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
MARCH 31, 1999.
_______ 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
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(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 May 7, 1999:
14,659,785
<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 March 31, 1999 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and 1998 4
Consolidated Statements of Comprehensive Income
for the Three Months Ended March 31, 1999 and 1998 5
Consolidated Condensed Statements of Cash
Flows for the Three Months Ended March 31, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis 10
PART II OTHER INFORMATION 14
SIGNATURES 15
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<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Unaudited)
<TABLE>
<CAPTION>
March 31, 1999
-----------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,619,178
Prepaid expenses and other 817,150
------------------
Total current assets 3,436,328
Property and Equipment, net 18,269,023
Goodwill, net 10,921,754
Other Assets 1,315,546
------------------
Total $ 33,942,651
==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 434,708
Accounts payable and accrued expenses 2,270,171
------------------
Total current liabilities 2,704,879
Long-Term Debt, less current portion 11,948,638
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; 14,659,785 shares outstanding 158,619
Additional paid-in capital 23,323,155
Accumulated other comprehensive loss - foreign currency translation (25,983)
Accumulated deficit (2,892,337)
------------------
20,563,454
Treasury stock - 1,202,100 shares, at cost (1,274,320)
------------------
Total shareholders' equity 19,289,134
------------------
Total $ 33,942,651
==================
</TABLE>
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 March 31,
---------------------------------------------------
1999 1998
------------------- -------------------
<S> <C> <C>
Operating Revenue:
Casino $ 5,086,374 $ 4,279,897
Food and beverage 210,823 176,478
Hotel 38,111 11,877
Other 17,850 25,430
-------------------- --------------------
5,353,158 4,493,682
Less promotional allowances (159,920) (148,599)
-------------------- --------------------
Net operating revenue 5,193,238 4,345,083
-------------------- --------------------
Operating Costs and Expenses:
Casino 2,123,272 1,728,373
Food and beverage 113,577 73,383
Hotel 50,247 7,428
General and administrative 1,460,033 1,335,724
Depreciation and amortization 802,452 766,339
-------------------- --------------------
Total operating costs and expenses 4,549,581 3,911,247
-------------------- --------------------
Income from Operations 643,657 433,836
Other income (expense), net (271,118) 92,488
-------------------- --------------------
Income before Income Taxes 372,539 526,324
Provision for income taxes (benefit) 183,000 (597,000)
-------------------- --------------------
Net Income $ 189,539 $ 1,123,324
==================== ====================
Earnings Per Share:
Basic $ 0.01 $ 0.07
==================== ====================
Diluted $ 0.01 $ 0.07
==================== ====================
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
---------------------------------------------------
1999 1998
--------------------- ----------------
<S> <C> <C>
Net Income $ 189,539 $ 1,123,324
Foreign currency translation adjustments (10,675) (13,067)
--------------------- ----------------
Comprehensive Income $ 178,864 $ 1,110,257
===================== ================
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
---------------------------------------------------
1999 1998
---------------------- ---------------------
<S> <C> <C>
Cash provided by operations $ 734,252 $ 1,224,609
---------------------- ---------------------
Cash provided by investing activities 415,016 222,300
---------------------- ---------------------
Cash used in financing activities (705,694) (1,388,943)
---------------------- ---------------------
Increase in cash and cash equivalents 443,574 57,966
Cash and cash equivalents at beginning of period 2,175,604 4,227,978
---------------------- ---------------------
Cash and cash equivalents at end of period $ 2,619,178 $ 4,285,944
====================== =====================
Supplemental Disclosure of Cash Flow Information:
Interest paid by the Company was $252,697 and $296,828 for the three months
ended March 31, 1999 and 1998.
Income taxes paid by the Company were $12,000
and $59,345 for the three months ended March 31, 1999 and 1998.
</TABLE>
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,
1998.
2. INCOME TAXES
The income tax provision for the quarter ended March 31, 1999, was
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. The income tax benefit of $597,000 for the three months
ended March 31, 1998 consisted 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 $218,000, based upon estimated full-year income for
financial reporting purposes adjusted for permanent differences,
primarily nondeductible goodwill amortization.
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<PAGE>
3. EARNINGS PER SHARE
Basic and diluted earnings per share for the three months ended March
31, 1999 and 1998 were computed as follows:
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
--------------------------------------------------
1999 1998
---------------------- ---------------------
<S> <C> <C>
Basic Earnings Per Share:
Net income $ 189,539 $ 1,123,324
====================== =====================
Weighted average common shares 14,667,285 15,790,013
====================== =====================
Basic earnings per share $ 0.01 $ 0.07
====================== =====================
Diluted Earnings Per Share:
Net income, as reported $ 189,539 $ 1,123,324
Interest expense, net of income taxes,
on convertible debenture 8,412
---------------------- ---------------------
Net income available to common shareholders $ 189,539 $ 1,131,736
====================== =====================
Weighted average common shares 14,667,285 15,790,013
Assumed issuance of contingent shares 710,295
Effect of dilutive securities:
Convertible debenture 271,739
Stock options and warrants 154,898 70,252
---------------------- ---------------------
Dilutive potential common shares 14,822,183 16,842,299
====================== =====================
Diluted earnings per share $ 0.01 $ 0.07
====================== =====================
Excluded from computation of diluted earnings per share
Due to antidilutive effect:
Options and warrants to purchase common shares 5,166,009 5,913,581
Weighted average exercise price $ 1.96 $ 2.02
</TABLE>
The convertible debenture would have had an antidilutive effect for the
three months ended March 31, 1999 and therefore was excluded from the
calculation.
The Company's obligation related to the contingently issuable shares
reflected in the calculation of dilutive earnings per share for the
three months ended March 31, 1998, was renegotiated and settled in the
second quarter of 1998 through a combination of a cash payment and
issuance of an unsecured note.
4. PURCHASE OPTION ON CRIPPLE CREEK PROPERTY
On March 25, 1999 the Company entered into a purchase option agreement
for a property in Cripple Creek, Colorado, situated across the street
from its Womacks/Legends Casino on Bennett Avenue. The agreement
provides for payments of up to $50,000 over 24 months. The Company may
exercise its option to purchase the property at any time during that
period for a price of $1,500,000, less 50% of cumulative monthly option
payments.
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<PAGE>
5. PRAGUE, CZECH REPUBLIC
In March 1999, Casino Millennium a.s. received a license for the
operation of a casino in Prague, Czech Republic. Through March 31,
1999, the Company had made deposits towards the purchase of gaming
equipment totaling $750,000, with approximately $750,000 remaining to
be funded prior to opening. The Company has a 20-year agreement with
Casino Millennium a.s. to provide casino management services for 10% of
the casino's gross revenue and to provide certain gaming equipment for
45% of the casino's net profit. The opening of the hotel and casino is
currently scheduled, subject to change, for the summer of 1999.
6. EMPLOYEES' EQUITY INCENTIVE PLAN
On February 8, 1999, the Company's Board of Directors approved the
award of options on 809,000 shares of the Company's common stock under
the Employees' Equity Incentive Plan. The options have an exercise
price of $0.75 per share, will vest in their entirety on February 8,
2000, and have an exercise period of ten years.
7. EVENT SUBSEQUENT TO MARCH 31, 1999
In April 1999, the terms of an unsecured note payable to a founding
shareholder were amended. The previously existing principal balance of
$420,360, plus accrued interest of approximately $60,000, were combined
into a new principal amount of $480,000. The Company concurrently made
a principal repayment of $100,000. The remaining principal of $380,000
bears interest at 6%, payable quarterly. The noteholder, at his option,
may elect to receive any or all of the unpaid principal by notifying
the Company on or before April 1 of any year. Payment of the principal
amount so specified would be required by the Company on or before
January 1 of the following year. The entire outstanding principal is
otherwise due and payable on April 1, 2004. Accordingly, in the
accompanying consolidated balance sheet at March 31, 1999, $100,000 of
principal is classified as a current liability and $380,000 is
classified as noncurrent.
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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 March 31, 1999 vs. 1998
Net operating revenue for the first quarter of 1999 was $5,193,238 compared with
$4,345,083 for the same period in 1998, an increase of 19.5%. Casino revenue for
Womacks/Legends Casino increased from $4,245,653 in 1998 to $5,086,374 in 1999.
The increase in casino revenue was due to a combination of improvements in the
mix of slot machine denominations and the unusually mild weather during the 1999
period. The casino's share of the Cripple Creek market was 18.9% for the first
quarter of 1999 compared with 17.4% a year earlier. Womacks/Legends Casino
operated 15.0% of the slot machines in the Cripple Creek market and achieved an
average daily win per machine of $95 versus the Cripple Creek average of $75.
Gross margin for the Company's casino activities decreased slightly to 58.3%
from 59.6% a year earlier, due principally to a higher effective gaming tax
rate. The difference in the effective gaming tax rate, year over year, resulted
from a higher revenue base in 1999, the graduated gaming tax rate structure, and
a change in the taxing authority's fiscal year which provided a one-time benefit
in 1998. The Company also earned $34,244 of casino revenue in the 1998 period
from a cruise ship concession agreement that expired in early 1998.
Food and beverage revenue increased 19.5% to $210,823, which was commensurate
with the increase in casino revenue. The cost of food and beverage promotional
allowances, which is included in casino costs, increased to $211,420 compared
with $201,727 in the prior year. The increase in hotel revenue and associated
costs is a result of the casino's marketing arrangement with a local hotel that
commenced in late 1998.
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<PAGE>
General and administrative expense as a percentage of
net operating revenue was 28.1% for the first quarter of 1999 compared with
30.7% in 1998. The decrease was primarily due to lower travel costs and no
relocation costs, which were incurred in 1998 in connection with closing the
Company's Colorado Springs offices.
Depreciation expense increased to $467,076 in the 1999 period from $430,963 in
1998, primarily due to the addition of new machines and ongoing improvements to
Womacks/Legends Casino, while amortization of goodwill remained unchanged at
$335,376 for both periods.
Other expense, net, for the first quarter of 1999 comprised $14,748 of interest
income, $251,199 of interest expense, a loss of $2,540 from the disposal of
fixed assets, and amortization of deferred financing costs of $32,127. Other
income, net, for the first quarter of 1998 comprised $31,915 of interest income,
$220,521 of interest expense, a gain of $49,436 from the disposal of fixed
assets, amortization of deferred financing costs of $24,470, a gain of $550,000
from a terminated management agreement, an impairment loss of $196,022 for an
equity investment in South Africa, and a writeoff of $97,850 of expiring
supplier trade credits.
The income tax provision for the quarter ended March 31, 1999, was 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. The income tax benefit of
$597,000 for the three months ended March 31, 1998 consisted 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 $218,000, based upon estimated full-year income for financial
reporting purposes adjusted for permanent differences, primarily nondeductible
goodwill amortization.
Liquidity and Capital Resources
Cash and cash equivalents totaled $2,619,178 at March 31, 1999, and the Company
had net working capital of $731,449. 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 $9.5 million at March
31, 1999. For the three months ended March 31, 1999, cash provided by operations
was $734,252 compared with $1,224,609 in the prior-year period, with the
decrease principally due to a higher current tax provision in the current year.
Cash provided by investing activities of $415,016 for the first quarter of 1999
included net redemptions of short-term investments of $1,038,496, partially
offset by fixed asset purchases and equipment deposits. Cash used in financing
activities for the current quarter consisted of net repayments of borrowings of
$668,213 and repurchases of outstanding common stock in the amount of $37,481.
On March 25, 1999 the Company entered into a purchase option agreement for a
property in Cripple Creek, Colorado, situated across the street from its
Womacks/Legends Casino on Bennett Avenue. The agreement provides for payments of
up to $50,000 over 24 months. The Company may exercise its option to purchase
the property at any time during that period for a price of $1,500,000, less 50%
of cumulative monthly option payments. Management believes the property has
strategic value either by allowing the Company to expand its own operations or
by limiting the expansion efforts of competitors.
In March 1999, Casino Millennium a.s. received a license for the operation of a
casino in Prague, Czech Republic. Through March 31, 1999, the Company had made
deposits towards the purchase of gaming equipment totaling $750,000, with
approximately $750,000 remaining to be funded prior to opening. The Company
expects to fund the remaining capital commitment through a combination of
operating cash flows and existing liquidity. The Company has a 20-year agreement
with Casino Millennium a.s. to provide casino management services for 10% of the
casino's gross revenue and to provide certain gaming equipment for 45% of the
casino's net profit. The opening of the hotel and casino is currently scheduled,
subject to change, for the summer of 1999.
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<PAGE>
On April 21, 1998, the Gauteng Gambling and Betting Board (the "Board")
announced the award of the remaining two gaming licenses for the province of
Gauteng, South Africa, which includes the major metropolitan areas of
Johannesburg and Pretoria. Silverstar Development Ltd. ("Silverstar"), the
consortium to which the Company is the contracted casino management partner, and
in which the Company holds a minority equity interest, had submitted an
application for a proposed $70 million, 1,700 gaming position hotel/casino
resort development. Silverstar was not awarded one of the licenses. The Company
recorded an impairment allowance against its entire equity investment in
Silverstar in the amount of $196,022, which was included in "other expense, net"
in the accompanying statement of operations for the three months ended March 31,
1998. Silverstar subsequently filed a legal action with the Supreme Court of
South Africa (the "Supreme Court") challenging the decision of the Board and the
provincial government in their failure to award a casino license to Silverstar
on the grounds that the decision-making process was legally deficient. On March
11, 1999, the Supreme Court overturned the previous license award that had been
sought by Silverstar, and remanded the licensing process for the West Rand
region to the provincial government. The competing license applicant appealed
the ruling, but on April 15, 1999, the Supreme Court rejected the request for
leave to appeal its March ruling. This defendant may make a final request for
leave to appeal with the Appeals Court, the final court of appeal. The Company's
legal advisors believe that a decision by the Appeals Court to grant or to
refuse final leave to appeal would then be made approximately three months
thereafter. A final decision to refuse leave to appeal would allow the
provincial government to redetermine its previous adjudication of the remaining
license that Silverstar seeks. While there can be no certainty as to the outcome
of any future adjudication regarding the award of the license, Silverstar and
Century remain confident as to the merits of their application.
Management believes that the Company's working capital position at March 31,
1999, 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.
Year 2000 Compliance
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a
two-digit year is generally referred to as the Year 2000 ("Y2K") compliance
issue. As the year 2000 approaches, such systems may be unable to accurately
process certain date-based or date-sensitive information. The Company is
presently implementing its plan to ensure Y2K compliance. The Company believes
that it has identified all software applications, hardware components, equipment
and third-party vendors that could pose potential Y2K problems.
Computerized Systems and Components
The computerized systems of most significance to the Company's ongoing business
operations are those that involve slot reporting, player tracking and
accounting. Those systems rely primarily on hardware and software obtained from
third-party vendors. The Company has contacted the respective vendors for these
systems and has received written confirmation that the software applications and
related hardware components currently in use for those systems are Y2K
compliant. Certain of these systems and components were upgraded during 1998.
The Company did not incur any significant incremental costs in making these
systems Y2K compliant.
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<PAGE>
Non-IT-Dependent Systems and Equipment
The Company uses in its business certain systems and equipment that contain
embedded technology ("non-IT dependent systems") such as electronic gaming
devices, security and surveillance equipment, copiers and fax machines, alarm
systems and voicemail systems, among others. The most significant of these to
the Company's operations are electronic gaming devices, from which the Company
derives in excess of 95% of its net operating revenue. Based on written
responses from its vendors, the Company believes that substantially all of the
electronic gaming devices presently being used in the Company's operations are
Y2K compliant. The Company has tested its security and surveillance systems
internally and determined that they are Y2K compliant. The remaining
non-IT-dependent systems and equipment are not considered critical to the
Company's operations. Through its own evaluation or contact with the appropriate
vendors, the Company has determined that the majority of these remaining systems
and equipment are Y2K compliant. Management believes that non-IT-dependent
systems and equipment that have not yet been fully evaluated for Y2K compliance
would not have a material adverse effect on the Company's operations in the
event of non-Y2K compliance.
Third-Party Service Providers
The Company has identified and contacted certain primary service providers,
including its banks and payroll processor, to determine whether their potential
Y2K problems could have a material adverse effect on the Company. The Company
has received responses that they are generally on schedule to achieving Y2K
compliance. The Company can make no assurances, however, that these providers
will, in fact, become Y2K compliant on a timely basis. The Company relies on its
banks principally to provide working capital and to process transactions. The
failure of the Company's banks to provide these services would likely have a
material adverse effect on the Company's day-to-day operations. The Company has
not yet developed a contingency plan to address any Y2K-related failures by its
banks. With respect to payroll processing, the Company estimates that the
incremental cost to process its payroll in-house would be approximately $75,000
on an annual basis. The Company has not, however, developed a contingency plan
to process its payroll in-house. The Company will continue to monitor the
progress of its banks and its payroll processor in addressing their potential
Y2K problems, and will consider whether to develop and test contingency plans
based on the extent of their reported progress.
The ability of the Company to conduct its operations is also dependent on the
provision of certain services such as electricity, water, natural gas,
telecommunications and the like by third parties, where there is limited or no
choice of alternative suppliers. Failures by such third-party suppliers would
have a material adverse effect on the Company's operations. The Company cannot
reasonably estimate the likelihood of Y2K-related failures by these suppliers to
provide their services. The Company does not believe that it is feasible to
develop or test contingency plans to cope with possible Y2K-related failures by
these third parties.
Current Status
Since the filing of the Company's Form 10-K on March 18, 1999, the Company has
received no substantial new information from third-party service providers
regarding their progress towards Y2K readiness, but that their efforts are
ongoing. With the exception of certain services on which the Company relies as
described in the preceding two paragraphs, the Company's information at this
time does not indicate that Y2K compliance issues will have a material adverse
effect upon the financial condition or results of operations of the Company. The
Company's incremental cost of its Y2K compliance program to date has not been
significant and incremental costs to be incurred by the Company to complete its
Y2K compliance program are not expected to be significant. There can be no
assurance, however, that the cost of Y2K compliance might not become material as
the Company's study progresses and more information becomes available.
* * * * * * * * * * * * * * * *
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<PAGE>
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 exhibit is filed herewith:
10.79 Casino Services Agreement dated January 4, 1999 by and between
Casino Millennium a.s., Century Casinos Management, Inc. and
B.H. Centrum a.s.
10.80 Option to Purchase Real Property dated March 25, 1999, by and
between Robert J. Elliott and WMCK Venture Corp.
10.81 Letter Amendment to Note Agreement dated April 1, 1999, by and
between Century Casinos, Inc. and Thomas Graf
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
March 31, 1999.
* * * * * * *
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<PAGE>
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: May 10, 1999
- 15 -
Exhibit 10.79
Casino Services Agreement dated January 4, 1999 by and between Casino Millennium
a.s., Century Casinos Management, Inc. and B.H. Centrum a.s.
<PAGE>
CASINO SERVICES AGREEMENT
THIS CASINO SERVICES AGREEMENT (the "Agreement"), is made and entered
into as of the 4th day of January 1999, by and between CASINO MILLENNIUM a.s., a
corporation duly organized in the Czech Republic ("Owner") and CENTURY CASINOS
MANAGEMENT, INC., a corporation duly organized under the laws of Delaware, USA
("CCM"). B. H. CENTRUM a. s., a corporation duly organized in the Czech
Republic, shall be party to this Agreement for certain select paragraphs only
("BHC").
WITNESSETH
WHEREAS, Owner shall use its best efforts to obtain all necessary
approvals from the relevant authorities in the Czech Republic to develop and
operate a gaming/entertainment facility to be situated in the Marriott Hotel in
Praha, Czech Republic (the "Casino"), which is currently under construction and
scheduled to open in the second quarter of 1999, being developed by BHC, the
landlord of the gaming/entertainment facility to be developed and operated by
Owner; and
WHEREAS, this Agreement shall become effective only if Owner has
successfully secured all licenses and approvals necessary to develop and operate
the Casino as outlined in the above Whereas paragraph; and
WHEREAS, Owner desires to engage CCM to provide the expertise necessary
for the management of the Casino and CCM is willing to provide such services on
behalf of and for the account of Owner on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
I. APPOINTMENT OF CCM
1.1 Owner hereby appoints, hires and employs CCM, as Owner's exclusive
agent, to provide services for the management of the Casino on behalf of and for
the account of Owner during the term of this Agreement. CCM hereby accepts such
appointment upon and subject to the terms, conditions, covenants and provisions
set forth herein. CCM agrees to act in compliance with this Agreement and in
conformity with the approved Annual Operating Plan.
1.2 Owner hereby agrees that, subject to the limitations described
herein, CCM shall have uninterrupted control of the management of the Casino
during the term of this Agreement, and that CCM may provide its services free of
eviction or disturbance by Owner or any third party through or under Owner.
1.3 Prior to CCM's recommendation of employment of the general manager
of the Casino, CCM shall submit to Owner and BHC the resume of such individual
and Owner and BHC shall have the right to interview such individual prior to
such individual being hired for the Casino. CCM shall not employ (for Owner) any
individual as general manager, if Owner and BHC have a reasonable and good faith
material basis for disapproving, as asserted in a writing expressing such basis
for Owner's and BHC's disapproval. If Owner and BHC have a reasonable and good
faith material objection to the performance of any individual employed by CCM
(for Owner) as general manager at the Casino, Owner and BHC shall notify CCM of
such objection and CCM shall meet with Owner and BHC with respect to such
objection. Subject to compliance with applicable rules and regulations, CCM
shall take such steps as Owner and BHC may reasonably request with respect to
any objectionable general manager that are reasonably necessary to satisfy
Owner's and BHC's reasonable objections. CCM shall promptly notify Owner of any
actual or contemplated replacement of the general manager and shall comply with
the requirements of the preceding with respect to any such replacement.
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II. TERM OF AGREEMENT
2.1 Unless sooner terminated pursuant to the provisions of this
Agreement, the initial term of this Agreement shall be deemed to have commenced
as of the Effective Date and shall expire on the twentieth (20th) anniversary of
the Opening Date of the Casino. The term of this Agreement shall automatically
continue for a further period of five (5) years unless one party serves notice
to the other party of their intention to terminate this Agreement at the end of
the initial twenty (20) year term as defined above. Such notice must be in
writing and delivered to the other party by registered mail no later than six
months before the end of the initial twenty (20) year term.
2.2 This Agreement shall terminate upon the occurrence of any of the
following events: (i) the expiration of the term of Agreement; (ii) the
agreement by both parties in writing to terminate this Agreement; (iii) the
exercise of any termination right expressly granted to either Owner or CCM in
this Agreement.
2.3 All sums owed by either party to the other shall be paid
immediately upon termination of this Agreement. In the event of any termination
of this Agreement, Owner shall, notwithstanding such termination, be liable to
CCM for the fees earned and reasonable out-of-pocket expenses incurred by CCM in
conformity with this Agreement prior to such termination as follows: (i) any
unpaid accrued portion of the management fee (including any unpaid accrued
interest thereon), if any, plus (ii) all reimbursable costs to CCM which were
properly incurred prior to termination in connection with the performance of
CCM's obligations in conformity with this Agreement. If the termination of this
Agreement is a consequence of Owner's Default, Owner shall also be liable to CCM
for all reasonable costs (including, but not limited to, severance pay or
settlements and moving expenses of CCM's employees, if any, and any attorney's
fees, expenses, and losses as the result of such severance) incurred as a direct
result of Owner's Default. If the termination of this Agreement is a consequence
of CCM's Default, CCM shall not have the right to collect any amounts due CCM
under this section from the Bank Accounts. If Owner shall have properly
instituted a proceeding in arbitration or litigation arising from CCM's Default,
Owner shall have the right to place in escrow that portion of the amount due CCM
under clauses (i) and (ii) which is equal to the damages and expenses sought in
such proceeding by Owner as a result of CCM's Default, pending the release of
such funds to the appropriate party upon (i) the entry of any final
non-appealable award of damages or expenses to Owner, or (ii) any final
non-appealable decision by the relevant court or arbitrator in favor of CCM.
III. MANAGEMENT FEE
3.1 During the Term of this Agreement, CCM shall be paid the
management fee by Owner set forth herein. Failure to pay the management fee in
accordance with the time periods set forth in this Agreement shall constitute a
breach of this Agreement. The management fee shall be equal to ten percent (10%)
of the Casino's Gross Revenue, plus applicable VAT (DHP). The applicable
exchange rate for the computation of the management fee and VAT (DHP) shall be
the average exchange rate valid on the payment date as announced by the Czech
National Bank.
3.2 The fee described above shall be paid from Owner to CCM on the
first (1st) day of each month, for the preceding month. Owner hereby authorizes
CCM to pay itself the monthly management fee due from the Bank Accounts.
Notwithstanding the foregoing, all Operating Expenses shall be paid directly
from the Bank Accounts.
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IV. CASINO DEVELOPMENT, PRE-OPENING
4.1 As soon as practicable after the Effective Date of this Agreement
and after Owner and BHC have demonstrated and represented, to CCM's reasonable
satisfaction, that the hotel and Casino will be finished and ready-to-use on a
certain date, until the Casino is substantially completed (including the
installation of FF&E), CCM, either directly or through one or more of its
Affiliates, shall provide the technical and pre-opening services described
below:
(i) Approx. three months prior to the Estimated Opening Date, CCM
shall present to Owner and BHC for approval within thirty (30)
days, such approval shall not be unreasonably withheld, CCM's
development plan and schedule for developing the Casino as
well as a development and pre-opening budget for the Casino.
CCM shall consult with Owner and BHC in the preparation of the
development plan, provided Owner and BHC make its
representatives readily available for such consultation.
(ii) CCM will prepare specific operational and functional criteria
for the Casino for use by the architects and the designers in
the preparation of the plans and specifications;
(iii) CCM shall advise and consult with the architects in the
development of schematic, preliminary and working plans and
specifications and the designers in the selection and
specifications of FF&E;
(iv) CCM shall review, critique and make recommendations to
architects and the designers in the selection and layout of
the FF&E in accordance with the FF&E specifications and the
plans and specifications.
(v) CCM shall start to implement the marketing portion of the
development plan, including, but not limited to, direct sales,
media and direct mail advertising, promotion, publicity and
public relations designed to attract customers to the Casino
from and after the opening date.
(vi) CCM shall, and shall have the sole authority to, recruit,
hire, provide orientation to, train, supervise, promote and
determine the compensation (which must be within normal and
reasonable industry standards) of and discharge all executive
and general staff of the Casino on behalf of Owner, including
all Casino personnel to be utilized during the period from the
Effective Date hereto until the opening date in accordance
with the development plan.
4.2 Owner shall engage and retain, at Owner's sole cost and expense,
such architects, engineers, contractors, designers and other specialists as CCM
and Owner deem necessary to prepare all site plans, grading plans, construction
drawings, surveys, materials, specifications, architectural plans and drawings,
elevations, engineering plans and drawings, approved plans and all other plans,
drawings, studies or reports required for the construction of the Casino and for
the purchase and installation of the FF&E.
4.3 The FF&E shall (i) bear the name or identifying characteristic or
logo of the Casino, where appropriate, (ii) be generally consistent in quality
and relative scope with other public areas of the Marriott hotel, (iii) comply
with all applicable laws, rules and regulations, and (iv) upon CCM's request and
at CCM's discretion, identify, clearly visible to the customers, that the Casino
is operated in cooperation with Century Casinos.
4.4 The Casino shall be opened to the public on a date established by
Owner, BHC and CCM ("Estimated Opening Date") upon satisfaction of the
following: (i) the construction project managers have issued to Owner a
certificate of substantial completion confirming that the Casino and the hotel
have been substantially completed in accordance with the plans and
specifications, (ii) all operating permits (including, without limitation, a
certificate of occupancy or local equivalent, gaming/casino, currency exchange,
liquor and restaurant licenses and all permits, certificates and other licenses
required by any authority) have been obtained, (iii) the initial cash needs and
the working capital for the Casino as determined by CCM and the Casino Bankroll
have been furnished by Owner, (iv) CCM is satisfied that all operational systems
have been adequately tested on a "dry-run" basis to the satisfaction of CCM and
any appropriate governmental authorities, and (v) all other governmental
requirements necessary to open, occupy and operate the Casino have been
satisfied. CCM shall use all reasonable efforts in the performance of its duties
under this Agreement to assist Owner in achieving the satisfaction of all of the
foregoing requirements by the Estimated Opening Date.
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4.5 All costs and expenses properly incurred in connection with the
technical and pre-opening services of CCM ("Pre-Opening Expenses") shall be paid
from the Bank Accounts. Owner shall deposit, in advance, such sums in accordance
with the schedule as shall be established by the parties in the development plan
and Owner shall maintain sufficient funds therein to pay all Pre-Opening
Expenses in accordance with monthly schedules to be prepared by CCM and
submitted to, and approved by, Owner and BHC. CCM shall not incur any expenses
or make any disbursements that are not provided for, or are in excess of one
hundred twenty percent (120%) of any line item, in the development plan without
Owner's prior written consent; provided, however, that if a savings of up to
forty percent (40%) is obtained for a line item, such amount may be reallocated
so as to allow an excess disbursement in an amount up to the amount saved with
respect to another line item.
4.6 All development plans and schedules and cost budgets are intended
only to be reasonable estimates based on CCM's best business judgment and CCM
shall not be liable or responsible in any event if any of the budgeted figures
are not attained or there is any variance between the actual numbers and the
amounts set forth in any development plans, schedules or cost budgets. Owner
acknowledges that CCM has not made any guarantees, warranty or representation of
any nature in this regard.
V. CASINO OPERATIONS
5.1 On or before November 15 of each year, CCM shall submit to Owner
and BHC for approval within thirty (30) days, such approval shall not be
unreasonably withheld, an annual operating plan for the operation of the Casino
for the forthcoming year (each such approved annual operating plan is referred
to herein as an "Annual Operating Plan"), which shall include an annual
marketing plan, annual operating budget by month (the "Annual Operating
Budget"), annual estimate of key operating statistics, annual projection of
sources of cash, and a two (2) year projection of capital expenditures. The
Annual Operating Plan shall include sufficient amounts for maintenance and
repairs to keep the Casino in good operating condition. CCM will consult with
Owner and BHC in preparing the Annual Operating Plan, provided that Owner and
BHC make its representatives readily available for such consultations. If Owner
and CCM cannot agree on certain portions of the proposed Annual Operating Plan
or an Annual Operating Budget contained therein, the undisputed portions of the
proposed Annual Operating Plan or Annual Operating Budget shall be deemed to be
adopted and approved. With respect to objectionable items in any proposed Annual
Operating Budget, the corresponding item contained in the Annual Operating
Budget for the preceding year shall be substituted in lieu of the disputed
portions of the proposed Annual Operating Budget, excluding, however, line items
in the previous Annual Operating Budget for extraordinary expenses or revenues.
In any instance where a portion of an Annual Operating Budget from a preceding
year is deemed to be applicable to the Annual Operating Budget in effect until a
new Annual Operating Budget is fully approved, corresponding items contained in
the Annual Operating Budget for the preceding year shall be automatically
adjusted by a percentage equal to the percentage change in the Consumer Price
Index during the preceding year.
5.2 Except as provided elsewhere in this Agreement, CCM shall not,
without Owner's prior written consent, incur any expenses or make any
disbursements that are either not provided for in an Annual Operating Budget or
are in excess of one hundred and twenty percent (120%) of the amount approved
for a particular item in such Annual Operating Budget unless otherwise
permitted; provided, however, that if a savings of up to forty percent (40%) is
obtained for a line item, such amount may be reallocated so as to allow an
excess disbursement in an amount up to the amount saved with respect to another
line item. Any request by CCM to make any expenditure or incur any obligation in
excess of one hundred twenty percent (120%) of an amount set forth in the Annual
Operating Budget contained in the applicable Annual Operating Plan or which
falls into any category of expenditures which is required by any law to have the
prior approval of Owner, shall be submitted to Owner in writing with an
explanation of such expenditure. Owner shall respond to any request within ten
(10) days after the receipt thereof. If Owner fails to respond within such ten
(10) day period, the proposed expenditure shall be deemed approved.
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5.3 CCM may make, enter into and perform, in the name of, for the
account of, on behalf of, and at the expense of Owner, any contracts and
agreements provided for under this Agreement and each Annual Operating Plan and
Annual Operating Budget, so long as CCM has complied with all the requirements
of this Agreement with respect to such contracts and agreements. All costs and
expenses reasonably incurred by CCM or an Affiliate of CCM in accordance with
this Agreement, the Annual Operating Plan and the Annual Operating Budget shall
be for and on behalf of Owner and for Owner's account. All debts and liabilities
properly incurred by CCM under this Agreement to third parties on behalf of
either Owner or the Casino are and shall remain the sole obligations of Owner.
5.4 During the Term of this Agreement, CCM shall maintain full and
adequate books of account and records ("Books and Records") reflecting the
results of the operation of the Casino on an accrual basis, all in accordance
with generally accepted accounting principles and Czech accounting regulations
consistently applied in all material respects. The Books and Records shall be
kept separate and distinct from all other operations and businesses of CCM or
Affiliates of CCM. CCM shall keep all Books and Records, including, without
limitation, current vendor invoices, payroll records, general ledgers, credit
transactions and other records relating to the Casino at such location as shall
be approved by Owner in writing, subject to such record retention and storage
policies and access rights required by any casino authority and any other
applicable governmental requirements. All such Books and Records shall at all
times be the property of Owner and shall not be removed from the approved
location by CCM without Owner's written approval except as required by general
laws. Upon any termination of this Agreement, all Books and Records shall
immediately be turned over to Owner so as to ensure the orderly continuance of
the operation of the Casino, but (i) CCM may make and retain copies of all or
any portion of the Books and Records needed for its own record keeping and (ii)
such Books and Records shall be available to CCM for a period of five years
after termination of this Agreement at all reasonable times for inspection,
audit, examination and transcription of particulars relating to the period in
which CCM managed the Casino.
5.5 All Annual Operating Plans and Budgets are intended only to be
reasonable estimates based on CCM's best business judgment and CCM shall not be
liable or responsible in any event if any of the budgeted figures are not
attained or there is any variance between the actual revenues and expenditures
and the amounts set forth in any Annual Operating Plans and Budgets. Owner
acknowledges that CCM has not made any guarantees, warranty or representation of
any nature concerning or related to the amounts of Gross Gaming Revenue to be
generated and Operating Expenses to be incurred from the operation of the Casino
during the term of this Agreement.
5.6 CCM shall have the discretion and authority to determine operating
policies and procedures, standards of operation, staffing levels and
organization, win payment arrangements, standards of service and maintenance,
pricing, and other policies affecting the Casino, or the operation thereof, to
implement all such policies and procedures, and to perform any act on behalf of
Owner which CCM deems necessary or desirable in its good faith business judgment
for the operation and maintenance of the Casino on behalf, for the account and
at the expense of Owner in order to maximize Owner's benefits from the operation
of the Casino. CCM shall apply the same standards of care and diligence as if it
were the Owner.
5.7 Owner shall establish one or more bank accounts that are necessary
for the operation of the Casino at various banking institutions chosen by Owner
and CCM (such accounts are hereinafter collectively referred to as the "Bank
Accounts"). The accounts shall be in the name of Owner, but, except as provided
in the following sentence, CCM's designees shall be the only persons authorized
to draw upon the Bank Accounts. If CCM has committed an Event of Default which
continues during the term of any applicable cure periods, or if CCM has acted in
bad faith with respect to Owner's funds in the Bank Accounts, then Owner shall
have the right to assume sole control of the Bank Accounts upon ten (10)
business days' prior written notice to CCM, whereupon the signatures of two (2)
members of Owner shall be required to draw upon the Bank Accounts. The Bank
Accounts shall be interest bearing accounts if such accounts are reasonably
available and all interest thereon shall be credited to the Bank Accounts. All
Gross Revenues received by CCM from the operations of the Casino shall be
deposited in the Bank Accounts and CCM shall pay out of the Bank Accounts, to
the extent of the funds therein, from time to time, all Operating Expenses and
other amounts required by CCM to perform its obligations under this Agreement.
Owner shall bear the risk of the insolvency of any financial institution holding
such Bank Accounts.
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<PAGE>
5.8 Without limiting the generality of this section, in the event that
a condition exists in, on, or about the Casino of a nature reasonably believed
by CCM to be an emergency, including structural repairs, which CCM believes
requires immediate repair to preserve and protect the Casino and assure its
continued operation or to protect the safety and welfare of the Casino's
customers, guests or employees, CCM, on behalf of and at the expense of Owner,
shall take all reasonable steps and make all reasonable expenditures necessary
to repair and correct any such condition, whether or not provisions have been
made in the applicable budgets for any such emergency expenditures. Expenditures
made by CCM in connection with an emergency shall be paid from the Bank
Accounts. Owner shall replenish funds paid from the Bank Accounts with any
insurance proceeds, if any, received by Owner with respect to such emergency
condition or situation, and Owner shall replace any difference between the
insurance proceeds, if any, and the amount used for such emergency from the Bank
Accounts. CCM shall promptly notify Owner of any emergency expenditures made
pursuant to this section.
5.9 CCM shall provide Owner and BHC with daily revenue and monthly
financial statements concerning the operation of the Casino without delay for
appropriate invoicing under Owner's Lease Agreement with BHC.
VI. EVENTS OF DEFAULT
6.1 The occurrence of any one or more of the events described in this
section which is not cured within the time permitted shall constitute a default
under this Agreement (hereinafter referred to as a "Default" or an "Event of
Default") as to the party failing in the performance or effecting the breaching
act.
a) CCM's Defaults. CCM shall have committed a "CCM's Default" if
CCM shall:
(i) file a voluntary petition in bankruptcy or
insolvency, or a petition for relief or
reorganization under any bankruptcy or insolvency
law;
(ii) consent to an involuntary petition in bankruptcy or
fail to vacate any order approving an involuntary
petition within sixty (60) days from the date of
entry thereof;
(iii) assign for the benefit of its creditors all or any
substantial part of its assets, or consent to the
appointment of a receiver, liquidator, custodian or
trustee in bankruptcy for CCM of all or any
substantial part of its assets;
(iv) fail to materially perform or materially comply with
any of the covenants, agreed terms or conditions
contained in this Agreement applicable to CCM (other
than monetary payments) and such failure shall
continue for a period of forty-five (45) days after
written notice thereof from Owner to CCM specifying
in detail the nature of such failure, or, in the case
such failure is of a nature that it cannot, with due
diligence and good faith, be cured within forty-five
(45) days, if CCM fails to proceed promptly and with
all due diligence and in good faith to cure the same
and thereafter to prosecute the curing of such
failure to completion with all due diligence within
ninety (90) days thereafter.
If the only result of the failure by CCM to act is a monetary loss to Owner
which is not otherwise capable of being cured by CCM, then CCM shall not be in
Default if CCM reimburses Owner for such losses within ninety (90) business days
of incurring such loss or otherwise protects Owner against such loss in a manner
reasonably acceptable to Owner.
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<PAGE>
b) Owner's Default. Owner shall have committed an "Owner's Default" if
Owner shall:
(i) file a voluntary petition in bankruptcy or
insolvency, or a petition for relief or
reorganization under any bankruptcy or insolvency
law;
(ii) consent to an involuntary petition in bankruptcy or
fail to vacate any order approving an involuntary
petition within sixty (60) days from the date of
entry thereof;
(iii) assign for the benefit of its creditors all or any
substantial part of its assets, or the consent to the
appointment of a receiver, liquidator, custodian or
trustee in bankruptcy for all or any substantial part
of its assets;
(iv) fail to make any monetary payment required under this
Agreement, including, but not limited to, the
management fee or Owner's Advances, on or before the
due date recited herein and said failure continues
for thirty (30) business days after written notice
from CCM specifying such failure; or
(v) fail to perform or materially comply with any of the
other covenants, agreements, terms or conditions
contained in this Agreement applicable to Owner and
such failure shall continue for a period of
forty-five (45) days after written notice thereof
from CCM to Owner specifying in detail the nature of
such failure, or, in the case such failure is of a
nature that it cannot, with due diligence and good
faith, cure within forty-five (45) days, if Owner
fails to proceed promptly and with all due diligence
and in good faith to cure the same and thereafter to
prosecute the curing of such failure to completion
with all due diligence within ninety (90) days
thereafter.
6.2 Upon the occurrence of a CCM's Default, Owner shall be entitled to
(i) terminate this Agreement by Owner's written notice of termination to CCM and
such termination shall be effective fifteen (15) days after delivery of such
notice; or (ii) obtain specific performance of CCM's obligations hereunder and
injunctive relief. In the event of a termination of this Agreement pursuant to
clause (i) of this section, Owner shall be entitled to a payment, as liquidated
damages, in the amount of the projected Management Fee for the twelve (12) month
period following the termination. Upon the occurrence of an Owner's Default, CCM
shall be entitled to (a) terminate this Agreement by CCM's written notice of
termination to Owner, and such termination shall be effective thirty (30) days
after delivery of such notice or such time as a new management services company
is appointed, whichever is earlier; or (b) obtain specific performance of
Owner's obligations hereunder and injunctive relief. In the event of a
termination of this Agreement pursuant to clause (a) of this section, CCM shall
be entitled to accelerated payment of its projected Management Fee for the
twelve (12) month period following the termination date of this Agreement. The
projection for the Management Fee shall be based on the estimated revenues for
the Casino in the Casino's most recent Annual Operating Budget. The parties
hereby agree that the amount payable as liquidated damages described above is a
reasonable estimate of the amount of damages for termination of this Agreement
arising out of such CCM or Owner Default and the termination of this Agreement
and upon payment thereof CCM or Owner, respectively, shall have no further
rights, claims or entitlement to damages as a consequence of such termination.
6.3 No delay or omission as to the exercise of any right or power
accruing upon any Event of Default shall impair the non-defaulting party's
exercise of any right or power or shall be construed to be a waiver of any Event
of Default.
7. CERTAIN RIGHTS AND RESPONSIBILITIES OF OWNER
7.1 Owner shall advance to CCM on a timely and prompt basis immediately
available funds with which to conduct the affairs of and maintain the Casino
(hereafter referred to as "Owner's Advances") as set forth in this Agreement and
as otherwise provided hereunder.
7.2 Owner shall timely fund to CCM the initial amounts agreed to by the
parties set forth in the development plan or any revisions thereof approved by
Owner. In the event that Owner or CCM anticipates a delay in the opening of the
Casino beyond the Estimated Opening Date, each shall be obligated to immediately
notify the other in writing and Owner shall, at the request of CCM, at any time
and from time to time, deposit with CCM any additional amounts that are
reasonably necessary to pay the additional Pre-Opening Expenses attributable to
the delay, which shall include, without limitation, wages and other expenses
relating to the Casino's personnel already employed.
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7.3 Thirty (30) days prior to the Estimated Opening Date, Owner shall
fund to CCM the working capital necessary to commence operating the Casino, as
established by CCM. During the term of this Agreement, within five (5) business
days after receipt of written notice from CCM, Owner shall fund Owner's Advances
adequate to insure that the working capital is sufficient to support the
uninterrupted and efficient ongoing operation of the Casino. The written request
for any additional working capital shall be submitted by CCM to Owner on a
quarterly basis based.
7.4 CCM shall pay from Gross Gaming Revenues the following items
on or immediately before their applicable due date:
(i) Operating Expenses (including the management fee) and
emergency expenditures, if any; and
(ii) Payments due on any purchase or other financing
arrangements relating to the FF&E, and any other
expenditures permitted by any Annual Operating Plan;
and
(iii) Any other taxes, expenses or fees which Owner is
obligated to pay out of Gross Revenues by contract,
as long as such contract has been brought to the
attention of CCM and Owner has requested, in writing,
that CCM shall provide this service for the account
of Owner, or under law.
CCM's responsibility to make any of the foregoing payments is subject to and
conditioned upon Owner making available funds sufficient to make such payments
from Gross Revenue or otherwise in the order set forth above.
7.5 In addition to the initial cash needs, at least fifteen (15) days
prior to the Estimated Opening Date, Owner shall provide the initial Casino
Bankroll and shall maintain such amount throughout the term of this Agreement.
If the Casino Bankroll required to be provided by Owner is not sufficient or is
depleted as a result of losses, Owner shall fund the Casino Bankroll in an
amount sufficient to carry on the Casino's operations and in a manner which
complies with governmental requirements
7.6 Owner and CCM shall cooperate fully with each other during the term
of this Agreement to facilitate the performance by CCM of CCM's obligations and
responsibilities set forth in this Agreement and to procure and maintain all
permits. Owner shall provide CCM with all such information necessary to the
performance by CCM of its obligations hereunder as may be reasonably and
specifically requested by CCM from time to time.
7.7 CCM acknowledges that BHC has the right to terminate the
lease/rental contract (entered into between BHC and Owner) for the casino
premises in the Marriott Hotel Praha, in case both of the following conditions
apply: (i) the average rental payment (which is calculated as a percentage of
the Casino's Gross Revenue) equals less than twenty-five Deutsche Mark (DM 25)
per square meter per month during any twelve months period, beginning after the
second anniversary of the Opening Date, and (ii) the Annual Operating Plan and
Budget for the next (after a twelve month period as defined under (i) above)
twelve months period fails to show a trend towards achieving such DM 25
benchmark. Should both conditions apply and BHC elect to terminate the
lease/rental contract, the Owner shall have the right to terminate this
Agreement. This DM 25 benchmark is subject to indexation applying the German
Consumer Price Index.
7.8 Owner shall further have the right to terminate this Agreement, in
case more than one of the members of CCM's Prague Project Committee of the Board
of Directors loses or be removed from the management and control of CCM.
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VIII. INSURANCE, DAMAGE
8.1 Owner and CCM shall procure all insurance coverages deemed
necessary and adequate, subject in each case to reasonable deductible amounts as
determined by Owner and CCM. The premiums for all insurance obtained and the
uninsured portion of any loss to which such insurance relates shall be Operating
Expenses.
8.2 In the event of a Minor Casualty, CCM shall repair any damage or
destruction at Owner's sole cost and expense. In the event of a Major Casualty,
Owner shall have the option, to repair and restore the damaged or destroyed
premises.
IX. MISCELLANEOUS
9.1 All notices, demands, consents, requests, approvals, and other
communications required or permitted hereunder shall be in writing and shall be
deemed effective only upon delivery (whether receipt is accepted or refused) at
the addresses set forth below (or at such other addresses as shall be given in
writing by any party to the others in accordance with this section). Notices may
be delivered by hand, registered or certified mail, return receipt requested, or
bonded private courier service.
If to Owner: Casino Millennium a.s.
Na Vaclavce 14
110 00 Praha 1
Att.: Vorsitzender des Vorstands
Gernot Leuthmetzer
with a copy to: B. H. Centrum a.s.
Hybernska 7
110 00 Praha 1
If to CCM: Erwin Haitzmann
200 - 220 East Bennett Avenue
Cripple Creek, CO. 80813, USA
with a copy to: Schellmann & Partner
Lerchengasse 2
2340 Modling, Austria
9.2 This Agreement shall be governed by the laws of the Czech Republic.
The forum for any actions between Owner and CCM will be a court of competent
jurisdiction in Prague.
9.3 This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns but
will not be assignable or delegable by any party without the prior written
consent of the other party; provided, however, that nothing in this Agreement is
intended to limit CCM's ability to assign its rights or delegate its
responsibilities under this Agreement to any directly or indirectly controlled
Affiliate of Century Casinos, Inc.
9.4 If any provision herein shall be held invalid or unenforceable,
such provision shall not affect the validity or enforceability of any other
provisions hereof, all of which other provisions shall, in such case, remain in
full force and effect.
9.5 This Agreement constitutes the entire understanding of the parties
with respect to the subject matter hereof and supersedes all other oral or
written agreements between the parties. This Agreement may not be amended,
modified, altered or waived, in whole or in part, except by a subsequent writing
signed by each of the parties hereto.
- 9 -
<PAGE>
9.6 Except as otherwise set forth elsewhere in this Agreement, both
parties shall maintain confidentiality with respect to any developments in the
course of the development and operation of the Casino. Except as required by any
general law (including, without limitation, federal securities exchange and
stock exchange or NASD requirements) and casino authorities, material
confidential information shall only be made available to such of a party's
employees and consultants as are required to have access to the same in order
for the recipient party to adequately use such information for the purposes for
which it was furnished. Any person to whom such information is disclosed shall
be informed of its confidential nature and shall agree to keep it confidential
as provided herein. Information provided by one party to the other shall be
presumed confidential unless the information is (i) published or in the public
domain other than as a result of any action by the recipient thereof, (ii)
disclosed to the recipient by a third party, or (iii) presented to the recipient
under circumstances which clearly and directly indicate the delivering party
does not intend such information to be confidential.
9.7 In the event of litigation or arbitration of any dispute or
controversy arising from, in, under or concerning this Agreement and any
amendments hereof, including, without limiting the generality of the foregoing,
any claimed breach hereof, any suit for accounting, or action for dissolution,
the prevailing party in such action or arbitration shall be entitled to recover
from the other party in such action or arbitration, such sum as the court or
arbitrator shall fix as reasonable attorneys' fees and expenses incurred by such
prevailing party.
9.8 No consent or waiver, express or implied, by any party to or of any
breach or default by any other party in the performance by the other of its
obligations hereunder shall be deemed or construed to be a consent or waiver to
or of any other breach or default in the performance by the other party of the
same or any other obligations of such party hereunder. Failure on the part of
any party to complain of any act or failure to act of the other party or to
declare the other party in default, irrespective of how long such failure
continues, shall not constitute a waiver by any such party of its rights
hereunder.
9.9 During the term of this Agreement, so long as no events of default
by CCM have occurred, Owner shall grant CCM the first right of refusal on all of
its and/or its Affiliates' future gaming casino projects. Such right shall be on
terms substantially similar to those outlined in this Agreement. CCM shall have
sixty (60) days upon receipt of notice from Owner to either accept or reject an
offer to act as CCM of Owner's and/or Owner's Affiliates' future gaming casino
project(s).
9.10 CCM, or any of its Affiliates, shall not, during the term of this
Agreement, manage or operate any other casino in Prague without the previous
written consent of Owner and BHC.
9.11 CCM has the right to remove itself from (terminate) this Agreement
in case it reasonably determines that any casino license currently held or
applied for by any company within the Century Casinos group of companies might
be threatened or put in jeopardy because of this Agreement. In addition, CCM
shall have the right to immediately terminate this Agreement in case any of the
following conditions occur:
The composition of Owner's members of the board or members of the
supervisory board is changed without CCM's written consent; Any of the
shareholders of Owner sells, pledges or otherwise disposes of his (her)
shares in Owner without CCM's written consent.
9.12 Exhibit A ("Definitions") shall be an integral part of this
Agreement.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.
FOR CASINO MILLENNIUM a. s.
By:/s/ Alois Slezacek By:/s/ Michal Janeba
- ---------------------------- --------------------------------
a duly authorized signatory a duly authorized signatory
Position: Shareholder Position: Shareholder
Print name: Alois Slezacek Print name: Michal Janeba
By:/s/ Gernot Leuthmetzer By:/s/ Peter Hoetzinger
- ---------------------------- --------------------------------
a duly authorized signatory a duly authorized signatory
Position: Member of the Board Position: Member of the Board
Print name: Gernot Leuthmetzer Print name: Peter Hoetzinger
FOR CENTURY CASINOS MANAGEMENT, INC.
By:/s/ Erwin Haitzmann By:/s/ Peter Hoetzinger
- ---------------------------- --------------------------------
a duly authorized signatory a duly authorized signatory
Position: Chairman Position: Vice Chairman
Print name: Erwin Haitzmann Print name: Peter Hoetzinger
B. H. CENTRUM a. s. for paragraphs 1.3, 4.1 (i), 4.4, 5.1, 5.9, 7.7, 9.10 and
the first WHEREAS clause only:
By:/s/ Gernot Leuthmetzer By:/s/ Ludwig Steinbauer
- ---------------------------- --------------------------------
a duly authorized signatory a duly authorized signatory
Position: Member of the Board Position: Member of the Board
Print name: Gernot Leuthmetzer Print name: Ludwig Steinbauer
- 11 -
<PAGE>
DEFINITIONS EXHIBIT A
Affiliate. The term "Affiliate" shall mean a Person that directly or indirectly,
or through one or more intermediaries, controls, is controlled by, or is under
common control with the person in question and any stockholder or partner of any
person referred to in the preceding clause owning more than fifty percent (50%)
or more of such person.
Casino. The term "Casino" means the casino facility, including improvements and
fixtures, at the Praha Marriott Hotel, consistent with the concepts set forth in
the development plan and in accordance with the plans and specifications.
Casino Bankroll. The term "Casino Bankroll" shall mean an amount of monies
determined by CCM as necessary to provide cash-on-hand monies required to
operate and maintain the Casino's operation, but in no event shall such amount
be less than the amount required by law. In no event shall the Casino Bankroll
include amounts necessary to provide for the payment of Operating Expenses,
Working Capital or initial cash needs. The Casino Bankroll shall include the
funds in the separate accounts in CCM's name plus any funds located on the
casino tables, in the gambling devices, cages, vault, counting rooms, or in any
other location in the Casino where funds may be found.
Default Rate. The term "Default Rate" shall mean the lesser of (i) the reference
or prime commercial lending rate in the Czech Republic, plus three percent (3%)
per annum, or (ii) the highest rate permitted by applicable law, to the extent
applicable law establishes a maximum rate of interest which may be charged with
respect to obligations of the type of questions, until paid.
Effective Date. The term "Effective Date" shall mean the date when Owner has
received Owner's Gaming License.
CCM's Prague Project Committee of the Board of Directors. The term "CCM's Prague
Project Committee of the Board of Directors" shall mean Erwin Haitzmann, Peter
Hoetzinger and Norbert Teufelberger.
FF&E. The term "FF&E" shall mean all furniture, furnishings, equipment, and
fixtures, including gaming equipment, computers, housekeeping and maintenance
equipment, necessary or appropriate to operate the Casino in conformity with
this Agreement.
Gross Revenue. The term "Gross Revenue" shall mean all gaming receipts less all
sums paid out as winnings in connection therewith, plus all other revenue
generated within the Casino, such as bar, merchandise, currency exchange, and
similar.
Major Casualty. The term "Major Casualty" shall mean any casualty or accident
which prevents or substantially impairs the conduct of the Casino's business and
the ability to earn or generate revenues.
Minor Casualty. The term "Minor Casualty" shall mean any casualty or accident
other than a Major Casualty.
Opening Date. The term "Opening Date" shall mean the first date a revenue-paying
customer is admitted to the Casino.
Operating Expenses. The term "Operating Expenses" shall mean those necessary or
reasonable operating expenses, including, without limitation, costs of operating
supplies, payroll and benefits, marketing, administration, maintenance, energy
and all costs and expenses of licensing CCM's or Owner's employees, incurred on
behalf of Owner after the Opening Date in connection with conducting and
operating the Casino, computed on an accrual basis, deductible under Generally
Accepted Accounting Principles in determining "Operating Income" (as defined in
casino industry practice) for purpose of preparing a statement of operations for
the Casino as well as taxes and other payments due any governmental authorities;
provided, however, Operating Expenses shall not include depreciation or
amortization with respect to the Casino or the F, F&E, debt service or capital
replacements deposits. Operating Expenses shall include the management fee under
this Agreement and the rent under the Lease Agreement between Owner and BHC.
Owner's Gaming License. The term "Owner's Gaming License " shall mean the
license necessary to operate the Casino.
Working Capital. The term "Working Capital" shall mean such amount in the Bank
Accounts as will be sufficient to reasonably assure the timely payment of all
current liabilities of the Casino and the uninterrupted and efficient operation
of the Casino during the term of this Agreement to permit CCM to perform its
responsibilities and obligations hereunder, all as contemplated by the
applicable Annual Operating Plan with reasonable reserves for unanticipated
contingencies and for short term business fluctuations resulting from monthly
variations between the Annual Operating Plan and actual operating expenses.
- 12 -
Exhibit 10.80
Option to Purchase Real Property dated March 25, 1999, by and between Robert J.
Elliott and WMCK Venture Corp.
<PAGE>
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT ("Agreement") is entered into as of the 25th day
of March, 1999, by and between ROBERT J. ELLIOTT ("Optionor") and WMCK Venture
Corporation, a Delaware corporation ("Optionee").
Recitals
--------
A. Optionor is the owner in fee of that certain real property ("Real
Property") located in the County of Teller, State of Colorado, more particularly
described in Exhibit A attached hereto, and the improvements and fixtures
thereon ("Improvements") (the Real Property and Improvements are collectively
called the "Property").
B. Optionor desires to grant to Optionee an option to purchase the
Property upon the terms and conditions set forth herein, and Optionee desires to
acquire such option.
NOW THEREFORE, IN CONSIDERATION of the mutual agreements herein set
forth, and other valuable consideration, receipt of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
GRANT OF OPTION
---------------
Optionor hereby grants to Optionee the exclusive option to purchase the
Property upon all of the terms, covenants and conditions set forth herein (the
"Option").
ARTICLE II
TERM AND MANNER OF EXERCISE
---------------------------
2.1 (a) The Option shall be exercisable by Optionee at any time during
the initial period commencing April 1, 1999 and terminating at 12:00 midnight
Cripple Creek time on March 31, 2000 (the "Initial Option Period") and provided
the Option is extended as set forth in Section 2.1(b) below, at any time during
the extended period commencing April 1, 2000 and terminating at 12:00 midnight
Cripple Creek time on March 31, 2001 (the "Extended Option Period"), by written
notice delivered by the Optionee to Optionor in the manner set forth in Section
<PAGE>
19.9 hereof prior to the expiration of the Initial Option Period or Extended
Option Period, as applicable. If Optionee fails to exercise the Option on or
before the last date applicable for such exercise specified above, the Option
and this Agreement shall be null and void and of no further force or effect.
(b) The Option may be extended for the Extended Option Period by
written notice delivered by the Optionee to Optionor in the manner set forth in
Section 19.9 hereof prior to the expiration of the Initial Option Period and
payment by the Optionee to Optionor of the sum of Ten Thousand and No/100
Dollars ($10,000.00) as provided for in Section 3.1(b) below.
ARTICLE III
OPTION CONSIDERATION
--------------------
3.1 (a) As consideration for the Option, during the Initial Option
Period, the Optionee shall pay to the Optionor the sum of Ten Thousand and
No/100 Dollars ($10,000.00) on April 1, 1999, and One Thousand Five Hundred and
No/100 Dollars ($1,500.00) per month during the Initial Option Period,
commencing with the month of April, 1999.
(b) As consideration for the Option, during the Extended Option
Period, the Optionee shall pay to the Optionor the sum of Ten Thousand and
No/100 Dollars ($10,000.00) by no later than March 31, 2000 and One Thousand and
No/100 Dollars ($1,000.00) per month thereafter during the Extended Option
Period, commencing with the month of April, 2000.
<PAGE>
(c) The monthly payments during the Initial Option Period and the
Extended Option Period, if applicable, shall be paid by the Optionee to the
Optionor by the tenth (10th) day of the applicable month by check. In the event
a monthly payment is not received by the Optionee by the tenth (10th) of the
month, the Optionor shall provide the Optionee with written notice of the same
in the manner set forth in Section 17.9 and provided that the Optionor receives
the applicable payment within ten (10) days of Optionee's receipt of such
notice, together with a late charge ("Late Charge") in the amount of five
percent (5.0%) of the late payment, this Option shall continue in full force and
effect.
(d) Such monthly payments shall be due and payable during the
Initial Option Period or Extended Option Period through the effective date of
the Optionee's exercise of the Option, but not thereafter. In the event such
effective date is a day other than the last day of the month, the option
consideration for such month shall be prorated through the effective date of
such exercise.
3.2 In the event Optionee elects to exercise the Option, fifty percent
(50%) of all monies paid by the Optionee to Optionor under Section 3.1 above,
except Late Charges, if any, shall be credited against the Purchase Price of the
Property set forth in Section 4 below.
ARTICLE IV
PURCHASE PRICE
--------------
4. Subject to the credit provided for in Section 3.2 above and the
prorations provided for in Section 11 below, the purchase price ("Purchase
Price") to be paid by the Optionee to the Optionor for the Property shall be One
Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) payable in good
funds at closing.
<PAGE>
ARTICLE V
TITLE MATTERS
-------------
5.1 Attached hereto as Exhibit B is a title commitment (the "Title
Commitment"), issued by Security Title Guaranty Company ("Title Agent") for
First American Title Insurance Company ("Title Insurer") showing the current
state of title of the Property. Optionee hereby approves such state of title, as
shown in the Title Commitment, with the deletion of the standard printed
exceptions and as such Title Commitment has been marked, if at all, by Optionee.
The title exceptions shown in the Title Commitment, excluding the standard
printed exceptions and excluding any other exceptions marked out on the Title
Commitment by Optionee, are called "Approved Title Exceptions."
5.2 Optionee's fee title to the Property shall be insured at closing by
an ALTA owner's extended coverage policy of title insurance to be issued by the
Title Insurer for the amount of the Purchase Price and containing such
endorsements as Optionee may require (collectively the "Title Policy"), showing
title vested in Optionee subject only to:
(a) Non-delinquent real property taxes and free and clear of
special assessments, if any; and
(b) Approved Title Exceptions, as described above.
5.3 Optionor agrees that it will not create any encumbrance, lien or
other matter which would affect or encumber title to the Property during the
term of this Option Agreement. In the event that any matter other than
non-delinquent real estate taxes or an Approved Title Exception affects title to
the Property prior to closing and Optionee objects thereto, Optionor shall have
an additional 60 days in which to discharge such matter or otherwise obtain
affirmative insurance for Optionee as provided herein. If any matter affecting
<PAGE>
title has been created through no fault of Optionor (but only if such matter
materially affects title and Optionee elects not to purchase the Property as a
result thereof), Optionor shall refund to Optionee all sums paid hereunder for
this Option, excluding Late Charges, if any.
5.4 Within sixty (60) days of the date of this Agreement, the Optionor,
at its expense, shall cause an Improvement Location Certificate ("ILC") of the
Property to be made and certified to the Optionee, by a surveyor duly licensed
in the State of Colorado and reasonably acceptable to the Optionee. Optionee
shall have a period of thirty (30) days following receipt of the ILC ("Objection
Deadline") to deliver written objection ("Objection"), if any, to the Optionor,
in the manner set forth in Section 19.9 hereof, concerning any encroachments
and/or areas of concern disclosed by the ILC. If such Objection is made and
Optionor and Optionee have not agreed, in writing, to the resolution of the
Objection on or before the date which is thirty (30) days after the Objection
Deadline ("Resolution Deadline"), this Agreement shall terminate five (5)
calendar days following the Resolution Deadline; unless, within such five (5)
calendar day period Optionor receives written notice from Optionee, in the
manner set forth in Section 19.9 hereof, waiving such Objection.
In the event no Objection is made or, if made, the Objection is waived
by the Optionee, the encroachments and/or areas of concern disclosed by the ILC
shall be deemed to be Approved Title Exceptions.
If Objection is made and this Agreement terminates under the first
subparagraph of this Section 5.4, Optionor shall refund to Optionee all sums
paid hereunder for this Option, excluding Late Charges, if any.
<PAGE>
ARTICLE VI
INSPECTIONS-ZONING MATTERS
--------------------------
6.1 From and after the date of this Agreement, Optionee shall have the
right at Optionee's sole cost and expense to enter onto the Property (either
through its employees or designated agents and representatives) at reasonable
times and in a reasonable manner after giving reasonable notice to Optionor for
the purpose of making such inspections as Optionee deems necessary in connection
with this Agreement; provided that Optionee shall, if requested by Optionor, be
accompanied by Optionor's employees in connection with any inspection of the
Property, and shall not make any physical alteration to the Property without
first securing the written consent of Optionor. Optionor shall not unreasonably
withhold or delay its consent to such right to enter by Optionee.
6.2 Optionor agrees to join with Optionee in any applications to
governmental authorities for modifications to land use regulations affecting the
Property so long as Optionee pays all expenses incurred in connection therewith
and such modification does not adversely affect Optionor's present use and
occupation of the Property.
6.3 Optionee shall indemnify and hold Optionor harmless from any loss,
liability, expense or damage (including reasonable attorneys' fees) in
connection with any such inspections and applications.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
------------------------------
7.1 As an inducement to Optionor to enter into this Agreement, Optionee
represents, warrants and covenants that it is a corporation duly organized,
<PAGE>
validly existing and in good standing under the laws of its state of
incorporation; that it has the corporate power and authority to enter into this
Agreement, and to consummate the transaction herein contemplated and that the
execution and delivery hereof and the performance by Optionee of its obligations
hereunder will not violate or constitute an event of default under the terms or
provisions of any agreement, document or instrument to which Optionee is a party
or by which Optionee is bound.
7.2 As an inducement to Optionee to enter into this Agreement, Optionor
represents, warrants and covenants as of the date hereof as follows:
(a) Optionor has all requisite authority and capacity to (i)
enter into this Option Agreement, and (ii) sell the Property. The execution and
delivery hereof and the performance by Optionor of its obligations hereunder
will not violate or constitute an event of default under the terms and
provisions of any agreement, document or instrument to which Optionor is a party
or by which Optionor is bound;
(b) This Agreement is a valid and binding obligation of Optionor;
(c) There are and shall be no leases, subleases, licenses,
tenancy or occupancy agreements, service contracts, union contracts or other
agreements to which Optionor or the Property is bound, whether written or
unwritten, covering or affecting the Property which will affect the Property at
closing other than the Approved Title Exceptions;
(d) Optionor has not received actual notice from any governmental
authority that existing uses of the Property are not in full compliance with all
applicable zoning laws (and applicable variances) and any other local,
municipal, regional, state or federal requirements or that the improvements on
the Property do not comply with all applicable building, safety, health, zoning,
environmental, subdivision and other laws, ordinances and regulations;
<PAGE>
(e) To the knowledge of Optionor as of the date hereof, there is
no action, proceeding or investigation whether in the nature of eminent domain
or otherwise, pending or threatened, with respect to the ownership, maintenance
or operation of the Property, and Optionor has no knowledge of any litigation or
threatened litigation affecting title to the Property or its use or operation;
(f) Optionor has not granted any options or any other rights to
acquire fee title or other interests in the Property, other than as set forth in
this Agreement;
(g) At closing, the Property will not be in violation of any
federal, state or local law, ordinance or regulation relating to industrial
hygiene or to the environmental conditions on, under, above or about the
Property including, but not limited to soil and groundwater conditions. Neither
Optionor nor, to the best of Optionor's knowledge (after due and diligent
inquiry), any third party has used, generated, manufactured, produced, stored,
released or disposed of on, under, above or about the Property or transported to
or from the Property any flammable explosives, radioactive materials, hazardous
wastes, toxic substances or related injurious materials, whether injurious by
themselves or in combination with other materials (collectively, "Hazardous
Materials"). For the purposes of this Agreement, Hazardous Materials shall
include, but not be limited to substances, materials and wastes which are or
become regulated under applicable local, state or federal law, or which are
classified as hazardous or toxic under federal, state, or local laws or
regulations; and in the regulations adopted and publications promulgated
pursuant to said laws;
<PAGE>
(h) Optionor shall not make any material alterations or additions
to the Property, during the Initial Option Period and Extended Option Period, as
applicable, without the prior written consent of Optionee, which shall not be
unreasonably withheld or delayed;
(i) Optionor shall continue to operate its retail tee-shirt
business from the Property prior to closing;
(j) Optionor, at its sole expense, shall maintain the preserve
the Property in good repair and condition, ordinary wear and tear excepted;
(k) Optionor, at its sole expense, shall obtain and keep in force
extended coverage casualty insurance, insuring the Property, for its full
replacement cost, and in the event of casualty, Optionor shall promptly rebuild
or restore the Property; and
(l) If (i) any of the representations, warranties or covenants
contained in this Section 7.2 are materially inaccurate at closing, (ii) such
inaccuracy materially and adversely affects the Property or Optionee's intended
use thereof, and (iii) Optionee elects in writing not to purchase the Property,
then Optionor shall refund to Optionee all sums paid hereunder for this Option,
excluding Late Charges, if any, and this Agreement shall terminate.
7.3 The truth, accuracy, and completeness of each of the
representations, warranties and covenants of Optionee and of Optionor herein set
forth, shall constitute a condition precedent to the obligations of Optionor and
Optionee, respectively, hereunder. All representations, warranties and covenants
herein set forth shall survive closing, and Optionee and Optionor each agree to
indemnify, defend and hold harmless the other from any claim, demand, liability,
loss or cost (including reasonable attorneys' fees and costs) which the other
may sustain because of any material breach of or inaccuracy in the respective
representations, warranties and covenants of Optionor and Optionee set forth in
this Agreement.
<PAGE>
7.4 Except as set forth in Section 7.2 above, Optionee acknowledges
that, except as provided in Section 7.2, Optionor makes no representations or
warranties, either express or implied, with respect to the Property, its present
condition or its fitness or suitability for any particular purpose and that the
Property is to be sold in an "as is" condition. In this respect, Optionee
confirms that, except as provided in Section 7.2, it is relying solely upon its
investigation of the present condition of the Property and all governmental laws
and ordinances which might affect its use and development.
ARTICLE VIII
CLOSING
------------
8. The Optionor and the Optionee agree that the purchase of the
Property will be consummated as follows:
8.1 Closing Date. The sale of the Property will close on a business day
which is no earlier than seventy-five (75) days and no later than ninety (90)
days (subject to extension as provided for in Section 5.3 above), after exercise
of the Option by the Optionee (the "Closing Date"). The closing of the sale of
the Property will take place at the offices of the Title Agent, with the exact
time for closing to be designated by the Optionee by written notice to the
Optionor and approved by the Optionor.
<PAGE>
8.2 Optionor's Deliveries and Instruments. On the Closing Date, the
Optionor will deliver or cause to be delivered to the Optionee the following
items (all documents will be duly executed and acknowledged where required);
(a) Special Warranty Deed. A special warranty deed executed by
the Optionor conveying the Property to the Optionee, subject to non-delinquent
real property taxes the Approved Title Exceptions;
(b) Assignment. A the election of the Optionee, an assignment
executed by the Optionor assigning to the Optionee all of the Optionor's rights
and obligations under contracts, including copies thereof, intangible personal
property, relating to the Property;
(c) Title Insurance. At Optionee's expense, the Title Policy
naming the Optionee as insured in the amount of the Purchase Price containing
the Approved Title Exceptions;
(d) Title Affidavits. Such affidavits and other documents as
might be reasonably requested by the Title Insurer to issue the Title Policy in
accordance with the terms of the Title Commitment;
(e) Survey. At Optionor's expense, such ALTA survey or other
survey of the Property as might be reasonably requested by the Title Insurer to
insure the Title Policy in accordance with the terms of the Title Commitment;
(f) Nonforeign Affidavit. An affidavit executed by the Optionor
confirming that the Optionor is not a foreign person within the purview of 26
U.S.C.ss.1445 and the regulations issued thereunder; and
<PAGE>
(g) Additional Documents. Such additional documents as might be
reasonably requested by the Optionee or the Title Insurer to consummate the sale
of the Property to the Optionee.
8.3 Optionee's Deliveries and Instruments. On the Closing Date, the
Optionee will deliver to the Optionor the following items (all documents will be
duly executed and acknowledged where required):
(a) Payment. The payment required by Section 4 of this Agreement;
(b) Assumption Agreement. An assumption agreement executed by the
Optionee assuming the Optionor's obligations and duties, prospectively from and
after the Closing Date, under the contracts and other intangible personal
property, if any, which are the subject of Section 8.2(b) above;
(c) Title Affidavits. Such affidavits and other documents as
might be reasonably requested by the Title Insurer to issue the Title Policy in
accordance with the terms of the Title Commitment;
(d) Evidence of Authority. Such resolutions, certificates of good
standing and incumbency certificates and other evidence of authority with
respect to the Optionee, any nominee of the Optionee acting under this Agreement
and the person or persons acting on behalf of the Optionee or the Optionee's
nominee as might be reasonably requested by the Optionor or the Title Insurer;
and
(e) Additional Documents. Such additional documents as might be
reasonably requested by the Optionor or the Title Insurer to consummate the sale
of the Property to the Optionee.
<PAGE>
8.4 Possession. Possession of the Property will be delivered by the
Optionor to the Optionee on or before the close of business on the Closing Date,
free from all parties claiming rights to possession of or having claims against
the Property other than pursuant to contractual obligations approved or to be
assumed by the Optionee or pursuant to the Approved Title Exceptions. If
Optionor fails to deliver possession on the Closing Date, Optionor shall be
subject to eviction and shall be additionally liable to Optionee for payment of
$500 per day from and including the Closing Date until possession is delivered.
ARTICLE IX
PAYMENT OF ENCUMBRANCES
-----------------------
9. Any encumbrance required to be paid shall be paid at or before
closing from the proceeds of this transaction or from any other source.
ARTICLE X
CLOSING COSTS AND SERVICES
--------------------------
10. Optionee and Optionor shall pay, in good funds, their respective
closing costs and all other items required to be paid at closing, except as
otherwise provided herein. Fees for real estate closing services shall not
exceed $350 and shall be paid at closing, one-half by Optionee and one-half by
Optionor. The local transfer tax, if any, shall be paid at closing by Optionor.
Any sales and use tax that may accrue because of this transaction shall be paid
when due by Optionor.
ARTICLE XI
PRORATIONS
----------
11. General taxes for the year of closing, based on the taxes for the
calendar year immediately preceding closing, water and sewer charges, and other
items reasonably subject to proration shall be prorated to the Closing Date. Any
special assessments shall be paid in full by the Optionor at or prior to
closing.
<PAGE>
ARTICLE XII
CONDITION OF PROPERTY
---------------------
12. Except as otherwise provided in this contract, the Property and
Inclusions shall be delivered in the condition existing as of the date of this
contract, ordinary wear and tear excepted.
ARTICLE XIII
COMMISSIONS
-----------
13. Optionor and Optionee each hereby represent and warrant to the
other that it has not dealt with any broker or finder or any other person who
might be entitled to a fee in connection with the purchase and sale of the
Property and that no fee or commission is due to any broker, finder or other
person in connection with this Agreement or the sale contemplated thereby.
Optionor and Optionee each hereby indemnify the other and agree to hold the
other harmless from and against any and all claims, demands, liabilities,
losses, judgments, costs and expenses (including, without limitation, reasonable
attorneys' fees) arising directly or indirectly out of any claim for a fee or
commission due to any broker or finder arising out of facts which contravene the
warranties herein stated. These representations, warranties and agreements shall
survive closing.
ARTICLE XIV
ASSIGNMENT
----------
14. Neither Optionee nor Optionor may assign this Agreement or any of
their rights hereunder for any purpose whatsoever without the written consent of
the other party (which consent shall not be unreasonably withheld or delayed by
either party) and any purported assignment unless approved shall be absolutely
void and of no force or effect.
<PAGE>
ARTICLE XV
OPTIONEE'S DEFAULT
------------------
15. In the event that Optionee does not exercise the Option, or if
Optionee does exercise the Option but fails to complete the purchase of the
Property other than because of a material breach hereof by Optionor, Optionor
shall be entitled to retain the entire consideration paid by Optionee for the
Option. If the Option granted hereby is exercised and Optionee nevertheless
fails to consummate the purchase of the Property in accordance with the terms of
this Agreement, it is agreed that it is reasonable under the circumstances to
provide that the damages to be suffered by Optionor in such event may be
liquidated to an amount equal to the consideration paid by the Optionee for the
Option. ACCORDINGLY, OPTIONOR SHALL ACCEPT AND BE ENTITLED TO RETAIN SUCH
CONSIDERATION OPTION AS LIQUIDATED DAMAGES AS ITS SOLE REMEDY IN LIEU OF ANY
OTHER RIGHT TO DAMAGES OR RIGHT TO SPECIFIC PERFORMANCE OF THIS AGREEMENT AND
WAIVES ANY FURTHER RIGHT TO CLAIM DAMAGES FROM OPTIONEE AS A RESULT OF FAILURE
BY OPTIONEE TO COMPLETE THE PURCHASE IF THE OPTION GRANTED HEREBY IS EXERCISED.
ARTICLE XVI
OPTIONOR'S DEFAULT
------------------
16. In the event of default by Optionor under this Agreement, Optionee
may elect to treat this Agreement as cancelled, in which case all payments made
by the Optionee to Optionor hereunder shall be returned to the Optionee or
Optionee may elect to treat this Agreement as being in full force and effect and
Optionee shall have the right to specific performance and consequent damages.
<PAGE>
ARTICLE XVII
RISK OF LOSS
------------
17. In the event that, prior to closing, the Property, or any part
thereof, is destroyed or materially damaged, Optionee shall have the right,
exercisable by giving notice to Optionor within fifteen (15) days after
receiving written notice of such destruction or damage, to terminate this
Agreement, in which case Optionor shall refund to Optionee all sums paid
hereunder for this Option, excluding Late Charges, if any, and, upon Optionee's
receipt thereof, neither party shall have any further rights or obligations
hereunder. Alternatively, should Optionee elect to carry out this Agreement
despite such damage, Optionor shall either repair such damage prior to closing
or, if not repaired prior to closing, Optionee shall be entitled to credit for
all insurance proceeds resulting from such damage to the Property, not
exceeding, however, the total Purchase Price.
ARTICLE XVIII
CONDEMNATION
------------
18. If prior to the closing all or any material portion of the Property
is taken or threatened to be taken by eminent domain, Optionor shall so notify
Optionee. In such event, Optionee may elect (i) to purchase the Property in
accordance with the terms of this Agreement, in which case Optionor shall assign
to Optionee on the Closing Date all of Optionor's interest in any proceeds of
eminent domain, or (ii) to terminate this Agreement without further liability to
either party hereto, in which case Optionee shall have no further interest
whatever in the Property.
ARTICLE XIX
MISCELLANEOUS
-------------
19.1 Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to the subject matter hereof, and no prior or
contemporaneous written or oral agreement or understanding pertaining to any
such matter shall be effective for any purpose. No provision of this Agreement
may be amended or added to except by an agreement in writing signed by the
parties hereto.
<PAGE>
19.2 Time of Essence. Time is of the essence of this Agreement.
19.3 Attorneys' Fees. Should any action be brought arising out of this
Agreement, including without limitation, any action for declaratory or
injunctive relief, the prevailing party shall be entitled to reasonable
attorneys' fees and costs and expenses of investigation incurred and in
appellate proceedings or in any action or participation in, or in connection
with, any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code or
any successor statutes, and any judgment or decree rendered in any such actions
or proceeding shall include an award thereof.
19.4 Binding Effect. The provisions of this Agreement shall inure to
the benefit of and be binding upon Optionor and Optionee and their respective
successors and permitted assigns.
19.5 No Waiver. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the waiver.
19.6 Further Acts. Each party shall, at the request of the other,
execute, acknowledge (if appropriate) and deliver whatever additional documents,
and do such other acts, as may be reasonably required in order to accomplish the
intent and purposes of this Agreement.
<PAGE>
19.7 Counterparts. This Agreement may be executed in counterparts, each
of which so executed shall be deemed to be an original, and such counterparts
shall together constitute but one and the same agreement.
19.8 Amendments. This Agreement may not be changed or modified except
by an instrument in writing executed by the parties hereto.
19.9 Notices.Any notice, demand or communication required or permitted
to be given by any provision of this Agreement will be in writing and will be
deemed to have been given when delivered personally to the party designated to
receive such notice, or on the date following the day sent by a nationally
recognized overnight courier, or on the third (3rd) business day after the same
is sent by certified mail, postage and charges prepaid, directed to the
following addresses or to such other or additional addresses as any party might
designate by written notice to the other party:
To the Optionor: Robert J. Elliott 247 East Bennett
Avenue Cripple Creek, Colorado 80813
To the Optionee: WMCK Venture Corporation Attn:
Peter Hoetzinger, Vice Chairman
210 East Bennett Avenue
Cripple Creek, Colorado 80813
19.9 Appurtenant Agreement. The terms, covenants, conditions and
agreements contained herein shall be a burden and appurtenant to the Property
and shall run with the Property.
19.10 Headings. Any headings in this Agreement are solely for the
convenience of the parties and are not part of this Agreement.
<PAGE>
19.11 Governing Law. This Agreement and the transaction herein
contemplated shall be construed in accordance with and governed by the laws of
the State of Colorado.
19.12 Recording. A Memorandum of Option to Purchase referring to this
Option Agreement has been executed and delivered on the date hereof and shall be
recorded in the Office of the County Recorder of Teller County, Colorado. In the
event that Optionee does not exercise the Option herein granted prior to its
expiration, it shall immediately deliver to Optionor a duly acknowledged
quitclaim deed of all of its interests in the Property under this Option
Agreement.
IN WITNESS WHEREOF, Optionor and Optionee have executed this Agreement
on the day and year first above written.
"OPTIONEE"
WMCK Venture Corporation, a Delaware corporation
By: /s/ Peter Hoetzinger
-------------------------------
Peter Hoetzinger, Vice Chairman
"OPTIONOR"
By: /s/ Robert J. Elliott
---------------------
Robert J. Elliott
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF Teller )
The foregoing instrument was acknowledged before me this 25th day of
March, 1999, by Peter Hoetzinger, Vice Chairman of WMCK Venture Corporation, a
Delaware corporation.
WITNESS my hand and official seal.
My commission expires _8-13-2002________.
/s/ Diane Miller
----------------
Notary Public
[SEAL]
STATE OF COLORADO )
) ss.
COUNTY OF Teller )
The foregoing instrument was acknowledged before me this 25th day of
March, 1999, by Robert J. Elliott.
WITNESS my hand and official seal.
My commission expires __8-13-2002__________.
/s/ Diane Miller
----------------
Notary Public
[SEAL]
<PAGE>
EXHIBIT A
---------
Lot 32, Block 16, Freemont (now Cripple Creek), Teller County,
Colorado, together with all easements, rights of way, licenses, privileges,
hereditaments and appurtenances thereto.
Exhibit 10.81
Letter Amendment to Note Agreement dated April 1, 1999, by and between
Century Casinos, Inc. and Thomas Graf
<PAGE>
April 1, 1999
Mr. Thomas Graf
Liectensteinstrasse 54
A-2344 Maria Enzerdorf
Austria
Dear Thomas:
This letter shall amend the terms of your loan to Century Casinos, Inc.
("Century"), which terms were last amended by agreement of the parties on June
5, 1996 (copy attached). As of March 31, 1999, Century shows a note payable to
you in the principal amount of $420,360, plus accrued interest of $63,054. The
terms of Century's note payable to you are hereby amended to be as follows:
<TABLE>
<S> <C>
Principal payment due T. Graf on 4/1/99: $100,000
Remaining principal amount of note (including
all previously accrued interest through 3/31/99)
after 4/1/99 principal payment: $380,000
Term of note: 5 years (matures 4/1/04)
Interest from 4/1/99 forward: 6% per annum
Payable quarterly in advance
</TABLE>
Unpaid principal may be called, in whole or in part, by T. Graf, in writing
to the Company, on any anniversary date beginning 4/1/00, with payment to be
made by Company nine (9) months thereafter (e.g. if call made on 4/1/00,
principal payment is due and payable 1/1/01).
The foregoing terms and provisions supersede all previous terms and provisions
of Century's note payable to you. If these revised terms and provisions are
acceptable to you, please acknowledge by signing below and returning a copy to
me at your earliest convenience.
Sincerely,
for Century Casinos, Inc. Accepted and agreed to as of April 1,1999
/s/ Brad Dobski /s/ Thomas Graf
- ---------------------- ------------------------
Brad Dobski Thomas Graf
Vice President - Finance and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000911147
<NAME> Century Casinos, Inc.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1.00
<CASH> 2,619,178
<SECURITIES> 0
<RECEIVABLES> 239,731
<ALLOWANCES> 0
<INVENTORY> 62,309
<CURRENT-ASSETS> 3,436,328
<PP&E> 23,114,883
<DEPRECIATION> 4,845,860
<TOTAL-ASSETS> 33,942,651
<CURRENT-LIABILITIES> 2,704,879
<BONDS> 11,948,638
0
0
<COMMON> 158,619
<OTHER-SE> 19,130,515
<TOTAL-LIABILITY-AND-EQUITY> 33,942,651
<SALES> 0
<TOTAL-REVENUES> 5,193,238
<CGS> 0
<TOTAL-COSTS> 2,287,096
<OTHER-EXPENSES> 2,262,485
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 251,199
<INCOME-PRETAX> 372,539
<INCOME-TAX> 183,000
<INCOME-CONTINUING> 189,539
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 189,539
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
