SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB-A
AMENDMENT NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1999 Commission File No 0-22290
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CENTURY CASINOS, INC.
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(Name of small business issuer in its charter)
Delaware 84-1271317
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
200 - 220 E. Bennett Ave., Cripple Creek, CO 80813
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(Address of principal executive offices) (Zip code)
(719) 689-9100
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(Issuer's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Exchange Act: None.
Securities Registered Pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.01 Par Value, and 1994 Class I Warrants
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(Title of classes)
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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
State the issuer's revenues for its most recent fiscal year: $23,584,171
The aggregate market value of the voting common stock held by non-affiliates of
the Registrant on February 25, 2000, was approximately $11,073,000 based upon
the average of the reported closing bid and asked price of such shares on Nasdaq
for that date. As of February 25, 2000, there were 14,486,889 shares of common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: Part III incorporates by reference from the
Registrant's Definitive Proxy Statement for its 2000 Annual Meeting of
Stockholders to be filed with the Commission within 120 days of December 31,
1999.
This Amendment includes all information required by Form 10-KSB, as certain
required information was unintentionally omitted from the Registrant's
previously filed Form 10-KSB.
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Item 1. Business.
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GENERAL
Century Casinos, Inc. and its subsidiaries (the "Company"), own and operate
a limited-stakes gaming casino in Cripple Creek, Colorado, manage a casino in
the Marriott Hotel in Prague, Czech Republic, and regularly pursue gaming
opportunities internationally and in the United States. Prior to July 1, 1996,
the Company's operations in Cripple Creek consisted of Legends Casino
("Legends"), which the Company had 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 was adjacent to Legends. Following
the acquisition of Womacks, both properties were renovated to facilitate
operation and marketing of the combined properties as one casino under the name
"Womacks/Legends Casino." The Company's operating revenue for 1999 and 1998 was
derived principally from its casino operations in Cripple Creek. See the
Consolidated Financial Statements and the notes thereto included herein.
The Company was formed in 1992 to acquire ownership interests in, and to
obtain management contracts with respect to, gaming establishments. The
Company, formerly known as Alpine, is a result of a business combination
completed on March 31, 1994, pursuant to which Century Casinos Management, Inc.
("Century Management") shareholders acquired approximately 76% of the then
issued and outstanding voting stock of the Company, and all officer and board
positions of the Company were assumed by the management team of Century
Management. Effective June 7, 1994, the Company reincorporated in Delaware
under the name "Century Casinos, Inc." Because the Company is the result of
this transaction, the Company's business has been combined with that of Century
Management, and references herein to the Company refer to the combined entities,
unless the context otherwise requires.
Century Management was founded in 1992 by a team of career gaming
executives who had worked primarily for an Austrian gaming company that owned
and operated casinos throughout the world. These persons held the positions of
chief executive officer, deputy to the chief executive office and managing
director.
Information contained in this Form 10-KSB 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 future results of the Company may vary materially from those
anticipated by management, and may be affected by various trends and factors,
which are beyond the control of the Company. These risks include the
competitive environment in which the Company operates, the Company's dependence
upon the Cripple Creek, Colorado gaming market, the effects of governmental
regulation and other risks described herein.
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PROPERTY AND PROJECT DESCRIPTIONS
WOMACKS/LEGENDS CASINO, CRIPPLE CREEK, COLORADO.
On July 1, 1996, the Company purchased substantially all of the assets, and
assumed substantially all of the liabilities, of Gold Creek, the owner of
Womacks in Cripple Creek, Colorado. Following the Company's acquisition of Gold
Creek, the Womacks property was consolidated with the Company's Legends Casino,
and the combined properties have been operated and marketed since then as one
casino under the name "Womacks/Legends Casino." Management implemented certain
consolidation, expansion and capital improvement programs. The Company created
openings in the common walls in order to open up and integrate the gaming areas
of Legends and Womacks; expanded the existing player tracking system of Womacks
to include all of the Legends gaming devices; added and promoted gaming
activities on second floor areas; made general interior enhancements; and
installed additional gaming devices and replaced older generation equipment.
Womacks/Legends Casino is located at 200 to 220 East Bennett Avenue in
Cripple Creek, Colorado. The lots comprising 200 to 210 East Bennett Avenue are
owned by wholly-owned subsidiaries of the Company and are collateralized by a
first mortgage held by Wells Fargo Bank. See Note 5 to the Consolidated
Financial Statements for further information.
The Company holds a leasehold interest in the real property and
improvements located at 220 East Bennett Avenue. An unaffiliated third party,
as fee owner of the property, granted first and second deeds of trust for the
benefit of Park State Bank ("Park") and Community Banks of Colorado Cripple
Creek ("Community"), respectively. The third party then leased the property to
Teller Realty, Inc. ("Teller") and granted to Teller an option to acquire the
fee interest in the property. Teller subsequently executed a sublease to the
property with Gold Creek, and granted to Gold Creek a suboption to purchase the
property through Teller's purchase option. The Company's wholly-owned
subsidiary which purchased the assets of Gold Creek, WMCK Acquisition Corp.
("WMCK"), has executed separate subordination, non-disturbance and attornment
agreements with each of Park and Community, pursuant to which WMCK has agreed
that its interest in the sublease is subordinate to the liens arising out of the
deeds of trust in the fee estate in favor of Park and Community. In return,
Park and Community have each agreed (i) not to disturb WMCK's possessory rights
in and to the property, and (ii) to honor the sublease and suboption, should
either foreclose on their respective lien, so long as WMCK is not in default
under the sublease, and so long as WMCK attorns to Park, Community or any
purchaser at a foreclosure. The sublease, as assigned to WMCK, provides for
monthly rental payments of $16,000, and expires on June 20, 2005 unless
terminated earlier by WMCK with 12 months' notice. The suboption may be
exercised at the expiration of the sublease at an exercise price of $1,500,000.
Teller, the third party, Gold Creek and WMCK have executed a four-party
agreement evidencing the assignment of the sublease and suboption, as well as
the consent to these assignments. None of the above entities other than WMCK is
affiliated with the Company.
In June 1998, the Company acquired 22,000 square feet of land (the "Hicks
Property") from an unaffiliated third party. The property, which is zoned for
gaming, is adjacent to Womacks/Legends Casino. A partially-completed building
structure that occupied a portion of the land was subsequently razed, and the
entire property has been improved to provide the first paved customer parking
spaces in the Cripple Creek market. The purchase price of $3.6 million was
financed through the Company's revolving credit facility with Wells Fargo Bank.
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Womacks/Legends Casino currently has approximately 608 slot and video devices
and eight gaming tables with the potential to add approximately 60 gaming
positions without conducting any substantial construction. Womacks/Legends
Casino has 150 feet of frontage on Bennett Avenue, the main gaming thoroughfare
in Cripple Creek, and 110 feet of frontage on Second Street, with approximately
40,000 square feet of floor space.
In the fourth quarter of 1999, the Company began construction of a
two-story building in Cripple Creek, which is expected to be completed in the
second quarter of 2000. The building, with an estimated total cost of $900,000,
will house the Company's corporate headquarters and "The Womacks Center -
Cripple Creek." Located next to the Womacks/Legends Casino, the 500-seat
Womacks Center is the first of its kind in Cripple Creek and is surrounded by
parking lots controlled by the Company. Under the terms of an agreement with
the City of Cripple Creek, the City will operate and market the center for its
own account and will schedule meetings, conventions, shows and other special
events on a year-round basis.
Management believes that, in addition to providing an adequate number of
hotel rooms, an integral component in attracting gaming patrons to Cripple Creek
is the availability of adequate, nearby parking spaces. Management believes
that it has secured or will be able to secure adequate parking for the
operations of Womacks/Legends Casino. The Company presently owns or leases
several hundred parking spaces, with an additional 100 spaces becoming available
with the impending purchase of two nearby parcels of land in the second quarter
of 2000.
In 1997, the Company exercised its purchase option to acquire three lots
(formerly known as the "Wright Property"), consisting of 8,250 square feet of
land across the street from Womacks/Legends Casino, for $785,000 in cash. This
acquisition provides the Company with 30 additional parking spaces.
The Company leases 99 contiguous parking spaces from the City of Cripple
Creek. Annual rent payments total $90,000 and the lease agreement, as amended
on February 17, 2000, expires on May 31, 2010. The agreement contains a
purchase option whereby the Company may purchase the property for $3.25 million,
less cumulative lease payments, at any time during the remainder of the lease
term. The Company has paved the property and currently uses it for customer
parking.
In March 1999, the Company entered into a purchase option agreement for a
piece of property, located in Cripple Creek across Bennett Avenue from its
Womacks/Legends Casino. The agreement, as amended in February 2000, provides
for an option period through March 31, 2004 and an exercise price of $1.5
million, less 50% of cumulative option payments through the exercise date.
In November 1999, the Company entered into a contract to purchase two
parcels of land located near the Womacks/Legends Casino for $1.85 million. The
purchase is expected to be completed in the second quarter of 2000. The two
parcels will provide an estimated additional 100 parking spaces for casino
patrons.
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CASINO MILLENNIUM, PRAGUE, CZECH REPUBLIC
In January 1999, the Company reached a 20-year definitive agreement with
Casino Millennium a.s., a Czech company, and with B.H. Centrum a.s., a Czech
subsidiary of Bau Holding AG, one of the largest construction and development
companies in Europe, to operate a casino in the five-star Marriott Hotel in
Prague, Czech Republic. The Company provides casino management services in
exchange for 10% of the casino's gross revenue, and has provided gaming
equipment for 45% of the casino's net profit. The hotel and casino opened in
July 1999.
In January 2000, the Company entered into a memorandum of agreement to either
acquire a 50% ownership interest in Casino Millennium a.s. or to form a new
joint venture with B.H. Centrum a.s., which joint venture would acquire all of
the assets of Casino Millennium. The Company anticipates that the transaction
would be completed in 2000.
ADDITIONAL COMPANY PROJECTS
In addition to Womacks/Legends Casino in Cripple Creek, Colorado and Casino
Millennium in Prague, Czech Republic, the Company has a number of potential
gaming projects in various stages of development. Along with the capital needs
of these potential projects, there are various other risks which, if they
materialize, could materially adversely affect a proposed project or eliminate
its feasibility altogether. For example, in order to conduct gaming operations
in most jurisdictions, the Company must first obtain gaming licenses or receive
regulatory clearances. To date, the Company has obtained gaming licenses or
approval to operate gaming facilities in Colorado, Louisiana, on an American
Indian reservation in California, and in the Czech Republic. While management
believes that the Company is licensable in any jurisdiction, each licensing
process is unique and requires a significant amount of funds and management
time. The licensing process in any particular jurisdiction can take significant
time and expense through licensing fees, background investigation costs, fees of
counsel and other associated preparation costs. Moreover, should the Company
proceed with a licensing approval process with industry partners, such industry
partners would be subject to regulatory review as well. The Company seeks to
satisfy itself that industry partners are licensable, but cannot assure that
such partners will, in fact, be licensable. Additional risks before commencing
operations include the time and expense incurred and unforeseen difficulties in
obtaining suitable sites, liquor licenses, building permits, materials,
competent and able contractors, supplies, employees, gaming devices and related
matters. In addition, certain licenses include competitive situations where,
even if the Company is licensable, other factors such as the economic impact of
gaming and financial and operational capabilities of competitors must be
analyzed by regulatory authorities. All of these risks should be viewed in
light of the Company's limited staff and limited capital.
Also, the Company's ability to expand to additional locations will depend
upon a number of factors, including, but not limited to: (i) the identification
and availability of suitable locations, and the negotiation of acceptable
purchase, lease, joint venture or other terms; (ii) the securing of required
state and local licenses, permits and approvals, which in some jurisdictions are
limited in number; (iii) political factors; (iv) the risks typically associated
with any new construction project; (v) the availability of adequate financing on
acceptable terms; and (vi) for locations outside the United States, all the
risks of foreign operations, including currency controls, unforeseen local
regulations, political instability and other related risks. Certain
jurisdictions issue licenses or approval for gaming operations by inviting
proposals from all interested parties, which may increase competition for such
licenses or approvals. The development of dockside and riverboat casinos may
require approval from the Army Corps of Engineers and will be subject to
significant Coast Guard regulations governing design and operation. Most of
these factors are beyond the control of the Company. As a result, there can be
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no assurance that the Company will be able to expand to additional locations or,
if such expansion occurs, that it will be successful. Further, the Company
anticipates that it will continue to expense certain costs, which have been
substantial in the past and may continue to be substantial in the future, in
connection with the pursuit of expansion projects, and may be required to write
off any capitalized costs incurred in connection with these ventures.
The following describes other activities of the Company.
SOUTH AFRICA. Recently enacted legislation in South Africa provides for
the award of up to 40 casino licenses throughout the country. To date, the
Company has entered into agreements with various local consortia to provide
consulting services during the application phase, as well as casino management
services should the Company's partners be awarded one or more licenses.
An application for a casino license in Caledon, province of the Western
Cape, was filed in October 1999 with the Western Cape Gambling and Racing Board
by Caledon Casino Bid Company (Pty) Limited ("CCBC"). The Company's subsidiary,
Century Casinos Africa (Pty) Ltd "CCA"), will have a 50% equity interest in
CCBC, by virtue of an agreement entered into between CCA and CCBC, together with
various affiliated entities. On February 16, 2000, the Western Cape Board
awarded Successful Applicant status to CCBC. The final license is to be issued
upon the provision, within 60 days of that date, of the required financial
guarantees and the satisfaction of certain other conditions precedent which are
primarily procedural in nature. CCBC anticipates that it will be able to
satisfy the conditions precedent to the award within the time stipulated. Upon
the award of the final license, the Company (through CCA) is obligated to fund
R10 million (South African Rands) of equity and R15 million in loans to CCBC
(approximately US$1,630,000 and US$2,445,000, respectively, based on the
December 31, 1999 currency exchange rate). In December 1999, in anticipation of
a successful application, the Company entered into a ten-year casino management
agreement with CCBC, which agreement may be extended at the Company's option
for multiple ten-year periods. The Company will earn management fees based on
percentages of annual gaming revenue and earnings before interest, income taxes,
depreciation, amortization and certain other costs.
An application was filed in June 1997 with the Gambling and Betting Board (the
"Board") in the province of Gauteng for a hotel/casino resort in the greater
Johannesburg area. 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.
The Board had awarded all six casino licenses by the end of April 1998, and
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 in the first quarter of 1998. Silverstar subsequently filed
a legal action with the High Court of South Africa (the "High Court")
challenging the decision of the Gauteng 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. In March 1999, the High 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 in April
1999, the High Court rejected the request for leave to appeal its March ruling.
This defendant also made no request for leave to appeal with the Appeals Court,
the final court of appeal. In June 1999, the Executive Council of the
provincial government resolved not to concur with the Gauteng Board's
recommendation of the competing applicant. In July 1999, the competing
applicant instituted action in the Court seeking to overturn the Executive
Council's decision. No date has yet been set for a hearing in the High Court of
the competing applicant's complaint. There can be no certainty regarding an
award of this gaming license or that this license will ultimately be awarded to
Silverstar.
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Another application was filed in January 1998, by the Company's partner, Great
North Resorts Limited, for a casino license in Pietersburg, the provincial
capital of the Northern Province. If successful in receiving a license, the
Company would provide consulting/management services with respect to the casino
operations of a proposed $40 million casino, hotel, entertainment and resort
complex pursuant to a five-year agreement commencing with the opening of the
permanent casino. The Company would also provide consulting/management services
with respect to the operations of a temporary casino during the development
phase of the resort complex. The Company would earn fees based on a percentage
of annual gaming revenue. The Company has no significant additional capital
obligations with respect to this application. The licensing process in the
Northern Province has been overturned as a result of a successful action in the
High Court initiated by a competing applicant. There remains the possibility
that this decision may be appealed by the provincial authorities and the future
of the whole licensing process is presently unclear.
RIVERBOAT DEVELOPMENT AGREEMENT - INDIANA. - In December 1995, the Company
sold its 80% interest in Pinnacle Gaming Development Corp. ("Pinnacle") to an
affiliate of Hilton Gaming Corporation and Boomtown, Inc. ("Hilton/Boomtown").
Pinnacle had been pursuing a riverboat gaming license application in Switzerland
County, Indiana. Upon signing the agreement, the Company received a cash payment
of $80,000 and recognized a gain on the sale of its investment of $26,627. The
agreement provided for additional payments to the Company upon the occurrence of
certain events. In September 1998, the Indiana Gaming Commission awarded a
Certificate of Suitability to Pinnacle to conduct riverboat gaming in
Switzerland County that resulted in the Company receiving a payment of $431,000
in the third quarter of 1998. The Company also received a payment of $1,040,000
in the third quarter of 1999 upon "groundbreaking" of the project. Additionally,
the Company was entitled to receive installment payments of $32,000 per month
for the first 60 months of the riverboat's operation; however, the Company
elected to receive an aggregate discounted amount of $1,380,000, which was
received and recorded as income in January 2000.
RHODES, GREECE. In 1995, the Company executed a casino management and
consulting agreement with Rhodes Casino, S.A., a consortium including Playboy
Enterprises, Inc., under which the Company, as an independent contractor, would
supply services and assistance in establishing a casino on the island of Rhodes,
Greece. The consortium was awarded the exclusive license for casino gaming on
Rhodes for a 12-year period commencing with the opening of the casino. The
Company's management consulting agreement with the consortium, which had an
initial term running through the third anniversary of the casino opening,
provided for fees to the Company of $200,000 for services to be rendered in the
pre-opening phase, $300,000 per year during the first three years of operation
and $50,000 per year thereafter, if renewed. In the fourth quarter of 1996, the
Company received $50,000 with respect to certain pre-opening phase services. In
the second quarter of 1998, the Company reached a consulting agreement ("current
agreement") with Rhodes Casino S.A. and Playboy Gaming International Ltd.
("Playboy") to assign certain of the Company's rights and delegate its
responsibilities under the previously executed management and consulting
agreement ("previous agreement"). Under the current agreement, in 1998, the
Company received from Playboy a payment of $25,000 for additional pre-opening
services performed to date. The Company also is to receive annual payments of
$50,000 for each of the first three years of the casino's operations, the first
of which payments was received in 1999. The Company will have no further
obligations under the previous agreement unless, subsequent to the opening of
the casino, Playboy is unwilling or unable to perform under the current
agreement. In such event, the previous agreement, and the Company's
obligations, would be reinstated together with the Company's right to receive up
to $300,000 per year for the first three years of casino operations, with an
aggregate minimum guarantee of approximately $250,000.
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NONOPERATING CASINO IN WELLS, NEVADA. In 1994, the Company purchased the Ranch
House Casino in Wells, Elko County, Nevada from an unaffiliated party. The total
purchase price of $851,504, including a note secured by the property, was
determined based on arm's length bargaining with the seller. Also in 1994, the
Company purchased a seven-acre parcel of land directly across the street from
the casino for $69,000. In April 1997, the Company paid off all amounts owed to
the seller and now owns the property free and clear. The property, closed since
1992 but in operable condition, is an 18,000 square foot building with
approximately 6,000 square feet of gaming space. Management currently does not
intend to pursue a gaming license with respect to the facility, and is seeking a
sale or lease of the casino and land.
INDIAN TRIBAL MANAGEMENT AGREEMENT - CALIFORNIA - In August 1995, the
Company terminated its management agreement with the Soboba Band of Mission
Indians with respect to the Legends Casino at Soboba in Riverside County,
California. In connection with the termination, an unaffiliated third party
issued a three-year promissory note to the Company for $3,100,000, with monthly
payments based on a percentage of gross revenue from certain operations of the
facility. In March 1998, the Company negotiated an early settlement of the
then-remaining outstanding balance. As a result, the Company received
cumulative payments through the date of settlement of $2,457,727, of which the
final $550,000 was recognized in income in 1998. No further payments will be
received under the note.
REVOLVING CREDIT FACILITY
In March 1997, the Company entered into a four-year revolving line of
credit facility (the "RCF") with Wells Fargo Bank ("Wells Fargo"). Various
provisions of the RCF were subsequently amended, including an increase in the
facility to $20 million in 1998, and decreasing quarterly beginning in the
second quarter of 1999. At December 31, 1999, the maximum available under the
RCF was $18.3 million. An annual commitment fee of between three-eighths and
one-half percent, payable quarterly, is charged on the unused portion of the
RCF. The RCF also contains an interest rate matrix that ties the interest rate
charged on outstanding borrowings to the Company's leverage ratio, as defined.
Largely as a result of an improvement in the Company's leverage ratio, the
Company's consolidated weighted-average interest rate on all borrowings
decreased from 8.74% in 1998 to 8.64% in 1999. At December 31, 1999, the
Company's unused borrowing capacity under the RCF was approximately $9.2
million. The RCF is secured by substantially all of the real and personal
property of Womacks/Legends Casino. Under the RCF, the Company is required to
comply with certain customary financial covenants, and is subject to certain
capital expenditure requirements and restrictions on investments. See Note 5 to
the Consolidated Financial Statements for further information.
In March 2000, the Company is in the final stages of negotiations with
Wells Fargo Bank to increase the RCF to $26 million and extend the maturity date
of the agreement until 2004. Management expects the agreement to be finalized
before the end of the first quarter 2000, however, there can be no assurances
that the line will be renewed or extended on the terms described herein. A
portion of the proceeds of borrowings under the RCF is expected to be used for
the development of the Company's South Africa projects discussed above.
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MARKETING STRATEGY
The marketing strategy of Womacks/Legends Casino highlights promotion of
Womacks Gold Club, a players club with a database containing profiles on nearly
50,000 members. Gold Club members receive benefits from membership, such as
cash, merchandise, food and lodging. Those who qualify for VIP status receive
additional benefits in addition to regular club membership. Status is determined
through player tracking. Members receive monthly newsletters of upcoming events
and parties, and, depending on player ranking, also receive invitations to
special events and monthly coupons.
THE CRIPPLE CREEK MARKET
Cripple Creek is a small mountain town located approximately 45 miles
southwest of Colorado Springs on the western boundary of Pikes Peak. Cripple
Creek is an historic mining town, originally founded in the late 1800's
following a large gold strike. Cripple Creek is a tourist town and its heaviest
traffic is in the summer months. Traffic generally decreases to its low point
in the winter months.
Cripple Creek is one of only three Colorado cities where casino gaming is
legal, the others being Black Hawk and Central City. Cripple Creek operated
approximately 29% of the gaming devices and generated 22% of gaming revenues for
these three cities during the year ended December 31, 1999. As of December 31,
1999, there were 18 casinos operating in Cripple Creek.
The tables below set forth information obtained from the Colorado Division
of Gaming regarding gaming revenue by market and slot machine data for Cripple
Creek from calendar 1996 through 1999. This data is not intended by the Company
to imply, nor should the reader infer, that it is any indication of future
Colorado or Company gaming revenue.
<TABLE>
<CAPTION>
GAMING REVENUE BY MARKET
(IN $000'S)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
% change % change % change % change
Over Over Over Over
1996 Prior Year 1997 Prior Year 1998 Prior Year 1999 Prior Year
--------- ----------- --------- ----------- -------- ----------- -------- -----------
CRIPPLE CREEK. $ 103,373 9.9% $ 108,628 5.1% $113,230 4.2% $122,385 8.1%
Black Hawk $ 219,911 12.3% $ 234,631 6.7% $272,008 15.9% $354,474 30.3%
Central City $ 88,870 -5.9% $ 87,391 -1.7% $ 93,980 7.5% $ 73,742 -21.5%
COLORADO TOTAL $ 412,154 7.2% $ 430,650 4.5% $479,218 11.3% $550,601 14.9%
</TABLE>
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<TABLE>
<CAPTION>
CRIPPLE CREEK SLOT DATA
(IN $000'S)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
% change % change % change % change
Over Over Over Over
1996 Prior Year 1997 Prior Year 1998 Prior Year 1999 Prior Year
--------- ----------- --------- ----------- -------- ----------- -------- -----------
Total Slot Revenue $ 97,024 11.1% $ 102,798 6.0% $107,690 4.8% $117,161 8.8%
(in $'000)
Average Number
Of Slots 4,175 8.6% 4,507 8.0% 4,369 -3.1% 4,046 -7.4%
Average Win Per
Slot Per Day $63 2.0% $62 -1.6% $68 8.1% $81 19.9%
</TABLE>
Gaming in Colorado is "limited stakes," which restricts any single wager
to a maximum of $5.00. While this limits the revenue potential of table
games, management believes that slot machine play, which accounts for over 95%
of total gaming revenues, is currently impacted only marginally by the $5.00
limitation.
The Company faces intense competition from other casinos in Cripple Creek,
including a handful of casinos of similar size and many other smaller casinos.
There can be no assurance that other casinos in Cripple Creek will not undertake
expansion efforts similar to those recently taken by the Company, thereby
further increasing competition, or that large, established gaming operators will
not enter the Cripple Creek market. The Company seeks to compete against these
casinos through promotion of Womacks Gold Club and superior service to players.
Management believes that the casinos likely to be more successful and best able
to take advantage of the market potential of Cripple Creek will be the larger
casinos that have reached a certain critical mass.
<TABLE>
<CAPTION>
CENTURY CASINOS' PROPERTY IN CRIPPLE CREEK
(PRESENTLY "WOMACKS/LEGENDS CASINO")
(IN $000'S)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
% change % change % change % change
Over Over Over Over
1996 Prior Year 1997 Prior Year 1998 Prior Year 1999 Prior Year
---------- ----------- ---------- ----------- -------- ----------- -------- -----------
Total Slot Revenue $ 10,078 208.6% $18,102 79.6% $18,597 2.7% $22,235 19.6%
Average Number
Of Slots 342 98.8% 547 59.9% 565 3.3% 592 4.8%
Average Win Per
Slot Per Day $80.73 55.2% $90.67 12.3% $90.18 -0.5% $102.56 13.7%
Market Share in % 10.39% 177.7% 17.61% 69.5% 17.27% -1.9% 18.91% 9.5%
</TABLE>
10
<PAGE>
The Company competes, to a far lesser extent, with 19 casinos in Black Hawk
and 11 casinos in Central City. Black Hawk and Central City are also small
mountain tourist towns, which adjoin each other and are approximately 30 miles
from Denver and a two and one-half hour drive from Cripple Creek. The main
market for Cripple Creek is the Colorado Springs metropolitan area, and the main
market for Black Hawk and Central City is the Denver metropolitan area.
In addition, there is intense competition among companies in the gaming
industry generally, and many gaming operators have greater name recognition and
financial and marketing resources than the Company. The Company competes with
many established operators in gaming venues other than Cripple Creek. Many of
these operators have greater financial, operational and personnel resources than
the Company. There can be no assurance that the number of casino and hotel
operations will not exceed market demand or that additional hotel rooms or
casino capacity will not adversely affect the operations of the Company.
EMPLOYEES
The Company employs approximately 200 persons on an equivalent full-time
basis, including cashiers, dealers, food and beverage service personnel,
facilities maintenance staff, and accounting and marketing personnel. No labor
unions represent any employee group. A standard package of employee benefits is
provided to full-time employees along with training and job advancement
opportunities. In March 1998, the Company adopted a 401(k) Savings and
Retirement Plan for its employees.
SEASONALITY
The Company's business is not considered to be seasonal; however, the
anticipated highest levels of business activity, at least in Colorado, will
occur in the tourist season (i.e., from May through September). Its base level
(i.e., November through May) is expected to remain fairly constant although
weather conditions during this period could have a significant impact on
business levels in Colorado.
GOVERNMENTAL REGULATION
The Company's gaming operations are subject to strict governmental
regulations at state and local levels. Statutes and regulations can require the
Company to meet various standards relating to, among other matters, business
licenses, registration of employees, floor plans, background investigations of
licensees and employees, historic preservation, building, fire and
accessibility requirements, payment of gaming taxes, and regulations concerning
equipment, machines, tokens, gaming participants, and ownership interests.
Civil and criminal penalties can be assessed against the Company and/or its
officers or stockholders to the extent of their individual participation in, or
association with, a violation of any of the state and local gaming statutes or
regulations. Such laws and regulations apply in all jurisdictions within the
United States in which the Company may do business. Management believes that the
Company is in compliance with applicable gaming regulations. For purposes of the
discussion below, the term "the Company" includes its applicable subsidiaries.
11
<PAGE>
COLORADO REGULATION
The Colorado Limited Gaming Control Commission ("Commission") has adopted
regulations regarding the ownership of gaming establish-ments by publicly held
companies (the "Regulations"). The Regulations require the prior clearance of,
or notification to, the Commission before any public offering of any securities
of any gaming licensee or any affiliated company. The Regulations require all
publicly traded or publicly owned gaming licensees to comply with numerous
regulatory gaming requirements. These requirements include, but are not limited
to, those listed below.
A publicly traded gaming licensee that sends to the holders of its voting
securities any proxy statements subject to Regulation 14A of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or an information statement
subject to Regulation 14C of the 1934 Act, must file such material with the
Colorado Division of Gaming (the "Colorado Division").
Whenever any document is furnished to the holders of voting securities of
a publicly traded gaming licensee or filed by a publicly traded gaming licensee
with the SEC, the publicly traded gaming licensee is required to file a true
copy of that document with the Colorado Division. Whenever a publicly traded
gaming licensee receives any material document filed with the SEC by any other
person relating to the publicly traded gaming licensee, it must file a true copy
of the document with the Colorado Division. Each publicly traded gaming
licensee must file with the Colorado Division, on an annual basis, a list of the
holders of its voting securities.
Each publicly traded gaming licensee is required to report promptly to the
Colorado Division the election or appointment of any director, any executive
officer and any other officers actively and directly engaged in the
administration or supervision of the gaming activities at any licensed gaming
establishment.
The following provisions are required to be included in the certificate of
incorporation for every publicly traded gaming licensee or holding company which
has a gaming license in the State of Colorado.
(i) The entity is precluded from issuing any voting securities except
in accordance with the provisions of the Colorado Limited
Gaming Act ("Gaming Act") and the regulations promulgated
thereunder. The issuance of any voting securities in violation
of the Gaming Act is ineffective and such voting securities
are deemed not to be issued and outstanding until (a) the
entity ceases to be subject to the jurisdiction of the
Commission, or (b) the Commission, by affirmative action,
validates the issuance or waives any defect in the issuance.
(ii) No voting securities issued by the entity and no interest in the
entity can be transferred in any manner except in accordance with
the provisions of the Gaming Act and its regulations. Any
transfer in violation of the Gaming Act is ineffective until (a)
the entity ceases to be subject to the jurisdiction of the
Commission, or (b) the Commission, by affirmative action,
validates the transfer or waives the defect in the transfer.
12
<PAGE>
(iii) If the Commission at any time determines that a holder of
voting securities of the entity is unsuitable to hold the
securities, then the issuer of the securities may, within 60
days after the finding of unsuitability, purchase the
securities of the unsuitable person at the lesser of (i) the
cash equivalent of such person's investment in the entity, or (ii)
the current market price of the date of finding of
unsuitability, unless the securities are transferred to a
suitable person, as determined by the Commission, within 60
days after the finding of unsuitability. Until the securities
are owned by persons found by the Commission to be suitable to
own them, (a) the entity is not required or permitted to
pay any dividend or interest with regard to the securities, (b) the
holder of the securities is not entitled to vote on any matter
as the holder of the securities and such securities shall not
for any purpose be included in the voting securities of the entity,
and (c) the entity is precluded from paying any remuneration in any
form to the holder of the securities.
The Company has the above provisions in its Certificate of Incorporation.
The Regulations also require each person who individually or in association
with others acquires, directly or indirectly, beneficial ownership of 5% or more
of any class of voting securities of a publicly traded gaming licensee to notify
the Colorado Division within 10 days after the person acquired 5% or more of the
securities. The person who acquires 5% or more of the securities shall provide
any additional information requested by the Colorado Division and be subject to
a finding of suitability as required by the Colorado Division. Publicly traded
gaming licensees are also required to notify each person subject to the
Regulations of the Colorado Division's requirements as soon as the gaming
licensee becomes aware of the acquisition.
Each person who, individually or in association with others, acquires,
directly or indirectly, the beneficial ownership of 10% or more of any class of
voting securities of a publicly traded gaming licensee required to contain the
above charter provisions is required to apply to the Commission for a finding of
suitability within 10 days after acquiring 10% or more of the securities. A
publicly traded gaming licensee is also required to notify each person subject
to the Regulations of its requirements as soon as the gaming licensee becomes
aware of the acquisition. However, the obligations of the person subject to the
Regulations are independent of and unaffected by the gaming licensee's failure
to give the notice.
Any person found unsuitable by the Commission is not permitted ownership of
any voting security of a publicly traded gaming licensee, subject to the
provisions of the Regulations, and must be removed immediately from any position
as a director, officer or employee of the publicly traded gaming licensee.
The State of Colorado created the Colorado Division within the Department
of Revenue to license, implement, regulate and supervise the conduct of limited
gaming. The Director of the Colorado Division, under the supervision of a
five-member Colorado Commission, has been granted broad power to ensure
compliance with the law, and regulations adopted thereunder. The Director may
inspect, without notice, premises where gaming is being conducted; he may seize,
impound or remove any gaming device. He may examine and copy any licensee's
records, may investigate the background and conduct of licensees and their
employees, and may bring disciplinary actions. He may also conduct detailed
background checks of persons who loan money to the Company.
13
<PAGE>
The Commission is empowered to issue five types of gaming and gaming
related licenses. The Colorado Division has broad discretion to revoke,
suspend, condition, limit or restrict a license at any time. The license of the
Company must be renewed each year. All licenses are revocable,
nontransferable and valid only for the particular location initially
authorized. No person, such as the Company, can have an ownership interest in
more than three retail licenses. Hence, the Company's business opportunities in
Colorado could be limited accordingly. All of the Company's employees involved
with gaming activities must apply for and receive a support gaming license prior
to commencing employment. The Commission has adopted comprehensive rules and
regulations which require the Company to maintain adequate books and records and
these rules also prescribe minimum operating, security and payoff procedures.
The Commission has the power to deny any license or renewal thereof to any
person it considers to be "unsuitable," a broad, discretionary standard. The
Commission has also promulgated a list of excluded persons; it is unlawful for
any person on this list to enter licensed premises or to hold shares in a
licensee. Rules regarding gaming, cheating and other fraudulent practices have
also been adopted, which rules the Company is obligated to police and enforce.
Other state regulatory agencies also impact the Company's operations,
particularly its license to serve alcoholic beverages. Rules and regulations in
this regard are strict, and loss or suspension of a liquor license could
significantly impair, if not ruin, a licensee's operation. Local building,
parking and fire codes and similar regulations could also impact the Company's
operations and proposed development of its properties.
Item 2. Properties.
- ------- ----------
The Company's corporate offices are located at its Womacks/Legends Casino
at 200 - 220 East Bennett Avenue, Cripple Creek, Colorado. The Company also
rents a small office at 999 18th Street, Suite 1810, Denver, Colorado pursuant
to a lease with an unaffiliated party. The Company intends to close its Denver
office at the end of March 2000. See Item 1. "Business -- Property and Project
Descriptions" herein for a description of the Company's other properties.
Item 3. 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.
14
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
- ------- -----------------------------------------------------------
The 1999 annual meeting of the stockholders of the Company was held on
December 14, 1999. At the annual meeting, (i) the two Class II directors to the
Board, Peter Hoetzinger and James D. Forbes, were elected to the Board for a
three-year term; (ii) a proposal to amend Article FOURTH of the Company's
Certificate of Incorporation to effect a reverse stock split of the Company's
common stock on a ratio not to exceed one for 20 was adopted by stockholders of
the Company; (iii) a proposal to increase the number of shares reserved for
issuance under the Employees' Equity Incentive Plan from 3,500,000 to 4,500,000
was adopted by the stockholders of the Company; and, (iv) a proposal to amend
Articles NINTH and TENTH of the Certificate of Incorporation of the Company to
add two additional fair price provisions which, in certain circumstances, may
require payment of a higher price to stockholders of the Company was not adopted
by the stockholders of the Company. On the proposal to elect the Class II
directors, the votes were: Peter Hoetzinger, 12,439,435 for, 132,578 against,
and 24,350 abstained; James D. Forbes, 12,443,435 for, 132,578 against, and
20,350 abstained. On the proposal with respect to the amendment to Article
FOURTH, the results were: 10,681,133 for, 1,903,155 against, and 12,075
abstained. On the proposal with respect to the amendment to the Employees'
Equity Incentive Plan, the results were: 7,820,308 for, 513,770 against, 32,150
abstained, and 4,230,135 not voted. On the proposal with respect to amendments
to Articles NINTH and TENTH, the results were: 5,853,851 for, 1,955,418 against,
5,150 abstained, and 4,751,944 not voted.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
- ------ ----------------------------------------------------------------------
The common stock of the Company began trading in the Nasdaq SmallCap Market
on November 10, 1993. The following table sets forth the low and high bid price
per share quotations as reported on the NASDAQ SmallCap Market of the common
stock for the periods indicated. These quotations reflect inter-dealer prices,
without retail mark-up, mark down or commission and may not necessarily
represent actual transactions. Actual prices may vary.
<TABLE>
<CAPTION>
Quarter Ended Low High
- ------------------ ----- -----
<S> <C> <C>
March 31, 1998 $0.88 $1.25
June 30, 1998 $0.88 $1.31
September 30, 1998 $0.94 $1.13
December 31, 1998 $0.78 $1.03
March 31, 1999 $0.75 $1.31
June 30, 1999 $0.97 $1.19
September 30, 1999 $0.88 $1.03
December 31, 1999 $0.88 $1.03
</TABLE>
At December 31, 1999, the Company had approximately 140 shareholders of
record of its common stock; management estimates that the number of beneficial
owners is approximately 900.
At the present time, management of the Company intends to use any earnings
which may be generated to finance the growth of the Company's business.
Accordingly, while payment of dividends rests within the discretion of the Board
of Directors, no dividends have been declared or paid by the Company, and it
does not presently intend to pay dividends.
15
<PAGE>
Item 6.
- --------
Management's Discussion and Analysis of Financial Condition and Results
- -----------------------------------------------------------------------
of Operations
- -------------
BUSINESS ENVIRONMENT AND RISK FACTORS
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, 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.
With the exception of historical information, the matters discussed below
under the headings "Results of Operations" and "Liquidity and Capital
Resources," may include forward-looking statements that involve risks and
uncertainties. 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
Net operating revenue increased significantly to $23,584,171 in 1999 from
$19,458,852 in 1998. The Company's casino revenue increased from $19,036,621 in
1998 to $22,726,004 in 1999, or 19.4%. Casino revenue in both years was
generated by the Womacks/Legends Casino, except for $34,244 that was derived
from a concession agreement which expired in January 1998. The Company's share
of the Cripple Creek market increased significantly from 16.8% in 1998 to 18.6%
in 1999. Womacks/Legends Casino operated approximately 14.6% of the gaming
devices in the Cripple Creek market in 1999, with an average win per day per
machine of $103 compared with a market average of $81. Gross margin from
company-wide casino activities increased from 59% in 1998 to 61% in 1999. The
increase in margin is attributable to a continuation of a focused management and
marketing approach for Womacks/Legends Casino. At the same time, a significant
number of new memberships in the casino's Gold Club were added again in 1999.
Additional emphasis was put into further refining the product mix, upgrading
both the interior of the facilities, as well as the slot machine mix. Parking
capacity was expanded and made more convenient as part of the Company's ongoing
efforts to provide the highest quality parking facilities for its customers.
Also contributing to the casino margin improvement were proportionately lower
payroll costs. Various other initiatives were undertaken that management
believes have resulted in greater attention to customer service.
16
<PAGE>
Food and beverage revenue increased from $878,991 in 1998 to $933,387 in
1999, or 6.2%. The increase is principally due to improvement in operations
that started to take effect in the second quarter of 1999. The cost of food and
beverage promotional allowances, which are included in casino costs, increased
only slightly from $842,305 in 1998 to $854,565 in 1999. Hotel revenue
increased from $62,624 to $149,131, principally as the result of a marketing
arrangement with a local hotel that commenced in late 1998 and continued through
September 1999. The increase in other revenue from 1998 to 1999 was chiefly due
to management fees from Casino Millennium of approximately $109,000 and the
Rhodes, Greece casino agreement of $50,000.
General and administrative expense increased from $5,850,870 in 1998 to
$6,710,215 in 1999, or 14.7%, but decreased as a percentage of net operating
revenue, from 30.1% in 1998 to 28.5% in 1999. The Company was able to reduce or
eliminate actual expenses for parking lot rent, office relocation, penalties
and fines, and workers' compensation insurance which contributed to
proportionately lower costs.
Depreciation increased from $1,655,176 in 1998 to $1,968,951 in 1999. The
increase is attributable to property improvements at Womacks/Legends Casino and
acquisition of new gaming equipment in Cripple Creek and Prague. Amortization
of goodwill was $1,341,504 in both years.
Interest expense decreased from $1,023,906 to $999,922, due to slightly
lower borrowings and a lower weighted-average interest rate. The
weighted-average interest rate was 8.64% in 1999 and 8.74% in 1998. The other
items included in the caption "Other expense, net" in the consolidated
statements of income, for both 1999 and 1998, are described in Note 9 to the
consolidated financial statements.
As more fully discussed in Note 8 to the consolidated financial statements,
the Company recognized income tax expense of $1,746,000 in 1999 versus $123,000
in 1998. The provision in 1999 is higher than the prior year's because the 1998
provision was substantially reduced due to a nonrecurring credit of $1,003,580
resulting from the reversal of a valuation allowance against net deferred tax
assets established in prior years.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Company had cash and cash equivalents totaling
$2.5 million and net working capital of $1.1 million. Additional liquidity is
available under the Company's revolving credit facility ("RCF") with Wells Fargo
Bank. See Note 5 to the Consolidated Financial Statements for further
information on the RCF. The Company had unused borrowing capacity under the RCF
of approximately $9.2 million at December 31, 1999. Net cash provided by
operations was $3.8 million in 1999 compared with $4.2 million in 1998, with the
decrease primarily attributable to the cash payments for income taxes in 1999,
whereas income tax payments in 1998 were reduced due to available net operating
loss carryforwards. The Company used cash of $2.6 million for purchases of
property and equipment in 1999, principally gaming equipment for Cripple Creek
and Casino Millennium in Prague. In 1998, the Company used cash of approximately
$5.2 million for purchases, of which $3.6 million was used to purchase property
adjacent to Womacks/Legends Casino that was subsequently improved to provide
paved parking for casino patrons.
As more fully described in Note 5 to the consolidated financial statements,
during 1998 the Company renegotiated certain terms of the RCF. Among other
provisions, the maximum availability was increased from $13 million to $20
million and the interest rate structure was amended, which will further lower
the Company's cost of capital if certain leverage ratios are achieved.
17
<PAGE>
In March 2000, the Company is in the final stages of negotiations with
Wells Fargo Bank to increase the RCF to $26 million and extend the maturity
date of the agreement until 2004. Management expects the agreement to be
finalized before the end of the first quarter 2000, however, there can be no
assurances that the line will be renewed or extended on the terms described
herein. A portion of the proceeds of borrowings under the RCF is expected to
be used for purposes described below.
In the fall of 1999, the Company began construction of The Womacks
Center, described in Item 1 "Business - Property and Project
Descriptions - Womacks/Legends Casino, Cripple Creek, Colorado." Through
December 31, 1999, the Company had incurred costs of approximately $277,000,
with estimated additional costs to complete of approximately $623,000. The
Company expects to complete the construction of the building through a
combination of existing liquidity and anticipated cash flow.
Management has deferred a decision on whether to proceed with the
construction of a hotel and parking structure on its property across the street
from Womacks/Legends Casino until it has had time to assess the impact of new
hotel capacity on the Cripple Creek market. From November 1998 through
September 1999, Womacks/Legends Casino had an agreement with the operator of a
new local hotel whereby the casino leased a block of rooms from the hotel. The
casino made these rooms available to its customers, sometimes on a complimentary
basis, and provided a free shuttle service between the casino and the hotel.
For the near term, the Company's property, which has been earmarked for
construction of a hotel, is being used for customer parking.
In January 1999, the Company reached a 20-year definitive agreement with
Casino Millennium a.s., a Czech company, and with B. H. Centrum a.s. ("BHC"), a
Czech subsidiary of Bau Holding AG, one of the largest construction and
development companies in Europe, to operate a casino in the five-star Marriott
Hotel, in Prague, Czech Republic. The hotel and casino opened in July 1999.
The Company provides casino management services in exchange for ten percent of
the casino's gross revenue, and has provided gaming equipment for 45% of the
casino's net profit. Through December 31, 1999, the Company purchased gaming
equipment totaling $1,266,000 which is being leased to the casino. In January
2000, the Company entered into a memorandum of agreement with BHC to acquire the
casino by either a joint acquisition of Casino Millennium a.s. or the formation
of a new joint venture. Any funding required by the Company to consummate this
transaction would be met through a combination of existing liquidity and
anticipated cash flow.
The Company continues to pursue several gaming opportunities in South
Africa. The Company is the contracted casino management partner to a
consortium, Caledon Casino Bid Company (Pty) Limited ("CCBC"), which has been
awarded Successful Applicant status for a gaming license in the province of the
Western Cape. The final license is expected to be issued to Caledon upon the
provision of the required financial guarantees. In the event that Caledon
receives the license, the Company would be required to make equity and debt
investments totaling approximately $4.1 million. These fundings would be
accomplished through additional borrowings under the revolving credit facility.
There can be no certainty, however, that Caledon will ultimately be awarded the
license.
18
<PAGE>
The Company is also the contracted casino management partner to another
consortium, Silverstar Development Ltd. ("Silverstar"), which is an applicant
for a gaming license in the province of Gauteng, South Africa. The Company has
a small equity position in Silverstar. The application process has been the
subject of litigation and the successful outcome of Silverstar's application is
uncertain. In the event that Silverstar would be awarded a license, the Company
would be required to make an additional equity investment of approximately $1.5
million. This funding requirement would be met through borrowings under the
revolving credit facility. The Company has also projected additional
development costs of up to $500,000 which could be incurred by the Company
related to this project.
In 1998, the Company's Board of Directors approved a discretionary program
to repurchase up to $2 million of the Company's outstanding common stock. The
Board believes that the Company's stock is undervalued in the trading market in
relation to both its present operations and its future prospects. Through
December 31, 1999, the Company had repurchased 1,385,000 shares at an average
cost per share of $1.06. Management expects to continue to review the market
price of the Company's stock and repurchase shares as appropriate, with funds
coming from existing liquidity or borrowings under the RCF.
Management believes that the Company's cash and working capital at December
31, 1999, together with expected cash flows from operations and borrowing
capacity under the RCF, will be sufficient to satisfy its debt repayment
obligations, fund its anticipated capital expenditures and pursue additional
business growth opportunities for the foreseeable future.
Since the beginning of 2000, the Company has not had any interruptions
of its business due to the Year 2000 issue. During the next few months, the
Company will continue to monitor its operations and assess whether the Year
2000 issue has an impact on the Company.
Item 7. Financial Statements.
- ------- ---------------------
See "Index to Financial Statements" on page F-1 hereof.
Item 8.
- -------
Changes In and Disagreements With Accountants on Accounting and Financial
- --------------------------------------------------------------------------
Disclosure
- ----------
Not applicable.
19
<PAGE>
Item 9. Directors, Executive Officers, Promoters and Control Persons;
- ------- -------------------------------------------------------------------
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------------
The information required by this item will be included in the Company's
Proxy Statement with respect to its 2000 Annual Meeting of Stockholders to be
filed with the Commission within 120 days of December 31, 1999, under the
captions "Information Concerning Directors and Executive Officers" and
"Compliance with Section 16(a) of the Securities Exchange Act."
Item 10. Executive Compensation.
- -------- -----------------------
The information required by this item will be included in the Company's
Proxy Statement with respect to its 2000 Annual Meeting of Stockholders to be
filed with the Commission within 120 days of December 31, 1999, under the
caption "Information Concerning Directors and Executive Officers."
Item 11. Security Ownership of Certain Beneficial Owners and Management.
- -------- --------------------------------------------------------------------
The information required by this item will be included in the Company's
Proxy Statement with respect to its 2000 Annual Meeting of Stockholders to be
filed with the Commission within 120 days of December 31, 1999, under the
caption "Voting Securities."
Item 12. Certain Relationships and Related Transactions.
- -------- --------------------------------------------------
The information in this item is incorporated by reference from the
Company's Definitive Proxy material with respect to the 2000 Annual Meeting of
Stockholders to be filed with the Commission within 120 days of December 31,
1999, under the caption "Certain Relationships and Related Transactions."
Item 13. Exhibits and Reports on Form 8-K.
- -------- -------------------------------------
a. Exhibits Filed Herewith or Incorporated by Reference to Previous
--------------------------------------------------------------------
Filings with the Securities and Exchange Commission:
-------------------------------------------------------
1. The following exhibits were included with the filing of the Alpine's
Form 10-KSB for the fiscal year ended December 31, 1993 and are
Incorporated herein by reference:
Exhibit No. Description
------------ -----------
10.14 Plan of Reorgani-zation and Agreement Among Alpine Gaming,
Inc., Alpine Acquisition, Inc. and Century Casinos
Management, Inc. - Filed with Form 8-K dated December
24, 1993 and incorporated by reference therein.
10.15 Amendments One, Two and Three to Plan of Reorganization
and Agreement Among Alpine Gaming, Inc., Alpine
Acquisition, Inc. and Century Casinos Management, Inc.
2. The following exhibits were filed with the Form 10-KSB for the
fiscal year ended December 31, 1995 and are incorporated herein
by reference:
20
<PAGE>
Exhibit No. Description
------------ -----------
3.1 Certificate of Incorporation (filed with Proxy Statement
in respect of 1994 Annual Meeting of Stockholders and
incorporated herein by reference).
3.2 Bylaws (filed with Proxy Statement in respect of
1994 Annual Meeting of Stockholders and incorporated
herein by reference).
10.51 Asset Purchase Agreement dated as of September 27, 1995
by and among Gold Creek Associates, L.P., WMCK
Acquisition Corp. and Century Casinos, Inc., including
Exhibits and Schedules, along with First Amendment
thereto.
10.57 Stock Purchase Agreement dated December 21, 1995
between Switzerland County Development Corp. ("Buyer")
and Century Casinos Management, Inc. and Cimarron
Investment Properties Corp. ("Sellers").
10.58 Consultancy Agreement - Chalkwell Limited.
3. The following exhibits were filed with the Form 8-K Current
Report dated July 1, 1996 and are incorporated herein by
reference:
Exhibit No. Description
------------ -----------
10.60 Promissory Note dated March 19, 1992, made by Chrysore,
Inc. in the original amount of $1,850,000 payable to
R. & L Historic Enterprises, together with Assignment
dated September 14, 1992 of said Promissory Note to TJL
Enterprises, Inc. and Assignment dated May 16, 1996 of
said Promissory Note to Century Casinos, Inc.
10.61 Promissory Note dated July 1, 1996, made by WMCK
Acquisition Corp. in the original principal amount
of $5,174,540 payable to Gold Creek Associates, L.P.,
together with Guaranty dated July 1, 1996, of said
Promissory Note by Century Casinos, Inc.
10.62 Building Lease dated as of July 1, 1996, among
TJL Enterprises, Inc., WMCK Acquisition Corp. and
Century Casinos, Inc., together with Memorandum of
Building Lease with Option to Purchase dated as of July 1,
1996, among the same parties.
10.63 Four Party Agreement, Assignment and Assumption of
Lease, Consent to Assignment of Lease, Confirmation of
Option Agreement and Estoppel Statements dated as of
July 1, 1996, among Harold William Large, Teller Realty,
Inc., Gold Creek Associates, L.P., and WMCK
Acquisition Corp.
10.64 Consulting Agreement dated as of July 1, 1996, between
WMCKAcquisition Corp. and James A. Gulbrandsen.
10.65 Consulting Agreement dated as of July 1, 1996, between
WMCK Acquisition Corp. and Gary Y. Findlay.
21
<PAGE>
4. The following exhibit was filed with the Form 10-QSB for the
quarterly period ended March 31, 1997 and is incorporated
herein by reference:
Exhibit No. Description
------------ -----------
10.68 Credit Agreement dated as of March 31, 1997, between
Wells Fargo Bank, N.A. ("Lender"); WMCK Venture Corp.,
Century Casinos Cripple Creek, Inc., and WMCK Acquisition
Corp. ("Borrowers"); and Century Casinos, Inc.
("Guarantor").
5. The following exhibits were filed with the Form 10-KSB for
the fiscal year ended December 31, 1997 and are
incorporated herein by reference:
Exhibit No. Description
------------ -----------
10.69 First Amendment to the Credit Agreement dated as of
March 31, 1997, between Wells Fargo Bank, N.A.
("Lender"); WMCK Venture Corp., Century Casinos Cripple
Creek, Inc., and WMCK Acquisition Corp. ("Borrowers");
and Century Casinos, Inc. ("Guarantor"), dated
November 11, 1997.
10.70 Second Amendment to the Credit Agreement dated as of
March 31, 1997, between Wells Fargo Bank, N.A. ("Lender");
WMCK Venture Corp., Century Casinos Cripple Creek, Inc.,
and WMCK Acquisition Corp. ("Borrowers"); and Century
Casinos, Inc. ("Guarantor"), dated January 28, 1998.
6. The following exhibits were filed with the Form 10-QSB for the
quarterly period ended June 30, 1998 and are incorporated
herein by reference:
Exhibit No. Description
------------ -----------
10.71 Termination of Stock Transfer and Registration Rights
Agreement dated May 1, 1998, between Century Casinos,
Inc. and Gary Y. Findlay
10.72 Promissory Note dated April 30, 1998, between Century
Casinos, Inc. and Gary Y. Findlay
10.73 Termination of Stock Transfer and Registration Rights
Agreement dated June 2, 1998, between Century
Casinos, Inc. and James A. Gulbrandsen
10.74 Promissory Note dated June 2, 1998, between Century
Casinos, Inc. and James A. Gulbrandsen
10.76 Casino Consulting Agreement dated March 25, 1998,
by and between Rhodes Casino S.A., Century Casinos, Inc.
and Playboy Gaming International Ltd.
22
<PAGE>
7. The following exhibits were filed with the Form 10-KSB for
the fiscal year ended December 31,1998 and are
incorporated herein by reference:
Exhibit No. Description
------------ -----------
10.77 Third Amendment to the Credit Agreement dated as of
March 31, 1997, between Wells Fargo Bank, N.A.
("Lender"); WMCK Venture Corp., Century Casinos Cripple
Creek, Inc., and WMCK Acquisition Corp. ("Borrowers");
and Century Casinos, Inc. ("Guarantor"), dated
November 4, 1998.
10.78 Parking Lease - Option to Purchase dated June 1,
1998, between the City of Cripple Creek ("Lessor")
and WMCK Venture Corporation ("Lessee")
8. The following exhibits were filed with the Form 10-QSB
for the quarterly period ended March 31, 1999 and are
incorporated herein by reference:
Exhibit No. Description
------------ -----------
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 ("Optionor") and WMCK
Venture Corp. ("Optionee").
10.81 Letter Amendment to Note Agreement dated April 1, 1999,
by and between Century Casinos, Inc. and Thomas
Graf
9. The following exhibit was filed with the Form 10-QSB
for the quarterly period ended June 30, 1999 and is
incorporated herein by reference:
Exhibit No. Description
------------ -----------
10.82 Master Lease Agreement dated January 4, 1999 by and
between Casino Millennium a.s. and Century
Management und Beteiligungs GmbH
10. The following exhibit was filed with the Form 10-QSB
for the quarterly period ended September 30, 1999 and
is incorporated by reference:
Exhibit No. Description
------------ -----------
10.83 Waiver and Release and Consulting Agreement dated
October 15, 1999 by and between Norbert
Teufelberger and Century Casinos, Inc.
11. The following exhibits are filed herewith:
Exhibit No. Description
------------ -----------
10.84 Marketing and Investor Relations Agreement, dated
November 5, 1999, by and between Century Casinos,
Inc. and advice! Investment Services GmbH, and
related Warrant Agreement
23
<PAGE>
10.85 Fourth Amendment to the Credit Agreement, dated as
of March 31, 1997, between Wells Fargo Bank, N.A.
("Lender"); WMCK Venture Corp., Century Casinos
Cripple Creek, Inc., and WMCK Acquisition Corp.
("Borrowers"); and Century Casinos, Inc.
("Guarantor"), dated November 15, 1999
10.86 Casino Management Agreement, dated December 3,
1999, by and between Caledon Casino Bid Company
(Pty) Limited and Century Casinos Africa (Pty) Ltd.
10.87 Shareholders Agreement, dated December 3, 1999, and
Addendum to the Agreement, dated December 9, 1999, by
and between Caledon Casino Bid Company (Pty) Limited,
Caledon Overberg Investments (Pty) Limited,
Century Casinos Africa (Pty) Ltd., Century Casinos,
Inc. (not as a shareholder or party, but for clauses
4.2.3 and 6.7 of this agreement only), Caledon
Hotel Spa and Casino Resort (Pty) Limited, Fortes
King Hospitality (Pty) Limited, The Overberger
Country Hotel and Spa (Pty) Limited, and
Senator Trust
10.88 Memorandum of Agreement, dated January 7, 2000, by
and between B. H. Centrum a.s (a subsidiary of Ilbau
and Bau Holding) and Century Casinos, Inc.
10.89 Assumption and Modification Agreement, dated
February 7, 2000, by and between Marcie I. Elliott
("Optionor") and WMCK Venture Corporation ("Optionee")
10.90 Commercial Contract to Buy and Sell Real
Estate, dated November 17, 1999, by and between
WMCK Venture Corporation ("Buyer") and Saskatchewan
Investments, Inc. ("Seller")
10.91 Prepayment and Release, dated January 19, 2000,
by and between Switzerland County Development
Corp. and Century Casinos Management, Inc.
10.92 Amendment No. 1 to Parking Lease - Option to
Purchase, dated February 17, 2000, by and
between City of Cripple Creek ("Lessor") and WMCK
Venture Corporation ("Lessee")
21. Subsidiaries of the Registrant
23.1 Consent of Independent Accountants
27. Financial Data Schedule
b. Reports on Form 8-K Filed During the Registrant's Fourth Fiscal Quarter:
------------------------------------------------------------------------
No reports on Form 8-K were filed by the Company during the fourth
quarter of its fiscal year ended December 31, 1999.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Cripple
Creek, State of Colorado on March 8, 2000.
CENTURY CASINOS, INC.
By:/s/ Erwin Haitzmann
---------------------
Erwin Haitzmann,
Chairman of the
Board and Chief
Executive Officer
/s/ Larry Hannappel
---------------------
Larry Hannappel,
Chief Accounting
Officer (Principal
Accounting Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Erwin Haitzmann, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Form 10-KSB, and to file the
same, with all exhibits thereto, and other documentation in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities indicated on March 8, 2000.
Signature Title
- --------- -----
/s/ Erwin Haitzmann Chairman of the Board and
- --------------------- Chief Executive Officer
Erwin Haitzmann
/s/ Peter Hoetzinger Vice Chairman of the Board
- --------------------- and President
Peter Hoetzinger
/s/ James D. Forbes Director
- ----------------------
James D. Forbes
/s/ Gottfried Schellmann Director
- --------------------------
Gottfried Schellmann
/s/ Robert S. Eichberg Director
- -------------------------
Robert S. Eichberg
25
<PAGE>
CENTURY CASINOS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page Number
------------
Independent Auditors' Report F2
Consolidated Balance Sheet as of December 31, 1999 F3
Consolidated Statements of Income for the Years Ended F4
December 31, 1999 and 1998
Consolidated Statements of Comprehensive Income for the F5
Years Ended December 31, 1999 and 1998
Consolidated Statements of Shareholders' Equity for the F6
Years Ended December 31, 1999 and 1998
Consolidated Statements of Cash Flows for the Years F7
Ended December 31, 1999 and 1998
Notes to Consolidated Financial Statements F9
F1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
of Century Casinos, Inc.
We have audited the accompanying consolidated balance sheet of Century Casinos,
Inc. and subsidiaries as of December 31, 1999, and the related consolidated
statements of income, comprehensive income, shareholders' equity and cash flows
for the two years in the period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Century Casinos, Inc. and
subsidiaries at December 31, 1999, and the results of their operations and their
cash flows for the two years in the period then ended in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
March 6, 2000
F2
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
- ------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
DECEMBER 31, 1999
-------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,508,363
Receivables 710,577
Prepaid expenses and other 343,030
-------------------
Total current assets 3,561,970
PROPERTY AND EQUIPMENT, NET 19,533,235
GOODWILL, NET 9,915,626
OTHER ASSETS 1,012,283
-------------------
TOTAL $ 34,023,114
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 220,405
Accounts payable and accrued liabilities 2,212,866
-------------------
Total current liabilities 2,433,271
LONG-TERM DEBT, LESS CURRENT PORTION. 10,458,552
COMMITMENTS AND CONTINGENCIES (NOTES 4 AND 7)
SHAREHOLDERS' EQUITY:
Preferred stock; $.01 par value; 20,000,000 shares
authorized; no shares issued and outstanding
Common stock; $.01 par value; 50,000,000 shares
authorized; 15,861,885 shares issued; 14,476,885 shares outstanding 158,619
Additional paid-in capital 23,329,458
Accumulated other comprehensive loss (32,325)
Accumulated deficit (860,779)
-------------------
22,594,973
Treasury stock - 1,385,000 shares, at cost (1,463,682)
-------------------
Total shareholders' equity 21,131,291
-------------------
TOTAL $ 34,023,114
===================
</TABLE>
See notes to consolidated financial statements.
F3
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
- ------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998
---- ----
OPERATING REVENUE:
Casino $ 22,726,004 $ 19,036,621
Food and beverage 933,387 878,991
Hotel 149,131 62,624
Other 428,769 152,769
------------ ------------
24,237,291 20,131,005
Less promotional allowances (653,120) (672,153)
------------ ------------
Net operating revenue 23,584,171 19,458,852
------------ ------------
OPERATING COSTS AND EXPENSES:
Casino 8,877,881 7,755,733
Food and beverage 504,466 490,290
Hotel 160,467 27,778
General and administrative 6,710,215 5,850,870
Depreciation and amortization 3,310,455 2,996,680
------------ ------------
Total operating costs and expenses 19,563,484 17,121,351
------------ ------------
INCOME FROM OPERATIONS 4,020,687 2,337,501
Other expense, net (53,590) (286,612)
------------ ------------
INCOME BEFORE INCOME TAXES 3,967,097 2,050,889
Provision for income taxes 1,746,000 123,000
------------ ------------
NET INCOME $ 2,221,097 $ 1,927,889
============ ============
INCOME PER SHARE, BASIC AND DILUTED $ 0.15 $ 0.13
============ ============
See notes to consolidated financial statements.
F4
<PAGE>
<TABLE>
<CAPTION>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
- ---------------------------------------------------
<S> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998
---- ----
NET INCOME $ 2,221,097 $ 1,927,889
Foreign currency translation adjustments (17,017) 12,469
----------- -----------
COMPREHENSIVE INCOME $ 2,204,080 $1,940,358
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
Accumulated
Additional Other
Common Stock Paid -in Comprehensive Accumulated Treasury Stock Total
Shares Amount Capital Income (Loss) Deficit Shares Amount
---------- -------- --------- ------------- ----------- ------ ------ -----
BALANCE AT DECEMBER 15,861,885 $158,619 $24,907,543 $(27,777) $(5,009,765) $20,028,620
31, 1997
Amortization of 44,612 44,612
warrants issued
to consultant
Issuance of cash and (1,629,000) (1,629,000)
Notes to former
principals of Gold
Creek Associates
Purchases of 1,157,100 (1,236,839) (1,236,839)
treasury stock
Other comprehensive 12,469 12,469
income
Net income 1,927,889 1,927,889
---------- ------- ---------- ------- --------- --------- ---------- ----------
BALANCE AT DECEMBER 15,861,885 158,619 23,323,155 (15,308) (3,081,876) 1,157,100 (1,236,839) 19,147,751
31, 1998 ---------- ------- ---------- ------- --------- --------- ---------- ----------
Amortization of 6,303 6,303
warrants issued
to directors
Purchases of 227,900 (226,843) (226,843)
treasury stock
Other comprehensive (17,017) (17,017)
loss
Net income 2,221,097 2,221,097
--------- -------- ----------- --------- ---------- --------- ------------ -----------
BALANCE AT DECEMBER 15,861,885 $158,619 $23,329,458 $(32,325) $(860,779) 1,385,000 $(1,463,682) $21,131,291
31, 1999 ========== ======== =========== ========= ========== ========= ============ ===========
</TABLE>
See notes to consolidated financial statements.
F6
<PAGE>
<TABLE>
<CAPTION>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -----------------------------------------
<S> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998
---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $2,221,097 $1,927,889
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 1,968,951 1,655,176
Amortization of goodwill 1,341,504 1,341,504
Amortization of deferred financing costs 127,429 104,044
Income from terminated projects, net (1,040,000) (687,128)
(Gain) loss on disposition of assets 9,504 (46,169)
Deferred tax benefit (99,000) (499,000)
Other noncash charges 6,303 44,612
Changes in operating assets and liabilities:
Receivables (513,525) (25,238)
Prepaid expenses and other assets (47,204) 85,914
Accounts payable and accrued liabilities (131,530) 320,268
---------- ----------
Net cash provided by operating activities: 3,843,529 4,221,872
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,644,756) (5,230,734)
Sales (purchases) of short-term investment securities, net 1,038,496 (1,038,496)
Proceeds from terminated projects 1,040,000 981,000
Expenditures for deposits and other assets (353,265) (638,034)
Proceeds received from disposition of assets 8,200 160,482
Payments to former principals of Gold Creek Associates (534,000)
---------- ----------
Net cash used in investing activities (911,325) (6,299,782)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from borrowings $12,990,550 $14,477,778
Principal repayments and prepayment premium on borrowings (15,363,152) (13,115,144)
Deferred financing costs (100,259)
Purchases of treasury stock (226,843) (1,236,839)
---------- ----------
Net cash provided by (used in) financing activities (2,599,445) 25,536
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 332,759 (2,052,374)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,175,604 4,227,978
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $2,508,363 $2,175,604
========== ==========
</TABLE>
F7
<PAGE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
<TABLE>
<CAPTION>
<S> <C>
Issuance of notes to former principals of Gold Creek Associates $1,095,000
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid by the Company was $947,000 in 1999 and $1,194,000 in 1998.
Income taxes paid by the Company were $1,883,000 in 1999 and $670,000 in 1998.
See notes to consolidated financial statements.
F8
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------
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,
manage a hotel casino in Prague, Czech Republic, and regularly
pursue 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 Company's operating revenue for both 1999
and 1998 is derived principally from its casino operations in Cripple
Creek.
2. SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The accompanying consolidated financial statements
Include the accounts of the Company and its majority-owned subsidiaries.
All significant intercompany transactions and balances have been
eliminated.
USE OF ESTIMATES - The preparation of the accompanying financial
Statements in accordance with generally accepted accounting principles
Requires the use of estimates by management in determining the
reported amount of certain assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
CASH EQUIVALENTS - All highly liquid investments with a maturity of
three months or less at the time of purchase are considered to be cash
equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS - In accordance with the reporting
and disclosure requirements of Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of
Financial Instruments," the Company calculates the fair value of
financial instruments and includes this additional information in the
notes to its financial statements when the fair value does not
approximate the carrying value of those financial instruments. Fair
value is determined using quoted market prices whenever available.
When quoted market prices are not available, the Company uses
alternative valuation techniques such as calculating the present
value of estimated future cash flows utilizing risk-adjusted discount
rates. Except for an interest rate swap (see Note 5), which has no
carrying value in the consolidated financial statements, the
Company's carrying value of financial instruments approximates fair
value at December 31, 1999.
PROPERTY AND EQUIPMENT - Property and equipment are stated at
cost. Depreciation of assets in service is provided using the
straight-line method over the estimated useful lives or the
applicable lease term, if shorter.
F9
<PAGE>
GOODWILL - Goodwill represents the excess of purchase price over net
identifiable assets acquired. Goodwill recognized in the 1994 Alpine
acquisition, which is not deductible for income tax purposes, has an unamortized
balance of $3,122,436 at December 31, 1999, and is being amortized on a
straight-line basis over 10 years. Goodwill recognized in the 1996 Gold Creek
acquisition has an unamortized balance of $6,793,190 at December 31, 1999, is
being amortized on a straight-line basis over 15 years, and is deductible for
income tax purposes. Total accumulated amortization for all goodwill is
$6,472,381 as of December 31, 1999.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company reviews long-lived assets for
possible impairment whenever events or circumstances indicate that the carrying
amount of an asset may not be recoverable. If there is an indication of
impairment, which is estimated as the difference between anticipated
undiscounted future cash flows and carrying value, the carrying amount of the
asset is written down to its estimated fair value by a charge to operations.
Estimates of future cash flows are inherently subjective and are based on
management's best assessment of expected future conditions.
REVENUE RECOGNITION - Casino revenue is the net win from gaming activities,
which is the difference between gaming wins and losses. Management and
consulting fees are recognized as revenue as services are provided.
PROMOTIONAL ALLOWANCES - Food and beverage furnished without charge to
customers is included in gross revenue at a value which approximates retail and
then deducted as complimentary services to arrive at net revenue. The estimated
cost of such complimentary services is charged to casino operations, and was
$854,565 in 1999 and $842,305 in 1998.
FOREIGN CURRENCY TRANSLATION - Adjustments resulting from the translation
of the accounts of the Company's Austrian and South African subsidiaries from
the local functional currency to U.S. dollars are recorded as other
comprehensive income or loss in the consolidated statements of shareholders'
equity. Adjustments resulting from the translation of transactions which are
denominated in a currency other than U.S. dollars are recognized in the
statement of operations.
INCOME TAXES - The Company accounts for income taxes using the liability
method, which provides that deferred tax assets and liabilities are recorded
based on the difference between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
STOCK-BASED COMPENSATION - The Company follows the intrinsic value based method
for valuing stock options or similar equity instruments granted to employees, as
permitted by SFAS No. 123, "Accounting for Awards of Stock-Based Compensation."
The intrinsic value based method generally provides that no compensation expense
is recognized when the option exercise price is equal to or greater than the
trading price of the stock on the date of grant. The Company follows the fair
value based method for valuing stock options or similar equity investments
granted to non-employees.
EARNINGS PER SHARE - The Company follows the provisions of SFAS No. 128,
"Earnings per Share," in calculating basic and diluted earnings per share. Basic
earnings per share considers only outstanding common stock in the computation.
Diluted earnings per share gives effect to all potentially dilutive securities.
COMPREHENSIVE INCOME - The Company follows SFAS No. 130, "Reporting
Comprehensive Income," which provides for a more inclusive financial reporting
measure than net income, and includes all changes in equity during the period,
except those resulting from investments by, and distributions to, shareholders
of the Company.
OPERATING SEGMENTS - Management considers the Company's business to presently
comprise a single operating segment, as that term is defined by SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information."
F10
<PAGE>
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - In 1998, the Financial
Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments and hedging activities. The
pronouncement requires that a company designate the intent of a
derivative to which it is a party, and prescribes measurement and
recognition criteria based on the intent and effectiveness of the
designation. The Company will be required to adopt SFAS No. 133 no later
than the first quarter of 2001. The Company is in the process of evaluating
the impact that will result from the adoption of SFAS No. 133.
RECLASSIFICATIONS - Certain reclassifications have been made in the
1998 financial statements to conform with the 1999 presentation.
3. RECEIVABLES FROM OFFICERS/DIRECTORS
At December 31, 1999, the Company had outstanding receivables from
officers/directors totaling $286,903, of which $195,000 is receivable in
2000 and classified as a current asset. The remaining amounts are due
in 2001 and classified as other noncurrent assets. The receivables are
noninterest bearing.
4. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1999, consist of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
Estimated
Service Life
in Years
--------------
Land $ 8,685,495
Buildings and improvements 7,158,349 7 - 31
Gaming equipment 6,262,530 3 - 7
Furniture and office equipment 1,471,254 5 - 7
Other equipment 936,876 3 - 7
Capital projects in process 432,753
--------------
24,947,257
Less accumulated depreciation (6,334,527)
--------------
18,612,730
Nonoperating casino and land 920,505
--------------
Property and equipment, net $ 19,533,235
==============
</TABLE>
In June 1998, the Company began leasing parking spaces from the City of
Cripple Creek under a five-year agreement which requires annual lease
payments of $90,000. The agreement contains a purchase option whereby
the Company may purchase the property for $3,250,000, less cumulative lease
payments ($142,500 through December 31, 1999), at any time during the
lease term. In February 2000, the agreement was amended to extend the
term to 2010.
F11
<PAGE>
In March 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, as amended
on February 7, 2000, expires March 31, 2004 and provides for option
payments as follows: 2000 - $37,500; 2001 - $49,000; 2002 - $24,000;
2003 - $24,000; and 2004 - $6,000. 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.On November 17,
1999, the Company entered into a contract to purchase two parcels of land
in Cripple Creek for $1,850,000, of which $185,000 has been paid as a
deposit and included in other assets in the accompanying consolidated
balance sheet as of December 31, 1999. The closing date is April 17,
2000, unless extended to June 14, 2000, as permitted under certain
provisions of the contract, at which time, the remainder of the purchase
price is payable. The two parcels are in the immediate vicinity of the
Womacks/Legends Casino and will provide additional parking capacity for
the casino.
5. LONG-TERM DEBT
Long-term debt at December 31, 1999, consists of the following:
<TABLE>
<CAPTION>
<S> <C>
Borrowings under revolving line of credit facility with bank $ 9,142,911
Notes payable to former principals of Gold Creek 583,599
Convertible debenture 500,000
Note payable to founding shareholder, unsecured 380,000
Notes payable secured by gaming equipment 72,447
-----------
Total long-term debt 10,678,957
Less current portion (220,405)
-----------
Long-term portion $10,458,552
===========
</TABLE>
At December 31, 1999, the Company had a $20 million reducing revolving line
of credit facility (the "RCF") with Wells Fargo Bank ("Wells Fargo") that
expires on April 1, 2001. The RCF is secured by substantially all of
the real and personal property of Womacks/Legends Casino, the Company's
principal operating assets. The interest rate on the outstanding amount
is equal to the bank's prime rate of 8.5% at December 31, 1999. The
interest rate is based on the Company's leverage ratio, as defined,
calculated on a trailing-four-quarters basis and adjusted quarterly.
Beginning April 1, 1999, the borrowing capacity under the RCF has been
reduced by $555,600 quarterly to $18.3 million as of December 31, 1999,
resulting in an unused borrowing capacity at December 31, 1999 of
approximately $9.2 million. Quarterly repayments of principal are
required to the extent that outstanding borrowings exceed borrowing capacity
at the beginning of any quarter. Based upon the balance of outstanding
borrowings at December 31, 1999, and the scheduled reductions in borrowing
capacity over the next 12 months, the entire balance of outstanding
borrowings has been classified as long-term in the accompanying balance
sheet. Under the RCF, the Company is required to comply with certain
customary financial covenants, and is subject to certain capital
expenditure requirements and restrictions on investments.
F12
<PAGE>
As of March 6, 2000, the Company is in the final stages of negotiations
With Wells Fargo to increase the RCF to $26 million and extend the maturity
date of the agreement until 2004. The proposed agreement would also
provide for quarterly principal reductions in the RCF of $722,000
beginning July 2000. Management expects the agreement to be finalized
before the end of the first quarter 2000, however, there can be no
assurances that the RCF will be renewed or extended on the terms
described herein.
In 1998, the Company entered into a five-year interest
rate swap agreement on $7.5 million notional amount of debt under the RCF,
whereby the Company pays a LIBOR-based fixed rate and receives a LIBOR-based
floating rate. Generally, the swap arrangement is advantageous to the
Company to the extent that interest rates increase in the future and
disadvantageous to the extent that they decrease. The net amount paid or
received by the Company on a quarterly basis results in an increase or
decrease to interest expense. Net additional interest expense to the
Company under the swap agreement in 1999 was $14,718. At December 31,
1999, termination of the interest rate swap would have resulted in a gain
to the Company of approximately $326,000.
During the second quarter of 1998, the Company reached agreement with the
two former principals of Gold Creek to pay them a total of $1,629,000,
consisting of cash of $534,000 and two promissory notes totaling
$1,095,000, in lieu of issuing common stock as previously provided for
in connection with the acquisition of Gold Creek's assets. The notes
bear interest at 8.75% and require aggregate monthly payments of principal
and interest of $16,100 through June 2001, at which time, the remaining
aggregate principal of $356,681 is due and payable.
On May 30, 1996, the Company issued a convertible debenture in the
Principal amount of $500,000 to a private investor. The proceeds were used
in financing the Gold Creek acquisition. The debenture bears interest
at 10.5%, payable quarterly. The holder has the option to convert, in one
or more transactions, all or a portion of the outstanding principal into the
Company's common stock at $1.84 per share, subject to a minimum per
conversion transaction of $50,000. As of December 31, 1999, the Company
has the option to prepay the debenture, in whole or in part, at 122% of the
outstanding principal. The prepayment amount declines to 116% after
May 30, 2000. The entire unpaid principal is due on May 30, 2001.
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, the note is classified as noncurrent
in the accompanying consolidated balance sheet as of December 31, 1999.
The Company has acquired certain of its gaming equipment subject to vendor
financing at fixed rates of 10% to 10.5%.
As of December 31, 1999, scheduled maturities of long-term debt are as
follows: 2000 - $220,405 and 2001 -$10,458,552.
F13
<PAGE>
6. SHAREHOLDERS' EQUITY
In February 1998, the Company's Board of Directors approved a discretionary
program to repurchase up to $1 million of the Company's outstanding
common stock. In October 1998, the Board voted to increase the limit
on the stock repurchase program from $1 million to an aggregate of
$2 million. Through December 31, 1999, the Company had repurchased
1,385,000 shares at an average cost per share of $1.06.
In April 1994, the Board of Directors of the Company adopted the Employees'
Equity Incentive Plan (the "Plan"), which was amended effective
November 22, 1995, and further amended November 25, 1996. The Plan
provides for the grant of awards to eligible employees in the form of
stock, restricted stock, stock options, stock appreciation rights,
performance shares or performance units, all as defined in the Plan.
The Plan provides for the issuance of up to 4,500,000 shares of common
stock through the various forms of award permitted. Through December 31,
1999, only stock option awards had been granted under the Plan. Stock
options may be either incentive stock options, for which the option price
may not be less than fair market value at the date of grant, or
nonstatutory options, which may be granted at any option price. All
options must have an exercise period not to exceed ten years. Options
granted to date have either one-year or two-year vesting periods.
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.
Transactions regarding the Plan are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1999 1998
--------------------- -----------------------
Weighted- Weighted-
Average Average
Exercise Exercise
Shares Price Shares Price
Incentive Stock Options:
Outstanding at January 1 2,606,400 $1.43 2,615,400 $1.44
Granted 809,000 0.75
Cancelled or forfeited (508,900) 1.07 (9,000) 1.50
--------- ---------
Outstanding at December 31 2,906,500 1.35 2,606,400 1.43
========= =========
Options exercisable at 2,273,500 $1.44 2,584,267 $1.44
December 31 ========= =========
</TABLE>
F14
<PAGE>
Summarized information regarding all options outstanding at December 31, 1999,
is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Weighted-
Number Average
Exercise Outstanding Remaining Exercisable
Price. At Year End Term in Years At Year End
- ---------- ----------- ------------- -----------
$0.75 833,000 8.7 180,000
0.94 20,000 2.8 20,000
1.50 2,054,000 5.7 2,054,000
1.63 30,000 6.0 30,000
2.25 9,500 5.4 9,500
----------- ------------- ----------
2,946,500. 6.5 2,293,500
========== ============= ==========
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for options granted under the Plan.
Accordingly, no compensation cost has been recognized in the
accompanying financial statements. Had compensation cost for the Plan
been determined based on the fair value at the grant dates for awards
under the Plan, consistent with the method recommended, but not required,
by SFAS No.123, the Company's net income and earnings per share would
have been adjusted to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998
---- ----
Net income As reported $2,221,097 $1,927,889
Pro forma $1,998,097 $1,881,683
Earnings per share,
basic and diluted As reported $0.15 $0.13
Pro forma $0.13 $0.12
</TABLE>
The fair value of options granted under the Plan was estimated on the
date of grant using the Black-Scholes option pricing model with
the following assumptions:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
--------- --------
Weighted-average fair value of
options granted during the year $0.47 $0.57
Weighted-average risk-free interest rate 5.6% 5.5%
Weighted-average expected life 10 yrs. 5 yrs.
Weighted-average expected volatility 43 67%
Weighted-average expected dividends $0 $0
</TABLE>
F15
<PAGE>
In 1995, the Company entered into a consulting agreement with a third
Party whereby the consultant will assist the Company, from time to time,
in seeking investors and business opportunities. The agreement provides
that, upon the consummation of certain transactions, the Company will issue
to the consultant warrants to purchase the Company's common stock. The
number of shares and exercise price are determined based on a formula,
which depends upon the type and size of transaction consummated and the
recent trading price of the common stock. In connection with a 1995 private
placement, the Company issued warrants to the consultant for 71,428 shares
exercisable at $1.05 per share. The warrants have a five-year term from
the date of issue. The consulting agreement may be terminated by either
party upon 30 days notice.
In June 1996, the Company completed a private placement of 4,072,233 shares
of its common stock at an average price of $1.43 per share, with proceeds,
net of selling commissions, of approximately $4,470,000. In connection
with this private placement, the Company issued warrants to a placement
agent to purchase 150,000 shares of its common stock at $2.36 per share.
The warrants expire in June 2001.
In connection with a purchase of the Company's common stock in 1994, the
Company granted to an unaffiliated third party options to acquire
230,000 shares of common stock at $3.00 per share. The options
expired in March 1999.
In connection with the business combination with Alpine, warrants were
granted to certain key Alpine employees to purchase 235,000 shares of
common stock at an exercise price of $3.49; in 1997, the exercise price
relating to warrants covering 150,000 shares was reduced to $1.50. The
warrants expired in March 1999.
Warrants to purchase 1,000,000 shares of common stock at an exercise price
of $2.25 were issued in connection with a private placement of common stock
in July 1994 and expired in June 1999.
In 1995, the Company completed a private placement of 1,460,000 units at
$1.50 per unit, each unit consisting of one share of common stock and one
warrant to purchase one share of common stock at an exercise price of $2.50
per share. The warrants expired December 31, 1999.
7. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
PRAGUE, CZECH REPUBLIC - In March 1998, the Company entered into a
joint venture agreement with B. H. Centrum a.s. ("BHC"), a Czech
subsidiary of Bau Holding AG, one of the largest construction and development
companies in Europe, to form Century Casinos Praha a.s. The Company was
to hold a 49% interest in the venture, which would operate a casino in
the five-star Marriott Hotel in Prague, Czech Republic. Subsequent to
signing the joint venture agreement, laws governing casino licenses in
the Czech Republic were amended to preclude a foreign entity from holding
an equity interest in a casino license. In January 1999, the Company
entered into a 20-year definitive agreement with Casino Millennium a.s.,
a Czech company that has secured the leasing rights from the hotel, to
provide casino management services for ten percent of the casino's gross
revenue, and to provide and lease to the casino certain gaming equipment
for 45% of the casino's net profit. During 1999, the Company purchased
and leased to Casino Millennium a.s. gaming equipment with a total
cost of approximately $1.3 million. In addition, the Company advanced
operating funds to the casino of approximately $208,000. In July 1999,
Casino Millennium a.s. commenced operations of its casino. Through
December 31, 1999, the Company earned management fee income from Casino
Millennium totaling $109,000, however, no lease income was earned by the
Company. At December 31, 1999, receivables in the accompanying
consolidated balance sheet includes $299,110 relating to advances and
management fees.
F16
<PAGE>
Subsequent to the formation of Casino Millennium a.s., the Czech laws were
again amended to permit the Czech Republic's Ministry of Finance to make
exceptions to the foreign ownership restriction, thereby allowing a foreign
entity to hold an equity interest in a casino license. Accordingly, in
January 2000, the Company entered into a memorandum of agreement with BHC
to continue the casino project on a joint venture basis with each party
having a 50% equity interest. It is anticipated that this will be
accomplished by the formation of a new joint venture or by the joint
acquisition of Casino Millennium a.s. by the Company and BHC. The current
shareholders of Casino Millennium a.s. have consented to the sale of their
respective equity interests or the sale of its net assets and liabilities.
It is the intention of the Company and BHC to enter into new lease and
management agreements under the same terms and conditions described above.
It is also expected that the Company and BHC will contribute certain
casino equipment and improvements currently being leased to Casino
Millennium and equalize their respective contributions to the joint
venture, taking into consideration previously advanced operating funds.
Management is not able to determine what, if any, additional
contributions might be required by the Company in order to complete
the formation of the joint venture.
SOUTH AFRICA-CALEDON - On February 16, 2000, Caledon Casino Bid Company
(Pty) Limited ("CCBC") received the only successful applicant status from
the Western Cape Gambling and Racing Board (the "Western Cape Board") for
a casino project in Caledon, South Africa. The final license is
expected to be issued to CCBC upon the provision, within 60 days of the
award date, of the required financial guarantees and the satisfaction of
certain other conditions precedent which are primarily procedural in
nature. CCBC anticipates that it will be able to satisfy the
conditions precedent to the award within the time stipulated. The
Company's subsidiary, Century Casinos Africa (Pty) Limited ("CCA"), will
have a 50% equity interest in CCBC by virtue of an agreement entered into
between the Company and CCA, together with various other affiliated
(not with the Company) entities. Pursuant to the shareholders'
agreement of CCBC, upon the award of the license to and the obtaining of
certain debt financing by CCBC, the Company is obligated to fund R10
million (South African Rands) of equity and R15 million in loans to CCBC
(approximately $1,630,000 and $2,445,000, respectively, based on the
December 31, 1999 currency exchange rate).
In December 1999, in anticipation of a successful application, the
Company entered into a ten-year casino management agreement with the
CCBC, which agreement may be extended at the Company's option for multiple
ten-year periods. The Company will receive a management fee consisting
of the following: (i) an amount equal to 3% (increasing to 4% and
5% in the second fiscal year of operations, variable based on levels of
annual gross revenues) of annual gross revenues, as defined, and (ii) an
amount equal to 7.5% of the casino's annual earnings before interest,
income taxes, depreciation, amortization and certain other costs.
SOUTH AFRICA-GAUTENG - In April 1998, the Gauteng Gambling and Betting
Board (the "Gauteng Board") announced the award of the remaining two
licenses for the province of Gauteng, South Africa. 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 is included in "other expense, net" in the
accompanying consolidated statement of income for the year ended December
31, 1998. Silverstar subsequently filed a legal action with the High
Court of South Africa (the "High Court") challenging the decision of the
Gauteng 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. In March 1999, the High
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
F17
government. The competing license applicant appealed the ruling, but
in April 1999, the High Court rejected the request for leave to appeal its
March ruling. This defendant also made no request for leave to appeal with
the Appeals Court, the final court of appeal. In June 1999, the
Executive Council of the provincial government resolved not to
concur with the Gauteng Board's recommendation of the competing
applicant. In July 1999, the competing applicant instituted action
in the Court seeking to overturn the Council's decision; however, the
applicant has subsequently withdrawn an application requesting leave
to appeal. There can be no certainty regarding an award of this gaming
license or that this license will ultimately be awarded to
Silverstar.
RIVERBOAT DEVELOPMENT AGREEMENT-INDIANA - In September 1998, the Indiana
Gaming Commission awarded a Certificate of Suitability to Pinnacle
Gaming Development Corporation ("Pinnacle") to conduct riverboat gaming in
Switzerland County. In accordance with the terms of the sale of the
Company's interest in Pinnacle in 1995, the Company received payments
of $1,040,000 in 1999 and $431,000 in 1998, which are included in "other
expense, net" in the accompanying consolidated statements of income.
Additionally, the Company was entitled to receive installment payments of
$32,000 per month for the first 60 months of the riverboat's operation;
however, subsequent to 1999, the Company elected to receive an
aggregate discounted payment amount of $1,380,000, which was received and
recognized as "other expense, net" in 2000.
CONSULTING AGREEMENT-RHODES, GREECE - In 1998, the Company reached a
consulting agreement (the "current agreement") with Rhodes Casino
S.A. and Playboy Gaming International Ltd. ("Playboy") to assign certain of
the Company's rights and delegate its responsibilities under a previously
executed management and consulting agreement (the "previous agreement")
pertaining to the operation of a casino on the island of Rhodes,
Greece. In 1998, the Company received from Playboy a payment of $25,000
for certain preopening services performed to date. The Company also
received payments totaling $50,000 in 1999 and is to receive additional
annual payments of $50,000 in both 2000 and 2001. The Company will
have no further obligations under the previous agreement unless,
subsequent to the opening of the casino, Playboy is unwilling or
unable to perform under the current agreement. In such event, the previous
agreement, and the Company's obligations, would be reinstated together with
the Company's right to receive up to $300,000 per year for the
first three years of casino operations, with an aggregate minimum
guarantee of approximately $250,000.
SETTLEMENT OF NOTE RECEIVABLE FROM TERMINATED MANAGEMENT AGREEMENT -
In March 1998, the Company negotiated an early settlement of its note
receivable from SSK Game Enterprises, Inc. ("SSK"), with respect to the
Company's casino management agreement with the Soboba Band of Mission
Indians in California, which agreement was terminated in August 1995.
Aggregate payments received pursuant to the note from August 1995
through the date of settlement were $2,457,727, of which the final
$550,000 was recognized in income in 1998 and is included in "other
expense, net" in the accompanying consolidated statement of income for the
year ended December 31, 1998. No further payments will be received under
the note.
AGREEMENT WITH FORMER OFFICER/DIRECTOR - In October 1999, in connection
with the termination of an officer/director's employment, the Company
entered into a noncompetition agreement with the former officer/director
with a term through March 31, 2001 for consideration of twelve monthly
payments of $14,000 beginning January 2000. The area covered by the
noncompetition agreement includes any geographical area in which the
Company is present. The Company will reflect the future monthly payments
as expense over the term of the noncompetition agreement. The
agreement also provides for limited consulting services to be performed
by the former officer/director during 2000. The accompanying
financial statements as of December 31, 1999 include noncompetition
amortization expense and an accrued liability of $28,000 relating
to this agreement.
F18
<PAGE>
COLORADO DIVISION OF GAMING AUDIT - In 1998, the Colorado Division of
Gaming (the "Division") conducted an audit of the Company's two
Colorado gaming licenses covering the period August 1995 through July
1998. As a result of the audit, the Division alleged certain violations
of Colorado gaming regulations and internal control procedures. The
licensees have each entered into a Stipulation and Agreement whereby
the licensees have agreed to fines totaling $120,000 and have submitted
to the Division corrective action plans that are responsive to the
Division's concerns. The corrective action plans have been approved by,
and will be monitored for compliance by, the Division. Management believes
that the licensees are in compliance with the corrective action plans.
EMPLOYEE BENEFIT PLAN - In March 1998, the Company adopted the 401(k)
Savings and Retirement Plan (the "Plan"). The Plan allows eligible
employees to make tax-deferred contributions that are matched by the
Company up to a specified level. The Company contributed $23,633 and
$16,177 to the Plan in 1999 and 1998, respectively.
OPERATING LEASE COMMITMENTS - The Company has entered into certain
Noncancelable operating leases for real property and equipment. As of
December 31, 1999, future minimum lease payments under existing leases
agreements are $421,000 in 2000, $337,000 in 2001, $324,000 in 2002,
$230,000 in 2003, $192,000 in 2004 and $80,000 thereafter. Rental
expense was $574,052 in 1999 and $573,584 in 1998.
STOCK REDEMPTION REQUIREMENT - Colorado gaming regulations require the
disqualification of any shareholder who may be determined by the
Colorado Division of Gaming to be unsuitable as an owner of a Colorado
casino. Unless a sale of such common stock to an acceptable party could
be arranged, the Company would repurchase the common stock of any
shareholder found to be unsuitable under the regulations. The Company
could effect the repurchase with cash, Redemption Securities, as such
term is defined in the Company's Certificate of Incorporation and having
terms and conditions as shall be approved by the Board of Directors, or
a combination thereof.
<TABLE>
<CAPTION>
8. INCOME TAXES
The provision for income taxes, before extraordinary item, consists of the
following:
1999 1998
----------- ----------
<S> <C> <C>
Current:
Federal $1,593,000 $ 512,000
State 252,000 110,000
----------- ----------
1,845,000 622,000
----------- ----------
Deferred:
Federal (90,000) (439,000)
State (9,000) (60,000)
----------- ----------
(99,000) (499,000)
----------- ----------
$1,746,000 $ 123,000
=========== ==========
</TABLE>
F19
<PAGE>
The provision for income taxes differs from the amount of income tax
Provision calculated by applying the U.S. statutory federal income tax
rate of 34% to pretax income as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Expected federal income tax provision at statutory rate $1,349,000 $697,000
Increase (decrease) due to:
Goodwill amortization 252,000 252,000
(Income) loss of foreign subsidiary (4,000) 17,000
State income taxes, net of federal benefit 155,000 99,000
Penalties and fines 45,000
Other, net (6,000) 17,000
Change in valuation allowance (1,004,000)
---------- -----------
Provision for income taxes $1,746,000 $123,000
========== ===========
</TABLE>
Deferred income taxes reflect the net tax effects of temporary
Differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes
Deferred tax assets and liabilities at December 31, 1999, consist of
the following:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Property and equipment - noncurrent $439,000
Accrued liabilities and other - current 214,000
---------
653,000
Deferred tax liabilities:
Prepaid expenses - current (55,000)
---------
Net deferred tax assets $598,000
=========
</TABLE>
Net deferred tax assets of $159,000 and $439,000 are classified as current
and noncurrent, respectively, and included in other assets in the
accompanying consolidated balance sheet as of December 31, 1999.
9. OTHER EXPENSE, NET
Other expense, net, consists of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
---- ----
Interest income $ 43,265 $ 108,041
Interest expense (999,922) (1,023,906)
Income from terminated projects, net 1,040,000 687,128
Amortization of deferred financing costs (127,429) (104,044)
Gain (loss) on disposal of equipment (9,504) 46,169
----------- -----------
$ (53,590) $ (286,612)
=========== ===========
</TABLE>
F20
<PAGE>
10. EARNINGS PER SHARE
Basic and diluted earnings per share were computed as follows:
<TABLE>
<CAPTION>
1999 1998
----------- ------------
<S> <C> <C>
Basic Earnings Per Share:
Net income $ 2,221,097 $ 1,927,889
=========== ============
Weighted average common shares 14,631,719 15,300,516
=========== ============
Basic earnings per share $ 0.15 $ 0.13
=========== ============
Diluted Earnings Per Share:
Net income, as reported $ 2,221,097 $ 1,927,889
Interest expense, net of income taxes, on convertible 32,918 32,918
Debenture ----------- ------------
Net income available to common shareholders $ 2,254,015 $ 1,960,807
=========== ============
Weighted average common shares 14,631,719 15,300,516
Effect of dilutive securities:
Convertible debenture 271,739 271,73
Stock options and warrants 216,430 63,253
------------ -----------
Dilutive potential common shares 15,119,888 15,635,508
============ ===========
Diluted earnings per share $ 0.15 $ 0.13
============ ===========
Excluded from computation of diluted earnings per share
due to antidilutive effect:
Options and warrants to purchase common shares 4,616,566 5,526,009
Weighted average exercise price $ 1.94 $ 1.99
</TABLE>
F21
<PAGE>
EXHIBIT 10.84
MARKETING AND INVESTOR RELATIONS AGREEMENT
------------------------------------------
To advice! Investment Services GmbH Attn. Mr. Rainer Goeritz
Vienna, 1999 - November - 05
Gentlemen:
Following is a summary of our discussions and agreement.
WHEREAS, advice! Investment Services GmbH ("Advice" hereinafter) is a company
that is able to provide Investor Relations services in various countries in
Europe and has expressed a willingness to provide these services to Century
Casinos, Inc.
WHEREAS, Century Casinos, Inc. ("Advice" hereinafter) is desirous to find a
company that is able and willing to provide various Investor Relations services
in Austria, Germany and Switzerland.
THEREFORE, CCI engages Advice in the manner outlined below.
1. Advice will perform marketing, public relations and investor relations tasks
that include, but are not necessarily limited to the following:
- - Make contacts on a continuous basis with existing CCI shareholders in
Europe.
- - Disburse information provided by the company to existing shareholders in
Europe.
- - Generate interest in CCI.
- - Set up contacts with other PR companies in Europe to generate interest in
the company in the future.
- - Set up contacts with investment banks with regard to a possible financing
in combination with a possible listing on a European stock
exchange.
- - Identify possible new projects and generate leads.
- - Do market research for CCI with regard to the marketability of its stock
in Europe.
2. The minimum number of hours that Advice will spend on performing the
above tasks per month will be 20 hours.
1
<PAGE>
3. The term during which Advice will perform its tasks under this Agreement
will start with the date of signing this Agreement and will end on December 31,
2000.
4. As compensation for its efforts Advice will receive the option to
purchase 360,000 shares of common stock of CCI at the price of US-$ 2.50 per
share, such right being in place until December 31, 2000. The specifics of this
are outlined in detail in the Warrant Agreement that is attached to this
Agreement.
5. If CCI desires for Advice to perform Investor Relations tasks of a
specific nature, then the compensation for those will be in cash and will be
agreed upon between the parties prior to an engagement for those tasks. These
cash payments may also include compensation for third party costs like travel
expenses and room, food and beverage.
6. The parties agree to the exclusive jurisdiction of the state courts of
Colorado, USA, in the event of any dispute under this Agreement as well as venue
in the District Court of the City and County of Denver, Colorado, as exclusive
venue for any dispute.
If the above meets with your understanding of our agreement, please sign and
send or fax back a copy to us.
Sincerely,
/s/ Erwin Haitzmann
____________________________
For CCI
/s/ Rainer Goeritz
______________________________
For advice!
2
<PAGE>
WARRANT AGREEMENT
THIS WARRANT AGREEMENT is made this 13th day of December 1999, by and
between CENTURY CASINOS, INC. ("Company"), and advice! Investment Services GmbH
(the "Warrant Holder");
WITNESSETH:
WHEREAS, the Warrant Holder has provided and continues to provide valuable
public relations services to the Company; and
WHEREAS, to induce the Warrant Holder to further its efforts on the
Company's behalf, the Company desires to grant to the Warrant Holder a warrant
to purchase shares of Common Stock of the Company; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Warrant Holder hereby agree as follows:
1. Grant of Warrant. The Company hereby grants to the Warrant Holder on
----------------
the date of this Agreement the warrant or option to purchase 360,000 shares of
Common Stock of the Company (the "Warrant Stock") subject to the terms and
conditions herein contained, subject only to adjustment in such number of shares
as provided in Paragraph 10.
2. Warrant Price. During the term of the warrant granted hereby, the
--------------
purchase price for the shares of Warrant Stock granted herein is U.S. $2.50 per
share (the "Warrant Price"), subject only to adjustment of such price as
provided Paragraph 10.
3. Exercisability and Term of Warrant. The warrant granted hereby shall
----------------------------------
vest in its entirety as of the date of this Warrant Agreement. The warrant
granted hereby shall terminate on December 31, 2000 at 5:00 p.m., U.S. mountain
standard time.
4. Exercise by Warrant Holder. The warrant granted hereby shall be
-----------------------------
exercisable only by the Warrant Holder. Furthermore, the warrant granted hereby
shall not be transferable by the Warrant Holder, in whole or in part. The
warrant granted hereby shall not, voluntarily or involuntarily, be subjected to
any lien, directly or indirectly, by operation of law, or otherwise, including
execution, levy, garnishment, attachment, pledge or bankruptcy.
5. Manner of Exercise of Warrant Holder.
------------------------ ---------------
(a) The warrant granted hereby may be exercised by the Warrant Holder
by giving written notice to the Company of an election to exercise such warrant.
Such notice shall specify the number of shares Warrant Stock to be purchased
hereunder, along with payment of the Warrant Price and shall be delivered to the
Company at 200-220 East Bennett Avenue, P.O. Box 373, Cripple Creek, Colorado
80813. Upon receipt of such notice and subject to the other provisions of this
Warrant Agreement, the Company shall, within a reasonable time, and upon payment
of the full purchase price for the shares to be purchased, deliver to the
Warrant Holder a certificate for the Warrant Stock so purchased. An exercise
form for the warrant granted hereby is attached hereto.
(b) The Warrant Price shall be paid in cash (United States currency) or by
cashier's check payable to the order of the Company.
6. Rights as a Shareholder. The Warrant Holder or a transferee of the
--------------------------
warrant granted hereby shall have no rights as a shareholder of the Company with
respect to any Warrant Stock covered by the warrant granted hereby until the
date of the issuance of a stock certificate for such
3
<PAGE>
shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property), distributions or
other rights for which the record date is prior to the date such stock
certificate is issued.
7. Withholding Taxes. Upon exercise of the warrant granted hereby and
------------------
prior to the issuance of any stock as a result of such exercise, the Warrant
Holder shall make appropriate arrangements acceptable to the Company to provide
for the amount of withholding required by applicable U.S. federal, state or
foreign tax laws.
(a) As a condition to the issuance by the Company of the warrant
granted hereby and Warrant Stock exercisable pursuant to this Agreement, the
Warrant Holder (i) represents that the shares of Warrant Stock, if acquired, are
being acquired for investment and not with a present intention of selling or
otherwise distributing, and Warrant Holder agrees to make such other
representations as may be necessary in order to comply with federal and
applicable state securities laws or appropriate to qualify the issuance of the
Warrant Stock as exempt from the U.S. Securities Act of 1933 and any other
applicable securities laws, and (ii) represent that Warrant Holder shall not
dispose of the shares of Warrant Stock in violation of the U.S. Securities Act
of 1933 or any other applicable securities laws. The Company reserves the right
to place a legend on any stock certificate issued pursuant to the exercise of
the warrant granted hereby to assure compliance with the foregoing.
(b) Warrant Holder acknowledges that (i) an investment in the Warrant
Stock involves significant risks and may represent an illiquid investment, (ii)
the Warrant Holder is able to bear the economic risks of an investment in the
Warrant Stock and is able to maintain his investment in the Warrant Stock for an
indefinite period of time, and (iii) Warrant Holder could bear a total loss of
the investment.
(c) Warrant Holder has such knowledge and experience in financial and
business matters to enable Warrant Holder to evaluate the merits and risks of an
investment in the Warrant Stock. Warrant Holder has been strongly encouraged by
the Company to consult with a financial, tax or legal advisor before investing
in the Warrant Stock. Warrant Holder has received a copy of the Company's Form
10-KSB for the Year Ended December 31, 1998, the Company's Form 10-QSB for the
six months Ended June 30, 1999, and its proxy statement in respect of its 1998
Annual Meeting of Stockholders.
9. Compliance with Securities Laws. The warrant granted hereby shall be
-------------------------------
subject to the requirement that, if at any time counsel to the Company shall
determine that the listing, registration or qualification of the Warrant Stock
upon any securities exchange or under any state or U.S. federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of Warrant Stock
thereunder, the warrant granted hereby may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification.
10. Adjustment for Stock Split, Stock Dividend. Etc.
-----------------------------------------------------
(a) If the Company shall at any time increase or decrease the number of
its outstanding shares of Common Stock by means of the payment of a stock
dividend or any other distribution upon such shares payable in stock, or through
a stock split, subdivision, consolidation, combination, reclassification or
re-capitalization involving the stock, then in relation to the unexercised
Warrant Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the unexercised Warrant Stock shall be increased,
decreased or changed in like manner as if they had been issued and outstanding,
fully paid and non-assessable at the time of such occurrence.
(b) If any adjustment or substitution provided for in this Paragraph shall
result in the creation of a fractional share of Warrant Stock, the Company
shall, in lieu of issuing such fractional share of Warrant Stock, pay to Warrant
Holder a cash sum in an amount equal to the product of such fraction multiplied
by the fair market value of a share of Common Stock on the date the fractional
share of Warrant Stock would otherwise have been issued equal to the mean
between the closing bid and asked price of the stock as reported on the Nasdaq
System on the trading day prior to the day of exercise. In the case of any such
substitution or adjustment affecting the warrant granted hereby, the
4
<PAGE>
Warrant Price for the Warrant Stock then subject to the warrant granted
hereby shall be equitably adjusted to reflect the greater or lesser number of
shares of Warrant Stock or other securities into which the Warrant Stock subject
to the warrant granted hereby may have been changed.
11. No Assurances. Neither the Company nor any of its officers, agents,
-------------
or representatives have made or can make any assurance that either the granting
or the exercise of the warrant granted hereby will not give rise to adverse tax
consequences. Certain actions taken or omitted by the Warrant Holder in respect
to the warrant granted hereby, or in respect of Warrant Stock acquired by
exercise of the warrant granted hereby, may cause the warrant to become
unexercisable or may cause adverse tax consequences to flow from the granting
and/or exercise of the warrant. Warrant Holder should consult with its own tax
advisers with respect to the tax consequences of the warrant granted hereby.
Warrant Holder shall have no rights or remedies against the
Company or against any of its officers, agents, or representatives on account of
any tax consequences flowing from the granting or exercise of the warrant
granted hereby.
12. Modifications. This Agreement may only be altered, amended or modified
-------------
in writing.
13. Scope of Agreement. This Agreement shall bind and inure to the benefit
--------------------
of the Company and its successors and assigns and the Warrant Holder and any
successor or successors of the Warrant Holder permitted herein.
14. Governing Law. This Agreement shall be construed in accordance with and
--------------
governed by the laws of the State of Colorado, which shall also serve as the
exclusive jurisdiction for disputes arising in respect of this Agreement. The
parties agree that the exclusive venue for the resolution of any disputes
regarding this Agreement shall be the District Court for the City and County of
Denver, Colorado.
IN WITNESS WHEREOF, the Company and the Warrant Holder have executed this
Agreement in the manner appropriate to each, as of the day and year first above
written.
CENTURY CASINOS, INC.
By: /s/ Erwin Haitzmann
---------------------
Erwin Haitzmann, Chairman and
Chief Executive Officer
WARRANT HOLDER
By:_/s/ Rainer Goeritz
Print Name and Title: Rainer Goeritz
5
<PAGE>
EXHIBIT 10.85
FOURTH AMENDMENT TO CREDIT AGREEMENT
------------------------------------
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT ("Fourth Amendment") is made and
entered into as of the 15th day of November, 1999, by and among WMCK VENTURE
CORP., a Delaware corporation, CENTURY CASINOS CRIPPLE CREEK, INC., a Colorado
corporation and WMCK ACQUISITION CORP., a Delaware corporation (collectively the
"Borrowers"), CENTURY CASINOS, INC., a Delaware corporation (the "Guarantor")
and WELLS FARGO BANK, National Association, as Lender and L/C Issuer and as the
administrative and collateral agent for the Lenders and L/C Issuer (herein in
such capacity called the "Agent Bank" and, together with the Lenders and L/C
Issuer, collectively referred to as the "Banks").
R E C I T A L S:
WHEREAS:
A. Borrowers, Guarantor, Agent Bank and Lender entered into a Credit
Agreement dated as of March 21, 1997 (the "Original Credit Agreement") as
amended by First Amendment to Credit Agreement dated as of November 11, 1997
(the "First Amendment") and by Second Amendment to Credit Agreement dated
January 28, 1998 (the "Second Amendment") and by Third Amendment to Credit
Agreement dated November 4, 1998 (the "Third Amendment", and together with the
Original Credit Agreement, the First Amendment and Second Amendment,
collectively the "Existing Credit Agreement") for the purpose of establishing a
reducing revolving line of credit in favor of Borrowers, up to the maximum
principal amount of Twenty Million Dollars ($20,000,000.00)
B. For the purpose of this Fourth Amendment, all capitalized words and
terms not otherwise defined herein shall have the respective meanings and be
construed herein as provided in Section 1.01 of the Existing Credit Agreement
and any reference to a provision of the Existing Credit Agreement shall be
deemed to incorporate that provision as a part hereof, in the same manner and
with the same effect as if the same were fully set forth herein.
C. Borrowers and Guarantor desire to further amend the Existing Credit
Agreement for the following purposes:
(i) Permitting the Distribution of up to Five Million Dollars
($5,000,000.00) from the Borrower Consolidation to Guarantor;
(ii) excluding from the calculation of the TFCC Ratio the Distribution
described in (i) above.
1
<PAGE>
D. Banks have agreed to make the amendments set forth in the preceding
recital paragraph subject to the terms, conditions and provisions set forth in
this Fourth Amendment.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do agree to the amendments and modifications to
the Existing Credit Agreement in each instance effective as of the Fourth
Amendment Effective Date, as specifically hereinafter provided as follows:
1. Definitions. Section 1.01 of the Existing Credit Agreement entitled
-----------
"Definitions" shall be and is hereby amended to include the following
definitions. Those terms which are currently defined by Section 1.01 of the
Existing Credit Agreement and which are also defined below shall be superseded
and restated by the applicable definition set forth below:
"Caledon Investment" shall mean the investment, directly by Guarantor or
through a Subsidiary which is owned or controlled by Guarantor, in a hotel,
casino and spa facility located in Caledon, Western Cape Providence of South
Africa.
"Credit Agreement" shall mean the Existing Credit Agreement as amended by
the Fourth Amendment, together with all Schedules, Exhibits and other
attachments thereto, as it may be further amended, modified, extended, renewed
or restated from time to time.
"Excluded Subdebt Reductions" shall mean collective reference to: (i) the
meaning ascribed to such term in Paragraph 11 of the Third Amendment, and (ii)
each Distribution made under the provisions of Paragraph 2(c) of the Fourth
Amendment.
"Existing Credit Agreement" shall have the meaning set forth in Recital
Paragraph A of the Fourth Amendment.
"First Amendment" shall have the meaning set forth in Recital Paragraph A
of the Fourth Amendment.
"Fourth Amendment" shall mean the Fourth Amendment to Credit Agreement.
"Fourth Amendment Effective Date" shall mean
November 30, 1999, subject to full satisfaction of each
Condition Precedent set forth in Paragraph 4 of the Fourth
Amendment.
"Fourth Amendment Fee" shall have the meaning set forth in Paragraph 4(c)
of the Fourth Amendment.
2
<PAGE>
"Johannesburg Investment" shall mean the investment, directly by Guarantor
or through a Subsidiary which is owned or controlled by Guarantor, in a
partnership or other joint venture arrangement with an entity known as
"Silverstar" for a casino operation to be located in Greater Johannesburg, South
Africa area.
"Original Credit Agreement" shall have the meaning set forth in Recital
Paragraph A of the Fourth Amendment
"Permitted CNTY Distributions" shall have the meaning ascribed to such term
in Paragraph 2 of the Fourth Amendment.
"Second Amendment" shall have the meaning set forth in Recital Paragraph A
of the Fourth Amendment.
"TFCC Ratio" shall be defined as follows:
Net profit after cash taxes, plus depreciation and amortization, plus
Interest Expense (accrued and capitalized), less Distributions (not including
the Excluded Subdebt Reduction and the Permitted CNTY Distributions) paid, less
Non-Financed Capital Expenditures incurred during the period under review,
Divided by (/)
Current portion of scheduled principal and actual interest payments on long
term debt and Capitalized Lease Liabilities, excluding payments made on
Subordinated Debt.
2. Permitted CNTY Distributions. Notwithstanding anything contained in the
----------------------------
Existing Credit Agreement to the contrary, the Borrower Consolidation may make
the following Distributions to Guarantor (collectively, the "Permitted CNTY
Distributions") so long as (i) no Default or Event of Default has occurred and
remains continuing at the time of such Distributions, (ii) June 30, 2000 shall
not have occurred; and (iii) such Permitted CNTY Distributions do not exceed
Five Million Dollars ($5,000,000.00) in the aggregate:
a. Distribution of the Johannesburg Investment up to a maximum
aggregate amount of Two Million Dollars ($2,000,000.00);
b. Distribution of the Caledon Investment up to a maximum aggregate
amount of Three Million Dollars
($3,000,000.00);
c. Distribution to be applied toward a prepayment of principal on the
Subordinated Debt up to the maximum aggregate amount of One Million Dollars
($1,000,000.00); and
3
<PAGE>
d. Distributions to be used to repurchase the stock of Guarantor.
3. Permitted CNTY Distributions and Subordinated Debt Payment Carve Out
--------------------------------------------------------------------
for TFCC Calculation. On and after the Fourth Amendment Effective Date and so
- ----------------------
long as no Default or Event of Default has occurred and remains continuing, the
- --
Permitted CNTY Distributions and Excluded Subdebt Reductions shall: (i) be
excluded from the TFCC calculation under Section 6.03 as provided in the amended
"TFCC Ratio" definition set forth in Paragraph 1 of the Fourth Amendment, and
(ii) not otherwise constitute a Default or Event of Default under the Credit
Agreement.
4. Conditions Precedent to Fourth Amendment Effective Date. The
-------------------------------------------------------------
occurrence of the Fourth Amendment Effective Date is subject to Agent Bank
having received the following documents and payments, in each case in a form and
substance reasonably satisfactory to Agent Bank, and the occurrence of each
other condition precedent set forth below on or before November 15, 1999:
a. Due execution by Borrowers, Guarantor and Banks of four (4)
duplicate originals of this Fourth Amendment;
b. Corporate resolutions or other evidence of requisite authority of
Borrowers and Guarantor, as applicable, to execute the Fourth Amendment;
c. Payment of a fee in the amount of Ten Thousand Dollars ($10,000.00)
(the "Fourth Amendment Fee") to Agent Bank to be disbursed by Agent Bank to
Lenders in proportion to their respective Syndication Interests in the Credit
Facility;
d. Reimbursement to Agent Bank by Borrowers for all reasonable fees and
out-of-pocket expenses incurred by Agent Bank in connection with the Fourth
Amendment, including, but not limited to, reasonable attorneys' fees of
Henderson & Morgan, LLC and all other like expenses remaining unpaid as of the
Fourth Amendment Effective Date; and
e. Such other documents, instruments or conditions as may be reasonably
required by Lenders.
5. Representations of Borrowers. Borrowers
------------------------------
hereby represent to the Banks that:
4
<PAGE>
a. the representations and warranties contained in Article IV of the
Existing Credit Agreement and contained in each of the other Loan Documents
(other than representations and warranties which expressly speak only as of a
different date, which shall be true and correct in all material respects as of
such date) are true and correct on and as of the Fourth Amendment Effective Date
in all material respects as though such representations and warranties had been
made on and as of the Fourth Amendment Effective Date, except to the extent that
such representations and warranties are not true and correct as a result of a
change which is permitted by the Credit Agreement or by any other Loan Document
or which has been otherwise consented to by Agent Bank;
b. Since the date of the most recent financial statements referred to
in Section 5.08 of the Existing Credit Agreement, no Material Adverse Change has
occurred and no event or circumstance which could reasonably be expected to
result in a Material Adverse Change or Material Adverse Effect has occurred;
c. no event has occurred and is continuing which constitutes a Default
or Event of Default under the terms of the Credit Agreement; and
d. The execution, delivery and performance of this Fourth Amendment has
been duly authorized by all necessary action of Borrowers and Guarantor and this
Fourth Amendment constitutes a valid, binding and enforceable obligation of
Borrowers and Guarantor.
6. Affirmation and Ratification of Continuing Guaranty. Guarantor joins
---------------------------------------------------
in the execution of this Fourth Amendment for the purpose of ratifying and
affirming its obligations under the Continuing Guaranty for the guaranty of the
full and prompt payment and performance of all of Borrowers' Indebtedness and
Obligations under the Credit Facility and each of the Loan Documents as modified
under this Fourth Amendment.
7. Incorporation by Reference. This Fourth Amendment shall be
----------------------------
and is hereby incorporated in and forms a part of the Existing Credit Agreement.
8. Governing Law. This Fourth Amendment to Credit Agreement shall be
--------------
governed by the internal laws of the State of Nevada without reference to
conflicts of laws principles.
9. Counterparts. This Fourth Amendment may be executed in any number of
------------
separate counterparts with the same effect as if the signatures hereto and
hereby were upon the same instrument. All such counterparts shall together
constitute one and the same document.
10. Continuance of Terms and Provisions. All of the terms and provisions of
------------------------------------
the Credit Agreement shall remain unchanged except as specifically modified
herein.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment
as of the day and year first above written.
BORROWERS:
WMCK VENTURE CORP.,
a Delaware corporation
By /s/Larry J. Hannappel
-----------------------
Name Larry J. Hannappel
--------------------
Title CFO
---
CENTURY CASINOS CRIPPLE CREEK, INC.,
a Colorado corporation
By /s/Larry J. Hannappel
-----------------------
Name Larry J. Hannappel
--------------------
Title CFO
---
WMCK ACQUISITION CORP.,
a Delaware corporation
By /s/Larry J. Hannappel
-----------------------
Name Larry J. Hannappel
--------------------
Title CFO
---
GUARANTOR:
CENTURY CASINOS, INC.,
a Delaware corporation
By /s/Larry J. Hannappel
-----------------------
Name Larry J. Hannappel
--------------------
Title CAO
---
BANKS:
WELLS FARGO BANK,
National Association,
Agent Bank, Lender and
L/C Issuer
By /s/David Kramer___
----------------
Name David Kramer
-------------
Title Vice President
---------------
6
<PAGE>
EXHIBIT 10.86
CASINO MANAGEMENT AGREEMENT
THIS CASINO MANAGEMENT AGREEMENT (the "Agreement"), is made and entered
into as of the 3 day of December 1999, by and between CALEDON CASINO BID COMPANY
(PTY) LIMITED, a South Africa corporation ("Owner") and CENTURY CASINOS AFRICA
(PTY) LTD., a South African corporation ("Manager").
WITNESSETH
----------
WHEREAS, Owner shall use its best efforts to obtain all necessary approvals
from the Gaming Board of the South African Province of the Western Cape and all
other relevant authorities to develop and operate a gaming/entertainment
facility (the "Casino") to be situated at a site located in Caledon, Overberg
region, within the Western Cape Province, as mutually agreed upon between Owner
and Manager (the "Site"), (the Casino and all property and fixtures thereon, the
buildings and improvements at the Site are collectively referred to herein as
the "Facility"); and
WHEREAS, Owner has secured/controls the Site and represents that the Site
is suitable for the development and operation of a Casino; and
WHEREAS, Owner is seeking experience and. expertise in the operation of the
gaming/entertainment business to be conducted at/on the Facility; and
WHEREAS, Manager has experience and expertise in the operation and
management of gaming facilities and in the gaming/entertainment business; and
WHEREAS, Owner desires to engage Manager to provide the management
necessary to manage and operate the gaming/entertainment business to be
conducted at/on the Facility; and
WHEREAS, Manager 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"
1
<PAGE>
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the respective
meanings indicated.
Act. The term "Act" shall mean the Gaming/Casino Act of the Province of the
---
Western Cape as well as South Africa, as the case may be, and the regulations
promulgated pursuant thereto.
Advancement Plan. The term "Advancement Plan" shall have the meaning set
-----------------
forth in Section 2.7.
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 (i) more than
fifty percent (50%) or more of such Person if such Person is a publicly traded
corporation, or (ii) more than fifty percent (50%) or more of an ownership or
beneficial interest in any other Person.
Annual Operating Budget. The term "Annual Operating Budget" shall have the
------------------------
meaning set forth in Section 7.1.
Annual Operating Plan. The term "Annual Operating Plan" shall have the
-----------------------
meaning set forth in Section 7. 1.
Approval. The term "Approval" means any license, finding of suitability,
--------
qualification, approval or permit by or from any Gaming Authority.
Approved Legal Counsel. The term "Approved Legal Counsel" shall have the
------------------------
meaning set forth in Section 7.17.
Bank Accounts. The term "Bank Accounts" shall have the meaning set in
--------------
Section 7.17.
Books and Records The term Books and Records" shall have the meaning set
-------------------
forth in Section 7.10.
Business Day. The term "Business Day" shall have the meaning set forth in
-------------
Section 18.14
Capital Replacements. The term "Capital Replacements" shall have the
---------------------
meaning set forth in Section 7.8
-
Casino. The term "Casino" means the casino improvements and fixtures
------
(temporary and/or permanent), including Casino Gaming Activities, to be
-
constructed at the Facility, 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 Manager as necessary to provide cash-on-hand monies required to
operate and maintain Casino Gaming Activities, 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 as described in Section 9.3 herein. The
Casino Bankroll shall include the finds in the separate accounts in Manager's
name plus any finds 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.
2
<PAGE>
Casino Gaming Activities. The term "Casino Gaming Activities" shall mean
---------------------------
the casino cage, table games (such as blackjack, baccarat, roulette, craps,
mini-baccarat, pai gow, poker or pai gow poker, or any other table game), gaming
machines, and other casino-type games operated by Manager in the Casino.
Century. The term "Century" shall mean Century Casinos, Inc., a Delaware,
-------
USA corporation, or any of its subsidiaries or assignees.
Condemnation. The term "Condemnation" shall mean any taking by eminent
------------
domain, condemnation or any other governmental action.
Construction Permits. The term "Construction Permits" shall mean all
---------------------
licenses, permits, approvals, consents and authorizations from Governmental
-
Authorities that are necessary to develop and construct the Facility (including,
without limitation, certificates of occupancy and other similar permits
necessary to occupy the Casino).
Consumer Price Index. The term "Consumer Price Index" shall mean the
----------------------
Consumer Price Index from time to time published by the relevant South African
-
authority.
Control. The term "Control" (including derivations such as "controlled" and
-------
"controlling") means with respect to a Person, the ownership of more than fifty
percent (50%) or more of the beneficial interest or voting power of such Person.
Credit Policy. The term "Credit Policy" means the policy prepared by
--------------
Manager and approved by Owner regarding the extension and collection of credit
-
to customers of the Casino, which Credit Policy shall be based on (i) the target
markets of the Casino, (ii) the business issues involved, and (iii) such changes
and refinements as Owner shall reasonably recommend, all of which shall comply
and conform in all respects with any applicable Governmental Requirements
(including, without limitation, the rules and regulations of the Gaming
Commission).
Default. The tern: "Default" shall have the meaning set forth in Section
-------
8.1.
Default Rate. The term "Default Rate" shall mean the lesser of (i) the
--------------
reference or prime commercial lending rate in South Africa, plus two percent
(2%) 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.
3
<PAGE>
Department. The term "Department" shall have the meaning set forth in Section
-----------
7.9.
--
Development Budget. The term "Development Budget" shall have the meaning
-------------------
set forth in Section 5.1.
Development Plan. The term "Development Plan" shall have the meaning set
-----------------
forth in Section 5.1.
EBITDA. The term "EBITDA" shall mean Owner's earnings before interest
------
expense, income taxes, depreciation and amortization, and also before any and
all costs/expenses beyond the control of Manager (such as F, F&E reserve, any
leasing, rental or similar costs/expenses) for the subject monthly, quarterly or
annual period, as reported in the financial statements prepared by the Manager.
Effective Date. The term "Effective Date" shall mean the execution date of
---------------
this Agreement.
Enforcement Division. The term "Enforcement Division" shall mean the
---------------------
relevant authority to grant casino gaming licenses.
-
Environmental Damages. The term "Environmental Damages" shall mean all
----------------------
claims, judgments, damages, losses, penalties, fines, liabilities (including
strict liability), encumbrances, liens, costs, and expenses of investigation and
defense of any claim, whether or not such claim is ultimately defeated, and of
any good faith settlement of judgment, of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or unforeseeable, including without
limitation reasonable attorneys' fees and disbursements and consultants' fees,
any of which are incurred at any time as a result of the existence of Hazardous
Material upon, about, beneath the Site, or migrating or threatening to migrate
to or from the Site, or the existence of a violation of Environmental
Requirements pertaining to the Site, regardless of whether the existence of such
Hazardous Material or the violation of Environmental Requirements arose prior to
the present ownership or operation of the Site.
Environmental Requirements. The term: "Environmental Requirements" shall
---------------------------
mean all applicable federal, state and local laws, rules, regulations,
ordinances and requirements relating to health and safety, worker health and
safety and pollution and protection of the environment, as amended or hereafter
amended.
Estimated Opening Date. The term "Estimated Opening Date" shall mean that
------------------------
projected opening date of the Facility as set forth in the agreed Construction
Schedule.
Event of Default. The term "Event of Default" shall have the meaning set
-
forth in Section 3.1
Extended Term. The term "Extended Term" shall have the meaning set forth in
--------------
Section 3.1.
4
<PAGE>
Facility. The term "Facility" shall have the meaning set forth in the
---------
"WHEREAS" clause of this Agreement.
Facility Employee. The term "Facility Employee" shall mean any employee of
------------------
Owner directed by Manager to work at the Facility or in any capacity related to
the Facility.
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 Facility in conformity with
this Agreement.
FF&E Requirements. The term "FF&E Requirements" shall have the meaning set
------------------
forth in Section 5.2(c).
FF&E Specifications. The term "FF&E Specification" shall have the meaning
--------------------
set forth in Section 5.2(a).
Financial Statements. The term "Financial Statements" shall mean an income
---------------------
statement, balance sheet and a cash flows statement, all prepared in conformity
with Generally Accepted Accounting Principles and on a basis consistent in all
material respects with that of the preceding period (except as to those changes
or exceptions disclosed in such Financial Statements).
Fiscal Year. The term "Fiscal Year" shall mean the period beginning on
------------
January 1 and ending on December 31 of each calendar year.
Gaming Authorities. The term "Gaming Authorities" or "Authority" shall mean
------------------
all agencies, authorities and instrumentalities of any state, nation, or other
governmental entity, or any subdivision thereof, regulating gaming or related
activities in South Africa, including, without limitation, the Gaming Commission
and the Enforcement Division.
Gaming Commission. The term "Gaming Commission" shall mean the Western Cape
-----------------
Gambling and Racing Board.
Gaming License. The term "Gaming License" shall have the mean all
---------------
activities set forth in Section 3.1.
----
Gaming Operations. The term "Gaming Operations" shall mean all activities
- ------------------
pertaining to the development and construction of the Casino and the Casino
- ------
thereon, all Casino Gaming Activities conducted in the Casino and all activities
- ----
conducted at the Facility; related to any of the foregoing.
General Laws The term "General Laws shall mean any statute, ordinance,
-------------
promulgation, law, treaty, rule, regulation, code, judicial or administrative
precedent or order of any court or other body of South Africa and any state law
or subdivision thereof, any foreign countries or subdivisions thereof, and shall
include all Laws.
Generally Accepted Accounting Principles. The term "Generally Accepted
-------------------------------------------
Accounting Principles" shall mean generally accepted accounting principles in
all material respects as established from time to time by the American Institute
of Certified Public Accountants, provided, however, that to the extent there are
changes in, or there are implemented by mandates now-existing elective
treatments under, Generally Accepted Accounting Principles from and after the
date hereof, such changes or implementations shall not be taken into
consideration for purposes of defining the term EBITDA.
5
<PAGE>
Governmental Authority. The term "Governmental Authorities" or "Authority"
-----------------------
means South Africa, Province of the Western Cape and any other political
subdivision in which the Facility is located, and any court or political
subdivision, agency, commission, board or instrumentality or officer thereof,
whether federal, state, local, having or exercising a jurisdiction over Owner,
Manager or the Facility, including, without limitation, any Gaming Authority.
Governmental Requirements. The term "Governmental Requirements" means all
--------------------------
Laws and agreements with any Governmental Authority that are applicable to the
acquisition, development, construction and operation of the Facility and
including, without limitation, the Purchase, all Required Contracts, Approvals
and any rules, guidelines or restrictions created by or imposed by Governmental
Authorities (including, without limitation, any Gaming Authority).
Gross Casino Revenue. The terms "Gross Gaming Revenue" and "Gross Casino
----------------------
Revenue" shall mean all gross revenues generated by or in the Casino, including
gaming receipts less all sums paid out as winnings in connection therewith.
Hazardous Materials. The term "Hazardous Materials" shall mean without
--------------------
limitation: (i) hazardous materials, hazardous substances, extremely hazardous
substances or hazardous wastes, (ii) petroleum, including, without limitation,
crude oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch
absolute); (iii) any radioactive material, including, without limitation, any
source, special nuclear, or by-product material, and (iv) asbestos in any form
or condition.
Initial Term. The term "Initial Term" shall have the meaning set forth in
-------------
Section 3.1.
Law. The term "Law" means any statute, ordinance, promulgation, law,
---
treaty, rule, regulation, code, judicial or administrative precedent or order of
-
any court or any other Governmental Authority, as well as the orders or
requirements of any local board of fire underwriters or any other body which man
exercise similar functions.
Major Casualty. The term "Major Casualty" shall mean any casualty or
----------------
accident which prevents or substantially impairs the conduct of the Facility's
-
business and the ability to earn or generate revenues and income or its ability
to make payments under the Purchase.
Major Condemnation. The term "Major Condemnation" shall mean any
--------------------
Condemnation which prevents or substantially impairs the conduct of the Facility
-----
and the ability to earn or generate revenues and income and/or its ability to
make payments under the Purchase.
Management Fee. The term "Management Fee" shall have the meaning set forth
---------------
in Section
4.1.
6
<PAGE>
Manager Denial. The term "Manager Denial" shall have the meaning set forth
---------------
in Section 10.3
Manager Indemnitees. The term "Manager Indemnitees" shall have the meaning
--------------------
set forth in Section 16.2
Manager Operating Permits. The term "Manager Operating Permits" shall mean
--------------------------
all licenses, permits, approvals, consents and authorizations which Manager is
required to obtain from any Governmental Authority to perform and carry out its
obligations under this Agreement.
Manager's Advances. The term "Manager's Advances" shall have the meaning
-------------------
set forth in Section 9.7.
Manager's Default. The term "Manager's Default" shall mean those
------------------
occurrences described in Section 8.2.
-----
Minor Casualty. The term "Minor Casualty" shall mean any casualty or
---------------
accident other than a Major Casualty.
-
Minor Condemnation. The term "Minor Condemnation" shall mean any
-------------------
Condemnation other than a Major Condemnation.
-----
Net Gaming Proceeds. The term "Net Gaming Proceeds" shall have the exact
---------------------
same meaning as "Gross Gamine Revenue".
Opening Date. The term "Opening Date" shall mean the first date a
-------------
revenue-paying customer is admitted to the Casino. The parties shall hereafter
----
confirm the Opening Date in an Addendum to this Agreement which shall be
attached hereto and made a part hereof
Operating Expenses. The term "Operating Expenses" shall mean those
-------------------
reasonable operating expenses, including payroll, marketing and administration
---
incurred on behalf of Owner after the Opening Date in connection with conducting
and operating the Facility, 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 Facility. VAT and other taxes shall not be included in
Operating Expenses Further. Operating Expenses shall not include depreciation or
amortization with respect to the Facility or the F. F&E. Debt Service or Capital
Replacements deposits. Operating Expenses shah include the Management Fee.
Operating Guidelines The term "Operating Guidelines" means the general
---------------------
guidelines for the operation of the Facility which shall be prepared by Manager
and shall be included in and constitute a part of each Annual Operating Plan.
Operating Guidelines shall include the Credit Policy. Manager's policies
regarding (i) restricting access to the Casino to those under the legal age for
gaming in South Africa, (ii) assisting compulsive gamblers, and (iii) employee
travel, employee expense reimbursement and employee gambling at the Casino.
7
<PAGE>
Operating Permits. The term "Operating Permits" shall mean Manager
------------------
Operating Permits and Owner Operating Permits.
---
Operating Supplies. The term "Operating Supplies" shall mean gaming
-------------------
supplies, paper supplies, cleaning materials, food and beverage, fuel, marketing
--
materials, maintenance supplies, linen, china, glassware, silverware, kitchen
utensils, uniforms and all other consumable supplies and materials used in the
operation of the Facility.
Owner Denial. The term "Owner Denial" shall have the meaning set forth in
-------------
Section 10. 1
Owner Indemnitees. The term "Owner Indemnitees" shall have the meaning set
------------------
forth in Section 16.1.
Owner Operating Permits. The term "Owner Operating Permits" shall mean all
------------------------
licenses, permits, approvals, consents and authorizations from Governmental
Authorities that are necessary to own, develop, open, operate and occupy the
Facility other than Manager Operating Permits and the Construction Permits.
Owner's Advances. The term "Owner's Advances" shall mean the amounts to be
-----------------
advanced by Owner to Manager pursuant to Section 9. 1.
Owner's Default. The term "Owner's Default" shall have the meaning set
----------------
forth in Section 8.3.
Person. The term "Person" shall mean any individual, partnership,
------
corporation, association or other entity, including, but not limited to, any
----
government or agency or subdivision thereof and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so admits.
Plans and Specifications. The term "Plans and Specifications" shall have
--------------------------
the meaning set forth in Section 5.2(a).
Pre-Opening Budget. The term "Pre-Opening Budget" shall mean the budget of
-------------------
expenses to be incurred prior to the Opening Date pursuant to Section 6. 1 of
the Agreement and with respect to any other provision of the Agreement
pertaining to the period prior to the Opening Date. Such expenses shall include,
without limitation, all budgeted expenses incurred by Manager or by any of
Manager's Affiliates in performing the Pre-Opening Services, the cost of
recruitment and training for all employees of the Facility, costs of licensing
or other qualification of Facility employees prior to the Opening Date, the cost
of pre-opening sales, marketing, advertising, promotion and publicity, the cost
of obtaining all Construction Permits and Owner Operating Permits, permits for
employees, including the fees of lawyers and other consultants incident thereto,
and other Pre-Opening Expenses.
8
<PAGE>
Pre-Opening Expenses. The term "Pre-Opening Expenses" shall have the
---------------------
meaning set forth in Section 6.2.
-
Pre-Opening Services. The term "Pre-Opening Services" shall have the
---------------------
meaning set forth in Section 6.1.
-
Project Architects. The term "Project Architects" shall have the meaning
-------------------
set forth in Section 5.2(a).
Project Designers. The term "Project Designers" shall have the meaning set
------------------
forth in Section 5.2(a).
Property Insurance. The term "Property Insurance" shall have the meaning
-------------------
set forth in Section 14.2.
Purchase. The term "Purchase" shall mean the Purchase or lease agreement
--------
for the Site.
Required Coverage. The term "Required Coverage" shall have the meaning set
------------------
forth in Section 14.1.
Senior Staff. The term "Senior Staff" shall have the meaning set forth in
-------------
Section 7.4.
Site. The term "Site" shall have the meaning set forth in the "WHEREAS"
----
clause of this Agreement.
Technical Services. The term "Technical Services" shall have the meaning
-------------------
set forth in Section 5.3.
Term. The term "Term" shall mean the Initial Term and any Extended Term for
----
which the option to extend as provided in the Agreement has been properly
exercised.
Unavoidable Delay. The term "Unavoidable Delay" shall have the meaning set
------------------
forth in Article XIII.
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 Facility and the uninterrupted and efficient
operation of the Facility during the Term of this Agreement to permit Manager 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 operating expenses.
9
<PAGE>
ARTICLE II
APPOINTMENT OF MANAGER
----------- -- -------
SECTION 2.1 Appointment Owner hereby appoints, hires and employs Manager,
-----------
as Owner's exclusive agent, to manage the Gaming Operations on behalf of and for
the account of Owner during the term of this Agreement. Manager hereby accepts
such appointment upon and subject to the terms, conditions, covenants and
provisions set forth herein.
SECTION 2.2 Management of the Facility. Manager agrees to act (i) in
-------------- -------------
compliance with this Agreement and the requirements of the Gaming Commission and
any other Governmental Requirements, (ii) in accordance with the requirements of
any carrier of insurance on the Facility or any part thereof, and (iii) in
conformity with the applicable Annual Operating Plan and the Operating
Guidelines (all of the foregoing being hereinafter collectively referred to as
the "Operating Goals").
SECTION 2.3 No Interference. Owner hereby agrees that, subject to the
----------------
limitations described herein, Manager shall have uninterrupted control of the
management of the Gaming Operations during the Term of this Agreement, subject
to the rights of Owner set forth herein, and that Manager may manage the Gaming
Operations free of molestation, eviction or disturbance by Owner or any third
party claiming by, through or under Owner, subject in each case, to exercise of
the fiduciary duties under applicable law of any other managers of Owner.
SECTION 2.4 Limitations on Authority of Manager. In addition to any other
--------------------------- -------
limitations on the powers and authority of Manager as set forth herein, except
for transactions in the ordinary course of business, Manager shall have no
authority to (i) sell or purchase all or any part of the Facility or (ii) cause
Owner to acquire any other business entities or sell all or substantially all of
the assets thereof.
SECTION 2.5 Other Century Casinos. The parties hereto acknowledge and agree
---------------------
that Century, Manager or its Affiliates are the beneficial owner and/or managers
of existing casinos and may. in the future, have an interest, direct and/or
indirect in other casinos, and/or manage or operate other casinos in South
Africa, provided that the limited restraint clause (Breeriver region, Western
Cape) contained in the shareholders agreement is fulfilled.
SECTION 2.6 Employment of Affiliates. Manager may, acting in its sole
------------------------
discretion in the best interests of Owner, employ or retain as consultants or
agents any of Manager's Affiliates, or any other entity or Person related to
Manager, in fulfilling its obligations pursuant to this Agreement; provided.
However, that Manager shall disclose all transactions with any entity related to
Manager, as required by Generally Accepted Accounting Principles on the
quarterly financial statements required under Section 7.11. All such service
agreements shall be on economic terms comparable with agreements negotiated on
an arms-length basis and subject to Owner's approval.
10
<PAGE>
ARTICLE III
TERM OF AGREEMENT
---- -- ---------
SECTION 3.1 Term. The operating term of this Agreement shall be ten (10)
----
years (initial Term"), despite the date of execution thereof, shall be deemed to
have commenced on the award of a casino license to Owner and the fulfillment of
the conditions precedent as outlined in clause 3. of the shareholders agreement
(concluded between Caledon Casino Bid Company (Pty) Ltd. Caledon Overberg
Investments (Pty) Ltd, Century Casinos Africa (Pty) Ltd, Caledon Hotel Spa and
Casino Resort (Pty) Ltd, Fortes King Hospitality (Pty) Ltd, Overberg Country
Hotel and Spa (Pty) Ltd and Senator Trust). This Agreement shall be
automatically renewed for further multiple ten (10) year periods ("Extended
Term"), unless Manager gives six months notice of its intention to withdraw from
this Agreement. Owner undertakes, subject to licensing for which Owner shall use
its best efforts at any time, throughout the term (Initial and Extended) of this
Agreement, to conduct the business of a Casino and Casino Gaming Activities at
the Facility.
SECTION 3.2 Effect of Termination. 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 Manager for the fees earned and reasonable
out-of-pocket expenses incurred by Manager in conformity with this Agreement
prior to such termination as follows: (i) any unpaid accrued portion of the
Management Fee and Manager's Advances (including any unpaid accrued interest
thereon), if any, plus (ii) all reimbursable costs to Manager which were
properly incurred prior to termination in connection with the performance of
Manager'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 Manager for all reasonable costs (including, but not limited to, severance
pay or settlements and moving expenses of Manager'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 Manager's Default, Manager shall not have the right to collect
any amounts due Manager under this Section 3.4 from the Bank Accounts. In such
event, Owner shall pay Manager within five (5) Business Days of the date of
termination the amounts owed Manager described in clauses (i) and (ii) above
through the date of termination.
SECTION 3.3 Survival of Representations and Indemnifications.
-----------------------------------------------------
Notwithstanding anything contained herein to the contrary, the parties
acknowledge that the representations, covenants and indemnifications set forth
in Articles XI, XIV, XVI and Sections 18.2, 18.6, 18.8 and 18.9 shall survive
the termination or expiration of this Agreement. All amounts due and payable
front either party to the other shall survive the termination of the Agreement.
11
<PAGE>
ARTICLE IV
FEE; EXPENSES
-------------
SECTION 4.1 Management Fee. During the Term of this Agreement, Manager
----------------
shall be paid the Management Fee 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.
12
<PAGE>
SECTION 4.2. Calculation of Management Fee. The Management Fee shall be
-------------------------------
equal to:
(a) A fixed amount of R35 000 (thirty five thousand) per month for the
pre-operations period (period from award of casino license to opening Date),
plus
(b) Four percent (4%) of the yearly gross revenues (excluding VAT and any
other taxes) generated by or in the Casino (excluding food & beverage), for the
applicable Fiscal Year, between zero Rand (R0) and forty million Rands
(R40,000,000), plus five percent (5%) of the yearly gross revenues (excluding
----
VAT and any other taxes) generated by or in the Casino (excluding food &
beverage), for the applicable Fiscal Year, exceeding forty million Rands
(R40,000,000), plus
----
(c) Seven and a half percent (7.5%) of the Casino's yearly EBITDA (excluding
food & beverage), for the applicable Fiscal Year.
(d) The percentage referred to in the first section of (b) above (four
percent) shall be reduced to three percent (3%) for the first twelve months of
casino operation.
SECTION 4.3 Time of Payment of Management Fee. All out-of-pocket costs and
---------------------------------
expenses incurred by Manager shall be invoiced to Owner and Owner shall pay
these amounts to Manager within ten days. The fee described in (a) above shall
be paid from Owner to Manager on the fifth (5th) day of each month, for the
preceding month. That portion of the Management Fee based upon EBITDA shall be
paid thirty (30) days after the last day of each calendar month. The aggregate
of the Management Fees so paid monthly shall be adjusted quarterly, and an
annual adjustment shall be made within ninety (90) days of the end of each
Fiscal Year. A partial Fiscal Year at the beginning and end of this Agreement
shall be treated as an Fiscal Year for purposes of this Section 4.3. Owner
hereby authorizes Manager to pay itself the monthly Management Fee due from the
Bank Accounts. Owner shall pay all applicable taxes or fees on the Management
Fee. For the last month of the term of this Agreement, Owner shall pay Manager
the Management Fee directly. The fee in 4.2.(c) shall not take into account any
losses carried forward from any prior financial year.
Section 4.4 Place of Payment of Management Fee. It shall be Owner's
----------------------------------------
obligation to ensure that the Management Fees are paid to Manager at such
account as may be determined by Manager from time to time.
Section 4.5 Expenses. In addition to the Management Fee, within ten (10)
---------
Business Days after presentation of expense vouchers or billing invoices, as the
case may be, Owner shall reimburse Manager on a monthly basis for (i) all
documented expenses properly incurred under this Agreement by Manager, its
officers and employees and/or agents in rendering the services provided for in
this Agreement, and (ii) all amounts billed to Manager by Persons for such
Persons' reasonable fees, charges, costs and expense properly incurred under
this Agreement in connection with Manager's performance of its duties hereunder.
Notwithstanding the foregoing, all Operating Expenses shall be paid directly
from the Bank Accounts pursuant to Section 7.19 herein. Any amounts not
reimbursed within ten (10) business days shall bear interest at the Default
Rate. No expenses payable to Manager's Affiliates shall be paid out without
Owner prior consent.
13
<PAGE>
ARTICLE V
FACILITY DEVELOPMENT
-------- -----------
SECTION 5.1 Development Plan.
-----------------
(a) As soon as practicable after the execution date of this Agreement,
after Owner has demonstrated and represented, to Manager's reasonable
satisfaction, that the necessary financing for the full development of the
Facility has been secured, and after a Gaming/Casino License has been issued to
Owner, Manager shall present to Owner a proposed development plan (the
"Development Plan"). The Development Plan will be Manager's plan and schedule
for developing the Casino, and shall contain (i) a development budget (the
"Development Budget") for developing the Casino and (ii) the Pre-Opening Budget.
Manager shall consult with Owner in the preparation of the Development Plan,
provided Owner makes its representatives readily available for such
consultation.
(b) Within fifteen (15) days of receipt of the proposed Development Plan,
Owner shall inform Manager in writing whether it disapproves of the proposed
Development Plan and, if so, the specific portions thereof of which it
disapproves and the reasons therefor. Owner shall not unreasonably withhold or
delay its approval of the Development Plan or any item therein. If Owner does
not inform Manager in writing of its disapproval of the Development Plan within
the above-described fifteen (15) day period, it shall be deemed to have approved
the Development Plan.
(c) If Owner reasonably disapproves of the Development Plan or any portion
thereof, Manager shall (i) endeavor to make such modifications to the
Development Plan as are necessary to resolve the objections raised in Owner's
notice pursuant to Section 5.1(b); (ii) within fifteen (15) days of Owner's
notice of disapproval, resubmit such Development Plan for review under the terms
of Section 5.1(b); and (iii) if necessary, to make further revisions under this
Section 5.1(c).
(d) If Manager and Owner cannot reach agreement as to matters contained
in the
Development Plan within forty-five (45) days of Manager's submission of the
proposed
Development Plan, the disputed matter(s) will be resolved through
arbitration pursuant to Article XVII herein.
SECTION 5.2 Plans and Specifications
--------------------------
(a) Owner will engage and retain, at Owner's sole cost and expense,
such architects, engineers, contractors, designers and other specialists as
Manager deems necessary to prepare all site plans, grading plans, construction
drawings, surveys, materials, specifications, architectural plans and drawings,
elevations, construction models, engineering plans and drawings, approved plans
and all other plans, drawings, studies or reports required for the construction
of the Facility (the "Plans and Specifications") and for the purchase and
installation of the FF&E (the "FF&E Specifications), as provided for in the
Development Plan. Manager shall consult and advise with the architects (the
architects so selected are referred to herein as the "Project Architects") and
the designers (the designers so selected are referred to herein as the "Project
Designers"), and the Owner on these matters.
(b) The Plans and Specifications shall be consistent in all material
respects with and based upon the conceptual plans for the Casino as set forth in
the Development Plan and shall be subject to any changes necessary to meet
applicable requirements of the Act and any other Governmental Requirements.
(c) 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 casinos in South Africa, taking into consideration the
Construction Budget's limitations, the Development Plan, local conditions, and
the image and target markets of the Casino, (iii) comply with all applicable
Laws and any other Governmental Requirements, and (iv) be available in
quantities required by the FF&E Specifications to meet the Construction Schedule
(collectively, the "FF&E Requirements").
14
<PAGE>
SECTION 5.3 Technical Services (Pre-Opening). From the date of the award of
--------------------------------
the casino license until the Casino is substantially completed (including the
installation of FF&E), Manager, either directly or through one or more of its
Affiliates, shall provide the technical services described below (collectively,
the "Technical Services"):
(i) Manager will prepare specific operational and functional criteria for
the Casino for use by the Project Architects and the Project Designers in the
preparation of the Plans and Specifications and the FF&E Specifications;
(ii) Manager shall advise and consult with the Project Architects in the
development of schematic, preliminary and working Plans and Specifications and
the Project Designers in the selection and specifications of FF&E;
(iii) Manager shall review, critique and make recommendations to Project
Architects and the Project Designers in the selection and layout of the FF&E in
accordance with the FF&E Specifications and the Plans and Specifications.
SECTION 5.4 Opening the Casino. The Casino shall be opened to the public on
------------------
a date established by Manager upon satisfaction of the following: (i) the
Project Architects have issued to Owner a certificate(s) of substantial
completion confirming that the Facility has been substantially completed in
accordance with the Plans and Specifications. (ii) the Project Designers have
issued to Owner a certificate(s) of substantial completion confirming that the
FE&E has been substantially installed therein in accordance with the FF&E
Specifications and the Plans and Specifications, (iii) all Operating Permits
(including, without limitation, a certificate of occupancy or local equivalent,
gaming/casino, liquor and restaurant licenses and all permits, certificates and
other licenses required of any authority) have been obtained, (iv) the initial
cash needs for the Casino as set forth in Section 9.3 and the Casino Bankroll
has been furnished by Owner, (v) Manager is satisfied that all operational
systems have been adequately tested on a "dry-run" basis to the satisfaction of
Manager and any appropriate Governmental Authorities, and (vi) all other
Governmental Requirements necessary to open, occupy and operate the Facility
have been satisfied. Manager 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.
15
<PAGE>
ARTICLE VI
PRE-OPENING SERVICES
----------- --------
SECTION 6.1 Pre-Opening Services. Between the date of the casino license
---------------------
and the Opening Date, Manager, as agent of Owner, shall perform or arrange for
others to perform the following services (in addition to the services described
in Article V herein) on behalf of and for the account of Owner but subject to
the Pre-Opening Budget contained in the Development Budget (the "Pre-Opening
Services"):
(a) Pre-Opening Marketing. Manager shall implement the marketing portion of
---------------------
the approved 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 in
accordance with the provisions of Section 7.24.
(b) Personnel. Manager 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 Facility on behalf of Owner, including
all Facility personnel to be utilized during the period from the date hereto
until the Opening Date in accordance with the approved Development Plan. The
authority granted to Manager pursuant to this Section 6. shall be in addition to
all authority granted to Manager pursuant to Sections 7.3 and 7.4 herein,
provided that all such personnel and staff shall be suitable under applicable
rules, regulations and laws of South Africa.
(c) Operating Permits. Manager shall use reasonable efforts in applying
------------------
for, processing and producing all Manager Operating Permits and in assisting
Owner in applying for, processing and procuring Owner Operating Permits within
the timetables established by the Development Plan (and in any event prior to
the Estimated Opening Date).
SECTION 6.2 Payment of Pre-Opening Expenses. All costs and expenses
----------------------------------
properly incurred in connection with the Pre-Opening Services (the "Pre-Opening
Expenses") shall be paid from the Bank Accounts. Pre-Opening Expenses and the
time schedule for incurring such expenses shall be established in the approved
Development Budget and Development Plan. Owner shall deposit, in advance, such
sums in accordance with the schedule as shall be established by the parties in
the Development Budget and 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 Manager and submitted to Owner. Manager
shall not incur any expenses or make any disbursements that are not provided
for, or are in excess of one hundred fifty percent (150%) of any the Development
Budget without Owner's prior written consent: provided, however, that if a
savings of up to five hundred thousand Rands (R500,000) 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. Manager may,
but is not required to, advance funds to pay Pre-Opening Expenses on behalf of
Owner. All such Pre-Opening Expenses advanced by Manager, if any, shall be
itemized, scheduled and submitted to Owner on a calendar month basis and
reimbursement within ten (10) Business Day's after such submission. Any
Pre-Opening Expenses advanced day Manager that remain unreimbursed ten (10)
Business Days after submission shall bear interest at the Default Rate.
SECTION 6.3 Temporary Casino. In the event that Owner is authorized by any
----------------
applicable Governmental Authority to conduct temporary gaming/casino operations,
and Owner elects to do so, Manager shall manage such gaming operations for the
same management fees as outlined above Manager shall reasonably cooperate with
Owner in preparing a pre-opening plan for the temporary casino and such other
information as Owner may reasonably request.
16
<PAGE>
ARTICLE XIII
FACILITY OPERATIONS
-------- ----------
SECTION 7.1 Annual Operating Plan and Budget
------------------------------------
(a) On or before the forty-fifth (45th) day preceding the first day of each
Fiscal Year subsequent to the Opening Date, Manager shall submit to Owner for
its approval an annual operating plan for the operation of the Casino for the
forthcoming Fiscal Year (each such annual operating plan that is approved by
Owner 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 by month, 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. Manager
will consult with Owner and the Casino Manager in preparing the Annual Operating
Plan, provided that Owner and Casino Manager make their representatives readily
available for such consultations.
(b) Within thirty (30) days after the date Manager submits the proposed
Annual Operating Plan, Owner shall inform Manager in writing whether it
disapproves of the proposed Annual Operating Plan and, if so, the specific
portions thereof of which it disapproves. Any notice that disapproves a proposed
Annual Operating Plan must contain reasonably detailed objections along with
suggestions as to what corrective measures can be taken to make such proposed
Annual Operating Plan acceptable to Owner. If Owner fails to provide written
notice to Manager of its objections within thirty (30) days after the submission
of the proposed Annual Operating Plan, such proposed Annual Operating Plan shall
be deemed to be approved as submitted
(c) If Owner reasonably disapproves or objects to the proposed Annual
Operating Plan, or any portion thereof, Manager shall endeavor to make such
modifications to the Annual Operating Plan as are necessary to resolve the
objections raised in Owner's notice, and within thirty (30) days of the Owner's
notice, to resubmit such Annual Operating Plan for review by Owner under the
terms of Section 7.1 and. if necessary, to make further revisions under this
Section 7.1.
(d) If Owner's objection relates only to 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, prior to the adoption of a new
Annual Operating Budget, the corresponding item contained in the Annual
Operating Budget for the preceding Fiscal 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 Fiscal 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 Fiscal Year shall be automatically adjusted by a percentage equal to
the percentage change in the Consumer Price Index during the preceding Fiscal
Year. Such calculation of percentage change in the Consumer Price Index shall be
made by Manager based upon the most recently published Consumer Price Index data
at the time the calculation is made.
17
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(e) If Owner and Manager are unable to agree on the amount of any capital
expenditure or reserve item in an Annual Operating Budget, only those capital
expenditures (or the undisputed amount when the amount is in dispute) with
respect to which Owner and Manager have reached an agreement that are approved
by Owner or are required to be made by any Governmental Authority shall be made
until Owner and Manager otherwise agree on the terms of such Annual Operating
Budget or the matter is decided by arbitration. The Annual Operating Plan will
be appropriately adjusted to reflect the effect of any delay in capital
expenditures.
(f) Each proposed Annual Operating Plan shall be prepared by Manager based
on the actual and projected results of the current Fiscal Year, the standard of
maintaining the Casino and the Facility in good operating condition, information
with respect to possible occurrences which may impact the marketing and/or
operation of the Casino and the Facility in the future, changes from the
previous Fiscal Year results, reasonable predictions for the future and such
other information and assumptions that shall be reasonable under the
circumstances.
(g) Except as otherwise provided in Sections 7.22 or 7.23, Manager 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 fifty percent (150%) of the amount approved for
a particular item in such Annual Operating Budget unless otherwise permitted by
Sections 7.22 or 7.23. Any request by Manager to make any expenditure or incur
any obligation in excess of one hundred fifty percent (150%) 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 fifteen (15) days after the receipt thereof. If Owner fails
to respond within such fifteen (15) day period, the proposed expenditure shall
be deemed approved.
SECTION 7.2 Contracts and Expenses. Manager 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 Manager has
complied with all the requirements of this Agreement with respect to such
contracts and agreements. All costs and expenses incurred by Manager or an
Affiliate of Manager 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 incurred Manager under this Agreement
to third parties on behalf of either Owner or the Facility are and shall remain
the sole obligations of Owner. Manager shall use commercially reasonable efforts
to promote and enforce the goals of the Advancement Plan by Owners contractors,
to the extent required by the Advancement Plan.
SECTION 7.3 Recruitment. Manager shall establish and implement procedures,
-----------
techniques, and programs consistent with the Annual Operating Plan, the Annual
Operating Budget and the Advancement Plan to recruit, screen, evaluate, hire,
orient and train qualified applicants to become Facility Employees. Manager
shall have the sole authority to recruit, hire, provide orientation to, train,
supervise, promote, determine the compensation of, and discharge all Facility
Employees.
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SECTION 7.4 Manager's Personnel Decisions. Manager shall have the
-------------------------------
authority to recruit, hire, provide orientation to, train, supervise, promote,
determine the compensation of, and discharge all personnel, including all
management personnel ("Senior Staff") at the Facility on behalf of Owner. Except
as otherwise decided by Manager, all of the Senior Staff shall be employees of
Owner. Regardless of whether they are employed by Owner or Manager, expenses and
costs pertaining to the employment of the Senior Staff, including without
limitation, affiliate incentive and stock plans, severance pay and the costs of
retirement benefits pertaining to such persons, shall be Operating Expenses of
the Facility and reimbursed to Manager on a current basis.
SECTION 7.5 Union Contracts. Manager shall assist Owner to negotiate with
---------------
any labor union lawfully entitled to represent the Facility Employees. All
decisions regarding union contracts applicable to the Facility shall be made by
Manager.
SECTION 7.6 Payroll Checks. Payroll checks for all Facility Employees
---------------
shall be in a form, contain such identifications and be signed by persons
specified by Owner (provided such checks shall not identify Manager without
Manager's consent).
SECTION 7.7 Financial Management. Manager shall be responsible for the
---------------------
administration of the day-to-day financial affairs of the Casino.
SECTION 7.8 Capital Replacements
---------------------
(a) Manager shall have the responsibility and sole authority to plan,
contract for, account for and supervise all capital replacements and
improvements to the Casino and the Facility or any portion thereof (collectively
"Capital Replacements") that are contemplated in any Annual Operating Plan.
Manager shall have the right to approve plans and specifications and select
architects, engineers, general contractors, subcontractors, suppliers, and
materialmen with respect to Capital Replacements, taking into consideration the
criteria set forth in the Development Plan and al1 Annual Operating Plans. Any
changes in the Casino structure itself or the structure of any of the buildings
located at the Facility shall comply with any requirements in the Purchase, or
any Governmental Requirements.
(b) Manager shall have the right to supervise the general contractor or
other person responsible for the Capital Replacements work. To the extent the
proposed Capital Replacements will have a material adverse effect on the
operation of the Facility during the performance of the work. the plans and
specifications applicable thereto shall comply with the terms of the Purchase
and any applicable Governmental Requirements.
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SECTION 7.9 Revisions to Annual Operating Plan and Reallocations of Funds.
-------------------------------------------------------------
If, after approval of an Annual Operating Plan for a particular Fiscal Year, in
Manager's reasonable business judgment, revisions to the Annual Operating Plan
are appropriate, Manager shall revise the Annual Operating Plan and submit such
revised Annual Operating Plan to Owner for approval in accordance with the
procedures set forth in Section 7.1. Owner shall have the right to suggest
revisions to the Annual Operating Plan subject to Manager's approval with
disagreements being resolved as set forth in Section 7. 1. Manager, without
Owner's consent, may reallocate all or any portion of any line item in an Annual
Operating Budget to another item in the same Department in an amount not to
exceed five hundred thousand Rands (R500,000) in the aggregate in any Fiscal
Year but may not reallocate from one Department to another without Owner's
approval. The term "Department" means those general divisional categories in the
Annual Operating Budgets and shall not mean or refer to subcategories appearing
in a divisional category. Manager shall not make any payments or disbursements
in excess of one hundred fifty percent (150%) of the Department or total
operating expense amounts in an Annual Operating Plan, except as follows:
(i) Pursuant to Sections 7.22 or 7.23;
(ii) If expenditures for Operating Expenses bear the same relationship
(ratio) to the amount budgeted for such items as actual gross revenue for such
month bears to the projected gross revenue for such month (provided that any
increase in Operating Expenses is, in Manager's reasonable business judgment, a
necessary consequence of the increase in gross revenue);
(iii) Any expenditures for which written approval in advance has been
obtained from Owner;
(iv) For taxes, insurance and utilities to reflect actual costs thereof,
subject to Owner s right to contest the validity of such items; and
(v) For payment of any final judgment in litigation involving the Facility.
SECTION 7.10 Accounting Records. During the Term of this Agreement, Manager
------------------
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 Accented Accounting Principles
consistently applied in all material respects. The Books and Records shall be
kept separate and distinct from all other operations and businesses of Manager
or Affiliates of Manager. Manager 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 the Facility or
at such other location as shall be approved by Owner in writing, subject to such
record retention and storage policies and access rights required by any Gaming
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 Facility or other approved location by Manager without Owner's written
approval except as required by General Laws. Upon any termination of this
Agreement, all Books and Records shall immediately by turned over to Owner so as
to ensure the orderly continuance of the operation of the Facility, but (i)
Manager 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 Manager 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 Manager managed the
Facility.
20
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SECTION 7.11 Financial Statements; Meetings. Manager shall provide Owner
-------------------------------
with reasonably accurate unaudited Financial Statements of the Casino sixty (60)
days after the end of each calendar quarter. The annual Financial Statements
shall be audited by Owner's auditors at Owner's expense and provided to Owner
within ninety (90) days after the end of the Fiscal Year. In addition, Manager
shall provide Owner with daily results (including cash drop) for all games and
with a copy of Manager's monthly casino report.
SECTION 7.12 Access. Review and Audit. Owner (or its duly appointed agents)
-------------------------
and any Gaming Authority (as permitted by Law) shall have the right at
reasonable times and during normal business hours, after reasonable written
notice to Manager, to examine, audit, inspect and transcribe the Book and
Records. With respect to such reviews, Owner and its respective agents shall be
subject to the confidentiality covenants in Section 18.8.
Section 7.13 Limitation of Responsibility for Annual Operating Budgets. All
---------------------------------------------------------
Annual Operating Budgets are intended only to be reasonable estimates based on
Manager's best business judgment and Manager 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 Budgets. Owner acknowledges that Manager 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 Facility during the Term of this
Agreement.
SECTION 7.14 Management. Subject at all times to the Operating Guidelines
----------
and those rights of Owner specifically provided in this Agreement. Manager 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, food and beverage
quality and service, 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 Manager deems necessary or desirable in its
good faith business judgment for the operation and maintenance of the Casino and
the Facility on behalf for the account and at the expense of Owner. including
but not limited to the following, as applicable:
(i) Manager shall negotiate and consummate such agreements necessary for the
furnishing of utilities, services, security, and supplies for the maintenance of
utilities, services, security, and supplies for the maintenance and operation of
the Casino.
(ii) If consistent with the Development Plan, Manager may negotiate and
grant concessions and purchases for space in the Casino.
(iii) Manager shall have sole authority to make all repairs, replacements,
and improvements which are necessary or appropriate.
Manager shall report directly to the Board of Directors of Owner as well as to
the Board of Directors of Century Casinos, Inc. on all matters.
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SECTION 7.15 Licenses. Permits, Reports and Accreditation.
------------------------------------------------
(a) Manager shall use its best efforts to apply for, process, obtain and
maintain all Manager Operating Permits and, to the extent requested by Owner,
Owner Operating Permits, in a manner and within the time periods that will
permit the Facility to be operated on a continuous and uninterrupted basis after
the Opening Date. If reasonably requested by Owner, Manager shall (i) apprise
Owner of the need to renew, reapply or requalify for any Owner Operating Permits
and filing any reports relating thereto or required by any Governmental
Authority, and (ii) assist Owner in processing all such matters in a timely
fashion. All reasonable out-of-pocket costs and expenses reasonably necessary to
obtain and maintain Manager Operating Permits shall be reimbursable by Owner and
shall constitute Operating Expenses. Owner shall provide all required
information for all of the above promptly upon request and such information
shall be accurate.
(b) If Owner fails to apply (or fails to request that Manager apply (on
behalf of Owner) for a necessary Owner Operating Permit, and Manager makes a
good-faith determination that such failure jeopardizes the ability to operate
the Facility on a continuous and uninterrupted basis after the Opening Date,
then Manager may take all necessary or desirable steps to obtain the Owner
Operating Permit on behalf of Owner and Owner hereby grants Manager an
irrevocable power of attorney, which Owner acknowledges is coupled with an
interest, to implement the foregoing. Manager shall be reimbursed by Owner for
all expenses incurred in obtaining such Owner Operating Permit.
SECTION 7.16 Government Regulations. Upon five (5) Business Day's written
----------------------
notice to Owner, Manager shall be permitted to contest the validity and/or
application of any Law or Governmental Requirement pertaining to Gaming
Operations before any court or appropriate administrative body unless Owner
shall object to such action in writing during said notice period.
SECTION 7.17 Legal Actions. All matters of a legal nature involving the
--------------
Facility, shall be handled by legal counsel selected by Manager and approved by
Owner (such legal counsel is hereinafter referred to as "Approved Legal
Counsel") Manager shall notify Owner in writing of the commencement of any legal
action or proceeding concerning the Facility as soon as practicable after
Manager receives actual notice of the commencement of such legal action which
could reasonably be anticipated to involve liability or damage to Owner for
which Manager reasonably anticipates liability. Notwithstanding the foregoing.
Manager shall notify Owner immediately of any action filed against the business,
the Facility, Owner, Manager or the Casino which could result in seizure of the
Casino. Except with respect to those legal matters in which Owner advises
Manager it desires to be directly involved, Manager shall be responsible for
retaining on behalf of Owner the Approved Legal Counsel to take any reasonable
or necessary legal actions to protect the assets of the Facility and to insure
compliance with the contractual obligations of others and all Governmental
Requirements. In any legal action or proceeding for damages in which Owner is to
be the plaintiff or complainant, then Manager may not commence such legal action
or proceeding without first notifying Owner in writing. Owner shall, by written
notice to Manager, within five (5) days of the date of such notice, consent to
the commencement of such legal action or proceeding or provide Manager with a
good faith material basis for not commencing such legal action or proceeding.
SECTION 7.18 Accounting Services. Manager shall establish and maintain
--------------------
accounting systems, internal controls, and reporting systems in accordance with
the Operating Guidelines that are (i) consistent in all material respects with
customary policies and procedures used by Managers' Affiliates engaged in such
business and (ii) which comply with all Governmental Requirements and
requirements of Gaming Authorities and has obtained all Gaming Authority
approvals which Owner or Manager are required to obtain.
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<PAGE>
SECTION 7.19 Bank Accounts. Owner shall establish one or more bank accounts
-------------
that are necessary for the operation of the Facility at various banking
institutions chosen by Manager and reasonably acceptable to Owner (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, Manager's designees shall be the only persons authorized to draw upon
the Bank Accounts. If Manager has committed an Event of Default which continues
during the term of any applicable cure periods, or if Manager 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 two (2) Business
Days' prior written notice to Manager, whereupon the signatures of two (2)
members of Owner shall be required to draw upon the Bank Accounts. Manager's
designated signatories must be covered by the fidelity insurance described in
Section 14.1. 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 Manager from the operations of
the Facility shall be deposited in the Bank Accounts and Manager 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 Manager to perform its
obligations under this Agreement. All funds in the Bank Accounts shall be
separate from any other funds and Manager may not commingle any of Managers
funds with the funds in the Bank Accounts. Owner shall bear the risk of the
insolvency of any financial institution holding such Bank Accounts.
SECTION 7.20 Credit. All decisions regarding the granting and collection of
------
credit, if allowed under the Act, shall be governed by the Credit Policy- to be
developed by Manager and approved by Owner. All credit shall be for the account
of and at the sole risk of Owner.
SECTION 7.21 Sales Taxes. Etc. If reasonably requested by Owner and agreed
-----------------
to by Manager, Manager shall use its best efforts to comply in all material
respects with all applicable Laws with respect to collecting, accounting for and
paying to the appropriate Governmental Authorities all applicable excise, sales
and use taxes and other similar governmental charges resulting from the
operation of the Casino.
SECTION 7.22 Emergency Expenditures. Without limiting the generality of
-----------------------
this Section 7.22, in the eve at that a condition exists in, on, or about the
Facility of a nature reasonably believed by Manager to be an emergency,
including structural repairs, which Manager believes requires immediate repair
to preserve and protect the Facility and assure its continued operation or to
protect the safety and welfare of the Facility customers, guests or employees,
Manager, 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 Manager in
connection with an emergency shall be paid from the Bank Accounts. Owner shall
replenish finds paid from the Bank Accounts with any insurance proceeds received
by Owner with respect to such emergency condition or situation, and Owner shall
replace any difference between the insurance proceeds and the amount used for
such emergency from the Bank Accounts. Manager shall promptly notify Owner of
any emergency expenditures made pursuant to this Section 7.22.
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SECTION 7.23 Expenditures Required for Compliance with Law. Without
--------------------------------------------------
limiting the generality of this Article VII, if at any time during the Term of
this Agreement repairs, additions, changes or corrections in the Facility of any
nature shall be required by reason of any Governmental Requirements now or
hereafter in force, such repairs, additions, changes or corrections shall be
made at the direction of Manager and shall be paid for by Owner. Manager shall
inform Owner of the existence of any Governmental Requirements which require
expenditures under this Section 7 23 as soon as practicable after learning of
such Governmental Requirements and the repairs, additions, changes or
corrections which Manager believes are required to be- made and the estimated
expenditures to be incurred. If compliance with any Governmental Requirements
that are the subject of this Section 7.23 will require expenditures which will
make the continued operation of the Facility uneconomical to Owner, Owner shall
have the right to cease operating the Facility (to the extent the cessation of
Facility operations will not result in any material liability to Manager) and in
connection therewith, to terminate this Agreement, which termination shall not
constitute a Default by Owner hereunder. In the event Owner reopens the Facility
or the Casino at a site different from the Site within three hundred sixty-five
(365) days after so ceasing operations, Manager shall have the option to be
reinstated and resume as Manager in accordance with the terms of this Agreement.
SECTION 7.24 Marketing Programs. Manager shall develop a marketing program
------------------
to implement the marketing plans contained in each Annual Operating Plan.
Manager may, at its option, also provide for the Facility, or seek to cause an
Affiliate to so provide the followings (i) joint marketing or advertising with
similar properties owned or operated by Affiliates of Manager and (ii) major
entertainment, sporting events or special attractions sponsored by the Facility.
Manager shall use its best efforts to cooperate with Owner in the development of
any joint marketing efforts which it determines at its option to provide for the
Facility.
SECTION 7.25 Limitations on Use of Names and Logos. Owner acknowledges that
-------------------------------------
neither this Agreement nor the exercise of any of Owner's rights in respect of
the Facility. shall give Owner any rights to the names "Century" or "Legends".
SECTION 7.26 Manager's Expenses. In connection with Manager's obligations
-------------------
under this Agreement and with Owner's prior approval, Manager may at its option
arrange for Century or its Affiliates to provide such reasonable supervisory,
accounting, administrative and operational services to Manager as are generally
provided by Century or its Affiliates to its other gaming units. Owner shall pay
Century (or its Affiliates, as the case may be) a commercially reasonable hourly
rate for such services and shall bear the cost of reasonable travel and related
expenses for any staff of Century or its Affiliates visiting the Facility for
purposes of providing such services to the Facility.
SECTION 7.27 Pricing for Hotel Rooms. Food & Beverage. Etc. The parties
-----------------------------------------------
agree that Annexure A (outlining pricing for complimentary hotel rooms, food &
beverage, etc.) shall be an integral part of this Agreement.
24
<PAGE>
ARTICLE VIII
DEFAULT/STEP-IN RIGHTS
----------------------
SECTION 8.1 Default or Event of Default. The occurrence of any one or more
------------------- -------
of the events described in Sections 8.2 and 8.3 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.
SECTION 8.2 Manager's Defaults. Manager shall have committed a "Manager's
------------------
Default" if Manager 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) have entered against it an order for relief under any bankruptcy
code (or any successor statute) or any other order, judgment or decree by any
court of competent jurisdiction on the application of a creditor adjudicating
Manager insolvent or approve a petition seeking reorganization or appointing a
receiver, trustee, custodian or liquidator of all or a substantial part of
Manager's assets, and such order, judgment or decree continues unstayed and in
effect for a period of ninety (90) days;
(iv) have appointed for it a receiver or custodian of or for all or a
substantial portion of the assets of Manager unless removed within sixty (60)
days:
(v) 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 Manager of all or any substantial part of
its assets;
(vi) fail to materially perform or materially comply with any of the
covenants, agreements, terms or conditions contained in this Agreement to
Manager (other than monetary payments) and such failure shall continue for a
period of forty-five (45) days after written notice thereof from Owner to
Manager 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 Manager 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; or
25
<PAGE>
(vii) take or fail to take any action to the extent required of Manager
under this Agreement that creates a default under any- Governmental Requirement
unless Manager cures such default or breach prior to the expiration of
applicable notice, grace and cure periods, if any.
If the only result of the failure by Manager to act is a monetary loss to Owner
which is not otherwise capable of being cured by Manager, then Manager shall not
be in Default if Manager reimburses Owner for such losses within thirty (30)
Business Days of incurring such loss or otherwise protects Owner against such
loss in a manner reasonably acceptable to Owner.
SECTION 8.3 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) have entered against it an order for relief under any bankruptcy
code (or any successor statute) or any other order, judgment or decree by any
court of competent jurisdiction on the application of a creditor adjudicating
such Owner insolvent or approve a petition seeking reorganization or appointing
a receiver, trustee, custodian or liquidator of all or a substantial part of
Owner's assets, and such order, judgment or decree continues unstayed and in
effect for a period of ninety (90) days;
(iv) have appointed for it a receiver or custodian of or for all or a
substantial portion of the assets of Owner unless removed within sixty (60)
days;
(v) 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:
(vi) 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 cue date recited herein and said failure continues for five (5)
Business Days after written notice front Manager specifying such failure: or
(vii) fail to perform or materially comply with any of the other
covenants. agreements, terms or conditions contained in this Agreement
applicable to Owner (other than monetary payments) and such failure shall
continue for a period of forty-five (45) days after written notice thereof from
Manager 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.
26
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SECTION 8.4 Delays and Omissions. 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 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 or acquiescence therein.
SECTION 8.5 Owner's Remedies. Upon the occurrence of a Manager's Default,
----------------
Owner shall be entitled to (i) terminate this Agreement by Owner's written
notice of termination to Manager and such termination shall be effective
forty-five (45) days after delivery of such notice; (ii) obtain specific
performance of Manager's obligations hereunder and injunctive relief, or (iii)
exercise Owner's step-in rights as described in Section 8.7 herein.
SECTION 8.6 Manager's Remedies. Upon the occurrence of an Owner's Default,
------------------
Manager shall be entitled to (i) terminate this Agreement by Manager's written
notice of termination to Owner, and such termination shall be effective
forty-five (45) days after delivery of such notice or such time as a new manager
is appointed, whichever is earlier; or (ii) obtain specific performance of
Owner's obligations hereunder and injunctive relief In the event of a
termination of this Agreement pursuant to clause (i) of this Section 8.6,
Manager shall be entitled to accelerated payment of all of its projected
Management Fees for the remainder of the then applicable ten year period this
Agreement or thirty-six (36) month period following the termination date of this
Agreement, whatever is longer, such projected Management Fees to be based on
last year's Management Fee increased by 15% (fifteen percent) per annum. 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 Owner Default and the termination of this
Agreement and upon payment thereof Manager shall have no further rights, claims
or entitlement to damages as a consequence of such termination.
SECTION 8.7 Step-In Rights.
---------------
(a) If Owner's funds are available, and Manager fails to pay when due any
amount which it is Manager's responsibility to pay from such Owner's funds
pursuant to this Agreement, then Owner, after five (5) days written notice to
Manager with respect to any Operating Expense, and with respect to any-
non-Operating Expense with such notice, if any as may be reasonable under the
circumstances (except in the event that Manager has exposure to potential
liability in connection with making such payments in which case Owner shall give
Manager five (5) days written notice), may (but shall not be required to) pay
such amounts (including fines, penalty, interest and late payment fees) and take
all such action as may be necessary in respect thereof. Manager shall, following
such payments by Owner, promptly reimburse Owner from the Bank Accounts to the
extent funds are available in the amount which Manager failed to pay when due.
27
<PAGE>
(b) If Manager fails to take any action which it is Manager's
responsibility under this Agreement to take, and the result is to expose Owner
to a material loss or Facility patrons to a material risk of physical safety,
then Owner, upon five (5) days' written notice to Manager (except in any
emergency in which case Owner shall give Manager such notice, if any, as is
reasonable under the circumstances), may (but shall not be required to) take
such actions as may be necessary to protect Owner's assets from such a material
loss and/or to protect the Facility customers. Manager shall, following any
payments by Owner made with respect to such actions, promptly- reimburse Owner
from the Bank Accounts, to the extent funds are available, the amount which
Owner has expanded.
SECTION 8.8 Remedies Nonexclusive. No remedy granted to either Owner or
----------------------
Manager under Sections 8.5, 8.6 and 8.7, respectively, is intended to be
exclusive of any other remedy herein or by General Law provided, but each shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity.
SECTION 8.9 Manager Responsibilities. In the event of termination of this
------------------------
Agreement. Manager will relinquish control of the Bank Accounts. Manager shall
make its Senior Staff available to Owner for a period of sixty (60) days at
Owner's expense to ensure an orderly and uninterrupted transition of the
management of the Facility. Owner shall reimburse Manager for all out-of-pocket
expenses, personnel costs and allocated overhead incurred during said sixty (60)
day period.
28
<PAGE>
ARTICLE IX
CERTAIN RIGHTS AND RESPONSIBILITIES OF OWNER
------- ------ --- ---------------- -- -----
SECTION 9.1 Owner's Advances. Owner shall advance to Manager on a timely
-----------------
and prompt basis immediately available funds with which to conduct the affairs
of and maintain the Facility (hereafter referred to as "Owner's Advances") as
set forth in this Agreement and as otherwise provided hereunder.
SECTION 9.2 Development Plan Funding.Owner shall timely fund to Manager 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 Manager
anticipates a delay in the opening of the Facility beyond the Estimated Opening
Date, each shall be obligated to immediately notify the other in writing and
Owner shall, at the request of Manager, at any time and from time to time,
deposit with Manager 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 Facility
personnel already employed
SECTION 9.3 Initial Cash Needs Thirty (30) days prior to the Estimated
--------------------
Opening Date, Owner shall fund to Manager the Working Capital necessary to
commence operating the Facility, as established by Manager.
SECTION 9.4 Working Capital Dome the Term of this Agreement, within five
----------------
(5) business Days after receipt of written notice front Manager, Owner shall
fund Owner's Advances adequate to insure that the Working Capital set forth in
the applicable Annual Operating Plan as revised pursuant to the provisions of
Section 7, is sufficient to support the uninterrupted and efficient ongoing
operation of the Facility. The written request for any additional Working
Capital shall be submitted by Manager to Owner on a monthly basis based on the
Financial Statements and the applicable Annual Operating Plan as revised
pursuant to the provisions of Section 7.9.
29
<PAGE>
SECTION 9.5 Payment of Expenses. Manager shall pay from Net Gaming Proceeds
-------------------
the following items in the order of priority listed below, subject to the
General Laws, on or before their applicable due date:
(i) Operating Expenses (including the Management Fee), expenditures
permitted pursuant to Sections 7.22 and 7.23, and other payments due under the
Purchase; and
(ii) If applicable, 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
(iv) If applicable, any other taxes, expenses or fees which Owner is
obligated to pay out of Net Gaming Proceeds by contract and Owner has asked
Manager to administer such payments (as long as such contract has been brought
to the attention of Manager) or under law.
Manager'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 Net Gaming Proceeds or otherwise in the order set forth above. Owner shall
have the right to elect to pay directly (rather than have Manager pay) rental,
fees and other payments due under the Purchase, or debt service upon five (5)
days' written notice to Manager and in such event Manager shall disburse to
Owner from gross revenues (subject to the prior payment of expenses listed in
clause (i) above) funds in such amounts and at such times as may be necessary to
pay such expenses on or before the date such expenses are due, subject to
various Casino Bankroll and Working Capital requirements and the availability of
such funds otherwise. Owner shall timely make all payments under this Section
9.5 where Owner has requested the right to make such payments directly and if
Owner fails to make such payments, Owner's right to make such payments directly
shall cease until Owner has brought all such obligations current. Nothing in
this Section 9.5 shall be deemed to relieve Owner from its obligations to pay
Management Fees in a timely manner in accordance with Article IV or to comply
with the time requirements set forth in Articles IV and VIII or to pay any other
obligation of Owner under this Agreement. Notwithstanding anything to the
contrary in this Agreement, Manager shall have the right to offset any amounts
due from Manager, if any, under this Agreement against any unpaid Management
Fee.
SECTION 9.6 Casino Bankroll In addition to the initial cash needs described
---------------
in Section 9.3 herein, 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 pursuant to this Section 9.6 is not sufficient to
adequately fund Casino Gaming Activities or is depleted as a result of losses,
Owner shall fund Casino Bankroll in an amount sufficient to carry on the Casino
Gaming Activities and in a manner which complies with Governmental Requirements.
30
<PAGE>
SECTION 9.7 Optional Funding by Manager. In the event Owner fails to fund
---------------------------
any Owner's Advance within the specific time period set forth in this Article IX
or make any other payment required to be made by Owner hereunder, or if sums are
required prior to such time as Owner is obligated to advance the same, Manager
may, at its sole option, upon five (5) days' written notice to Owner, without
assuming any liability for the payment of any account, advance the amount
required, or any portion thereof, on behalf of Owner. The amount advanced and
paid on behalf of Owner ("Manager's Advances") shall be reimbursed on demand and
shall bear interest at the Default Rate until Manager is reimbursed in full,
including all accrued interest. The funding of any Manager's Advance does not in
any manner waive any rights or remedies granted to Manager under the terms of
this Agreement, including the right to declare Owner in Default as provided in
Article VIII and to proceed with any remedies granted under Article VIII.
SECTION 9.8 Cooperation of Owner and Manager. Owner and Manager shall
------------------------------------
cooperate fully with each other during the Term of this Agreement to facilitate
the performance by Manager of Manager's obligations and responsibilities set
forth in this Agreement and to procure and maintain all Construction and
Operating Permits. Owner shall provide Manager with such information pertaining
to the Purchase, Governmental Requirements and the Facility necessary to the
performance by Manager of its obligations hereunder as may be reasonably and
specifically- requested by Manager from time to time.
ARTICLE X
LICENSE PROTECTION
------- ----------
SECTION 10.1 Owner Denial. If at any time (i) either Owner or any Person owning
------------
any partnership interest or any of the issued and outstanding stock of (or
beneficial interest in) either Owner or an Affiliate of Owner, or a partner,
limited partner, officer or director of either is (x) denied a license, found
unsuitable, or is denied any other Approval with respect to the Facility or any
other gaming operation anywhere by a Gaming Authority because of such Person's
misconduct or association with any other Person who is reputed to be controlled
by Persons known to be engaged in criminal activities, or (y) is required by any
Gaming Authority to apply for an Approval and does not apply within any required
time limit (including extensions, if any), wrongfully withdraws any application
for Approval, and if the result of the foregoing has or would have an adverse
affect on Manager or any Affiliate of Manager with respect to its operation, or
ownership of a casino under any Gaming Authority or does or would materially
delay obtaining any Approval affecting Manager or any Affiliate of Manager, or
(ii) any Gaming Authority commences any suit or proceeding against either
Manager or an Affiliate or to terminate or deny any right or Approval of Manager
or any Affiliate because of a final determination of unsuitability or similar
finding concerning Owner, any Affiliate of Owner or any Person owning a
beneficial interest in Owner or an Affiliate of Owner or (iii) the compliance
committee of Manager reasonably determines that Owner, or any Person owning any
partnership interest or any of the issued and outstanding stock of (or
beneficial interest in) Owner or an Affiliate of Owner may jeopardize Approvals
held by Manager or its Affiliates, or the current status of Manager or its
Affiliates with any Gaming Authority (all of the foregoing events described in
clauses (i)-(iii) above are collectively referred to as an "Owner Denial"), said
Owner Denial shall be a Default and shall entitle Manager to its remedies under
Article VIII. Said Owner Denial shall not be an Event of Default, however,
providing Owner ends such association within such period of time, if any, as the
Gaming Authority and/or Manager's compliance committee gives for terminating
such association. Owner and all Persons associated with Owner shall promptly,
and in all events within any time limit established by law or such Gaming
Authority, furnish each Gaming Authority any information requested by such
Gaming Authority and shall otherwise fully cooperate with all Gaming Authorities
including any required inspections.
31
<PAGE>
SECTION 10.2 Manager's South Africa Licensing. Manager shall apply for and
--------------------------------
pursue all Manager Operating Permits or licenses, and use best efforts to assist
Owner in obtaining Owner Operating Permits or licenses, as expeditiously as
possible. Manager shall not be obligated to accept any conditions to obtain any
Manager Operating Permit which imposes any liabilities, financial obligations or
performance obligations not required by this Agreement.
SECTION 10.3 Manager Denial. If at any time (i) either Manager, any
---------------
Affiliate of Manager or any Person associated in any way with Manager is denied
a license, found unsuitable, or is denied any other Approval with respect to the
Facility or any other gaming operation by a Gaming Authority or is required by
any Gaming Authority to apply for an Approval and does not apply within any
required time limit (including extensions, if any), wrongfully withdraws any
application for Approval, and if the result of the foregoing has or would have
an adverse effect on Owner or any Affiliate of Owner or any officer or director
of Owner or its Affiliates with respect to such person's or its operation of a
casino under any Gaming Authority, or does or would materially delay obtaining
any Approval affecting Owner or any Affiliate of Owner, or (ii) any Gaming
Authority commences any suit or proceeding against either Owner or any Affiliate
because of a final determination of unsuitability or similar finding concerning
Manager, any Affiliate of Manager or any Person owning a beneficial interest in
Manager (all of the foregoing events described in clauses (i) and (ii) above are
collectively referred to as a "Manager Denial"), said Manager Denial shall
entitle Owner to terminate this Agreement. If Owner exercises its right to
terminate this Agreement pursuant to this Section 10.3 solely as the result of
an association of Manager or any Person associated with Manager, this Agreement
shall not terminate if Manager ends such association within such period of time,
if any, as the Gaming Authority gives for terminating such association, Manager
and all Persons associated with Manager shall promptly, and in all events within
any time limit established by General Law or such Gaming Authority, furnish each
Gaming Authority any information requested by such Gaming Authority including
any required inspections. The purpose of this Section 10.3 is solely to protect
existing licenses of Owner and Owner's Affiliates and of their respective
officers and directors. This Section 10.3 does not apply to any-event described
above that does not jeopardize the continued viability of such licenses. Any
Manager Denial that is attributable in whole or in part to the acts or omissions
of Owner shall not entitle Owner to terminate this Agreement.
SECTION 10.4 Owner's South Africa Licensing. Owner shall timely obtain and
------------------------------
maintain any Owner Operating Permits the responsibility for the maintenance of
which Owner has not requested of Manager pursuant to this Agreement.
ARTICLE XI
OWNER'S COVENANTS AND REPRESENTATIONS
------- --------- --- ---------------
Owner makes the following covenants and representations to Manager, which
representations and covenants shall, unless otherwise stated herein, survive the
execution and delivery of this Agreement and the Opening Date and shall continue
to be true during the Term of this Agreement.
SECTION 11.1 Corporate Status. Owner is a company duly organized, validly
----------------
existing, and in good standing under the laws of South Africa and has full
corporate power to enter into this Agreement and execute all documents required
hereunder.
32
<PAGE>
SECTION 11.2 Authorization The making, execution, delivery and performance
-------------
of this Agreement by Owner has been duly authorized and approved by all
requisite action of the Board of Directors of Owner, and this Agreement has been
duly executed and delivered by Owner and constitutes a valid and binding
obligation of Owner, enforceable in accordance with its terms.
SECTION 11.3 Other Agreements. Neither the execution and delivery of this
----------------
Agreement by Owner nor Owner's performance of its obligations hereunder will
result in a violation or breach of or constitute a default with respect to or
accelerate the performance required under any other agreement or obligation to
which Owner is a party or is otherwise bound or to which the Facility or any
part thereof is subject, and will not constitute a violation of any General Law
to which Owner or the Facility is subject.
SECTION 11.4 Documentation. If necessary to carry out the intent of this
-------------
Agreement, Owner agrees to execute and provide to Manager, on or after the date
hereof any and all other instruments, documents and agreements necessary to make
this Agreement fully and legally effective, binding and enforceable between the
parties hereto and as against third parties.
SECTION 11.5 Related Contracts. Owner shall cause the timely payment and
------------------
performance of all its obligations under the Purchase, loan documents and all
other contracts related to the development and operation of the Facility other
than such responsibilities as are imposed upon Manager pursuant to this
Agreement; provided, however, that Owner shall fund all such obligations to the
extent gross revenues are sufficient therefor.
ARTICLE XII
MANAGER'S COVENANTS AND REPRESENTATIONS
------------------- -------------------
Manager makes the following covenants and representations to Owner, which
covenants and representations shall, unless otherwise stated herein, survive the
execution and delivery of this Agreement and the Opening Date and continue to be
true during the Term of this Agreement.
SECTION 12.1 Corporate Status. Manager is a corporation duly organized,
-----------------
validly existing, and in good standing with full corporate power to enter into
this Agreement and execute all documents required hereunder.
SECTION 12.2 Authorization. The making, execution, delivery and performance
-------------
of this Agreement by Manager has been duly authorized and approved by all
requisite action of the Board of Directors of Manager, and this Agreement has
been duly executed and delivered by Manager and constitutes a valid and binding
obligation of Manager, enforceable in accordance with its terms.
SECTION 12.3 Other Agreements. Neither the execution and delivery of this
----------------
Agreement by Manager nor Manager's performance of its obligations hereunder will
result in a violation or breach of or constitute a default with respect to or
accelerate the performance required under any other agreement or obligation to
which Manager is a party or is otherwise bound and will not constitute a
violation of any General Law to which Manager is subject.
SECTION 12.4 Documentation If necessary to carry out the intent of this
-------------
Agreement, Manager agrees to execute and provide to Owner, on or after the date
hereof any and all other instruments, documents and agreements that may be
necessary to make this Agreement fully and legally effective, binding and
enforceable between the parties hereto and against third parties.
33
<PAGE>
ARTICLEXIII
UNAVOIDABLE DELAYS
------------------
The provisions of this Article XIII shall be applicable if there shall
occur during the Term of this Agreement any (i) strike(s), lockout(s) or labor
dispute(s), (ii) inability to obtain labor or materials, or reasonable
substitutes therefor, (iii) acts of God, governmental restrictions, regulations
or controls, enemy or hostile governmental action, civil commotion, fire or
other casualty, (iv) delay attributable to the failure to obtain any
Construction Permit, Operating Permit or any Approval of any Governmental
Authority for reasons that are not the fault of or beyond the reasonable control
of the party obligated, or (v) other conditions similar to those enumerated in
this Article XIII beyond the reasonable control of the party obligated to
perform (collectively referred to as "Unavoidable Delay"). If Manager or Owner
shall, as the result of any Unavoidable Delay fail punctually to perform any
obligation on its part under this Agreement, then, upon written notice to the
other within five (5) Business Days of such event, such failure shall be excused
and not be a breach of this Agreement by the party claiming an Unavoidable
Delay, but only to the extent occasioned by such event. If any right or option
of either party to take any action under or with respect to the Term of this
Agreement is conditioned upon the same being exercised within any prescribed
period of time or at or before a named date, then such prescribed period of time
or such named date shall be deemed to be extended or delayed, as the case may
be, upon written notice, as provided above, for a time equal to the period of
the Unavoidable Delay. Notwithstanding anything contained herein to the
contrary, the provisions of this Article XIII shall not be applicable to the
time periods for satisfying Manager's or Owner's obligation to make any payments
to the other pursuant to the terms of this Agreement nor shall this Article
operate to extend any time period set forth in Article X.
34
<PAGE>
ARTICLE XIV
INSURANCE
---------
SECTION 14.1 Operating Insurance
--------------------
(a) Owner shall procure all insurance coverages deemed necessary and
adequate by Manager (the "Required Coverage")
(b) The premiums for all insurance obtained in accordance with
this Section XIV shall be Operating Expenses
(c) Manager shall be required to provide the following:
(i) Prompt reporting of any incident or potential claim on or about the
premises:
(ii) Assist and cooperate in the adjustment of all claims;
(iii) Implementation and monitoring of all loss control practices as
required by Owner or various insurance companies; and
(iv) Advise Owner of any unsafe conditions or hazards brought to the
attention of Manager during the Term of this Agreement.
SECTION 14.2 Other Insurance. Owner shall procure and maintain at all times
---------------
during the Term of this Agreement insurance (subject to reasonable deductible
amounts as determined by Manager and as available and consistent with market
conditions) protecting the real and personal property of the Casino against
fire, with all risks coverage against fire, with all risk coverage against other
perils, including vandalism, malicious mischief, flood, hurricane, tornado,
earthquake, lightning, aircraft and explosion, and also including boiler and
machinery and business interruption with ordinary payroll coverage and such
other insurance as is required by the Purchase or the loan documents (excluding,
however, insurance described in Section 14.3) or commonly or prudently
maintained by owners of similar properties similarly used, in the full
replacement value at an agreed amount, including cost of debris removal and
increased cost of construction ("Property Insurance"). Owner shall obtain
builder's risk and workman's compensation, commercial general liability and
automobile liability c overage during all construction. Owner shall also obtain
all insurance necessary to insure the Casino as provided for in the Casino
Management Agreement. Owner shall also procure such additional kinds of coverage
that Manager determines shall be reasonable and prudent with respect to the
Facility or as reasonably required by lender(s) or the terms of the Purchase.
SECTION 14.3 Parties to be Covered by Insurance: Location of Policies. All
--------------------------------------------------------
policies of insurance procured pursuant to Sections 14.1, 14.2 and any
Governmental Requirements shall name Manager (and, if such insurance is procured
by Century, Owner) as an additional insured by policy endorsement where
permitted by the terms and conditions of the various policies but in all events
with respect to all liability insurance. All policies shall name such other
parties as may be required by the loan documents, the Purchase and any
Governmental Requirements as the insured persons thereunder, as their respective
interests may appear, and shall provide that they shall not be canceled,
modified or denied renewal without at least thirty (30) days prior written
notice (or such longer period as is required by Law) to each party that is a
named or additional insured thereunder. Owner shall not be required to cause any
Person other than those Persons required to be named pursuant to this Section
14.3 to be insured by any insurance policy until thirty (30) days after Owner
has received notice of such Person's interest.
SECTION 14.4 Rights of Manager and Owner to Receive Information on
------------------------------------------------------------
Insurance Matters. Owner and Manager shall furnish each other with certificates
----------
of insurance, evidencing that the insurance required herein has been procured,
no later than thirty (30) days after the approval of the Development Plan. Any
binder issued as interim proof must cc replaced within thirty (30) days of
issuance with a certificate of insurance indicating a policy number.
35
<PAGE>
SECTION 14.5 Termination of Agreement. In the event of the termination of
------------------------
this Agreement for any reason. Owner shall, at Owner's sole cost and expense,
continue to name Manager as an additional insured on the liability insurance
coverage required by this Agreement following the date of the termination of
this Agreement, provided that Owner's obligations under this sentence are
subject to the availability of such coverage from the existing insurance
carrier. Owner shall provide Manager with evidence of the foregoing coverages
following the date of the termination of this Agreement by the delivery of
certificates of insurance evidencing the current in place coverage, together
with such other information as may be reasonably requested, from time to time,
by Manager.
SECTION 14.6 Other Insurance Requirements. All the insurance required under
----------------------------
this Agreement shall be issued by insurance companies authorized to do business
in South Africa with a financial rating of at least an A- status as rated in the
most recent edition of Best Insurance Reports, or an equivalent rating by a
responsible company providing similar services if Best Insurance Reports ceases
to be regularly published.
36
<PAGE>
ARTICLE XV
DAMAGE AND CONDEMNATION
---------- ------------
SECTION 15.1 Minor Casualty. In the event of a Minor Casualty, Manager
---------------
shall repair any damage or destruction at Owner's sole cost and expense.
SECTION 15.2 Major Casualty. Major Condemnation. In the event of a Major
-----------------------------------
Casualty or a Major Condemnation, this Agreement shall remain in full force and
effect if the Casino or the Facility is repaired or restored within one (1) year
from the date of the Major Casualty or the Major Condemnation. If not repaired
or restored within one year, Owner shall pay to Manager the greater of a sum
equivalent to five percent (5%) of all insurance monies received or the
projected Management Fees for the remainder of this Agreement. Such projected
Management Fees shall be equal to the last year's Management Fee increased by
15% (fifteen percent) per annum.
SECTION 15.4 Minor Condemnation. In the event a Minor Condemnation occurs,
------------------
this Agreement shall not terminate and Owner shall use the award to repair and
restore the Facility, including, without limitation, to the extent required
under the Purchase or the loan documents. Manager may separately claim for,
prove and receive an award for any separately compensable rights of Manager that
are taken in any such condemnation action.
37
<PAGE>
ARTICLE XVI
INDEMNIFICATION
---------------
Section 16.1 Owner lndemnitv. Owner hereby covenants and agrees to
----------------
indemnify, save, and defend at Owner's sole cost and expense and hold harmless.
Manager and its officers, directors and Affiliates (collectively, "Owner
Indemnitees"), from and against the full amount of any and all Losses. The term:
"Losses" shall include, but not be limited to, any and all liabilities, claims,
suits, administrative proceedings, losses, damages or costs, which may be
asserted against an Owner Indemnitee arising from, or relating to the financing,
construction or operation of the Facility and shall include expenses of defense
including, without limitation, attorneys' fees. The term "Losses" also includes
losses arising out of the negligence or strict liability of any Owner
Indemnitee. Each Owner Indemnitee will promptly notify Owner of such action,
suit or proceeding which relates to any matter covered by the indemnity in this
Section 16.1.
SECTION 16.2 Manager Indemnity. Manager hereby covenants and agrees to
------------------
indemnify, save and defend, at Manager's sole cost and expense, and hold
harmless, Owner and its officers and directors (collectively, "Manager
Indemnitees") from and against liabilities, claims, losses, damages, costs or
expenses that may be asserted against a Manager Indemnitee solely arising from
or relating to the criminal misconduct or fraud of Manager in breach of any of
its duties and obligations under this Agreement. Owner will promptly notify
Manager of such action, suit or proceeding which relates to any matter covered
by the indemnity in this Section 16.2.
SECTION 16.3 Special Environmental Indemnity. Owner agrees to indemnify,
--------------------------------
defend, reimburse and hold harmless Manager from and against any and all
Environmental Damages arising from the presence of Hazardous Materials upon,
about or beneath the Site, or migrating to or from same, or arising in any
manner whatsoever out of the violation of any Environmental Requirements
pertaining to the Site, whether or not arising out of Manager's negligence, or
the breach of any warranty or covenant or the inaccuracy of any representation
of Owner contained in this Agreement.
SECTION 16.4 Legal Fees. Etc.: Procedures. Each indemnitor under this
-------------------------------
Article XVI shall reimburse each indemnitee for any legal fees and costs,
including reasonable attorneys' fees and other litigation or proceeding
expenses, even if the claim is groundless, false, or fraudulent, reasonably
incurred by such indemnitee in connection with investigating or defending
against Losses with respect to which indemnity is provided hereunder; provided,
however, that an indemnitor shall not be required to indemnify an indemnitee for
any payment made by such indemnitee to any claimant in settlement of Losses
unless such settlement has been previously approved by the indemnitor. If Losses
are asserted, or if any action or suit is commenced with respect thereto, for
which indemnity may be sought against an indemnitor hereunder, the indemnitee
shall notify the indemnitor in writing within ten (10) days after the indemnitee
shall have had actual knowledge of the assertion or commencement of the Losses
or a claim which could give rise to Losses, which notice shall specify in
reasonable detail the matter for which indemnity may be sought. The indemnitor
shall have the right, upon notice to the indemnitee given within thirty (30)
days following its receipt of the indemnitee's notice (or shorter period if such
notice specifies such shorter period and provides reasonable reason therefor),
to take primary responsibility, for the prosecution, defense or settlement of
such matter, including the employment of counsel chosen by the indemnitor with
the approval of the indemnitee. which approval shall not be unreasonably
withheld or delayed, and payment of expenses in connection therewith. The
indemnitee shall provide, without cost to the indemnitor, all relevant records
and information reasonablv required by the indemnitor for such prosecution,
defense or settlement and shall cooperate with the indemnitor to the fullest
extent possible The indemnitee shall have the right to employ its own counsel in
any matter with respect to which the indemnitor has elected to take primary
responsibility for prosecution (without regard to Section 7.17), defense or
settlement, but the fees and expenses of such counsel shall be the expense of
the indemnitee except when indemnitee has engaged its own counsel due to a
conflict of interest between indemnitors and indemnitees interests in which case
such fees and expenses shall be paid in accordance with this Section 16.4.
38
<PAGE>
ARTICLE XVII
RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS
------------- --------- --- ------- -------
SECTION 17.1 No Joint Venture or Ownership. Nothing contained in this
---------------------------------
Agreement nor any. acts of the parties shall be deemed or construed by the
parties or by any third party as (i) creating the relationship of a partnership
or joint venture between the parties to this Agreement, or (ii) creating or
vesting any right, title, interest, estate, equity participation or beneficial
ownership interest in favor of Manager in or to the Facility except the
contractual rights created in Manager by this Agreement. Neither any provisions
contained herein nor any acts of the parties shall be deemed to create any
relationship between the parties other than the relationship of Owner and
Manager, as provided in this Agreement.
SECTION 17.2 Manager Affiliates. The parent of Manager and/or other
-------------------
Affiliates of Manager may provide service to, provide loans and funds to,
negotiate for, provide personnel to, and, from time to time take actions on
behalf of or for the benefit of Manager by direct dealings with Owner or those
acting for it. The parent corporation(s) or Affiliates of Manager shall not be
liable to Owner for obligations or liabilities of Manager.
SECTION 17.3 Arbitration. The exact same article about "Arbitration" of the
-----------
Hotel Management Agreement between Owner and Fortes King Hospitality (Pty) Ltd.,
which is of the same date as this Agreement, shall be incorporated into this
Agreement.
ARTICLE XXIII
MISCELLANEOUS
-------------
SECTION 18.1 Notices. 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
18.1) Notices may be delivered by hand, registered or certified mail, return
receipt requested, or bonded private courier service.
If to Owner: _____________________
_____________________
Attention:
With a copy to: _______________________
_______________________
_______________________
If to Manager: Centurv Casinos Africa (Pty) Limited
c/o Deloitte & Touche
Attn: Mr. David Parker
Deloitte & Touche Place, The Woodlands
Woodland Drive, Woodmead, Sandton 2196
with a copy to: Century Casinos, Inc.
200 220 East Bennett Avenue
Cripple Creek, CO 80813, USA
39
<PAGE>
SECTION 18.2 Governing Law. This Agreement shall be governed by the laws of
-------------
South Africa, without giving effect to the principles of conflicts of law.
Notwithstanding the foregoing, this Agreement shall be deemed to include all
provisions required by the Act, and shall be conditioned upon the approval of
the Gaming Commission and the Enforcement Division. To the extent that any term
or provision contained in this Agreement shall be inconsistent with the Act, the
provisions of the Act shall govern. All provisions of the Act, to the extent
required by law to be included in this Agreement, are incorporated herein by
reference as if fully restated in this Agreement. The forum for any actions
between Owner and Manager will be a court of competent jurisdiction in the
Province where the Facility is located.
SECTION 18.3 Limitations on Rights of Third Parties. Except as otherwise
---------------------------------------
set forth herein, nothing in this Agreement is intended or shall be construed to
confer upon or give any Person, other than the parties hereto and their
respective successors, any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby. Provisions herein referring to
Century or its Affiliates are included herein for the benefit of such Persons.
SECTION 18.4 Assignments. This Agreement will 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 Manager's ability to assign its rights or
delegate its responsibilities under this Agreement to any directly or indirectly
controlled Affiliate of Manager. This Agreement shall not be assignable without
the prior approval of the Gaming Commission and the Enforcement Division.
SECTION 18.5 Unenforceabilitv. 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.
SECTION 18.6 Entire .Agreement and Amendments. 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. No
amendments may be made to this Agreement without the approval of the Gaming
Commission.
SECTION 18.7 Limitation on Damages. Neither party shall be liable to the
----------------------
other party for any consequential damages resulting from a breach hereof.
40
<PAGE>
SECTION 18.8 Confidentialitv. Except as otherwise set forth in Article X,
---------------
both parties shall maintain confidentiality with respect to material
developments in the course of development and operation of the Facility subject
to Governmental Requirements and General Law. Except as required by any General
Law (including, without limitation, federal securities exchange and stock
exchange or NASD requirements) and Gaming 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.
SECTION 18.9 Securities Law Requirements. Owner acknowledges that Century's
---------------------------
parent company, Century Casinos, Inc. is a publicly held company and that
trading in its securities based on non-public information or unauthorized
disclosure or other use of material developments could expose Manager and Owner
to significant penalties. Owner shall take appropriate precautions to inform its
employees and independent contractors of such requirements. In the event Owner
or any Affiliate of Owner becomes a publicly-held company, Manager shall take
appropriate precautions to inform its employees and independent contractors that
trading in the securities of Owner or such Affiliate based on non-public
information or unauthorized disclosure or other use of material developments
could expose Owner and Manager to significant penalties.
SECTION 18.10 Payment of Fees. 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.
SECTION 18.11 No Waiverof Default. 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 or 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.
SECTION 18.12 Counterparts This Agreement may be execute in any number of
------------
Counterparts, all of which, when taken together, shall constitute one and the
same instrument.
SECTION 18.13 Future Deliveries. Each party will, from time to time,
------------------
execute and deliver such further instruments and do such further acts and things
as may be reasonably requested by any other party to carry out the intent and
purposes of this Agreement.
SECTION 18.14 Computation of Time. In the computation of any period of time
--------------- ----
provided for in this Agreement, the day of the act or event from which said
period of time runs shall be excluded, and the last day of such period shall be
included unless it is a Saturday, Sunday, or national United States or South
African holiday, in which case the period shall be deemed to run until the end
of the next day which is not a Saturday, Sunday, or national United States or
South African holiday. As used in this Agreement "Business Day" for any party
shall be a day which is not a Saturday, Sunday or national United States or
South African holiday.
41
<PAGE>
SECTION 18.15 First Right of Refusal. During the term of this Agreement, so long
-------------- -------
as no events of default by Manager have occurred, Owner shall grant Manager the
first right of refusal on all of its and/or its Affiliates future gaming casino
projects. Such right shall be on terms similar to those outlined in this
Agreement. Manager shall have sixty (60) days upon receipt of notice from Owner
to either accept or reject an offer to act as manager of Owner's and/or Owner's
Affiliates future gaming casino project(s).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
FOR CALEDON CASINO BID COMPANY (PTY) LTD.
By: /s/ Leon Fortes- Witness: ____________________________
-----------------
a duly authorized signatory Print name: ____________________
Position:Director__________
--------
Print name: Leon Fortes
FOR CENTURY CASINOS AFRICA (PTY) LTD
By:/s/ Peter Hoetzinger Witness: ____________
----------------------
A duly authorized signatory Print name: ___________
Position: Vice Chairman
Print name: Peter Hoetzinger
42
<PAGE>
("9
EXHIBIT 10.87
<PAGE>
SHAREHOLDERS AGREEMENT
between
CALEDON CASINO BID COMPANY (PTY) LIMITED ("Bidco")
and
CALEDON OVERBERG INVESTMENTS (PTY) LIMITED ("Caledon")
and
CENTURY CASINOS AFRICA (PTY) LTD ('Century SA")
and
CENTURY CASINOS, INC. (not as a shareholder or party, but for clauses 4.2.3. and
6.7. of this agreement only)
and
CALEDON HOTEL SPA AND CASINO RESORT (PTY) LIMITED ("Devco")
and
FORTES KING HOSPITALITY (PTY) LIMITED ("Hospitality")
and
OVERBERGER COUNTRY HOTEL AND SPA (PTY) LIMITED ("Hotelco")
and
SENATOR TRUST
1
<PAGE>
1. DEFINITIONS AND INTERPRETATION
1.1 Clause headings in this agreement are used for reference purposes only
and shall not be used in its interpretation.
1.2 In this agreement, unless the context clearly indicates the contrary
intention:
1.2.1 An expression which denotes:
1.2.1.1 the singular includes the plural and vice versa;
1.2.1.2 any one gender includes the other genders;
1.2.1.3 a natural person includes created entities (corporate or
unincorporate) and vice versa;
1.2.2 The following expressions bear the meanings assigned to them below and
cognate expressions bear corresponding meanings:
1.2.2.1 "ACT" means the Companies Act, 1973;
1.2.2.2 "THE BOARD" means the Western Cape Gambling and Racing Board;
1.2.2.3 "THE CASINO BUSINESS" means the casino business owned by the company
excluding, without limitation, the hotel, health spa, tourist village which will
be owned by the company;
1.2.2.4 "COMPANY" means Bidco;
1 2 2 5 "LICENCE" means a casino licence for Caledon in the Western Cape;
1 2 2 6 "THE LICENCE APPLICATION" means the licence application submitted by
Bidco on 15 October 1999 for the licence;
1.2.2.7 "THE PREFERENCE SHAREHOLDERS" and "MINORITY SHAREHOLDERS" means
Overberg Empowerment Company Ltd ("Empowerco"), and The Overberg Community Trust
("Trust");
1.2.2.8 "THE PROJECT" means the project contemplated in the licence
application;
1.2.2.9 "THE REMAINING BIDCO BUSINESS" means the business of Bidco but
excluding the casino business;
1.2.2.10 "THE SHAREHOLDERS" means ordinary shareholders and preference
shareholders;
1.2.2.11 "THE ORDINARY SHAREHOLDERS" means Century SA and Caledon and
any other holder of ordinary shares in Bidco from time to time
1.2.2.12 "THE CALEDON GROUP" means Senator Trust, Caledon, Devco,
Hospitality, Hotelco;
2
<PAGE>
1.2.2.13 "THE HOTEL BUSINESS" means the Overberger Hotel in
Caledon and the land on which it is situated, being Portion 1 Farm 812 Caledon
Division
1.2.2.14 "THE ORIGINAL SHAREHOLDERS AGREEMENT" means the agreement entered
into between Devco, Bidco, Caledon, Century SA and other parties dated 13
October 1999.
1.2.2.15 "PARTIES" to this agreement are Caledon Group and Century SA.
1.3 Words and expressions defined in the Act, shall bear the same meanings
in this agreement.
1.4 If any provision in the definition is a substantive provision conferring
rights or imposing obligations on anyone, effect shall be given to it as if it
were a substantive provision in the body of this agreement.
1.5 Where any number of days is prescribed in this agreement, same shall be
reckoned exclusively of the first and inclusively of the last day unless the
last day falls on a Saturday, Sunday or public holiday in the Republic of South
Africa, in which case, the last day shall be the next succeeding day which is
not a Saturday, Sunday or public holiday in the Republic of South Africa.
2. INTRODUCTION
2.1 On 13 October 1999, Devco, Bidco, Caledon, Century SA and other parties
entered into a binding agreement (the original Shareholders Agreement) whereby a
bid for a casino licence would be made by those parties.
2.2 On 15 October 1999 Bidco submitted an application for a casino licence
for the town of Caledon which inter a/ia provided that a casino resort project
be implemented through Bidco. The project consisted of a casino, hotel, health
spa, and small tourist village; the casino will be managed by Century SA, the
hotel, food & beverage and parking elements will be managed by Hospitality (or
the entity to which the agreement referred to in 5.2 has been assigned). The
management of all other elements of the resort shall be decided upon by the
Board of Directors of the company.
2.3 The parties wish to give effect to the above and the ordinary
shareholders of Bidco wish to regulate their relationship inter se as
shareholders of Bidco.
3. CONDITIONS PRECEDENT
3.1 The whole of this agreement (with the exception of clauses 1, 2, 3,
6,15,16, 17, 18 and 19 by which the parties shall nevertheless be bound) is
subject to the following conditions precedent:
3
<PAGE>
3.1.1 The casino licence being granted and irrevocable debt financing
undertakings given by funders for the required amount set out in the license
application on terms and conditions reasonably satisfactory to Century SA, Bidco
and Caledon Group and all the suspensive conditions to which such licence is
subject being fulfilled;
3.2 The parties shall use their best endeavours to procure that all the
conditions precedent referred to herein are fulfilled as soon as possible after
the date of signing of this agreement. Caledon Group represents and warrants
that Bidco will have all necessary water rights for the proposed development;
3.3 If all the conditions are not fulfilled or waived in writing by
Bidco, Caledon Group and Century SA by 31 December 2000 or if the licence
application is formally rejected by the Board, this agreement (save for the
provisions of clauses 1, 2, 3, 6, 15, 16, 17, 18 and 19) shall cease to be of
any force or effect. No party shall have any claim against any other in
consequence of such non-fulfilment, save in circumstances where a party has
deliberately frustrated the fulfilment thereof or has breached the provisions of
this clause 3.
4. SHAREHOLDING OF BIDCO
4.1 Before the transactions described below take effect, Caledon Group owns
100% of the entire issued ordinary share capital of Bidco.
4.2 The parties shall procure that forthwith (but in any event no later than
30 days) after the conditions precedent have been fulfilled that:
4.2.1 The Caledon Group will sell to Bidco the Hotel Business and the land
as scheduled in "Appendix C" as a going concern, both free and clear of any and
all debt, financial liens and liabilities, encumbrances, or similar (except for
operational undertakings in the ordinary course of business), at their agreed
values, which will result in the fulfilment of article 4.2.4 below. The Caledon
Group undertakes to procure that to the extent its aggregate loan accounts
("Caledon Group Loan Account") in Bidco exceed R15 000 000 (fifteen million),
such excess be transferred to the share premium of Bidco. It is recorded that it
is anticipated this transfer will amount to R10 000 000 (ten million) less the
nominal value of the issued share capital of Bidco.
4.2.2 Provided that the transactions set out in 4.2.1 have been implemented
and all conditions precedent been fulfilled, Century SA will pay (within three
days) R10 000 000 (ten million) to Bidco to subscribe for shares constituting
50% of the issued ordinary share capital in Bidco at the time through the
issuing of further shares in Bidco and Century SA will (at the same time) loan
R15 000 000 (fifteen million) to Bidco by way of loan account1 "Century SA Loan
Account".
4
<PAGE>
4.2.3 Century jointly and severally with Century SA undertake to provide
Bidco with the funds necessary to fulfil clause 4.2.2.
4.2.4 After all the transactions described in this article 4.2 have been
completed, the total shareholdings and total loan accounts in Bidco will be as
follows:
Both Century SA and Caledon will each own 50% (fifty percent) of the entire
issued ordinary share capital of Bidco (collectively 100%);
Century SA and Caledon Group will each have R15 000 000 (fifteen million)
in loan accounts in Bidco, and no other loan accounts shall be outstanding.
4.2.5 All such transactions shall be effected in the most tax efficient
manner for both Century SA and Caledon Group.
4.3 The ordinary shareholders and Bidco shall procure that forthwith after
the fulfilment or waiver of the condition precedent that:
4.3.1 The authorised share capital of Bidco shall be increased to include
200 preference shares ("the preference shares") of R1,00 each the preference
shares having the rights and privileges as set out in annexure A hereto;
4.3.2 200 preference shares shall be allotted and issued to the minority
shareholders as follows:
4.3.2.1 100 preference shares shall be allotted and issued to the Trust
(which shall subscribe therefor) at par;
4.3.2.2 100 preference shares shall be allotted and issued to the Empowerco
(which shall subscribe therefor) at par;
4.4 Century SA shall pay the amount of R100,00 payable by the Trust and
Caledon the R100-00 for Empowerco for the subscription of their preference
shares.
4.5 After the completion of the transactions referred to above the
preference shareholding of Bidco shall be as follows:
4.5.1 Empowerco, will own 100 preference shares of R1,00 each, being 50% of
the issued preference shares of Bidco;
4.5.2 the Trust, will own 100 preference shares of R1,00 each, being 50% of
the issued preference shares of Bidco.
5
<PAGE>
5. MANAGEMENT AGREEMENTS
The following Management Agreements will be signed simultaneously with the
signature of this agreement.
5.1 CASINO MANAGEMENT AGREEMENT
5.1 .1 Century SA will be awarded and will sign the casino management
agreement on the following terms and conditions:
Period: For duration of the licence initially 10 years with a guaranteed option
to renew for further ten year periods
Fees: 1. 4% of gaming revenue (after VAT, but before all other taxes)
up to R40 million per year, plus
2. 5% of gaming revenue (after VAT, but before all other taxes) above R40
million per year, plus
3. 7.5% of EBITDA (Earnings before interest, tax, depreciation, amortization
and any non-casino management controllable
items such as leases, rent or similar).
5.1.2 The percentage referred to in 1 above shall be reduced to three
percent (3%) for the first twelve months of casino operation.
5.1.3 The casino department shall report directly to the Board of Directors
of Bidco as well as to Century SA.
5.2 HOTEL AND RESORT MANAGEMENT CONTRACT
5.2.1 Hospitality will be awarded and will sign the hotel and resort
management agreement (for hotel, food & beverage and parking, and any other
element the board of directors of Bidco decides, excluding casino and any other
areas in respect of which the company contracts with a third party) on the
following terms and conditions:
Period: 10 years with a guaranteed option to renew for further ten year
periods
Fees: 6,5% (six and a half percent) of all hotel/resort revenue (after VAT),
excluding casino and any other and any other areas in respect of which a third
party may receive management fees, plus 15% of EBITDA of the hotel and resort
complex (excluding casino and any other areas in respect of which a third party
may receive management fees).
6
<PAGE>
5.2.2 The EBITDA percentage referred to above (15%) shall be reduced to ten
percent (10%) for the first twelve months of casino/hotel/resort operation.
5.2.3 The hotel and resort department will report directly to the board of
directors of Bidco and Hospitality.
5.3 Hospitality shall operate the Hotel for its own account until such a
time a~ the casino licence is granted. Hospitality and/or the Caledon Group
shall be paid by Bidco simultaneously with the fulfilment of the conditions
precedent and the fulfilment of clause 4.2.1, for all refurbishments and
improvements (incl. new and additional F, F&E) expended on the Hotel Business
since 3 September 1999 up to an amount of R2,5 million (two and one half million
rands) by bank guaranteed cheque.
5.4 Bidco has entered, on the same date of this Agreement, into a Hotel
Management Agreement with Hospitality for the management of the hotel and into a
Casino Management Agreement with Century SA for the management of the casino.
Bidco, Hospitality and Century SA agree that the provisions that deal with
general (non-hotel or non-casino specific) terms and conditions (such as term,
termination rights, timing of fees and expenses payable, arbitration, budget
approvals, insurance protection, indemnification, and similar) shall be equal
and interpreted equally in both the Hotel Management Agreement and the Casino
Management Agreement. If any provisions in either one or both of these Hotel and
Casino Management Agreements are in conflict with this clause 5.4, this clause
5.4 shall take precedent.
6. BID FEES
6.1 The bid fees have been budgeted at R800 000, but the final cost depends
on the probiety cost and other potential costs/expenses. Caledon and Century SA
shall jointly decide on how that budget is actually being spent.
6.2 Century SA has already contributed R250 000 by cheque deposit on 15
October 1999 to Bidco account.
6.3 Basil Read has contributed bid fees of R300 000 in exchange for a fixed
competitive priced contributions contract for the work to be down under the
casino bid.
7
<PAGE>
6.4 The Caledon Group through their associate companies have contributed
R250 000 to Bidco and has in conjunction with the parties, prepared the bid and
will provide secretarial and administrative support (including printing,
stationery, files, etc) as part of this amount. They have already spent as part
of their R250 000 the following amounts for the bid (approximate):
Registration Fees R20 000
Market Survey R 9 000
Legal Fees Council R14 000
Legal Fee Ladbroke RI5 000
--------
R58 000
--------
The balance in the amount of R192 000 has been put into the bank account of
Bidco. Any further amounts that may have been in credit with the Board prior as
at 10 October 1999 will be regarded as part of the Caledon Group's contribution
to the bid and can be repaid on demand unless agreed by them otherwise.
6.5 Should the casino licence be awarded and the project proceeded with, all
bid money will be paid back to the relevant parties on completion of the
building contract unless agreed otherwise by written agreement with Bidco as may
be the case with Basil Read.
6.6 If no licence is awarded to or the project not proceeded with, the fees
will not be paid back and no party shall have any claim against any other party
for the fees.
6.7 If any parties probiety investigation causes the bid budget to exceed
the R250 000 allocated to probity, then the said party will pay in the direct
proportional cost thereof.
7. RIGHT OF FIRST REFUSAL
7.1 Should any ordinary shareholder decide to sell directly or indirectly
its shares or part thereof in Bidco to a third party (that is an entity not
majority controlled by Century SA or the Caledon Group and excluding their
holding companies or fellow controlled subsidiaries) then the party wishing to
sell shares must offer the shares to the other party on the same terms and
conditions as the offer from the third party. The offer shall remain open for 45
working days and should the other parties not accept such an offer, the seller
is free to sell his shares on the same terms and conditions to the third party,
subject to the approval of the Gambling Board. The parties agree that,
notwithstanding article 13.1 of this agreement, the parties will amend article
94. of the articles of association of the company based on the principle set out
in this clause 7.1. but making use of the standard for the right of first
refusal wording of the existing wording of the articles of association of Bidco.
8
<PAGE>
7.2 The parties agree that, in case any shareholder of the company is found
unsuitable to hold a casino/gaming license, article 95. of the company's
articles of association shall apply mutatis mutandis, provided that the
remaining ordinary shareholders, in case no other purchaser acceptable to the
Gambling Board pays the purchase price in cash, shall have the right to pay the
purchase price using redemption securities (i.e. loan account). The board of
directors of the company shall then decide when payment under such loan account
will be made, giving consideration to the cash flow and other financial
situations of the company, but acting in a reasonable manner to facilitate
payment.
8. DIVIDEND POLICY
The shareholders agree that the dividend policy will be determined by the Board
of Directors taking into account the capital commitments, earnings and all other
relevant matters.
9. SHAREHOLDERS LOANS
Interest will be paid on shareholders loans (Century SA Loan Account and Caledon
Group Loan Account) at the lower of: prime overdraft rate or the cost of debt
funding to the company for sums in excess of R1 million (one million rands),
unless the board of directors of the company determines otherwise. Shareholders'
loan accounts will be treated equally in all respects and no repayment or
payment on interest thereon shall be made without the permission of Century SA
and Caledon.
10. BOARD OF DIRECTORS
10.1 Both the Trust and Empowerco will be entitled to nominate and appoint
one board member each to Bidco. Century SA and Caledon will be able to nominate
and appoint up to four (4) board members each. Initially, however, Century SA
and Caledon will appoint three (3) members each. The increase from three to four
members each shall be undertaken, if at all, simultaneously by Century SA and
Caledon.
10.2 All decisions of the board of directors to be approved will require at
least 70% of the directors of the board members agreement.
10.3 The chairman of the directors of the board meetings of the directors
shall not have casting vote.
11. ORIGINAL SHAREHOLDERS AGREEMENT
11.1 If any provision of this agreement is in conflict with the original
shareholders agreement this agreement should take precedent.
11.2 The following clauses are cancelled in the original shareholders
agreement and are of no further full or effect: clauses: 1, 2, 3, 4, 5, 7. 1,
7.2.
9
<PAGE>
12. PAYMENT TO LADBROKE OF R7 MILLION
12.1 Notwithstanding any previous agreement or anything contained in this
agreement Ladbroke Casino Holdings (SA) (Pty) Ltd will be paid by Bidco the R7
million due in terms of an agreement between them and various other parties
including Caledon, (and referred to in clause 20.1 of this agreement) upon
request of Caledon, which shall be no sooner than 28 days from the award of a
gaming licence. The purpose of this clause is to ensure that all potential or
other liabilities, indemnification's and any other commitments have been met by
Ladbroke Casino Holdings (SA) (Pty) Ltd and their group companies in terms of
the agreement referred to in terms of clause 20.1 of this agreement. Caledon and
the Caledon Group shall not request such payment of R7 million, or parts
thereof, from Bidco unless Caledon/Caledon Group immediately pays all such
monies to Ladbroke or to other parties which were, in the reasonable view of
Caledon, indemnified by Ladbroke. All monies not paid out by Caledon/Caledon
Group within five days after receipt of monies from Bidco shall be paid back to
Bidco immediately. Caledon, Caledon Group or any of its affiliates shall under
no circumstance realize any benefit, financial or otherwise, out of this
transactions.
12.2 Notwithstanding anything to the contrary herein contained, Century SA
shall be entitled on written notice to such effect to the Caledon Group, to
require the relevant members of the Caledon Group to exercise any and all rights
that they may have against Ladbroke Casino Holdings (SA) Pty Ltd and/or
Landbroke Casino (Holding) Ltd. and/or any subsidiary or holding company of
that. Should the Caledon Group not do so within a reasonable period after
receipt of such notice, the Caledon Group hereby authorizes and empowers Century
SA to do so and, for such purposes, each of the members of the Caledon Group
hereby appoint Century SA as its duly authorized agent, in rem suam.
12.3 Notwithstanding anything in this clause 12., Bidco shall in absolutely
no way be obligated to pay more than. R7 million under this clause 12.
13. AMENDMENT OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY
13.1 Where there is a conflict between the memorandum and articles of
association of the company and this agreement, the provisions of this agreement
shall prevail. Should it be required by any party hereto, the parties undertake
to procure that the articles of association of the company shall be amended to
accord with the provisions of this agreement.
13.2 In addition to 7.1, 7.2 and 13.1 and without derogating from the
provisions thereof, the ordinary shareholders agree to procure that the
memorandum and articles of association shall be amended as follows:
10
<PAGE>
13.2.1 the main business should be changed in paragraph 2 of the memorandum
to read:
"the main business which the company is to carry on to own, develop and operate
a hotel, spa, casino and resort in so far as the relevant laws permit and
subject to approval by the relevant authorities";
13.2.2 paragraph 3 of the memorandum be deleted and substituted with the
following:
"the main object of the company is, to own, develop and operate a hotel, spa,
casino and resort in so far as the relevant laws permit and subject to approval
by the relevant authorities"~
13.2.3 in article 9 add "The issue of preference shares however to Empowerco
and the Trust may not have their rights varied without the unanimous consent of
the ordinary shareholders";
13.2.4 in article 27.2 delete "Ladbroke Casino Holdings SA (Pty) Ltd" and
add "all directors nominated by Caledon Overberg Investments (Pty) Ltd and all
directors nominated by Century Casinos Africa (Pty) Ltd";
13.2.5 in article 28 delete "Ladbroke Casino Holdings (SA) Pty) Ltd'
and insert "all directors nominated by Caledon Overberg Investments (Pty) Ltd
and all directors nominated by Century Casinos Africa (Pty) Ltd";
13.2.6 in article 29.3 delete "Ladbroke Casino Holdings SA (Pty) Ltd"
and insert Caledon Overberg Investments (Pty) Ltd and Century Casinos Africa
(Pty) Ltd.
13.2.7 in article 45.1 delete "Caledon Overberg Investments (Pty) Ltd'
and insert after the Overberg Empowerment Company Ltd the word "and". In
addition the word "any" shall be replaced by the word "one";
13.2.8 in article 45.2 delete "Ladbroke Casino Holdings SA (Pty) Ltd"
and add the words "Caledon Overberg Investments (Pty) Ltd" and "Century Casinos
Africa (Pty) Ltd". Substitute the words "as it" for the words "they are"; add
"Caledon Overberg Investments (Pty) Ltd and Century Casinos Africa (Pty) Ltd
cannot replace, appoint or remove each others directors";
13.2.9 in article 49 the name "Ladbroke Casino Holdings SA (Pty) Ltd"
shall be substituted by "the Overberg Empowerment Company Ltd and Century
Casinos Africa (Pty) Ltd";
13.2.10 delete article 59.4.1;
13.2.11 delete article 59.4.2;
13.2.12 delete the first paragraph of article 61.1 and replace with the
following:"The quorum necessary for the transactions of the business of the
directors shall be all directors from Caledon Overberg Investments (Pty) Ltd and
all directors from Century Casinos Africa (Pty) Ltd.;
13.2.13 in article 61.3 substitute the words "Ladbroke" with the words
"Caledon Overberg Investments (Pty) Ltd and Century Casinos Africa (Pty) Ltd;
11
<PAGE>
13.2.14 in article 96.1.1.1 to be cancelled and substituted with a new
articles 9.6.1.1.1 which is to read: "any company or close corporation or trust
or any other legal entity which is controlled directly or indirectly by the
controlling shareholders of Caledon Overberg Investments (Pty) Ltd";
13.2.15 delete articles 96.1.1.2 and 96.1.1.3
13.2.16 change article 96.1.2 by deleting the contents and substitute a new
article 96.1.2 to read: "Century Casinos Africa (Pty) Ltd means any company,
close corporation, trust or any other legal entity or person that is controlled
directly or indirectly by Century Casinos Africa (Pty) Ltd and/or Century
Casinos Incorporated.
13.2.17 in article 56, add clause 56.4 which must read "if required to do so
in terms of the Western Cape Gambling and Racing Board or any other similar
gambling authority.
13.2.18 in article 59.2, change 7 days to 21 (twenty-one) days.
13.2.19 The name of the company shall be changed to "Century Casinos Caledon
(Pty) Ltd.".
13.2.20 A new article shall be included to give effect to the following:
should the casino assets of the project be sold and it be necessary to effect
the sale, the preference shareholders shall be bought out at the fair market
value, as determined by the company's auditors.
13.2.21 Add the following at the end: "Notwithstanding the above, each vote
of the preference shareholders shall require ten shares".
13.3. Notwithstanding 13.2.19, Century SA and/or Century Inc shall at
any time be entitled, on written notice to the company, to require the company
to change its name so as not to include the word "Century" or any word
confusingly similar thereto. The company and the ordinary shareholders shall,
within 30 days after receipt of such notice, procure that the company changes
its name accordingly.
14. BASIS OF ACCOUNTING FOR THE CASINO BUSINESS
The basis of accounting for the casino business for the sole purpose of
determining the profits available for distribution to the preference
shareholders and the amount to be distributed to the preference shareholders are
set out in annexure B hereto which annexure shall not be exhaustive.
15. ANNOUNCEMENTS
15.1 The provisions of this agreement shall remain confidential at all times
and, save as provided in this agreement, shall not be disclosed to any person.
15.2 Subject to 15.3, no public announcement, communication or circular
concerning the transactions referred to or contemplated in this agreement shall
be made or dispatched at any time without the prior written consent of the board
of directors of the company, such consent not to be unreasonably withheld or
delayed.
12
<PAGE>
15.3 Where the announcement, communication or circular is required by
law or by any rule or any regulatory authority, it shall be made by a party only
after reasonable consultation with the other party, if practicable. Caledon
acknowledges that Century is a publicly traded company with certain disclosure
requirements.
16. WHOLE AGREEMENT, NO AMENDMENT
16.1 This agreement constitutes the whole agreement between the parties
relating to the subject matter hereof.
16.2 No amendment or consensual cancellation of this agreement or any
provision or term thereof or of any agreement, bill of exchange or other
document issued or executed pursuant to or in terms of this agreement and no
settlement of any disputes arising under this agreement and no extension of
time, waiver or relaxation or suspension of any of the provisions or terms of
this agreement or of any agreement, bill of exchange or other document issued
pursuant to or in terms of this agreement shall be binding unless recorded in a
written document signed by the parties. Any such extension, waiver or relaxation
or suspension which is so given or made shall be strictly construed as relating
strictly to the matter in respect whereof it was made or given.
16.3 No extension of time or waiver or relaxation of any of the
provisions or terms of this agreement or any agreement, bill of exchange or
other document issued or executed pursuant to or in terms of this agreement,
shall operate as an estoppel against any party in respect of its rights under
this agreement, nor shall it operate so as to preclude such party thereafter
from exercising its rights strictly in accordance with this agreement.
16.4 No party shall be bound by any express or implied term, representation,
warranty, promise or the like not recorded herein.
17. DOMICILIUM CITANDI ET EXECUTANDI
17.1 The parties choose as their dornicilia citandi et execulandi for all
purposes under this agreement, whether in respect of court process, notices or
other documents all communications of whatsoever nature (including the exercise
of any option), the following addresses:
Century SA: c/o Deloitte & Touche
13
<PAGE>
Att: David Parker
Deloitte & Touche Place
The Woodlands
Woodlands Drive
Woodmead
Sandton 2196
Telefax: 0912536817531
Century Inc: 200 East Bennett Avenue
Cripple Creek, Colorado 80813, USA
Telefax: 0917079827586
FKC: 1 Nicol Street
Gardens
8001
Telefax: 021 425 3861
Bidco: 1 Nicol Street
Gardens
8001
Telefax: 021 425 3861
Devco: 1 Nicol Street
Gardens
8001
Telefax: 021 425 3861
Hotelco: 1 Nicol Street
Gardens
8001
Telefax: 021 425 3861
Caledon: 1 Nicol Street
Gardens
8001
Telefax: 021 425 3861
Hospitality: 1 Nicol Street
Gardens
8001
Telefax: 021 425 3861
Century: 200 East Bennett
Cripple Creek, Colorado 80813, USA
Telefax: 0917079827586
FKC: 1 Nicol Street
Gardens
8001
Telefax:: 021 425 3861
Bidco 1 Nicol Street
Gardens
8001
Telefax:: 021 425 3861
Devco: 1 Nicol Street
Gardens
8001
Telefax:: 021 425 3861
Hotelco: 1 Nicol Street
Gardens
8001
Telefax:: 021 425 3861
Caledon: 1 Nicol Street
Gardens
8001
Telefax:: 021 425 3861
Hospitality: 1 Nicol Street
Gardens
8001
Telefax:: 021 425 3861
14
<PAGE>
17.2 Any notice or communication required or permitted to be given in terms
of this agreement shall be valid and effective only if in writing but it shall
be competent to give notice by telefax.
17.3 Any party may by notice to any other party change the physical address
chosen as its domiciliurn citandi et executandi vis-a-vis that party to another
physical address or telefax number, provided that the change shall become
effective vis--a-vis that addressee on the tenth business day from the deemed
receipt of the notice by the addressee.
17.4 Any notice to a party sent by telefax to its chosen telefax shall be
deemed to have been received on the date of despatch (unless the contrary is
proved).
17.5 Notwithstanding anything to the contrary herein contained a written
notice or communication actually received by a party shall be an adequate
written notice of communication to it notwithstanding that it was not sent to or
delivered at its chosen domicilium citandi et executandi.
18. ARBITRATION
18.1 Save in respect of those provisions of this agreement which provide for
their own remedies which would be incompatible with arbitration, a dispute which
arises in regard to:
18.1.1 the interpretation of; or
18.1.2 the carrying into effect of; or
18.1.3 any of the parties' rights and obligations arising from; or
18.1.4 the termination or purported termination of or arising from the
termination of; or
18.1 .5 the rectification or proposed rectification of;
this agreement or out of or pursuant to this agreement or on any matter which in
terms of this agreement requires agreement by the parties, other than where an
urgent interdict is sought or urgent relief may be obtained from a court of
competent jurisdiction, shall be submitted to and decided by arbitration in
accordance with the rules of Arbitration Foundation of Southern Africa (or its
successor) by an arbitrator appointed by the Foundation.
18.2 Nothing in this agreement shall preclude any party from seeking an
urgent interdict or urgent relief from a court of competent jurisdiction.
15
<PAGE>
19. COSTS
The legal fees and disbursements incidental to the negotiation, preparation and
implementation of this agreement and the stamp duty thereon shall be borne by
the company, except where any party seeks its own legal advice in which case it
will be borne by the party seeking such advice.
20. ALLOCATION OF AMOUNTS TO CASINO BUSINESS
Without in any way purporting to be exhaustive and without derogating from the
other provisions of this agreement (including annexure B) for the sole purpose
of determining the profits available for distribution to the preference
shareholders, the following shall be allocated to the casino business and
notwithstanding that such amounts may have been incurred prior to the date of
this agreement:
20.1 the fee of R7 million payable to Ladbroke Casino Holdings SA (Pty) Ltd
in terms of agreement dated 3 September 1999 between Ladbroke Casino (Holdings)
Limited; Ladbroke Casino Holdings (SA) (Pty) Limited; Fortes King Properties
(Pty) Limited; Leon Fortes; Caledon Casino Bid Company (Pty) Limited; Caledon
Hotel Spa and Casino Resort (Pty) Limited; Overberger Country Hotel and Spa
(Pty) Limited; Caledon Overberg Investments (Pty) Limited; Fortes King
Hospitality (Pty) Limited and Kevin King.
20.2 all direct and indirect costs and fees relating to the licence
application or the establishment and development of the casino business. The bid
fees of approximately R800 000 shall be repaid to the parties who provided the
funding.
20.3 all costs expenses and fees payable or paid by Bidco in terms of
agreements or undertakings entered into or given by Bidco prior to the date of
this agreement.
21. The parties agree to forthwith enter into an agreement with the minority
shareholders to give effect to the terms and conditions contained in this
agreement. The parties agree that it is this agreement that shall take precedent
over any agreement (i.e. the agreement with the minority shareholders)
regulating the relationship and dealings between the parties to this agreement.
All terms and conditions of any dealings between the parties to this agreement
shall be interpreted according to this agreement only (and not according to the
agreement which includes the minority shareholders).
22. An international auditing firm (such as Deloitte & Touche, KPMG or Ernst
& Young) nominated by Century SA shall be the joint auditor of the company,
together with a joint auditing firm chosen by Caledon.
23. This agreement shall not become effective unless approved by the Board
of Directors of Century SA and Century Inc. Such approval shall be forthcoming
within five days of the board approval of the Caledon Group.
16
<PAGE>
24. The obligations of Caledon Group under this Agreement shall be joint and
several.
25. LIMITED RESTRAINT
25.1 For one particular potential opportunity, in the town of Worcester or
in the Breeriver Valley in the Western Cape Province of South Africa, the
following shall apply, but only during the first two years of this shareholders
agreement: should Century or Century SA become involved in this Worcester
project, they shall use their best efforts to include Bidco or Caledon Group in
this project in a meaningful and substantial manner, similar to the present
structure of the Caledon bid. If Caledon Group cannot be included in this
project, Century or Century SA, if they become involved and a casino
actuallyopens in Worcester with Century or Century SA as casino managers, shall
pay to Caledon Group an amount equal to five percent (5%) of the net income
stream Century or Century SA derive from this project during the first five
years of operation of that project. If Century or Century SA become involved in
this Worcester or Breeriver project after two years of this shareholders
agreement have elapsed, this provision 25.1 shall be null and void.
25.2 Century, Century SA and the Caledon Group shall endeavour to include
each other in a casino bid for Club Mykonos, Westem Cape.
26. ASSIGNMENT
This shareholder agreement will 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 one signatory's or party's ability to assign its rights and
responsibilities to any directly controlled affiliate, in which case all other
parties need to be notified. Once a party or signatory has assigned its rights
and responsibilities, it shall no longer be party or signatory to this
agreement.
17
<PAGE>
THUS DONE AND SIGNED by Bidco at CAPE TOWN this 3 day of December 1999.
/s/ Leon Fortis
-----------------
THUS DONE AND SIGNED by Caledon at CAPE TOWN this 3 day of December 1999.
/s/ Leon Fortis
-----------------
THUS DONE AND SIGNED by CenturySA at CAPE TOWN this 3 day of December 1999.
/s/ Peter Hoetzinger
----------------------
Peter Hoetzinger, Vice Chairman
Century Casinos Inc. signs for clauses 4.2.3 and 6.7 of this agreement only:
/s/ Peter Hoetzinger
----------------------
Peter Hoetzinger,Vice Chairman
THUS DONE AND SIGNED by Hotelco at CAPE TOWN this 3 day of December 1999.
/s/Leon Fortes
---------------
.
THUS DONE AND SIGNED by Hospitality at CAPE TOWN this 3 day of December 1999.
/s/Leon Fortes
---------------
THUS DONE AND SIGNED by Devco at CAPE TOWN this 3 day of December 1999.
/s/Leon Fortes
---------------
THUS DONE AND SIGNED by Senator at CAPE TOWN this 3 day of December 1999.
/s/Leon Fortes
---------------
18
<PAGE>
ANNEXURE A
The following rights, privileges and conditions shall apply to the preference
shares (which for the avoidance of doubt shall not be cumulative) having a par
value of R1 each ("preference shares") in the capital of the company -
1. Each preference share shall confer on the holder the right to receive by
way of dividend in respect of each financial year of Bidco 0.1% (one tenth of
one per cent) of the after tax profits directly attributable to the Caledon
casino business in that year and prior to the payment of interest or capital on
shareholders' loans (other than shareholders loans provided in respect of the
casino business), subject to, as determined by the directors of Bidco in their
sole and absolute discretion, any working capital, capital expenditure
requirements, loan obligations and liabilities, attributable to the casino
business and after taking into account the amount of STC payable in relation to
the dividends on the preference shares and distributable reserves of the casino
business. The dividend (if any) shall be payable within 3 months after the
financial statements of Bidco have been audited and signed by the directors of
Bidco.
2. Should the casino business be wound up, each preference share shall
confer the right on the holder to receive out of funds which may lawfully be
applied for that purpose, in priority to the holders of all other classes of
shares in the share capital of the company, 0.1% (one tenth of one per cent) of
any surplus directly attributable to the casino business available for
distribution after payment of all other liabilities attributable to such casino
business.
3. Save as set out herein, the holders of the preference shares shall
not be entitled to participate in the profits of the company or any dividend
payable on the winding-up of the company.
4. The preference shareholders shall have the right to attend general
meetings and adjourned meetings of the company but shall not, save in
circumstances envisaged in section 194. of the Company's Act 1973, have the
right to vote at any such meeting.
5. Should any preference shareholder wish to dispose of its shares, it
shall be required to do so in accordance with the preemptive rights provisions
contained in the articles of association of the company.
6. The terms of the preference shares may not be modified, altered, varied,
added to or abrogated.
7. The preference shares shall not be redeemable except by agreement between
the company and the holders of the preference share willing to have them
redeemed.
19
<PAGE>
ANNEXURE B
Basis of accounting for the casino business of Bidco for the sole purpose of
determining the profits available for distribution to the preference
shareholders and the amount to be distributed to the preference shareholders
1. DEFINITIONS
Words and expressions defined in this annexure shall bear the same meanings as
the agreement to which the annexure is annexed.
2. BOOKS OF ACCOUNT
2.1 Bidco shall maintain separate books of account for the casino business.
The casino business will be accounted for as a branch of Bidco with "branch
accounting" being used.
2.2 The branch accounts of the casino business ("branch accounts") will be
used to determine the profits available for distribution to the minority
shareholders.
3. CASINO BRANCH CAPITAL AND UNDISTRIBUTED PROFITS
3.1 The casino business will have an initial branch capital of R2.5 million
3.2 The cumulative branch profits of the casino business which have not been
distributed, whether by way of dividend to the minority shareholders or by
transfer to the remaining Bidco business, will be included as "retained
undistributed profits" in the branch accounts.
4. FINANCE FOR CASINO BUSINESS
Any finance obtained by Bidco (including for the avoidance of doubt,
shareholders' loans) which is related to the operation of the casino business
will be allocated directly to the casino business. The interest and other costs
and capital repayments of such finance will be met by the casino business prior
to the distribution of dividends to minority shareholders.
20
<PAGE>
5. BRANCH FIXED ASSETS
All fixed assets directly relating to the casino business (for the avoidance of
doubt, excluding the casino premises which will be an asset of the remaining
Bidco business), will be included within the books of account of the casino
business. Similarly all liabilities directly attributable to the casino business
shall be recorded as such in the branch accounts and shall be taken into account
in determining the profits of the casino business available for distribution.
6. BANK ACCOUNTS AND WORKING CAPITAL
6.1 Separate bank accounts will be maintained for the casino business.
6.2 Surplus funds generated by the casino business will either be placed on
deposit with approved banking institutions or may be lent to the remaining Bidco
business on terms and conditions as to the repayment of capital and interest
only which reflect an arm's length basis.
6.3 If any working capital facilities are arranged by the remaining Bidco
business for the casino business, the casino business will be charged with the
cost of providing those facilities.
6.4 If any additional working capital is provided by the remaining Bidco
business to the casino business, the casino business will be charged for these
funds on an arm s length basis and will be required to repay such working
capital together with interest prior to any payments of dividends to the
minority shareholders.
7. SERVICES PROVIDED BY THE REMAINDER
7.1 Where services are provided to the casino business by the remaining
Bidco business, a charge will be made to the casino business on an arm's length
basis. Such services include but are not limited to the provision of the casino
premises and central resort services and the basis of these charges is set out
below.
21
<PAGE>
7.2 Rent for the casino premises shall be based on the aggregate of cost of
the casino premises to Bidco and the premises leased to the Trust, commencing at
20% of cost and escalating at 9% per annum. The casino business shall bear all
costs attributable to such premises including but not limited to maintenance,
repairs, insurance and the like.
7.3 Central resort services and other shared services shall be based on the
actual cost of providing the services which will be allocated on a basis that
reflects usage.
7.4 The cost of any other services provided by the remaining Bidco business
shall be charged to the casino business on an arm's length basis.
8. COSTS AND INCOME OF THE CASINO OPERATION
It is intended that all costs and all income directly relating to the casino
business should be reflected in the branch accounts.
9. TAXATION
For the purposes of the branch accounts, the taxation charge relating to the
casino business will be calculated as if the casino business is a stand alone
company. STC relating to the payment of dividends to the minority shareholders
will be charged to the minority shareholders' portion of the casino business.
Payments of income tax (including advance payments of taxation) attributable to
the casino business will be charged to the casino business on the dates that the
payments are or would have been made to the authorities
10. BASIS OF PREPARATION OF BRANCH ACCOUNTS
The accounts of the casino business should be prepared using the same accounting
policies as used by Bidco in its statutory accounts and the manner of their
application thereof, subject to any differences which arise from the
intra-company transactions which will be eliminated on the preparation of the
company's statutory accounts (e.g. the intra-company charges for central
services and rent).
22
<PAGE>
11. BRANCH ACCOUNTS TO BE PREPARED ANNUALLY
The branch accounts prepared at the financial year end of Bidco will be prepared
using an equivalent format, mutatis mutandis, to that used for the statutory
accounts of Bidco. In particular, the branch accounts will include a profit and
loss account, a balance sheet, a statement of source and application of funds
and a statement of the planned capital expenditure over the next two years. The
branch accounts will be sent to the minority shareholders. The costs of the
branch accounts shall be borne by the casino business.
12. BASIS OF DETERMINATION OF THE DISTRIBUTION TO BE MADE FROM THE BRANCH
On the basis of the position shown in those branch accounts, the directors of
Bidco will determine in their sole and absolute discretion the amount which can
properly be distributed from the after-tax profits shown in the branch accounts
having regard to any working capital, capital expenditure requirements, loan
obligations and liabilities of the casino business and after taking account of
the secondary tax payable in relation to the preference dividends and the
distributable reserves within Bidco. Notwithstanding the aforegoing the
directors shall in determining such distribution have regard to the fact that
the tax reflected in the 1999 branch accounts may be more than the amount
actually payable by Bidco as a consequence of any losses incurred by the
remaining business.
13. TRANSFER OF RESERVES TO THE REMAINING BIDCO BUSINESS
Simultaneously with the distribution of dividends to minority shareholders, the
balance of the after tax profits determined by the directors of the company as
available for distribution shall be transferred to the remaining Bidco business.
14. PREPARATION OF FINAL BRANCH ACCOUNTS
In the event that Bidco were to lose its casino licence, final accounts would be
prepared for the branch which would inter alia record the profit/loss arising on
the disposal of the fixed assets.
23
<PAGE>
APPENDIX C
THE PROPERTIES
1. The properties owned by Caledon Hotel Spa & Casino Resort (Pty) Limited
are the following:
Remaining extent of the farm Oatlands South 408, Caledon Division Held by
Deed of Transfer No T 11255/1997
Portion 1 of the farm Oatlands South 408, Caledon Division Held by Deed of
Transfer No T 34201/1 997
Portion 3 of the farm Caledon Baths 560, Caledon Division Held by Deed of
Transfer T 44647/1 997
Erf2842Caledon
Held by Deed of Transfer T90028/1 998
Erf 2843 Caledon
Held by Deed of Transfer T 90032/1 998
Erf 2844 Caledon
Held by Deed of Transfer T 90032/1998
24
<PAGE>
ADDENDUM TO THE AGREEMENT
between
CALEDON CASINO BID COMPANY (PTY) LIMITED
("Bidco")
and
CALEDON OVERBERG INVESTMENTS (PTY) LIMITED
("Caledon')
and
CENTURY CASINO'S AFRICA (PTY) LIMITED
and
CENTURY CASINO'S INC. (not as a shareholder or party. but for clauses 4.2.3
and 6.7 of this agreement only)
and
CALEDON HOTEL SPA AND CASINO RESORT (PTY) LIMITED
("Devco")
and
FORTES KING HOSPITALITY (PTY) LIMITED
("Hospitality")
and
OVERBERGER COUNTRY HOTEL AND SPA (PTY) LIMITED ("Hotelco")
and
SENATOR TRUST
Dated 3 December 1999
25
<PAGE>
It is hereby agreed that clause 26 of this agreement be deleted and that the
following new clause 26 is substituted.
26. ASSIGNMENT
This shareholder agreement will be binding upon aid 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 one signatory's or party's ability to assign its rights arid
responsibilities to any directly controlled affiliate, provided the prior
written consent of the other parties are obtained which' consent shall not
unreasonably be withheld.
THUS DONE AND SIGNED by Bidco at CAPE TOWN this 9 day of December 1999,
/s/Leon Fortes
---------------
THUS DONE AND SIGNED by Caledon at CAPE TOWN this 9 day of December 1999.
/s/Leon Fortes
---------------
THUS DONE AND SIGNED by Century SA at CAPE TOWN this 9 day or December 1999
/s/Peter Hoetzinger
--------------------
Peter Hoetzlnger, Vice Chairman
Century Casino's Inc. signs for clauses 4.2.3 and 6.7 of this agreement
only;
. /s/Peter Hoetzinger
--------------------
Peter Hoetzinger, Vice Chairman
Century Casino's Inc.
THUS DONE AND SIGNED by Hotelco at CAPE TOWN this 9 day of December 1999.
/s/Leon Fortes
---------------
THUS DONE AND SIGNED by Hospitality at CAPE TOWN this 9 day of December 1999.
/s/Leon Fortes
---------------
THUS DONE AND SIGNED by Devco at CAPE TOWN this 9 day of December 1999.
/s/Leon Fortes
---------------
THUS DONE AND SIGNED by Senator at CAPE TOWN this 9 day of December 1999.
/s/ Leon Fortes
- -----------------
Leon Fortes. Trustee
26
<PAGE>
EXHIBIT 10.88
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement ("MOA") by and between B.H. Centrum a.s. (a
subsidiary of Ilbau and Bau Holding) ("BHC") and Century Casinos, Inc. ("CCI")
is dated January 7, 2000.
PREAMBLE:
1. HC has developed a hotel/retail/office complex in Prague, Czech Republic
("Marriott Hotel" and "MiIlennium Plaza"). The company Casino Millennium a.s.
("CM") has rented space in the complex from BHC for the operation of a casino.
CCI (or its subsidiary) has entered into a casino services agreement with CM to
assist CM in the management of the casino. The casino opened to the public in
July 1999.
2. BHC receives 10% of the casinos gross revenues as rent and CCI receives
10% of the casino's gross revenues as casino services fee. Further, BHC receives
45% of CM's distributable profit in exchange for certain investments (e.g.
inside architecture arid design, etc.) and CCI receives 45% of CM's
distributable profit in exchange for the provision of gaming equipment.
3. Initially, before the opening of the casino, it has bean the intent of
both BHC and CCI to undertake this casino project as a joint venture. Sudden
changes in local laws, however, made that impossible at that time. These changes
have been reversed in late 1999, opening the way for BHC and CCI to follow their
original joint venture intent.
AGREEMENT:
1. BHC and CCI agree to continue this project on a 50/50 joint venture
basis. This shall be achieved by either forming a new joint venture company, to
be owned 50% by BHC and 50% by CCI, or by jointly acquiring the existing company
CM. in early 2000. The consent to sell the CM shares has already been obtained
from the current CM shareholders. BHC and CCI represent that the attorneys have
already been briefed in this regard and a first draft of a joint venture
agreement should be forthcoming shortly.
2. BHC and CCI shall have equal representation on the Supervisory Board and
the Management Board of that new joint company. The joint company shall rent the
casino space under the same terms and conditions from BHC as does CM currently;
the joint company shall enter into a casino services agreement with CCI under
the same terms and conditions as outlined in the existing casino services
agreement between CM and CCI.
Agreed to and accepted:
/s/ G. Leuthmetzer__________
------------------------------
DipI. Ing. G. Leuthmetzer
B. H. Centrum
/s/ Peter Hoetzinger__________
- --------------------------------
Peter Hoetzinger
Century Casinos. Inc.
1
<PAGE>
EXHIBIT 10.89
ASSUMPTION AND MODIFICATION AGREEMENT
---------- --- ------------ ---------
THISASSUMPTION AND MODIFICATION AGREEMENT
- --------------------------------------------
("Agreement") is made and entered into this 7th day of February. 2000, by and
--------------------------------------- -- ----------------------
between MARCIE I. ELLIOTT ("Elliott") and WMCK VENTURE CORPORATION, a Delaware
--------------------------------------------------------------------- --------
corporation ("Optionee").
-------------------------
RECITALS:
--------
1. ROBERT J. ELLIOTT ("Optionor"), as 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"), and Optionee, properly executed and
delivered that certain Option Agreement ("Option Agreement"), dated March 25,
1999, pursuant to which Optionor granted to Optionee the option to purchase the
Property upon the terms and conditions set forth in the Option Agreement.
2. Optionor and Optionee properly executed and delivered that
Memorandum of Option to Purchase ("Memorandum of Option") in respect to the
Option Agreement, which was recorded on March 31, 1999 at Reception No. 489749
of the Teller County, Colorado real estate records.
3. Optionor is now deceased. Pursuant to the terms of the
Optionor's last will and testament, Elliott shall be appointed as personal
representative of the estate of the Optionor (the "Estate") and the Property
shall be conveyed from the Estate to Elliott by personal representative's deed
("Personal Representative's deed"), subject to the Option Agreement.
4. Pursuant to the terms and conditions of this Agreement, Elliott
and Optionee have mutually agreed to (a) the assumption by Elliott of the
Optionor's obligations under the Option Agreement and (b) the modification of
the Option Agreement as provided for in this Agreement.
NOW, THEREFORE, in consideration of the execution of this Agreement, the mutual
promises contained herein1 and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Elliott agrees to proceed promptly, diligently and in good faith (a)
to accomplish her appointment as personal representative of the Estate and,
promptly after such appointment, (b) to cause letters testamentary, evidencing
Elliott's appointment as personal representative of the Estate to be recorded in
the Teller County real estate records, (c) to execute, deliver and record in the
Teller County real estate records the Personal Representative's Deed conveying
the Property to Elliott and (d) to take such other actions as may be reasonably
necessary to accomplish such appointment and conveyance.
1
<PAGE>
Optionee agrees to proceed promptly, diligently and in good faith to
accomplish the condition under Section 4(d) below, relating to the Title
Commitment, unless waived by Optionee.
2. Effective upon the Effective Date (defined in Section 4 below), Elliott
hereby irrevocably and unconditionally assumes, covenants, promises and agrees:
(a) to perform each and every covenant, agreement and obligation in the Option
Agreement be performed by Optionor; (b) that the representations and warranties
of the Optionor are ratified as her own; and (c) to be bound by each and all of
the terms and conditions of the Option Agreement as though the Option Agreement
had originally been made, executed and delivered by Elliott, as the Optionor.
3. Effective upon the Effective Date (as defined in Section 4 below),
Elliott and Optionee agree that the Option Agreement shall be and hereby is
modified as follows:
a. Article II and Article III of the Option Agreement shall be modified and
restated in their entirety as follows:
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, 2004 (the "Extended Option Period"), by written
notice delivered by the Optionee to Optionor in the manner set forth in Section
19.8 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 19.8 hereof prior to the expiration of the Initial Option Period and
payment by the Optionee to Optionor of the sum of Fifteen Thousand and No/l00
Dollars ($15,000.00) 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.
2
<PAGE>
(a) As consideration for the Extended Option Period, the Optionee shall pay
to the Optionor the sum of Fifteen Thousand and No/100 Dollars ($15,000.00) by
no later than March 31, 2000. As consideration for the Option, during the
Extended Option Period, the Optionee shall pay to the Optionor Two Thousand and
No/100 Dollars ($2,000.00) per month thereafter during the Extended Option
Period, commencing with the month of April, 2000. In addition, provided the
Option has not been previously exercised, the Optionee shall pay to the Optionor
the sum of Twenty-Five Thousand and No/100 Dollars ($25,000.00) on March 31,
2001.
(b) 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 19.8 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.
(c) 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.
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<PAGE>
b. The notice address for the Optionor, which appears in Section 19.8
of the Option Agreement is amended to read as follows:
Marcie I. Elliott
247 East Bennett Avenue
Cripple Creek, Colorado 80813
With a copy to:
------------- --
Tyler D. Kraemer, Esq.
Kraemer, Kendall & Benson
430 North Tejon, Suite 300
Colorado Springs, CO 80903-1167
4. The "Effective Date" shall be the date upon which the last of the
following conditions has been satisfied: (a) Elliott shall have been duly
appointecf as personal representative of the Estate, (b) letters testamentary
shall have been issued, evidencing such appointment, and such letters shall have
been recorded in the Teller County real estate records, (c) Elliott, as personal
representative of the Estate, shall have executed and delivered the Personal
Representative's Deed conveying the Property from the Estate to Elliott and such
Personal Representative's Deed shall have been recorded in the Teller County
real estate records and (d) unless waived in writing by the Optionee, the Title
Commitment (as defined in Section 5.1 of the Option Agreement) shall have been
endorsed, at the Optionee's expense, (i) to show, in Paragraph 3 of Schedule A
of the Title Commitment, that Elliott is the owner of the Property and (ii) to
show the Option Agreement, as modified by this Agreement, as an exception in
Schedule B - Section 2 of the Title Commitment.
Elliott and Optionee agree that Sections 2 and 3 of this Agreement shall
become effective upon the occurrence of the Effective Date. Under the terms of
the modified Article III (set forth in Section 3 above) from and after March 31,
2000, Option consideration is payable by the Optionee to Elliott in amounts
which are in excess of the consideration payable under Option Agreement prior to
modification. The parties anticipate that the Effective Date will occur prior to
March 31, 2000. Nonetheless, in the event the Effective Date occurs after March
31, 2000, the parties agree that any Additional Option Consideration (as defined
below) shall be paid by the Optionee to Elliott within fifteen (15) days of the
Effective Date. "Additional Option Consideration" shall be the amount which is
equal to (a) the Option consideration payable, up to and including the Effective
Date, under the modified Article III minus (b) the Option consideration which
-----
has been paid, up to and including the Effective Date, by the Optionee to the
Estate under Article III of the Option Agreement without modification.
5. Promptly after the occurrence of the Effective Date (as defined in
Section 4 above), the parties agree to execute a Memorandum of Modification of
Option to Purchase, in the form and content as Exhibit B, which shall be
---------
recorded in the Office of the County Recorder of Teller County, Colorado.
6. This Agreement is a modification only and shall relate back to the date
of the execution and delivery of the Option Agreement and, except as provided
herein, all of the terms and conditions of the Option Agreement shall remain in
full force and effect. Elliott and Optionee ratify and confirm the
enforceability of the Option Agreement as assumed by Elliott, as if Elliott was
the original Optionor, and modified by this Agreement.
4
<PAGE>
7. This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, and such counterparts shall together constitute but
one and the same agreement.
IN WITNESS WHEREOF, Elliott 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
Name: Peter Hoetzinger
Its: Director
"ELLIOTT"
/s/ Marcie I. Elliott
Marcie I. Elliott
STATE OF COLORADO )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this 7th day of
February, 2000, by Peter Hoetzinger, as Director of WMCK Venture Corporation, a
Delaware corporation.
WITNESS my hand and official seal.
[SEAL]
/s/ Lori Gray
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this 7th day of
February, 2000, by Marcie I. Elliott.
WITNESS my hand and official seal.
My commission expires:
/s/LORI GRAY
NOTARY PUBLIC
[SEAL STATE OF COLORADO
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.
5
<PAGE>
EXHIBIT 10.90
COMMERCIAL
CONTRACT TO BUY AND SELL REAL ESTATE
November 17, 1999
1. PARTIES AND PROPERTY. WMCK VENTURE CORPORATION, a Delaware
corporation ("Buyer"), agrees to buy, and SASKATCHEWAN INVESTMENTS, INC., a
Texas corporation ("Seller"), agrees to sell, on the terms and conditions set
forth in this contract ("Contract"), the following described property in the
County of Teller, Colorado:
Parcel 1:
- ----------
The South 75 feet of Lots 1 through 4, inclusive, and the East 19 feet 4 inches
of the
South 75 feet of Lot 5 and the North 50 feet of Lots 1 through 4, inclusive, and
the
East 19 feet 4 inches of the North 50 feet of Lot 5, all in Block 29, Fremont,
now
Cripple Creek, in Teller County, Colorado,
and -
Lots 1 through 5, inclusive, Block 2, First Addition to Fremont. now Cripple
Creek, in Teller County, Colorado (Parcel 1 and Parcel 2 collectively called the
"Property"), together with all:
(i) privileges, easements, rights of ways, access, licenses, franchises,
rights, appendages, tenements, hereditaments and other appurtenances thereto;
(ii) any and all fixtures and improvements thereon;
(iii) any and all development rights and land use permits, if any, in respect
thereto; and
(iv) any and all right, title and interest Seller has in and to any and all
strips and gores of land, and in, to and under the real property within roads,
alleys and access ways serving, abutting and adjoining the real property
described above, including, without limitation:
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(A) that portion of Outlot A, First Addition to Fremont, now Cripple
Creek, lying East of the West line of the East 19 feet 4 inches of Lot 5,
Block 29, Fremont, now Cripple Creek. extended South. in Teller County. Colorado
("Outlot A"),
(B) that portion of the alley in First Addition to Fremont lying between
Parcel 1 and Parcel 2 above, being more particularly described as that portion
of the North half of the alley, lying East of the West line of the East 19 feet
4 inches of Lot 5, Block 29, Fremont, now Cripple Creek extended South, and that
portion of the South half of the alley, lying East of the West line of Lot 5,
Block 2, First Addition to Fremont, now Cripple Creek, extended North) in Tcller
County, Colorado (collectively the "Alley") and
(C) the property to the east ("2nd Street"), which lies between the
Property, Outlot A and the Alley, on one hand, and Colorado Highway 67, on the
other.
The parties acknowledge and agree that the description of Outlot A, the
Alley and/or 2nd Street may change as a result of proceedings and applications
described in paragraph 9(c) below or otherwise. In the event of any such change.
the parties agree to amend this Contract accordingly
2. RESERVED.
3. PURCHASE PRICE AND TERMS. The purchase price shall be $1,850,000.00,
payable in U.S. dollars by Buyer as follows:
(a) Earnest Money.
$185,000.00 in the form of a check, as earnest money deposit and part payment of
the purchase price, payable to and held by Security Title Guaranty Company
("Title Agent"), in its trust account on behalf of both Seller and Buyer. Title
Agent shall invest the earnest money deposit in an interest-bearing account,
acceptable to Buyer, established at Community Banks of Colorado - Cripple Creek.
All interest earned on the earnest money deposit shall remain the sole and
separate property of the Buyer. The Buyer's taxpayer identification number is
84-1247753.
(b) Cash at Closing.
$1,665,000.00, plus closing costs to be paid by Buyer at closing in funds which
comply with all applicable Colorado laws, which include cash, electronic
transfer funds, certified check, savings and loan tellers check, and cashier's
check (Good Funds).
4. RESERVED.
5. RESERVED.
6. RESERVED.
2
<PAGE>
7. NOT ASSIGNABLE. Except for an assignment by the Buyer to an affiliate of
the Buyer which is hereby approved by Seller, this Contract shall not be
assignable by Buyer without Seller's prior written consent. In the event of any
assignment as hereinbefore contemplated, the Buyer shall not be released from
its covenants and undertakings herein and shall remain responsible to Seller.
Except as so restricted, this Contract shall enure to the benefit of and be
binding upon the heirs, personal representatives, successors and assigns of the
parties.
8. EVIDENCE OF TITLE. Seller shall furnish to Buyer at Seller's expense, a
current commitment for owner's title insurance policy in an amount equal to the
purchase price, on or before December 8, 1999 (Title Deadline). Seller shall
cause copies of instruments (or abstracts of instruments) listed in the schedule
of requirements ("Requirements") and in the schedule of exceptions (Exceptions)
in the title insurance commitment to be furnished to Buyer at Seller's expense.
This requirement shall pertain only to instruments shown of record in the office
of the clerk and recorder of the designated county or counties. The title
insurance commitment, together with any copies or abstracts of instruments
furnished pursuant to this Section 8, constitute the title documents (Title
Documents). Seller will pay the premium at closing and have the title insurance
of First American Title Insurance Company ("Title Company") delivered to Buyer
as soon as practicable after closing.
The parties agree that the deletion of standard exceptions from the title
insurance policy shall be a condition of closing. For such purpose, the Buyer
shall deliver a copy of the Survey, defined in paragraph 9.(c) below, to the
Title Agent and the Seller shall deliver to the Title Company, on or before the
Closing Date, the standard affidavit and indemnity agreement required by the
Title Company for the deletion of standard exceptions. Further, the parties
agree that the issuance of mineral and access endorsement(s) to the title
insurance policy by the Title Company shall be a condition of closing; provided,
however, the Buyer shall pay the premiums for issuance of such endorsements.
9. TITLE.
(A) TITLE REVIEW. Buyer shall have the right to inspect the Title Documents.
Written notice by Buyer of unmerchantability of title or of any other
unsatisfactory title condition shown by the Title Documents shall be signed by
or on behalf of Buyer and given to Seller on or before January 19, 2000, or
within five (5) calendar days after receipt by Buyer of any Title Document(s) or
endorsement(s) adding new Exception(s) to the title commitment together with a
copy of the Title Document adding new Exception(s) to title, whichever is the
last to occur. If Seller does not receive Buyer's notice by the date(s)
specified above, Buyer accepts the condition of title as disclosed by the Title
Documents as satisfactory.
(B) MATTERS NOT SHOWN BY THE PUBLIC RECORDS. Seller shall deliver to Buyer,
on or before the Title Deadline set forth in Section 8, true copies of all
leases, agreements, entitlements. permits, studies, reports and surveys in
Seller's possession pertaining to the Property and shall disclose to Buyer all
easements, liens or other title matters not shown by the public records of which
Seller has actual knowledge. Buyer shall have the right to inspect the Property
to determine if any third party(s) has any right in the Property not shown by
the public records (such as an unrecorded easement. unrecorded lease, or
boundary line discrepancy). Written notice of any unsatisfactory condition(s)
disclosed by Seller or revealed by such inspection shall be signed by or on
behalf of Buyer and given to Seller on Or before January 19, 2000. If Seller
does not receive Buyer's notice by said date, Buyer accepts title subject to
such rights, if any, of third parties of which Buyer has actual knowledge.
3
<PAGE>
(C) The parties acknowledge that Parcel 1 and Parcel 2 of the Property,
as described in
paragraph 1 above, are separated by Outlot A (defined in paragraph 1
(iv)(A) above)
and by the Alley (defined in paragraph 1 (iv)(B) above), as shown on
the recorded
plat for First Addition to Fremont, now Cripple Creek, and the survey
(the "Survey")
of the Property prepared by Alfred C. Kroeger of Teller County Land
Surveying,
dated September 23, 1999. In order to gain a contiguity endorsement
("Contiguity
Endorsement") insuring that Parcel 1 and Parcel 2 are not physically
separated:
(i) fee title to Outlot A will need to be obtained by the buyer through
acquisition, quiet title action or other appropriate action ("Outlot A
Acquisition Condition") and
(ii) the Alley will need to be vacated so that title to the Alley becomes
vested in the owner of Parcel 1 and Parcel 2 ("Alley Vacation")
If the Outlot A Acquisition Condition (the Alley Vacation is not a condition of
this Contract, provided, however, as set forth in the next subparagraph, Seller
agrees to cooperate with the Buyer in the Buyer's efforts to obtain the Alley
Vacation) has not been satisfied by March 15, 2000. then, unless:
(i) Buyer waives the Outlot A Acquisition Condition or
(ii) Buyer extends the time for satisfaction of the Qutlot A Acquisition
Condition, as provided for in the next sentence, by written notice to Seller on
or before March 20, 2000,
this Contract shall terminate and the earnest money deposit together with the
interest earned thereon shall be returned to the Buyer.
If the Outlot A Acquisition Condition has not been satisfied by March 15, 2000
and provided Buyer gives written notice to Seller on or before March 20, 2000 of
Buyer's election to extend the time for satisfaction of such condition, then the
time for satisfaction of the Outlet A Acquisition Condition shall be extended to
May 15, 2000 and $18,500.00 of the earnest money deposit shall become
non-refundable. In the event of such extension, the Closing Date shall be
extended to June 14, 2000.
After the mutual execution of this Contract by Seller and Buyer, the Buyer
shall, with reasonable promptness and at the Buyer's expense, commence good
faith, diligent efforts to cause the Outlot A Acquisition Condition to be
satisfied; provided, however, the determination of the amount of consideration
to be paid for the acquisition of Outlot A or, if applicable, the determination
of the likelihood of success in prevailing upon a quiet title action or other
appropriate action concerning Outlot A shall be reserved to and be made by the
Buyer, in the exercise of the Buyers sole discretion. The Seller agrees to
reasonably, promptly and in good faith cooperate with the Buyer at the Buyer's
expense in the Buyer's efforts:
4
<PAGE>
(i) to satisfy the Outlot A Acquisition Condition; and
(ii) to obtain:
(A) the Alley Vacation; and
(13) the vacation of 2nd Street (defined in paragraph 1 (iv)(C) above),
including, without limitation, acting as the nominal p1aintiff in any quiet
title or other proceeding and/or acting as the nominal applicant in any vacation
application(s) and/or proceeding(s), and, upon request of the Buyer, allowing
the Buyer to be substituted as plaintiff and/or applicant, as the case may be,
in such proceedings and/or application(s).
Costs and Indemnity. Buyer agrees to be responsible for all cost and expense
required for the Outlot A Acquisition as contemplated herein, for the Alley
Vacation and the vacation of 2nd Street.
Buyer agrees to indemnify and save harmless Seller from all claims, losses,
expenses, costs (including, without limitation, attorney fees) which Seller may
incur or suffer as a result of the steps taken by Buyer in the Outlot A
Acquisition, Alley Vacation and/or the vacation of 2nd Street.
(d) Special Taxing Districts. SPECIAL TAXING DISTRICTS MAY BE SUBJECT
TO GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL
TAX LEVIES ON THE TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN
SUCH DISTRICTS MAY BE PLACED AT RISK FOR INCREASED MILL LEVIES AND EXCESSIVE TAX
BURDENS TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE
RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH INDEBTEDNESS
WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYER SHOULD INVESTIGATE THE DEBT
FINANCING REQUIREMENTS OF THE AUTHORIZED GENERAL OBLIGATION INDEBTEDNESS OF SUCH
DISTRICTS. EXISTING MILL LEVIES OF SUCH DISTRICT SERVICING SUCH INDEBTEDNESS,
AND THE POTENTIAL FOR AN INCREASE IN SUCH MILL LEVIES.
In the event the Property is located within a special taxing district and
Buyer desires to terminate this Contract as a result, if written notice is given
to Seller on or before January 14, 2000, this Contract shall then terminate and
the earnest money deposit, together with the interest earned thereon, shall be
returned to the Buyer. If Seller does not receive Buyer's notice by the date
specified above, Buyer accepts the effect of the Property's inclusion in such
special taxing district(s) and waives the right to so terminate.
(C) RIGHT TO CURE. If Seller receives notice of unmerchantability of
title or any other unsatisfactory title condition(s) as provided in subsection
(a) or (b) above, Seller shall use reasonable effort to correct said
unsatisfactory title condition(s) prior to the Closing Date. If Seller fails to
correct said unsatisfactory title condition(s) on or before the date of closing,
this Contract shall then terminate and the earnest money deposit, together with
the interest earned thereon, shall be returned to the Buyer; provided, however,
Buyer may, by written notice received by Seller, on or before the Closing Date,
waive objection to said unsatisfactory title condition(s).
5
<PAGE>
10. INSPECTION. Buyer or any designee, shall have the right to have
inspection(s) of the physical condition, including, without limitation, the
right to cause an environmental site assessment of the Property to be conducted
at Buyer's expense. If written notice of any unsatisfactory physical condition,
signed by or on behalf of Buyer, is not received by Seller on or before March
15, 2000 (Objection Deadline), the physical condition of the Property shall be
deemed to be satisfactory to Buyer. If such notice is received by Seller as set
forth above, and if Buyer and Seller have not agreed, in writing, to a
settlement thereof on or before March 31, 2000 (Resolution Deadline), this
Contract shall terminate on April 5, 2000: unless, on or before April 5, 2000,
Seller receives written notice from Buyer waiving objection to any
unsatisfactory condition. In the event of termination, the earnest money
deposit, together with the interest earned thereon, shall be returned to the
Buyer.
Buyer shall carry out and conduct its inspections at such times and in such
a manner that it will not interfere with or disrupt the operations and peaceful
enjoyment of the property by the Seller's tenant of the Property.
Buyer is responsible for and shall pay for any damage which occurs in the
Property as a result of inspection of the Property under paragraph 9(b) above
and/or this paragraph 10. In addition, Buyer shall indemnify, save and hold
Seller and the Property harmless and defend Seller and the Property from any
liens, loss, liability or expense, including reasonable attorney's fees and
costs, incurred by Seller, or any claims made against Seller and/or the
Property, arising from the Buyer's inspecting the Property under paragraph 9(b)
above and this paragraph 10.
11. DATE OF CLOSING. The date of closing shall be April 17, 2000, unless
extended to June 14, 2000, as provided for in paragraph 9(c) above, (as
applicable the "Closing Date"), or by mutual agreement at an earlier date. The
hour and place of closing sha1l be as designated by mutual agreement of Buyer
and Seller.
12. TRANSFER OF TITLE Subject to tender or payment at closing as required
herein and compliance by Buyer with the other terms and provisions hereof,
Seller shall execute and deliver a good and sufficient special warranty deed to
Buyer, on closing, conveying the Property and those items of property described
in subparagraph (i) and (ii) of paragraph 1 above free and clear of all taxes
except the general taxes for the year of closing, and except the matters
accepted by the buyer as provided for in the remainder of this paragraph. Title
shall be conveyed free and clear of all liens for special improvements installed
as of the date of Buyer's signature hereon, whether assessed or not; except
(i) those matters reflected by the Title Documents accepted by Buyer in
accordance with subsection 9(a);
(ii) inclusion of the Property within any special taxing district; and
(iii) subject to building and zoning regulations.
6
<PAGE>
Provided, however, the matters described in clause (iii), immediately preceding,
shall be subject to the prior review and approval of Buyer, in the exercise of
its sole and unfettered discretion, which approval shall be a condition
precedent to the Buyer's obligations hereunder. If written objection as to any
of the matters described in said clause, signed by or on behalf of Buyer, is
received by Seller on or before March 15, 2000, then this Contract shall
terminate and the earnest money deposit, together with the interest earned
thereon, shall be returned to the Buyer.
Seller shall convey to Buyer by bargain and sale deed or quit-claim
assignment, with an after-acquired title clause, as applicable, those items of
property described in subparagraphs (iii) and (iv) of paragraph 1 above.
13. PAYMENT OF ENCUMBRANCES. Any encumbrance required to be paid shall be
paid at or before closing from the proceeds of this transaction or from any
other source
14. CLOSING COSTS, DOCUMENTS AND SERVICES. Buyer and Seller shall pay, in
Good Funds, their respective closing costs and all other items required to be
paid at closing, except as otherwise provided herein, Buyer and Seller shall
sign and complete all customary or required documents at or before closing.
Fees for real estate closing services shall not exceed $350.00 and shall be paid
at closing one-half by Seller and one-half by Buyer.
15. PRORATIONS. General taxes for the year of closing, based on the taxes
for the calendar year immediately preceding closing, water and sewer charges,
shall be prorated to date of closing. The apportionment shall be final.
16. POSSESSION. Possession of the Property shall be delivered to Buyer on
the Closing Date free of any leases, tenancies or occupancy rights, if Seller,
after closing, fails to deliver possession on the date herein specified, Seller
shall be subject to eviction and shall be additionally liable to Buyer for
payment of $500.00 per day from the date of agreed possession until possession
is delivered.
17. CONDITION OF AND DAMAGE TO PROPERTY. Except as otherwise provided in
this Contract, the Property shall be delivered in the condition existing as of
the date of this Contract, ordinary wear and tear excepted. In the event the
property shall be damaged by fire or other casualty prior to time of closing, in
an amount of not more than ten percent of the total purchase price, Seller shall
be obligated to repair the same before the date of closing. In the event such
damage is not repaired within said time or if the damages exceed such sum, this
Contract may be terminated at the option of Buyer. If terminated by Buyer, the
earnest money deposit, together with all interest earned thereon, shall be
returned to Buyer. Should Buyer elect to carry out this Contract despite such
damage, Buyer shall he entitled to credit for all the insurance proceeds
resulting from such damage to the Property, not exceeding, however, the total
purchase price. Should service(s), if any, fail or be damaged between the date
of this Contract and the Closing Date, then Seller shall be liable for the
repair or replacement of service(s) with a unit of similar size, age and
quality, or an equivalent credit, less any insurance proceeds received by Buyer
covering such repair or replacement.
18. CONDEMNATION. If any portion of the Property is acquired, or any
proceedings commenced to acquire the Property, by authority of any governmental
agency in the exercise of its power of eminent domain or by private purchase in
lieu thereof, the Buyer may elect, at its sole option, either:
(i) to terminate this Contract in which case the earnest money deposit,
together with all interest carried thereon, shall be immediately returned to
Buyer and both Seller and Buyer shall be released from further responsibility
hereunder; or
7
<PAGE>
(ii) to waive its right to terminate this Contract and to consummate the
transaction contemplated hereby, in which case Seller shall assign to Buyer all
of Seller's right to receive the aware or other proceeds, if any, payable as a
result of such exercise of the power of eminent domain.
19. TIME OF ESSENCE/REMEDIES. Time is of the essence hereof. If any note or
check received as earnest money hereunder or any other payment due hereunder is
not paid, honoured or
tendered when due, or if any other obligation hereunder is not performed or
waived as herein provided, there shall be the following remedies:
A. IF BUYER IS 1N DEFAULT:
All payments and things of value received hereunder, except for the interest
earned on the earnest money deposit, shall be forfeited by Buyer and retained on
behalf of Seller and both parties shall thereafter be released from all
obligations hereunder. It is agreed that such payments and things of value are
LIQUIDATED DAMAGES and (except as provided in subsection (c)) are SELLER'S SOLE
AND ONLY REMEDY for Buyer's failure to perform the obligations of this Contract.
Seller expressly waives the remedies of specific performance and additional
damages.
B. IF SELLER IS IN DEFAULT:
Buyer may elect to treat this Contract as cancelled, in which case all payments
and things of value received hereunder shall be returned and Buyer may recover
such damages as may be proper, or Buyer may elect to treat this Contract as
being in full force and effect and Buyer shall have the right to specific
performance or damages, or both.
C. COSTS AND EXPENSES:
Anything to the contrary herein notwithstanding, in the event of any arbitration
or litigation arising out of this Contract, the arbitrator or court shall award
to the prevailing party, an reasonable costs and expenses, including attorney
fees
20. EARNEST MONEY DISPUTE. Buyer and Seller agree that, in the event of any
controversy regarding the earnest money and things of value held by broker or
closing agent, unless mutual written instructions are received by the holder of
the earnest money and things of value, broker or closing agent shall not be
required to take any action but may await any proceeding, or at broker's or
closing agent's option and sale discretion, may interplead all parties and
deposit any money or things of value into a court of competent jurisdiction and
shall recover court costs and reasonable attorney fees.
21. ALTERNATIVE DISPUTE RESOLUTION: MEDIATION. If a dispute arises between
the parties relating to this Contract, the parties agree to submit the dispute
to mediation. The parties will jointly appoint an acceptable mediator and will
share equally in the cost of such mediator. If mediation proves unsuccessful,
the parties may then proceed with such other means of dispute resolution as they
so choose.
22. ADDITIONAL PROVISIONS:
8
<PAGE>
(A) NOTICES
All notices hereunder to the respective parties shall he in writing and
shall be served by depositing the same in the United States mail, first class
postage prepaid, certified mail, return receipt requested, or air courier
service, or by personal delivery or facsimile machine to the following:
Seller: Saskatchewan Investments, Inc.
6113 - Harrowgate Drive
Austin, Texas 78759
Phone: (512) 335-4816 Fax; (512) 335-6844
with a copy to:
David M. Manning, Q.C.
C/o Johnson Ming Manning
Barristers and Solicitors
4th Floor 4945 -50 Street
Red Deer. Alberta T4N 1Y1
Phone: (403) 346-5591 Fax: (403) 346-5599
Buyer:
WMCK Venture Corporation
Attention: Peter Hoetzinger, Vice-Chairman
200 East Bennett Avenue
Cripple Creek, Colorado 80813
Phone: (719)689-0333
Fax: (719) 689-9700
with Copies to;
Bruce A. Kolbezen, Esq.
Sherman & Howard LLC
90 South Cascade Avenue, Suite 1500
Colorado Springs, Colorado 80903
Phone: (719) 448-4030
Fax: (719) 635-4576
Any notice to the Seller or Buyer shall be deemed to be given and effective the
date hand-delivered or transmitted by facsimile machine (fax) or one business
day after
deposit with a commercial air courier service guaranteeing next day delivery or
three (3) days after deposit in the United States mail. A party may change its
place for receipt of any notice by delivering a notice of change of address to
the other parry in the aforesaid manner.
9
<PAGE>
(B) GENERAL PROVISIONS.
1. Subject to the provisions of this Contract, Seller and Buyer each reserve
the right to waive any of the conditions precedent to its respective obligations
as set forth herein which conditions are inserted solely for the benefit of
Seller or Buyer, as the case may be.
2 The performance and interpretation of this Contract shall be
controlled by the laws of the State of Colorado.
3. This Contract may not be amended or modified except by a written
instrument executed by both Seller and Buyer.
4. If any term or provision of this Contract or an application thereof shall
be invalid or unenforceable, the remainder of this Contract and the application
of any remaining term or provision shall not be affected thereby.
5. Any provision of this Contract, which by its terms requires performance
or observance, subsequent to the time of closing, shall be deemed to survive
closing and continue to be binding upon Seller and Buyer.
6. Except as otherwise provided in this Contract, all representations,
covenants, and warranties contained in this Contract shall survive closing and
shall not be merged thereby.
7. This Contract Constitutes the entire agreement between the parties and
supersedes all prior and contemporaneous agreements, representations, and
understandings of the parties.
23. TERMINATION. In the event this Contract is terminated, all payments and
things of value received hereunder shall be returned and the parties shall be
relieved of all obligations hereunder, subject to Section 20.
24. NOTICE OF ACCEPTANCE: COUNTERPARTS. This proposal shall expire unless
accepted in writing, by Buyer and Seller, as evidenced by their signatures
below, and the offering party receives notice of such acceptance on or before
December 7, 1999 (Acceptance Deadline). If accepted, this document shall become
a contract between Seller and Buyer. A copy of this document may be executed by
each party, separately, and when each party has executed a copy thereof, such
copies taken together shall be deemed to be a full and complete contract between
the parties. Delivery by facsimile of a party's counterpart of this Contract
shall be effective as delivery of an original contract.
BUYER.
WMCK VENTURE CORPORATION,
a Delaware corporation
By: /s/ Erwin Haitzmann
---------------------
Erwin Haitzmann, Chief Executive Officer
Date of Buyer's signature December 3, 1999
SELLER
SAKATCHEWAN INVESTMENTS, INC.
A Texas corporation
By: /s/ V. G. Walls
------------------
Name: V. G. Walls
Its: President
Date of Seller's signature December 6, 1999
10
<PAGE>
EXHIBIT 10.91
PREPAYMENT AND RELEASE
This Prepayment and Release Agreement ("Agreement') is entered into this
19th day of January, 2000 by and between Switzerland County Development Corp., a
Nevada corporation ("Buyer") and Century Casinos Management, Inc., a Delaware
corporation ("Seller"). Buyer and Seller are collectively referred to as
"Parties".
WHEREAS, on December 21, 1995 the Parties entered into a stock purchase
agreement ("Purchase Agreement") whereby Buyer agreed to purchase and Seller,
together with Cimmaron Investment Properties Corp., a Colorado Corporation
("Cimarron"), agreed to sell all issued and outstanding shares of capital stock
of Pinnacle Gaming Development Corp., a Colorado corporation
("Pinnacle Stock"); and
WHEREAS, the Purchase Agreement provides Buyer pay Cimarron and Seller Four
Million Three Hundred Thirty-One Thousand Dollars ($4,331,000) for the Pinnacle
Stock as follows:
i. One Hundred Thousand Dollars ($100,000) at the closing;
ii. Four Hundred Thirty One Thousand Dollars ($431,000) to Seller and One
Hundred Thousand Dollars ($100,000) to Cimarron within seven (7) business days
after receipt by Buyer of a certificate of suitability from the Indiana Gaming
Commission;
iii. One Million Three Hundred Thousand Dollars ($1,300,000) within seven
(7)
business days after the groundbreaking by the Buyer for a riverboat casino
development; and
iv. Forty Thousand Dollars ($40,000) on the first day of each of the sixty
(60) months following the month in which the riverboat casino development opens
for business; and
WHEREAS, the Purchase Agreement provides that all payments pursuant to
above clauses i, iii and iv shall be paid eighty percent (80%) to Seller and
twenty percent (20%) to Cimarron.
WHEREAS, Buyer has paid above items i, ii and iii as provided in the Purchase
Agreement; and
WHEREAS, only above item iv remains to be paid by Buyer to Seller: and
WHEREAS, Buyer has proposed to prepay, and Seller has agreed to accept
prepayment, of Seller's portion of the payments specified in clause iv above,
upon the terms contained herein; and
1
<PAGE>
WHEREAS, with respect to Cimarron, Buyer has made separate arrangements to
prepay Cimarron's share of above item iv in full; and
WHEREAS, One Million Three Hundred Eighty Thousand Dollars ($1,380,000) is
the total sum to be paid to Seller in prepayment of above item iv ("Prepayment
Price"); and
WHEREAS, the Parties desire to memorialize the prepayment of above item iv
and provide for other matters relating thereto.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Buyer and Seller, the Parties agree as follows:
1. Other than with respect to matters relating to the prepayment to Cimarron
to which Seller is not a party and accordingly, unable to represent and warrant,
the above recitals are true and incorporated herein as if fully set forth.
2. The Prepayment Price shall be paid to Seller by Buyer on January 24,
2000, pursuant to wire instructions to be delivered by Seller to Buyer.
3. Upon receipt of the Prepayment Price, Seller acknowledges that all
obligations of Buyer to Seller under the Purchase Agreement have been fully
discharged and Seller and Buyer agree to forever and unconditionally release,
acquit and discharge the other, its subsidiaries, affiliates, successors,
assigns, officers, directors, partners, shareholders, agents, and employees from
any and all claims, demands, actions, causes of action and damages which have
arisen or which might hereafter arise and regardless of type, cause or nature
arising from or in any manner related to either the Purchase Agreement, this
Agreement. Furthermore, Seller acknowledges that Buyer has made separate
arrangements to prepay Cimarron its share of item iv above, and waives any claim
that it may be entitled to the benefit of such arrangement.
4. This Agreement shall inure to the benefit of and be binding upon the
Parties and their respective successors and assigns.
5. This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be an original, but all such
counterparts shall constitute one and the same Agreement.
2
<PAGE>
SWITZERLAND COUNTY DEVELOPMENT CORP.,
a Nevada corporation
By: _/s/ Loren S. Ostrow____________
-----------------------
Loren S. Ostrow,
Senior Vice President & General Counsel
CENTURY CASINOS MANAGEMENT, INC.,
a Delaware corporation
By: _/s/ Peter Hoetzinger____________
----------------------
Peter Hoetzinger, Vice Chairman
3
<PAGE>
EXHIBIT 10.92
AMENDMENT NO. 1 TO PARKING LEASE - OPTION TO PURCHASE
THIS AMENDMENT NO. 1 TO PARKING LEASE - OPTION TO PURCHASE ("First
Amendment") is entered into and is effective as of this 17th day of February,
2000; by and between CITY OF CRIPPLE CREEK, a municipal corporation ("Lessor")
and WMCK VENTURE CORPORATION, a Delaware corporation ("Lessee").
RECITALS:
--------
1. Lessor and Lessee entered into a Parking Lease - Option to Purchase as of
June 1, 1998 ("Lease"), covering certain property (the "Property") described as
follows:
Lots 11 through 20, Block 28 Fremont Addition to Cripple Creek, Colorado.
2. Lessor and Lessee agree to amend the Lease as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Effective Date. The effective date ("Effective Date") of this First
---------------
Amendment shall be as of the date first written above.
2. The Lease is amended as follows:
a. The name of the Lessee is corrected to read, WMCK Venture Corporation, a
Delaware corporation.
b. The Term of the Lease is extended to and shall end on May 31, 2010.
Accordingly, the date May 31, 2010 is substituted for May 31, 2003 in Section 1
of the Lease.
c. The following subparagraph is added at the end of Section 2 of the Lease:
1
<PAGE>
Consumer Price Index Increases. Subject to the limitations set forth herein, if
- -------------------------------
at any time after May 31, 2003 the Events Center Lease, as defined below, has
expired without renewal or extension (such expiration date, if any, shall
hereinafter be called the "Trigger Date"), the Rent provided for in the first
subparagraph of this Section 2 shall be increased as provided below by the
percentage of increase, if any, of the United States Bureau of Labor Statistics
U.S. Consumer Price Index for All Items - Urban Wage Earners and Clerical
Workers ("CPI-W") (base year 1982-84 = 100) (the "Index"). If the Index changes
so that the base year differs from that used in this Section, the Index shall be
converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics, to the 1982-84 base. If
the Index is discontinued or revised during the Term, such other government
index or computation with which it is replaced shall be used in order to obtain
substantially the same result as would be obtained if the Index had not been
discontinued or revised.
The Index published nearest to the Trigger Date of this Agreement shall be the
"Beginning Index". The Index published most recently, but at least four (4)
months, before the applicable Adjustment Date shall be the "Adjustment Index".
The Adjustment Date shall be the first day of June following the Trigger Date,
and every June 1st thereafter.
The Rent shall be adjusted as follows:
On each Adjustment Date, the Rent shall be adjusted by multiplying the initial
Rent under this Agreement by a fraction, the numerator of which is the
applicable Adjustment Index and the denominator of which is the Beginning Index;
provided, however, that in no case shall the increase in Rent over the
previously applicable Rent exceed four percent (4.0%); and provided further, in
no case shall such adjustment result in a decrease in the previously applicable
Rent. The amount so determined shall be the adjusted Rent payable under the
first subparagraph of this Section 2 for the lease year beginning on the
applicable Adjustment Date until the next Adjustment Date.
"Event Center Lease" means that certain lease between Lessor, as lessee, and
Lessee, as lessor, of even date herewith, pursuant to which Lessor has leased
from Lessee those certain premises, commonly known as Womacks Center-Cripple
Creek, which premises are located in a portion of the improvements to be
constructed upon Lots 6 through 8, inclusive, First Addition to Fremont, now
Cripple Creek, Colorado
3. Effect of Amendment. Except as expressly modified in this First
---------- ---------
Amendment, the Lease shall remain unmodified and in full force and effect.
--
4. Counterparts. This First Amendment may be executed in counterparts which
------------
together shall constitute a single original First Amendment.
2
<PAGE>
5. Facsimile Delivery. Delivery of facsimile copies of the executed
-------------------
counterparts of this First Amendment shall be effective as delivery of the
original executed First Amendment.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of the
date first set forth above.
LESSEE:
CITY OF CRIPPLE CREEK, a Colorado municipal corporation
By: /s/ Thomas L. Litherland
---------------------------
Thomas L. Litherland, Mayor
ATTEST:
By: /s/Kathleen Conley
-------------------
Kathleen Conley, City Clerk
STATE OF COLORADO )
) ss.
COUNTY OF TELLER )
The foregoing instrument was acknowledged before me this 17th day of
February 2000, by Thomas L. Litherland, as Mayor, and Kathleen Conley, as City
Clerk, of the City of Cripple Creek, a Colorado municipal corporation.
WITNESS My hand and official seal.
/s/Melissa A. Beaty
---------------------
Notary Public
3
<PAGE>
(SEAL)
LESSOR:
WMCK VENTURE CORPORATION, a Delaware corporation
By: /s/Peter Hoetzinger
--------------------
Name: Peter Hoetzinger
-----------------
Its: Director
--------
STATE OF COLORADO )
) ss.
COUNTY OF TELLER )
The foregoing instrument was acknowledged before me this 8th day of
February 2000, by Peter Hoetzinger, as Director of WMCK Venture Corporation, a
Delaware corporation.
WITNESS My hand and official seal.
/s/ Lori Gray
---------------
Notary Public
(SEAL)
4
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
State or Country
Name of Incorporation
- ---- -----------------
Century Casinos Management, Inc. Delaware
Century Casinos - Nevada, Inc. Nevada
Century Management und Beteiligungs GmbH Austria
Century Casinos Cripple Creek, Inc. Colorado
Century Casinos Missouri, Inc. Missouri
WMCK Acquisition Corp. Delaware
WMCK Venture Corp. Delaware
Century Casinos Africa (Pty) Limited South Africa
1
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-13801 on Form S-8 of Century Casinos, Inc. of our report dated March 6,
2000, appearing in this Annual Report on Form 10-KSB of Century Casinos, Inc.
for the year ended December 31, 1999.
/s/ Deloitte & Touche LLP
- -----------------------------
Deloitte & Touche LLP
Denver, Colorado
March 6, 2000
1
<PAGE>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
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