of promotional allowances, included in
casino costs, decreased 14.1%. The decrease in other revenue from $109,385 in
1997 to $44,177 in 1998, is due to the decline in concession revenue from the
expiration of Company's cruise ship contracts and lower gift shop sales at
Womacks/Legends Casino.
General and administrative expense, as a percentage of net operating revenue,
increased from 27.4% to 29.1% The increase was due primarily to a higher
headcount in the administrative departments. The cost of this headcount
increase, however, was more than offset by lower payroll costs of casino
operations.
Depreciation expense increased to $846,493 from $737,387, while amortization of
goodwill remained unchanged at $335,376 for both periods. The increase in
depreciation expense is primarily attributable to ongoing property improvements
at Womacks/Legends Casino.
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<PAGE>
In March 1998 the Company negotiated an early settlement of its note receivable
from SSK Game Enterprises, Inc. ("SSK"), with respect to the Company's casino
management agreement with the Soboba Band of Mission Indians in California,
which agreement was terminated in August 1995. The Company received cash
payments, included in "other expense, net," totaling $550,000 in the first
quarter of 1998. Aggregate payments received pursuant to the note from August
1995 through date of settlement were $2,475,000, of which $1,843,000 were
applied to recovery of capitalized costs and $632,000 were recognized in income.
No further payments will be received under the note.
On April 21, 1998, the Company was informed that the consortium with which it
had filed a gaming license application for the province of Gauteng, South Africa
was not awarded one of the two remaining licenses for the province. Accordingly,
the Company provided an impairment allowance of $196,022 against its entire
equity investment in the license applicant in the first quarter of 1998.
In addition to the payments received from SSK and the provision for impairment
previously described, other expense, net, for the first six months of 1998
consisted of $454,236 of interest expense, $60,789 of interest income, a gain of
$46,842 from the disposal of fixed assets, amortization of deferred debt costs
of $49,151, and expense of $97,850 related to expired trade credits from an
equipment supplier. Other expense, net, for the prior year period consisted of
$526,377 of interest expense, $78,758 of interest income, a loss of $46,133 from
the disposal of fixed assets, and amortization of deferred debt costs of
$21,741.
The income tax benefit of $293,000 for the 1998 year-to-date period includes a
nonrecurring credit of $815,000 resulting from the reversal of the valuation
allowance previously provided against the Company's net deferred tax assets. The
remaining provision of $522,000 is based upon estimated full-year income for
financial reporting purposes, adjusted for permanent differences and utilization
of available net operating loss carryforwards and alternative minimum tax credit
carryforwards. The income tax benefit of $102,000 for the year-earlier period,
which excludes a benefit of $40,000 associated with an extraordinary charge, is
based on estimated full-year income for financial reporting purposes, adjusted
for permanent differences and utilization of available NOLs.
Liquidity and Capital Resources
Cash, cash equivalents and short-term investments totaled $3,217,543 at June 30,
1998, and the Company had net working capital of $827,645. Additional liquidity
may be provided by the Company's revolving credit facility ("RCF") with Wells
Fargo Bank, under which the Company had unused borrowing capacity of
approximately $3 million at June 30, 1998. For the six months ended June 30,
1998, cash provided by operations was $2,003,573 as compared with $1,144,767 in
the prior year period, with most of the increase attributable to the operations
of Womacks/Legends Casino. Cash used in investing activities for the first half
of 1998 included property and equipment additions of $4,544,718, the purchase of
commercial paper for $503,895, and payments of $534,000 to two former principals
of Gold Creek in partial settlement of the Company's remaining financial
obligation arising from its acquisition of Gold Creek's assets in 1996. The
Company had net borrowings under its RCF with Wells Fargo of $2,563,953,
principally to acquire real property adjacent to Womacks/Legends Casino, and
repurchased outstanding common stock in the amount of $610,742.
The Company is considering construction of a hotel with 30 to 50 rooms and a
two-level parking garage, directly across the street from the Womacks/Legends
Casino. Although the Company is still reviewing architectural plans and the
construction cost has not been determined, management believes it will be able
to finance the construction cost through a combination of working capital,
operating cash flow and borrowing capacity under the RCF.
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<PAGE>
In February 1998, the Company's Board of Directors approved a discretionary
program to repurchase up to $1 million of the Company's outstanding common
stock. Through June 30, 1998, the Company had repurchased 545,500 shares at an
average cost of $1.12.
In March 1998 the Company entered into a joint venture agreement with a Czech
subsidiary of Bau Holding AG, one of the largest construction and development
companies in Europe, to form Century Casinos Praha a.s. The Company was to hold
a 49% interest in the venture, which will operate a casino in the five-star
Marriott Hotel, currently under construction in Prague, Czech Republic.
Subsequent to signing the joint venture agreement, laws governing casino
licenses in the Czech Republic were changed to preclude a foreign entity from
holding an equity interest in a casino license. The Company is presently
negotiating an agreement whereby it would manage the casino operations pursuant
to a ten-year management agreement for a fee based upon gross casino revenue,
and the Company would lease gaming equipment with a value of approximately $1.2
million to the casino. The Company would likely finance its purchase of the
equipment through either its current cash position or a combination of cash and
vendor financing. A definitive agreement, however, has not yet been finalized.
The opening of the hotel and casino is currently scheduled, subject to change,
for the second quarter of 1999.
On April 21, 1998, a consortium that includes the Company submitted an
application for a gaming license in the province of KwaZulu Natal, South Africa.
The province may award up to five gaming licenses. The consortium's application
is for a $35 million multipurpose entertainment resort in the city of Empangeni.
The Company would manage the 520-gaming position casino pursuant to a 15-year
management agreement. The Company has received a three percent equity interest
in the consortium in consideration of services rendered during the application
phase, and may acquire an additional five percent of the equity for
approximately $500,000 upon licensing. The additional equity investment would be
funded through the Company's working capital. Detailed applications are required
to be filed by August 10, 1998, and preferred finalists are expected to be
announced at the end of October 1998. The KwaZulu Natal Gambling Board has
indicated that final licenses will be awarded in February 1999.
The Company holds a small equity position in Great North Resorts Limited, which
has submitted a license application for Pietersburg, the capital of the Northern
Province, South Africa. If successful in receiving a license, the Company would
provide consulting/management services with respect to the casino operations of
a proposed $40 million casino, hotel, entertainment and resort complex pursuant
to a five-year agreement commencing with the opening of the permanent casino.
The Company would also provide consulting/management services with respect to
the operations of a temporary casino during the development phase of the resort
complex. The Company would earn fees based on a percentage of annual gaming
revenue. The Company has no significant additional capital obligations with
respect to this application. The licensing process in the Northern Province has
been halted by the South African Supreme Court pending an investigation of
alleged improprieties by the Northern Province Casino and Gaming Board.
On November 28, 1997, the Kamloops Indian Band of British Columbia, Canada, in
cooperation with the Company, presented a proposal for a $40 million destination
casino resort complex to the British Columbia Lottery Advisory Committee. The
Company has reached an agreement in principle to become the casino
management/consulting partner in case of license award. The Company was paid a
fee in 1997 for its consulting services in connection with the application
process, and final terms of the management agreement will be negotiated in the
event licensing details become available. The Company has been informed that a
decision will be made on the license application in September 1998.
- 14 -
<PAGE>
In the second quarter of 1998, the Company reached a consulting agreement
("current agreement") with Rhodes Casino S.A. and Playboy Gaming International
Ltd. ("Playboy") to assign certain of the Company's rights and delegate its
responsibilities under a previously executed management and consulting agreement
("previous agreement") pertaining to the operation of a casino on the island of
Rhodes, Greece. The Company will receive from Playboy a payment of $25,000 in
respect of all services performed to date, and annual payments of $50,000 for
each of the first three years of the casino's operations. The Company will have
no further obligations under the previous agreement unless, subsequent to the
opening of the casino, Playboy is unwilling or unable to perform under the
current agreement. In such event, the previous agreement, and the Company's
obligations, would be reinstated together with the Company's right to receive up
to $300,000 per year for the first three years of casino operations, with an
aggregate minimum guarantee of approximately $250,000.
Management believes that the Company's working capital position at June 30,
1998, together with expected cash flow from operations and borrowing capacity
under its revolving credit facility, will be adequate to satisfy its debt
repayment obligations, meet its anticipated capital expenditures and pursue
additional business growth opportunities for the foreseeable future.
* * * * * * * * * * * * * * * *
PART II
OTHER INFORMATION
Item 1. - Legal Proceedings
The Company is not a party to, nor is it aware of, any pending or
threatened litigation which, in management's opinion, could have a material
adverse effect on the Company's financial position or results of
operations.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits - The following exhibits are filed herewith:
10.71 Termination of Stock Transfer and Registration Rights Agreement
dated May 1, 1998, between Century Casinos, Inc. and Gary Y.
Findlay
10.72 Promissory Note dated April 30, 1998, between Century Casinos,
Inc. and Gary Y. Findlay
10.73 Termination of Stock Transfer and Registration Rights Agreement
dated June 2, 1998, between Century Casinos, Inc. and James A.
Gulbrandsen
10.74 Promissory Note dated June 2, 1998, between Century Casinos,
Inc. and James A. Gulbrandsen
- 15 -
<PAGE>
10.75 Commercial Contract to Buy and Sell Real Estate dated November
19, 1997, between WMCK Venture Corp. and Hal D. Hicks
10.76 Casino Consulting Agreement dated March 25, 1998, by and between
Rhodes Casino S.A., Century Casinos, Inc. and Playboy Gaming
International Ltd.
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended June 30, 1998.
* * * * * * *
SIGNATURES:
Pursuant to 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.
CENTURY CASINOS, INC.
/s/ Brad Dobski
---------------------------
Brad Dobski
Vice President - Finance,
Chief Accounting Officer and duly authorized officer
Date: August 4, 1998
- 16 -
TERMINATION OF STOCK TRANSFER AND
REGISTRATION RIGHTS AGREEMENT
This Termination of Stock Transfer and Registration Rights Agreement
(this "Agreement") dated this 1st day of May, 1998, is between Century Casinos,
Inc., a Delaware corporation ("Century"), and Gary Y. Findlay ("Findlay").
Recitals
By a Stock Transfer and Registration Rights Agreement dated July 1, 1996
(the "Stock Transfer and Registration Rights Agreement"), Century agreed to
issue and deliver to Findlay on July 1, 1998 530,000 shares of common stock of
Century (the "Shares") in full payment for purchase of Findlay's ownership
interest in Chysore, Inc.'s management agreement with Gold Creek Associates,
L.P.
Century and Findlay have agreed that, in lieu of issuance of the Shares to
Findlay, Century will pay Findlay $390,000.00 in cash and a Promissory Note in
the principal amount of $390,000.00 in the form attached hereto (the "Note").
Agreement
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
and conditions contained herein, the parties agree as follows:
Termination of Stock Transfer and Registration Rights Agreement. The Stock
Transfer and Registration Rights Agreement is hereby terminated and shall no
longer be of any force and effect.
Consideration for Termination. In consideration of the termination of the
Stock Transfer and Registration Rights Agreement, Century hereby (i) pays
Findlay $390,000.00 by certified or bank cashier's check and (ii) issues to
Findlay the Note.
Mutual Release of Claims. In consideration of the foregoing, Century and
Findlay, for themselves and their respective representatives, heirs, agents,
affiliates, and assigns, hereby release each other from any and all claims,
liabilities, losses or damages relating to or arising out of the Stock Transfer
and Registration Rights Agreement.
Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Governing Law. This Agreement shall be deemed to be an agreement made under
the laws of the State of Colorado and for all purposes shall be governed by and
construed in accordance with such laws.
0175972.02
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
CENTURY CASINOS, INC.
By: /s/ Norbert Teufelberger
----------------------
Name: Norbert Teufelberger
Title: Director and Secretary
/s/ Gary Findlay
----------------------
Gary Y. Findlay
0175972.02
PROMISSORY NOTE
Cripple Creek, Colorado
$390,000.00 Amount April 30, 1998
This PROMISSORY NOTE (this "Note") is executed this 30th day of April,
1998, by Century Casinos, Inc., a Delaware corporation ("Maker"), whose address
is 200-220 East Bennett Avenue, Cripple Creek, Colorado 80813, in favor of Gary
Y. Findlay ("Holder"), whose legal address is 3236 Electra Drive South, Colorado
Springs, Colorado 80906.
Promise to Pay. For value received, Maker hereby promises to pay to
the order of Holder the principal sum of $390,000.00Amount, together with
interest thereon at a rate equal to 8.75% per annum ("Interest Rate"), all
in lawful money of the United States of America which constitutes legal
tender for payment of debts, public and private, at the time of payment.
Maturity Date. The "Maturity Date" shall mean July 1, 2001.
Payment Schedule. Payments of interest and principal for a total of
$8,049.00 shall be payable monthly beginning on July 1, 1998 through and
including June 1, 2001 in accordance with Exhibit 1. The entire remaining
outstanding principal balance of this Note, totaling $176, 618.00, together
with all accrued but unpaid principal and interest, shall, if not
previously paid, be finally due and payable on the Maturity Date.
Prepayment Privilege. Maker shall have the right to prepay this Note
at any time prior to the Maturity Date without penalty.
Application of Payments. All payments hereunder shall be applied first
to the payment of accrued and unpaid interest on the principal of this
Note, including interest accrued at the Default Rate as hereinafter
provided, and second to the reduction of principal of this Note.
Default. Each of the following shall constitute an "Event of Default"
under this Note:
The failure of Maker to pay in full any amount due hereunder by
the date the same is due, as provided herein, and such failure shall
continue for 10 days after written notice from Holder to Maker of such
failure, or Maker's failure to pay in full any amount due hereunder
upon maturity of this Note, by acceleration or otherwise; or
The failure of Maker to perform, satisfy and observe in full,
when due, any of the obligations, covenants, conditions and
restrictions under this Note, not involving the payment of money, and
such failure shall continue for 30 days after written notice from
Holder to Maker of such failure, or if said failure cannot reasonably
be cured within said 30-day period, Maker shall not have pursued the
cure with reasonable diligence and shall not have cured
0175950.01
<PAGE>
such failure within a reasonable time after the written notice from
Holder to Maker described above.
Right to Accelerate on Event of Default. Upon the occurrence of
any Event of Default hereunder, the Interest Rate on the principal
amount of this Note then due and payable shall accrue at 12% per annum
("Default Rate"), and the entire balance of principal, accrued
interest, and any other sums owing hereunder shall, at the option of
Holder, become at once due and payable without prior notice or demand.
Waivers of Demand, etc. Maker and all parties now or hereafter
liable for the payment hereof, primarily or secondarily, directly or
indirectly, and whether as endorser, guarantor, surety, or otherwise,
severally waive demand, presentment, notice of dishonor or nonpayment,
protest and notice of protest, and diligence in collecting, and
consent to extensions of time for payment, renewals of this Note and
acceptance of partial payments, whether before, at, or after maturity,
all or any of which may be made without notice to any of said parties
and without affecting their liability to Holder.
Costs of Collection. Maker and all parties now or hereafter
liable for the payment hereof agree jointly and severally to pay all
costs and expenses, including reasonable attorneys' fees, incurred in
collecting this Note or any part thereof.
No Usury Payable. The provisions of this Note and of all
agreements between Maker and Holder are hereby expressly limited so
that in no contingency or event whatsoever shall the amount paid, or
agreed to be paid, to Holder for the use, forbearance, or retention of
the Loan Amount ("Interest") exceed the maximum amount permissible
under applicable law. If, from any circumstance whatsoever, the
performance or fulfillment of any provision hereof or of any other
agreement between Maker and Holder shall, at the time performance or
fulfillment of such provision shall be due, exceed the limit for
Interest prescribed by law, then, ipso facto, the obligation to be
performed or fulfilled shall be reduced to such limit, and if, from
any circumstance whatsoever, Holder should ever receive as Interest an
amount which would exceed the highest lawful rate, the amount which
would be excessive Interest shall be applied to the reduction of the
principal balance owing hereunder (or, at Holder's option, or if no
principal shall be outstanding, be paid over to Maker) and not to the
payment of Interest.
Severability of Provisions. If any provision hereof shall, for
any reason and to any extent, be invalid or unenforceable, then the
remainder of the instrument in which such provision is contained, the
application of the provision to other persons, entities or
circumstances, and any other instrument referred to herein shall not
be affected thereby but instead shall be enforceable to the maximum
extent permitted by law.
Successors to Maker or Holder. The term "Maker" as used herein
shall include the original maker of this Note and any party who may
subsequently become primarily liable for the payment hereof. The term
"Holder" as used herein shall mean the original payee of this Note or,
if this Note is transferred, the then holder of this Note, provided
that, until written notice is given to Maker designating another party
as Holder, Maker may consider the Holder to be the original payee or
the party last designated as Holder in a written notice to Maker.
0175950.01
<PAGE>
Notices. All notices, consent or other instruments or
communications provided for under this Note shall be in writing,
signed by the party giving the same, and shall be deemed properly
given and received when actually delivered and received or three
business days after mailed, if sent by registered or certified mail,
postage prepaid, to the address set forth in the first paragraph of
this Note, or to such other address as a party may designate by
written notice to the other party.
Captions for Convenience. The captions to the Sections hereof are
for convenience only and shall not be considered in interpreting the
provisions hereof.
Governing Law. Regardless of the place of its execution, this
Note shall be construed and enforced in accordance with the laws of
the State of Colorado.
MAKER:
CENTURY CASINOS, INC.
By: /s/ Norbert Teufelberger
-----------------------------------
Name: Norbert Teufelberger
Title: Director and Secretary_
0175950.01
<PAGE>
Century Casinos, Inc.
Amortization Schedule
G. Findlay Promissory Note
Dated April 30, 1998
Loan Amount: $ 390,000.00
Interest: 8.750%
Pmt: $ 8,048.52
Amortization term 60
Balloon on 7/1/01 $ 176,618
<TABLE>
<CAPTION>
Jul-98 Aug-98 Sep-98 Oct-98 Nov-98 Dec-98 Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Payment # 1 2 3 4 5 6 7 8 9 10 11 12
Principal 5,204.77 5,242.72 5,280.95 5,319.46 5,358.25 5,397.32 5,436.67 5,476.31 5,516.24 5,556.47 5,596.98 5,637.79
Interest 2,843.75 2,805.80 2,767.57 2,729.06 2,690.28 2,651.21 2,611.85 2,572.21 2,532.28 2,492.05 2,451.54 2,410.73
-------------------------------------------------------------------------------------------------------------------------
Total 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52
Remaining Principal
384,795 379,553 374,272 368,952 363,594 358,197 352,760 347,284 341,767 336,211 330,614 324,976
Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00
Payment # 13 14 15 16 17 18 19 20 21 22 23 24
Principal 5,678.90 5,720.31 5,762.02 5,804.04 5,846.36 5,888.99 5,931.93 5,975.18 6,018.75 6,062.64 6,106.85 6,151.37
Interest 2,369.62 2,328.21 2,286.50 2,244.48 2,202.16 2,159.53 2,116.59 2,073.34 2,029.77 1,985.88 1,941.68 1,897.15
-------------------------------------------------------------------------------------------------------------------------
Total 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52
Remaining Principal
319,297 313,577 307,815 302,011 296,164 290,275 284,344 278,368 272,350 266,287 260,180 254,029
Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01
Payment # 25 26 27 28 29 30 31 32 33 34 35 36
Principal 6,196.23 6,241.41 6,286.92 6,332.76 6,378.94 6,425.45 6,472.30 6,519.50 6,567.03 6,614.92 6,663.15 6,711.74
Interest 1,852.29 1,807.11 1,761.60 1,715.76 1,669.58 1,623.07 1,576.22 1,529.02 1,481.49 1,433.60 1,385.37 1,336.78
-------------------------------------------------------------------------------------------------------------------------
Total 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52 8,048.52
Remaining Principal
247,832 241,591 235,304 228,971 222,592 216,167 209,695 203,175 196,608 189,993 183,330 176,618
Principal payments due:
1998 31,803
1999 67,921
2000 74,108
2001 216,167
----------
390,000
==========
</TABLE>
TERMINATION OF STOCK TRANSFER AND
REGISTRATION RIGHTS AGREEMENT
This Termination of Stock Transfer and Registration Rights Agreement (this
"Agreement") dated this 2nd day of June, 1998, is between Century Casinos, Inc.,
a Delaware corporation ("Century"), and James A. Gulbrandsen ("Gulbrandsen").
Recitals
By a Stock Transfer and Registration Rights Agreement dated July 1, 1996
(the "Stock Transfer and Registration Rights Agreement"), Century agreed to
issue and deliver to Gulbrandsen on July 1, 1998 530,000 shares of common stock
of Century (the "Shares") in full payment for purchase of Gulbrandsen's
ownership interest in Chysore, Inc.'s management agreement with Gold Creek
Associates, L.P.
Century and Gulbrandsen have agreed that, in lieu of issuance of the Shares
to Gulbrandsen, Century will pay Gulbrandsen $75,000.00 in cash and a Promissory
Note in the principal amount of $705,000.00 in the form attached hereto (the
"Note").
Agreement
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
and conditions contained herein, the parties agree as follows:
Termination of Stock Transfer and Registration Rights Agreement. The Stock
Transfer and Registration Rights Agreement is hereby terminated and shall no
longer be of any force and effect.
Consideration for Termination. In consideration of the termination of the
Stock Transfer and Registration Rights Agreement, Century hereby (i) pays
Gulbrandsen $75,000.00 by certified or bank cashier's check and (ii) issues to
Gulbrandsen the Note.
Mutual Release of Claims. In consideration of the foregoing, Century and
Gulbrandsen, for themselves and their respective representatives, heirs, agents,
affiliates, and assigns, hereby release each other from any and all claims,
liabilities, losses or damages relating to or arising out of the Stock Transfer
and Registration Rights Agreement.
Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Governing Law. This Agreement shall be deemed to be an agreement made under
the laws of the State of Colorado and for all purposes shall be governed by and
construed in accordance with such laws.
179275.1
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
CENTURY CASINOS, INC.
By: /s/ Norbert Tuefelberger
----------------------
Name: Norbert Tuefelberger
Title: Director and Secretary
/s/ James Gulbrandsen
----------------------
James A. Gulbrandsen
179275.1
PROMISSORY NOTE
Cripple Creek, Colorado
$705,000.00 June 2, 1998
This PROMISSORY NOTE (this "Note") is executed this 2nd day of June, 1998,
by Century Casinos, Inc., a Delaware corporation ("Maker"), whose address is
200-220 East Bennett Avenue, Cripple Creek, Colorado 80813, in favor of James A.
Gulbrandsen ("Holder"), whose legal address is 30 Clermont Lane, St. Louis,
Missouri 63124.
Promise to Pay. For value received, Maker hereby promises to pay to the
order of Holder the principal sum of $705,000.00Amount, together with interest
thereon at a rate equal to 8.75% per annum ("Interest Rate"), all in lawful
money of the United States of America which constitutes legal tender for payment
of debts, public and private, at the time of payment.
Maturity Date. The "Maturity Date" shall mean July 1, 2001.
Payment Schedule. Payments of interest and principal for a total of
$8,050.00 shall be payable monthly beginning on July 1, 1998 through and
including June 1, 2001 in accordance with Exhibit 1. Additional principal
payments shall be made as follows:
August 1, 1998 $75,000
October 1, 1998 $75,000
January 1, 1999 $75,000
April 1, 1999 $50,000
July 1, 1999 $50,000
The entire remaining outstanding principal balance of this Note together with
all accrued but unpaid interest, shall, if not previously paid, be finally due
and payable on the Maturity Date.
Prepayment Privilege. Maker shall have the right to prepay this Note at any
time prior to the Maturity Date without penalty.
Application of Payments. All payments hereunder shall be applied first to
the payment of accrued and unpaid interest on the principal of this Note,
including interest accrued at the Default Rate as hereinafter provided, and
second to the reduction of principal of this Note.
Default. Each of the following shall constitute an "Event of Default" under
this Note:
The failure of Maker to pay in full any amount due hereunder by the date
the same is due, as provided herein, and such failure shall continue for 10 days
179276.1
<PAGE>
after written notice from Holder to Maker of such failure, or Maker's failure to
pay in full any amount due hereunder upon maturity of this Note, by acceleration
or otherwise; or
The failure of Maker to perform, satisfy and observe in full, when due, any
of the obligations, covenants, conditions and restrictions under this Note, not
involving the payment of money, and such failure shall continue for 30 days
after written notice from Holder to Maker of such failure, or if said failure
cannot reasonably be cured within said 30-day period, Maker shall not have
pursued the cure with reasonable diligence and shall not have cured such failure
within a reasonable time after the written notice from Holder to Maker described
above.
Right to Accelerate on Event of Default. Upon the occurrence of any Event
of Default hereunder, the Interest Rate on the principal amount of this Note
then due and payable shall accrue at 12% per annum ("Default Rate"), and the
entire balance of principal, accrued interest, and any other sums owing
hereunder shall, at the option of Holder, become at once due and payable without
prior notice or demand.
Waivers of Demand, etc. Maker and all parties now or hereafter liable for
the payment hereof, primarily or secondarily, directly or indirectly, and
whether as endorser, guarantor, surety, or otherwise, severally waive demand,
presentment, notice of dishonor or nonpayment, protest and notice of protest,
and diligence in collecting, and consent to extensions of time for payment,
renewals of this Note and acceptance of partial payments, whether before, at, or
after maturity, all or any of which may be made without notice to any of said
parties and without affecting their liability to Holder.
Costs of Collection. Maker and all parties now or hereafter liable for the
payment hereof agree jointly and severally to pay all costs and expenses,
including reasonable attorneys' fees, incurred in collecting this Note or any
part thereof.
No Usury Payable. The provisions of this Note and of all agreements between
Maker and Holder are hereby expressly limited so that in no contingency or event
whatsoever shall the amount paid, or agreed to be paid, to Holder for the use,
forbearance, or retention of the Loan Amount ("Interest") exceed the maximum
amount permissible under applicable law. If, from any circumstance whatsoever,
the performance or fulfillment of any provision hereof or of any other agreement
between Maker and Holder shall, at the time performance or fulfillment of such
provision shall be due, exceed the limit for Interest prescribed by law, then,
ipso facto, the obligation to be performed or fulfilled shall be reduced to such
limit, and if, from any circumstance whatsoever, Holder should ever receive as
Interest an amount which would exceed the highest lawful rate, the amount which
would be excessive Interest shall be applied to the reduction of the principal
balance owing hereunder (or, at Holder's option, or if no principal shall be
outstanding, be paid over to Maker) and not to the payment of Interest.
Severability of Provisions. If any provision hereof shall, for any reason
and to any extent, be invalid or unenforceable, then the remainder of the
instrument in which such provision is contained, the application of the
provision to other persons, entities or circumstances, and any other instrument
referred to herein shall not be affected thereby but instead shall be
enforceable to the maximum extent permitted by law.
Successors to Maker or Holder. The term "Maker" as used herein shall
include the original maker of this Note and any party who may subsequently
179276.1
<PAGE>
become primarily liable for the payment hereof. The term "Holder" as used herein
shall mean the original payee of this Note or, if this Note is transferred, the
then holder of this Note, provided that, until written notice is given to Maker
designating another party as Holder, Maker may consider the Holder to be the
original payee or the party last designated as Holder in a written notice to
Maker.
Notices. All notices, consent or other instruments or communications
provided for under this Note shall be in writing, signed by the party giving the
same, and shall be deemed properly given and received when actually delivered
and received or three business days after mailed, if sent by registered or
certified mail, postage prepaid, to the address set forth in the first paragraph
of this Note, or to such other address as a party may designate by written
notice to the other party.
Captions for Convenience. The captions to the Sections hereof are for
convenience only and shall not be considered in interpreting the provisions
hereof.
Governing Law. Regardless of the place of its execution, this Note shall be
construed and enforced in accordance with the laws of the State of Colorado.
MAKER:
CENTURY CASINOS, INC.
By: /s/ Norbert Tuefelberger
-----------------------------------
Name: Norbert Tuefelberger
Title: Director and Secretary
179276.1
<PAGE>
Exhibit 1 to Promissory Note
Issued by Century Casinos to Jim Gulbrandsen
TOTAL COMPENSATION: $780,000
Cash Payment At Closing ($75,000)
1-Aug-98 ($75,000) Principal
1-Oct-98 ($75,000) Pmts in
1-Jan-99 ($75,000) 1998 172,205
1-Apr-99 ($50,000) 1999 239,473
1-Jul-99 ($50,000) 2000 73,849
------------ 2001 219,473
($400,000) -----------
705,000
Loan amount: $705,000
Interest 8.75%
Fixed Payments of: 8,050 per month
Balloon $180,063 after 3 years, due July 1, 2001
YEAR 1 YEAR 2 YEAR 3 TOTAL
------------------------------------- ------------
Princ 327,098 120,699 77,140 524,937
Interest 44,502 25,901 19,460 89,863
------------------------------------- ------------
Total 371,600 146,600 96,600 614,800
<TABLE>
<CAPTION>
Monthly calculation 1-Jul-98 1-Aug-98 1-Sep-98 1-Oct-98 1-Nov-98 1-Dec-98 1-Jan-99 1-Feb-99 1-Mar-99 1-Apr-99 1-May-99 1-Jun-99
- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7 8 9 10 11 12
Princ bal. $705,000 $627,091 $623,613 $545,110 $541,035 $536,930 $457,795 $453,083 $448,337 $393,556 $388,376 $383,158
Y1 Add. Red. ($75,000) ($75,000) ($75,000) ($50,000)
- ------------------ ---------------------------------------------------------------------------------------------------------------
327,098 Princ 2,909 3,477 3,503 4,075 4,105 4,135 4,712 4,746 4,781 5,180 5,218 5,256
44,502 Interest 5,141 4,573 4,547 3,975 3,945 3,915 3,338 3,304 3,269 2,870 2,832 2,794
- ------------------ ---------------------------------------------------------------------------------------------------------------
96,600 Total 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050
1-Jul-99 1-Aug-99 1-Sep-99 1-Oct-99 1-Nov-99 1-Dec-99 1-Jan-00 1-Feb-00 1-Mar-00 1-Apr-00 1-May-00 1-Jun-00
13 14 15 16 17 18 19 20 21 22 23 24
Princ bal. $327,902 $322,243 $316,542 $310,800 $305,017 $299,191 $293,322 $287,411 $281,457 $275,459 $269,418 $263,332
Y2 Add. Red. ($50,000)
- ------------------ ---------------------------------------------------------------------------------------------------------------
120,699 Princ 5,659 5,700 5,742 5,784 5,826 5,868 5,911 5,954 5,998 6,041 6,085 6,130
25,901 Interest 2,391 2,350 2,308 2,266 2,224 2,182 2,139 2,096 2,052 2,009 1,965 1,920
- ------------------ ---------------------------------------------------------------------------------------------------------------
96,600 Total 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050
1-Jul-00 1-Aug-00 1-Sep-00 1-Oct-00 1-Nov-00 1-Dec-00 1-Jan-01 1-Feb-01 1-Mar-01 1-Apr-01 1-May-01 1-Jun-01
25 26 27 28 29 30 31 32 33 34 35 36
- ------------------ ---------------------------------------------------------------------------------------------------------------
Princ bal. $257,202 $251,028 $244,808 $238,543 $232,233 $225,876 $219,473 $213,023 $206,527 $199,983 $193,391 $186,751
Y3 Add. Red.
- ------------------ ---------------------------------------------------------------------------------------------------------------
77,140 Princ 6,175 6,220 6,265 6,311 6,357 6,403 6,450 6,497 6,544 6,592 6,640 6,688
19,460 Interest 1,875 1,830 1,785 1,739 1,693 1,647 1,600 1,553 1,506 1,458 1,410 1,362
- ------------------ ---------------------------------------------------------------------------------------------------------------
96,600 Total 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050 8,050
</TABLE>
COMMERCIAL
CONTRACT TO BUY AND SELL REAL ESTATE
November 19, 1997
1. PARTIES AND PROPERTY WMCK Venture Corporation
_____________________________________________________, Buyer(s) (Buyer), (as
joint tenant/tenants in common) agrees to buy, and the undersigned seller(s),
(Seller) agrees to sell, on the terms and conditions set forth in the contract,
for following described real estate in the County of Teller, Colorado to-wit:
Lots 21R, 24,25,26,and 27 (lots 21-27 inclusive):
Block 21; Fremont Addition (now Cripple Creek)
Known as No. Cripple Creek, Colorado 80513
Together with all interest of Seller in vacated streets and alleys adjacent
thereto, all easements and other appurtenances thereto, all improvements thereon
and all attached fixtures thereon, except as herein excluded (collectively the
Property),
2. INCLUSIONS/EXCLUSIONS. The purchase price includes the following items
(a) if attached to the Property on the date of this contract: lighting, heating,
plumbing, ventilation, and air conditioning fixtures, TV antenna, water
softeners, smoke/fire/burglar alarms, security devices, inside telephone wiring
and connecting blocks/jacks, plants, mirrors, floor coverings, intercom systems,
built-in Kitchen appliances, sprinkler systems and control; (b) if on the
property whether attached or not on the date of this contract: storm windows,
storm doors, window and porch shades, awnings, blinds, screens, curtain rods,
drapery rods, all keys and (c) any HVAC or other equipment on site or off site
as related to the property and mentioned by Seller on this date.
The above-described included items (Inclusions) are to be conveyed to Buyer by
Seller by bill of sale with warranty of title at the closing, free and clear of
all taxes, liens and encumbrances, except as provided in Section 12. The
following attached fixtures are excluded from this sale: None
3. PURCHASE PRICE AND TERMS. The purchase price shall be $3.2 million plus
400,000 restricted (rule144) shares of Century Casinos Inc. Common Stock,
payable in U.S. dollars by Buyer as follows, (Complete the applicable terms
below.)
(a) Earnest Money
$150,000 in the form of Company Check as earnest money deposit and part payment
of the purchase price, payable to and held by Pikes Peak Title (Woodland Park,
Colorado), broker, in its trust account on behalf of both Seller and Buyer.
Broker is authorized to deliver the earnest money deposit to the closing agent,
if any, at or before closing.
The balance of $______________ (purchase Price less earnest money) shall be
paid as follows:
(b) Cash at Closing.
$3,050,000, plus closing costs, to be paid by Buyer at closing in funds which
comply with all applicable Colorado laws, which include cash, electronic
transfer funds, certified check, savings and loan tellers check, and cashier's
check (Good Funds). (See Additional Provisions)
(c) New Loan.
Not Applicable
(d) Assumption
Not Applicable
(e) Seller or Private Third Party Financing
Not Applicable
4. FINANCING CONDITIONS AND OBLIGATIONS - Not Applicable
5. APPRAISAL PROVISION-Not Applicable
6. COST OF APPRAISAL-Not Applicable
<PAGE>
7. NOT ASSIGNABLE. This contract shall not be assignable by Buyer without
Seller's prior written consent. Except as so restricted, this contract shall
inure to the benefit of and be binding upon the heirs, person representatives,
successors and assigns of the parties.
8. EVIDENCE OF TITLE. Seller shall furnish to buyer, at Seller's expense,
either a current Commitment for owner's title insurance policy in an amount
equal to purchase price on or before December 3, 1997(Title Deadline). If a
title insurance commitment is furnished, Buyer may require of Seller that copies
of instruments (or abstracts of instruments) listed in schedule of exceptions
(Exceptions) in the title insurance commitment also be furnished to Buyer at
Seller's expense. This requirement shall pertain only to instruments shown of
record in the office of the clerk and recorder of the designated county or
counties. The title insurance commitment, together with any copies or abstracts
of instruments furnished pursuant to this Section 8, constitute the title
documents (Tile Documents). Seller will pay the premium at closing and have the
title insurance policy delivered to Buyer as soon as practicable after closing.
Also, title insurance policy shall be issued on the ALTA 1987 Owners Form,
amended 10/17/92, with standard printed exceptions 1,2,3, and 4 deleted.
9. TITLE.
(a) Title Review. Buyer shall have the right to inspect the Title Documents
or abstract Written Notice by Buyer of unmerchantability of title or any other
unsatisfactory title condition shown by the Title Documents or abstract shall be
signed by or on behalf of Buyer and given to Seller on or before 5 calendar days
before closing. If Seller does not receive Buyer's notice by the date(s)
specified above, Buyer accepts the condition of title as disclosed by the Title
Documents as satisfactory.
(b) Matters Not Shown by the Public Records. Seller shall deliver to Buyer,
on or before the Title Deadline set forth if Section 8, true copies of all
lease(s) and survey(s) in Seller's possession pertaining to the Property and
shall disclose to Buyer all easements, liens or other title matters not shown by
the public records of which Seller has actual knowledge. Buyer shall have the
right to inspect the Property to determine if any third party(s) has any right
in the Property not shown by the public records (such as an unrecorded easement,
recorded lease, or boundary line discrepancy). Written notice of any
unsatisfactory conditions(s) disclosed by Seller or revealed by such inspection
shall be signed by or on behalf of Buyer and given to Seller on or before 5 days
before closing. If Seller does not receive Buyer's notice by said date; Buyer
accepts title subject to such rights, if any, of third parties of which Buyer
has actual knowledge.
(c) Special Taxing Districts. SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO
GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL
TAX LEVIES ON THE TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN
SUCH DISTRICTS MAY BE PLACED AT RISK FOR INCREASE MILL LEVIES AND EXCESSIVE TAX
BURDENS TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE
RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH INDEBTEDNESS
WITHOUT SUCH AN INCREASE IN MILL LEVIES, BUYER SHOULD INVESTIGATE THE DEBT
FINANCING REQUIREMENTS OF THE AUTHORIZED GENERAL OBLIGATION INDETEDNESS OF SUCH
DISTRICTS, EXSISTING MILL LEVIES OF SUCH DISTRICT SERVICING SUCH INDEBTEDNESS,
AND THE POTENTION FOR AN INCREASE IN SUCH MILL LEVIES.
In the event the Property is located with a special taxing district and
Buyer desires to terminate this contract as a result, if written notice is given
to Seller on or before the date set forth in subsection 9(b), this contract
shall then terminate. If Seller does not receiver Buyer's notice by the date
specified above, Buyer accepts the effect of the Property's inclusion in such
special taxing districts(s) and waives the right to so terminate.
(d) Right To Cure. If Seller receives notice of unmerchantability of title
or any other unsatisfactory title condition(s) as provided in subsection (a) or
(b) above, Seller shall use reasonable effort to correct said unsatisfactory
title condition(s) prior to the date of closing. If Seller fails to correct said
unsatisfactory title condition(s) on or before the date of closing this contract
shall then terminate; provide, however, Buyer may, by written notice receiver by
Seller, on or before closing, waive objection to said unsatisfactory title
condition(s).
10. INSPECTION. Buyer or any designee, shall have the right to have
inspection(s) of the physical condition of the Property and Inclusions, at
Buyers expense. If written notice of any unsatisfactory condition, signed by or
on behalf of Buyer, is not received by Seller on or before January 31, 1997
(Objection Deadline) the physical condition of the Property and inclusions shall
<PAGE>
be deemed to be satisfactory to Buyer. If such notice is received by Seller as
set forth above, and if Buyer and Seller have not agreed in writing, to a
settlement thereof on or before February 28, 1997(Resolution Deadline), this
contract shall terminate three calendar days following the Resolution Deadline;
unless, within the three calendar days, Seller receives written notice from
Buyer waiving objection to any unsatisfactory condition. Buyer is responsible
for and shall pay for any damage, which occurs to the Property and Inclusions as
a result of such inspection.
11. DATE OF CLOSING. The date of closing shall be March 31, 1997, or by
mutual agreement at an earlier date. The hour and place of closing shall be as
designated by Pikes Peak Title.
12. TRANSFER OF TITLE. Subject to tender or payment at closing as required
herein and compliance by Buyer with the other terms and provisions hereof.
Seller shall execute and deliver a good and sufficient general warranty deed to
Buyer, on closing, conveying the Property free and clear of all taxes except the
general taxes for the year of closing, and except none. Title shall be conveyed
free and clear of all liens for special improvements installed as of the date of
Buyer' signature heron, whether assessed or not; except (I) distribution utility
easements (including cable TV), (ii) those matters reflected by the Title
Documents accepted by Buyer in accordance with subsection 9(a), (iii) those
rights, if any, of third partied in the Property not shown by the public records
in accordance with subsection 9(b), (iv) inclusion of the Property within any
special taxing district, and (v) subject to building and zoning regulations.
13. PAYMENT OF ENCUMBRANCES. Any encumbrance required to be paid shall be
paid at or before closing from the proceeds of this transaction or from any
other source.
14. CLOSING COSTS, DOCUMENTS AND SERVICES. Buyer and Seller shall pay, in
Good Funds, their respective closing costs and all other items required to be
paid at closing, except as otherwise provided herein. Buyer and Seller shall
sign and complete all customary or required documents at or before closing. Fees
for real estate closing services shall not exceed $1,000 and shall be paid by
Buyer and Seller equally. The local transfer tax of N/A % of the purchase price
shall be paid at closing by N/A. Any sales and use tax that may accrue because
of this transaction shall be paid when due by Buyer.
15. PROBATIONS. General taxes for the year of closing, based on the taxes
for the calendar year immediately preceding closing, rents, water and sewer
charges, owner's association dues, and interest on continuing loan(s), if any,
and N/A shall be prorated to date of closing.
16. POSSESSION. Possession of the Property shall be delivered to Buyer as
follows: At Closing, with title conveyed as described in (12) above, subject to
the following lease(s) or tenancy(s) none. If Seller, after closing, fails to
deliver possession on the date herein specified, Seller shall be subject to
eviction and shall be additionally liable to Buyer for payment of $N/A per day
from the date of agreed possession until possession is delivered
17. CONDITION OF AND DAMAGE TO PROPERTY. Not Applicable.
18. TIME OF ESSENCE/REMEDIES. Time is of the essence hereof. If any note or
check received as earnest money hereunder or any other payment due hereunder is
not paid, honored or tendered when due, or if any other obligation hereunder is
not performed or waived as herein provided, there shall be the following
remedies.
(a) IF BUYER IS DEFAULT:
(1) Specific Performance-Not Applicable
(2) Liquidated Damages. All payments and things of value received hereunder
shall be forfeited by Buyer and retained on behalf of Seller and both parties
shall thereafter be released from all obligations hereunder. It is agreed that
such payments and things of value are LIQUIDATED DAMAGES and (except as provided
in subsection(C)) are SELLERS SOLE AND ONLY REMEDY for Buyer's failure to
perform the obligations of this contract. Seller expressly waives the remedies
of specific performance and additional damages.
<PAGE>
(b) IF SELLER IS IN DEFAULT:
Buyer may elect to treat this contract as cancelled, in which case all
payments and thing so value received hereunder shall be returned and Buyer may
recover such damages as may be proper, or Buyer may elect to treat this contract
as being in full force and effect and Buyer shall have the right to specific
performance or damages or both.
(c) COSTS AND EXPENSES
Anything to the contrary herein notwithstanding, in the event of any
arbitration or litigation arising out of this contract, the arbitrator or court
shall award to the prevailing party all reasonable costs and expenses, including
attorney fees.
19. EARNEST MONEY DISPUTE. Notwithstanding any termination of this
contract, Buyer and Seller agree that, in the event of any controversy regarding
the earnest money and things of value held by broker of closing agent, unless
mutual written instructions are received by the holder of the earnest money and
things of value, broker or closing agent shall not be required to take any
action but may await any proceeding or at broker's or closing agent's option and
sole discretion, may interplead all parties and deposit any moneys or things of
value into a court of competent jurisdiction and shall recover court costs and
reasonable attorney fees.
20. ALTERNATIVE DISPUTE RESOLUTION, MEDIATION. Not Applicable
21. ADDITONAL PROVISIONS.
(a) Extension of Closing: At any time prior to the expiration of Buyers
rights hereunder, Buyer shall have the right to extend the date of closing for
90 days upon waiver or satisfaction of all contingencies, release the earnest
money deposit (except interest thereon) to seller and payment to Seller of
additional $100,000 to be non-refundable and credited against the closing
payment described in Section 3(b). These funds shall be deposited with Pikes
Peak Title (closing agent).
(b) Leases: Any existing leases on the property shall be disclosed to Buyer
with 15 days hereof. Seller agrees not to make or allow any changes to or
extensions of the Lease (if any) prior to conveyance of the property to Buyer
pursuant to this contract. Seller represents that any such lease shall be
immediately terminated upon closing.
(c) Survey: Buyer may obtain a survey of the Property, certified by a
licensed Colorado Surveyor. The Survey shall be considered one of the Title
Documents. Survey performed at Buyer's expense.
(d) Defects: Seller shall notify Buyer immediately of any conditions known
to Seller with respect to the Property which violates any ordinance, code or law
of any city, county, state, governmental or quasi-governmental agency or court.
If such a condition exists, Buyer may elect to terminate or renegotiate this
contract with Seller.
(e) Property Information: Seller shall deliver to Buyer any architectural
drawings, studies and property data with 15 days hereof.
(f) Buyer has the right to terminate this contract for any reason for 7
days following the data hereof. In the event of such termination, the Earnest
Money deposit shall be refunded to Buyer.
22. RECOMMENDATION OF LEGAL COUNSEL. By signing this document, Buyer and
Seller acknowledge that the Selling Company or the Listing Company has advised
that this document has important legal consequences and has recommended the
examination of title and consultation with legal and tax or other counsel before
signing this contract.
23. TERMINATION. In the event this contract is terminated, all payments and
thing of value received hereunder shall be returned and the parties shall be
relieved of all obligations hereunder, subject to Section 19.
<PAGE>
24. SELLING COMPANY BROKER RELATIONSHIP. The selling broker N/A and its
salesperson have been engaged as N/A Selling Company has previously disclosed in
writing to the Buyer that different relationships are available which include
buyer agency, seller agency, subagency, or transaction-broker.
25. NOTICE TO BUYER. Any notice to Buyer shall be effective when received
by Buyer.
26. NOTICE TO SELLER. Any notice to Seller shall be effective when received
by Seller or Listing Company.
27. MODIFICATION OF THIS CONTRACT. No subsequent modification of any of the
terms of this contract shall be valid, banding upon the parties, or enforceable
unless made in writing and signed by the parties.
28. ENTIRE AGREEMENT. This contract constitutes the entire contract between
the parties relating to the subject hereof, and any prior agreements pertaining
thereto, whether oral or written, have been merged and integrated into this
contract.
29. NOTICE OF ACCEPTANCE COUNTERPARTS. This proposal shall expire unless
accepted in writing, by Buyer and Seller, as evidenced by their signatures
below, and the offering party receives notice of such acceptance on or before
N/A (Acceptance Deadline). If accepted, this document shall become a contract
between Seller and Buyer. A copy of this document may be executed by each party,
separately, and when each party has executed a copy thereof, such copies taken
together shall be deemed to be a full and complete contract between the parties.
/s/ Chris Wrolstad /s/ Larry Hannappel
- ----------------------------------- -------------------------------------------
<TABLE>
<S> <C> <C> <C>
Date of Buyers Signature November 19, 1997 Date of Buyer Signature November 19, 1997
----------------- -----------------
</TABLE>
Buyers Address 200 E. Bennett Ave., Cripple Creek, Co 80813
---------------------------------------------
/s/ Hal D. Hicks
- --------------------------------------------------------------------------------
Date of Sellers Signature November 19, 1997
-----------------
Sellers Address c/o C. Michael Witters, 131 W. 4th St. Mt Carmel, IL 62863
---------------------------------------------
<PAGE>
ADDENDUM TO BUY AND SELL REAL ESTATE BETWEEN WMCK
VENTURE CORPORATION AND HAL D. HICKS
The following is an addendum to the foregoing Agreement dated November 19,
1997:
G. Buyer has until January 31, 1998 to perform all due diligence on the
property (surveys, inspections, defects, etc.), provided that Seller delivers
the title documents as described in this Contract. The due diligence period
shall be extended by the number of days Seller is delinquent in delivering the
title documents. Unless notified by the Buyer in writing of a title,
environmental or ordinance prohibiting Buyer's use of the property on or before
January 31, 1998, the $150,000.00 earnest money deposit will be released to the
Seller on February 1, 1998.
H. Buyer shall have the option to pay $400,000.00 in cash at closing in
lieu of issuance of the common stock referred to herein.
WMCK VENTURE CORPORATION
------------------------
BY:/s/ Chris Wrolstad
---------------------------
HAL D. HICKS
BY:/s/ Hal D. Hicks
---------------------------
This Casino Consulting Agreement ("Agreement") is entered into by and between:
* RHODES CASINO S.A. ("Owner") duly represented by
* Mr. Theod. Charagionis and George Stamatakis
* CENTURY CASINOS INC. (Century) duly represented by
* Mr. Peter Hoetzinger
* PLAYBOY GAMING INTERNATIONAL LTD ("Playboy") duly represented
by Mr. Garry Saunders
as of March 25, 1998
RECITALS
WHEREAS, Century is a party to a Casino Management Consulting Agreement (the
"Consulting Agreement") dated October 12, 1995 with Owner for a hotel/casino
complex on the island of Rhodes, Greece (the "Complex");
WHEREAS, Playboy is willing to provide management services under the Consulting
Agreement, Century is willing to assign its rights and delegate its
responsibilities under the Consulting Agreement to Playboy and Owner is willing
to agree to such assignment and delegation;
NOW, THEREFORE, in consideration of the mutual promises herein contained, it is
mutually agreed as follows:
1. All of the Recitals are restated and made a part hereof.
2. Century will be relieved of all obligations under the Consulting Agreement
except to the extent that:
a. Playboy, on behalf of owner, requests certain consulting services, in
which case Century will provide those services at the rate of U.S.
$1,000 per day plus reasonable out of pocket expenses [which shall be
payable within ten (10) business days after Playboy's receipt of
invoice for same] by Playboy, unless expressly otherwise agreed;
b. subsequent to the opening of the Complex, if Playboy is unable or
unwilling to manage the Complex, this Agreement will be null and void
and Century will remain obligated to perform its obligations under the
Consulting Agreement and entitled to all of its rights under the
Consulting Agreement, Including, but not limited to, the right to
receive all fees and other payments net of any amounts paid to Century
hereunder or under the Consulting Agreement.
3. Except as provided in paragraph 2, above, all payments due Century by
Owner under the Consulting Agreement will be made by Owner to Playboy.
<PAGE>
4. Playboy will pay Century U.S. $25,000 for the Complex's pre-opening period
(payable on execution of this Agreement by all of the parties hereto) and
U.S. $50, 000 for each of the first three (3) years of the Complex's
operation (payable in equal installments at the end of the first and second
quarters of each such fiscal years). Except for any payments due Century
under this paragraph 4 and paragraph 2 as above, Century will be entitled
to no other payments under the Consulting Agreement.
5. Upon the execution of this Agreement, the Consulting Agreement will be
terminated and Century will have no claim, liability, right, or obligation
under the Consulting Agreement, subject only to paragraph 2, hereof.
6. Playboy and Century and Owner will initially approve any press or news
release concerning the subject matter of this Agreement.
7. This Agreement represents the entire understanding of the parties hereto.
None of the terms of this Agreement can be waived or modified except by an
express agreement in writing signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by the duly authorized representative of each.
This Agreement is signed in five (5) copies, distributed as follows:
* RHODES CASINO S.A. 3 copies
* PLAYBOY GAMING INTERNATIONAL LTD 1 copy
* CENTURY CASINOS INC. 1 copy
and represents the binding obligations of the parties hereto.
RHODES CASINO S.A.
By /s/ Theod. Charagionis By /s/ George Stamatakis
------------------------------------- -----------------------
Name: Th. Charagionis Name: G. Stamatakis
CENTURY CASINOS INC.
By /s/ Peter Hoetzinger
-------------------------------------
Name: P. Hoetzinger
PLAYBOY GAMING INTERNATIONAL INC.
By /s/ Garry W. Saunders
-------------------------------------
Name: G. Saunders
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0000911147
<NAME> Century Casinos, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 2713648
<SECURITIES> 503895
<RECEIVABLES> 242787
<ALLOWANCES> 0
<INVENTORY> 60173
<CURRENT-ASSETS> 3870967
<PP&E> 22150487
<DEPRECIATION> 3657000
<TOTAL-ASSETS> 35539949
<CURRENT-LIABILITIES> 3043322
<BONDS> 13289896
0
0
<COMMON> 158619
<OTHER-SE> 19048112
<TOTAL-LIABILITY-AND-EQUITY> 35539949
<SALES> 0
<TOTAL-REVENUES> 9196259
<CGS> 0
<TOTAL-COSTS> 3755846
<OTHER-EXPENSES> 4189374
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 454236
<INCOME-PRETAX> 1111411
<INCOME-TAX> (293000)
<INCOME-CONTINUING> 1404411
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1404411
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
