SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 1, 1996
CENTURY CASINOS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-22290 84-1271317
(Commission (I.R.S. Employer
File Number) Identification No.)
50 South Steele Street, Suite 755
Denver, Colorado 80209
(Address of principal executive offices, including zip code)
(303) 388-5848
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
Acquisition of Womack's Saloon & Gaming Parlor. On July 1, 1996, the
Registrant, through a wholly-owned subsidiary, purchased substantially all of
the assets, and assumed substantially all of the liabilities, of Gold Creek
Associates, L.P. ("Gold Creek"), the operator of Womack's Saloon & Gaming Parlor
("Womack's") in Cripple Creek, Colorado. Prior to the acquisition, the
Registrant and its affiliates were not affiliated with Gold Creek or its
affiliates.
The total purchase price of the acquisition was approximately $13.5
million, consisting of a base cash payment of $5 million plus $320,000 for the
amount of estimated working capital as of the closing date, a promissory note of
$5.2 million issued to Gold Creek and the assumption of existing debt of Gold
Creek of approximately $3 million. The working capital portion of the purchase
price is subject to final determination 60 days after the closing date.
Additionally, the agreement provides that on July 1, 1998, the Registrant will
issue 1,060,000 shares of its common stock, valued at approximately $2 million
based on recent trading prices, to two principals of Gold Creek who entered into
consulting contracts with the Registrant at closing. The number of shares to be
issued is subject to upward adjustment, determined by a formula, to the extent
that the trading price of the Registrant's common stock is less than $1.58 at
the time of issuance, and subject to downward adjustment to the extent that the
trading price exceeds $4.00 at the time of issuance. The purchase price was
negotiated through arms' length bargaining between the parties. In determining
the amount of consideration that was ultimately agreed to, the Registrant took
into account many factors, including a review of the historical operating
results of Womack's, the growth potential of Womack's and the Cripple Creek
market, and the long-term prospects of combining Womack's with the Registrant's
Legends Casino (these two properties are contiguous), including the operating
efficiencies that could be achieved.
The promissory note issued to Gold Creek bears interest at 9% and provides
for monthly payments of only interest for 18 months; thereafter, monthly
principal payments of $43,121, plus interest on the unpaid principal, are
required, with a final balloon principal payment of $2,328,000 due in July 2003.
The note is secured by substantially all of the tangible assets purchased,
subject to existing encumbrances, and the Registrant is required to meet certain
financial covenants.
In addition to the financing provided by Gold Creek, additional funds
required to complete the acquisition were raised through private sales of common
stock of the Registrant, with net proceeds of $4,552,000 from 4,072,233 shares
sold. In connection with sales of common stock by a placement agent, the
Registrant also issued warrants to the placement agent to purchase 150,000
shares of the Registrant's common stock at $2.36 per share. The warrants have a
term of five years. In addition, the Registrant issued a $500,000 convertible
debenture to a private investor. The debenture bears interest at 10.5%, payable
quarterly. The holder has the option to convert the outstanding principal into
the Registrant's common stock at $1.84 per share, subject to a minimum per
conversion transaction of $50,000. The Registrant has the option to repay the
note, in whole or in part, after the first anniversary date at 132% of the
outstanding principal. The prepayment amount declines to 127% after the second
anniversary date, 122% after the third anniversary date and 116% after the
fourth anniversary date. The entire unpaid principal is due on May 30, 2001.
In a transaction coincident with the above described Gold Creek
transaction, the Registrant purchased from an unaffiliated third party a 9%
first mortgage note on the Womack's casino property for $1,337,500. The
principal amount of the note, which is included in debt assumed by the
Registrant in the acquisition, was $1,248,000 at the date of purchase by the
Registrant. The premium of approximately $89,500 paid by the Registrant to
purchase the note is being amortized to expense ratably through 1999, the
remaining term of the note.
2
The Registrant will account for the Gold Creek acquisition using the
purchase method of accounting, whereby the total purchase price, including
direct out-of-pocket costs of the acquisition, will be allocated to the assets
purchased and liabilities assumed based on their estimated fair values. The
excess of the purchase price over the identifiable net assets, which excess the
Registrant preliminarily estimates will approximate $9 million, will be
amortized to expense ratably over 15 years.
Description of Assets and Properties. Womack's consists of three
contiguous parcels of real property and improvements: Womack's Saloon and Gaming
Parlor, Diamond Lil's and the Golden Horseshoe. Womack's has a total of
approximately 310 slot and video devices and four blackjack tables. It has
23,900 square feet of floor space, an 80-seat restaurant, three bars, nine hotel
rooms, offices, and public areas. Womack's has 100 feet of frontage on Bennett
Avenue, the main gaming thoroughfare in Cripple Creek, Colorado. Womack's began
gaming operations in July 1992, and expanded in May 1994 through acquisition of
the neighboring Diamond Lil's casino. In July 1995, Womack's acquired its other
neighboring casino and renamed it the "Golden Horseshoe."
Womack's Saloon and Gaming Parlor is located at 210 East Bennett
Avenue, Cripple Creek and the real properties and improvements are owned in fee
simple subject to several encumbrances, including a security interest granted to
Gold Creek.
The Golden Horseshoe consists of 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 Registrant's
wholly-owned subsidiary which purchased Womack's, 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 30, 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 Registrant.
Diamond Lil's comprises the real property and improvements at 208 East
Bennett Avenue. This property was leased by Gold Creek from Louie D. Carleo
d/b/a L.D.C. Properties ("Carleo"). Subsequently, Carleo executed a deed of
trust on the fee interest to secure a promissory note issued to Community.
Carleo then conveyed the fee interest in the property, subject to the lease and
the deed of trust, to T.J.L.Enterprises, Inc. ("TJL"). Gold Creek conveyed its
interest in the lease to WMCK, and TJL and WMCK have executed a new lease on the
property. WMCK and Community have executed a subordination, non-disturbance and
attornment agreement pursuant to which WMCK has agreed that its interest in the
lease is subordinate to Community's lien arising out of the deed of trust in the
fee estate, and Community has agreed not to disturb WMCK's possessory rights in
and to the property should Community foreclose on its lien, so long as WMCK is
not in default under the lease, and so long as WMCK attorns to Community or any
purchaser at foreclosure. The terms of the final lease between TJL and WMCK
provide for monthly rental payments of approximately $14,600 and the lease
expires in 2004. In addition, the lease provides WMCK with an option to purchase
the property after one year for approximately $2,000,000. None of the above
entities other than WMCK is affiliated with the Registrant.
3
Marketing Plan. Due to the size and customer traffic of Womack's,
management believes that, at present, the Womack's name has a higher level of
brand recognition in Cripple Creek than the Legends Casino. In addition, through
use of a modern slot machine player tracking system along with an expanded
player club, Womack's has a larger and more established client data base. For
these reasons, the Registrant plans that the combined properties will initially
highlight the Womack's name. After future upgrading of the combined properties,
the gaming operations may be relaunched under the Legends Casino trade name.
Management anticipates that the overall marketing plan will initially
focus on extending the slot machine player tracking system of Womack's to
Legends Casino's slot machines and the new slot machines that are contemplated
to be installed. The player tracking system is a computerized program that
tracks each player's use of gaming machines, including time spent playing,
machines played and dollar amounts spent while playing. Management believes the
combination of the Womack's and Legends Casino data bases should contain
approximately 40,000 customer profiles. All Legends Casino customers added to
the data base will be offered the same benefits as existing player club members
of Womack's.
Management has formulated marketing concepts to target three areas --
regular player development (increased play from regular players), inactive
player development (attracting former and infrequent players back to play) and
new player development (attracting new players). Marketing activities will
generally consist of direct mailings to regular players and one-on-one contact
with inactive players through telemarketing and direct mailing. The Registrant
will seek to attract new players through conventional retail marketing. Over the
medium and longer term, the Registrant intends to expand marketing to cover a
larger geographic area and include the promotion of banquet facilities and
additional hotel rooms, which are planned as part of the development of the
Cripple Creek operations. The Registrant also plans to institute an expanded bus
transportation program in conjunction with group packages to be marketed
directly and through travel agencies.
Development Plan. Management has planned certain consolidation, expansion
and capital improvement programs in connection with combining the Registrant's
Legends Casino, with Womack's, which cover three phases. Phase I is expected to
encompass: (i) creating openings in the common walls in order to open up and
integrate the gaming areas of Legends Casino and Womack's; (ii) expanding the
existing player tracking system of Womack's to include all of the Legends Casino
gaming devices; (iii) adding and promoting gaming activities on second floor
areas; (iv) constructing easy and open access to second floor gaming areas; and
(v) making general interior enhancements. Phases II and III will not be
implemented until market demand demonstrates the need for further expansion and
acceptable financing can be arranged. While these phases have been reviewed by
management and considerable effort has been spent formulating the proposed
strategy, the plans may be changed, altered significantly or terminated by
management in its discretion as conditions warrant. Phase II is contemplated to
involve the construction of a hotel and casino to be connected to the combined
casino operations and/or the acquisition of another gaming operation in Cripple
Creek. Phase III is contemplated to involve the further expansion of a hotel,
expansion of the combined casinos and construction of a multilevel parking
garage. Phase I is expected to be substantially completed during the twelve
months ending June 30, 1997.
4
Management believes that an integral component of attracting gaming
patrons in Cripple Creek is adequate, nearby parking spaces. Management believes
that it has secured or will be able to secure adequate parking for the
contemplated combined operations, including planned growth. Presently the
Registrant has rights to the use of 22 nearby property lots, containing
approximately 242 parking spaces. Approximately 88 of the spaces are held
pursuant to two month-to-month leases. Another 44 spaces are held pursuant to a
month-to-month sublease. The remaining 110 spaces are presently subject to a
lease/option to purchase the property covering these 110 spaces, and the
Registrant has full use of the lots. Management believes that the Registrant
could obtain satisfactory parking spaces if existing arrangements were
terminated or became inadequate.
Item 7. Financial Statements and Exhibits
The following financial statements are filed herewith: (i) Gold Creek
Associates, L.P. (a Limited Partnership) Financial Statements as of and for the
Two Years in the Period Ended December 31, 1995 and Independent Auditors'
Report; (ii) Gold Creek Associates, L.P. (a Limited Partnership) Unaudited
Balance Sheet as of March 31, 1996, Unaudited Income Statements for the Three
Months Ended March 31, 1996 and 1995, and Unaudited Condensed Statements of Cash
Flows for the Three Months Ended March 31, 1996 and 1995; (iii) Century Casinos,
Inc. Unaudited Pro Forma Combined Balance Sheet as of March 31, 1996, Unaudited
Pro Forma Combined Income Statement for the three months ended March 31, 1996
and Unaudited Pro Forma Combined Income Statement for the year ended December
31, 1995.
The following exhibits are incorporated herein:
Name of Exhibit Exhibit No.
- --------------- -----------
Asset Purchase Agreement dated as of September 24, 1995 by and
Among Gold Creek Associates, L.P., WMCK Acquisition Corp. and
Century Casinos, Inc., along with First American thereto, filed
with the Registrant's Form 10-KSB for the Year Ended December 31,
1995, and incorporated herein by reference 10.51
The following exhibits are filed herewith:
Name of Exhibit Exhibit No.
- --------------- -----------
Second Amendment to Asset Purchase Agreement dated as of
April 10, 1996, among Gold Creek Associates, L.P., WMCK
Acquisition Corp. and Century Casinos, Inc. 10.59
5
Promissory Note dated March 19, 1992, made by Chrysore, Inc.
in the original principal 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. 10.60
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. 10.61
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 10.62
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. 10.63
Consulting Agreement dated as of July 1, 1996, between WMCK
Acquisition Corp. and James A. Gulbrandsen 10.64
Consulting Agreement dated as of July 1, 1996, between WMCK
Acquisition Corp. and Gary Y. Findlay 10.65
Stock Transfer and Registration Rights Agreement dated as of
July 1, 1996, between Century Casinos, Inc. and James A.
Gulbrandsen and Gary Y.Findlay 10.66
6
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTURY CASINOS, INC.
July 15, 1996 By /s/ Brad Dobski
Brad Dobski, Chief Accounting Officer
7
Item 7. Financial Statements and Exhibits
EXHIBIT 10.59
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT DATED AS
OF APRIL 10, 1996, AMONG GOLD CREEK ASSOCIATES, L.P., WMCK
ACQUISITION CORP. AND CENTURY CASINOS, INC.
8
SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
Reference is made to the Asset Purchase Agreement dated as of September 27,
1995 by and among Gold Creek Associates, L.P., WMCK Acquisition Corp. and
Century Casinos, Inc., as amended by a First Amendment dated November 14, 1995
(as so amended, the "Agreement"). Capitalized terms not otherwise defined herein
shall have the meanings given to them in the Agreement.
Buyer, Century and Seller hereby agree as follows:
1. Purchase Price. A new paragraph (d) of Section 2.3 is added to read as
follows:
"(d) The purchase price for the Assets shall be increased by an amount
equal to the aggregate principal payments made by Seller in respect of any Debt
after May 1, 1996. The amount of such increase shall be added to the Note and
shall be paid ratably with other principal payments due under the Note. The
Extension Payment (hereinafter defined) will be credited to the Base Amount due
in cash at Closing."
2. Amendment to Closing Date; Outside Closing Date. The reference in
Section 3.1 to "March 1, 1996" is hereby changed to "May 1, 1996," and the
reference in the definition of "Outside Closing Date" to "May 1, 1996" is hereby
changed to "July 1, 1996."
3. Definition of Deposit. The definition of Deposit is hereby changed to
"amounts paid by Century and/or Buyer pursuant to Section 3.1 of the Agreement."
4. Deposit Payments; Release of Deposit. Section 3.1 of the Agreement is
hereby amended by deleting the final sentence of that section in its entirety
and adding the following:
"By notice to Seller on or before April 29, 1996, Century may postpone the
Closing to June 1, 1996 (or such earlier date as Century may specify), provided
9
such notice shall be accompanied by payment of $50,000 to the Escrow Agent,
which sum shall become the Deposit. If Century elects to postpone the Closing by
notice on or before April 29, 1996, then Century may postpone the Closing again,
to a date not later than July 1, 1996, by notice to Seller on or before May 25,
1996 accompanied by an additional $50,000 to the Escrow Agent (for a total
Deposit of $100,000). If on July 1, 1996 all of the conditions to Seller's
obligation to close have been satisfied or waived by Seller, and if Buyer has by
that date submitted to the Colorado Limited Gaming Control Commission (the
"Commission") all of the applications and information that could reasonably be
expected to be necessary for the Commission to be able to approve the
transactions contemplated by this Agreement, and if the only reason that the
parties are unable to consummate the transactions contemplated by this Agreement
is that the Commission has not granted such approval, then the Closing shall be
postponed until the date that is five days after receipt of Commission approval.
If such approval is not obtained before September 1, 1996, however, then the
provisions of Section 9.1(h) of this Agreement may be exercised."
5. Disbursements of Funds. Upon receipt of the approval of Seller's limited
partners of this Second Amendment, Seller will instruct the Escrow Agent,
pursuant to written instruction (the "Instruction") executed at the time of the
execution of this Second Amendment, to deliver $400,000 (plus interest and
income) to Seller in consideration of Seller's execution of this Second
Amendment (the "Extension Payment"). If this Second Amendment does not become
effective pursuant to Section 8 hereof, then Seller will immediately destroy the
Instruction. Seller will be permitted to retain the Extension Payment unless (a)
Century or Buyer terminate the Agreement pursuant to paragraphs (b) or (c) of
Section 9.1, or (b) Century or Buyer terminate the Agreement, at a time when
they are ready, willing and able to close the transactions contemplated by the
Agreement, pursuant to paragraphs (e) or (f) of Section 9.1 of the Agreement, or
pursuant to paragraph 9.1(g) of the Agreement as a result of the failure of a
condition in Section 7.2 of the Agreement, other than the conditions specified
in paragraphs (a), (c) or (j) of Section 7.2. . Buyer and Century agree that
Seller shall have no obligation to close, and may retain the Extension Payment,
if consummation of the transactions contemplated by the Agreement would cause
Buyer to be in default of any of the covenants in the Note and Security
Documents. Seller shall return the Extension Payment to Century within seven
days after Century is entitled to its return. Seller will not distribute the
Extension Payment to its partners until the Closing or until the Agreement is
terminated under circumstances where Century is not entitled to the Extension
Payment.
6. Waiver of Default. Buyer and Century hereby forever waive for purposes
of Section 7.2, Section 9 and Section 10.1 of the Agreement, any breaches of the
representations and warranties of Seller which are known to Buyer or Century as
of the date of this Second Amendment, which Century and Buyer represent and
warrant are limited to the following (with the understanding that (a) Buyer and
Century do not waive any breaches resulting from actions or omissions after the
date hereof, and (b) Seller shall not be deemed to have admitted that any of the
listed circumstances constitute a breach of any representation or warranty):
Any breach related to the inaccuracy of the Financial Statements.
10
7. Closing Adjustments.
(a) For purposes of determining the amount of Seller's Current Liabilities
within the meaning of Section 2.3 of the Agreement, only 17.5% of the dollar
equivalent of outstanding unredeemed points under Seller's player tracking Gold
Club system as of the Determination Time shall be treated as Current
Liabilities.
(b) The amount of any gaming and liquor license application fees paid by
Seller after March 31, 1996 shall be treated as a "Current Asset" within the
meaning of Section 2.3 of the Agreement, even though Buyer and/or Century will
be required to obtain new licenses after the Closing.
8. Effectiveness. This Second Amendment shall be effective only if and when
approved by Seller's limited partners, and shall have no further force or effect
if not approved by Seller's limited partners by April 24, 1996. Seller shall
give Century an opportunity to review and approve Seller's solicitation
materials.
9. Expenses. Within five (5) business days after Century's receipt of
invoices, Century shall reimburse Seller for any reasonable legal fees incurred
by Seller or its general partner in connection with the negotiation and
execution of this Second Amendment and the solicitation of the approval of
Seller's limited partners.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
to the Agreement as of this 10th day of April, 1996.
GOLD CREEK ASSOCIATES, L.P.
By: Chrysore, Inc., General Partner
By: /s/ Gary Findlay
Name: Gary Findlay
Title: Vice President
WMCK ACQUISITION CORP.
By: /s/ Norbert Teufelberger
Name: Norbert Teufelberger
Title: Director
CENTURY CASINOS, INC.
By: /s/ Norbert Teufelberger
Name: Norbert Teufelberger
Title: Secretary
11
EXHIBIT 10.60
PROMISSORY NOTE DATED MARCH 19, 1992, MADE BY CHRYSORE,
INC. IN THE ORIGINAL PRINCIPAL 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.
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447642 05/17/1996 01:05PM Page 1 of 1
Constance R. Joiner, Clerk & Recorder, Teller County
ASSIGNMENT
FOR AND IN CONSIDERATION of the sum of $1.00 and other good and valuable
consideration, the undersigned do hereby convey, transfer and assign all of the
undersigned's right, title and interest to the assets described below to T J L
ENTERPRISES, INC., a Colorado corporation. The assets being transferred are
described as follows:
1. A Promissory Note dated March 19, 1992 in the original principal sum
of $1,850,000 payable to the order of R & L Historic Enterprises, a
Colorado General Partnership, and given by Chrysore, Inc., a New
Jersey corporation.
2. A Deed of Trust given to secure said Promissory Note of even date
recorded March 27, 1992 in Book 0597 at Page 0266 of the records of
the Recorder of Teller County, Colorado, constituting a first lien on
real property legally described as:
Lots 16 and 17, Block 21, Fremont, now the City of Cripple Creek
Commonly known as 210-212 E. Bennet Ave., Cripple Creek, CO 80813.
DATED this 14th day of September, 1992.
/s/ Joseph A. Fortino
Joseph A. Fortino
/s/ Joe Giannetto
Joe Giannetto
/s/ Louis D. Carleo
Louis D. Carleo
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447643 05/17/1996 01:05PM Page 1 of 1
Constance R. Joiner, Clerk & Recorder, Teller County
ASSIGNMENT OF NOTE AND DEED OF TRUST
FOR AND IN CONSIDERATION of the sum One Million Three Hundred Thirty-Seven
Thousand Five Hundred Dollars ($1,337,500.00) to be paid in cash or certified
funds upon the execution of this Assignment, the undersigned does hereby convey,
transfer, and assign to Century Casinos, Inc., whose mailing address is 50 South
Steele Street, Suite 755, Denver, Colorado 80209, the following:
a. Promissory Note dated March 19, 1992, in the original principal sum of
One Million Eight Hundred Fifty Thousand Dollars ($1,850,000.00)
payable to the order of R & L Historic Enterprises, a General
Partnership, having an approximately balance as of May 10, 1996 in the
amount of One Million Two Hundred Forty-Eight Thousand Dollars
($1,248,000.00), and being secured by a Deed of Trust dated March 19,
1992.
b. A Deed of Trust dated March 19, 1992 securing the Promissory Note
referred to in Paragraph 1 hereof, recorded March 27, 1992 in Book 597
at Page 266 under Reception No. 394130 of the records of the Recorder
of Teller County, Colorado, constituting a lien against real property
and improvements commonly known as 210-212 East Bennett Avenue,
Cripple Creek, Colorado and legally described as follows:
Lots 16 and 17, in Block 21, in Fremont, now City of Cripple Creek,
Teller County, Colorado.
c. This Assignment is without recourse to the assignors hereof.
d. The undersigned represents and warrants to the assignee hereof, that
the original Promissory Note and Deed of Trust have been assigned to
the undersigned.
e. The assignee herein acknowledges having received a copy of the
original Promissory Note and Addendum thereto along with the recorded
Deed of Trust and the Addendum thereto.
Dated this 16th day of May, 1996.
TJL ENTERPRISES, INC.
By:/s/ Louis D. Carleo
Louis D. Carleo
Secretary/Treasurer
14
STATE OF COLORADO )
)ss
COUNTY OF PUEBLO )
Subscribed and sworn to me this 16th day of May, 1996 by Louis D. Carleo as
Secretary/Treasurer of TJL Enterprises, Inc.
/s/ David J. Banner
Notary Public
My Commission Expires: 10/11/97
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447641 05/17/1996 01:05PM Page 1 of 3
Constance R. Joiner, Clerk & Recorder, Teller County
The printed portions of this form approved by the
Colorado Real Estate Commission (NTD 82-U-83)
IF THIS FORM IS USED IN A CONSUMER CREDIT TRANSACTION, CONSULT LEGAL COUNSEL.
THIS IS A LEGAL INSTRUMENT. IF NOT UNDERSTOOD, LEGAL, TAX OR OTHER COUNSEL
SHOULD BE CONSULTED BEFORE SIGNING.
PROMISSORY NOTE
(Right to Cure)
U.S. $1,850,000.00 Pueblo, Colorado
March 19, 1992
1. FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay
R & L HISTORIC ENTERPRISES, A GENERAL PARTNERSHIP
or order, (Note Holder) the principal sum of ONE MILLION EIGHT HUNDRED FIFTY
THOUSAND AND NO 100's ($1,850,000.00)
U.S. Dollars, with interest on the unpaid principal balance from SEE ADDENDUM,
until paid, at the rate of 9% percent per annum. Principal and interest shall be
payable at Pueblo, Colorado, or such other place as the Note Holder may
designate, in SEE ADDENDUM payments of SEE ADDENDUM, due SEE ADDENDUM, being SEE
ADDENDUM. Such payments shall continue until the entire indebtedness evidenced
by this Note is fully paid; provided, however, if not sooner paid, the entire
principal amount outstanding and accrued interest thereon, shall be due and
payable on July 15, 1999.
2. Borrower shall pay to the Note Holder a late charge of 15.0% of any payment
not received by the Note Holder within 15 days after the payment is due.
3. Payments received for application to this Note shall be applied first to the
payment of late charges, if any, second to the payment of accrued interest
specified above, and the balance applied in reduction of the principal amount
hereof.
4. If any payment required by this Note is not paid when due, the entire
principal amount outstanding and accrued interest thereon shall become due and
payable at the option of the Note Holder (Acceleration) twenty days after notice
of Acceleration has been given. This time period shall run concurrently with the
right to cure, if any, allowed by the Uniform Consumer Credit Code. Such notice
of Acceleration shall specify the amount of the nonpayment plus any unpaid late
charges and other costs, expenses and fees due under this Note. Until the
expiration of said twenty-day period, the Borrower may cure all defaults
consisting of a failure to make required payments by tendering the amounts of
all unpaid sums due at the time of tender, without Acceleration, as specified by
the Note Holder in such notice. Cure restores the Borrower to his rights under
this Note as though defaults had not occurred. Any defaults under this Note
occurring within twelve months after the Note Holder has once given a notice of
Acceleration, entitles Borrower to no right to cure, except as otherwise
provided by law. The Note Holder shall be entitled to collect all reasonable
costs and expense of collection and/or suit, including, but not limited to
reasonable attorneys' fees.
5. Borrower may prepay the principal amount outstanding under this Note, in
whole or in part, at any time without penalty. Any partial prepayment shall be
applied against the principal amount outstanding and shall not postpone the due
date of any subsequent payments or change the amount of such payments.
16
6. Borrower and all other makers, sureties, guarantors, and endorsers hereby
waiver presentment, notice of dishonor and protest, and they hereby agree to any
extensions of time of payment and partial payments before, at, or after
maturity. This Note shall be the joint and several obligation of Borrower and
all other makers, sureties, guarantors and endorsers, and their successors and
assigns.
7. Any notice to Borrower provided for in this Note shall be in writing and
shall be given and be effective upon (1) delivery to Borrower or (2) mailing
such notice by first-class U.S. mail, addressed to Borrower at the Borrower's
address stated below, or to such other address as Borrower may designate by
notice to the Note Holder. Any notice to the Note Holder shall be in writing and
shall be given and be effective upon (1) delivery to the Note Holder or (2) by
mailing such notice by first-class U.S. mail, to the Note Holder at the address
stated in the first paragraph of this Note, or to such other address as Note
Holder may designate by notice to Borrower.
8. The indebtedness evidenced by this Note is secured by a Deed of Trust dated
March 19, 1992, and until released said Deed of Trust contains additional rights
of the Note Holder. Such rights may cause Acceleration of the indebtedness
evidenced by this Note. Reference is made to said Deed of Trust for such
additional terms. Said Deed of Trust grants rights in the property identified as
follows:
Lots 16 and 17, in Block 21, in Fremont, now City of Cripple Creek, Teller
County, Colorado.
Property address: 210-212 E. Bennett Avenue, Cripple Creek, Colorado 80813.
(CAUTION: SIGN ORIGINAL NOTE ONLY/RETURN COPY)
IF BORROWER IS CORPORATION:
ATTEST: CHRYSORE, INC., A NEW JERSEY CORPORATION
/s/ By:/s/ Jim Gulbrandsen
JIM GULBRANDSEN, PRESIDENT
KEEP THIS NOTE IN A SAFE PLACE. THE ORIGINAL OF THIS NOTE MUST BE EXHIBITED TO
THE PUBLIC TRUSTEE IN ORDER TO RELEASE A DEED OF TRUST SECURING THIS NOTE.
447641 05/17/1996 01:05PM Page 2 of 3
Constance R. Joiner, Clerk & Recorder, Teller County
17
FILE DATE: 03/27/1992 TIME: 12:15P BOOK: 0597 PAGE: 0270
Teller County, Colorado, Constance R. Joiner - County Clerk & Recorder
DOC #:0394130
447641 05/17/1996 01:05PM Page 3 of 3
Constance R. Joiner, Clerk & Record, Teller County
EXHIBIT "A"
ADDENDUM
PAYMENTS SHALL BE IN THE AMOUNT OF $18,764.00 PER MONTH, INCLUDING PRINCIPAL AND
INTEREST, AND SHALL COMMENCE UPON THE OPENING OF THE CASINO TO BE CONSTRUCTED
UPON THE PROPERTY, OR JULY 15, 1992, WHICHEVER IS SOONER, AND SHALL BE DUE ON
THE 1ST DAY OF EACH SUCCEEDING MONTH THEREAFTER. IF NOT SOONER PAID, THE BALANCE
OF PRINCIPAL AND ACCRUED INTEREST SHALL BE DUE AND PAYABLE SEVEN YEARS AFTER
PAYMENTS COMMENCE.
IN ADDITION TO THE REGULAR FIRST MONTHLY PAYMENT EITHER UPON OPENING OF SAID
CASINO OR JULY 15, 1992 (WHICHEVER IS SOONER) ACCRUED INTEREST AT 9% ON THE
$1,850,000.00 NOTE FROM MARCH 19, 1992 WILL BE DUE AND PAYABLE ON SEPTEMBER 1,
1992.
IN ADDITION TO THE REGULAR PRINCIPAL AND INTEREST PAYMENTS ON THE NOTE SET FORTH
ABOVE, BORROWER (GRANTOR) SHALL PAY A PRINCIPAL PAYMENT OF $300,000.00 TO LENDER
(BENEFICIARY) TWELVE (12) MONTHS AFTER THE DATE OF OPENING OF THE CASINO TO BE
CONSTRUCTED UPON THE PROPERTY.* MONTHLY PAYMENTS SHALL THEREAFTER BE REAMORTIZED
AT 9% OVER THE REMAINING PORTION OF THE ORIGINAL 15 YEAR TERM TO REFLECT THIS
PRINCIPAL REDUCTION, BUT THE FINAL PAYMENT DATE FOR PAYMENT IN FULL SHALL REMAIN
SEVEN YEARS AFTER THE ORIGINAL PAYMENTS COMMENCE.
BORROWER (GRANTOR) SHALL NOT ALLOW NOR PERMIT ANY MECHANIC'S LIEN TO BE FILED
AGAINST THE PROPERTY AND SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS THE PROPERTY
AND LENDER (BENEFICIARY) FROM AND AGAINST ANY SUCH MECHANIC'S LIEN. BORROWER
(GRANTOR) SHALL OBTAIN BUILDER'S ALL RISK INSURANCE NAMING THE LENDER
(BENEFICIARY) AS LOSS PAYEE AND PAYMENT AND PERFORMANCE BONDS COVERING ALL
CONSTRUCTION WORK ON THE PROPERTY. VIOLATION OF THIS PROVISION SHALL CONSTITUTE
A DEFAULT AUTHORIZING THE LENDER (BENEFICIARY), AT ITS OPTION, TO FORECLOSE.
*BUT NOT LATER THAN OCTOBER 1, 1993.
Pay to the order of Century Casinos, Inc., without recourse.
TJL Enterprises, Inc.
By:/s/ Louis D. Carleo
Louis D. Carleo
Secretary/Treasurer
18
EXHIBIT 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.
19
PROMISSORY NOTE
$5,174,540.00 July 1, 1996
FOR VALUE RECEIVED, the undersigned WMCK ACQUISITION CORP., a Delaware
corporation (the "Maker"), promises to pay to the order of GOLD CREEK
ASSOCIATES, L.P., a New Jersey limited partnership, or assigns (the "Holder"),
at Cooper Perskie April Niedelman Wagenheim & Levenson, P.A., 1125 Atlantic
Avenue, Atlantic City, New Jersey 08041-4891, Attention: Anthony P. Monzo, Esq.,
or at such other place as the Holder of this Note may from time to time
designate, the principal amount of FIVE MILLION ONE HUNDRED SEVENTY FOUR
THOUSAND FIVE HUNDRED FORTY AND NO/100THS DOLLARS ($5,174,540.00), together with
the interest on the unpaid principal amount from the date hereof, until paid in
full, said principal and interest being due payable as follows:
Payment. Payments of interest on the unpaid principal balance hereof shall
be due and payable monthly in arrears at the rate of nine percent (9.0%) per
annum (computed on the basis of a 360 day year applied to the actual number of
days elapsed in each interest calculation period) commencing August 15, 1996 and
continuing on the fifteenth (15th) day of each month thereafter until this Note
is paid in full. Commencing January 15, 1998, payments of interest shall be
accompanied by monthly principal payments of $43,121.17. On June 30, 2003, the
entire balance of this Note shall be due and payable in full. (See attached
Amortization Schedule.) All payments hereunder shall be made in lawful money of
the United States of America, without offset.
Prepayment. The unpaid principal amount of this Note may be prepaid in
whole or in part at any time or times without premium or penalty. Each
prepayment shall be applied first to the payment of all interest and other
amounts accrued hereunder or under the Security Documents (as hereinafter
defined) on the date of any such prepayment in such order as the Holder elects,
and the balance of any such prepayment shall be applied to the principal amount
hereof. No prepayment shall entitle any person to be subrogated to the rights of
the Holder unless and until this Note has been paid in full.
Security. This Note evidences such monies advanced by the Holder to or for
the benefit of the Maker as Buyer under a certain Asset Purchase Agreement dated
as of September 27, 1995 by and among the Maker, Century Casinos, Inc.
("Century") and the Holder (as amended, the "Asset Purchase Agreement"), and is
secured by a Deed of Trust and Assignment of Rents and Leases (the "Deed of
Trust"), a Security Agreement (the "Security Agreement"), a Collateral
Assignment of Lease (the "Lease Assignment") and a Collateral Assignment of
Sublease (the "Sublease Assignment"), each dated of even date herewith (the Deed
of Trust, Security Agreement, Lease Assignment and Sublease Assignment are
collectively referred to herein as the "Security Documents"). The Deed of Trust
was made and executed by the Maker to the Public Trustee of Teller County, State
of Colorado, for the benefit of the Holder, to be recorded in the real estate
records of Teller County, Colorado, conveying and/or encumbering certain
20
property situated in Cripple Creek, Colorado, as more fully described in the
Deed of Trust. The Security Agreement was made and executed by the Maker, as
Debtor, and the Holder, as Secured Party, granting the Holder a security
interest in certain collateral, as more fully described in the Security
Agreement. The Lease Assignment was made and executed by the Maker and Century,
as Assignor, for the benefit of the Holder, as Assignee, to be recorded in the
real estate records of Teller County, Colorado, collaterally assigning to the
Holder all of the Maker's and Century's right, title and interest as lessee
under a lease of certain real property situated in Cripple Creek, Colorado, as
more fully described in the Lease Assignment. The Sublease Assignment was made
and executed by the Maker, as Assignor, for the benefit of the Holder, as
Assignee, to be recorded in the real estate records of Teller County, Colorado,
collaterally assigning to the Holder all of the Maker's the right, title and
interest as sublessee under a sublease of certain real property situated in
Cripple Creek, Colorado, as more fully described in the Sublease Assignment. The
Holder is entitled to the benefits of the Security Documents and reference is
made to each of them for a description of the collateral and the rights and
remedies of the Holder thereunder. None of the references to the Asset Purchase
Agreement or to any of the Security Documents nor any provision thereof shall
affect or impair the absolute and unconditional obligation of the Maker to pay
the principal amount hereof, together with interest accrued thereon, when due.
This Note shall evidence, and each of the Security Documents shall
secure, the indebtedness described herein and any future loans or advances or
payments that may be made to or on behalf of the Maker by the Holder at any time
or times hereafter under the Security Documents and any such loans or advances
or payments shall be added to and shall bear interest at the same rate as the
principal indebtedness hereunder unless, as to advances or payments provided for
under the Security Documents, a greater rate is otherwise expressly provided for
by the Security Documents.
Guaranty. Payment of the principal and interest on this Note and
performance of the Maker's obligations under the Security Documents have been
unconditionally guaranteed by Century Casinos, Inc. (the "Guarantor") pursuant
to a Guaranty of even date herewith (the "Guaranty") given by the Guarantor to
the Holder.
Default. The occurrence of any one or more of the following shall
constitute an event of default ("Event of Default") hereunder:
(1) failure to pay, when due, the principal, any interest, or any other sum
payable hereunder, and continuance of such failure for five (5) days after the
date on which such principal, installment of interest or other sum is due
(whether upon maturity hereof, upon any installment payment date, upon any
prepayment date, upon acceleration, or otherwise); or
(2) the occurrence of an event of default under the Guaranty, the Security
Agreement or the Deed of Trust (in each case as defined therein) or a material
breach of any representation, warranty or covenant of Maker under the
Assignments that is not cured within the applicable grace period, if any; or
21
(3) the termination by Maker of either of the Consulting Agreements of even
date herewith between Maker and Gary Findlay and James A. Gulbrandsen for any
reason other than "for cause."
Upon the occurrence of any such Event of Default hereunder, the entire
principal amount hereof, and all accrued and unpaid interest thereon, and any
other amounts due hereunder or under any of the Security Documents, shall be
accelerated, and shall be immediately due and payable, at the option of the
Holder, without demand or notice, and in addition thereto, and not in
substitution therefor, the Holder shall be entitled to exercise any one or more
of the rights and remedies exercisable by the Holder upon a default under any of
the Security Documents, or provided by applicable law. Failure to exercise said
option or to pursue such other remedies shall not constitute a waiver of such
option or such other remedies or of the right to exercise any of the same in the
event of any subsequent Event of Default hereunder.
The Holder may, upon the occurrence of any such Event of Default hereunder,
have resort to the collateral, whether real or personal property, given as
security for this Note in any order, and may sell and dispose of such collateral
in whole or in part, at any time or from time to time, with no requirement on
the part of the Holder of this Note to marshal assets. The Holder shall not be
required to preserve any rights in such collateral as against prior parties. In
the event that the Holder is required to give notice of any intended disposition
of collateral held as security for this Note, five (5) days' notice given by
mail or telegraph to the last known address of Maker shall be deemed to be
reasonable notice, unless a longer period is prescribed by law.
Default Interest. In the event that the principal amount hereof, any
interest or any other sum due hereunder is not paid when due and payable, the
whole of the unpaid principal amount evidenced hereby and all unpaid accrued
interest thereon shall, from the date when such payment was due and payable
until the date of payment in full thereof, bear interest at the rate of fifteen
percent (15%) per annum, which rate, if applicable, shall commence, without
notice, immediately upon the date when said payment was due and payable.
Late Payment Charges. In the event that the principal amount hereof, any
interest, or any other sum is not paid when due and payable hereunder or under
the terms hereof or under any of the Security Documents for a period in excess
of five (5) days, a "late charge" equal to five percent (5%) of such payment or
part thereof so not paid may be charged to the Maker by the Holder. This charge
shall be in addition to, and not in lieu of, any other right or remedy the
Holder may have and is in addition to any reasonable fees and charges of any
agents or attorneys which the Holder is entitled to employ upon the occurrence
of any Event of Default hereunder, whether authorized herein or by law. Such
"late charge" if not previously paid shall, at the option of the Holder, be
added to and become part of the next succeeding monthly payment to be made
hereunder.
Collection Costs. The Maker promises to pay all costs and expenses
(including without limitation reasonable attorneys' fees and disbursements)
incurred in connection with the collection hereof or in the protection or
realization of any collateral now or hereafter given as security for the
22
repayment hereof (including, without limitation, the security provided under the
Security Documents), and to perform each and every covenant or agreement to be
performed by the Maker under this Note, the Security Documents and any other
instrument evidencing or securing the obligation represented by this Note.
Counting of Days. Any payment on this Note coming due on a Saturday, a
Sunday, or a day which is a legal holiday in the place at which a payment is to
be made hereunder shall be made on the next succeeding day which is a business
day in such place, and any such extension of the time of payment shall be
included in the computation of interest hereunder.
Waiver. Each Obligor (which term shall include the Maker, the Guarantor and
all other makers, sureties, guarantors, endorsers and other persons assuming
obligations pursuant to this Note) under this Note hereby waives presentment,
protest, demand, notice of dishonor, and all other notices, and all defenses and
pleas on the grounds of any extension or extensions of the time of payments or
the due dates of this Note, in whole or in part, before or after maturity, with
or without notice. No renewal or extension of this Note, no release or surrender
of any collateral given as security for this Note, no release of any Obligor,
and no delay in enforcement of this Note or in exercising any right or power
hereunder, shall affect the liability of any Obligor. The pleading of any
statute of limitations as a defense to any demand against any Obligor is
expressly waived.
No Waiver by the Holder. No single or partial exercise by the Holder of any
right hereunder, under any of the Security Documents or under any other
agreement given as security for this Note or pertaining hereto, shall preclude
any other or further exercise thereof or the exercise of any other rights. The
Holder shall at all times have the right to proceed against any portion of the
property conveyed and/or encumbered by the Deed of Trust and/or the Security
Agreement and/or the Assignments in such manner as the Holder may deem fit,
without waiving any rights with respect to any portion of the property conveyed
and/or encumbered by the Deed of Trust and/or the Security Agreement and/or the
Assignments. No delay or omission on the part of the Holder in exercising any
right hereunder shall operate as a waiver of such right or of any other right
under this Note.
No Right to Set Off. The Maker shall have no right to set off any amounts
due from the Holder to the Maker against any amounts due to the Holder from the
Maker under this Note or any of the Security Documents.
References. Whenever used herein, the words "Maker" and "Holder" and
"Obligor" shall be deemed to include their respective successors and assigns.
Governing Law; Jurisdiction. This Note shall be governed by and construed
under and in accordance with the laws of Colorado (but not including the choice
of law rules thereof). The Maker hereby consents to the jurisdiction of any
competent court within the State of Colorado and consents to service of process
by any means authorized by the laws of the State of Colorado. The Maker hereby
expressly waives its rights to trial by jury in any action relating to this Note
or the Security Documents.
23
Assignment. This Note may be assigned by Gold Creek Associates, L.P. to its
partners or to a trust or other entity formed for their benefit and may be
enforced against Maker by any such assignee(s).
IN WITNESS WHEREOF, the undersigned has duly executed this Note, or has
caused this Note to be duly executed on its behalf, as of the day and year first
hereinabove set forth.
[SEAL] WMCK ACQUISITION CORP., a Delaware corporation
ATTEST:
/s/ Erwin Haitzmann By: /s/James D. Forbes
- ----------------------- -------------------------
Erwin Haitzmann By: James D. Forbes
Chairman President
24
GUARANTY
THIS GUARANTY is made as of July 1, 1996, by CENTURY CASINOS, INC., a
Delaware corporation ("Guarantor"), whose address is 50 South Steele Street,
Suite 755, Denver, Colorado 80209, to and for the benefit of GOLD CREEK
ASSOCIATES, L.P., a New Jersey limited partnership ("Lender"), whose address is
c/o Cooper Perskie April Niedelman Wagenheim & Levenson, P.A., 1125 Atlantic
Avenue, Atlantic City, New Jersey 08401-4891, Attention: Anthony P. Monzo, Esq.
WHEREAS, in order to induce Lender to make a term loan (the "Loan") in the
principal amount of FIVE MILLION ONE HUNDRED SEVENTY FOUR THOUSAND FIVE HUNDRED
FORTY AND NO/100THS DOLLARS ($5,174,540.00) to WMCK Acquisition Corp., a
Delaware corporation and an affiliate of Guarantor ("Borrower"), in connection
with that certain Asset Purchase Agreement dated as of September 27, 1995 (as
amended, the "Asset Purchase Agreement") by and among Lender, Borrower and
Guarantor, which Loan is evidenced by a promissory note (the "Note") of even
date herewith executed by Borrower and is secured pursuant to (i) a Security
Agreement between Borrower and Lender (the "Security Agreement"), (ii) a Deed of
Trust and Assignment of Rents and Leases executed by Borrower in favor of
Lender, (iii) a Collateral Assignment of Lease executed by Borrower and
Guarantor in favor of Lender, and (iv) a Collateral Assignment of Sublease
executed by Borrower in favor of Lender, each of even date herewith
(collectively, together with this Guaranty, and any and all other documents
executed in connection therewith or arising therefrom, the "Security
Documents"), Lender has asked that Guarantor sign this Guaranty;
WHEREAS, Lender is willing to advance the Loan only upon the condition that
it receive this Guaranty of Borrower's payment of the Note and performance under
the Security Documents; and
WHEREAS, Guarantor acknowledges that, as owner of all of the capital stock
of Borrower, it will be considerably benefited by the advancement of the Loan to
Borrower;
NOW, THEREFORE, in consideration of the Loan made by Lender to Borrower,
and other good and valuable consideration receipt of which is hereby
acknowledged, Guarantor hereby agrees as follows:
1. Guaranty of Payment. Guarantor unconditionally and absolutely guarantees
the punctual and full payment when due of all principal, interest and other sums
due and owing or which in the future become due or owing on the Note or under
any of the other Security Documents, regardless of whether recovery on such
indebtedness or liability may be or hereafter become barred by any statute of
limitations or such indebtedness or liability may otherwise be or become
unenforceable, and agrees that this Guaranty shall be deemed a continuing
Guaranty of the Loan from Lender to Borrower.
2. Guaranty of Performance. Guarantor unconditionally and absolutely
guarantees the due, punctual and full performance and observance by Borrower of
all of the other terms, covenants and conditions of the Note and the other
Security Documents, whether according to the present terms thereof, at any
earlier or accelerated date or dates as provided therein, or pursuant to any
extension of time or to any change or changes in the terms, covenants and
conditions thereof now or at any time hereafter made or granted.
25
3. Waiver; Term of Liability. Guarantor waives diligence, presentment,
protest, notice of dishonor, demand, extension of time for payment, notice of
non-payment at maturity, and indulgences and notices of every kind, and consents
to any and all forbearances and extensions of time of payment of the Note, and
to any and all changes in terms, covenants and conditions thereof or of the
Security Documents; it being the intention hereof that Guarantor shall remain
liable as a principal until the full amount of all sums payable under the Note
shall have been fully paid and until the terms, covenants and conditions of the
Note and of the Security Documents shall have been performed and observed by
Borrower, notwithstanding any act, omission or thing which might otherwise
operate as a legal or equitable discharge of Guarantor.
4. Change in Borrower. Guarantor agrees that its obligation as a Guarantor
shall not be impaired, modified, changed, released or limited in any manner
whatsoever by any impairment, modification, change, release or limitation of the
liability of Borrower or its estate in bankruptcy, resulting from the operation
of any present or future provision of the bankruptcy laws or other similar
statute, or from the decision of any court.
5. Actions by Lender. Guarantor agrees that Lender shall have the full
right, in its sole discretion and without any notice to or consent from
Guarantor, from time to time and at any time and without affecting, impairing or
discharging, in whole or in part, the liability of Guarantor hereunder: (a) to
make any change, amendment or modification whatsoever of any of the terms or
conditions of the Note or of the Security Documents; (b) to extend, in whole or
in part, by renewal or otherwise, and on one or any number of occasions, the
time for the payment of any principal or interest or any other amount pursuant
to the Note or for the performance of any term or condition of the Note or of
the Security Documents; (c) to settle, compromise, release, substitute,
surrender, modify or impair, to enforce and exercise, or to fail or refuse to
enforce or exercise, any claims, rights or remedies of any kind or nature, which
Lender may at any time have against Borrower, or with respect to any security
interest of any kind held by Lender at any time, whether under the Note or under
the Security Documents or otherwise; and (d) to release, substitute, surrender
or enforce any security interest of any kind held by Lender at any time, and to
collect and retain or liquidate any collateral subject to such security
interest, whether under this Guaranty or otherwise.
6. Independent Obligation. Guarantor agrees that Guarantor's obligations
hereunder are irrevocable, and are independent of the obligations of Borrower;
that a separate action or actions may be brought and prosecuted against
Guarantor regardless of whether any action is brought against Borrower or
whether Borrower is joined in any such action or actions; and that Guarantor
waives the benefit of any statute of limitations affecting its liability
hereunder or the enforcement hereof.
7. Default. In case of any default by Borrower under any of the Security
Documents remaining uncured after any applicable notice and grace period, Lender
shall have the right (a) to enforce its rights under this Guaranty or (b) to
enforce its rights against Borrower, including without limitation its rights
under any instrument securing the payment or performance of the Loan, in any
26
order, and all remedies available to Lender shall be non-exclusive. Guarantor
hereby empowers Lender, its successors and assigns, in its sole discretion,
without notice to Guarantor, to exercise any right or remedy it may have,
including but not limited to judicial foreclosure, exercise of rights of power
of sale, taking a deed or assignment in lieu of foreclosure or sale, appointment
of a receiver to protect the security or to collect the rents and profits,
exercise of remedies against personal property, or enforcement of an assignment
of leases, as to any security, whether real, personal or intangible, and
Guarantor shall be liable to Lender for any failure of such securities to fully
satisfy the Loan, even though any rights Guarantor may have against Borrower or
others may be diminished or destroyed by the exercise or election to exercise
any such remedy. In the event Lender, in its sole discretion, elects to
foreclose against all or any portion of the security given for the Loan, the
amount bid by Lender, provided such bid has been as required by law, or the
amount received by Lender at the sale of the security shall be conclusive
evidence of the value of the security for purposes of determining any remaining
deficiency judgment to be enforced against Guarantor. Guarantor hereby expressly
waives its rights to trial by jury in any action relating to the Guaranty.
8. Reimbursement. Guarantor agrees that in the event that Lender retains or
engages an attorney or attorneys to enforce this Guaranty, Guarantor will
reimburse Lender for all expenses incurred, including attorneys' fees and
disbursements.
9. Jurisdiction. Guarantor irrevocably submits to the non-exclusive
jurisdiction of any Colorado or Federal court sitting in Colorado in any action
or proceeding arising out of or relating to this Guaranty, and irrevocably
agrees that all claims in respect of such action or proceeding shall be heard
and determined in such Colorado or Federal court. Guarantor agrees that service
of process may be made, and personal jurisdiction over Guarantor may be
obtained, by whatever methods are provided by Colorado law. Guarantor
irrevocably waives (a) any objection that Guarantor may have to the laying of
venue of any such action or proceeding in any of the said courts, and (b) any
claim that it may have that any such action or proceeding has been brought in an
inconvenient forum. Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
paragraph shall affect the right of Lender to serve legal process in any manner
permitted by law. In addition, and for the purposes of enforcing any judgment,
Guarantor irrevocably consents to the jurisdiction of the courts of any
jurisdiction where assets or properties of Guarantor are located. To the extent
that Guarantor has or hereafter may acquire any immunity from the jurisdiction
of any court (including, without limitation, any court of Colorado or of the
United States of America) or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution,
or otherwise) with respect to itself or its property, and to the extent that in
any such jurisdiction there may be attributed such immunity (whether or not
claimed), Guarantor irrevocably and unconditionally agrees not to claim and
irrevocably and unconditionally waives such immunity in respect of its
obligations under this Guaranty and in respect of any action or proceeding
arising out of or relating to this Guaranty.
27
10. Subrogation. Guarantor agrees that Guarantor shall have no right of
subrogation whatever with respect to the indebtedness guaranteed hereby or to
any collateral securing such indebtedness unless and until such indebtedness has
been paid in full.
11. Assignment. Lender may assign or transfer this Guaranty and its rights
hereunder, in whole or in part, in connection with the assignment or transfer of
the Loan. The benefit of this Guaranty shall automatically pass with a transfer
or assignment of Lender or its successor or assign in the Loan or any portion
thereof to any subsequent party to the extent of such party's interest in the
Loan. In the event of any such transfer or assignment, this Guaranty shall
remain in full force and effect with respect to any interest retained by Lender.
Guarantor's obligations hereunder may not be assigned or delegated.
12. Financial Statements. During the term of this Guaranty, Guarantor shall
provide to Lender:
(a) as soon as available but no later than one hundred and twenty (120)
days after the end of each fiscal year of Guarantor, a copy of the audited
balance sheet of Guarantor as of the end of such fiscal year and the related
audited statements of income, changes in stockholders' equity and changes in
financial position of Guarantor for such fiscal year, setting forth in each case
in comparative form the corresponding figures for the previous year, all
prepared in reasonable detail and in accordance with generally accepted
accounting principles ("GAAP") consistently applied, and certified without
qualification by an independent certified public accountant of recognized
standing, and
(b) as soon as available but no later than sixty (60) days after the end of
each fiscal quarter, Guarantor's balance sheet as of the end of such period, and
Guarantor's income statement for such period and for that portion of Guarantor's
financial reporting year ending with such period, conforming with generally
accepted accounting principles consistently applied and prepared and attested by
the chief financial officer or controller of Guarantor as being complete and
correct and fairly presenting Guarantor's financial condition and the results of
Guarantor's operations, provided that Guarantor has prepared such information in
the ordinary course of business or can prepare such information without
significant cost or expense to Guarantor; and
(c) such additional information with respect to Guarantor as Lender may
from time to time reasonably request.
13. Negative Covenants of Guarantor. Until all sums due and owing under the
Note and the Security Documents have been paid in full and performed, Guarantor
hereby covenants and agrees that it shall not:
(a) Unless Lender otherwise consents in writing, purchase, redeem or
otherwise acquire any of its own capital stock or the capital stock of any
Affiliate (hereinafter defined), unless the consideration paid therefor is less
than $100,000 in the aggregate on a cumulative basis.
(b) Declare or pay any dividends.
28
(c) Without the prior written consent of Lender, (i) change its name
(unless Lender is given at least 21 days' prior written notice of such change),
(ii) discontinue its business, (iii) make any material change in the nature or
character of its business, or (iv) reorganize, liquidate, terminate or dissolve,
whether voluntarily or involuntarily.
(d) Without the prior written consent of Lender, directly or indirectly (i)
make any loans, advances, extensions of credit or capital contributions to or
other investment in any Affiliate that is not consolidated with Guarantor in the
statements furnished to Lender pursuant to Section 12 hereof, except in amounts
not to exceed $100,000 in the aggregate in any calendar year, (ii) transfer,
sell, assign or otherwise dispose of any assets to any Affiliate, except in the
ordinary course of business on terms no less favorable to Guarantor than could
be obtained from a third party and with prior written notice to Lender, (iii)
purchase or acquire assets from any Affiliate, except in the ordinary course of
business on terms no less favorable to Guarantor than could be obtained from a
third party and with prior written notice to Lender, or (iv) enter into any
other transaction with or for the benefit of any Affiliate, except in the
ordinary course of business on terms no less favorable to Guarantor than could
be obtained from a third party and with prior written notice to Lender. For
purposes of this Agreement, the term "Affiliate" shall have the same meaning
given to it in the Security Agreement.
14. Affirmative Covenants of Guarantor. Until all sums due and owing under
the Note and the Security Documents have been paid in full and performed,
Guarantor hereby covenants and agrees that it shall:
(a) Preserve, maintain and keep in full force and effect its corporate
existence in the jurisdiction of its incorporation, and all rights, franchises,
licenses and privileges necessary or desirable in the normal conduct of its
business (unless the failure to maintain any right, franchise, license or
privilege would not have a material adverse effect on Guarantor), including
without limitation all required gaming and liquor licenses; continue to engage
in business of the same general type as now conducted by it; and conduct such
business in an orderly, efficient and regular manner consistent with the conduct
of its business prior to the date hereof.
(b) Timely file all required tax returns; pay and discharge all material
taxes, assessments and other governmental charges imposed upon it; provided that
Guarantor shall not be required to pay any such tax, assessment or charge which
is being contested in good faith and by proper proceedings if Guarantor sets
aside on its books adequate reserves therefor.
(c) Perform in accordance with its terms every contract, agreement, or
other arrangement to which Guarantor is a party or by which it or any of its
assets are bound, except to the extent that (i) Guarantor is contesting the
provisions thereof in good faith and by proper proceedings, or (ii) the failure
to comply therewith does not and will not, in the aggregate, have a material
adverse effect on the business, operations, property, or condition (financial or
otherwise) of Guarantor.
(d) Comply with all applicable laws, regulations, orders and other
requirements of any court, tribunal, arbitrator or governmental authority,
including without limitation the Colorado gaming and liquor license laws,
non-compliance with which could have a material adverse effect on the business,
operations, property or condition (financial or otherwise) of Guarantor and/or
Borrower.
29
15. Default. The occurrence of any one or more of the following shall
constitute an event of default ("Event of Default") hereunder:
(a) the breach by Guarantor of any representation, warranty or covenant in
this Guaranty; or
(b) a breach by Borrower of any representation, warranty or covenant in the
Note or the Security Documents that is not cured within the applicable grace
period, if any; or
(c) the failure of Guarantor to maintain, on a consolidated basis and as of
the date of any financial statement provided pursuant to Section 12 above, a
ratio of Net Tangible Equity to Lender Debt of at least .5 to 1. For this
purpose, "Net Tangible Equity" means Guarantor's total assets (exclusive of
intangibles, including good will, and exclusive of any assets acquired pursuant
to the Asset Purchase Agreement or used in the operations of the Casino (as
defined in the Asset Purchase Agreement)) minus Guarantor's total liabilities
(exclusive of Lender Debt), and "Lender Debt" means the unpaid principal balance
of the Note, in each case to be determined in accordance with GAAP on a
consolidated basis. For purposes of calculating Net Tangible Equity hereunder,
upon payment of any Lender Debt, Net Tangible Equity shall be reduced by only
$.50 for each $1.00 of Lender Debt paid.
(d) Guarantor becomes bankrupt or insolvent or enters into liquidation or
enters into any arrangement or composition with its creditors (or any of them)
or has a receiver appointed.
16. Amendment. This Guaranty may not be changed orally, and no obligation
of Guarantor may be released or waived by Lender, except by a writing signed by
Lender.
17. Proceeds. Guarantor hereby authorizes Lender, without notice to
Guarantor, to apply all payments and credits received from Borrower or from
Guarantor to payment of the Loan or the satisfactions of the covenants and
conditions set forth in the Security Documents, in such manner and in such
priority as Lender, in its sole judgment, shall see fit.
18. Notices. All notices and other communications hereunder shall be in
writing and mailed, sent by facsimile transmission or personally delivered, if
to Guarantor, addressed to Guarantor at the address set forth above; if to
Lender, addressed to Lender at the address set forth above; or at such other
address as shall be designated in a written notice as provided herein. All such
notices and communications shall be effective, when mailed (certified mail,
return receipt requested), when deposited in the U.S. mail, and, when
transmitted or delivered, upon receipt, addressed as aforesaid.
19. Captions. The section headings in this Guaranty are for convenience of
reference only and are not to be considered a part hereof and shall not limit or
otherwise affect any of the terms hereof.
30
20. Binding Effect. Guarantor agrees that this Guaranty shall inure to the
benefit of and may be enforced by Lender and its successors and assigns, and any
subsequent holder of the Note or any other promissory note given by Borrower to
Lender, and shall be binding upon and enforceable against Guarantor and
Guarantor's successors or assigns.
21. Governing Law. This Guaranty shall be governed by and construed in
accordance with the laws of Colorado (but not including the choice of law rules
thereof).
22. Reasonableness. Section 13 hereof contemplates that Guarantor may seek
Lender's consent to take actions which are otherwise prohibited by this
Guaranty. The Lender hereby agrees to act reasonably in considering whether to
grant or withhold consent to the actions otherwise prohibited by paragraphs (a),
(c) or (d) of Section 13, meaning that such consent will be provided unless the
Lender believes in good faith that the proposed action (or omission) adversely
affects in any material respect the likelihood of the Loan being repaid in full
in accordance with the terms of the Note. With respect to any consent requested
by Guarantor, if Guarantor's request is not responded to by Lender within ten
(10) business days after Lender has received a written request from Guarantor,
Guarantor may provide notification to Lender of such fact and Lender agrees that
any such consent shall be deemed granted if Guarantor's request is not responded
to within three (3) business days following receipt of such written notice.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed as of
the day and year first above written.
WITNESS: CENTURY CASINOS, INC., a Delaware Corporation
/s/ Erwin Haitzmann By: /s/James D. Forbes
- ----------------------- -------------------------
Erwin Haitzmann By: James D. Forbes
Chairman President
31
EXHIBIT 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
32
BUILDING LEASE
THIS LEASE, made and entered into this 1st day of July, 1996, between TJL
Enterprises, Inc., a Colorado corporation, hereinafter called the LESSOR, and
WMCK Acquisition Corp., a Delaware corporation, and Century Casinos, Inc., a
Delaware corporation, hereinafter collectively called Lessee.
W-I-T-N-E-S-S-E-T-H:
THAT IN CONSIDERATION of the payment of rent hereinafter provided and the
keeping and performance of each of the covenants and agreements hereinafter set
forth by the Lessee, Lessor has and does hereby lease unto the Lessee the
following described premises and building located thereon, situated in the
County of Teller, State of Colorado, to wit: Lot 18, Block 21, Fremont (now
Cripple Creek), commonly known as 208 East Bennett Avenue, Cripple Creek,
Colorado 80813 ("Premises").
TO HAVE AND TO HOLD the same unto the Lessee from 12:00 o'clock midnight
July 1, 1996 to 12:00 o'clock midnight June 30, 2006, at and for a rental, for
the full term aforesaid of One Million Seven Hundred Fifty-two Thousand and
no/100 ($1,752,000.00) payable in monthly installments of Fourteen Thousand Six
Hundred and no/100 ($14,600.00) on or before the third day of each calendar
month during the term at Lessor's Pueblo, Colorado, address set forth in this
Lease.
TRIPLE NET LEASE. It is the understanding and agreement of the parties
hereto that this is a Triple Net Lease, Lessee to bear all expenses and make all
payments consistent with the principle of a Triple Net Lease unless stipulated
otherwise herein: and Lessee hereby assumes and agrees to perform all duties and
obligations with relation to the premises, the improvements thereon, and the
appurtenances thereto, as well as the use, operation, and maintenance thereof,
even though such duties and obligations would otherwise be construed to be those
of Lessor provided, however, that Lessee shall not be required to pay any prior
existing mortgages or any future mortgages that are placed on the property by
Lessor. Lessee shall have the same rights as Lessor under all guaranties and
warranties by building contractors and suppliers of materials and equipment
installed in the Premises.
PAYMENT OF REAL ESTATE TAXES AND ASSESSMENTS. The parties agree that, as
part of the consideration for the Lease and in addition to the rent provided,
Lessee shall, after the commencement of the term of this Lease, and during the
remainder of the term of this Lease and any renewal or extension thereof, pay to
the public officers charged with the collection thereof, promptly as the same
become due, all taxes, levies, licenses, excises, franchises, imposts,
penalties, and charges, general and special, ordinary and extraordinary, of
whatever name, nature, and kind, which are now or may hereafter be levied,
assessed, charged, or imposed, which are or may become a lien (whether federal,
state, city, county, or other public authority) upon this Lease, the
above-described Premises, the use or occupancy thereof, the buildings and
improvements now or hereafter situated thereon, or upon the occupants in respect
thereof. It is agreed that the above taxes shall not be in any way construed to
include any federal or state income taxes assessed against Lessor.
33
In the event Lessee should fail to pay the taxes or assessments herein
required to be paid by Lessee, prior to the date when a delinquent rate would be
imposed, then Lessor may, at its option (ten (10) days prior written notice
having been given to Lessee), pay such taxes to the public officers charged with
the collection thereof, and the amount or amounts of money so paid by Lessor,
together with interest on all such amounts at the rate of 18% (eighteen percent)
per annum, shall be repaid by Lessee to Lessor upon demand, and the payment
thereof may be collected or enforced by Lessor in the same manner as though said
amounts were an installment or rent specifically required by the terms of the
Lease agreement to be paid by Lessee to Lessor upon the date when Lessor demands
repayment thereof; the election of Lessor to pay such taxes shall not waive the
default thus committed by Lessee.
OTHER TAXES. Lessee agrees that during the term of this Lease or any
extension or renewal thereof, it will pay to the public officers charged with
the collection thereof any use tax, sales tax and personal property tax that
might be imposed by any governmental body against either Lessor or Lessee by
reason of the occupancy of the Premises and payment of rental therefor by
Lessee; and Lessee further covenants and agrees to pay such tax or taxes prior
to the same becoming delinquent and to furnish unto Lessor evidence of such
payment. In the event Lessee should fail to pay such use or sales taxes, then
Lessor, at its sole option, (ten (10) days prior written notice having been
given to Lessee) may pay said tax or taxes, and the amount so paid by Lessor
together with interest on all such amounts at the rate of 18% (eighteen percent)
per annum shall be added to and become additional rental to be paid by Lessee to
Lessor.
THE LESSEE AGREES to pay the rent and all charges for all utilities and
taxes promptly when due; if said rent is not paid within ten (10) days from date
due, to pay all reasonable costs and expenses of litigation, including
reasonable attorney fees incurred by Lessor because of nonpayment of rent or
other breach by Lessee, whether or not said litigation proceeds to judgment.
Should Lessor be in default or breach of this Lease, Lessee shall give Lessor
written notice of same, and, if the default is not cured within thirty (30) days
thereafter, Lessee shall be entitled to reasonable attorneys fees in enforcing
Lessee's rights.
THE LESSEE AGREES to keep all improvements upon said Premises, including,
but not limited to, all fixtures, all sewer connections, plumbing, heating and
air-conditioning equipment, wiring, electrical service and glass, in good order
and repair and to maintain the exterior walls and roof, ordinary wear and tear
excepted.
THE LESSEE AGREES not to install signs on the exterior of the Leased
Premises, not to order any repairs whatsoever at the expense of the Lessor, nor
to make any improvements, alterations, or changes or redecorations to the Leased
Premises without first obtaining the written consent of the Lessor. Lessor's
consent shall not be unreasonably withheld. All improvements, alterations,
changes, or redecorations of the Leased Premises shall be made at Lessee's sole
cost and expense. Lessee shall not permit or allow liens to be filed against the
Leased Premises and prior to ordering and repairs or remodeling Lessee shall
34
timely post notice that Lessor's interest in the Leased Premises is not subject
to any lien in accordance with C.R.S. 38-22-105. Lessee shall, if directed in
writing by Lessor, upon termination of this Lease immediately replace, remove,
or change walls or fixtures and restore the Leased Premises to its original
condition.
THE LESSEE AGREES at the expiration of this Lease to surrender and
deliver up said Premises, including, but not limited to, all fixtures, including
fixtures on inventory list attached as Exhibit A, heating and air-conditioning
equipment, plumbing, sewer connections, wiring and glass, in as good order and
condition as when the same were entered upon, loss by fire, insurable accident
or ordinary wear and tear expected.
THE LESSEE AGREES to sublet no part of said Premises nor assign this
Lease or any interest herein, without the written consent of the Lessor first
being obtained. Lessor's consent shall not be unreasonably withheld.
THE LESSEE AGREES to use said Leased Premises only for the purpose set
forth in the following paragraph, and for no purpose prohibited by the laws of
the United States, the State of Colorado, or the ordinances of the City of
Cripple Creek, now in force or hereafter enacted; to promptly observe and comply
with or execute, at its own expense, all present and future laws, rules,
requirements, orders, directions, ordinances, and regulations of the United
States of America, or of any State, City or municipality and of any and all
other government authorities or agencies that have jurisdiction.
THE LESSEE AGREES to keep all sidewalks and parking area free from ice,
litter, dirt, debris and obstructions: to keep said Premises clean and in the
sanitary condition required by all ordinances and health, sanitary and police
regulations; and to use said Premises for the purpose of casino and gaming
establishment, gift shop, and restaurant.
THE LESSEE AGREES neither to permit nor suffer any unreasonable
disorderly conduct or nuisance about said premises.
THE LESSEE AGREES neither to hold nor attempt to hold the Lessor liable
for any injury or damage to persons or property either proximate or remote,
including, but not limited to, those arising from the use of said Premises by
Lessee, or from repairs, alterations, injury or accident occurring on said
Premises or other parts of Lessor's property not herein leased, or on adjacent
Premises, or occasioned by defective electric wiring, or breakage or stoppage
resulting from freezing or otherwise, or for any water damage to the fixtures,
equipment, or merchandise of Lessee in the Leased Premises unless said injury is
due to negligent acts or omissions of Lessor.
THE LESSEE AGREES neither to permit nor suffer said Premises, or the
walls or floors thereof, to be endangered by overloading.
THE LESSEE AGREES that none of Lessor's personal property referenced on
Exhibit B shall be moved in any material respect or removed without Lessor's
consent.
35
THE LESSEE AGREES that if the Lessee removes brick or other material from
the Premises, the Lessee shall, at the Lessee's expense, remove such material to
a mutually agreed location, shall retain such material to the extent required by
law and shall restore such removed material to the extent possible on
termination of the Lease.
THE LESSEE AGREES to permit the Lessor at any reasonable hour of the day to
enter into or upon and to go through and inspect said Premises.
THE LESSEE AGREES to indemnify and save Lessor harmless from any and all
claims, demands, expenses, fines, attorney fees, suits, causes of action and
liability for any damage or injury to persons or property through accident or
casualty occurring on any portion of the Leased Premises or arising out of or in
any way connected with Lessee's use of the Leased Premises, or as a result of
any act or omission of Lessee, its agents or employees. Lessee shall carry
worker's compensation insurance as required by law and comprehensive general
liability insurance including bodily and property damage, requiring the giving
of thirty (30) days' notice to Lessor prior to cancellation, termination or
change in such insurance during the term hereof covering Lessee as named insured
and Lessor as additional insured with an insurance company satisfactory to
Lessor for limits of not less than $1,000,000 per claim occurrence. Lessee shall
no less frequently than annually provide Lessor certificates thereof showing
such insurance to be in force.
THE LESSEE AGREES at its cost, to obtain concurrent with the taking of
occupancy of the demised Premises, and to maintain at all times during the term
of this Lease, with insurance companies qualified to do business in the State of
Colorado and having a general policyholder's rating of A+, fire and extended
coverage insurance upon the demised Premises in the amount equal to the
replacement cost of the demised Premises and improvements thereon. The policy
shall waive subrogation rights against Lessor and Lessee agrees to make no
claims against Lessor. All policies of insurance or certificates thereof as
provided in this paragraph shall be delivered to Lessor and shall be renewed
from time to time by Lessee so that at all times the insurance protection herein
provided shall continuously exist.
In the event of the destruction of the improvements located on the demised
Premises so as to render the Premises or a portion thereof untenantable by
Lessee, it shall be the obligation of Lessor, as hereinafter provided for,
promptly to repair or rebuild the building and improvements as well as possible
to their original condition, and the proceeds collected from the insurance
policy or policies herein described shall be made available to Lessor for the
purposes of effecting such repair or restoration, and the parties hereto agree
that such insurance proceeds shall be first applied to the cost of any repairs
and restoration before using any portion thereof for any other purposes.
In the event that there shall remain any portion of the proceeds of such
insurance policy or policies after the repair and reconstruction of any building
or improvements to a condition equal to the former condition thereof, and
provided no condition of default exists on the part of Lessee herein under the
terms of this Lease, then any such excess shall be paid to Lessee herein. Lessee
shall be entitled to all insurance proceeds representing the value of the
leasehold improvements being paid for by Lessee (together with all replacements
thereof and additions thereto).
36
Lessee covenants and agrees with Lessor that Lessee will pay the premiums
for all of the insurance policies that Lessee is obligated to carry under the
terms of this Lease and that Lessee will deliver to Lessor evidence of such
payment before the payment of any such premiums becomes in default; and Lessee
will cause renewals of expiring policies to be written and the policies or
copies thereof, as Lessor may require, to be delivered to Lessor at least
fifteen (15) days before the expiration date of such expiring policies. If
obtainable, such policy or policies of insurance shall provide that the same may
not be canceled without giving at least thirty (30) days' notice to Lessor of
intent to cancel.
Anything to the contrary herein notwithstanding, the parties hereto agree
that the provisions of this paragraph shall be subject to the requirements of
any institutional lender now or at any time hereafter holding a lien upon the
demised Premises, including, without limitation thereto, the types and amounts
of coverage, the named insureds, the insurers, and the right of the mortgagee to
apply any insurance proceeds on account of the debt.
IT IS MUTUALLY AGREED that if, after the expiration of the term of this
Lease, Lessee shall remain in possession of the Leased Premises and continue to
pay rent without any express written agreement as to such holding over, then
Lessee agrees that all terms and covenants of this Lease shall remain in effect,
except that Lessee shall be a tenant from month to month at a monthly rental to
be mutually agreed to by Lessor and Lessee; however rent payable shall be no
less than the amount paid during the month previous to the expiration of the
term.
IT IS MUTUALLY AGREED that if the Lessee shall be declared insolvent or
bankrupt, or if any assignment of the Lessee's property shall be made for the
benefit of creditors or otherwise, or if Lessee's leasehold interest herein
shall be levied upon under execution, or seized by virtue of any writ of any
Court of law, or a Trustee in Bankruptcy or a Receiver appointed for the
property of the Lessee, whether under the operation of the state or the federal
statutes, then and in any such case, the Lessor may, at his option, after the
expiration of fifteen (15) days from the date of service of written notice to
Lessee, terminate this Lease and immediately retake possession of the Premises
without the same working any forfeiture of the obligations of the Lessee
hereunder; and it is further agreed that in the event of any of these
happenings, or the termination or expiration of this Lease as herein provided,
the Lessor shall have a lien for the payment of rent provided for in this Lease
upon all the furniture, equipment, inventory and fixtures of the Lessee which
are or may be put in or upon the Leased Premises, and such lien may be enforced
by the taking and sale of such property in the same manner as provided under the
Colorado Uniform Commercial Code.
IT IS MUTUALLY AGREED that if the rent above reserved, or any part thereof,
shall be in default, or in case of a breach by the Lessee of any of the
covenants or agreements herein, the said Lessor may declare this Lease
terminated, and after the expiration of fifteen (15) days from the date of
service of written notice to that effect, if said breach or default has not been
fully corrected, be entitled to the possession of said premises without further
37
notice or demand; and further, that in case the Lessor shall become entitled to
the possession of the Premises either by the expiration of this Lease or by any
violation of any term or provision as herein provided for, and the said Lessee
shall refuse to surrender and deliver up the possession of the Premises, after
the service of said notice as aforesaid, then and in that event, the said Lessor
may, without further notice or demand, enter into and upon said premises, or any
part thereof, and take possession thereof and repossess them, and expel, remove,
and put out of possession the Lessee, using such help, assistance, and force in
so doing as may be needful and proper, without prejudice to any remedy allowed
by law, available in such cases.
IT IS MUTUALLY AGREED that in case the Premises are left vacant and any
part of the rent herein reserved be due and unpaid, then the Lessor may, without
in anyway being obligated to do so, and without terminating this Lease, retake
possession of the Premises and rent the same for such rent, and upon such
conditions as the Lessor may think best, making such changes and repairs as may
be required giving credit for the amount of rent so received less all expenses
of such charges and repairs, and said Lessee shall be liable for the balance of
the rent herein reserved until the expiration of this Lease.
IT IS MUTUALLY AGREED that no assent, expressed or implied, to any breach
of any one or more of the covenants and agreements hereof, shall be deemed or
taken to be a waiver of any succeeding or other breach of any covenant or
agreement hereof and acceptance of rent with knowledge of any breach shall not
constitute waiver of said breach by Lessor.
IT IS MUTUALLY AGREED that Lessee, if not in default under any of the terms
and provisions hereof, may, at the expiration of the original term and renewal
terms, if any, remove any equipment, store and business fixtures installed and
paid for by Lessee, provided that said Lessee shall, at Lessee's own expense,
immediately repair any and all damage to the Premises occasioned by said removal
and restore the Premises to as good condition as when same was received by
Lessee, ordinary wear and tear excepted.
IT IS MUTUALLY AGREED all notices which are to be made by either party
shall be made by mailing same, certified mail, and such notice shall be deemed
to have been served on the date of such mailing. All notices to Lessor shall be
mailed to 114 West Seventh Street, Pueblo, Colorado 81003, and all notices to
Lessee shall be mailed to 50 S. Steele St., Suite 755, Denver, CO 80209,
Attention: Brad Dobski, or at such other addresses as Lessor or Lessee may from
time to time designate in writing to the other. In addition, Lessor shall
simultaneously mail a copy of any notices to Lessee hereunder to Gold Creek
Associates, L.P., c/o Cooper Perskie April Niedelman Wagenheim & Levenson, 1125
Atlantic Avenue, Atlantic City, New Jersey 08401-4891 Attn.: Anthony P. Monzo in
connection with a Collateral Assignment of Lease dated the date hereof between
Lessee and Gold Creek Associates, L.P.
IT IS MUTUALLY AGREED if any term or provisions of the Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, all other provisions of this Lease, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby.
38
IT IS MUTUALLY AGREED where applicable, the singular includes the plural
and the neuter includes the male or female.
IT IS MUTUALLY AGREED this Lease shall be deemed to have been executed and
be governed exclusively by the provisions hereof and the laws of the State of
Colorado.
IT IS MUTUALLY AGREED in the event that Lessor mortgages the Leased
Premises or assigns this Lease as collateral security for loan purposes, Lessee
agrees to subordinate its interest to said assignment or mortgage and to execute
all instruments deemed necessary by Lessor or Lessor's assignees or mortgagee to
complete and effectively carry out the intent and purpose of said mortgage or
collateral assignment; provided, however, that in the event of foreclosure of
said mortgage or assignment, this Lease and Lessee's interest herein shall not
be divested or in any way affected so long as Lessee shall not be in default
under the terms of this Lease.
IT IS MUTUALLY AGREED all the terms and covenants of this Lease Agreement
shall be binding upon and apply to the heirs, assigns and personal
representatives of the Lessor and Lessee or any person claiming by, through or
under either of them or their agents and attorneys.
IT IS MUTUALLY AGREED if the Leased Premises shall be taken or condemned in
whole or in part for public purpose, then the term of this Lease shall, at the
option of the Lessor, forthwith cease and terminate, the Lessor shall receive
the entire award for land and building; the current rent, however, shall in such
case abate proportionately.
IT IS MUTUALLY AGREED if not in default hereunder, Lessee shall after the
effective term of the Lease, have the right and option to renew said lease, for
an additional period of time to equal the period of time of the original lease,
to have and to hold the same unto the said Lessee from 12:00 o'clock midnight,
July 1, 2006, to 12:00 o'clock midnight, June 30, 2016, at and for a rental, for
the full term aforesaid, to be negotiated a minimum of ninety (90) days prior to
the expiration of the original lease.
IT IS MUTUALLY AGREED if not in default hereunder, Lessee shall have the
right and option to purchase the Premises for the purchase price of
$2,000,000.00 (Two Million and no/100 Dollars) commencing one year following the
commencement of this lease term and continuing thereafter throughout the term of
the lease. If Lessee elects to exercise this purchase option, a closing shall
occur within sixty (60) days following Lessor's receipt of Lessee's notice of
election to purchase ("Exercise"). Lessee's obligation to purchase the Premises
following its Exercise of its purchase option shall be contingent upon Lessor
delivering title to Lessee for the Premises by general warranty deed subject
only to those exceptions which Lessee determines are reasonably acceptable and a
title policy insuring title in Lessee in the full amount of the purchase price
and subject to the permitted exception referenced on the deed above described.
39
IT IS MUTUALLY AGREED that the obligations of Lessee hereunder shall be
joint and several.
IT IS MUTUALLY AGREED that this Lease may be executed in counterparts, each
of which shall constitute an original.
LESSOR
TJL ENTERPRISES, INC., a Colorado corporation
/s/ Louie D. Carleo
--------------------------------------
Louie D. Carleo
Secretary/Treasurer
LESSEE:
WMCK ACQUISITION CORP., a Delaware corporation
/s/ James Forbes
--------------------------------------
James Forbes
President
/s/ Erwin Haitzmann
--------------------------------------
Erwin Haitzmann
Chairman
CENTURY CASINOS, INC., a Delaware corporation
/s/ Erwin Haitzmann
--------------------------------------
Erwin Haitzmann
Chairman
/s/ James Forbes
--------------------------------------
James Forbes
President
40
MEMORANDUM OF BUILDING LEASE
WITH OPTION TO PURCHASE
THIS MEMORANDUM OF BUILDING LEASE WITH OPTION TO PURCHASE (this
"Memorandum") is made and entered into as of the 1st day of July, 1996 between
TJL ENTERPRISES, INC., a Colorado corporation ("Lessor"), and WMCK ACQUISITION
CORP., a Delaware corporation, and CENTURY CASINOS, INC., a Delaware corporation
("Lessee"), with respect to the following:
1. LEASE OF PREMISES. Lessor has leased and demised to Lessee, and Lessee
leased from Lessor that certain real property located in the City of Cripple
Creek, County of Teller, State of Colorado, more particularly described on
Exhibit A attached hereto and incorporated herein by reference (the "Premises"),
pursuant to and on the terms and provisions of that certain Building Lease of
even date herewith (the "Lease"). The provisions of the Lease are incorporated
into this Memorandum by this reference as if set out in full herein.
2. INITIAL TERM. The initial term of the Lease shall commence at 12:00
midnight on July 1, 1996 ("Commencement Date") and shall expire at 12:00
midnight on June 30, 2006 subject to earlier termination as provided in the
Lease ("Initial Term").
3. EXTENDED TERMS. Pursuant to and subject to the conditions set forth in
the Lease, Lessee shall have the right to extend the Initial Term of the Lease
for an additional period of time equal to the period of time of the original
lease, upon the same terms and conditions as set forth in the Lease applicable
to the Initial Term, subject to adjustment of rent pursuant to the terms of the
Lease.
4. OPTION TO PURCHASE. Lessee shall have the right and option to purchase
Lessor's fee interest in the Premises pursuant to the terms, covenants and
conditions set forth in the Lease. The term of the Option commences one (1) year
after the Commencement Date and continues through the Initial Term, and any
extended term pursuant to Lessees's right to extend set forth above, all as more
particularly set forth in the Lease.
5. PURPOSE OF MEMORANDUM. This Memorandum is prepared and executed for the
purpose of recordation and in no way modifies the terms and provisions of the
Lease. In the event of any inconsistency between the terms of the Lease and the
terms of this Memorandum, the terms of the Lease shall prevail. This Memorandum
may be executed in counterparts, each of which shall constitute an original.
41
IN WITNESS WHEREOF, the parties have executed this Memorandum of Building
Lease with Option to Purchase as of the day and year first above written.
LESSOR:
TJL ENTERPRISES, INC., a Colorado corporation
/s/ Louie D. Carleo
--------------------------------------
Louie D. Carleo
Secretary/Treasurer
LESSEE:
WMCK ACQUISITION CORP., a Delaware corporation
/s/ James Forbes
--------------------------------------
James Forbes
President
CENTURY CASINOS, INC., a Delaware corporation
/s/ James Forbes
--------------------------------------
James Forbes
President
42
EXHIBIT A
(Legal Description of Property)
Lot 18, Block 21, Fremont (now Cripple Creek), Teller County,
Colorado, commonly known as 208 East Bennett Avenue,
Cripple Creek, Colorado 80813
43
EXHIBIT 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.
44
FOUR PARTY AGREEMENT, ASSIGNMENT AND ASSUMPTION OF LEASE,
CONSENT TO ASSIGNMENT OF LEASE, CONFIRMATION OF OPTION
AGREEMENT AND ESTOPPEL STATEMENTS
THIS FOUR PARTY AGREEMENT, ASSIGNMENT AND ASSUMPTION OF LEASE, CONSENT TO
ASSIGNMENT OF LEASE, CONFIRMATION OF OPTION AGREEMENT AND ESTOPPEL STATEMENTS
(the "Four Party Agreement") is entered into as of this 1st day of July, 1996 by
and between HAROLD WILLIAM LARGE, an Individual ("Large"), TELLER REALTY, INC.,
a Colorado corporation ("Teller"), GOLD CREEK ASSOCIATES, L.P., a New Jersey
limited partnership ("Assignor") and WMCK ACQUISITION CORP., a Delaware
corporation ("Assignee") with respect to the following:
RECITALS
A. Large, as "Seller" thereunder, and Teller, as "Purchaser" thereunder,
entered into that certain "Agreement" dated August 31, 1994 (the "Master
Lease"), a copy of which is attached as Exhibit "A" hereto and is incorporated
herein by this reference, pursuant to which, among other things, Large leased to
Teller certain real property and the improvements thereto and the personal
property therein located at 220 East Bennett Ave., Cripple Creek, Colorado more
particularly defined as the "Property" in the Master Lease. (Capitalized terms
not otherwise defined herein shall have the meaning ascribed to them in the
Master Lease);
B. In addition to the parties' agreement concerning Teller's lease of the
Property, the terms of the Master Lease grant to Teller a Purchase Option to
acquire fee title to the Property (the "Master Option"), which Master Option
Teller is entitled to exercise at any time on or before six (6) months prior to
expiration of the Master Lease, all as more particularly set forth in Section B
of the Master Lease;
C. Teller, as "Lessor" thereunder, and Assignor, as "Lessee" thereunder,
entered into that certain "Agreement" dated May 1, 1995, as amended by that
certain "Addendum To Agreement" of even date (the "First Addendum"), and by that
certain "Second Addendum To Agreement" of even date (the "Second Addendum") (the
Agreement as amended by the First Addendum and the Second Addendum are
collectively referred to herein as the "Sublease"), a copy of which is attached
as Exhibit "B" hereto and is incorporated herein by this reference, pursuant to
which Teller (i) subleased to Assignor all of Teller's right, title and interest
as "Purchaser" under the Master Lease, and (ii) granted to Assignor an option to
acquire fee title to the Property through Teller's rights under the Master
Option (the "Sub-Option"), all as more particularly set forth in the Sublease;
D. By that certain letter dated April 28, 1995, Large consented to Teller's
sublease of the Property, and by execution of the Second Addendum, Large
consented to all of the terms of the Sublease, including, without limitation,
the granting by Teller of the Sub-Option, all as more particularly set forth
therein;
45
E. Pursuant to the terms of that certain "Asset Purchase Agreement" dated
as of September 27, 1995 (the "Asset Purchase Agreement"), Assignor has agreed
to sell to Assignee, and Assignee has agreed to acquire from Assignor, all of
Assignor's right, title and interest in and to the Assets (as defined in the
Asset Purchase Agreement), which Assets include, without limitation, Assignor's
right, title and interest as "Lessee" under the Sublease, and all of Assignor's
right, title and interest in and to the Sub-Option, all as more particularly set
forth in the Asset Purchase Agreement; and
F. Assignor, Assignee, Teller and Large are now each entering into this
Four Party Agreement in order to, among other things, (i) evidence Assignor's
irrevocable assignment of all of its right, title and interest in and to the
Sublease and the Sub-Option to Assignee effective as of the Closing Date (as
defined in the Asset Purchase Agreement) (hereinafter, the "Effective Date"),
(ii) confirm among each of the parties hereto the existence and status of the
Master Lease, the Master Option, the Sublease and the Sub-Option as of the
execution date of this Four Party Agreement and as of the Effective Date, as
more particularly set forth herein, and (iii) confirm and evidence Large's and
Teller's consent to the assignment of the Sublease and the Sub-Option from
Assignor to Assignee as evidenced by this Four Party Agreement, and Large's and
Teller's agreement to recognize Assignee's rights to the Sublease and the
Sub-Option following Assignor's assignment of the same to Assignee, all as more
particularly set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor, Assignee, Teller and Large each hereby agree as follows:
ARTICLE
I
ASSIGNOR'S ASSIGNMENT AND ASSIGNEE'S ASSUMPTION
OF SUBLEASE AND SUB-OPTION
1.1 Assignor's Assignment of Sublease and Sub-Option. Assignor hereby
irrevocably and unconditionally assigns and transfers to Assignee, all of
Assignor's right, title and interest as "Lessee" under the Sublease, including,
without limitation, all of Assignor's right, title and interest in and to the
Sub-Option, which assignment shall be immediately effective upon the Effective
Date. Assignor hereby represents and warrants, as of the date of its execution
of this Four Party Agreement and reaffirmed as of the Effective Date, that: (i)
it is the sole owner of the entire "Lessee's" interest in and to the Sublease
and the Sub-Option, (ii) the Sublease and the Sub-Option are each valid and
enforceable and have not been altered, modified or amended in any manner
whatsoever other than as shown in Exhibit "B", and (iii) to Assignor's
knowledge, the "Lessor" named in the Sublease is not in default under any of the
terms, covenants or conditions thereof. Assignor hereby protects, defends,
indemnifies and holds Assignee harmless from and against any and all losses,
claims, liabilities, costs and expenses, including, without limitation,
attorneys' fees and court costs, arising from or otherwise related to any act or
omission by or on behalf of Assignor from or in connection with the Sublease
46
and/or the Sub-Option occurring prior to the Effective Date. Assignee hereby
protects, defends, indemnifies and holds Assignor harmless from and against any
and all losses, claims, liabilities, costs and expenses, including, without
limitation, attorneys' fees and court costs, arising from or otherwise related
to any act or omission by or on behalf of Assignee from or in connection with
the Sublease and/or the Sub-Option occurring after the Effective Date.
1.2 Assignee's Assumption of Lease. Assignee hereby assumes and agrees to
perform, from and after the Effective Date, each and all of the covenants,
conditions and obligations of "Lessee" under the terms of the Sublease and the
Sub-Option (the "Obligations"), and further agrees that it shall be solely
responsible and liable for all such Obligations which arise under the Sublease
and the Sub-Option following the Effective Date.
ARTICLE
II
CONFIRMATION, CONSENT AND ESTOPPEL OF LARGE
2.1 Large's Consent to Assignment of Sublease. Pursuant to the provisions
of the Master Lease, including, without limitation, the provisions of paragraph
14 thereof, Large hereby irrevocably and unconditionally (i) reaffirms its
consent to Teller's sublease of the Property to Assignor pursuant to the terms
of the Sublease and the Sub-Option, and (ii) consents to Assignor's assignment
of all of its right, title and interest in the Sublease and the Sub-Option to
Assignee, and to Assignee's assumption of all of the obligations of Assignor
thereunder, and agrees to recognize Assignee as the "Lessee" under the Sublease
and the Sub-Option for all purposes as though Assignee were the original
"Lessee" thereunder, all as more particularly set forth above.
2.2 Notices; Right to Cure. From and after the Effective Date, Large agrees
that, in addition to the requisite notices required under the terms of the
Master Lease and the Master Option, copies of any and all future notices or
communications permitted or required under the Master Lease and the Master
Option shall be sent to Assignee at the following address:
50 South Steele Street, Suite 755
Denver, Colorado 80209
Attention: Peter Hoetzinger
Large hereby acknowledges and reaffirms his agreement set forth in
paragraph 5 of the Second Addendum concerning Assignor's rights to cure defaults
under the Master Lease and the Master Option (and following the Effective Date,
Assignee's right to so cure such defaults), and by way of confirmation and
clarification thereof, Large hereby agrees that Assignee shall be entitled to
notice of any default under the Master Lease and the Master Option, as well as
an opportunity and a reasonable period of time within which to cure after the
expiration of Teller's notice and cure periods under the Master Lease and the
Master Option, and Large hereby agrees to accept performance by Assignee under
the Master Lease and the Master Option in lieu of performance by Teller. Large
hereby agrees that neither the Master Lease nor the Master Option may be
47
terminated for any defaults by Teller unless and until Assignee has received
such notice and an opportunity to cure Teller's defaults, and the cure periods
under the Master Lease and the Master Option shall be extended for a reasonable
period of time so as to enable Assignee to complete such cure, but in any case
until such cure is completed so long as Assignee has exercised in writing its
right to cure granted hereunder and is diligently pursuing such cure to
completion. Large hereby agrees that, upon Assignee's cure of any such default,
and provided Assignee remains in possession of the Property and is not in
default under any other provision of the Master Lease, the rights of Assignee
under the Master Lease and the Sublease shall not be affected or disturbed by
Large, and Assignee shall be entitled to continue in occupancy of the Property
under the same terms and conditions of the Master Lease (including, without
limitation, all of the rights in and to the Master Option), to the same extent
and with the same force as if Assignee were the original "Purchaser" under the
Master Lease and Master Option. Assignee hereby agrees that, upon its cure of
any such default, Assignee will abide by all of the terms and obligations of the
Master Lease and the Master Option, and shall continue in occupancy of the
Property under the same terms and conditions of the Master Lease and the Master
Option, to the same extent and with the same force as if Assignee were the
original "Purchaser" under the Master Lease.
2.3 Waiver of Right to Terminate Master Lease and Master Option. Large
hereby acknowledges and understands that Assignee has entered into this Four
Party Agreement in reliance upon and with the intent of acquiring, among other
things, Assignor's rights to the Sublease and to acquire fee title to the
Property pursuant to the Sub-Option and the Master Option, and that but for such
rights under the Sub-Option, Assignee would not have entered into this Four
Party Agreement. As a result, Large hereby agrees that it will not enter into
any agreement with Teller, or any of its successors or assigns, to terminate,
modify or otherwise amend any of the terms or provisions of the Master Lease or
the Master Option, without the express prior written consent of Assignee.
2.4 Memorandum of Sublease and Sub-Option. Large hereby agrees that
Assignee shall be entitled, at its sole cost and expense, to record a memorandum
of the Sublease and Sub-Option agreement in the real property records of Teller
County, Colorado.
2.5 Large's Estoppel Statement Concerning the Master Lease, Master Option,
Sublease and Sub-Option. Large hereby acknowledges, understands, confirms and
agrees as follows:
(a) Copy of Master Lease and Master Option. The copy of the Master Lease
and the Master Option attached as Exhibit "A" hereto and incorporated herein by
this reference is a true, correct and complete copy of the Master Lease and the
Master Option (with the express exception of those portions which have been
lined out, which portions Large hereby represents and warrants only involve the
financial information concerning the rent payable under the Master Lease,
financial information concerning Chips and Token liability, and the purchase
price concerning Teller's right to acquire the Property, and none of which
lined-out portions include any additional rights or obligations between the
48
parties or otherwise restrict Teller's right to acquire the Property under the
Master Lease or the Master Option), includes all rights and obligations of
Teller with respect to the Master Lease and the Master Option, and such Master
Lease and the Master Option rights set forth therein are in full force and
effect and constitutes and represents the entire agreement between Large and
Teller with respect to the Property;
(b) Parties to Master Lease and Master Option. Teller is the current and
rightful "Purchaser" under the Master Lease and the Master Option, and was the
rightful "Purchaser" thereunder at the time of its execution of the Sublease,
and Large is the current and rightful "Seller" under the Master Lease and Master
Option.
(c) Full Force and Effect. The Master Lease and the Master Option are each
in full force and effect, the obligations of both Teller and Large thereunder
are valid and binding and there have been no modifications or additions to the
Master Lease or the Master Option, written or oral, other than as shown in
Exhibit "A";
(d) No Pending Defaults. With respect to Teller and Large, there exists no
breach, default or event or condition which, with the giving of notice or the
passage of time or both, would constitute a breach or default under the Master
Lease or the Master Option, or both;
(e) Rent; Master Option Payments. All rent owing under the Master Lease has
been paid in full through October 31, 1995;
(f) Term; Option Term, Extension and Exercise. The primary term of the
Master Lease commenced on October 1, 1994 and continues in effect until December
31, 1999. Pursuant to the terms of the Master Lease, Teller has an option to
extend the primary term of the Master Lease for an additional sixty (60) months
through December 31, 2004 upon notice to Large given at any time on or before
expiration of the primary term. Teller has no further options to extend said
term. In connection with Teller's rights under the Master Option, and as
required by the provisions of paragraph 19 of the Master Lease, Teller is
required to provide Large with notice of its exercise of the Master Option no
later than six (6) months prior to the expiration of the Master Lease, and to
pay to Large the amount of Fifty Thousand Dollars ($50,000) (the "Option
Extension Payment") on the first day of Teller's extension of the primary term
of the Master Lease. In the event Teller elects to exercise the Master Option
and purchase the Property at the expiration of the primary term, payment of the
foregoing Option Extension Payment is not required. Upon Teller's timely
exercise of its extension right through December 31, 2004, and upon Teller's
timely payment of the Option Extension Payment, Teller's rights to exercise the
Master Option will be extended through June 30, 2004, all as more particularly
set forth in paragraph 19 of the Master Lease, and no further payments will be
due, owing or otherwise chargeable in order for Teller's rights to acquire the
Property under the Master Lease and Master Option to remain in full force and
effect. Large hereby understands, acknowledges and agrees that, in the event
Teller timely pays the Option Extension Payment in connection with Teller's
exercise of its right to extend the primary term of the Master Lease, such
Option Extension Payment will be applied by Large toward payment of the Purchase
Price. Notwithstanding the provisions of Section B, paragraph 2 of the Master
49
Lease, Large hereby acknowledge, understands and agrees that in the event the
rights under the Master Option are exercised, payment of the Purchase Price and
transfer of fee title to the Property shall occur concurrently at the time of
the closing;
(g) Assignor's and Assignee's Rights Under Option. Large hereby
acknowledges that Teller has agreed with Assignor, pursuant to the provisions of
paragraph 1 of the Second Addendum, to extend the primary term of the Master
Lease as provided in paragraph 19 thereof. Large hereby further acknowledges
that Assignee is relying upon Teller's extension thereof and payment of the
Option Extension Payment in order to preserve Teller's rights to possession of
the Property under the Master Lease and Teller's right to acquire the Property
under the Master Option, thereby preserving Assignee's rights to possession of
the Property under the Sublease and Assignee's rights to acquire the Property
under the Sub-Option. In acknowledgment of the foregoing, Large hereby agrees
and hereby reaffirms its agreement set forth in paragraph 11 of the Second
Addendum that, in the event Teller fails to exercise its right to extend the
primary term of the Master Lease, or otherwise fails to make the Option
Extension Payment or exercise its rights to acquire the Property under the
Master Option, Assignor (and following the Effective Date, Assignee) shall have
the right to lease the Property directly from Large under the same terms and
conditions set forth in the Master Lease for the remainder of such term,
including, without limitation, the right to extend the term of the Master Lease
through December 31, 2004, and shall further have the right, upon payment to
Large of the Option Extension Payment, to extend the option exercise date
through June 30, 2004. In the event Teller so fails to exercise its right to
extend the primary term of the Master Lease or otherwise pay the Option
Extension Payment, Large will provide Assignor (and following the Effective
Date, Assignee) with written notice thereof and afford Assignor (and following
the Effective Date, Assignee) the option of exercising such extension rights and
entering into a new lease with Large in the manner described above.
(h) Consent to Sublease and Sub-Option. Large has previously consented to
Teller's sublease of the Property to Assignor pursuant to the terms of the
Sublease, and to Teller's grant to Assignor of the Sub-Option. Large hereby
acknowledges Assignor's right to exercise such Sub-Option, and upon Large's
receipt of notice of Assignor's exercise thereof (or Assignee's exercise thereof
following the Effective Date), Large acknowledges and agrees to abide by
Teller's rights under the Master Lease and the Master Option, and Teller's
obligations under the Sublease and the Sub-Option, to exercise its rights to
acquire the Property pursuant to the terms of the Master Option;
(i) Insolvency. Large is not presently considering nor has he (a) made a
general assignment for the benefit of creditors; (b) filed any voluntary
petition in bankruptcy or suffered the filing of an involuntary petition by its
creditors; (c) suffered the appointment of a receiver to take possession of all
or substantially all of its assets; (d) suffered the attachment or other
judicial seizure of all or substantially all of its assets; (e) admitted in
50
writing its inability to pay its debts as they come due, or (f) made an offer of
settlement, extension or composition of its creditors generally;
(j) Defenses or Offsets. There are no existing claims, defenses or offsets
against any of Large's obligations as "Seller" under the Master Lease or the
Master Option; and
(k) Improvement; Alterations. Any and all improvements required by the
terms of the Master Lease to be constructed by either Large or Teller have been
completed to the satisfaction of Large. Any alterations or other modifications
to the improvements on the Property have been approved by Large and the
improvements on the Property as of the Effective Date comply in all material
respects with the requirements under the Master Lease. Large has approved the
location, size and material of all signs displayed by either Teller or Assignor
on the Property and upon completion of the acquisition of Assignor's interest in
the Sublease and the Sub-Option, Assignee shall have the right to replace each
of Teller's or Assignor's signs with Assignee's signs of comparable materials
and quality.
2.6 Assignee's Reliance Upon Large's Statements and Agreements. Large has
entered into this Four Party Agreement with respect to each of the foregoing
matters, and hereby acknowledges, understands and agrees that Assignee is
relying upon each of the foregoing statements, representations, warranties and
agreements of Large in connection with its entering into this Four Party
Agreement, and that, but for such statements, representations, warranties and
agreements of Large, Assignee would not have entered into this Four Party
Agreement or otherwise assumed the obligations under the Sublease and the
Sub-Option. Large hereby acknowledges, understands and agrees that each of the
statements and representations set forth herein are true and correct as of the
date of execution of this Four Party Agreement, and will remain true and correct
and are hereby reaffirmed as being true and correct as of the Effective Date
(with the express exception of paragraph 2.5(e) concerning the date through
which rent has been paid; provided, however, that all rent due and owing as of
the Effective Date shall have been paid and Large hereby confirms such fact as
of the Effective Date), unless otherwise indicated by Large to Assignee in
writing.
ARTICLE
III
CONFIRMATION, CONSENT AND ESTOPPEL OF TELLER
3.1 Teller's Consent to Assignment. Pursuant to the requirements of
paragraphs 4, 15 and 17 of the Sublease, Teller hereby irrevocably and
unconditionally consents to Assignor's assignment of all of its right, title and
interest in the Sublease and the Sub-Option to Assignee, and to Assignee's
assumption of all of the obligations of Assignor thereunder, and agrees to
recognize Assignee as the "Lessee" under the Sublease for all purposes as though
Assignee were the original "Lessee" thereunder, all as more particularly set
forth above. In connection with such assignment from Assignor to Assignee,
Teller hereby agrees that Assignor shall be and hereby is released from all of
its obligations under the Sublease and the Sub-Option arising from and after the
51
Effective Date. From and after the Effective Date, Teller agrees that all future
notices or communications permitted or required under the Sublease and the
Sub-Option shall be sent to Assignee at the following address:
50 South Steele Street, Suite 755
Denver, Colorado 80209
Attention: Peter Hoetzinger
3.2 Waiver of Right to Terminate Master Lease and Master Option. Teller
hereby acknowledges and understands that Assignee has entered into this Four
Party Agreement in reliance upon and with the intent of acquiring, among other
things, Assignor's rights to the Sublease and to acquire fee title to the
Property pursuant to the Sub-Option and the Master Option, and that but for such
rights under the Sub-Option, Assignee would not have entered into this Four
Party Agreement. As a result, Teller hereby agrees that it will not enter into
any agreement with Large, or any of its successors or assigns, to terminate,
modify or otherwise amend any of the terms or provisions of the Master Lease or
the Master Option, without the express prior written consent of Assignee.
3.3 Memorandum of Sublease and Sub-Option. Teller hereby agrees that
Assignee shall be entitled, at its sole cost and expense, to record a memorandum
of the Sublease and Sub-Option agreement in the real property records of Teller
County, Colorado.
3.4 Teller's Estoppel Statement Concerning the Master Lease, Master Option,
Sublease and Sub-Option. Teller hereby acknowledges, understands, confirms and
agrees as follows:
(a) Copy of Master Lease, Master Option, Sublease and Sub-Option. The copy
of the Master Lease and the Master Option attached as Exhibit "A" hereto and
incorporated herein by this reference is a true, correct and complete copy of
the Master Lease and the Master Option (with the express exception of those
portions which have been lined out, which portions Teller hereby represents and
warrants only involve the financial information concerning the rent payable
under the Master Lease, financial information concerning Chips and Token
liability, and the purchase price concerning Teller's right to acquire the
Property, and none of which lined-out portions include any additional rights or
obligations between the parties or otherwise restrict Teller's right to acquire
the Property under the Master Lease or the Master Option), includes all rights
and obligations of Teller with respect to the Master Lease and the Master
Option, and such Master Lease and the Master Option rights set forth therein are
in full force and effect and constitutes and represents the entire agreement
between Large and Teller with respect to the Property. The copy of the Sublease
and Sub-Option attached as Exhibit "B" hereto and incorporated herein by this
reference is a true, correct and complete copy of the Sublease and the
Sub-Option;
(b) Parties to Sublease. Assignor is the current and rightful "Lessee"
under the Sublease, and Teller is the current and rightful "Lessor" under the
Sublease.
52
(c) Full Force and Effect. The Sublease and the Sub-Option are in full
force and effect, the obligations of both Assignor and Teller thereunder are
valid and binding and there have been no modifications or additions to the
Sublease or the Sub-Option, written or oral, other than as shown in Exhibit "B".
All contingencies to the effectiveness of the Sublease and the Sub-Option have
been satisfied or otherwise waived by the parties thereto (including, without
limitation, the approval of The Colorado Division of Gaming and the
contingencies referenced in paragraph 10 of the Second Addendum), and
notwithstanding the provisions of paragraphs 2 and 18 of the First Addendum, the
copy of the Sublease and Sub-Option constitutes and represents the entire, final
and definitive agreement between Teller and Assignor with respect to the
Property;
(d) No Pending Defaults. With respect to Assignor and Teller, there exists
no breach, default or event or condition which, with the giving of notice or the
passage of time or both, would constitute a breach or default under the Sublease
or the Sub-Option, or both;
(e) Rent; Security Deposit. Notwithstanding any other provision of the
Sublease to the contrary, the monthly rent payable under the Sublease is Sixteen
Thousand Dollars ($16,000.00), payable on or before the twenty-fifth (25th) day
of each calendar month for the balance of the term of the Sublease, all pursuant
to the provisions of the Sublease, and all such rent has been paid in full
through September 25, 1995. All rent payable by Assignor in connection with the
renting of the eight sleeping rooms located upstairs has been paid in full, and
pursuant to the terms of the Sublease, no further rent obligations exist on
behalf of Assignor (and following the Effective Date, will exist on behalf of
Assignee) with respect to such sleeping rooms;
(f) Term. The primary term of the Sublease commenced on May 1, 1995 and
will continue in effect until June 30, 2005, and Assignor has no options to
extend said term. The Sublease is terminable by Assignor (and following the
Effective Date, will be terminable by Assignee) upon twelve (12) month's notice,
and no other rights of termination concerning the Sublease or the Sub-Option
exist on the part of either party.
(g) Insolvency. Teller is not presently considering nor has it (a) made a
general assignment for the benefit of creditors; (b) filed any voluntary
petition in bankruptcy or suffered the filing of an involuntary petition by its
creditors; (c) suffered the appointment of a receiver to take possession of all
or substantially all of its assets; (d) suffered the attachment or other
judicial seizure of all or substantially all of its assets; (e) admitted in
writing its inability to pay its debts as they come due, or (f) made an offer of
settlement, extension or composition of its creditors generally;
(h) Defenses or Offsets. There are no existing claims, defenses or offsets
against any of Teller's obligations as Lessor under the Sublease or the
Sub-Option;
(i) Improvement; Alterations; Maintenance. Any and all improvements
required by the terms of the Sublease to be constructed by either Teller or
Assignor have been completed to the satisfaction of Teller. Any alterations or
other modifications to the improvements on the Property have been approved by
Teller and the improvements on the Property as of the Effective Date comply in
all material respects with the requirements under the Sublease. Teller has
53
approved the location, size and material of all signs displayed by Assignor on
the Property and upon completion of the acquisition of Assignor's interest in
the Sublease, Assignee shall have the right to replace each of Assignor's signs
with Assignee's signs of comparable materials and quality. Notwithstanding the
provisions of paragraph 8 of the Sublease, Teller hereby acknowledges that
Assignor (and following the Effective Date, Assignee) shall in no event be
obligated to make any repairs or alterations to the Property required pursuant
to any governmental requirements, including, without limitation, the Americans
with Disabilities Act of 1990;
(j) Improvement Contributions; Improvement Note. Teller has timely
contributed Forty-Five Thousand Dollars ($45,000) toward remodeling and
reconditioning of the Property as required by the provisions of paragraph 7 of
the Sublease and paragraph 7 of the First Addendum, and Assignor has properly
spent such monies on remodeling and reconditioning of the Property as required
by such paragraphs and to Teller's satisfaction. In addition, Teller has made an
unsecured loan in the amount of Fifty Thousand Dollars ($50,000) as contemplated
by the provisions of paragraph 7 of the Sublease and paragraph 7 of the First
Addendum, and the terms of such paragraphs constitute the unsecured "note"
contemplated thereby for such purposes (the "Improvement Note"), there being no
separate promissory note or other written evidence of such obligation. Assignor
is currently obligated under the Improvement Note to repay Teller the amount of
Fifty Thousand Dollars ($50,000), which amount is to be fully amortized over
three (3) years from the date of issuance on June 15, 1995 at twelve percent
(12%) interest. Based upon the foregoing, Assignor's monthly payments under the
Improvement Note are One Thousand Six Hundred Sixty and 72/100 ($1,660.72),
payable on or before the 22nd day of each calendar month, all such payments
owing through the date of execution of this Four Party Agreement having been
timely paid, and there are not other defaults outstanding with respect to such
Improvement Note. As of September 22, 1995, the outstanding principal and
accrued interest owing under the Improvement Note is Forty-Five Thousand Two
Hundred Eighty Seven and 01/100 Dollars ($45,287.01), and the Improvement Note
may be prepaid by Assignor (or by Assignee following the Effective Date) at any
time, without penalty. Teller hereby irrevocably consents to Assignor's
assignment and Assignee's assumption of all of the obligations under the
Improvement Note; provided, however, that Assignor shall not be released from
its obligation to make payment for the same in the event Assignee defaults under
such obligation. All monies advanced pursuant to the Improvement Note have been
properly spent on remodeling and reconditioning of the Property as required by
such paragraphs and to Teller's satisfaction; and
(k) Teller has previously paid, in full, all amounts owing to the City of
Cripple Creek pursuant to the City of Cripple Creek liens referenced in
paragraph 6 of the Second Addendum, and such liens either have been or by the
Effective Date will have been released by the City of Cripple Creek of record.
54
3.5 Assignee's Reliance Upon Teller's Statements and Agreements. Teller has
entered into this Four Party Agreement with respect to each of the foregoing
matters, and hereby acknowledges, understands and agrees that Assignee is
relying upon each of the foregoing statements, representations, warranties and
agreements of Teller in connection with its entering into this Four Party
Agreement, and that, but for such statements, representations, warranties and
agreements of Teller, Assignee would not have entered into this Four Party
Agreement or otherwise assumed the obligations under the Sublease and the
Sub-Option. Teller hereby acknowledges, understands and agrees that each of the
statements and representations set forth herein are true and correct as of the
date of execution of this Four Party Agreement, and will remain true and correct
and are hereby reaffirmed as being true and correct as of the Effective Date
(with the express exception of paragraph 3.4 (e) concerning the date through
which rent has been paid, and paragraph 3.4 (j) concerning the outstanding
principal owing under the Improvement Note; provided, however, that all rent due
and owing as of the Effective Date shall have been paid and all payments then
due and owing under the Improvement Note shall have been paid, and Teller hereby
confirms such fact as of the Effective Date), unless otherwise indicated by
Teller to Assignee in writing.
ARTICLE
IV
MISCELLANEOUS
4.1 Governing Law. Any dispute arising from this Four Party Agreement shall
be governed and interpreted according to the laws of the State of Colorado.
4.2 Counterparts. This Four Party Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
collectively constitute one and the same agreement.
4.3 Headings. All headings appearing in this Four Party Agreement are for
convenience only and shall be disregarded in construing this Four Party
Agreement.
4.4 Attorneys' Fees. In the event any action shall be brought between
Assignor, Assignee, Teller or Large to enforce or interpret any provision of
this Four Party Agreement or to protect or establish any right or remedy of
either Assignee or Assignor hereunder, including any action taken as a result of
filing bankruptcy or pursuant to any other laws related to creditor's rights,
the prevailing party shall recover all costs thereof, including, without
limitation, reasonable attorneys' fees and court costs, from the other party.
4.5 Entire Agreement. This Four Party Agreement embodies the entire
agreement between the parties relative to the subject matter hereof, and there
are no oral or parole agreements existing between Assignor, Assignee, Teller or
Large relative to the subject matter hereof which are not expressly set forth
herein and covered hereby.
55
4.6 Successors. This Four Party Agreement shall be binding on and inure to
the benefit of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, Assignor, Assignee, Teller and Large have each executed
this Four Party Agreement as of the date first above written.
"ASSIGNOR"
GOLD CREEK ASSOCIATES, L.P., a New
Jersey limited partnership
By: CHRYSORE, INC., a New Jersey corporation
Its: General Partner
By: /s/ Gary Findley
_____________________________
Gary Findley
Secretary
By: /s/ J. A. Gulbrandsen
_____________________________
J. A. Gulbrandsen
President
"ASSIGNEE"
WMCK ACQUISITION CORP., a Delaware corporation
By: /s/James D. Forbes
_____________________________
James D. Forbes
President
By: /s/ Erwin Haitzmann
_____________________________
Erwin Haitzmann
President
"TELLER"
TELLER REALTY, INC., a Colorado
corporation
By: /s/ Mel Peterson
_____________________________
Mel Peterson
President
"LARGE"
/s/ Harold William Large
_______________________________
Harold William Large, an individual
56
EXHIBIT "A"
(Copy of Master Lease/ Master Option)
57
EXHIBIT "B"
(Copy of Sublease/ Sub-Option)
58
EXHIBIT 10.64
CONSULTING AGREEMENT DATED AS OF JULY 1, 1996, BETWEEN WMCK
ACQUISITION CORP. AND JAMES GULBRANDSEN
59
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") dated as of July 1, 1996,
is between WMCK ACQUISITION CORP., a Delaware corporation (the "Company"), and
James A. Gulbrandsen (the "Consultant") residing at 3215 Orion Avenue, Colorado
Springs, Colorado 80906.
RECITALS
A. The Company and its affiliates are in the business of acquiring and
managing casinos in Colorado and throughout the world.
B. The Company has acquired Womack's Saloon & Gaming Parlor and Womack's
Golden Horseshoe and Diamond Lil's (jointly, the "Casino") in Cripple Creek,
Colorado.
C. Consultant has managed the Casino and the Company desires to obtain the
services of Consultant to undertake such duties and responsibilities, with
respect to the Casino and other casinos operated by the Company as the Company
may reasonably request.
D. In order to obtain the services of Consultant, the Company and
Consultant each desire to enter into this Agreement whereby Consultant will
serve as a consultant to the Company on the terms and conditions set forth
herein.
AGREEMENT
1. Engagement as Consultant. The Company agrees to engage Consultant and
Consultant agrees to be engaged by the Company as a consultant with respect to
the gaming operations of the Casino and other casinos operated by the Company
and its affiliates in Cripple Creek, Colorado and with respect to other casinos
operated by the Company for the compensation, duration and subject to the terms
and conditions hereinafter set forth, effective on the date hereof (the
"Effective Date").
2. Term. This Agreement shall commence on the date hereof and shall
continue for a period ending on the earlier of (i) Consultant's death, (ii)
termination pursuant to Sections 8, 9 or 10 hereof or (iii) July 1, 2003.
3. Basic Duties and Compensation. During the entire term of this Agreement,
Consultant shall perform such duties with respect to the Casino or other casinos
operated by the Company or its affiliates as the Board of Directors of the
Company may reasonably request from time to time. Consultant shall act in the
best interests of the Casino and the Company. If Consultant identifies gaming
opportunities that Consultant is permitted to pursue under this Agreement but
does not intend to pursue, Consultant shall refer such opportunities to the
Company. Consultant's duties shall include, but are not limited to, providing
analysis and reporting services to holders of a promissory note (the "Note")
issued by the Company to Gold Creek Associates, L.P. ("GCA"). As compensation
60
for the services to be rendered by Consultant under this Section 3, the Company
shall pay Consultant a consulting fee of $75,000.00 per year for GCA so long as
the Note is outstanding. This fee shall be payable to the Consultant in monthly
installments of $6,250.00.
4. Stock Transfer. As partial consideration for Consultant's agreement to
serve as a Consultant to the Company hereunder, Century Casinos, Inc., the
parent of the Company ("Century"), has agreed to issue to Consultant common
stock of Century pursuant to a Stock Transfer and Registration Rights Agreement
dated as of the date hereof (the "Stock Transfer Agreement"). The Company agrees
that any termination of this Agreement or Consultant's performance or failure to
perform under this Agreement shall not rescind or affect Consultant's rights
under the Stock Transfer Agreement.
5. Compensation. The Company may require Consultant to provide off-site
consulting services ("Off-Site Services"), or on-site consulting services, which
shall not involve a combined total of more than 12 man/months per year on the
part of Consultant and James A. Gulbrandsen ("On-Site Services"). The Company
shall allocate On-Site Services equitably between Consultant and James A.
Gulbrandsen. On-Site Services shall be deemed to be provided when Consultant
provides services for more than one day per week, and in such event Consultant
shall be deemed to have performed one week of services. The Company shall not
require Consultant to provide in any year more than 25 days of Off-Site Services
and On-Site Services that involve one day or less in any week. Consultant agrees
to provide On-Site Services from the date of this Agreement through September
30, 1996, subject to the Company's right to release Consultant from this
requirement or to extend this period through December 31, 1996. With respect to
other On-Site Services, the Company may require that Consultant provide such
services for a minimum of three consecutive months. The Company shall give
Consultant reasonable advance notice of a request to provide Off-Site or On-Site
Services. Consultant shall receive no additional compensation for the provision
of Off-Site Services. Consultant shall receive an additional $6,250.00 per month
(prorated based on 160 hours per month) for the provision of On-Site Services,
payable monthly.
6. Benefits. As a consultant, Consultant shall not be entitled to any
benefits available to executives or employees of the Company, including, but not
limited to group health, life and disability insurance benefits.
7. Reimbursement of Expenses. Consultant shall be entitled to be reimbursed
by the Company for all reasonable expenses incurred by him on behalf of the
Company in the performance of his duties pursuant to this Agreement.
Reimbursement of expenses under this Section 7 shall be made upon proper
accounting by Consultant and in accordance with the normal procedures of the
Company.
8. Termination for Cause. Any time after the Effective Date of this
Agreement, the Company shall have the right to terminate Consultant's engagement
hereunder upon the occurrence of any of the following events: (i) indictment or
conviction of a felony; (ii) loss by Consultant of any type of license required
by the Colorado Limited Gaming Control Commission or any other gaming authority;
61
or (iii) willful failure to follow reasonable directions of the Board of
Directors of the Company; or (iv) gross negligence, willful misconduct or
willful neglect in the performance of Consultant's duties that have a material
adverse effect on the Company (provided, however, that in an action by
Consultant for wrongful termination based upon a purported termination under
clause (iv), it shall be the Company's burden to prove that Consultant committed
an act enumerated in clause (iv). Notice of such termination shall be in writing
and must be authorized by a resolution of the Board of Directors of the Company
which states with particularity the cause or causes, the specific facts relied
upon and a termination date not less than 30 days after the date of delivery of
such writing. Consultant shall have the right to cure the breach before the
effective date of termination, on a one-time basis only, a proposed termination
under Section 8(iv).
9. Voluntary Termination by Consultant. Consultant shall have the right to
terminate this Agreement at any time on 30 days' prior written notice if the
Company commits a material breach; provided that the Company shall have a right,
on a one-time basis only, to cure the breach prior to the effective date of
termination.
10. Disability of Consultant. The Company shall have the right to terminate
this Agreement if, despite reasonable accommodations by the Company, Consultant
becomes physically or mentally disabled to such degree that he is unable to
perform the services hereunder due to such disability for a period of not less
than 60 consecutive days; provided, however, that the Company shall not have the
right to terminate this Agreement if, notwithstanding Consultant's disability
Gary F. Findlay is able to perform such services. Notice of such termination
shall be in writing and must be authorized by a resolution of the Board of
Directors of the Company which states with particularity the specific facts
relied upon and a termination date not less than 30 days after the date of
delivery of such writing.
11. Effect of Termination. Termination of this Agreement by the death of
Consultant or pursuant to Sections 8, 9 or 10 hereof shall end the obligation of
the Consultant to perform services hereunder, the obligation of the Company to
retain Consultant and the obligation of the Company to pay compensation
hereunder except to the extent accrued prior to the date of such termination.
Termination of this Agreement pursuant to Section 8 shall be in addition to any
and all other remedies at law and in equity to which the party terminating this
Agreement would otherwise be entitled.
12. Confidentiality. (a) Except in the furtherance of the Company's
interest, Consultant will not, directly or indirectly, during or after the term
of this Agreement, use, disseminate or disclose any information known by
Consultant as a consequence of his employment by the Company, about the
Company's plans or strategies for its existing casinos, including marketing and
merchandising, as well as any plans or strategies for future acquisitions of
casinos. This restriction shall not apply to information that has passed into
the public domain prior to or after its development by or for the Company other
than through acts or omissions attributable to Consultant.
62
(b) Upon termination of this Agreement, Consultant shall
forthwith deliver to the Company all notes, reports, notebooks,
letters, manuals, prints, drawings, photocopies of documents,
electronically recorded data and all other materials relating to
the Company, including copies thereof, that are in the possession
of or under the control of Consultant.
(c) This Section 12 shall survive termination of this
Agreement for a period of two years.
13. Competition. The Company and Consultant agree that Consultant will be
performing services for the Company of a uniquely personal nature and
accordingly agree as follows with respect to Consultant's activities:
(a) Other Businesses. During the term of this Agreement and
for a period of two years thereafter, Consultant shall not,
directly or indirectly, be a significant investor in, participate
in, or be employed in any capacity by a Competitor; provided that
investments held by Consultant as of the date of this Agreement
and attached as an exhibit hereto shall be excluded from this
proscription. For purposes of this Section, the term "Competitor"
shall mean any corporation, partnership, proprietorship or other
entity that is engaged in the gaming, restaurant, entertainment
or marketing business in Cripple Creek, Colorado or in real
estate in Cripple Creek, Colorado involving an area bounded by
First and Third Avenues and Carr and Warren Streets. This
covenant shall terminate if Consultant terminates this Agreement
as a result of the Company's material breach hereof.
(b) Organization of New Business. During the term of this
Agreement and for a period of two years thereafter, Consultant
shall not undertake planning for or organization of any business
activity competitive with the business of the Company in Cripple
Creek, Colorado or combine with other Consultants of the Company
for the purpose of organizing any such competitive business
activity. This covenant shall terminate if Consultant terminates
this Agreement as a result of the Company's material breach
hereof.
(c) Enforcement. Consultant agrees that the breach by him of
any of the foregoing covenants contained in Section 12 and in
this Section 13 is likely to result in irreparable harm to the
Company, and Consultant therefore consents and agrees that if he
violates any of such obligations, the Company shall be entitled,
among and in addition to any other rights or remedies available
hereunder or otherwise, to temporary and permanent injunctive
relief to prevent Consultant from committing or continuing a
breach of such obligations. Consultant hereby submits to the in
personam jurisdiction of any state or federal court located
within the State of Colorado in any action pertaining to or
arising under this Agreement. It is the desire, intent and
agreement of Consultant and the Company that the restrictions
placed on Consultant by this Section 13 be enforced to the
fullest extent permissible under the law and public policy
applied by any jurisdiction in which enforcement is sought.
14. Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other, except that the
Company may assign this Agreement in any transaction involving a merger or sale
of assets to any successor to the business of the Company.
63
15. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to such other relief to which such party may be entitled.
16. Waiver. Each party's failure to enforce any provision of this Agreement
shall not in any way be construed as a waiver of such provision, or prevent such
party thereafter from enforcing each and every other provision of this
Agreement.
17. Notices. Any notice given with respect to this Agreement shall be
deemed given and received when (i) received if personally hand-delivered in
writing; or (ii) on the third business day after the same is deposited in the
United States mail, postage prepaid, certified mail, addressed to a party at his
or its principal business address, or at such other address as a party may from
time to time designate by five days written notice to the other:
The Company: WMCK Acquisition Corp.
50 South Steele Street, Suite 755
Denver, Colorado 80209
Attn: Erwin Haitzmann
Consultant: James A. Gulbrandsen
3215 Orion Avenue
Colorado Springs, Colorado 80906
18. Independent Contractor. Consultant is an independent contractor with
respect to the Company. As such, Consultant shall be responsible for all taxes,
including self-employment taxes, attributable to the fees paid Consultant
hereunder.
19. Further Actions. Each party shall execute and deliver such other
documents and take such other actions as the other party may reasonably require
to carry out the transactions contemplated by this Agreement.
20. Colorado Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Colorado.
21. Entire Agreement; Modification. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof.
This Agreement may not be changed except in writing executed by all the parties
hereto.
22. Partial Invalidity. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable,
the remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
64
23. Captions. Captions to the Sections of this Agreement are for the
convenience of the parties, are not a part of the Agreement and shall not be
used for the interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
WMCK ACQUISITION CORP.
/s/ James D. Forbes
-------------------------
James D. Forbes
President
CONSULTANT
/s/ James A. Gulbrandsen
-------------------------
James A. Gulbrandsen
65
EXHIBIT 10.65
CONSULTING AGREEMENT DATED AS OF JULY 1, 1996, BETWEEN
WMCK ACQUISITION CORP, AND GARY Y. FINDLAY
66
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") dated as of July 1, 1996, is
between WMCK ACQUISITION CORP., a Delaware corporation (the "Company"), and Gary
Y. Findlay (the "Consultant") residing at 3083 Electra Drive South, Colorado
Springs, Colorado 80906.
RECITALS
A. The Company and its affiliates are in the business of acquiring and
managing casinos in Colorado and throughout the world.
B. The Company has acquired Womack's Saloon & Gaming Parlor and Womack's
Golden Horseshoe and Diamond Lil's (jointly, the "Casino") in Cripple Creek,
Colorado.
C. Consultant has managed the Casino and the Company desires to obtain
the services of Consultant to undertake such duties and responsibilities, with
respect to the Casino and other casinos operated by the Company as the Company
may reasonably request.
D. In order to obtain the services of Consultant, the Company and
Consultant each desire to enter into this Agreement whereby Consultant will
serve as a consultant to the Company on the terms and conditions set forth
herein.
AGREEMENT
1. Engagement as Consultant. The Company agrees to engage Consultant and
Consultant agrees to be engaged by the Company as a consultant with respect to
the gaming operations of the Casino and other casinos operated by the Company
and its affiliates in Cripple Creek, Colorado and with respect to other casinos
operated by the Company for the compensation, duration and subject to the terms
and conditions hereinafter set forth, effective on the date hereof (the
"Effective Date").
2. Term. This Agreement shall commence on the date hereof and shall
continue for a period ending on the earlier of (i) Consultant's death, (ii)
termination pursuant to Sections 8, 9 or 10 hereof or (iii) July 1, 2003.
3. Basic Duties and Compensation. During the entire term of this Agreement,
Consultant shall perform such duties with respect to the Casino or other casinos
operated by the Company or its affiliates as the Board of Directors of the
Company may reasonably request from time to time. Consultant shall act in the
best interests of the Casino and the Company. If Consultant identifies gaming
opportunities that Consultant is permitted to pursue under this Agreement but
does not intend to pursue, Consultant shall refer such opportunities to the
Company. Consultant's duties shall include, but are not limited to, providing
analysis and reporting services to holders of a promissory note (the "Note")
issued by the Company to Gold Creek Associates, L.P. ("GCA"). As compensation
67
for the services to be rendered by Consultant under this Section 3, the Company
shall pay Consultant a consulting fee of $75,000.00 per year for GCA so long as
the Note is outstanding. This fee shall be payable to the Consultant in monthly
installments of $6,250.00.
4. Stock Transfer. As partial consideration for Consultant's agreement to
serve as a Consultant to the Company hereunder, Century Casinos, Inc., the
parent of the Company ("Century"), has agreed to issue to Consultant common
stock of Century pursuant to a Stock Transfer and Registration Rights Agreement
dated as of the date hereof (the "Stock Transfer Agreement"). The Company agrees
that any termination of this Agreement or Consultant's performance or failure to
perform under this Agreement shall not rescind or affect Consultant's rights
under the Stock Transfer Agreement.
5. Compensation. The Company may require Consultant to provide off-site
consulting services ("Off-Site Services"), or on-site consulting services, which
shall not involve a combined total of more than 12 man/months per year on the
part of Consultant and James A. Gulbrandsen ("On-Site Services"). The Company
shall allocate On-Site Services equitably between Consultant and James A.
Gulbrandsen. On-Site Services shall be deemed to be provided when Consultant
provides services for more than one day per week, and in such event Consultant
shall be deemed to have performed one week of services. The Company shall not
require Consultant to provide in any year more than 25 days of Off-Site Services
and On-Site Services that involve one day or less in any week. Consultant agrees
to provide On-Site Services from the date of this Agreement through September
30, 1996, subject to the Company's right to release Consultant from this
requirement or to extend this period through December 31, 1996. With respect to
other On-Site Services, the Company may require that Consultant provide such
services for a minimum of three consecutive months. The Company shall give
Consultant reasonable advance notice of a request to provide Off-Site or On-Site
Services. Consultant shall receive no additional compensation for the provision
of Off-Site Services. Consultant shall receive an additional $6,250.00 per month
(prorated based on 160 hours per month) for the provision of On-Site Services,
payable monthly.
6. Benefits. As a consultant, Consultant shall not be entitled to any
benefits available to executives or employees of the Company, including, but not
limited to group health, life and disability insurance benefits.
7. Reimbursement of Expenses. Consultant shall be entitled to be reimbursed
by the Company for all reasonable expenses incurred by him on behalf of the
Company in the performance of his duties pursuant to this Agreement.
Reimbursement of expenses under this Section 7 shall be made upon proper
accounting by Consultant and in accordance with the normal procedures of the
Company.
8. Termination for Cause. Any time after the Effective Date of this
Agreement, the Company shall have the right to terminate Consultant's engagement
hereunder upon the occurrence of any of the following events: (i) indictment or
conviction of a felony; (ii) loss by Consultant of any type of license required
by the Colorado Limited Gaming Control Commission or any other gaming authority;
68
or (iii) willful failure to follow reasonable directions of the Board of
Directors of the Company; or (iv) gross negligence, willful misconduct or
willful neglect in the performance of Consultant's duties that have a material
adverse effect on the Company (provided, however, that in an action by
Consultant for wrongful termination based upon a purported termination under
clause (iv), it shall be the Company's burden to prove that Consultant committed
an act enumerated in clause (iv). Notice of such termination shall be in writing
and must be authorized by a resolution of the Board of Directors of the Company
which states with particularity the cause or causes, the specific facts relied
upon and a termination date not less than 30 days after the date of delivery of
such writing. Consultant shall have the right to cure the breach before the
effective date of termination, on a one-time basis only, a proposed termination
under Section 8(iv).
9. Voluntary Termination by Consultant. Consultant shall have the right to
terminate this Agreement at any time on 30 days' prior written notice if the
Company commits a material breach; provided that the Company shall have a right,
on a one-time basis only, to cure the breach prior to the effective date of
termination.
10. Disability of Consultant. The Company shall have the right to terminate
this Agreement if, despite reasonable accommodations by the Company, Consultant
becomes physically or mentally disabled to such degree that he is unable to
perform the services hereunder due to such disability for a period of not less
than 60 consecutive days; provided, however, that the Company shall not have the
right to terminate this Agreement if, notwithstanding Consultant's disability
James A. Gulbrandsen is able to perform such services. Notice of such
termination shall be in writing and must be authorized by a resolution of the
Board of Directors of the Company which states with particularity the specific
facts relied upon and a termination date not less than 30 days after the date of
delivery of such writing.
11. Effect of Termination. Termination of this Agreement by the death of
Consultant or pursuant to Sections 8, 9 or 10 hereof shall end the obligation of
the Consultant to perform services hereunder, the obligation of the Company to
retain Consultant and the obligation of the Company to pay compensation
hereunder except to the extent accrued prior to the date of such termination.
Termination of this Agreement pursuant to Section 8 shall be in addition to any
and all other remedies at law and in equity to which the party terminating this
Agreement would otherwise be entitled.
12. Confidentiality. (a) Except in the furtherance of the Company's
interest, Consultant will not, directly or indirectly, during or after the term
of this Agreement, use, disseminate or disclose any information known by
Consultant as a consequence of his employment by the Company, about the
Company's plans or strategies for its existing casinos, including marketing and
merchandising, as well as any plans or strategies for future acquisitions of
casinos. This restriction shall not apply to information that has passed into
the public domain prior to or after its development by or for the Company other
than through acts or omissions attributable to Consultant.
69
(b) Upon termination of this Agreement, Consultant shall
forthwith deliver to the Company all notes, reports, notebooks,
letters, manuals, prints, drawings, photocopies of documents,
electronically recorded data and all other materials relating to
the Company, including copies thereof, that are in the possession
of or under the control of Consultant.
(c) This Section 12 shall survive termination of this
Agreement for a period of two years.
13. Competition. The Company and Consultant agree that Consultant will be
performing services for the Company of a uniquely personal nature and
accordingly agree as follows with respect to Consultant's activities:
(a) Other Businesses. During the term of this Agreement and
for a period of two years thereafter, Consultant shall not,
directly or indirectly, be a significant investor in, participate
in, or be employed in any capacity by a Competitor. For purposes
of this Section, the term "Competitor" shall mean any
corporation, partnership, proprietorship or other entity that is
engaged in the gaming, restaurant, entertainment or marketing
business in Cripple Creek, Colorado or in real estate in Cripple
Creek, Colorado involving an area bounded by First and Third
Avenues and Carr and Warren Streets. This covenant shall
terminate if Consultant terminates this Agreement as a result of
the Company's material breach hereof.
(b) Organization of New Business. During the term of this
Agreement and for a period of two years thereafter, Consultant
shall not undertake planning for or organization of any business
activity competitive with the business of the Company in Cripple
Creek, Colorado or combine with other Consultants of the Company
for the purpose of organizing any such competitive business
activity. This covenant shall terminate if Consultant terminates
this Agreement as a result of the Company's material breach
hereof.
(c) Enforcement. Consultant agrees that the breach by him of
any of the foregoing covenants contained in Section 12 and in
this Section 13 is likely to result in irreparable harm to the
Company, and Consultant therefore consents and agrees that if he
violates any of such obligations, the Company shall be entitled,
among and in addition to any other rights or remedies available
hereunder or otherwise, to temporary and permanent injunctive
relief to prevent Consultant from committing or continuing a
breach of such obligations. Consultant hereby submits to the in
personam jurisdiction of any state or federal court located
within the State of Colorado in any action pertaining to or
arising under this Agreement. It is the desire, intent and
agreement of Consultant and the Company that the restrictions
placed on Consultant by this Section 13 be enforced to the
fullest extent permissible under the law and public policy
applied by any jurisdiction in which enforcement is sought.
14. Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other, except that the
Company may assign this Agreement in any transaction involving a merger or sale
of assets to any successor to the business of the Company.
70
15. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to such other relief to which such party may be entitled.
16. Waiver. Each party's failure to enforce any provision of this Agreement
shall not in any way be construed as a waiver of such provision, or prevent such
party thereafter from enforcing each and every other provision of this
Agreement.
17. Notices. Any notice given with respect to this Agreement shall be
deemed given and received when (i) received if personally hand-delivered in
writing; or (ii) on the third business day after the same is deposited in the
United States mail, postage prepaid, certified mail, addressed to a party at his
or its principal business address, or at such other address as a party may from
time to time designate by five days written notice to the other:
The Company: WMCK Acquisition Corp.
50 South Steele Street, Suite 755
Denver, Colorado 80209
Attn: Erwin Haitzmann
Consultant: Gary Y. Findlay
3083 Electra Drive South
Colorado Springs, Colorado 80906
18. Independent Contractor. Consultant is an independent contractor with
respect to the Company. As such, Consultant shall be responsible for all taxes,
including self-employment taxes, attributable to the fees paid Consultant
hereunder.
19. Further Actions. Each party shall execute and deliver such other
documents and take such other actions as the other party may reasonably require
to carry out the transactions contemplated by this Agreement.
20. Colorado Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Colorado.
21. Entire Agreement; Modification. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof.
This Agreement may not be changed except in writing executed by all the parties
hereto.
22. Partial Invalidity. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable,
the remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
71
23. Captions. Captions to the Sections of this Agreement are for the
convenience of the parties, are not a part of the Agreement and shall not be
used for the interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WMCK ACQUISITION CORP.
/s/ James D. Forbes
-------------------------
James D. Forbes
President
CONSULTANT
/s/ Gary Y. Findlay
-------------------------
Gary Y. Findlay
72
EXHIBIT 10.66
STOCK TRANSFER AND REGISTRATION RIGHTS AGREEMENT
DATED AS OF JULY 1, 1996, BETWEEN CENTURY CASINOS, INC.
AND JAMES A. GULBRANDSEN AND GARY Y. FINDLAY
73
STOCK TRANSFER AND REGISTRATION RIGHTS AGREEMENT
This Stock Transfer and Registration Rights Agreement (this "Agreement")
dated this 1 day of July, 1996, is between Century Casinos, Inc., a Delaware
corporation ("Century"), and [Gary Y. Findlay][James A. Gulbrandsen]
("Transferee").
Recitals
1. By an Asset Purchase Agreement dated as of September 27, 1995 (the
"Purchase Agreement"), WMCK Acquisition Corp., an affiliate of Century, and
Century agreed to purchase all of the assets of Gold Creek Associates, L.P.
("GCA").
2. Transferee is an executive officer of the general partner of GCA and, as
such, has been primarily responsible for the operation of the assets to be
conveyed under the Purchase Agreement.
3. By an Employment Agreement dated as of the date hereof, Century Casinos
Cripple Creek, Inc. ("CCCC"), an affiliate of Century, has agreed to employ
Transferee as manager of the casino operations of Century and its
affiliates in Cripple Creek, Colorado.
4. Century desires to issue common stock to Transferee as additional
consideration for the employment of Transferee by CCCC.
Agreement
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
and conditions contained herein, the parties agree as follows:
1. Issuance of Stock. Century hereby agrees to issue and deliver to Transferee
on _____, 1998 (the "Transfer Date") 530,000 shares of common stock of
Century (the "Shares"). Century represents and warrants to Transferee that
the Shares have been duly authorized and, when issued, will be validly
issued, fully paid and nonassessable. The number of the Shares issuable to
Transferee on the Transfer Date shall be subject to adjustment in the event
of a stock split, reverse stock split, recapitalization or other similar
event the record date for which occurs prior to the Transfer Date that
increases or decreases the number of outstanding shares held by the
existing stockholders of Century.
74
2. Investment Intent. Transferee represents and warrants to Century that he is
acquiring the Shares for investment purposes and without an intent to
distribute such Shares. Transferee has sufficient knowledge, skill and
experience in business, financial and/or investment matters relating to an
investment of the type represented by the Shares, and is capable of
evaluating the merits and risks of such investment. Transferee is an
experienced and sophisticated investor not in need of the protection
afforded investors by the Securities Act of 1933 (the "Act") or applicable
state securities laws. Transferee agrees that until such Shares are
registered under the Act, the certificates representing the Shares will
contain the following restrictive legend in addition to any other
restrictive legend reasonably required by Century to comply with applicable
law or regulation or its Certificate of Incorporation:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN
RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN THE ACT. AS
SUCH, THE PURCHASE OF THIS SECURITY WAS NECESSARILY WITH THE INTENT OF
INVESTMENT AND NOT WITH A VIEW FOR DISTRIBUTION. THEREFORE, ANY
SUBSEQUENT TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE
UNLAWFUL UNLESS IT IS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION
FROM REGISTRATION IS AVAILABLE. FURTHERMORE, IF THIS SECURITY IS NOT
REGISTERED UNDER THE ACT, NO SALE OR TRANSFER OF THIS SECURITY OR ANY
INTEREST THEREIN MAY BE MADE WITHOUT AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY THAT THE PROPOSED TRANSFER OR SALE DOES NOT AFFECT THE
EXEMPTIONS RELIED UPON BY THE COMPANY IN ORIGINALLY DISTRIBUTING THE
SECURITY AND THAT REGISTRATION IS NOT REQUIRED.
3. Registration Rights. Upon the written request of Transferee received by
Century no earlier than 60 days prior to the Transfer Date, Century shall
file, within 60 days of such receipt, a registration statement with the
Securities and Exchange Commission ("SEC") under the Act registering all
Shares then owned by Transferee; provided, however, that Century shall have
no obligation to register any Shares that are then eligible for resale by
Transferee pursuant to Rule 144(k) under the Act. Any such request by
Transferee shall specify the aggregate number of Shares proposed to be sold
and shall also specify the intended method of disposition thereof. Century
shall use its best efforts to keep the registration statement effective
until the earlier of six (6) months after the date of effectiveness of the
registration statement or until Transferee has sold the number of Shares
for which it requested registration (the "Distribution Period"). Transferee
shall not be entitled to make a demand pursuant to this Section 3 more than
one (1) time; provided, however, that (i) if no registration statement is
declared effective with respect to a demand which Transferee has made
(other than because Transferee has requested that the registration
75
statement not be declared effective) or (ii) if the registration statement
does not include all of the Shares that Transferee requests to be included,
that demand shall not be counted for purposes of this limit. Century may
defer filing a registration statement pursuant to this Section 3 for up to
120 days if in the reasonable judgment of Century's Board of Directors the
filing of such registration statement would force Century to make
disclosure of material nonpublic information the disclosure of which would
be detrimental to Century. Such option of Century's Board of Directors
shall be exercised only once with respect to each request.
4. Registration Procedures.
(a) Transferee shall furnish Century with all information and statements about
or pertaining to Transferee in such reasonable detail and on such timely
basis as is reasonably deemed by Century to be necessary or appropriate for
the preparation of the registration statement.
(b) Whenever Transferee has requested that Shares be registered pursuant to
Section 3 hereof, Century shall, subject to the provisions of Section 3
hereof:
(1) prepare and file with the SEC a registration statement with
respect to such Shares and use its reasonable efforts to cause
such registration statement to become effective as soon as
practicable after the filing thereof (provided that before filing
a registration statement or prospectus or any amendments or
supplements thereto, Century shall furnish counsel for Transferee
with copies of all such documents proposed to be filed);
(2) prepare and file with the SEC such amendments and supplements to
such registration statement and prospectus contained therein as
may be necessary to keep such registration statement effective
during the Distribution Period;
(3) furnish to Transferee the number of copies of such registration
statement, each amendment and supplement thereto, the prospectus
contained in such registration statement (including each
preliminary prospectus), and such other documents as Transferee
may reasonably request;
(4) use its best efforts to register or qualify such Shares under the
state blue sky or securities ("Blue Sky") laws of such
jurisdictions as Transferee reasonably requests (and to keep such
registrations and qualifications effective during the
Distribution Period, and to do any and all other acts and things
that may be reasonably necessary or advisable to enable
Transferee to consummate the disposition of such Shares in such
jurisdictions; provided, however, that Century will not be
required to do any of the following: (i) qualify generally to do
business in any jurisdiction where it would not be required but
for this Section 4(b), (ii) subject itself to taxation in any
such jurisdiction, or (iii) file any general consent to service
of process in any such jurisdiction;
(5) promptly notify Transferee, at any time when a prospectus
relating thereto is required to be delivered under the Act during
the period that Century is required to keep the registration
statement effective, of the occurrence of any event as a result
of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein in the light of the
circumstances under which they were made, not misleading, and
prepare a supplement or amendment to the prospectus so that, as
thereafter delivered to the purchasers of such Shares, the
prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading;
(6) provide a transfer agent and registrar (if Century does not
already have such an agent) for all such Shares not later than
the effective date of such registration statement; and
76
(7) ensure that, if Transferee is included as a party to the
underwriting agreement between Century and any underwriter,
Transferee shall not be required to make any representations or
warranties to or agreements with Century or the underwriters
other than representations, warranties or agreements regarding
Transferee's status, Transferee's stockholdings, Transferee's
intended method of distribution, and any other representations,
warranties, and agreements of selling stockholders customarily
included in an underwriting agreement.
5. Registration Expenses.
(a) If, pursuant to Section 3 hereof, Shares owned by Transferee are
included in a registration statement, then Transferee shall pay
all transfer taxes, if any, relating to the sale of its Shares,
the fees and expenses of its own counsel, and its pro rata
portion of any underwriting discounts or commissions or the
equivalent thereof.
(b) Except for the fees and expenses specified in Section 5(a) hereof
and except as provided below in this Section 5(b), Century shall
pay all expenses incident to the registration and to Century's
performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees, expenses of
compliance with Blue Sky laws, printing expenses, messenger and
delivery expenses, and fees and expenses of counsel for Century
and all independent certified public accountants and other
persons retained by Century.
6. Indemnity and Contribution.
In connection with any registration statement filed by Century to register
Shares owned by Transferee, the parties shall agree to such indemnification
and contribution provisions as are customary in transactions between
issuers and selling stockholders.
7. Binding Effect.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
8. Governing Law.
This Agreement shall be deemed to be an agreement made under the laws of
the State of Colorado and for all purposes shall be governed by and
construed in accordance with such laws.
77
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
CENTURY CASINOS, INC.
/s/ James D. Forbes
------------------------------------
James D. Forbes
President
/s/ Gary F. Findlay
------------------------------------
Gary F. Findlay
/s/ James A. Gulbrandsen
------------------------------------
James A. Gulbrandsen
78
INDEPENDENT AUDITORS' REPORT
To the Partners of Gold Creek Associates, L.P. (a Limited Partnership)
and the Board of Directors of Century Casinos, Inc.
We have audited the accompanying balance sheet of Gold Creek Associates, L.P. (a
Limited Partnership) as of December 31, 1995, and the related statements of
income, partners' capital and cash flows for the two years in the period then
ended. These financial statements are the responsibility of the Partnership'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 audit 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 financial statements present fairly, in all material
respects, the financial position of Gold Creek Associates, L.P. at December 31,
1995, and the results of its operations and its cash flows for the two years in
the period then ended in conformity with generally accepted accounting
principles.
As discussed in Note 6 to the financial statements, the Partnership's financial
statements for the year ended December 31, 1994, have been restated.
DELOITTE & TOUCHE LLP
Denver, Colorado
April 1, 1996
79
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
BALANCE SHEET
- --------------------------------------------------------------------------------
December 31, 1995
-----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 901,767
Accounts receivable, prepaid expenses and other,
including $100,000 receivable from related party 290,913
---------------------
Total current assets 1,192,680
PROPERTY AND EQUIPMENT, net 6,786,652
OTHER ASSETS, net of accumulated amortization of $16,589 84,347
=====================
TOTAL $ 8,063,679
=====================
-Continued on following page-
80
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
BALANCE SHEET (Continued)
- ----------------------------------------------------------------------------------------------------------------------------------
December 31, 1995
-----------------
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 967,911
Accounts payable and accrued liabilities 887,863
----------------------
Total current liabilities 1,855,774
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 2,464,341
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General partner 654,141
Limited partners 3,089,423
----------------------
Total partners' capital 3,743,564
----------------------
TOTAL $ 8,063,679
======================
See notes to financial statements.
81
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
STATEMENTS OF INCOME
- ----------------------------------------------------------------------------------------------------------------------------------
For the Year Ended December 31,
-------------------------------
(As restated,
see Note 6)
1995 1994
OPERATING REVENUE:
Casino $ $9,640,586 $ 7,039,614
Food and beverage 526,421 305,171
Other 69,768 49,426
------------------ ----------------
10,236,775 7,394,211
Less promotional allowances 351,937 242,599
------------------ ----------------
Net operating revenue 9,884,838 7,151,612
------------------ ----------------
OPERATING COSTS AND EXPENSES:
Casino 5,655,709 3,942,738
Food and beverage 324,881 197,817
General and administrative 1,446,442 830,902
Depreciation and amortization 544,948 388,628
------------------ ----------------
Total operating costs and expenses 7,971,980 5,360,085
------------------ ----------------
INCOME FROM OPERATIONS 1,912,858 1,791,527
OTHER INCOME (EXPENSE):
Interest expense (291,774) (356,011)
Loss on disposal of assets (65,410)
Interest income and other 39,132 21,553
------------------ ----------------
NET INCOME $ 1,594,806 $ 1,457,069
================== ================
See notes to financial statements.
82
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
- --------------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994 (As Restated)
- --------------------------------------------------------------------------------------------------------------------------------
General Limited
Partner Partners Total
------- -------- -----
Balance, December 31, 1993 $ 41,979 $ 1,492,077 $ 1,534,056
Net income 457,520 999,549 1,457,069
Distributions to partners (72,542) (23,098) (95,640)
------------------- ------------------ -----------------
Balance, December 31, 1994 426,957 2,468,528 2,895,485
Net income 500,769 1,094,037 1,594,806
Distributions to partners (273,585) (473,142) (746,727)
------------------- ------------------ -----------------
Balance, December 31, 1995 $ 654,141 $ 3,089,423 $ 3,743,564
=================== ================== =================
See notes to financial statements.
83
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------------------------------
For the Year Ended December 31,
-------------------------------
(As restated,
see Note 6)
1995 1994
---- ----
CASH FLOWS FROM OPERATIONS:
Net income $ 1,594,806 $ 1,457,069
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization 544,948 388,628
Loss on disposal of assets 65,410
Changes in operating assets and liabilities:
Accounts receivable, prepaid expenses and other assets (231,369) (2,513)
Accounts payable and accrued liabilities 407,052 83,999
---------------- ---------------
Net cash provided by operations 2,380,847 1,927,183
---------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (573,454) (231,409)
Proceeds received from sale of assets 2,811
---------------- ---------------
Net cash used in investing activities (570,643) (231,409)
---------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 50,000
Principal repayments on borrowings (710,944) (1,355,249)
Distributions to partners (746,727) (95,640)
---------------- ---------------
Net cash used in financing activities (1,407,671) (1,450,889)
---------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS 402,533 244,885
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 499,234 254,349
---------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 901,767 $ 499,234
================ ===============
-Continued on following page-
84
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
STATEMENTS OF CASH FLOWS (Continued)
- --------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
For the Year Ended December 31,
1995 1994
---- ----
Property and equipment acquired through long-term financing $ 1,703,264 $ 524,405
Property and equipment returned to vendor in satisfaction of remaining
financing obligation $ 533,442
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid by the Partnership was $265,462 in 1995 and $357,466 in 1994.
See notes to financial statements.
85
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
Gold Creek Associates, L.P. (a limited partnership), doing business as
Womack's Saloon & Gaming Parlor (the "Partnership"), operates a casino located
in Cripple Creek, Colorado. The Partnership was formed on February 15, 1992, and
the casino began doing business on July 19, 1992. The Partnership expanded its
gaming operations in May 1994, when it began operating the neighboring Diamond
Lil's casino. In July 1995 the Partnership began operating its other neighboring
casino, Wild Bill's, which was subsequently renamed Womack's Golden Horseshoe.
The general partner of the Partnership is Chrysore, Inc., which holds an
interest of 31.4%. The remaining 68.6% is held by approximately 30 limited
partners.
2. SIGNIFICANT ACCOUNTING POLICIES
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 Values of Financial Instruments," the
Partnership 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 Partnership uses alternative
valuation techniques such as calculating the present value of estimated future
cash flows utilizing risk-adjusted discount rates.
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.
Revenue Recognition - Casino revenue is the net win from gaming activities,
which is the difference between gaming wins and losses.
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
$179,000 in 1995 and $138,000 in 1994.
Gaming Taxes - Gaming taxes are recorded in the accompanying financial
statements by applying the estimated effective tax rate for the taxing
authority's fiscal year, which ends on September 30, to the Partnership's
taxable gaming revenue.
Income Taxes - The Partnership is not subject to federal or state income
taxes on its income as such taxes are the responsibility of the partners.
Accordingly, no provision or liability for income taxes is included in the
accompanying financial statements.
Recently Issued Accounting Pronouncement - The Financial Accounting
Standards Board ("FASB") issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," in March 1995.
This statement, effective for the Partnership's fiscal year ending December 31,
1996, requires that long-lived assets and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Management believes that if SFAS No. 121 had been applied in
preparing its 1995 financial statements, it would not have had a significant
effect on the financial position or results of operations of the Partnership.
86
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1995 consists of the following:
Estimated
Service Life
in Years
--------
Land and improvements $ 2,216,283
Buildings and improvements 1,848,740 31.5
Gaming equipment 3,464,781 5 - 7
Furniture and office equipment 237,877 7
-----------------
7,767,681
Less: accumulated depreciation and amortization (981,029)
-----------------
Property and equipment, net $ 6,786,652
=================
Equipment recorded under capital leases, consisting primarily of gaming
equipment, totaled $223,787, less accumulated amortization of $55,928,
at December 31, 1995.
4. LONG-TERM DEBT, LEASES, COMMITMENTS AND CONTINGENCIES
Long-term debt, including capital lease obligations, at December 31, 1995
consist of the following:
Note payable secured by first mortgage on building in Cripple Creek,
CO, payable in monthly installments of $14,945 including interest
at 9%, maturing in July 1999
with a balloon payment of approximately $1,000,300 $ 1,267,589
Note payable to bank, secured by second mortgage on
building in Cripple Creek, payable in monthly installments
of $8,262, including interest at a floating rate, maturing
in July 1999 300,989
87
Note payable secured by gaming equipment, payable in
monthly installments of $39,076, including interest
at 12%, maturing in May 1998 1,100,872
Note payable secured by gaming equipment, payable in
monthly installments of $10,309, plus interest at 12%,
maturing in July 1998 333,294
Notes payable secured by gaming equipment, payable in
monthly installments of $5,668, including interest at
14%, maturing in April and July 1996 33,435
Note payable secured by gaming equipment, payable in
monthly installments of $2,728, including interest at
12.5%, maturing in January 1997 35,256
Note payable secured by computer equipment, payable in
monthly installments of approximately $25,000,
including interest at 12%, maturing in June 1996 149,477
Note payable secured by gaming equipment, payable in
monthly installments of $5,523, including interest at
14%, maturing in May 1996 59,451
Note payable, unsecured, payable in monthly installments
of $1,660, including interest at 12%, maturing in June 1998 42,859
Capital lease obligations 109,030
----------------
Total long-term debt and capital lease obligations 3,432,252
Less current portion (967,911)
=================
Long-term portion $ 2,464,341
=================
The note payable to bank bears interest at the bank's base rate plus
1%, which was 10.25% at December 31, 1995, and is adjustable daily. The
required monthly payments of $8,262 are based on an imputed interest
rate of 11%. Monthly payments are applied to interest first, then
principal.
Scheduled maturities of long-term debt and capital lease obligations at
December 31, 1995, are as follows:
Total
-----
1996 $ 967,911
1997 746,101
1998 611,709
1999 1,106,531
================
Total $ 3,432,252
================
88
Future minimum payments under capital lease obligations and commitments under
noncancelable operating leases at December 31, 1995, are as follows:
Capital Leases Operating
Leases
1996 $ 67,349 $ 367,200
1997 52,845 367,200
1998 3,343 367,200
1999 367,200
2000 367,200
Thereafter 1,433,400
---------------- ----------------
Future minimum lease payments 123,537 $ 3,269,400
================
Less amounts representing interest (14,507)
----------------
Present value of minimum lease payments 109,030
Less current portion (58,533)
----------------
Long-term portion $ 50,497
================
Capital lease obligations represent vendor-financed purchases of gaming
equipment. Noncancelable operating leases consist of leases with
unrelated third parties for portions of the building in which the
Partnership conducts its casino operations. Rental expense was $365,040
in 1995 and $199,597 in 1994. The Partnership is party to legal
proceedings arising in the normal course of business. Management
believes that the final outcome of these matters will not have a
material adverse impact on the Partnership's financial position or
results of operations.
5. RELATED PARTY TRANSACTIONS
During the year ended December 31, 1995, the Partnership paid management
fees totaling $157,300 to its general partner. At December 31, 1995, the
Partnership had a receivable of $100,000 for advances made to the general
partner. The advances were repaid in early 1996.
89
6. RESTATEMENT OF 1994 FINANCIAL STATEMENTS
The Partnership's 1994 financial statements have been restated from amounts
previously reported. The effects of the restatement on partners' capital at
January 1, 1994 and on net income for the year ended December 31, 1994 are as
follows:
Net Income
Partners' Capital for the Year Ended
at January 1, 1994 December 31, 1994
------------------ -----------------
As previously reported $ 1,755,421 $ 1,565,937
Decrease due to:
Adjustment of gaming tax expense from marginal
to effective rate (119,124) (53,469)
Expensing cost of chips and tokens previously
capitalized (34,335)
Recognition of liability for promotion program (47,495) (29,782)
Expensing of other costs previously capitalized (20,411) (25,617)
====================== =======================
As restated $ 1,534,056 $ 1,457,069
====================== =======================
The previously reported distributions to partners for the year ended
December 31, 1994 have been restated as follows:
General Limited
Partner Partners Total
------- -------- -----
Distributions as previously reported $ 201,456 $ 440,123 $ 641,579
============== =============== ===============
Distributions as restated $ 20,780 $ 74,860 $ 95,640
============== =============== ===============
The distributions previously reported have been reduced by amounts
which were not declared and paid until 1995. Such amounts were previously
included in current liabilities at December 31, 1994.
7. DISTRIBUTION TO PARTNERS
Subsequent to December 31, 1995, the Partnership made cash distributions of
$282,600 to the general partner and $617,400 to the limited partners in
accordance with provisions of the Partnership agreement.
90
8. PROPOSED SALE OF ASSETS
In September 1995 the Partnership signed a definitive agreement to sell
substantially all of its assets to a wholly-owned subsidiary of Century Casinos,
Inc. ("Century"). The total sales price is approximately $13.5 million,
consisting of an anticipated cash component of $5 million, a promissory note of
$5 million to be issued by Century and approximately $3.5 million of existing
debt of the Partnership to be assumed by Century. The cash consideration is
subject to adjustment by the amount of the Partnership's working capital, as
defined, at closing. Additionally, the agreement provides that two years after
the closing of the transaction, Century will issue 1,060,000 shares of its
common stock to two principals of the Partnership's general partner who will be
entering into employment contracts with Century at closing. Closing of the
transaction is subject to Century securing acceptable financing and obtaining
required regulatory approvals. Century has made escrow deposits totaling
$400,000 toward the purchase price. The deposits are subject to forfeiture to
the Partnership under certain circumstances and are not reflected in the
accompanying financial statements. The Partnership anticipates that, should all
the foregoing requirements be met, the transaction will close in the second
quarter of 1996.
9. EVENT SUBSEQUENT TO APRIL 1, 1996 (Unaudited)
On July 1, 1996, the sale of assets described in Note 8 was consummated.
The total sales price of approximately $13.5 million consisted of a base cash
payment of $5 million plus $320,000 for the amount of estimated working capital
as of the closing date (subject to final determination), a promissory note of
$5.2 million and approximately $3 million of debt to be assumed by Century. The
number of shares to be issued to two principals of the Partnership's general
partner is subject to upward adjustment, determined by a formula, to the extent
that the trading price of Century's stock is less than $1.58 at the time of
issuance, and subject to downward adjustment to the extent that the trading
price exceeds $4.00.
The promissory note issued to the Partnership bears interest at 9% and
provides for monthly payments of only interest for eighteen months; thereafter,
monthly principal payments of $43,121, plus interest on the unpaid principal,
are required, with a final balloon principal payment of $2,328,000 due July
2003. The note is secured by substantially all of the tangible assets sold,
subject to existing encumbrances, and Century is required to meet certain
financial covenants.
91
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
BALANCE SHEET (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
March 31, 1996
--------------
CURRENT ASSETS:
Cash and cash equivalents
$ 974,897
Accounts receivable, prepaid expenses and other, 203,329
---------------------
Total current assets 1,178,226
PROPERTY AND EQUIPMENT, net 6,597,888
OTHER ASSETS, net of accumulated amortization of $19,343 78,675
=====================
TOTAL $ 7,854,789
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 856,048
Accounts payable and accrued liabilities 819,526
----------------------
Total current liabilities 1,675,574
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 2,242,009
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General partner 701,441
Limited partners 3,235,765
----------------------
Total partners' capital 3,937,206
----------------------
======================
TOTAL $ 7,854,789
======================
See notes to financial statements.
92
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
STATEMENTS OF INCOME (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
For the Three Months Ended March 31,
1996 1995
---- ----
OPERATING REVENUE:
Casino $ 2,850,047 $ 1,713,781
Food and beverage 132,730 63,692
Other 11,499 8,326
-------------------- ------------------
2,994,276 1,785,799
Less promotional allowances (94,328) (58,769)
-------------------- ------------------
Net operating revenue 2,899,948 1,727,030
-------------------- ------------------
OPERATING COSTS AND EXPENSES:
Casino 1,422,177 1,058,820
Food and beverage 44,835 4,078
General and administrative 328,097 214,644
Depreciation and amortization 127,341 102,703
-------------------- ------------------
Total operating costs and expenses 1,922,450 1,380,245
-------------------- ------------------
INCOME FROM OPERATIONS 977,498 346,785
OTHER INCOME (EXPENSE):
Interest expense (128,999) (65,128)
Loss on disposal of assets (44,591)
Interest income and other 9,418 6,873
-------------------- ------------------
NET INCOME
$ 813,326 $ 288,530
==================== ==================
See notes to financial statements.
93
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
- --------------------------------------------------------------------------------------------------------------------------------
For the Three Months Ended March 31,
1996 1995
---- ----
CASH FLOWS FROM OPERATIONS
$ 1,007,423 $ 527,579
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES: 19,586 (123,579)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES: (953,879) (669,561)
------------------ ------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 73,130 (265,561)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 901,767 499,737
------------------ ------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 974,897 $ 234,176
================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid by the Partnership was $128,999 in 1996 and $65,128 in 1995.
See notes to financial statements.
94
GOLD CREEK ASSOCIATES, L.P. (a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
Gold Creek Associates, L.P. (a limited partnership), doing business as
Womack's Saloon & Gaming Parlor (the "Partnership"), operates a casino located
in Cripple Creek, Colorado. The Partnership was formed on February 15, 1992, and
the casino began doing business on July 19, 1992. The Partnership expanded its
gaming operations in May 1994, when it began operating the neighboring Diamond
Lil's casino. In July 1995 the Partnership began operating its other neighboring
casino, Wild Bill's, which was subsequently renamed Womack's Golden Horseshoe.
The general partner of the Partnership is Chrysore, Inc., which holds an
interest of 31.4%. The remaining 68.6% is held by approximately 30 limited
partners. The accompanying financial statements and related notes have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. In the opinion of
management, all adjustments (consisting of only normal recurring accruals)
considered necessary for fair presentation of financial position, results of
operations and cash flows have been included. These financial statements should
be read in conjunction with the Partnership's financial statements and notes
thereto for the year ended December 31, 1995.
2. EVENT SUBSEQUENT TO MARCH 31, 1996 - SALE OF ASSETS
On July 1, 1996, the Partnership sold substantially all of its assets to a
wholly-owned subsidiary of Century Casinos, Inc.("Century"). The total sales
price was approximately $13.5 million, consisting of a base cash payment of $5
million plus $320,000 for the amount of estimated working capital as of the
closing date, a promissory note of $5.2 million issued to the Partnership and
approximately $3 million of existing debt of the Partnership to be assumed by
Century. The working capital portion of the sales price is subject to final
determination sixty days after the closing date. Additionally, the agreement
provides that two years after the closing of the transaction, Century will issue
1,060,000 shares of its common stock, valued at approximately $2 million based
on recent trading prices, to two principals of the Partnership's general
partner, which individuals have entered into consulting contracts with Century
at closing. The number of shares to be issued is subject to upward adjustment,
determined by a formula, to the extent that the trading price of Century's stock
is less than $1.58 at the time of issuance, and subject to downward adjustment
to the extent that the trading price exceeds $4.00. The promissory note issued
to the Partnership bears interest at 9% and provides for monthly payments of
only interest for eighteen months; thereafter, monthly principal payments of
$43,121, plus interest on the unpaid principal, are required, with a final
balloon principal payment of $2,328,000 due July 2003. The note is secured by
substantially all of the tangible assets sold, subject to existing encumbrances,
and Century is required to meet certain financial covenants.
95
PRO FORMA COMBINED FINANCIAL INFORMATION (Unaudited)
INTRODUCTION
The accompanying pro forma combined balance sheet as of March 31, 1996 has
been prepared to reflect, on a pro forma basis, the effects of the acquisition
of assets and assumption of liabilities of Gold Creek Associates, L.P. ("Gold
Creek") by Century Casinos, Inc. ("Century") as if the acquisition had occurred
on March 31, 1996. The acquisition was consummated on July 1, 1996. The
transaction is more fully described in Item 2, under the heading "Acquisition of
Womack's Saloon & Gaming Parlor," elsewhere in this Form 8-K.
The accompanying pro forma combined income statements for the three months
ended March 31, 1996 and for the year ended December 31, 1995, were prepared as
if the acquisition had occurred on January 1, 1995. Material nonrecurring
charges resulting from the transaction which are expected to be included in the
determination of net income subsequent to March 31, 1996, have not been included
in the pro forma income statement for the three months ended March 31, 1996, but
have been separately disclosed.
The pro forma combined financial information is not necessarily indicative
of the results which actually would have occurred had the acquisition been
consummated on the dates indicated above, nor does it purport to represent the
combined future financial position or results of operations.
The historical financial information presented for Century and Gold Creek
has been derived from their audited financial statements for the year ended
December 31, 1995 and from their unaudited financial statements for the three
months ended March 31, 1996. The applicable historical Gold Creek financial
statements are included elsewhere herein.
96
CENTURY CASINOS, INC.
PRO FORMA COMBINED BALANCE SHEET (Unaudited)
As of March 31, 1996
--------------------
Historical Historical Pro Forma Pro Forma
Century Gold Creek Adjustments Combined
------- ---------- ----------- --------
(in thousands)
--------------
ASSETS
Current Assets
Cash, cash equivalents and short-term investment $ 3,769 $ 975 $ (4,920)(a) $ 4,298
(540)(b)
4,552 (c)
462 (d)
Other 624 203 6 (e) 833
---------- ---------- ---------- ----------
Total current assets 4,393 1,178 (440) 5,131
---------- ---------- ---------- ----------
Property and Equipment, net 4,780 6,598 320 (a) 11,698
Goodwill 5,935 8,237 (a) 14,841
540 (b)
129 (e)
Deferred costs 1,558 1,558
Other 1,609 79 (400)(a) 897
38 (d)
(429)(e)
---------- ---------- ---------- ----------
TOTAL ASSETS $ 18,275 $ 7,855 $ 7,995 $ 34,125
=========== ========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 505 $ 856 $ 1,361
Accounts payable, accrued liabilities and other 917 820 1,737
---------- ---------- ---------- ----------
Total current liabilities 1,422 1,676 0 3,098
---------- ---------- ---------- ----------
Long-term debt, net of current portion 1,690 2,242 $ 5,174 (a) 9,606
500 (d)
Shareholders' equity:
Common stock 118 11 (a) 170
41 (c)
Partners' capital 3,937 (3,937)(a)
Additional paid-in-capital 18,606 1,989 (a) 25,106
4,511 (c)
Foreign currency translation adjustment (9) (9)
Accumulated deficit (3,552) (294)(e) (3,846)
---------- ---------- ---------- ----------
Total shareholders' equity 15,163 3,937 2,321 21,421
---------- ---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 18,275 $ 7,855 $ 7,995 $ 34,125
=========== ========== ========== ===========
97
<FN>
Pro Forma Adjustments
(a) To record purchase of Gold Creek assets and assumption of existing
debt for cash of $5,000,000 (less previously paid escrow deposit of
$400,000, plus working capital adjustment of $320,000), issuance of
note to seller in principal amount of $5,174,000 and assumed issuance
of Century stock (valued at $2,000,000) to two principals of seller
two years after closing date of acquisition.
(b) To record estimated out-of-pocket costs of the acquisition incurred
subsequent to March 31, 1996.
(c) To record estimated net proceeds from the sale of 4,072,233 shares of
Century common stock to finance the acquisition.
(d) To record the issuance of a convertible debenture in the face amount
of $500,000, and related issuance costs of $37,500, to finance the
acquisition.
(e) To reclassify out-of-pocket costs of the acquisition incurred through
March 31, 1996, and to write off previously deferred costs relating to
financing efforts which did not result in the consummation of
financing.
</FN>
98
CENTURY CASINOS, INC.
PRO FORMA COMBINED INCOME STATEMENT (Unaudited)
For the Three Months Ended March 31, 1996
-----------------------------------------
Historical Historical Pro Forma Pro Forma
Century Gold Creek Adjustments Combined
------- ---------- ----------- --------
(in thousands, except share and per share data)
-----------------------------------------------
OPERATING REVENUE:
Casino $ 1,101 $ 2,850 $ 3,951
Food and beverage 14 39 53
Other 19 11 30
---------- ---------- ---------- ----------
Net operating revenue 1,134 2,900 4,034
---------- ---------- ---------- ----------
OPERATING COSTS AND EXPENSES:
Casino 425 1,422 1,847
Food and beverage 21 45 66
General and administrative 764 328 1,092
Depreciation and amortization 315 127 $ 164 (a) 606
---------- ---------- ---------- ----------
Total operating costs and expenses 1,525 1,922 164 3,611
---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS (391) 978 (164) 423
OTHER INCOME (EXPENSE), net 11 (165) (132)(b) (286)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (380) 813 (296) 137
PROVISION FOR INCOME TAXES 36 (c) 36
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (380) $ 813 $ (332) $ 101
========== ========== ========== =========
INCOME (LOSS) PER SHARE $ (0.03) $ 0.01
========== =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 11,602,839 16,735,072
========== ==========
<FN>
Pro Forma Adjustments
(a) To record goodwill amortization of $148,000 and additional
depreciation of $16,000 on fair value step-up to property and
equipment.
(b) To record interest expense of $15,000 on convertible debenture and
$117,000 on promissory note issued to Gold Creek.
(c) To adjust the provision for income taxes based on pro forma combined
pretax income. Due to the availability of net operating loss
carryforwards, the pro forma provision for income taxes consists of
$32,000 for the anticipated utilization of Century net operating loss
carryforwards related to a previous business combination, and $4,000
of alternative minimum tax.
The Company expects to record, in the second quarter of 1996, a charge to
operations of $294,000, net of income tax effects, relating to the write off of
previously deferred costs relating to financing efforts which did not result in
the consummation of financing. Such charge has not been reflected in the pro
forma combined income statement presented above.
</FN>
99
CENTURY CASINOS, INC.
PRO FORMA COMBINED INCOME STATEMENT (Unaudited)
For the Year Ended December 31, 1995
------------------------------------
Historical Historical Pro Forma Pro Forma
Century Gold Creek Adjustments Combined
------- ---------- ----------- --------
(in thousands, except share and per share data)
-----------------------------------------------
OPERATING REVENUE:
Casino $ 4,003 $ 9,641 $ 13,644
Food and beverage 133 174 307
Other 86 70 156
---------- ---------- ---------- ----------
Net operating revenue 4,222 9,885 14,107
---------- ---------- ---------- ----------
OPERATING COSTS AND EXPENSES:
Casino 1,794 5,656 7,450
Food and beverage 251 325 576
General and administrative 3,532 1,446 4,978
Depreciation and amortization 1,251 545 $ 657 (a) 2,453
---------- ---------- ---------- ----------
Total operating costs and expenses 6,828 7,972 657 15,457
---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS (2,606) 1,913 (657) (1,350)
OTHER INCOME (EXPENSE), net 3,518 (318) (526)(b) 2,674
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES 912 1,595 (1,183) 1,324
PROVISION FOR INCOME TAXES 300 4 (c) 304
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 612 $ 1,595 $ (1,187) $ 1,020
========== ========== =========== ==========
INCOME (LOSS) PER SHARE $ 0.06 $ 0.07
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,471,052 15,603,285
========== ==========
<FN>
Pro Forma Adjustments
(a) To record goodwill amortization of $593,000 and additional
depreciation of $64,000 on fair value step-up to property and
equipment.
(b) To record interest expense of $61,000 on convertible debenture and
$465,000 on promissory note issued to Gold Creek.
(c) To adjust the provision for income taxes based on pro forma combined
pretax income. Due to the availability of net operating loss
carryforwards, the adjustment for income taxes consists solely of
alternative minimum tax.
Included in other income for Century for the year ended December 31, 1995 is
a nonrecurring gain of $3,928,000 relating to the termination of a riverboat
gaming management contract.
</FN>
100