-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LP6RAHosyj3PQZgYQSOYI+vEYI5xWRlXkb/DJK6iB/ctjfoAwbvhZuXdlnX0q8XV 7v5HXYXm0x/52AlxWlfHVA== 0000911147-01-000005.txt : 20010409 0000911147-01-000005.hdr.sgml : 20010409 ACCESSION NUMBER: 0000911147-01-000005 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY CASINOS INC /CO/ CENTRAL INDEX KEY: 0000911147 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 841271317 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-22900 FILM NUMBER: 1588665 BUSINESS ADDRESS: STREET 1: 200-220 EAST BENNETT AVE STREET 2: SUITE 755 CITY: CRIPPLE CREEK STATE: CO ZIP: 80813 BUSINESS PHONE: 7196890333 MAIL ADDRESS: STREET 1: 200-220 EAST BENNETT AVENUE STREET 2: SUITE 755 CITY: CRIPPLE CREEK STATE: CO ZIP: 80813 FORMER COMPANY: FORMER CONFORMED NAME: CENTURY CASINOS INC DATE OF NAME CHANGE: 19940802 FORMER COMPANY: FORMER CONFORMED NAME: ALPINE GAMING INC DATE OF NAME CHANGE: 19930824 10KSB 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2000 Commission File No. 0-22290 - -------------------------- ------------------ CENTURY CASINOS, INC. ----------------------- (Name of small business issuer in its charter) Delaware 84-1271317 --------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 200 - 220 E. Bennett Ave., Cripple Creek, CO 80813 ---------------------------------------------------- (Address of principal executive offices) (Zip code) (719) 689-9100 --------------- (Issuer's telephone number, including area code) Securities Registered Pursuant to Section 12(b) of the Exchange Act: None. Securities Registered Pursuant to Section 12(g) of the Exchange Act: Common Stock, $.01 Par Value ---------------------------- (Title of classes) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ X ] State the issuer's revenues for its most recent fiscal year: $29,009,038 The aggregate market value of the voting common stock held by non-affiliates of the Registrant on March 23, 2001, was approximately $17,066,541 based upon the average of the reported range of sale price of such shares on Nasdaq for that date. As of March 23, 2001, there were 13,873,684 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE: Part III incorporates by reference from the Registrant's Definitive Proxy Statement for its 2001 Annual Meeting of Stockholders to be filed with the Commission within 120 days of December 31, 2000. 1 Item 1. Business. - ------- -------- GENERAL Century Casinos, Inc. and its subsidiaries (the "Company"), own and operate a limited-stakes gaming casino in Cripple Creek, Colorado, manage a casino in the Marriott Hotel in Prague, Czech Republic, own 65% of, is developing, and manages a hotel and casino resort in Caledon, South Africa, serve as concessionaire of small casinos on luxury cruise vessels and regularly pursue gaming opportunities internationally and in the United States. Prior to July 1, 1996, the Company's operations in Cripple Creek consisted of Legends Casino ("Legends"), which the Company had acquired on March 31, 1994, through a merger with Alpine Gaming, Inc. ("Alpine"). On July 1, 1996, the Company acquired the net assets of Gold Creek Associates, L.P. ("Gold Creek"), the owner of Womack's Saloon & Gaming Parlor ("Womacks"), which was adjacent to Legends. Following the acquisition of Womacks, both properties were renovated to facilitate operation and marketing of the combined properties as one casino under the name "Womacks/Legends Casino." The Company's operating revenue for 1999 was derived principally from its casino operations in Cripple Creek. In the year 2000, the acquisition of Caledon Casino Hotel & Spa has contributed significant revenues to the consolidated results of the Company as reported in Note 7 of the Consolidated Financial Statements. See the Consolidated Financial Statements and the notes thereto included herein. The Company was formed in 1992 to acquire ownership interests in, and to obtain management contracts with respect to, gaming establishments. The Company was founded by a team of career gaming executives who had worked primarily for an Austrian gaming company that owned and operated casinos throughout the world. The Company, formerly known as Alpine, is a result of a business combination completed on March 31, 1994, pursuant to which Century Casinos Management, Inc. ("Century Management") shareholders acquired approximately 76% of the then issued and outstanding voting stock of the Company, and all officer and board positions of the Company were assumed by the management team of Century Management. Effective June 7, 1994, the Company reincorporated in Delaware under the name "Century Casinos, Inc." Because the Company is the result of this transaction, the Company's business has been combined with that of Century Management, and references herein to the Company refer to the combined entities, unless the context otherwise requires. Information contained in this Form 10-KSB contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of words such as "may," "will," "expect,""anticipate," "estimate" or "continue," or variations thereon or comparable terminology. In addition, all statements, other than statements of historical facts, that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, and other such matters, are forward-looking statements. The future results of the Company may vary materially from those anticipated by management, and may be affected by various trends and factors, which are beyond the control of the Company. These risks include the competitive environment in which the Company operates, the Company's dependence upon the Cripple Creek, Colorado gaming market, the effects of governmental regulation and other risks described herein. 2 Property and Project Descriptions Womacks/Legends Casino, Cripple Creek, Colorado. On July 1, 1996, the Company purchased substantially all of the assets, and assumed substantially all of the liabilities, of Gold Creek, the owner of Womacks in Cripple Creek, Colorado. Following the Company's acquisition of Gold Creek, the Womacks property was consolidated with the Company's Legends Casino, and the combined properties have been operated and marketed since then as one casino under the name "Womacks/Legends Casino." Management implemented certain consolidation, expansion and capital improvement programs. The Company created openings in the common walls in order to open up and integrate the gaming areas of Legends and Womacks; expanded the existing player tracking system of Womacks to include all of the Legends gaming devices; made general interior enhancements; and installed additional gaming devices and replaced older generation equipment. Womacks/Legends Casino is located at 200 to 220 East Bennett Avenue in Cripple Creek, Colorado. The lots comprising 200 to 210 East Bennett Avenue are owned by wholly-owned subsidiaries of the Company and are collateralized by a first mortgage held by Wells Fargo Bank. See Note 5 to the Consolidated Financial Statements for further information. The Company holds a subleasehold interest in the real property and improvements located at 220 East Bennett Avenue. The sublease, as assigned to WMCK-Acquisition Corp., provides for monthly rental payments of $16,000, and expires on June 20, 2005 unless terminated by the Company with 12 months' advance notice. The Company has an option to acquire the property at the expiration of the sublease at an exercise price of $1,500,000. In June 1998, the Company acquired 22,000 square feet of land (the "Hicks Property") from an unaffiliated third party. The property, which is zoned for gaming, is adjacent to Womacks/Legends Casino. A partially-completed building structure that occupied a portion of the land was subsequently razed, and the entire property has been improved to provide the first paved customer parking spaces in the Cripple Creek market. The purchase price of $3.6 million was financed through the Company's revolving credit facility with Wells Fargo Bank. 3 Womacks/Legends Casino currently has approximately 608 slot and video devices and eight gaming tables. Womacks/Legends Casino has 150 feet of frontage on Bennett Avenue, the main gaming thoroughfare in Cripple Creek, and 110 feet of frontage on Second Street, with approximately 40,000 square feet of floor space. Management believes that, in addition to providing an adequate number of hotel rooms, an integral component in attracting gaming patrons to Cripple Creek is the availability of adequate, nearby parking spaces. Management believes that it has secured adequate parking for the operations of Womacks/Legends Casino. The Company presently owns or leases nearly four hundred parking spaces, including more than 100 spaces that became available in May 2000 through the purchase of two nearby parcels of land. In 1997, the Company exercised its purchase option to acquire three lots (formerly known as the "Wright Property"), consisting of 8,250 square feet of land across the street from Womacks/Legends Casino, for $785,000 in cash. This acquisition provides the Company with 30 additional parking spaces. The Company leases 99 contiguous parking spaces from the City of Cripple Creek. Annual rent payments total $90,000 and the lease agreement, as amended on February 17, 2000, expires on May 31, 2010. The agreement contains a purchase option whereby the Company may purchase the property for $3.25 million, less cumulative lease payments, at any time during the remainder of the lease term. The Company has paved the property and currently uses it for customer parking. In March 1999, the Company entered into a purchase option agreement for a piece of property, located in Cripple Creek across Bennett Avenue from its Womacks/Legends Casino. The agreement, as amended in February 2000, provides for an option period through March 31, 2004 and an exercise price of $1.5 million, less 50% of cumulative option payments through the exercise date. In May 2000, the Company completed its acquisition of two parcels of land located near its Womacks/Legends Casino for $1.85 million. The two parcels provide more than 100 parking spaces for casino patrons and those attending events held at the Womacks Events Center, located adjacent thereto. In August 2000, the Company opened the Womacks Events Center located near its Womacks/Legends Casino. The Company believes the 500-seat Womacks Events Center can further increase the number of visitors to Cripple Creek and add to the consistent growth experienced in the Cripple Creek gaming market. Through an arrangement with the City of Cripple Creek, Century intends to market the Events Center as an additional attraction bringing people to the City via meetings, conventions, shows and other special events on a year-round basis. As an additional benefit, the second floor of the building houses much of the Company's administration and accounting departments thereby freeing up valuable floor-space in its Womacks/Legends Casino and allowing for additional hotel and casino expansion. 4 The Caledon Casino, Hotel & Spa - Caledon, South Africa An application for a casino license in Caledon, province of the Western Cape, was filed in October 1999 with the Western Cape Gambling and Racing Board by Caledon Casino Bid Company (Pty) Limited ("CCBC"). The Company's subsidiary, Century Casinos Africa (Pty) Ltd "CCA"), originally had a 50% equity interest in CCBC, by virtue of an agreement entered into between CCA and CCBC, together with various affiliated entities. In December 1999, in anticipation of a successful application, the Company entered into a ten-year casino management agreement with CCBC, which agreement may be extended at the Company's option for multiple ten-year periods, whereby the Company will earn management fees based on percentages of annual gaming revenue and earnings before interest, income taxes, depreciation, amortization and certain other costs. On February 16, 2000, the Western Cape Board awarded Successful Applicant status to CCBC. On April 13 2000 CCBC was awarded the final license and the Company, through CCA, invested approximately $3.8 million (based on the exchange rate at that time) consisting of approximately $1.5 million ( 10 million South African Rands) in equity and $2.3 million in debt ( 15 million South African Rands). In December, 2000 the Company reported that, through a subsidiary, it had completed its acquisition of an additional 15% of The Caledon Casino, Hotel and Spa - raising its ownership of the project to 65%. Terms of the agreement included the payment of approximately $1.8 million U.S. Dollars by Century to its partners in exchange for 15% of the total ordinary shares of the project (valued at approximately $1.2 million) and a shareholder loan to the project previously held by its partners (with a value of approximately $600,000). The Caledon Casino Hotel and Spa is located approximately one hour's drive from Cape Town on approximately 600 acres (230 hectares) of land adjacent to the N-2 highway, the main thoroughfare between Cape Town and Durban. This highway is known as the Garden Route, passing through an established tourist area known for its popular coastal towns, whale watching and wineries. Caledon is home to a 100 year-old annual wild flower show and a well-known 200 year-old national landmark with mineral hot springs located on the resort site. The Caledon Casino, Hotel and Spa employs approximately 400 staff from the neighboring communities and includes a casino with 250 slot/video machines and 14 tables, a 92-room hotel, mineral hot springs facility, two restaurants, two bars, a gift shop, conference facilities, an outdoor amphitheatre and the Outdoor Experience - a corporate team building facility. In addition, zoning approval has been secured for the potential future development of the resort to include a championship golf course, up to 350 residential or time-share units, possible additional hotel accommodations and additional retail facilities. Casino Millennium, Prague, Czech Republic In January 1999, the Company reached a 20-year definitive agreement with Casino Millennium a.s., a Czech company, and with B.H. Centrum a.s., a Czech subsidiary of Bau Holding AG, one of the largest construction and development companies in Europe, to operate a casino in the five-star Marriott Hotel in Prague, Czech Republic. The Company provides casino management services in exchange for 10% of the casino's gross revenue, and has provided gaming equipment for 45% of the casino's net profit. The hotel and casino opened in July 1999. In January 2000, the Company entered into a memorandum of agreement to either acquire a 50% ownership interest in Casino Millennium a.s. or to form a new joint venture with B.H. Centrum a.s., which joint venture would acquire all of the assets of Casino Millennium. The Company anticipates that the transaction will be completed in 2001. 5 Silversea Cruises In May 2000, the Company signed a five-year casino concession agreement with Silversea Cruises, a world-renowned, six-star cruise line based in Fort Lauderdale, Florida. The agreement gives the Company the exclusive right to install and operate casinos aboard four Silversea vessels. The Company will operate each shipboard casino for its own account and pay concession fees based on gross gaming revenue Starting in late September with the new, 388-passenger Silver Shadow, Century began its shipboard casino operations. Within 60 days thereafter, the Company installed casinos on the 296-passenger vessels Silver Wind and Silver Cloud. Century will install its fourth casino aboard the new, 388-passenger Silver Whisper scheduled to depart on its maiden voyage in July of 2001. The Company anticipates that it will have an approximate total of 210 gaming positions on the four combined shipboard casinos. The World of ResidenSea On August 30, 2000 Century signed a five-year casino concession agreement with The World of ResidenSea Ltd., the owner and operator of the world's first ocean going luxury resort, based in Freeport, Bahamas. ResidenSea is the first to offer private residences on board a ship for purchase by customers. The ResidenSea vessel has a total of 198 suites (including 88 guest suites) ranging in price from $2 to $7 million. Century will equip and operate the shipboard casino with up to 45 gaming positions on the vessel that is scheduled to depart for its maiden voyage early in 2002. As with the casino concession agreements with Silversea, Century has negotiated a five-year concession agreement with ResidenSea, will operate each shipboard casino for its own account and pay concession fees based on gross gaming revenue. In addition, the Company has a right of first refusal to install casinos aboard any new ships built or acquired by ResidenSea during the term of the agreement. 6 Additional Company Projects In addition to Womacks/Legends Casino in Cripple Creek, Colorado, Caledon Casino, Hotel and Spa in Caledon , South Africa, Casino Millennium in Prague, Czech Republic, Silversea Cruises and ResidenSea, the Company has a number of potential gaming projects in various stages of development. Along with the capital needs of these potential projects, there are various other risks which, if they materialize, could materially adversely affect a proposed project or eliminate its feasibility altogether. For example, in order to conduct gaming operations in most jurisdictions, the Company must first obtain gaming licenses or receive regulatory clearances. To date, the Company has obtained gaming licenses or approval to operate gaming facilities in Colorado, Louisiana, on an American Indian reservation in California, the Czech Republic and the Western Cape province of South Africa. While management believes that the Company is licensable in any jurisdiction, each licensing process is unique and requires a significant amount of funds and management time. The licensing process in any particular jurisdiction can take significant time and expense through licensing fees, background investigation costs, fees of counsel and other associated preparation costs. Moreover, should the Company proceed with a licensing approval process with industry partners, such industry partners would be subject to regulatory review as well. The Company seeks to satisfy itself that industry partners are licensable, but cannot assure that such partners will, in fact, be licensable. Additional risks before commencing operations include the time and expense incurred and unforeseen difficulties in obtaining suitable sites, liquor licenses, building permits, materials, competent and able contractors, supplies, employees, gaming devices and related matters. In addition, certain licenses include competitive situations where, even if the Company is licensable, other factors such as the economic impact of gaming and financial and operational capabilities of competitors must be analyzed by regulatory authorities. All of these risks should be viewed in light of the Company's limited staff and limited capital. Also, the Company's ability to expand to additional locations will depend upon a number of factors, including, but not limited to: (i) the identification and availability of suitable locations, and the negotiation of acceptable purchase, lease, joint venture or other terms; (ii) the securing of required state and local licenses, permits and approvals, which in some jurisdictions are limited in number; (iii) political factors; (iv) the risks typically associated with any new construction project; (v) the availability of adequate financing on acceptable terms; and (vi) for locations outside the United States, all the risks of foreign operations, including currency controls, unforeseen local regulations, political instability and other related risks. Certain jurisdictions issue licenses or approval for gaming operations by inviting proposals from all interested parties, which may increase competition for such licenses or approvals. The development of dockside and riverboat casinos in the United States of America may require approval from the Army Corps of Engineers and will be subject to significant Coast Guard regulations governing design and operation. Most of these factors are beyond the control of the Company. As a result, there can be no assurance that the Company will be able to expand to additional locations or, if such expansion occurs, that it will be successful. Further, the Company anticipates that it will continue to expense certain costs, which have been substantial in the past and may continue to be substantial in the future, in connection with the pursuit of expansion projects 7 The following describes other activities of the Company. South Africa - Legislation enacted in 1996 in South Africa provides for the award of up to 40 casino licenses throughout the country. To date, the Company has entered into agreements with various local consortia to provide consulting services during the application phase, as well as casino management services should the Company's partners be awarded one or more licenses. Under South African gaming legislation passed in 1996, six casino licenses were allocated to the province of Gauteng - primarily for the Greater Johannesburg area. Silverstar Development Ltd., a consortium owned by trusts, corporations and individuals from the province, chose Century Casinos as equity and management partner for its proposed 1,000 gaming position casino, hotel and entertainment resort in the West Rand region (western portion of greater Johannesburg). Since joining forces more than four years ago, Century has helped Silverstar work through a series of legal issues regarding the award of this gaming license - culminating in March 2000 with Silverstar entering into an agreement with the competing license applicant. This agreement has settled all past claims and has brought both parties together in an effort to jointly secure the sixth and final gaming license in the province. In a process entered into with the Gauteng Gambling Board for their consideration of the amended proposal for a casino license, the parties jointly filed the requisite amendment application. There can be no certainty regarding the award of this license or that this license will ultimately be awarded to the consortium Silverstar is part of. Riverboat Development Agreement - Indiana. - In December 1995, the Company sold its 80% interest in Pinnacle Gaming Development Corp. ("Pinnacle") to an affiliate of Hilton Gaming Corporation and Boomtown, Inc. ("Hilton/Boomtown"). Pinnacle had been pursuing a riverboat gaming license application in Switzerland County, Indiana. Upon signing the agreement, the Company received a cash payment of $80,000 and recognized a gain on the sale of its investment of $26,627. The agreement provided for additional payments to the Company upon the occurrence of certain events. In September 1998, the Indiana Gaming Commission awarded a Certificate of Suitability to Pinnacle to conduct riverboat gaming in Switzerland County that resulted in the Company receiving a payment of $431,000 in the third quarter of 1998. The Company also received a payment of $1,040,000 in the third quarter of 1999 upon "groundbreaking" of the project. Additionally, the Company was entitled to receive installment payments of $32,000 per month for the first 60 months of the riverboat's operation; however, the Company elected to receive an aggregate discounted amount of $1,380,000, which was received and recorded as income in January 2000. 8 Revolving Credit Facility In March 1997, the Company entered into a four-year revolving line of credit facility (the "RCF") with Wells Fargo Bank ("Wells Fargo"). Various provisions of the RCF were subsequently amended, including an increase in the facility to $20 million in 1998 and an increase to $26 million in April 2000 whereby the line of credit decreases quarterly beginning in the fourth quarter of 2000. At December 31, 2000, the maximum available under the RCF was $25.3 million. An annual commitment fee of between three-eighths and one-half percent, payable quarterly, is charged on the unused portion of the RCF. The RCF also contains an interest rate matrix that ties the interest rate charged on outstanding borrowings to the Company's leverage ratio, as defined. Largely as a result of an improvement in the Company's leverage ratio, the Company's consolidated weighted-average interest rate on all borrowings decreased from 8.64% in 1999 to 8.58% in 2000. At December 31, 2000, the Company's unused borrowing capacity under the RCF was approximately $6.6 million. A portion of the proceeds of borrowings under the RCF was used for the development of The Caledon Casino, Hotel & Spa. The RCF is secured by substantially all of the real and personal property of Womacks/Legends Casino. Under the RCF, the Company is required to comply with certain customary financial covenants, and is subject to certain capital expenditure requirements and restrictions on investments. See Note 5 to the Consolidated Financial Statements for further information. Marketing Strategy Womacks/Legends Casino - The marketing strategy of Womacks/Legends Casino highlights promotion of Womacks Gold Club, a players club with a database containing profiles on nearly 50,000 members. Gold Club members receive benefits from membership, such as cash, merchandise, food and lodging. Those who qualify for VIP status receive additional benefits in addition to regular club membership. Status is determined through player tracking. Members receive information about upcoming events and parties, and, depending on player ranking, also receive invitations to special events and monthly coupons. Caledon Casino, Hotel & Spa - As with Womacks Casino described above, the marketing strategy of The Caledon Casino, Hotel & Spa highlights promotion of its players club and building its player information database. Players club members receive benefits such as cash, merchandise, food and lodging. Those who qualify for VIP status receive additional benefits in addition to regular club membership. Status is determined through player tracking. Members receive newsletters of upcoming events and parties, and, depending on player ranking, also receive invitations to special events and monthly coupons. Market Data The Cripple Creek Market - Cripple Creek is a small mountain town located approximately 45 miles southwest of Colorado Springs on the western boundary of Pikes Peak. Cripple Creek is an historic mining town, originally founded in the late 1800's following a large gold strike. Cripple Creek is a tourist town and its heaviest traffic is in the summer months. Traffic generally decreases to its low point in the winter months. Cripple Creek is one of only three Colorado cities, exclusive of Indian gaming operations, where casino gaming is legal, the others being Black Hawk and Central City. Cripple Creek operated approximately 29% of the gaming devices and generated 21% of gaming revenues for these three cities during the year ended December 31, 2000. As of December 31, 2000, there were 19 casinos operating in Cripple Creek. 9 The tables below set forth information obtained from the Colorado Division of Gaming regarding gaming revenue by market and slot machine data for Cripple Creek from calendar 1997 through 2000. This data is not intended by the Company to imply, nor should the reader infer, that it is any indication of future Colorado or Company gaming revenue.
GAMING REVENUE BY MARKET (IN $000'S) % change % change % change % change Over Over Over Over 1997 Prior Year 1998 Prior Year 1999 Prior Year 2000 Prior Year -------------------------------------------------------------------------------------------- CRIPPLE CREEK $ 108,628 5.1% $ 113,230 4.2% $122,385 8.1% $133,328 8.9% Black Hawk $ 234,631 6.7% $ 272,008 15.9% $354,474 30.3% $430,720 21.5% Central City $ 87,391 -1.7% $ 93,980 7.5% $ 73,742 -21.5% $ 63,380 -14.1% -------------------------------------------------------------------------------------------- COLORADO TOTAL $ 430,650 4.5% $ 479,218 11.3% $550,601 14.9% $627,428 14.0%
CRIPPLE CREEK SLOT DATA (IN $000'S) % change % change % change % change Over Over Over Over 1997 Prior Year 1998 Prior Year 1999 Prior Year 2000 Prior Year ------------------------------------------------------------------------------------------------ Total Slot Revenue $ 102,798 6.0% $ 107,690 4.8% $117,161 8.8% $128,198 9.4% (in $'000) Average Number Of Slots 4,507 8.0% 4,369 -3.1% 4,046 -7.4% 4,106 1.5% Average Win Per Slot Per Day 62 -1.6% 68 8.1% 81 19.9% 85 4.7%
Gaming in Colorado is "limited stakes," which restricts any single wager to a maximum of $5.00. While this limits the revenue potential of table games, management believes that slot machine play, which accounts for over 96% of total gaming revenues, is currently impacted only marginally by the $5.00 limitation. The Company faces intense competition from other casinos in Cripple Creek, including a handful of casinos of similar size and many other smaller casinos. There can be no assurance that other casinos in Cripple Creek will not undertake expansion efforts similar to those recently taken by the Company, thereby further increasing competition, or that large, established gaming operators will not enter the Cripple Creek market. The Company seeks to compete against these casinos through promotion of Womacks Gold Club and superior service to players. Management believes that the casinos likely to be more successful and best able to take advantage of the market potential of Cripple Creek will be the larger casinos that have reached a certain critical mass. 10
CENTURY CASINOS' PROPERTY IN CRIPPLE CREEK ( "WOMACKS/LEGENDS CASINO") (IN $000'S) % change % change % change % change Over Over Over Over 1997 Prior Year 1998 Prior Year 1999 Prior Year 2000 Prior Year --------------------------------------------------------------------------------------------- Total Slot Revenue $ 18,102 79.6% $ 18,597 2.7% $22,235 19.6% $23,670 6.5% (in $'000) Average Number Of Slots 547 59.9% 565 3.3% 592 4.8% 627 5.9% Average Win Per Slot Per Day $ 90.67 12.3% $ 90.18 -.05% $102.56 13.7% $103.15 .57% Market Share in % 17.61% 69.5% 17.27% -1.9% 18.91% 9.5% 18.46% -2.4%
The Company competes, to a far lesser extent, with 19 casinos in Black Hawk and 11 casinos in Central City. Black Hawk and Central City are also small mountain tourist towns, which adjoin each other and are approximately 30 miles from Denver and a two and one-half hour drive from Cripple Creek. The main market for Cripple Creek is the Colorado Springs metropolitan area, and the main market for Black Hawk and Central City is the Denver metropolitan area. In addition, there is intense competition among companies in the gaming industry generally, and many gaming operators have greater name recognition and financial and marketing resources than the Company. The Company competes with many established operators in gaming venues other than Cripple Creek. Many of these operators have greater financial, operational and personnel resources than the Company. There can be no assurance that the number of casino and hotel operations will not exceed market demand or that additional hotel rooms or casino capacity will not adversely affect the operations of the Company. The Caledon, South Africa Market - Caledon is a small agricultural community located approximately 60 miles east of Cape Town. Caledon lies on the N-2 highway - the main thoroughfare between Cape Town and Durban - and is known for its wild flower shows, wineries and the natural historic hot springs located on The Caledon site. Caledon is also a tourist town and the Company believes its heaviest traffic is experienced during the December holiday season (summer in South Africa). Management also believes that traffic will be somewhat slower in the winter months (June through September), but they are optimistic that the enhanced hot springs facilities and completed phase one amenities will attract additional patrons during this time. The Caledon Casino, Hotel and Spa operates its casino under one of only five licenses awarded in the Western Cape Province which has a population of approximately 4 million. Although the competition is limited by the number of casino licenses and the casinos will be geographically distributed, Management believes that the Caledon Casino Hotel and Spa will face intense competition from the other four casinos - particularly a large casino located in Capetown located approximately one hour from Caledon. The Company will strive to compete against these casinos by emphasizing Caledon's destination resort appeal in its marketing campaign, by promotion of its players club and by superior service to its players. 11 In addition, there is intense competition among companies in the South Africa gaming industry, and the gaming industry in general, and many gaming operators have greater name recognition, financial and marketing resources than the Company. The Company competes with many established operators in gaming venues other than the Western Cape Province. Many of these operators have greater financial, operational and personnel resources than the Company. There can be no assurance that the number of casino and hotel operations will not exceed market demand or that additional hotel rooms or casino capacity will not adversely affect the operations of the Company. Gaming in South Africa is "unlimited wagering" where each casino can set its own limits. As a result, the relationship between table games revenues and slot revenues will resemble more traditional gaming markets (unlike Cripple Creek where nearly 96% of gaming revenues are derived from the slot machines). The casino has 250 slot machines and 14 table games including blackjack, roulette and Caribbean Stud.
CENTURY CASINOS' PROPERTY IN CALEDON ( "THE CALEDON CASINO, HOTEL & SPA") (IN $000'S) 2000 ------ Total Slot Revenue (in $'000) $2,838 Average Number Of Slots 250 Average Win Per Slot Per Day $ 138 Other Gaming Revenue (in $'000) $ 698
The Caledon Casino opened for business on October 11, 2000. It was in operation for 82 days in the year 2000. In addition, the effects of recently opened competition are unknown. Accordingly, the above operating results may not be representative of the casino's operating results for an entire year. Employees Womacks/Legends Casino - The Company employs approximately 200 persons in Cripple Creek, CO on an equivalent full-time basis, including cashiers, dealers, food and beverage service personnel, facilities maintenance staff, and accounting and marketing personnel. No labor unions represent any employee group. A standard package of employee benefits is provided to full-time employees along with training and job advancement opportunities. In March 1998, the Company adopted a 401(k) Savings and Retirement Plan for its employees. Caledon Casino Hotel & Spa - The Caledon Casino Hotel & Spa employs approximately 400 persons on an equivalent full-time basis, including cashiers, dealers, food and beverage service personnel, facilities maintenance staff, and accounting and marketing personnel. No labor unions represent any employee group. A standard package of employee benefits is provided to full-time employees along with training and job advancement opportunities. 12 Seasonality Womacks/Legends Casino - The Company's business in Cripple Creek, CO is at its highest levels during the tourist season (i.e., from May through September). Its base level (i.e., October through April) is expected to remain fairly constant although weather conditions during this period could have a significant impact on business levels in Colorado. Caledon Casino Hotel & Spa - The Company's business in Caledon is expected to be seasonal; the anticipated highest levels of business activity, at least in South Africa, will occur in the holiday season in December. Caledon has a very mild climate and management is optimistic that it can maintain steady traffic to the Caledon Casino Hotel & Spa in the winter months (June through September) due to its enhanced historic hot springs facilities and phase one amenities scheduled for completion during the second quarter of 2001. Governmental Regulation Womacks/Legends Casino - The Company's gaming operations are subject to strict governmental regulations at state and local levels. Statutes and regulations can require the Company to meet various standards relating to, among other matters, business licenses, registration of employees, floor plans, background investigations of licensees and employees, historic preservation, building, fire and accessibility requirements, payment of gaming taxes, and regulations concerning equipment, machines, tokens, gaming participants, and ownership interests. Civil and criminal penalties can be assessed against the Company and/or its officers or stockholders to the extent of their individual participation in, or association with, a violation of any of the state and local gaming statutes or regulations. Such laws and regulations apply in all jurisdictions within the United States in which the Company may do business. Management believes that the Company is in compliance with applicable gaming regulations. For purposes of the discussion below, the term "the Company" includes its applicable subsidiaries. The Colorado Limited Gaming Control Commission ("Commission") has adopted regulations regarding the ownership of gaming establishments by publicly held companies (the "Regulations"). The Regulations require the prior clearance of, or notification to, the Commission before any public offering of any securities of any gaming licensee or any affiliated company. The Regulations require all publicly traded or publicly owned gaming licensees to comply with numerous regulatory gaming requirements including, but not limited to, notifying / filing with the Colorado Division of Gaming any proxy statements, lists of shareholders, new officers and directors of the Company, any shareholders obtaining 5% or more of the Company's common stock and any issuance of new voting securities. Other state regulatory agencies also impact the Company's operations, particularly its license to serve alcoholic beverages. Rules and regulations in this regard are strict, and loss or suspension of a liquor license could significantly impair, if not ruin, a licensee's operation. Local building, parking and fire codes and similar regulations could also impact the Company's operations and proposed development of its properties. 13 Caledon Casino Hotel & Spa - Caledon's gaming operations are subject to strict regulations by the Western Cape Gambling and Racing Board under national and provincial legislation. Statutes and regulations require the Company to meet various standards relating to, among other matters, business licenses, licensing of employees, historic preservation, building, fire and accessibility requirements, payment of gaming taxes, and regulations concerning equipment, machines, tokens, gaming participants, and ownership interests. Civil and criminal penalties can be assessed against the Company and/or its officers to the extent of their individual participation in, or association with, a violation of any of these gaming statutes or regulations. Management believes that the Company is in compliance with applicable gaming regulations. Casino Millennium - Casino Millennium's gaming operations are subject to strict regulations by the Czech Republic under national legislation. Statutes and regulations require the Company to meet various standards relating to, among other matters, business licenses, building,fire and accessibility requirements, payment of gaming taxes, and regulations concerning equipment, machines, tokens, gaming participants, and ownership interests. Civil and criminal penalties can be assessed against the Company and/or its officers to the extent of their individual participation in, or association with, a violation of any of these gaming statutes or regulations. Management believes that the Company is in compliance with applicable gaming regulations. Silversea Cruise Ships - The casinos onboard the cruise ships only operate when they are in international waters. Therefore, the gaming operations are not regulated by any national or local regulatory body. Management believes however that the Company follows standardized rules and practices in the daily operation of the casinos. Item 2. Properties. - ------- ---------- The Company's corporate offices are located at its Womacks/Legends Casino at 200 East Bennett Avenue, Cripple Creek, Colorado. See Item 1. "Business -- Property and Project Descriptions" herein for a description of the Company's other properties. See also Note 5 to the Consolidated Financial Statements for complete disclosure of the debt instruments which are secured by Company property. Item 3. Legal Proceedings. - ------- ------------------ The Company is not a party to, nor is it aware of, any pending or threatened litigation which, in management's opinion, could have a material adverse effect on the Company's financial position or results of operations. Item 4. Submission of Matters to a Vote of Security Holders. - ------- ----------------------------------------------------------- The 2000 annual meeting of the stockholders of the Company was held on June 15, 2000. At the annual meeting (i) the two Class III directors to the Board, Erwin Haitzmann and Gottfried Schellmann, were elected to the Board for a three year term; and (ii) a proposal to ratify the First Supplement to the Company's Rights Agreement whereby a "friendly group" will be allowed to accumulate additional shares of the Company's common stock without causing an inadvertent triggering or implementation of the rights plan was adopted by the stockholders of the Company. On the proposal to elect the Class III directors, the votes were: Erwin Haitzmann, 8,137,679 for, 38,196 against, and 4,384 abstained; Gottfried Schellmann, 8,137,679 for, 38,196 against, and 4,384 abstained. On the proposal to ratify the First Supplement to the Company's Rights Agreement, the results were: 8,138,778 for, 36,852 against, and 4,629 abstained, and 6,303,542 not voted. 14 Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. - ------- --------------------------------------------------------------------- The common stock of the Company began trading in the Nasdaq SmallCap Market on November 10, 1993. The following table sets forth the low and high sale price per share quotations as reported on the NASDAQ SmallCap Market of the common stock for the periods indicated. These quotations reflect inter-dealer prices, without retail mark-up, mark down or commission and may not necessarily represent actual transactions. Actual prices may vary.
Quarter Ended. Low High - ------------------ ----- ----- March 31, 1999 $0.75 $1.44 June 30, 1999 $0.97 $1.25 September 30, 1999 $0.88 $1.13 December 31, 1999 $0.88 $1.06 March 31, 2000 $0.97 $2.47 June 30, 2000 $1.50 $1.97 September 30, 2000 $1.44 $1.97 December 31, 2000 $1.50 $1.94
At December 31, 2000, the Company had approximately 115 shareholders of record of its common stock; management estimates that the number of beneficial owners is approximately 1,700. At the present time, management of the Company intends to use any earnings that may be generated to finance the growth of the Company's business. Accordingly, while payment of dividends rests within the discretion of the Board of Directors, no dividends have been declared or paid by the Company, and it does not presently intend to pay dividends. Item 6. Management's Discussion and Analysis of Financial Condition and Results - ------- ----------------------------------------------------------------------- of Operations -------------- Business Environment and Risk Factors The following discussion should be read in conjunction with the Company's consolidated financial statements and related notes included elsewhere herein. The Company's future operating results may be affected by various trends and factors beyond the Company's control. These include, among other factors, the competitive environment in which the Company operates, present dependence upon the Cripple Creek, Colorado gaming and the South African gaming markets, changes in the rates of gaming-specific taxes, shifting public attitudes toward the socioeconomic costs and benefits of gaming, actions of regulatory bodies, dependence upon key personnel, the speculative nature of gaming projects the Company may pursue, risks associated with expansion, and other uncertain business conditions that may affect the Company's business. With the exception of historical information, the matters discussed below under the headings "Results of Operations" and "Liquidity and Capital Resources," may include forward-looking statements that involve risks and uncertainties. The Company cautions the reader that a number of important factors discussed herein, and in other reports filed with the Securities and Exchange Commission, could affect the Company's actual results and cause actual results to differ materially from those discussed in forward-looking statements. 15 Results of Operations Net operating revenue increased significantly to $29,009,000 in 2000 from $23,584,000 in 1999. The Company's casino revenue increased from $22,726,000 in 1999 to $27,703,000 in 2000, or 21.9%. The Company's operating revenue for 1999 was derived principally from its casino operations in Cripple Creek. In the year 2000, the acquisition of Caledon Casino Hotel and Spa has contributed significant revenues to the consolidated results of the Company as reported in Note 7 of the Consolidated Financial Statements. The Company's share of the overall Cripple Creek market decreased slightly from 18.6% in 1999 to 18.1% in 2000. Womacks/Legends Casino operated approximately 15.3% of the gaming devices in the Cripple Creek market in 2000, with an average win per day per machine of $103 compared with a market average of $85. Gross margin from company-wide casino activities increased from 61% in 1999 to 63% in 2000. The increase in margin is attributable to a continuation of a focused management and marketing approach for Womacks/Legends Casino. At the same time, a significant number of new memberships in the casino's Gold Club were added again in 2000. Additional emphasis was put into further refining the product mix, upgrading both the interior of the facilities, as well as the slot machine mix. Parking capacity was expanded and made more convenient as part of the Company's ongoing efforts to provide the highest quality parking facilities for its customers. Also contributing to the casino margin improvement was a reduction in the gaming tax rate which has lowered the effective tax rate on gaming operations in Cripple Creek. Various other initiatives were undertaken that management believes have resulted in greater attention to customer service. Food and beverage revenue increased from $933,000 in 1999 to $1,377,000 in 2000, or 47.5%. The increase is principally due to improvement in operations that started to take effect in the second quarter of 1999. The cost of food and beverage promotional allowances, which are included in casino costs, decreased from $854,565 in 1999 to $828,900 in 2000. Hotel revenue increased from $149,000 to $257,000 principally as the result of the opening of the Hotel, Casino & Spa resort in Caledon S.A. General and administrative expense increased from $6,710,000 in 1999 to $8,004,000 in 2000, or 19.3%, but decreased slightly as a percentage of net operating revenue, from 28.5% in 1999 to 27.6% in 2000. In spite of one time costs of $624,000 related to the start up in Caledon, the Company was able to proportionately contain cost. Depreciation increased from $1,969,000 in 1999 to $2,412,000 in 2000. The increase is attributable to continued property improvements at Womacks/Legends Casino, the completion of the Womacks Event Center, the acquisition of new gaming equipment in Cripple Creek and Prague and the purchase of approximately $11.7 million of fixed assets in Caledon. Amortization of goodwill was $1,341,000 in both years. Interest expense, including debt issuance cost, increased from $1,127,000 in 1999 to $1,617,000 in 2000, due to a 20% increase in the average outstanding balance on the RCF, which was used to fund the Company's investment in Caledon, and the incursion of approximately $370,000 in interest on CCBC debt which has been used to fund the capital improvements to the Hotel, Casino & Spa resort in Caledon. The weighted-average interest rate on the borrowings under the RCF has decreased slightly from 8.65% in 1999 to 8.58%. The other items included in the caption "Other expense, net" in the consolidated statements of income, for both 2000 and 1999 are described in Note 10 to the consolidated financial statements. As more fully discussed in Note 9 to the consolidated financial statements, the Company recognized income tax expense of $2,542,000 in 2000 versus $1,746,000 in 1999. The provision in 2000 is higher than the prior year's due to the substantial increase in pre-tax income. liquidity and Capital Resources 16 Cash and cash equivalents totaled $9.1 million at December 31, 2000, and the Company had net working capital of ($915,000). The cash balance at December 31, 2000 was maintained to satisfy current obligations payable in the first quarter of the year 2001. Additional liquidity may be provided by the Company's revolving credit facility ("RCF") with Wells Fargo Bank, under which the Company had a total commitment of $25.3 million and unused borrowing capacity of approximately $6.6 million at December 31, 2000. For the year ended December 31, 2000, cash provided by operating activities was $7.1 million compared with $3.8 million in the prior-year period. Cash used by investing activities was $13.9 million for the year 2000 and included $1.4 million in capitalized licensing cost related to the hotel and casino resort in Caledon, South Africa, $2.0 million for the purchase of land for additional parking in Cripple Creek, $1.8 million towards the construction of the Womacks Event Center and the purchase of other fixed assets, $7.8 million towards construction of the hotel and casino resort in Caledon, South Africa and $1.8 million towards the purchase of an additional 15% equity stake in the Caledon project, offset by $1.4 million from the sale of the Company's interest in an Indiana riverboat gaming license. Cash provided by financing activities in 2000 consisted of net borrowings of $9.5 million under the RCF with Wells Fargo, and $5.6 million borrowed under the loan agreement with PSG, offset by the repurchase of company's stock, on the open market, with a cost of $818,000, and other net payments of $800,000. Effective April 26, 2000, the Company and Wells Fargo Bank entered into an amended and restated credit agreement, which increased the borrowing commitment as of that date from $17.2 million to $26.0 million and extended the maturity date of the RCF until April 2004. The agreement provides for the availability of funds, not to exceed a total of $12.4 million, for the Company's South Africa and Casino Millennium investments and repurchase of the Company's common stock. On April 13, 2000, the Caledon Casino Bid Company (Pty) Limited ("CCBC") was awarded a gaming license for a casino at a 92-room resort hotel and spa in Caledon, province of the Western Cape, South Africa. On April 17, 2000, the Company's subsidiary, Century Casinos Africa (Pty) Ltd ("CCA"), acquired a 50% equity interest in CCBC by making an equity investment of approximately $1.5 million in and loans totaling approximately $2.3 million to CCBC with borrowings obtained under the Company's RCF. The Company has a ten-year casino management agreement with CCBC, which agreement may be extended at the Company's option for multiple ten-year periods. The Company will earn management fees based on percentages of annual gaming revenue and earnings before interest, income taxes, depreciation, amortization and certain other costs. The casino opened on October 11, 2000 with 250 slot machines and 14 gaming tables. In addition to the casino license, hotel and spa, CCBC owns approximately 600 acres of land, which is expected to be used for future expansion of the Caledon project. In December, 2000 the Company reported that, through a subsidiary, it had completed its acquisition of an additional 15% of The Caledon Casino, Hotel and Spa - raising its ownership of the project to 65%. Terms of the agreement included the payment of approximately $1.8 million U.S. Dollars by Century to its partners in exchange for 15% of the total ordinary shares of the project (valued at approximately $1.2 million) and a shareholder loan to the project previously held by its partners (with a value of approximately $600,000). In April 2000, CCBC entered into a loan agreement with PSG Investment Bank Limited, which agreement provides for a principal loan of approximately $6.2 million to fund development of the Caledon project and a working capital facility of approximately $2.1 million. As of December 31, 2000, $5.6 million has been advanced against the loan agreement. 17 The Company has a 20-year agreement with Casino Millennium a.s., a Czech company, to operate a casino in the five-star Marriott Hotel, in Prague, Czech Republic. The hotel and casino opened in July 1999. The Company provides casino management services in exchange for ten percent of the casino's gross revenue and leases gaming equipment, with an original cost of approximately $1.3 million, to the casino for 45% of the casino's net profit. In January 2000, the Company entered into a memorandum of agreement with B. H. Centrum, a Czech company which owns the hotel and casino facility, to acquire the operations of the casino by either a joint acquisition of Casino Millennium a.s. or the formation of a new joint venture. The transaction, if completed, would result in the Company having a 50% equity interest in Casino Millennium. Any funding required by the Company to consummate this transaction would be met through a combination of RCF borrowings, existing liquidity and anticipated cash flow. The Company is in the process of negotiating a definitive purchase agreement. In May 2000, the Company entered into a five-year casino concession agreement with a cruise line for casino operations aboard four cruise vessels. The Company is required to pay a fee to the owner of the vessels based on a percentage of gross gaming revenue, as defined, in excess of an established per passenger per day amount. In August 2000, the Company entered into a similar agreement to serve as concessionaire of a small casino aboard a vessel designed to be an exclusive residential community at sea. Both agreements require the Company to provide all necessary gaming equipment. On September 18, 2000 the Company announced the opening of the first of four casinos aboard the cruise vessels and, within 60 days thereafter, opened two more such casinos giving it a total of three shipboard casino operations by the end of 2000. The company expects to open its fourth shipboard casino in July, 2001. The Company's Board of Directors has approved a discretionary program to repurchase up to $5 million of the Company's outstanding common stock. The Board believes that the Company's stock is undervalued in the trading market in relation to both its present operations and its future prospects. During 2000, the Company purchased 464,800 additional shares at an average cost per share of $1.76. Beginning in 1998 and through 2000, the Company has repurchased a total of 1,849,800 shares at a total cost of approximately $2.3 million. January 1 through March 23, 2001, the Company repurchased an additional 147,600 shares at a total cost of approximately $297,000. Management plans to retire all treasury shares on a periodic basis. Management expects to continue to review the market price of the Company's stock and repurchase shares as appropriate, with funds coming from existing liquidity or borrowings under the RCF. The Company is the contracted casino management partner with and has the right to a minority equity interest in a consortium including Silverstar Development Ltd. ("Silverstar"). Silverstar has submitted an application for a proposed $60 million, hotel/casino resort development in the greater Johannesburg area of South Africa. In the event that Silverstar is awarded a license, the Company would be required to make an equity investment of approximately $1.5 million. This funding requirement would be met through borrowings under the RCF. The Company has also projected additional development costs of up to $500,000 which could be incurred by the Company related to this project. At the present time, however, there can be no certainty regarding an award of this gaming license or that this license will ultimately be awarded to the consortium Silverstar is part of. Management believes that the Company's cash and working capital at December 31, 2000, together with expected cash flows from operations and borrowing capacity under the RCF, will be sufficient to fund its anticipated capital expenditures, pursue additional business growth opportunities for the foreseeable future, and satisfy its debt repayment obligations. Item 7. Financial Statements. - ------- --------------------- See "Index to Financial Statements" on page F-1 hereof. 18 Item 8. Changes In and Disagreements With Accountants on Accounting and - ------- ----------------------------------------------------------------- Financial Disclosure. --------------------- On March 24, 2000, the Registrant filed a Report on Form 8-K, reporting that it had dismissed its principal independent accountant, Deloitte & Touche LLP, and sent requests for proposals to several other accounting firms. On April 6, 2000, the Registrant filed a Report on Form 8-K, reporting that it had selected Grant Thornton LLP as its principal independent accountant (its "Successor Auditor"), to replace Deloitte & Touche LLP (its "Former Auditor"). Registrant had no disagreements with the Former Auditor that, if not resolved would have caused the Former Auditor to report the disagreement. There has been no adverse opinion, disclaimer of opinion, or qualified opinion in the Former Auditor's report for any of the preceding two years. A letter from the Former Auditor stating its agreement with the Registrant's disclosures was filed as Exhibit 2000- 2, with the Registrant's 8-K filed on March 24, 2000. The Company authorized the Former Auditor to respond fully to inquiries of the Successor Auditor. Grant Thornton LLP was not consulted on the application of accounting principles to any specific completed or contemplated transactions prior to its appointment as the Company's independent accountant. The decision to select Grant Thornton LLP as registrant's independent accountants was recommended by the Audit Committee of the Board of Directors, and approved by the Board. Item 9. Directors, Executive Officers, Promoters and Control Persons; - ------- ------------------------------------------------------------------- Compliance with Section 16(a) of the Exchange Act. -------------------------------------------------------- The information required by this item will be included in the Company's Proxy Statement with respect to its 2001 Annual Meeting of Stockholders to be filed with the Commission within 120 days of December 31, 2000, under the captions "Information Concerning Directors and Executive Officers" and "Compliance with Section 16(a) of the Securities Exchange Act." Item 10. Executive Compensation. - -------- ----------------------- The information required by this item will be included in the Company's Proxy Statement with respect to its 2001 Annual Meeting of Stockholders to be filed with the Commission within 120 days of December 31, 2000, under the caption "Information Concerning Directors and Executive Officers." Item 11. Security Ownership of Certain Beneficial Owners and Management. - -------- -------------------------------------------------------------------- The information required by this item will be included in the Company's Proxy Statement with respect to its 2001 Annual Meeting of Stockholders to be filed with the Commission within 120 days of December 31, 2000, under the caption "Voting Securities." 19 Item 12. Certain Relationships and Related Transactions. - -------- -------------------------------------------------- The information in this item is incorporated by reference from the Company's Definitive Proxy material with respect to the 2001 Annual Meeting of Stockholders to be filed with the Commission within 120 days of December 31, 2000, under the caption "Certain Relationships and Related Transactions." Item 13. Exhibits and Reports on Form 8-K. - -------- ------------------------------------- a. Exhibits Filed Herewith or Incorporated by Reference to Previous -------------------------------------------------------------------- Filings with the Securities and Exchange Commission: ------------------------------------------------------- 1. The following exhibits were included with the filing of the Alpine's Form 10-KSB for the fiscal year ended December 31, 1993 and are incorporated herein by reference: Exhibit No. Description ------------ ----------- 10.14 Plan of Reorganization and Agreement Among Alpine Gaming, Inc., Alpine Acquisition, Inc. and Century Casinos Management, Inc. - Filed with Form 8-K dated December 24, 1993 and incorporated by reference therein. 10.15 Amendments One, Two and Three to Plan of Reorganization and Agreement Among Alpine Gaming, Inc., Alpine Acquisition, Inc. and Century Casinos Management, Inc. 2. The following exhibits were filed with the Form 10-KSB for the fiscal year ended December 31, 1995 and are incorporated herein by reference: Exhibit No. Description ------------ ----------- 3.1 Certificate of Incorporation (filed with Proxy Statement in respect of 1994 Annual Meeting of Stockholders and incorporated herein by reference). 3.2 Bylaws (filed with Proxy Statement in respect of 1994 Annual Meeting of Stockholders and incorporated herein by reference). 10.51 Asset Purchase Agreement dated as of September 27, 1995 by and among Gold Creek Associates, L.P., WMCK Acquisition Corp. and Century Casinos, Inc., including Exhibits and Schedules, along with First Amendment thereto. 10.57 Stock Purchase Agreement dated December 21, 1995 between Switzerland County Development Corp. ("Buyer") and Century Casinos Management, Inc. and Cimarron Investment Properties Corp. ("Sellers"). 10.58 Consultancy Agreement - Chalkwell Limited. 20 3. The following exhibits were filed with the Form 8-K Current Report dated July 1, 1996 and are incorporated herein by reference: Exhibit No. Description ------------ ----------- 10.60 Promissory Note dated March 19, 1992, made by Chrysore, Inc. in the original amount of $1,850,000 payable to R. & L Historic Enterprises, together with Assignment dated September 14, 1992 of said Promissory Note to TJL Enterprises, Inc. and Assignment dated May 16, 1996 of said Promissory Note to Century Casinos, Inc. 10.61 Promissory Note dated July 1, 1996, made by WMCK Acquisition Corp. in the original principal amount of $5,174,540 payable to Gold Creek Associates, L.P., together with Guaranty dated July 1, 1996, of said Promissory Note by Century Casinos, Inc. 10.62 Building Lease dated as of July 1, 1996, among TJL Enterprises, Inc., WMCK Acquisition Corp. and Century Casinos, Inc., together with Memorandum of Building Lease with Option to Purchase dated as of July 1, 1996, among the same parties. 10.63 Four Party Agreement, Assignment and Assumption of Lease, Consent to Assignment of Lease, Confirmation of Option Agreement and Estoppel Statements dated as of July 1, 1996, among Harold William Large, Teller Realty, Inc., Gold Creek Associates, L.P., and WMCK Acquisition Corp. 10.64 Consulting Agreement dated as of July 1, 1996, between WMCK Acquisition Corp. and James A. Gulbrandsen. 10.65 Consulting Agreement dated as of July 1, 1996, between WMCK Acquisition Corp. and Gary Y. Findlay. 4. The following exhibit was filed with the Form 10-QSB for the quarterly period ended March 31, 1997 and is incorporated herein by reference: Exhibit No. Description ------------ ----------- 10.68 Credit Agreement dated as of March 31, 1997, between Wells Fargo Bank, N.A. ("Lender"); WMCK Venture Corp., Century Casinos Cripple Creek, Inc., and WMCK Acquisition Corp. ("Borrowers"); and Century Casinos, Inc. ("Guarantor"). 21 5. The following exhibits were filed with the Form 10-KSB for the fiscal year ended December 31, 1997 and are incorporated herein by reference: Exhibit No. Description ------------ ----------- 10.69 First Amendment to the Credit Agreement dated as of March 31, 1997, between Wells Fargo Bank, N.A. ("Lender"); WMCK Venture Corp., Century Casinos Cripple Creek, Inc., and WMCK Acquisition Corp. ("Borrowers"); and Century Casinos, Inc. ("Guarantor"), dated November 11, 1997. 10.70 Second Amendment to the Credit Agreement dated as of March 31, 1997, between Wells Fargo Bank, N.A. ("Lender"); WMCK Venture Corp., Century Casinos Cripple Creek, Inc., and WMCK Acquisition Corp. ("Borrowers"); and Century Casinos, Inc. ("Guarantor"), dated January 28, 1998. 6. The following exhibits were filed with the Form 10-QSB for the quarterly period ended June 30, 1998 and are incorporated herein by reference: Exhibit No. Description - ------------ ----------- 10.71 Termination of Stock Transfer and Registration Rights Agreement dated May 1, 1998, between Century Casinos, Inc. and Gary Y. Findlay 10.72 Promissory Note dated April 30, 1998, between Century Casinos, Inc. and Gary Y. Findlay 10.73 Termination of Stock Transfer and Registration Rights Agreement dated June 2, 1998, between Century Casinos, Inc. and James A. Gulbrandsen 10.74 Promissory Note dated June 2, 1998, between Century Casinos, Inc. and James A. Gulbrandsen 10.76 Casino Consulting Agreement dated March 25, 1998, by and between Rhodes Casino S.A., Century Casinos, Inc. and Playboy Gaming International Ltd. 7. The following exhibits were filed with the Form 10-KSB for the fiscal year ended December 31,1998 and are incorporated herein by reference: Exhibit No. Description - ------------ ----------- 10.77 Third Amendment to the Credit Agreement dated as of March 31, 1997, between Wells Fargo Bank, N.A. ("Lender"); WMCK Venture Corp., Century Casinos Cripple Creek, Inc., and WMCK Acquisition Corp. ("Borrowers"); and Century Casinos, Inc. ("Guarantor"), dated November 4, 1998. 10.78 Parking Lease - Option to Purchase dated June 1, 1998, between the City of Cripple Creek ("Lessor") and WMCK Venture Corporation ("Lessee") 22 8. The following exhibits were filed with the Form 10-QSB for the quarterly period ended March 31, 1999 and are incorporated herein by reference: Exhibit No. Description ------------ ----------- 10.79 Casino Services Agreement dated January 4, 1999 by and between Casino Millennium a.s., Century Casinos Management, Inc. and B.H. Centrum a.s. 10.80 Option to Purchase Real Property dated March 25, 1999, by and between Robert J. Elliott ("Optionor") and WMCK Venture Corp. ("Optionee"). 10.81 Letter Amendment to Note Agreement dated April 1, 1999, by and between Century Casinos, Inc. and Thomas Graf 9. The following exhibit was filed with the Form 10-QSB for the quarterly period ended June 30, 1999 and is incorporated herein by reference: Exhibit No. Description ------------ ----------- 10.82 Master Lease Agreement dated January 4, 1999 by and between Casino Millennium a.s. and Century Management und Beteiligungs GmbH 10. The following exhibit was filed with the Form 10-QSB for the quarterly period ended September 30, 1999 and is incorporated by reference: Exhibit No. Description ------------ ----------- 10.83 Waiver and Release and Consulting Agreement dated October 15, 1999 by and between Norbert Teufelberger and Century Casinos, Inc. 11. The following exhibits were filed with the Form 10-KSB for the fiscal year ended December 31,1999 and are incorporated herein by reference: Exhibit No. Description ------------ ----------- 10.84 Marketing and Investor Relations Agreement, dated November 5, 1999, by and between Century Casinos, Inc. and advice! Investment Services GmbH, and related Warrant Agreement 10.85 Fourth Amendment to the Credit Agreement, dated as of March 31, 1997, between Wells Fargo Bank, N.A. ("Lender"); WMCK Venture Corp., Century Casinos Cripple Creek, Inc., and WMCK Acquisition Corp. ("Borrowers"); and Century Casinos, Inc. ("Guarantor"), dated November 15, 1999 10.86 Casino Management Agreement, dated December 3, 1999, by and between Caledon Casino Bid Company (Pty) Limited and Century Casinos Africa (Pty) Ltd. 23 10.87 Shareholders Agreement, dated December 3, 1999, and Addendum to the Agreement, dated December 9, 1999, by and between Caledon Casino Bid Company (Pty) Limited, Caledon Overberg Investments (Pty) Limited, Century Casinos Africa (Pty) Ltd., Century Casinos, Inc. (not as a shareholder or party, but for clauses 4.2.3 and 6.7 of this agreement only), Caledon Hotel Spa and Casino Resort (Pty) Limited, Fortes King Hospitality (Pty) Limited, The Overberger Country Hotel and Spa (Pty) Limited, and Senator Trust 10.88 Memorandum of Agreement, dated January 7, 2000, by and between B.H. Centrum a.s (a subsidiary of Ilbau and Bau Holding) and Century Casinos, Inc. 10.89 Assumption and Modification Agreement, dated February 7, 2000, by and between Marcie I. Elliott ("Optionor") and WMCK Venture Corporation ("Optionee") 10.90 Commercial Contract to Buy and Sell Real Estate, dated November 17, 1999, by and between WMCK Venture Corporation ("Buyer") and Saskatchewan Investments, Inc. ("Seller") 10.91 Prepayment and Release, dated January 19, 2000, by and between Switzerland County Development Corp. and Century Casinos Management, Inc. 10.92 Amendment No. 1 to Parking Lease - Option to Purchase, dated February 17, 2000, by and between City of Cripple Creek ("Lessor") and WMCK Venture Corporation ("Lessee") 12. The following exhibits were filed with the Form 10-QSB for the quarterly period ended March 31, 2000 and is incorporated by reference: Exhibit No. Description ------------ ----------- 10.93 Amended and Restated Credit Agreement, by and among, WMCK Venture Corp., Century Casinos Cripple Creek, Inc., and WMCK Acquisition Corp. (collectively, the "Borrowers"), Century Casinos, Inc. (the "Guarantor") and Wells Fargo Bank, National Association, dated April 21, 2000. 10.94 Loan Agreement between Century Casinos Africa (Proprietary) Limited, Caledon Casino Bid Company (Proprietary) Limited, Caledon Overberg Investments (Proprietary) Limited, and Century Casinos, Inc. (for purposes of clause 14.6 only), dated March 31, 2000. 10.95 Subscription Agreement between Century Casinos Africa (Proprietary) Limited, Caledon Casino Bid Company (Proprietary) Limited, Caledon Overberg Investments (Proprietary) Limited, and Century Casinos, Inc. (for purposes of clause 10.6 only), dated March 31, 2000. 24 13. The following exhibits were filed with the Form 10-QSB for the quarterly period ended June 30, 2000 and is incorporated by reference: Exhibit No. Description ------------ ----------- 10.96 Loan Agreement, dated April 13, 2000, between PSG Investment Bank Limited and Caledon Casino Bid Company (Proprietary) Limited 10.97 Subordination, Cession and Pledge Agreement, dated April 13, 2000, between PSG Investment Bank Limited, Century Casinos Africa (Proprietary) Limited, Caledon Overberg Investments (Proprietary) Limited, and Caledon Casino Bid Company (Proprietary) Limited 14. The following exhibits are filed herewith: Exhibit No. Description ------------ ----------- 10.98 Shareholders Agreement, dated November 4, 2000, by and between Caledon Casino Bid Company (Pty) Limited, Caledon Overberg Investments (Pty) Limited, Century Casinos Africa (Pty) Ltd., Century Casinos, Inc. (not as a shareholder or party, but for clauses 8.5, 15.1 and 15.2 of this agreement only), Overberg Empowerment Company Limited and The Overberg Community Trust 10.99 Sale of Shares Agreement, dated November 4, 2000 by and between Caledon Casino Bid Company (Pty) Limited, Caledon Overberg Investments (Pty) Limited and Century Casinos Inc. 21. Subsidiaries of the Registrant 23.1 Consent of Independent Accountants b. Reports on Form 8-K Filed During the Registrant's Fourth Fiscal Quarter: ------------------------------------------------------------------------ No reports on Form 8-K were filed by the Company during the fourth quarter of its fiscal year ended December 31, 2000. 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cripple Creek, State of Colorado on March 23, 2001. CENTURY CASINOS, INC. By:/s/ Erwin Haitzmann --------------------- Erwin Haitzmann, Chairman of the Board and Chief Executive Officer /s/ Larry Hannappel --------------------- Larry Hannappel, Chief Accounting Officer (Principal Accounting Officer) POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Erwin Haitzmann, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Form 10-KSB, and to file the same, with all exhibits thereto, and other documentation in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on March 23, 2001.
Signature Title Signature Title - --------- ------ --------- ----- /s/ Erwin Haitzmann Chairman of the Board and /s/ Gottfried Schellmann Director - ------------------- ------------------------- Erwin Haitzmann Chief Executive Officer Gottfried Schellmann /s/ Peter Hoetzinger Vice Chairman of the Board /s/ Robert S. Eichberg Director - -------------------- ---------------------- Peter Hoetzinger and President Robert S. Eichberg /s/ James D. Forbes Director /s/ Dinah Corbaci Director - ------------------- ----------------- James D. Forbes Dinah Corbaci
26
CENTURY CASINOS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Number ----------- Independent Auditors' Reports F2 Consolidated Balance Sheet as of December 31, 2000 F4 Consolidated Statements of Earnings for the Years Ended F5 December 31, 2000 and 1999 Consolidated Statements of Shareholders' Equity for the Years F6 Ended December 31, 2000 and 1999 Consolidated Statements of Cash Flows for the Years F7 Ended December 31, 2000 and 1999 Notes to Consolidated Financial Statements F9
F1 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of Century Casinos, Inc. We have audited the accompanying consolidated balance sheet of Century Casinos, Inc. and subsidiaries as of December 31, 2000, and the related consolidated statements of earnings, shareholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Century Casinos, Inc. and subsidiaries at December 31, 2000, and the consolidated results of their operations and their consolidated cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. GRANT THORNTON LLP Colorado Springs, Colorado February 2, 2001 F2 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of Century Casinos, Inc. We have audited the accompanying consolidated statements of earnings, Shareholders' equity and cash flows of Century Casinos, Inc. and subsidiaries for the year ended December 31 , 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted In the United States of America. 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 audit provides a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of Century Casinos Inc. and subsidiaries for the year ended December 31, 1999 in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Denver, Colorado March 6, 2000 F3
CENTURY CASINOS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollar amounts in thousands) DECEMBER 31, 2000 ------------------- ASSETS Current Assets: Cash and cash equivalents $ 9,077 Receivables 875 Prepaid expenses and other 936 ------------------- Total current assets 10,888 Property and Equipment, Net 33,268 Goodwill, Net 9,414 Other Assets 2,552 ------------------- Total $ 56,122 =================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 7,314 Accounts payable and accrued liabilities 4,489 ------------------- Total current liabilities 11,803 Long-Term Debt, less current portion 20,314 Minority Interest 1,035 Commitments and Contingencies Shareholders' Equity: Preferred stock; $.01 par value; 20,000,000 shares authorized; no shares issued and outstanding - Common stock; $.01 par value; 50,000,000 shares authorized; 14,485,776 shares issued; 14,021,284 shares outstanding 145 Additional paid-in capital 21,910 Accumulated other comprehensive loss (659) Retained earnings 2,392 ------------------- 23,788 Treasury stock - 464,492 shares, at cost (818) ------------------- Total shareholders' equity 22,970 ------------------- Total $ 56,122 ===================
See notes to consolidated financial statements. F4
CENTURY CASINOS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollar amounts in thousands) FOR THE YEAR ENDED DECEMBER 31, ------------------------------- 2000 1999 -------- -------- Operating Revenue: Casino $ 27,703 $ 22,726 Food and beverage 1,377 933 Hotel 257 149 Other 427 429 --------- ---------- 29,764 24,237 Less promotional allowances (755) (653) --------- ---------- Net operating revenue 29,009 23,584 --------- ---------- Operating Costs and Expenses: Casino 10,202 8,878 Food and beverage 761 504 Hotel 416 161 General and administrative 8,004 6,710 Depreciation and amortization 3,753 3,310 --------- ---------- Total operating costs and expenses 23,136 19,563 --------- ---------- Earnings from Operations 5,873 4,021 Other expense, net (20) (54) --------- ---------- Earnings before Income Taxes and Minority Interest 5,853 3,967 Provision for income taxes 2,542 1,746 --------- ---------- Earnings before Minority Interest 3,311 2,221 Minority interest in subsidiary profits (58) 0 --------- ---------- Net Earnings $ 3,253 $ 2,221 ========= ========== Earnings Per Share, Basic $ 0.23 $ 0.15 ========= ========== Earnings Per Share, Diluted $ 0.22 $ 0.15 ========= ==========
See notes to consolidated financial statements. F5
CENTURY CASINOS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 (Dollar amounts in thousands) Accumulated Retained Additional Other Earnings Common Stock Paid -in Comprehensive Accumulated Treasury Stock Total Comprehensive Shares Amount Capital Income (Loss) Deficit Shares Amount Income (Loss) ---------- ------- --------- ------------- ----------- --------- -------- ------ --------- BALANCE AT JANUARY 15,861,885 $159 $23,323 $(15) $(3,082) 1,157,100 $(1,237) $19,148 1, 1999 Purchases of 227,900 (227) (227) treasury stock Foreign currency (17) (17) $(17) translation adjustments Other equity 6 6 changes Net earnings 2,221 2,221 2,221 ---------- ---- ------- ----- ------ --------- -------- ------- ------ BALANCE AT DECEMBER 15,861,885 159 23,329 (32) (861) 1,385,000 (1,464) 21,131 $2,204 31, 1999 ====== Purchases of 464,800 (818) (818) treasury stock Options 8,891 - 2 2 exercised Re-issued - (308) - - treasury shares Retired (1,385,000) (14) (1,449) (1,385,000) 1,464 1 treasury shares Foreign currency (627) (627) $(627) translation adjustments Other equity 28 28 changes Net earnings 3,253 3,253 3,253 ---------- ---- ------- ------ ------ ------- ------ ------- ------ BALANCE AT DECEMBER 14,485,776 $145 $21,910 $(659) $2,392 464,492 $(818) $22,970 $2,626 31, 2000 ========== ==== ======= ====== ====== ======= ====== ======= ======
See notes to consolidated financial statements. F6
CENTURY CASINOS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar amounts in thousands) FOR THE YEAR ENDED DECEMBER 31, ------------------------------- 2000 1999 ---- ---- Cash Flows from Operating Activities: Net earnings $ 3,253 $ 2,221 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 2,411 1,969 Amortization of goodwill 1,342 1,342 Amortization of deferred financing costs 88 127 Income from sale of casino project rights (1,380) (1,040) (Gain) loss on disposition of assets (80) 10 Deferred tax benefit (446) (99) Minority interest in net earnings of consolidated subsidiaries 58 - Other noncash charges 34 6 Changes in operating assets and liabilities: Receivables (164) (514) Prepaid expenses and other assets (358) (47) Accounts payable and accrued liabilities 2,304 (132) --------- ---------- Net cash provided by operating activities: 7,062 3,843 --------- ---------- Cash Flows from Investing Activities: Purchases of property and equipment (12,863) (2,645) Sales (purchases) of short-term investment securities, net 8 1,039 Proceeds from sale of casino project rights 1,380 1,040 Expenditures for deposits and other assets (1,179) (353) Proceeds received from disposition of assets 571 8 Acquisition of subsidiary, net of cash acquired (1,858) - --------- ---------- Net cash used in investing activities (13,941) (911) --------- ----------
-Continued on following page- F7
CENTURY CASINOS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Dollar amounts in thousands) FOR THE YEAR ENDED DECEMBER 31, ------------------------------- 2000 1999 ---- ---- Cash Flows from Financing Activities: Proceeds from borrowings $ 31,401 $ 12,991 Principal repayments (16,754) (15,363) Deferred financing costs (273) - Purchases of treasury stock (818) (227) -------- --------- Net cash provided by (used in) financing activities 13,556 (2,599) -------- --------- Effect of exchange rate changes on cash (108) - -------- --------- Increase in Cash and Cash Equivalents 6,569 333 Cash and Cash Equivalents at Beginning of Year 2,508 2,175 -------- --------- Cash and Cash Equivalents at End of Year $ 9,077 $ 2,508 ======== ========= Supplemental Disclosure of Noncash Investing and Financing Activities: Issuance of notes to former principals of Gold Creek Associates $ - $ 1,095 ======== ========= In connection with the subsidiary acquired, liabilities were assumed as follows: Fair value of assets acquired, including cash of $881 $ 6,707 $ - Cash Paid (2,739) - -------- --------- Liabilities assumed $ 3,968 $ - ======== ========= Supplemental Disclosure of Cash Flow Information: Interest paid $ 1,416 $ 947 ======== ========= Income taxes paid $ 2,461 $ 1,883 ======== =========
See notes to consolidated financial statements. F8 CENTURY CASINOS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands) 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Century Casinos, Inc. and subsidiaries (the "Company") is an international gaming company which owns and operates a limited-stakes gaming casino in Cripple Creek, Colorado, manages a casino within a hotel located in Prague, Czech Republic, owns 65% of, is developing, and manages a hotel and casino resort in Caledon, South Africa, and serves as concessionaire of small casinos on luxury cruise vessels. The Company regularly pursues additional gaming opportunities internationally and in the United States. The Company's operations in Cripple Creek, Colorado began with the 1994 acquisition of Legends Casino ("Legends"), followed by the 1996 acquisition of Womack's Saloon & Gaming Parlor ("Womacks"), which is immediately adjacent to Legends. Following the acquisition of Womacks, interior renovations were undertaken on both properties to facilitate the operation and marketing of the combined properties as one casino under the name Womacks/Legends Casino. In July 1999, the Company began providing management services and leasing gaming equipment to the Casino Millennium, located in the five-star Marriott Hotel in Prague, Czech Republic. In January 2000, the Company entered into a memorandum of agreement to acquire a 50% ownership interest in Casino Millennium. The Company is in the process of negotiating a definitive purchase agreement. In April 2000, the Company's South African subsidiary acquired a 50% equity interest in Caledon Casino Bid Company (Pty) Limited ("CCBC"). CCBC owns a 92-room resort hotel and spa and approximately 600 acres of land in Caledon, South Africa and was awarded a casino license for the project. The Company has a long-term agreement to manage the operations of the casino, which began on October 11, 2000. In November 2000 the Company, through its South African subsidiary, increased its equity interest in CCBC by 15% raising its total ownership to 65%. In May 2000, the Company entered into a five-year agreement to serve as concessionaire of small casinos providing unlimited-stakes gaming operations on four luxury cruise vessels. The Company will operate the casinos for its own account and pay concession fees based on passenger count and gross gaming revenue. On September 18, 2000 the Company announced the opening of the first of four casinos with 55 gaming positions. In October 2000 the Company opened a second casino and, in November 2000, opened a third aboard a luxury cruise vessel. In August 2000, the Company entered into a five-year agreement to serve as concessionaire of a small casino aboard a vessel designed to be an exclusive residential community at sea. The Company will operate the casino for its own account and pay concession fees based on gross gaming revenue. The maiden voyage of the residential cruise liner is expected early in 2002. 2. SIGNIFICANT ACCOUNTING POLICIES Consolidation - The accompanying consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. F9 Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents - All highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Fair Value of Financial Instruments - In accordance with the reporting and disclosure requirements of Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments," the Company calculates the fair value of financial instruments and includes this additional information in the notes to its financial statements when the fair value does not approximate the carrying value of those financial instruments. The Company's financial instruments include cash and cash equivalents, long-term debt and an interest rate swap agreement. Fair value is determined using quoted market prices whenever available. When quoted market prices are not available, the Company uses alternative valuation techniques such as calculating the present value of estimated future cash flows utilizing risk-adjusted discount rates. Except for the interest rate swap agreements (see Note 5), which have no carrying value in the consolidated financial statements, the Company's carrying value of financial instruments approximates fair value at December 31, 2000. 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. Goodwill - Goodwill represents the excess of purchase price over net identifiable assets acquired. Goodwill recognized in the 1994 Alpine stock acquisition has an unamortized balance of $2,381 at December 31, 2000, and is being amortized on a straight-line basis over 10 years. The Company acquired the Legends Casino operation through a merger with Alpine Gaming Inc. Goodwill recognized in the 1996 Gold Creek asset acquisition has an unamortized balance of $6,193 at December 31, 2000 and is being amortized on a straight-line basis over 15 years. In the Gold Creek acquisition, the Company acquired substantially all of the assets and assumed all of the liabilities of Womacks Casino which was consolidated with the Company's Legends Casino. Goodwill recognized in the 2000 CCBC stock acquisition was $840 which will be amortized on a straight-line basis over 10 years. Total accumulated amortization for all goodwill is $7,814 as of December 31, 2000. Impairment of Long-Lived Assets - The Company reviews long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If there is an indication of impairment, which is estimated as the difference between anticipated undiscounted future cash flows and carrying value, the carrying amount of the asset is written down to its estimated fair value by a charge to operations. Fair value is estimated based on the present value of estimated future cash flows using a discount rate commensurate with the risk involved. Estimates of future cash flows are inherently subjective and are based on management's best assessment of expected future conditions. Revenue Recognition - Casino revenue is the net win from gaming activities, which is the difference between gaming wins and losses. Management and consulting fees are recognized as revenue as services are provided. Promotional Allowances - Food and beverage furnished without charge to customers is included in gross revenue at a value which approximates retail and then deducted as complimentary services to arrive at net revenue. The estimated cost of such complimentary services is charged to casino operations, and was $829 in 2000 and $855 in 1999. F10 Foreign Currency Translation - Adjustments resulting from the translation of the accounts of the Company's Austrian and South African subsidiaries from the local functional currency to U.S. dollars are recorded as other comprehensive income or loss in the consolidated statements of shareholders' equity. Adjustments resulting from the translation of transactions which are denominated in a currency other than U.S. dollars are recognized in the statement of earnings. Income Taxes - The Company accounts for income taxes using the liability method, which provides that deferred tax assets and liabilities are recorded based on the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, at a rate expected to be in effect when the differences become deductible or payable. Stock-Based Compensation - Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation," encourages, but does not require companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to account for stock-based compensation for employees using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for Stock issued to Employees", and related Interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee must pay to acquire that stock. The Company follows SFAS 123 for valuing stock-based compensation granted to non-employees. Earnings Per Share - The Company follows the provisions of SFAS No. 128, "Earnings per Share," in calculating basic and diluted earnings per share. Basic earnings per share considers only weighted-average outstanding common shares in the computation. Diluted earnings per share gives effect to all potentially dilutive securities. Comprehensive Income - The Company follows SFAS No. 130, "Reporting Comprehensive Income," which provides for a more inclusive financial reporting measure than net income, and includes all changes in equity during the period, except those resulting from investments by, and distributions to, shareholders of the Company. Operating Segments - The Company has adopted SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information" which establishes standards for public business enterprises to report information about operating segments in annual financial statements and in condensed interim financial reports issued to shareholders. Recently Issued Accounting Pronouncements - In 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments and hedging activities. The pronouncement requires that a company designate the intent of a derivative to which it is a party, and prescribes measurement and recognition criteria based on the intent and effectiveness of the designation. In 2000, FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities" which amends SFAS No. 133. SFAS No. 138 amends the accounting and reporting standards for certain derivative instruments and certain hedging activities, including amendments to normal purchases and normal sales, interest rate risk, hedging recognized foreign currency denominated assets and liabilities and intercompany derivative provisions of SFAS No. 133. The Company will be required to adopt SFAS No. 133 and SFAS No. 138 no later than the first quarter of 2001. As of December 31, 2000, the interest rate swap agreements had a fair value of ($279) which would be recorded as a liability and as a charge to equity on the balance sheet of the Company at January 1, 2001. F11 Also in 2000, FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" which replaces SFAS No. 125. SFAS No. 140 revises some of the standards for accounting for collateral and for securitizations and other transfers of financial assets and is effective for fiscal years ending after December 15, 2000. SFAS No. 140 had no effect on income or the financial position of the Company for 2000, and the Company currently does not anticipate any material effect on its future financial statements. Advertising Costs - Costs incurred for producing and communicating advertising are expensed when incurred. Advertising expense was $156 and $47 for the years ended December 31, 2000 and 1999, respectively. Reclassifications - Certain reclassifications have been made to the 1999 financial information in order to conform to the 2000 presentation. 3. RECEIVABLES FROM OFFICERS/DIRECTORS At December 31, 2000, the Company had outstanding receivables from officers/directors totaling $119, all of which is due in 2001 and is classified a current asset. The receivables are noninterest bearing. F12 4. PROPERTY AND EQUIPMENT Property and equipment at December 31, 2000, consist of the following: Estimated Service Life in Years -------- Land $ 11,167 Buildings and improvements 16,676 7 - 31 Gaming equipment 9,005 3 - 7 Furniture and office equipment 2,943 5 - 7 Other equipment 1,087 3 - 7 Capital projects in process 50 ----------- 40,928 Less accumulated depreciation (8,580) ----------- 32,348 Nonoperating casino and 920 land held for sale ----------- Property and equipment, net $ 33,268 ============ In June 1998, the Company began leasing parking spaces from the City of Cripple Creek under a five-year agreement which requires annual lease payments of $90. The agreement contains a purchase option whereby the Company may purchase the property for $3,250, less cumulative lease payments ($232 through December 31, 2000), at any time during the lease term. In February 2000, the agreement was amended to extend the term to 2010. In March 1999, the Company entered into a purchase option agreement for a property in Cripple Creek, Colorado, situated across the street from its Womacks/Legends Casino on Bennett Avenue. The agreement, as amended on February 7, 2000, expires March 31, 2004 and provides for option payments as follows: 2000 - $37; 2001 - $49; 2002 - $24; 2003 - $24; and 2004 - $6. The Company may exercise its option to purchase the property at any time during that period for a price of $1,500, less 50% of cumulative monthly option payments. The nonoperating casino and land is located in Nevada and is carried at estimated net realizable value. F13 5. LONG-TERM DEBT Long-term debt at December 31, 2000, consists of the following:
Borrowings under revolving line of credit facility with Wells Fargo bank $18,640 Borrowings under loan agreement with PSG bank 5,558 Note payable to minority shareholder 1,492 Capital leases for various equipment 664 Notes payable to former principals of Gold Creek 435 Note payable to founding shareholder, unsecured 380 Convertible debenture 300 Note payable to director, unsecured 85 Other unsecured note payables 74 -------- Total long-term debt 27,628 Less current portion (7,314) -------- Long-term portion $20,314 ========
On April 26, 2000, the Company and Wells Fargo Bank (the "Bank") entered into an Amended and Restated Credit Agreement (the "Agreement") which increased the Company's aggregate borrowing commitment from the Bank under a Revolving Line of Credit Facility ("RCF") to $26 million and extended the maturity date to April 2004. The aggregate commitment available to the Company will be reduced quarterly by $722 beginning October 2000 through the maturity date. Interest on the Agreement is variable based on the interest rate option selected by the Company, plus an applicable margin based on the Company's leverage ratio. The Agreement also requires a nonusage fee based on the Company's leverage ratio on the unused portion of the commitment. The principal balance outstanding under the loan agreement as of December 31, 2000 was $18,640. The amount available under the RCF as of December 31, 2000 was $6,638, net of amounts outstanding as of that date. The loan agreement includes certain restrictive covenants, the most significant of which include i) WMCK Venture Corp., a wholly-owned subsidiary of the Company, must maintain a maximum leverage ratio no greater than 3.10 to 1.00, ii) WMCK Venture Corp. must maintain a minimum interest coverage ratio no less than 1.50 to 1.00, and iii) WMCK Venture Corp. must maintain a TFCC ratio ( a derivative of EBITDA, as defined in the agreement) of no less than 1.10 to 1.00. The loan is collateralized by a deed of trust and a security agreement with assignments of lease, rents and furniture, fixtures and equipment. Interest rates at December 31, 2000 were 9.5% for $7,340 outstanding under prime based provisions of the loan agreement and 9.12% for $11,300 outstanding under LIBOR based provisions of the loan agreement(see below). In 1998, the Company entered into a five-year interest rate swap agreement on $7.5 million notional amount of debt under the RCF, whereby the Company pays a LIBOR-based fixed rate of 5.55% and receives a LIBOR-based floating rate reset quarterly based on a three month rate. In May 2000, the Company entered into a second five-year interest rate swap agreement on $4.0 million notional amount of debt under the RCF, whereby the Company pays a LIBOR-based fixed rate of 7.95% and receives a LIBOR-based floating rate reset quarterly based on a three month rate. Generally, the swap arrangement is advantageous to the Company to the extent that interest rates increase in the future and disadvantageous to the extent that they decrease. The net amount paid or received by the Company on a quarterly basis results in an increase or decrease to interest expense. Net additional (reduction in) interest expense to the Company under the swap agreement was ($64) in 2000 and $15 in 1999. At December 31, 2000, termination of the interest rate swap agreements would have resulted in a net loss to the Company of approximately $279. F14 In April 2000, CCBC entered into a loan agreement with PSG Investment Bank Limited ("PSGIB"), which agreement provides for a principal loan of approximately $6,200 to fund development of the Caledon project and a working capital facility of approximately $2,100. CCBC is required to make principal payments beginning December 2001 and continuing over a five-year period. Outstanding borrowings bear interest at the bank's base rate plus 2.75-3.75%. The interest rate as of December 31, 2000 was 17.05%. The shareholders of CCBC have pledged all of the common shares held by them in CCBC to PSGIB as collateral. The loan is also collateralized by a first mortgage bond over land and buildings and a general notorial bond over all equipment. As of December 31, 2000, $5.6 million has been advanced against the loan agreement. The loan agreement includes certain restrictive covenants, as defined in the agreement, the most significant of which include, i) CCBC must maintain a debt/equity ratio of 44:56 after the first twelve months of operations and a 40:60 debt/equity ratio after two years of operations, ii) CCBC must maintain an interest coverage ratio of at least 2.0 after the first twelve months of operations, iii) CCBC must maintain a debt service coverage ratio of at least 1.3 for the principal loan and 1.7 for the working capital facility after the first twelve months of operations, and iv) CCBC must maintain a loan life coverage ratio of 1.5 for the principal loan and a loan life coverage ratio of 2.5 for the working capital facility. In April 2000, CCBC, the Company and Caledon Overberg Investments (Proprietary) Limited ("COIL"), the minority shareholder in CCBC, entered into a note agreement as part of the purchase of CCBC. Under the terms of the agreement, CCBC, in exchange for the contribution of certain fixed assets, entered into a loan agreement with COIL in the amount of approximately $2,300. Under the terms of the agreement, the loan bears interest at the rate of 2% over the prime/base rate established by PSGIB, and is due on demand subsequent to the repayment in full of the loan between CCBC and PSGIB. In November 2000, as part of the Company's additional equity investment in CCBC, the Company acquired a portion of the note payable between CCBC & COIL valued at approximately $600. F15 During the year 2000, CCBC entered into a series of lease agreements for the purchase of capital equipment. The average effective interest rate on the lease obligations is 13.5% and are repayable over a term of 60 months. Assets under lease included in property and equipment as of December 31, 2000: Original Book Value Accumulated Depreciation Gaming equipment $515 $43 Furniture and office equipment $146 $11 Other equipment $76 $2 ---- --- Total $737 $56 ==== === During the second quarter of 1998, the Company reached agreement with the two former principals of Gold Creek to pay them a total of $1,629, consisting of cash of $534 and two promissory notes totaling $1,095, in lieu of issuing common stock as previously provided for in connection with the acquisition of Gold Creek's assets. The notes are unsecured, bear interest at 8.75% and require aggregate monthly payments of principal and interest of $16 through June 2001, at which time, the remaining aggregate principal of $357 is due and payable. On May 30, 1996, the Company issued a convertible debenture in the principal amount of $500 to a private investor. Simultaneously, the Company issued a guaranty of payment on the otherwise unsecured debt. The proceeds were used in financing the Gold Creek acquisition. The debenture bears interest at 10.5%, payable quarterly. The holder has the option to convert, in one or more transactions, all or a portion of the outstanding principal into the Company's common stock at $1.84 per share, subject to a minimum per conversion transaction of $50. On August 4, 2000 the Company made a prepayment of $200 in lieu of the holder exercising their right to convert the principal balance to stock. As of December 31, 2000, the Company has the option to prepay the debenture, in whole or in part, at 116% of the outstanding principal. The entire unpaid principal is due on May 30, 2001. In April 1999, the terms of an unsecured note payable to a founding shareholder were amended. The previously existing principal balance of $420, plus accrued interest of approximately $60, were combined into a new principal amount of $480. The Company concurrently made a principal repayment of $100. The remaining principal of $380 bears interest at 6%, payable quarterly. The noteholder, at his option, may elect to receive any or all of the unpaid principal by notifying the Company on or before April 1 of any year. Payment of the principal amount so specified would be required by the Company on or before January 1 of the following year. The entire outstanding principal is otherwise due and payable on April 1, 2004. Accordingly, the note is classified as noncurrent in the accompanying consolidated balance sheet as of December 31, 2000. The consolidated weighted average interest rate on all borrowings was 9.87% for the year ended December 31, 2000.
As of December 31, 2000, scheduled maturities of all long-term debt are as follows: Future minimum Total lease payment Other long term of capital leases debt debt ----------------- ----- --------- 2001 - $ 310 $ 7,055 $ 7,365 2002 - $ 145 $ 1,492 $ 1,637 2003 - $ 145 $ 1,112 $ 1,257 2004 - $ 145 $14,251 $14,396 2005 - $ 117 $ 1,111 $ 1,228 Thereafter $ - $ 1,943 $ 1,943 ------ ------- ------- $ 862 $26,964 $27,826 Less amounts representing interest. $ 198 $ - $ 198 ------ ------- ------- Total $ 664 $26,964 $27,628 ====== ======= ======= F16
6. SHAREHOLDERS' EQUITY In February 1998, the Company's Board of Directors approved a discretionary program to repurchase up to $1 million of the Company's outstanding common stock. In October 1998, the Board voted to increase the limit on the stock repurchase program from $1 million to an aggregate of $2 million. In March 2000, the Board further voted to increase the limit on the stock repurchase program from $2 million to an aggregate of $5 million. Through December 31, 2000, the Company had repurchased 1,849,800 shares of its common stock at an average cost per share of $1.23. 1,385,000 shares of its common stock, with an average cost of $1.06 per share, were retired in February 2000. In November 2000, 308 shares of common stock were awarded in a drawing amongst investors, leaving 464,492 shares remaining as of December 31, 2000, at an average cost per share of $1.76. In April 1994, the Board of Directors of the Company adopted the Employees' Equity Incentive Plan (the "Plan"), which was amended effective November 22, 1995, and further amended November 25, 1996. The Plan provides for the grant of awards to eligible employees in the form of stock, restricted stock, stock options, stock appreciation rights, performance shares or performance units, all as defined in the Plan. The Plan provides for the issuance of up to 4,500,000 shares of common stock through the various forms of award permitted. Through December 31, 2000, only stock option awards had been granted under the Plan. Stock options may be either incentive stock options, for which the option price may not be less than fair market value at the date of grant, or nonstatutory options, which may be granted at any option price. All options must have an exercise period not to exceed ten years. Options granted to date have either one-year or two-year vesting periods. On May 1, 2000 the Plan was further amended to provide the Incentive Plan Committee the power and discretion to prescribe the terms and conditions for the exercise of, or modification of, any outstanding Awards in the event of merger, acquisition or any other form of acquisition other than a reorganization of the Company under United States Bankruptcy Code or liquidation of the Company. On February 8, 1999, the Company's Board of Directors approved the award of options on 809,000 shares of the Company's common stock under the Employees' Equity Incentive Plan. The options have an exercise price of $0.75 per share, vested in their entirety on February 8, 2000, and have an exercise period of ten years. As of December 31, 2000 there were an additional 100,000 options outstanding to directors of the Company. These options have a weighted average exercise price of $1.09 Transactions regarding the Plan are as follows:
2000 1999 ---------- --------- Weighted- Weighted- Average Average Exercise Exercise Shares Price Shares Price ------ ------- ------ ------- Incentive Stock Options: Outstanding at January 1 2,906,500 $ 1.29 2,606,400 $ 1.43 Granted - - 809,000 $ 0.75 Exercised (8,891) .82 - - Cancelled or forfeited (85,309) 1.44 (508,900) 1.07 ---------- --------- Outstanding at December 31 2,812,300 1.29 2,906,500 1.29 ========== ========= Options exercisable at 2,812,300 $ 1.29 2,273,500 $1.44 December 31 ========== =========
F17 Summarized information regarding all options outstanding at December 31, 2000, is as follows:
Weighted- Number Average Number Outstanding Remaining Exercisable At Year End Term in Years At Year End ------------- ------------- ------------ Exercise Price 0.75 784,000 7.8 784,000 1.50 1,993,300 4.7 1,993,300 1.63 30,000 5.0 30,000 2.25 5,000 4.4 5,000 ------------- ------------- ------------ 2,812,300. 5.5 2,812,300 ============= ============= ============
The Company applies Accounting Principles Board Opinion No. 25 and related interpretations in accounting for options granted under the Plan. Accordingly, no compensation cost has been recognized in the accompanying financial statements. Had compensation cost for the Plan been determined based on the fair value at the grant dates for awards under the Plan, consistent with the method recommended, but not required, by SFAS No.123, the Company's net earnings and earnings per share would have been adjusted to the pro forma amounts indicated below:
2000 1999 ---- ---- Net earnings As reported $3,253 $2,221 Pro forma $3,233 $1,998 Earnings per share Basic As reported $ 0.23 $ 0.15 Pro forma $ 0.23 $ 0.13 Diluted As reported $ 0.22 $ 0.15 Pro forma $ 0.22 $ 0.13
The fair value of options granted under the Plan was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: 1999 ---- Weighted-average risk-free interest rate 5.6% Weighted-average expected life 10 yrs. Weighted-average expected volatility 43% Weighted-average expected dividends $ 0 No options were granted under the Plan in the year 2000. The weighted-average fair value of the options granted during 1999 was $ 0.47. F18 Warrants: In 1995, the Company entered into a consulting agreement with a third party whereby the consultant will assist the Company, from time to time, in seeking investors and business opportunities. The agreement provides that, upon the consummation of certain transactions, the Company will issue to the consultant warrants to purchase the Company's common stock. The number of shares and exercise price are determined based on a formula, which depends upon the type and size of transaction consummated and the recent trading price of the common stock. In connection with a 1995 private placement, the Company issued warrants to the consultant for 71,428 shares exercisable at $1.05 per share. The warrants had a five-year term from the date of issue and expired in May 2000 without being exercised. The consulting agreement may be terminated by either party upon 30 days notice. In June 1996, the Company completed a private placement of 4,072,233 shares of its common stock at an average price of $1.43 per share, with proceeds, net of selling commissions, of approximately $4,470,000. In connection with this private placement, the Company issued warrants to a placement agent to purchase 150,000 shares of its common stock at $2.36 per share. The warrants expire in June 2001. Subsidiary Preference Shares: During the year ended December 31, 2000, the Company's South African subsidiary acquired a 65% equity interest in Caledon Casino Bid Company (Pty) Limited (CCBC) (note 1). In connection with the granting of a gaming license to CCBC by the Western Cape Gambling and Racing Board in April 2000, CCBC issued a total of 200 preference shares, 100 shares each to two minority shareholders. The preference shares are not cumulative, nor are they redeemable. The preference shares entitle the holders of said shares to dividends of 20% of the after-tax profits directly attributable to the CCBC casino business subject to working capital and capital expenditure requirements and CCBC loan obligations and liabilities as determined by the directors of CCBC. Should the casino business be sold or otherwise dissolved, the preference shareholders are entitled to 20% of any surplus directly attributable to the CCBC casino business, net of all liabilities attributable to the CCBC casino business. Due to the October 2000 opening of the casino, the 2000 preference dividend is not significant. F19 7. SEGMENT INFORMATION The company has adopted FASB Statement No. 131 " Disclosures about Segments of an Enterprise and Related Information," The Company is managed in four segments; Cripple Creek Colorado, South Africa, Cruise Ships, and Corporate operations. Corporate operations include the revenue and expense of certain corporate gaming projects for which the Company has secured long term management contracts. Earnings before interest, taxes, depreciation and amortization (EBITDA) is not considered a measure of performance recognized as an accounting principle generally accepted in the United States of America. Management believes that EBITDA is a valuable measure of the relative performance amongst its operating segments. Segment information as of and for the year ended December 31, 2000 is presented below. Comparable information is not provided for 1999 because during 1999 the Company operated as one identifiable segment, Cripple Creek Colorado.
Dollar amounts in thousands Cripple South Cruise Corporate Intersegment Consolidated Creek CO Africa Ships & Other Elimination Property and equipment, net of accumulated depreciation $ 19,275 $ 11,759 $ 213 $ 2,021 - $ 33,268 Total Assets $ 36,386 $ 20,310 $ 438 $ 2,176 ($3,188) $ 56,122 Net operating revenue $ 24,389 $ 4,155 $ 189 $ 276 - $ 29,009 Depreciation & amortization $ 3,241 $ 290 $ 6 $ 216 - $ 3,753 Interest income $ 2 $ 112 - $ 372 ($341) $ 145 Interest expense, including debt issuance cost $ 1,510 $ 367 - $ 81 ($341) $ 1,617 Earnings before income taxes and minority interest $ 4,916 $ 666 $ 12 $ 259 - $ 5,853 Income tax expense(benefit) $ 2,262 $ 193 - $ 87 - $ 2,542 Net earnings $ 2,654 $ 416 $ 12 $ 171 $ 3,253 EBITDA $ 9,665 $ 1,154 $ 18 $ 183 - $ 11,020
F20 8. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS Prague, Czech Republic - In March 1998, the Company entered into a joint venture agreement with B. H. Centrum a.s. ("BHC"), a Czech subsidiary of Bau Holding AG, one of the largest construction and development companies in Europe, to form Century Casinos Praha a.s. The Company was to hold a 49% interest in the venture, which would operate a casino in the five-star Marriott Hotel in Prague, Czech Republic. Subsequent to signing the joint venture agreement, laws governing casino licenses in the Czech Republic were amended to preclude a foreign entity from holding an equity interest in a casino license. In January 1999, the Company entered into a 20-year definitive agreement with Casino Millennium a.s., a Czech company that has secured the leasing rights from the hotel, to provide casino management services for ten percent of the casino's gross revenue, and to provide and lease to the casino certain gaming equipment for 45% of the casino's net profit. During 1999, the Company purchased and leased to Casino Millennium a.s. gaming equipment with a total cost of approximately $1.3 million. In addition, the Company advanced operating funds to the casino of approximately $208. In July 1999, Casino Millennium a.s. commenced operations of its casino. During the years ended December 31, 2000 and 1999, the Company earned management fee income from Casino Millennium totaling $177 and $109 respectively. Casino Millennium recognized no earnings in the years ended December 31, 2000 and 1999. Accordingly, no lease income was earned by the Company. At December 31, 2000, receivables in the accompanying consolidated balance sheet include $421 relating to advances and management fees. Subsequent to the formation of Casino Millennium a.s., the Czech laws were again amended to permit the Czech Republic's Ministry of Finance to make exceptions to the foreign ownership restriction, thereby allowing a foreign entity to hold an equity interest in a casino license. Accordingly, in January 2000, the Company entered into a memorandum of agreement with BHC to continue the casino project on a joint venture basis with each party having a 50% equity interest. It is anticipated that this will be accomplished by the formation of a new joint venture or by the joint acquisition of Casino Millennium a.s. by the Company and BHC. The current shareholders of Casino Millennium a.s. have consented to the sale of their respective equity interests or the sale of its net assets and liabilities. It is the intention of the Company and BHC to enter into new lease and management agreements under the same terms and conditions described above. It is also expected that the Company and BHC will contribute certain casino equipment and improvements currently being leased to Casino Millennium and equalize their respective contributions to the joint venture, taking into consideration previously advanced operating funds. In addition to the assets which would be contributed, the Company expects that the cash contribution required to equalize the transaction will not exceed $300. Any funding required by the Company to consummate this transaction would be met through a combination of existing liquidity and anticipated cash flow. The Company is in the process of negotiating a definitive purchase agreement. As of December 31, 2000, the Company's net fixed assets leased under operating leases to the Casino Millennium approximated $1.0 million. F21 South Africa-Caledon - On April 13, 2000, the Caledon Casino Bid Company (Pty) Limited ("CCBC") was awarded a gaming license for a casino at a 92-room resort hotel and spa in Caledon, province of the Western Cape, South Africa. On April 17, 2000, the Company's South African subsidiary, Century Casinos Africa (Pty) Ltd ("CCA"), acquired a 50% equity interest in CCBC. In March 2000, in anticipation of the award of the final license, the Company borrowed approximately $4.0 million under its revolving credit facility and, in April 2000, the Company (through CCA) made its equity investment of approximately $1,534 in and a loan of approximately $2,302 to CCBC. In a concurrent transaction, another 50% investor contributed fixed assets to CCBC in exchange for a 50% equity investment of approximately $1,534 and a loan payable of approximately $2,302. The acquisition of CCBC by the Company has been recorded using the purchase method of accounting. On November 4, 2000 CCA acquired an additional 15% equity interest in the ordinary shares of CCBC. In exchange for $1.8 million borrowed under its revolving credit facility, the Company, through CCA, acquired 600 ordinary shares and claim to an additional 15% of the total outstanding shareholder loans, which as of December 31, 2000 were $3,965, from the other 50% investor. The acquisition of the additional 15% interest has been recorded using the purchase method of accounting. As of December 31, 2000, net long-lived assets held by CCBC, included in the Company's condensed consolidated balance sheet, approximated $11.5 million. Pro forma financial information presenting the results of operations as if the acquisition of CCBC had been consummated as of the beginning of the year ended December 31, 2000 have not been included because they were not material to the Company's consolidated results of operations. In December 1999, the Company entered into a ten-year casino management agreement with CCBC, which agreement may be extended at the Company's option for multiple ten-year periods. The Company will receive a management fee consisting of the following: (i) an amount equal to 3% (increasing to 4% and 5% in the second fiscal year of operations, variable based on levels of annual gross revenues) of annual gross revenues, as defined, and (ii) an amount equal to 7.5% of the casino's annual earnings before interest, income taxes, depreciation, amortization and certain other costs. The casino opened on October 11, 2000 with 250 slot machines and 14 gaming tables. In addition to the casino license, hotel and spa, CCBC owns approximately 600 acres of land, which is expected to be used for future expansion of the project. Initial start up costs of the casino, resort hotel and spa have resulted in a pre-tax charge of $652 against the income for the year ended December 31, 2000. South Africa-Gauteng -Legislation enacted in 1996 in South Africa provides for the award of up to 40 casino licenses throughout the country. To date, the Company has entered into agreements with various local consortia to provide consulting services during the application phase, as well as casino management services should the Company's partners be awarded one or more licenses. Under South African gaming legislation passed in 1996, six casino licenses were allocated to the province of Gauteng - primarily for the Greater Johannesburg area. Silverstar Development Ltd., a consortium owned by trusts, corporations and individuals from the province, chose Century Casinos as equity and management partner for its proposed 1,000 gaming position casino, hotel and entertainment resort in the West Rand region (western portion of greater Johannesburg). Since joining forces more than four years ago, Century has helped Silverstar work through a series of legal issues regarding the award of this gaming license - culminating in March 2000 with Silverstar entering into an agreement with the competing license applicant. This agreement has settled all past claims and has brought both parties together in an effort to jointly secure the sixth and final gaming license in the province. In a process entered into with the Gauteng Gambling Board for their consideration of the amended proposal for a casino license, the parties jointly filed the requisite amendment application. There can be no certainty regarding the award of this license or that this license will ultimately be awarded to the consortium Silverstar is part of. F22 Riverboat Development Agreement-Indiana - In September 1998, the Indiana Gaming Commission awarded a Certificate of Suitability to Pinnacle Gaming Development Corporation ("Pinnacle") to conduct riverboat gaming in Switzerland County. In accordance with the terms of the sale of the Company's interest in Pinnacle in 1995, the Company received payments of $1,380 in 2000 and $1,040 in 1999, which are included in "other expense, net" in the accompanying consolidated statements of earnings. The Company was entitled to receive installment payments of $32 per month for the first 60 months of the riverboat's operation; however, subsequent to 1999, the Company elected to receive an aggregate discounted payment amount of $1,380, which was received and recognized as "other expense, net" in 2000, as discussed above. Consulting Agreement-Rhodes, Greece - In 1998, the Company reached a consulting agreement (the "current agreement") with Rhodes Casino S.A. and Playboy Gaming International Ltd. ("Playboy") to assign certain of the Company's rights and delegate its responsibilities under a previously executed management and consulting agreement (the "previous agreement") pertaining to the operation of a casino on the island of Rhodes, Greece. In 1998, the Company received from Playboy a payment of $25 for certain preopening services performed to date. The Company also received payments totaling $50 in 1999 and 2000 and is to receive a final annual payment of $50 in 2001. The Company will have no further obligations under the previous agreement unless, subsequent to the opening of the casino, Playboy is unwilling or unable to perform under the current agreement. In such event, the previous agreement, and the Company's obligations, would be reinstated together with the Company's right to receive up to $300 per year for the first three years of casino operations, with an aggregate minimum guarantee of approximately $250. Agreement with Former Officer/Director - In October 1999, in connection with the termination of an officer/director's employment, the Company entered into a noncompetition agreement with the former officer/director with a term through March 31, 2001 for consideration of twelve monthly payments of $14 beginning January 2000. The area covered by the noncompetition agreement includes any geographical area in which the Company is present. The agreement also provides for limited consulting services to be performed by the former officer/director during 2000. In March 2000, in accordance with paragraph II.A.5. of the Waiver and Release and Consulting Agreement, the Company made a discounted payment to the former officer/director and terminated the consulting portion of the agreement. All other provisions of the noncompetition agreement remain in effect. The accompanying financial statements include noncompetition amortization expense of $137 in 2000 and $28 in 1999 relating to this agreement. Employee Benefit Plan - In March 1998, the Company adopted the 401(k) Savings and Retirement Plan (the "Plan"). The Plan allows eligible employees to make tax-deferred contributions that are matched by the Company up to a specified level. The Company contributed $26 and $24 to the Plan in 2000 and 1999, respectively. Operating Lease Commitments - The Company has entered into certain noncancelable operating leases for real property and equipment. As of December 31, 2000, future minimum lease payments under existing lease agreements are $344 in 2001, $329 in 2002, $286 in 2003, $282 in 2004, $170 in 2005 and $398 thereafter. Rental expense was $505 in 2000 and $574 in 1999. Stock Redemption Requirement - Colorado gaming regulations require the disqualification of any shareholder who may be determined by the Colorado Division of Gaming to be unsuitable as an owner of a Colorado casino. Unless a sale of such common stock to an acceptable party could be arranged, the Company would repurchase the common stock of any shareholder found to be unsuitable under the regulations. The Company could effect the repurchase with cash, Redemption Securities, as such term is defined in the Company's Certificate of Incorporation and having terms and conditions as shall be approved by the Board of Directors, or a combination thereof. F23 9. INCOME TAXES
The provision for income taxes consists of the following: 2000 1999 ------- ------- Current: Federal $2,261 $1,593 State 341 252 Foreign 386 - ------- ------- 2,988 1,845 ------- ------- Deferred: Federal (219) (90) State (34) (9) Foreign (193) - ------- ------- (446) (99) ------- ------- $2,542 $1,746 ======= =======
The provision for income taxes differs from the expected amount of income tax calculated by applying the statutory rate to pretax income as follows:
2000 1999 ------- ------- Expected income tax provision at statutory rate of 34% $1,990 $1,349 Increase (decrease) due to: Goodwill amortization 252 252 Effect of foreign operations taxed at different rates (18) (4) State income taxes, net of federal benefit 201 155 Other, net 117 (6) ------- ------- Provision for income taxes $2,542 $1,746 ======= =======
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities at December 31, 2000, consist of the following: Deferred tax assets: Property and equipment - noncurrent $ 623 Accrued liabilities and other - current 1,010 -------- 1,633 Deferred tax liabilities: Prepaid expenses - current (615) -------- Net deferred tax assets $ 1,018 ======== Net deferred tax assets of $395 and $623 are classified as current and noncurrent, respectively, and included in other assets in the accompanying consolidated balance sheet as of December 31, 2000. CCBC, a 65% owned subsidiary of the Company's South African subsidiary, has approximately $2,700 in net operating loss carryforwards as of December 31, 2000, which carry no expiration date. F24
10. OTHER EXPENSE, NET Other expense, net, consists of the following: 2000 1999 -------- -------- Interest income $ 145 $ 43 Interest expense (1,529) (1,000) Income from sale of casino project rights 1,380 1,040 Foreign exchange losses (1) - Amortization of deferred financing costs (88) (127) Gain (loss) on disposal of equipment 80 (10) Other (7) - -------- -------- $ (20) $ (54) ======== ========
11. EARNINGS PER SHARE Basic and diluted earnings per share for the years ended December 31, 2000 and 1999 were computed as follows:
2000 1999 ----------- ----------- Basic Earnings Per Share: Net earnings $ 3,253 $ 2,221 =========== =========== Weighted average common shares 14,240,990 14,631,719 =========== =========== Basic earnings per share $ 0.23 $ 0.15 =========== =========== Diluted Earnings Per Share: Net earnings, as reported $ 3,253 $ 2,221 Interest expense, net of income taxes, on convertible debenture 28 33 ----------- ----------- Net earnings available to common shareholders $ 3,281 $ 2,254 =========== =========== Weighted average common shares 14,240,990 14,631,719 Effect of dilutive securities: Convertible debenture 227,489 271,739 Stock options and warrants 567,362 216,430 ----------- ----------- Dilutive potential common shares 15,035,841 15,119,888 =========== =========== Diluted earnings per shares $ 0.22 $ 0.15 =========== =========== Excluded from computation of diluted earnings per share due to antidilutive effect: Options and warrants to purchase common shares 205,000 4,616,566 Weighted average exercise price $ 2.19 $ 1.94
F25 12. UNAUDITED SUMMARIZED QUARTERLY DATA Summarized quarterly financial data for 2000 and 1999 is as follows: (Dollar amounts in thousands, except per share data)
1st Quarter(1) 2nd Quarter 3rd Quarter 4th Quarter(2) Year ended December 31, 2000 Net operating revenue $ 5,834 $ 6,212 $ 7,190 $ 9,773 Earnings from operations $ 603 $ 1,052 $ 1,554 $ 2,664 Net earnings $ 979 $ 396 $ 830 $ 1,048 Basic earnings per share $ 0.07 $ 0.03 $ 0.06 $ 0.07 Diluted earnings per share $ 0.07 $ 0.03 $ 0.06 $ 0.06
( 1) During the 1st quarter of 2000, the Company received $1,380 from the sale of its riverboat gambling license in Indiana. This was offset by charges of $302 related to the write-off of a noncompete agreement with a former officer / director and bonuses paid to certain officers / directors related to the final payment received on the sale of the Company's riverboat gambling license in Indiana. ( 2) The Caledon Casino opened for business on October 11, 2000. During the 4th quarter of 2000, net operating revenue for the casino was $3,536. Consolidated net earnings, after eliminating all intercompany transactions, for CCA, the Company's South African subsidiary, of which the Caledon Casino is a part, was $748 for the 4th quarter of 2000.
1st Quarter 2nd Quarter 3rd Quarter(1) 4th Quarter Year ended December 31, 1999 Net operating revenue $ 5,193 $ 5,552 $ 6,704 $ 6,135 Earnings from operations $ 644 $ 821 $ 1,770 $ 786 Net earnings $ 190 $ 271 $ 1,456 $ 304 Basic and diluted earnings per share $ 0.01 $ 0.02 $ 0.10 $ 0.02
( 1) During the 3rd quarter of 1999, the Company received $1,040 from the sale of its riverboat gambling license in Indiana. F26 EX-10.98 2 0002.txt SHAREHOLDERS AGREEMENT SHAREHOLDERS AGREEMENT between CENTURY CASINOS AFRICA (PROPRIETARY) LIMITED CALEDON OVERBERG INVESTMENTS (PROPRIETARY) LIMITED OVERBERG EMPOWERMENT COMPANY LIMITED THE OVERBERG COMMUNITY TRUST and CALEDON CASINO BID COMPANY (PROPRIETARY) LIMITED
TABLE OF CONTENTS PART I - INTRODUCTORY 1 2 INTRODUCTION 7 3 SUSPENSIVE CONDITIONS 8 PART 11 - THE COMPANY 9 4 THE COMPANY 9 5 GENERAL COMPANY AFFAIRS 9 6 MEMORANDUM AND ARTICLES OF ASSOCIATION 10 7 OBJECT OF THE COMPANY 10 PART III - SHAREHOLDINGS 11 8 SHAREHOLDING 11 9 PRE-EMPTIVE RIGHTS 11 10 COME-ALONG 17 11 TAG ALONG 18 12 FORCED SALES 19 13 DILUTION 23 PART IV - CORPORATE GOVERNANCE 24 14 DIRECTORS OF THE COMPANY 24 15 MEETINGS OF SHAREHOLDERS 27 PART V - BUSINESS OF THE COMPANY 28 16 CONDUCT OF THE BUSINESS OF THE COMPANY 28 17 FUNDING REQUIREMENTS OF THE COMPANY 28 18 BASIS OF ACCOUNTING FOR THE CASINO BUSINESS 31 PART VI - GENERAL 31 19 CESSION 31 20 PERFORMANCE 31 21 ARBITRATION 31 22 DOMICILIUM AND NOTICES 34 23 GENERAL 36 24 GOVERNING LAW AND JURISDICTION 37 25 LEGAL COSTS 37 ANNEXURES ANNEXURE A RIGHTS ATTACHING TO PREFERENCE SHARES ANNEXURE B NO ANNEXURE APPLICABLE ANNEXURE C AMOUNTS TO BE DISTRIBUTED TO PREFERENCE SHAREHOLDERS
SHAREHOLDERS AGREEMENT between CENTURY CASINOS AFRICA (PROPRIETARY) LIMITED CALEDON OVERBERG INVESTMENTS (PROPRIETARY) LIMITED OVERBERG EMPOWERMENT COMPANY LIMITED THE OVERBERG COMMUNITY TRUST and CALEDON CASINO BID COMPANY (PROPRIETARY) LIMITED PART I - INTRODUCTORY 1 In this agreement, clause headings are for convenience and shall not be used in its interpretation and, unless the context clearly indicates a contrary intention, - 1.1 an expression which denotes - 1.1.1 any gender includes the other genders; 1.1.2 a natural person includes an artificial or juristic person and vice versa; 1.1.3 the singular includes the plural and vice versa; 1.2 the following expressions shall bear the meanings assigned to them below and cognate expressions bear corresponding meanings - 1.2.1 "Act" - the Companies Act, 61 of 1973, as amended; 2 1.2.2 "the/this agreement" - the agreement as set out herein, together with all its annexures, as amended from time to time; 1.2.3 "auditors" - the auditors of the company as appointed by the company at its annual general meeting from time to time; 1.2.4 "board" - the board of directors of the company from time to time; 1.2.5 "business" - the business to be conducted by the company from time to time, being all business activities relating to, associated with or connected to or furthering the Caledon Casino, Hotel & Spa Resort; 1.2.6 "business day" - any calendar day, other than a Saturday, Sunday or official public holiday in the Republic of South Africa; 1.2.7 "Century" - Century Casino Africa (Proprietary) Limited, a private company with limited liability duly incorporated in the Republic of South Africa with registration number [96/10501/07]; 1.2.8 "CCI" - Century Casinos Incorporated, a company incorporated in the State of Delaware , United States of America; 1.2.9 "COIL" - Caledon Overberg Investments (Proprietary) Limited, a private company with limited liability duly incorporated in the Republic of South Africa with registration number [96/06728/07]; 1.2.10 "company" and/or "Bidco" - Caledon Casino Bid Company (Proprietary) Limited, a private company with limited liability duly incorporated in the Republic of South Africa with registration number [96/010708/07] (to be renamed Century Casinos Caledon (Proprietary) Limited or such other name as the Registrar of Companies may approve); 1.2.11 "control" of a shareholder includes, without limiting the generality of the term - 1.2.11.1 the beneficial ownership of the majority in number of the issued equity shares (or other equity interest) in the shareholder; or 1.2.11.2 the beneficial ownership of issued equity shares (or other equity interest) in the shareholder entitling the beneficial owner thereof to exercise less than a majority of the votes attaching to all the issued equity shares (or other equity interest) in the shareholder, where such voting power is sufficiently dominant relative to the spread of other shareholdings or other equity interest holdings in the shareholder that it does constitute de facto control of the shareholder; or 1.2.11.3 the right, through shareholding or otherwise, to control the composition of the board of directors (or other controlling body) of the shareholder and, without prejudice to the generality of the foregoing, the composition of such board (or other controlling body) shall be deemed to be so controlled if the person or entity holding the right may by the exercise of some power, directly or indirectly, appoint or remove the majority of the directors (or members of such other controlling body); or 1.2.11.4 the right to control the management of the shareholder; or 1.2.11.5 the ability to exercise a material influence over financial and/or trading policies of the shareholder; 1.2.12 "dispose" - sell, transfer, exchange, dispose of or otherwise alienate; 3 1.2.13 "Empowerco" - Overberg Empowerment Company Limited, a public company with limited liability duly incorporated in the Republic of South Africa with registration number;97/00328/06 1.2.14 "Hospitality" - Fortes King Hospitality (Proprietary) Limited, a private company with limited liability duly incorporated in the Republic of South Africa with registration number [80/00096/07] 1.2.15 "hotel management agreement" - the written hotel management agreement dated [3 December 1999] concluded between Hospitality and the company; 1.2.16 "management" - the chairman and the managing director or chief executive officer, as the case may be, of the company and all senior managers reporting directly to them or either of them; 1.2.17 "ordinary shares" - ordinary par value shares of Rl each in the share capital of the company; 1.2.18 "ordinary shareholders" - Century and COIL; 1.2.19 "parties" - Century, COIL, Empowerco, the trust and the company; 1.2.20 "preference shares" - preference par value shares of Rl each in the share capital of the company, having the rights and being subject to the terms and conditions set out in annexure A hereto; 1.2.21 "preference shareholders" - Empowerco and the trust; 1.2.22 "prime rate" - the publicly quoted annual prime/base rate of interest from time to time levied by the company's bankers on the unsecured overdrawn current accounts of its most favoured private sector corporate customers (which rate shall be evidenced by a certificate issued under the hand of any manager 4 of that bank, whose appointment as such it shall not be necessary to prove), compounded monthly in arrears; 1.2.23 "PSGIB" - PSG Investment Bank Limited, registration number 1998/817396/06, a public company with limited liability duly incorporated in the Republic of South Africa; 1.2.24 "sale agreement" - the written sale of shares agreement to be concluded between CCI, COIL and the company contemporaneously with the conclusion of this agreement, pursuant to which CCI will acquire from COIL ordinary shares constituting 15% of all the issued ordinary shares in the issued share capital in the company, which shares CCI will subsequently transfer to Century; 1.2.25 "shareholders" - the registered members of the company bound by this agreement from time to time; 1.2.26 "shareholders claims" - all amounts of whatsoever nature and however arising owing by the company to a shareholder; 1.2.27 "signing date" - the date upon which this agreement is signed by the party signing last in time; 1.2.28 "suspensive conditions" - the suspensive conditions set out in 3.1; 1.2.29 "trust" - The Overberg Community Trust, masters reference number [IT2086/98] 1.3 any reference to any statute,"regulation or other legislation shall be a reference to that statute, regulation or other legislation as at the signature date, and as amended or substituted from time to time; 5 1.4 if any provision in a definition is a substantive provision conferring a right or imposing an obligation on any party then, notwithstanding that it is only in a definition, effect shall be given to that provision as if it were a substantive provision in the body of this agreement; 1.5 where any term is defined within a particular clause other than this 1, that term shall bear the meaning ascribed to it in that clause wherever it is used in this agreement; 1.6 where any number of days is to be calculated from a particular day, such number shall. be calculated as excluding such particular day and commencing on the next day. If the last day of such number so calculated falls on a day which is not a business day, the last day shall be deemed to be the next succeeding day which is a business day; 1.7 any term which refers to a South African legal concept or process (for example, without limiting the foregoing, winding-up or curatorship) shall be deemed to include a reference to the equivalent or analogous concept or process in any other jurisdiction in which this agreement may apply or to the laws of which a party may be or become subject; 1.8 the use of the word "including" followed by a specific example/s shall not be construed as limiting the meaning of the general wording preceding it and the eiusdem generis rule shall not be applied in the interpretation of such general wording or such specific example/s. The terms of this agreement having been negotiated, the contra proferentem rule shall not be applied in the interpretation of this agreement. 2 - INTRODUCTION 2.1 It is recorded that - 2.1.1 Century and COIL are, between them, the holders of all the issued ordinary shares in the share capital of the company; and 6 2.1.2 Empowerco and the trust are, between them, fhe holders of all the issued preference shares in the share capital of the company. 2.2 The parties accordingly wish to regulate - 2.2.1 the governance of the company; 2.2.2 the structure of the company; 2.2.3 the financing of the company; 2.2.4 the business activities of the company; and 2.2.5 the relationship of the shareholders inter se as shareholders in the company. 3 SUSPENSIVE CONDITIONS 3.1 This agreement, in its entirety, is subject to the suspensive conditions that - the sale agreement is concluded and becomes fully binding and unconditional on the parties thereto by virtue of the fulfillment or waiver, as the case may be, of all suspensive conditions to which it may be subject; and 3.2 Should the suspensive condition not be fulfilled or waived, as the case may be, then this agreement shall be of no further force or effect and - 3.2.1 to the extent that this agreement may have been partially implemented the parties shall be restored to the status quo ante; and 7 3.2.2 no party shall have any claim against any other arising out of or in connection with this agreement except as contemplated in this clause 3. 3.3 The parties shall use their respective best endeavours to procure the timeous fulfilment of the condition. PART 11 - THE COMPANY 4 THE COMPANY It is recorded that, as at the signing date, the company has - 4.1 an authorised share capital of R4 000, consisting of 4 000 ordinary shares of which 4 000 ordinary shares are issued, and a further 200 preference shares of Rl.00 each which are in the process of being issued; and 4.2 a financial year ending on the last day of December of each year. 5 GENERAL COMPANY AFFAIRS 5.1 The parties shall procure that, by no later than December 31, 2000 - 5.1.1 the company's name is changed to Century Casinos Caledon (Proprietary) Limited or such other name as the registrar of companies may approve; and 5.1.2 the company adopts new standard set articles of association, in the place and stead of its existing articles of association as soon as possible after the signing date 5.2 Until the company in general meeting determines otherwise - 8 5.2.1 save for the company's other commitments for the year 2000, the auditors shall be Grant Thornton Kessel Feinstein, auditors of Cape Town; 5.2.2 the company shall have its registered address at the auditor's main office in Cape Town; and 5.2.3 the secretary and public officer of the company shall be J Forbes. 6 MEMORANDUM AND ARTICLES OF ASSOCIATION 6.1 the extent that the provisions of the memorandum and articles of association of the company may conflict with or fail to record the provisions of this agreement - 6.1.1 any shareholder may require the memorandum and/or articles of association of the company to be amended accordingly; and 6.1.2 the shareholders shall vote in favour of all resolutions of the company necessary to amend the memorandum and/or articles of association of the company in terms of 6.1.1. 6.2 Without detracting from the provisions of 6.1, to the extent that the provisions of this agreement may conflict with the provisions of the company's memorandum and/or articles of association or any prior agreement between the shareholders regarding the subject matter of this agreement, the provisions of this agreement shall take precedence and shall be given effect to accordingly by the parties to the extent that it is legally possible. 7 OBJECT OF THE COMPANY 7.1 The object of the company shall be to conduct the business on sound commercial terms. 9 PART III - SHAREHOLDINGS 8 SHAREHOLDING 8.1 After implementation of the transactions set out in the sale agreement, the issued shares in the share capital of the company will beneficially be owned in the following proportions by the shareholders - 8.1.1 Century - 65% of the ordinary shares; 8.1.2 COIL - 35% of the ordinary shares; 8.1.3 Empowerco - 50% of the preference shares; and 8.1.4 the trust - 50% of the preference shares. 8.2 All ordinary shares shall rank pari passu in all respects. 8.3 All preference shares shall - 8.3.1 rank pari passu in all respects; and 8.3.2 have the rights, privileges and conditions set out in the company's articles of association, which rights, privileges and/or conditions may not be amended without the prior approval of the ordinary shareholders in general meeting. 8.4 It is recorded that, as at signature date, the value of the preference shares is their par value, being an aggregate amount of [R200]. 8.5 All parties to this Shareholder Agreement agree and approve that CCI has the right to, transfer the shares acquired by it pursuant to the sale agreement to Century. 10 9 PRE-EMPTIVE RIGHTS 9.1 The ordinary shareholders shall not - 9.1.1 dispose of any of its ordinary shares in or claims against the company unless it (referred to in this clause as "the seller) first offers to sell such ordinary shares and an equivalent proportion of its claims against the company ("claims") to the other ordinary shareholder (referred to in this clause as "the offeree") save for a disposition to a company, trust or other entity that currently controls or is controlled by the seller. 9.1.2 save for the pledge and cession in favour of PSGIB in effect as at the signing date, be entitled to cede, pledge or otherwise encumber any shares in or claims against the company held by it from time to time without the prior written consent of the other ordinary shareholder. 9.2 No preference shareholder shall - 9.2.1 dispose of any of its preference shares in or claims against the company unless such shareholder (referred to in this clause as ("the seller") first offers to sell such preference shares and an equivalent proportion of its claims against the company ("claims") to the other preference shareholder (referred to in this clause as "the offeree"); 9.2.2 be entitled to cede, pledge or otherwise encumber any shares in or claims against the company held by it from time to time without the prior written consent of the other shareholders. 9.3 The seller's offers in terms of 9.1 or 9.2, as the case may be - 9.3.1 shall be in writing and delivered to the offeree; 9.3.2 shall be irrevocable and shall remain open for acceptance by the offeree for a period of thirty days after receipt; 11 9.3.3 shall specify the claims and the number of shares which the seller is offering to sell; 9.3.4 shall be accompanied, where applicable, by - 9.3.4.1 a written memorandum of the consideration as well as all of the other terms and conditions that have been offered to the seller orally; or 9.3.4.2 a true and complete copy of any written offer made to the seller (which sets out the consideration and all other terms and conditions of such offer), by any bona fide third party in respect of the shares in and the claims against the company which the seller wishes to accept, and which in either case must contain the name of the bona fide third party, and in the case where the bona fide third party is an agent, the name of his ultimate principal; 9.3.5 if there is a bona fide offer from a third party, be deemed to be for the consideration and subject to, mutatis mutandis, the terms and conditions set out in the memorandum or written offer referred to in 9.3.4; 9.3.6 subject to 9.2.1, shall, if there is no offer from a bona fide third party, state that fact as well as the consideration and full terms and conditions upon which the seller wishes to sell its shares in and claims against the company; 9.3.7 shall be subject to the conditions that - 9.3.7.1 the seller's offer may be accepted by the offeree only on the basis that all of the shares and claims offered are to be purchased as one indivisible transaction; 12 9.3.7.2 unless the offer referred to in 9.3.4 or the seller's offer referred to in 9.3.6 provides to the contrary - 9.3.7.2.1 a written cession of the claims offered and accepted and delivery of the share certificates in respect of all the shares offered and accepted together with transfer forms in respect of all such shares duly completed in accordance with the articles of association of the company shall be made to the purchaser within seven days after acceptance of the seller's offer; 9.3.7.2.2 the consideration referred to in 9.3.5 or 9.3.6, as the case may be, shall be payable against delivery as set out in 9.3.7.2.1; 9.3.8 shall not be subject to any other terms or conditions. 9.4 Should the offeree referred to in 9.2.1 not accept the seller's offer in terms of 9.2 in respect of all the preference shares and claims so offered, the seller shall offer such preference shares and claims to the ordinary shareholders in the proportion in which they hold ordinary shares in the issued ordinary share capital of the company at the time mutatis mutandis on the basis set out in 9.3 save that, any of the ordinary shareholders may accept an offer made in terms of the preference shares and claims in respect of a greater proportion of the preference shares and an equivalent proportion of the seller's claims offered than his pro rata share thereof, provided that such acceptance will only be effective in respect of the excess - 9.4.1 if and to the extent that the other ordinary shareholder accepts the offer in respect of a smaller proportion of the preference shares and claims than its respective pro rata entitlement; and 13 9.4.2 acceptance by both the ordinary shareholders together constitute acceptance for all the preference shares and claims offered, provided further that if acceptances in terms of this clause together constitute acceptances for more than the preference shares and claims offered, then the preference shares and claims offered shall be apportioned amongst the accepting ordinary shareholders in the proportions as near as may be to their existing ordinary shareholding in the company on the date of the seller's offer, but on the basis that no ordinary shareholder shall be obliged to purchase more preference shares and claims than the proportion of the preference shares and claims accepted by him; 9.5 Should - 9.5.1 after such offer to the ordinary shareholders in terms of 9.4, the ordinary shareholders not accept such offer in respect of all the preference shares and claims so offered; or 9.5.2 the offeree referred to in 9.1.1 not accept the seller's offer in terms of 9.1 in respect of all the ordinary shares and claims so offered, the seller shall be entitled, subject to the remainder of the provisions of this clause 9, for a period of thirty days after the expiry of the time for last acceptance by the ordinary shareholders referred to in 9.4 or the offeree, as the case may be, to dispose of all the shares and claims included in the seller's offer to the bona fide third party whose offer was disclosed in the seller's offer referred to in 9.3 or, if the seller's said offer disclosed that there was no bona fide third party offeror in respect of the shares and the claims, then to any third party, provided that in either instance - 14 9.5.3 shares and the claims are transferred to the third party only at a price and on terms and conditions not more favourable to the purchaser than the price, terms and conditions set out in the seller's offer referred to in 9.3; 9.5.4 the third party offers to the shareholders in writing to be bound by the provisions of this agreement and any other existing shareholders' agreement relating to the company; and 9.5.5 the third party agrees to purchase all the shares and claims which were offered by the seller in terms of 9.1, and provided further that in the case of a sale to a third party whose identity had not yet been disclosed to the offeree and/or the remaining shareholders, the seller shall disclose the name of the proposed third party to the offeree if requested by the offeree within seven days after the commencement of the thirty day period referred to in this 9.5 and should the offeree within seven days after the identity of the third party was disclosed, require the seller by written request delivered to the seller to do so, the seller shall be obliged to offer the shares to the offeree again in terms of 9.1, 9.2, 9.3 and 9.4 provided that should the offeree not accept the seller's offer in respect of all shares and claims offered, the seller shall be entitled to sell the shares to the third party subject to the provision set out in this 9.4. 9.6 If all the shares and claims offered for sale by the seller are not sold to the third party within the thirty days referred to in 9.4, then the provisions of 9.1, 9.2, 9.3, 9.4 and this clause 9.6 shall again apply to the seller's shares and claims. 9.7 If the seller's offer in terms of 9.1 and 9.2 is accepted in accordance with the provisions of this clause, the seller hereby irrevocably authorises the offeree to sign any share transfer form on the sellers behalf for purposes of effecting due transfer to the offeree of the shares sold against payment of the purchase price. 15 9.8 Unless otherwise specified in the seller's offer, payment for shares and claims acquired in terms of this clause 9 shall be effected against delivery of a written cession of the claims and transfer of the shares so acquired. 10 COME-ALONG 10.1 Notwithstanding any provision to the contrary contained in this agreement, Century ("the disposer') may at any time give written notice to the other ordinary shareholder ("the recipient") to the effect that - 10.1.1 the disposer has received a written offer from a third party offering to purchase ordinary shares constituting the entire issued ordinary share capital of, and all of the shareholders' claims of ordinary shareholders against, the company on such terms as may be specified in such notice; and 10.1.2 the disposer's entire ordinary shareholding in the company and the disposer's shareholders' claims against the company are available for purchase by the recipient upon the terms so specified, mutatis mutandis in accordance with the applicable provisions of 9. 10.2 Should the recipient not purchase all of the ordinary shares and all of the shareholders' claims of the disposer in terms of 10.1.2 after receipt of the disposer's written notice contemplated in 1 0. 1, the disposer shall be entitled to sell all the ordinary shares and all the shareholders' claims of the ordinary shareholders in and against the company by way of written agreement entered into within sixty days after the expiry of the time for acceptance of the disposer's offer in terms of 10. l-, provided that - 10.2.1 the sale of shares ranking pari passu with each other shall be on the same basis irrespective of holders; and 16 10.2.2 such sale is to the third party offeror notified in the disposer's notice referred to in 10.1 and upon the terms and conditions not less favourable to the disposer and the recipient than were notified in such notice. 11 TAG ALONG 11.1 Should Century ("the disposer") at any time receive a written offer from a bona fide third party (save for a disposition to a company, trust or other entity that currently controls or is controlled by the seller) offering to purchase so many of the disposer's ordinary shares as would constitute directly or indirectly a change in control in the company which the disposer intends to accept, the disposer shall be obliged to given written notice to the other ordinary shareholder ("the recipient") to the effect that the disposer has received such an offer which the disposer intends to accept for cash and upon such further terms as may be specified in such notice. 11.2 The disposer shall be obliged, if so notified in writing by the recipient within fifteen days of receipt of the written notice referred to in 11. 1, to attempt sell ordinary shares constituting the entire ordinary shareholding of the disposer and the recipient in the company and all shareholders' claims of the disposer and the recipient against the company by way of a written agreement to such third party, provided that - 11.2.1 the sale of ordinary shares ranking pari passu with each other shall be on the same basis irrespective of holder; and 11.2.2 such sale is to the third party offeror identified in the disposer's notice referred to in 11. 1 and upon terms and conditions not less favourable to the disposer and the recipient than were notified in such notice. 11.3 In the event of the entire issued ordinary share capital of the company being sold in terms of this clause 11, the purchaser of the shares and 17 claims shall pay over the recipient's share of the purchase price to it within ten business days of receipt of the purchase consideration from the third party. 12 FORCED SALES 12.1 Should - 12.1.1 the entity or person controlling any shareholder as at the signing date for any reason whatsoever loose such control or cease to control that shareholder without the prior written approval of all the other shareholders (save for loosing control to another entity which is in fact controlled by that shareholder); or 12.1.2 any shareholder - 12.1.2.1 become subject to any provisional or final order for its liquidation, winding-up or judicial management or for any similar process to occur in respect of that shareholder; or 12.1.2.2 voluntarily, whether by way of members' resolution or otherwise, place itself in liquidation; or 12.1.2.3 adopt any resolution, whether in general meeting or otherwise, relating to its liquidation or winding-up; or 12.1.2.4 which is a trust, suffers any change in any of its trustees or beneficiaries (whether beneficiaries in respect of income or capital or both); or 12.1.2.5 and/or the entity or person controlling such shareholder, for any reason whatsoever, lose or forfeit the approval of any appropriate gaming authority required in relation to its involvement in the company, 18 then the shareholder referred to in 12.1.1 or 12.1.2, as the case may be, ("offeror") shall be deemed to have offered to sell all the shares and the shareholder's claims held by it to the other shareholders of the company (on the basis that ordinary shares shall be offered only to the other ordinary shareholder and preference shares shall firstly be offered to the other preference shareholder and thereafter to the ordinary shareholders in proportion in which they hold ordinary shares in the issued share capital of the company mutatis mutandis as envisaged in 9.4) at a price equal to the fair market value thereof, with effect from the day on which the event referred to in 12.1.1 has taken place or the day prior to the day on which the event referred to in 12.1.2 has taken place, as the case may be. 12.2 A deemed offer in terms of 12.1 - 12.2.1 shall be irrevocable and shall remain open for acceptance for a period of forty five days from the date on which the relevant offeree became aware of the deemed offer; 12.2.2 shall be subject to the conditions that - 12.2.2.1 the relevant transfer must be approved by all appropriate gaming authorities; 12.2.2.2 a written cession of the claims offered and accepted and delivery of the share certificates in respect of all the shares offered and accepted together with transfer forms in respect of all such shares duly completed in accordance with the articles of association of the company shall be made to the offeree within seven days after acceptance of the offer; 12.2.2.3 the consideration shall be payable against delivery of the shares and claims as set out in 12.2.2.2; 19 12.2.2.4 the offer may be accepted only on the basis that all of the offeror's shares in and all of the offeror's claims against the company are to be purchased as one indivisible transaction; and 12.2.3 shall not be subject to any other terms or conditions. 12.3 If any offeree acquires any shares in and claims against the company from the offeror in terms of this clause 12, the offeree shall use its best endeavours to procure the release of the offeror from all its obligations which the offeror may have in terms of or arising out of or in connection with any suretyship, guarantee, indemnity or other act of intercession given, made or entered into by the offeror on behalf of the company ("guarantees"). 12.4 For purposes of this clause 12 - 12.4.1 "fair market value" means - 12.4.1.1 a price per share determined by a firm of independent auditors (acting as experts and not as arbitrators) agreed upon by the ordinary shareholders within fourteen days after the date of acceptance in terms of 12.2.1, whose decision shall be final and binding; 12.4.1.2 a price for the shareholder's claims equal to the book value thereof; 12.4.2 should the ordinary shareholders fail to agree upon an independent firm of auditors within fourteen days after the date of acceptance in terms of 12.2.1, then such independent firm of auditors shall be appointed by the chairman for the time being of the South African Institute of Chartered Accountants; 20 12.4.3 the independent firm of auditors shall, in determining the fair market value - 12.4.3.1 be obliged to call upon the shareholders to furnish it with their respective written suggestions as to what the proper method should be in valuing the shares, which written suggestions must be delivered to the independent firm of auditors within seven days after it has requested such suggestions, whereafter the independent firm of auditors shall decide upon the method to be applied; 12.4.3.2 have reference to the value of the shares in the open market on a going concern basis as between a willing purchaser and a willing seller; 12.4.4 all shareholders shall forthwith be informed of a valuation of the shares in and shareholder's claims against the company valued by the independent firm of auditors, who shall be obliged to specify in writing to the shareholders the basis of the valuation and the reasons therefor. 13 DILUTION 13.1 Subject to 17.2 and 17.3, the percentage of the total of the shareholders' loans to the company held by any ordinary shareholder shall at all times be equal to the percentage of the total issued ordinary shares of the company held by that shareholder. 13.2 Accordingly, should any ordinary shareholder ("defaulting party")at any time fail to contribute any capital or loans which it was obliged to contribute to the company as specified in this agreement or as otherwise agreed in writing, and remain in default for more than fifteen days after receipt of a written notice from any of the other ordinary shareholders or from the company calling upon the defaulting party to remedy that 21 default, the ordinary shareholding in the company shall be adjusted as set out in this clause 13. 13.3 Any ordinary shareholder wishing to have the ordinary shareholding in the company adjusted as contemplated in 13.2 or the company, as the case may be, shall give written notice to the defaulting party that it requires the ordinary shareholding to be adjusted. 13.4 Within ten days after the date on which the notice was given in terms of 13.3, the company shall issue to all ordinary shareholders other than the defaulting party, at an issue price based on the fair market value of the company at such time (determined in the event of a dispute, mutatis mutandis, in accordance with 12.4) minus 10%, such number of ordinary shares in the company as will have the effect of adjusting the ordinary shareholding of the ordinary shareholders in the company to accord with the principles described in 13.1. 13.5 The ordinary shareholders shall vote in favour of all resolutions of the company and shall execute all such documents as may be required to bring about the implementation of 13.4, including, but not limited to, the creation of new share capital by the company to enable it to issue such further ordinary shares to the non-defaulting ordinary shareholders. 13.6 Notwithstanding anything contained herein once the valuation of the shares contemplated in this clause is complete, the defaulting party shall have the right within 3 days of such completion to elect rather to contribute the required capital or loan than be diluted in terms of this clause. PART IV - CORPORATE GOVERNANCE 14 DIRECTORS OF THE COMPANY 14.1 Until the ordinary shareholders otherwise resolve, the company shall have a maximum of ten directors of which - 22 14.1.1 Century shall be entitled to appoint six; 14.1.2 COIL shall be entitled to appoint two; 14.1.3 Empowerco shall be entitled to appoint one; and 14.1.4 the trust shall be entitled to appoint one. 14.2 Any shareholder shall be entitled, on notice to the company, to remove any director appointed by it and to appoint another director in his stead. 14.3 Each director shall be entitled, on notice to the secretary to the company and subject to the company obtaining all appropriate gaming authority approvals in this regard, to appoint an alternate director to act during his absence and in his stead. 14.4 Chairman and Vice Chairman of the board - 14.4.1 The chairman of the board shall be appointed by Century; and 14.4.2 shall have a second or casting vote. 14.4.3 A vice chairman of the board shall be appointed by COIL. 14.5 quorum for any directors' meeting of the company shall be all directors appointed by Century and all directors appointed by COIL, or their alternates, personally present. 14.6 Should a quorum not be present within thirty minutes after the time appointed for the' commencement of any meeting of the directors of the company, that meeting shall stand adjourned to the following day, at the same time and place, or such other day, time or place as the chairman of the meeting shall appoint. The adjourned meeting may only deal with matters which were on the agenda of the meeting which was adjourned. 23 14.7 Where a meeting has been adjourned as aforesaid, the company shall be obliged to inform the directors who are not present at the adjourned meeting of the time, date and place to which the meeting has been adjourned by giving written notice of such adjourned meeting to the directors in question. 14.8 If at any adjourned meeting the directors appointed by Century, or their alternates, are present and the directors appointed by COIL, or their alternates, are not, the directors present shall be a quorum. If at any adjourned meeting the directors appointed by Century, or their alternates, are not present, the meeting shall again stand adjourned to the following day, at the same time and place, or such other day, time or place as the chairman of the meeting shall appoint. The adjourned meeting may only deal with matters which were on the agenda of the meeting which was adjourned. 14.9 The directors present at the third adjournment of any meeting of the board shall be a quorum. 14.10 The board shall also meet at the written request of the majority in number of the directors, which request shall be delivered to the company. 14.11 Each of the shareholders shall procure that each director and each alternate director appointed by such shareholder shall upon his appointment furnish the company in writing with a postal address and facsimile number at which notice of meetings shall be given to him. 14.12 The company shall give notice to all its directors and alternate directors of all directors' meeting of the company at the address provided for in 14.11. 24 14.13 Seven clear days' notice shall be given of all meetings of the directors of the company unless the majority of the directors agree on a shorter period of notice. 14.14 Each of the directors or his alternate, present at a meeting - 14.14.1 appointed by Century shall have six votes divided by the number of directors present at the meeting appointed by Century; 14.14.2 appointed by each of COIL, Empowerco and the trust shall have one vote each. 14.15 Without limiting the discretion of the directors to regulate their meetings, the directors may confer by telephone, close circuit television or other electronic means or audio or audiovisual communication and a resolution passed at such a conference shall, notwithstanding that the directors are not present together in one place at the time of the conference, be deemed to have been passed at a meeting of the directors duly called and constituted on the day on which and at the time at which the conference was so held, it being agreed that the provisions of this agreement relating to meetings of directors shall apply mutatis mutandis to such conferences. 14.16 Resolutions signed in writing by a majority of the directors (after having been circulated to all the directors at the addresses referred to in 14.11) shall be as valid and effectual as if passed at a meeting of directors. The resolution may consist of several documents each signed by one or more director (or their alternates). 14.17 Should a deadlock arise at any meeting of the directors of the company, the matter in connection with which the deadlock arose shall immediately be referred for determination to an ordinary shareholders' meeting of the company which shall be convened immediately and the resolution of the ordinary shareholders of the company regarding the matter so referred 25 shall be the decision of the company regarding that matter. A quorum for such a meeting shall include all the ordinary shareholders. 15 MEETINGS OF SHAREHOLDERS 15.1 A quorum for a general meeting of the company shall be the minimum number required by the Act, save that there shall be no quorum unless CCI or Century (for so long as they are shareholders in the company) and COIL (for so long as it is a shareholder in the company) are represented in person or by proxy at such meeting. 15.2 Should a quorum not be present within thirty minutes after the appointed time for a general meeting, the general meeting, if convened by or on a requisition of members, shall be dissolved and in any other case shall stand adjourned to the same day (of if that day is a Saturday, Sunday or public holiday the next business day), two weeks later at the same time and place and a quorum at the resumption of the general meeting shall be the minimum number required by the Act, save that there shall be no quorum unless CCI or Century (for so long as it is a shareholder in the company) is represented in person or by proxy at such meeting. 15.3 Subject to the provisions of the Act, all decisions taken at a meeting of shareholders shall be taken by majority vote. PART V - BUSINESS OF THE COMPANY 16 CONDUCT OF THE BUSINESS OF THE COMPANY 16.1 It is recorded that the company has, prior to the signing date, concluded 16.1.1 a written casino management agreement with Century; and 16.1.2 a written hotel management agreement with Hospitality, 26 and that such management agreements shall remain in full force and effect according to their tenor. No changes, cancellations, other amendments, suspension or any other decision affecting these agreements shall be made save for under the breach clauses without the joint consent of Century and COIL. It is the understanding of Century and COIL that the hotel management agreement includes all hotel and accommodation on the resort as well as food & beverage activities within the accommodation, or hotel and casino and this cannot be managed by any third party. 16.2 The day to day affairs of the company not managed in terms of the management agreements referred to in 16.1 shall be controlled by the board. 17 FUNDING REQUIREMENTS OF THE COMPANY 17.1 It is recorded that, as at the signing date and taking into account this transaction and excluding any sundry loan accounts or interest paid or due and payable on any loan accounts 17.1.1 Century has made working capital loan funding available to the company in the form of a shareholders' loan in an amount of R19 500 000 and 17.1.2 COIL has made working capital loan funding available to the company in the form of a shareholders' loan in an amount of R10 500 000 17.2 All additional funding required by the company in respect of its activities or for purposes of developing its business or funding any other working capital requirement, as determined by the board from time to time, shall be provided, unless the board determines otherwise, by way of own funding contributed by the ordinary shareholders, whether in the form of loans by the ordinary shareholders to the company in the proportion of their ordinary shareholding in the company or by way of further ordinary 27 share capital subscribed for by the ordinary shareholders. It is recorded that it is not Century's intention to require additional funding to be contributed primarily in order to dilute COIL. 17.3 Should the company be financed by loans from the ordinary shareholders referred to in 17.2, such loans shall - 17.3.1 be made by the ordinary shareholders simultaneously (in proportion to their respective ordinary shareholding in the company at the time); 17.3.2 be unsecured; 17.3.3 shall bear interest at such rate and calculated and payable at such intervals as may from time to time be determined by the board provided that the rate of interest payable to one ordinary shareholder shall at all times be the same as the rate of interest payable to the other ordinary shareholder; 17.3.4 only be repayable when the board so resolves and then only on the basis that the ordinary shareholders are repaid simultaneously and proportionally; and 17.3.5 be repaid on the granting of an order (whether provisional or final) of liquidation or judicial management of the company. 17.4 Notwithstanding anything to the contrary contained in this agreement, no suretyship, financial guarantee or indemnity shall be required to be given by any shareholder of the company without the shareholder's prior written agreement. 17.5 If any suretyship, financial guarantee or indemnity is given by a shareholder on behalf of the company for the purposes of any obligation of the company, then the shareholders shall endeavour to procure that such suretyship, financial guarantee or indemnity be given by the 28 shareholders severally in proportion to their shareholding in the company. 17.6 In the event of any shareholder nevertheless giving a suretyship, financial guarantee or indemnity to anybody jointly and severally with the consent of the other shareholders in accordance with the provisions of this clause 17, the shareholders shall be liable under any such suretyship, financial guarantee or indemnity as between each other in proportion to their shareholding in the company at the time of giving the suretyship, financial guarantee or indemnity, irrespective of the terms of that suretyship, financial guarantee or indemnity. 18 BASIS OF ACCOUNTING FOR THE CASINO BUSINESS The basis of accounting for the casino business for the sole purpose of determining the profits available for distribution to the preference shareholders and the amount to be distributed to the preference shareholders are set out in annexure C hereto, which annexure shall not be exhaustive. PART VI - GENERAL 19 CESSION No party to this agreement shall cede, assign, transfer, encumber or delegate any of their rights in terms of this agreement without the consent of the other parties. 20 PERFORMANCE The parties shall do all acts and sign all such documents as may be required from time to time in order to implement and carry out the terms and conditions of this agreement. 21 ARBITRATION 29 21.1 Should any dispute arise between the parties in connection with - 21.1.1 the formation or existence of; 21.1.2 the implementation of; 21.1.3 the interpretation or application of the provisions of; 21.1.4 the parties' respective rights and obligations in terms of or arising out of, or the breach or termination of; 21.1.5 the validity, enforceability, rectification, termination or cancellation, whether in whole or in part of; 21.1.6 any documents furnished by the parties pursuant to the provisions of, this agreement or which relates in any way to any matter affecting the interests of the parties in terms of this agreement, that dispute shall, unless resolved amongst the parties to the dispute, be referred to and be determined by arbitration in terms of this clause. 21.2 Any party to this agreement may demand that a dispute be determined in terms of this clause by written notice given to the other parties. 21.3 This clause shall not preclude any party from obtaining interim relief on an urgent basis from a court of competent jurisdiction pending the decision of the arbitrator. 21.4 The arbitration shall be held - 21.4.1 at Cape Town or such other place as the parties to the dispute may agree upon in writing; 21.4.2 with only the legal and other representatives of the parties to the dispute present thereat; 30 21.4.3 mutatis mutandis in accordance with the provisions of the Supreme Court Act, No. 59 of 1959, the rules made in terms of that act and the practice of the division of the High Court referred to in 21.9; 21.4.4 otherwise in terms of the Arbitration Act, No. 42 of 1965, it being the intention that the arbitration shall be held and completed as soon as possible. 21.5 The arbitrator shall be, if the matter in dispute is principally - 21.5.1 a legal matter, a practising advocate or attorney of Cape Town of at least fifteen years' standing; 21.5.2 an accounting matter, a practising chartered accountant of Cape Town of at least fifteen years' standing; 21.5.3 any other matter, any independent person, agreed upon between the parties to the dispute. 21.6 Should the parties to the dispute fail to agree whether the dispute is principally a legal, accounting or other matter within seven days after the arbitration was demanded, the matter shall be deemed to be a legal matter. 21.7 Should the parties fail to agree on an arbitrator within fourteen days after the giving of notice in terms of 21.2, the arbitrator shall be appointed at the request of either party to the dispute by the President for the time being of the Law Society of the Cape of Good Hope according to the provisions of 21.5. 31 21.8 The decision of the arbitrator shall be final and binding on the parties to the dispute and may be made an order of the court referred to in 21.9 at the instance of any of the parties to the dispute. 21.9 The parties hereby consent to the jurisdiction of the High Court of South Africa (Cape Provincial Division) in respect of the proceedings referred to in 21.4. 21.10 The parties agree to keep the arbitration including the subject-matter of the arbitration and the evidence heard during the arbitration confidential and not to disclose it to anyone except for purposes of an order to be made in terms of 21.8. 21.11 The provisions of this clause - 21.11.1 constitute an irrevocable consent by the parties to any proceedings in terms hereof and no party shall be entitled to withdraw there from or claim at any such proceedings that it is not bound by such provisions; 21.11.2 are severable from the rest of this agreement and shall remain in effect despite the termination of or invalidity for any reason of this agreement. 22 DOMICILIUM AND NOTICES 22.1 The parties choose domicilium citandi et executandi ("domicilium") for all purposes relating to this agreement, including the giving of any notice, the payment of any sum, the serving of any process, as follows - 22.1.1 Century and physical 1 nerina street the company Caledon 7230 facsimile 0282122773 32 22.1.2 COIL physical - 64 Kloof Street Gardens Cape Town facsimile - 021 423 4407 22.1.3 Empowerco physical - facsimile - 0 22.1.4 the Trust physical - facsimile - 22.2 Any party shall be entitled from time to time, by giving written notice to the others, to vary its physical domicilium to any other physical address (not being a post office box or poste restante) within the Republic of South Africa and to vary its facsimile domicilium to any other facsimile number. 22.3 Any notice given or payment made by any party to another ("addressee") which is delivered by hand between the hours of 09:00 and 17:00 on any business day to the addressee's physical domicilium for the time being shall be deemed to have been received by the addressee at the time of delivery. 22.4 Any notice given by any party to another which is successfully transmitted by facsimile to the addressee's facsimile domicilium for the time being shall be deemed (unless the contrary is proved by the addressee) to have been received by the addressee on the day immediately-succeeding the date of successful transmission thereof. 22.5 This 22 shall not operate so as to invalidate the giving or receipt of any written notice which is actually received by the addressee other than by a method referred to in this 22. 33 22.6 Any notice in terms of or in connection with this agreement shall be valid and effective only if in writing and if received or deemed to be received by the addressee. 23 GENERAL 23.1 This agreement novates and replaces all written shareholder agreements concluded between the company, COIL, Century, Century Casinos Inc., Caledon Hotel Spa and Casino Resort (Proprietary) Limited, Fortes King Hospitality (Proprietary) Limited, Overberger Country Hotel and Spa (Proprietary) Limited and the Senator Trust. 23.2 This agreement constitutes the sole record of the agreement between the parties in relation to the subject matter hereof. Neither party shall be bound by any express, tacit or implied term, representation, warranty, promise or the like not recorded herein. This agreement supersedes and replaces all prior commitments, undertakings or representations, whether oral or written, between the parties in respect of the subject matter hereof. 23.3 No addition to, variation, novation or agreed cancellation of any provision of this agreement shall be binding upon the parties unless reduced to writing and signed by or on behalf of the parties. 23.4 No indulgence or extension of time which either party may grant to the other shall constitute a waiver of or, whether by estoppel or otherwise, limit any of the existing or future rights of the grantor in terms hereof, save in the event and to the extent that the grantor has signed a written document expressly waiving or limiting such right. 23.5 Without prejudice to any other provision of this agreement, any successor-in-title, including any executor, heir, liquidator, judicial manager, curator or trustee, of either party shall be bound by this agreement. 34 23.6 The signature by either party of a counterpart of this agreement shall be as effective as if that party had signed the same document as the other party. 24 DIVIDEND POLICY The ordinary shareholders shall procure that in respect of each financial year the company declares and pays a dividend equal to not less than 1/3 of the after tax profits of the company. Notwithstanding the above no such dividend shall be declared to the extent that any such declaration or payment will; 24.1 cause the company to borrow money to effect such payment; 24.2 prevent the company from paying any of its debts as they may become due and payable in the ordinary course of business as well ensuring that it has sufficient funds for capital expenditure requirements and any developmental plans; 24.3 will be declared to the extent that the auditors of the company certify that such dividend and payment is contrary to sound business practice having regard to the financial position of the company. 25.1 GOVERNING LAW AND JURISDICTION 25.1 This agreement shall in all respects (including its existence, validity, interpretation, implementation, termination and enforcement) be governed by the law of the Republic of South Africa which is applicable to agreements executed and wholly performed within the Republic of South Africa. 25.2 The parties hereby consent and submit to the' jurisdiction of the Cape Provincial Division of the High Court of the Republic of South Africa in respect of any dispute or claim arising out of or in connection with this agreement. 35 26 LEGAL COSTS Each party shall bear and pay its own legal and other costs in respect of drafting, preparing and implementing this agreement. Signed at Caledon on 4th November 2000 for Century Casinos Africa (Pty) Ltd. /s/Peter Hoetzinger who warrants that he is duly authorised hereto Signed at on 2000 for Caledon Overberg Investments (Proprietary) Limited who warrants that he is duly authorised hereto Signed at on 2000 for Overberg Empowerment Company Limited who warrants that he is duly authorised hereto Signed at on 2000 for Overberg Community Trust 36 who warrants that he is duly authorised hereto Signed at Caledon on 4th November 2000 for Caledon Casino Bid Company (Proprietary) Limited /s/Kevin King who warrants that he is duly authorised hereto We, Century Casinos Inc., Caledon Hotel Spa and Casino Resort (Proprietary) Limited, Fortes King Hospitality (Proprietary) Limited, Overberger Country Hotel and Spa (Proprietary) Limited and the Senator Trust, hereby agree and consent to clause 23.1 of this agreement. Signed at Caledon on 4th November 2000 for Century Casinos Inc. /s/Peter Hoetzinger who warrants that he is duly authorised hereto Signed at Caledon on 4th November 2000 for Caledon Hotel Spa and Casino Resort (Proprietary) Limited /s/Leon Fortes who warrants that he is duly authorised hereto 37 Signed at Caledon on 4th November 2000 for Fortes King Hospitality (Proprietary) Limited /s/Leon Fortes who warrants that he is duly authorised hereto Signed at Caledon on 4th November 2000 for Senator Trust /s/Leon Fortes who warrants that he is duly authorised hereto Signed at Caledon on 4th November 2000 for Overberger Country Hotel and Spa (Proprietary) Limited /s/Leon Fortes who warrants that he is duly authorised hereto 38 ANNEXURE PREFERENCE SHARES 98.1 The following rights, privileges and conditions shall apply to the preference shares (which for the avoidance of doubt shall not be cumulative) having a par value of R1 each ("preference shares") in the capital of the company - 98.1.1 Each preference share shall confer on the holder the right to receive by way of dividend in respect of each financial year of the company 0.1% (one tenth of one per cent) of the after tax profits directly attributable to the Caledon casino business in that year and prior to the payment of interest or capital on shareholders' loans (other than shareholders loans provided in respect of the casino business), subject to, as determined by the directors of the company in their sole and absolute discretion, any working capital, capital expenditure requirements, loan obligations and liabilities, attributable to the casino business and after taking into account the amount of STC payable in relation to the dividends on the preference shares and distributable reserves of the casino business. The dividend (if any) shall be payable within 3 months after the financial statements of the company have been audited and signed by the directors of the company. 98.1.2 Should the casino business be wound up, each preference share shall confer the right on the holder to receive out of funds which may lawfully be applied for that purpose, in priority to the holders of all other classes of shares in the share capital of the company, 0.1% (one tenth of one per cent) of any surplus directly attributable to the casino business available for distribution after payment of ail other liabilities attributable to such casino business. 98.1.3 Save as set out herein, the holders of the preference shares shall not be entitled to participate in the profits of the company or any dividend payable on the winding-up of the company. 98.1.4 The preference shareholders shall have the right to attend general meetings and adjourned meetings of the company but shall not, save in circumstances envisaged in section 194, of the Company's Act 1973, have the right to vote at any such meeting. 98.1.5 Should any preference shareholder wish to dispose of its shares, it shall be required to do so in accordance with the pre-emptive rights provisions contained in the articles of association of the company 98.1.6 The terms of the preference shares may not be modified, altered, varied, added or abrogated. 98.1.7 The preference shares shall not be redeemable except by agreement between the company and the holders of the preference share willing to have them redeemed. 98.2 The basis of accounting for the casino business of the company for the sole purpose of determining the profits available for distribution to the preference shareholders and the amount to be distributed to the preference shareholders as set out in Annexure hereto BASIS OF ACCOUNTING FOR THE CASINO BUSINESS OF THE COMPANY FOR THE SOLE PURPOSE OF DETERMINING THE PROFITS AVAILABLE FOR DISTRIBUTION TO THE PREFERENCE SHAREHOLDERS AND THE AMOUNT TO BE DISTRIBUTED TO THE PREFERENCE SHAREHOLDERS 1. Definitions The following words and expressions shall bear the meanings assigned to them below and cognate words and/or expressions shall bear corresponding meanings: 1.1 "the casino business" means the casino business owned by the company excluding, without limitation, the hotel, health spa, tourist village which will be owned by the company; 1.2 "the preference shareholders" and "minority shareholders" means Overberg Empowerment Company Ltd ("Empowerco"), and The Overberg Community Trust ("the Trust"); 1.3 "the remaining company business" means the business of the company but excluding the casino business; 1.4 "the Trust" means the Trustees for the time being of the Overberg Community Trust; 2. Books of account 2.1 The company shall maintain separate books of account for the casino business. The casino business will be accounted for as a branch of the company with "branch accounting" being used. 2.2 The branch accounts of the casino business ("branch accounts") will be used to determine the profits available for distribution to the minority shareholders. 3. Casino branch capital and undistributed profits 3.1 The casino business will have an initial branch capital of R2,5 million. 3.2 The cumulative branch profits of the casino business which have not been distributed, whether by way of dividend to the minority shareholders or by transfer to the remaining company business, will be included as "retained undistributed profits" in the branch accounts. 4. Finance for casino business Any finance obtained by the company (including for the avoidance of doubt, shareholders' loans which is related to the operation of the casino business will be allocated directly to the casino business. The interest and other costs and capital repayments of such finance will be met by the casino business prior to the distribution of dividends to minority shareholders. 5 Branch fixed assets All fixed assets directly relating to the casino business (for the avoidance of doubt, excluding the casino premises which will be an asset of the remaining company business), will be included within the books of account of the casino business. Similarly all liabilities directly attributable to the casino business shall be recorded as such in the branch accounts and shall be taken into account in determining the profits of the casino business available for distribution. 6. Bank accounts and working capital 6.1 Separate bank accounts will be maintained for the casino business. 6.2 Surplus funds generated by the casino business will either be placed on deposit with approved banking institutions or may be lent to the remaining company business on terms and conditions as to the repayment of capital and interest only which reflect an arm's length basis. 6.3 If any working capital facilities are arranged by the remaining company business for the casino business, the casino business will be charged with the cost of providing those facilities. 6.4 If any working capital is provided by the remaining company business to the casino business, the casino business will be charged for these funds on an arm's length basis and will be required to repay such working capital together with interest prior to any payments of dividends to the minority shareholders. 7. Services provided by the remainder 7.1 Where services are provided to the casino business by the remaining company business, a charge will be made to the casino business on an arm's length basis. Such services include but are not limited to the provision of the casino premises and central resort services and the basis of these charges is set out below. 7.2 Rent for the casino premises shall be based on the aggregate of cost of the casino premises to the company and the premises leased to the Trust, commencing at 20% of cost and escalating at 9% per annum. The casino business shall bear all costs attributable to such premises including but not limited to maintenance, repairs, insurance and the like. 7.3 Central resort services and other shared services'shall be based on the actual cost of providing the services which will be allocated on a basis that reflects usage. 7.4 The cost of any other services provided by the remaining company business shall be charged to the casino business on an arm's length basis. 8. Costs and income of the casino operation It is intended that all costs and all income directly relating to the casino business should be reflected in the branch accounts. 9. Taxation For the purposes of the branch accounts, the taxation charge relating to the casino business will be calculated as if the casino business is a stand alone company. STC relating to the payment of dividends to the minority shareholders will be charged to the minority shareholders' portion of the casino business. Payments of income tax (including advance payments of taxation) attributable to the casino business will be charged to the casino business on the dates that the payments are or would have been made to the authorities. 10. Basis of preparation of branch accounts The accounts of the casino business should be prepared using the same accounting policies as used by the company in its statutory accounts and the manner of their application thereof, subject to any differences which arise from the intra-company transactions which will be eliminated on the preparation of the company's statutory accounts (e.g. the intra-company charges for central services and rent). 11. Branch accounts to be prepared annually The branch accounts prepared at the financial year end of the company will be prepared using an equivalent format, mutatis mutandis, to that used for the statutory accounts of the company. In particular, the branch accounts will include a profit and loss account, a balance sheet, a statement of source and application of funds and a statement of the planned capital expenditure over the next two years. The branch accounts will be sent to the minority shareholders. The costs of the branch accounts shall be borne by the casino business. 12. Basis of determination of the distribution to be made from the branch On the basis of the position shown in those branch accounts, the directors of the company will determine in their sole and absolute discretion the amount which can property be distributed from the after-tax profits shown in the branch accounts, having regard to any working capital, capital expenditure requirements, loan obligations and liabilities of the casino business and after taking account of the secondary tax payable in relation to the preference dividends and the distributable reserves within the company. Notwithstanding the aforegoing the directors shall in determining such distribution have regard to the fact that the tax reflected in the branch accounts may be more than the amount actually payable by the company as a consequence of any losses incurred by the remaining business. 13. Transfer OF Reserves to the remaining company business Simultaneously with the distribution of dividends to minority shareholders, the balance of the after tax profits determined by the directors of the company as available for distribution shall be transferred to the remaining company business. 14. Preparation of final branch accounts In the event that the company were to lose its casino license, final accounts would be prepared for the branch which would inter alia record the profit/loss arising on the disposal of the fixed assets. EX-10.99 3 0003.txt SALE OF SHARES AGREEMENT SALE OF SHARES AGREEMENT between CENTURY CASINOS INCORPORATED CALEDON OVERBERG INVESTMENTS (PROPRIETARY) LIMITED and CALEDON CASINO BID COMPANY (PROPRIETARY) LIMITED
TABLE OF CONTENTS 1 INTERPRETATION 1 2 INTRODUCTION 6 3 SUSPENSIVE CONDITIONS 6 4 SALE 8 5 PURCHASE PRICE AND PAYMENT 9 6 RESTRICTIONS ON RESTRICTED CENTURY STOCK 11 7 DELIVERY AND CLOSING 13 8 RISK AND BENEFIT 13 9 WARRANTIES 13 10 ANNOUNCEMENT AND CO-OPERATION 14 11 BREACH 15 12 ARBITRATION 15 13 GOVERNING LAW AND JURISDICTION 16 14 DOMICILIUM AND NOTICES 16 15 GENERAL 17 16 COSTS 18 ANNEXURES ANNEXURE A- RESOLUTION OF THE DIRECTORS OF PURCHASER ANNEXURE B RESOLUTION OF THE DIRECTORS OF SELLER ANNEXURE C- RESOLUTION OF THE MEMBERS OF SELLER
SALE OF SHARES AGREEMENT between CENTURY CASINOS INCORPORATED CALEDON OVERBERG INVESTMENTS (PROPRIETARY) LIMITED and CALEDON CASINO BID COMPANY (PROPRIETARY) LIMITED 1 INTERPRETATION In this agreement, clause headings are for convenience and shall not be used in its interpretation and, unless the context clearly indicates a contrary intention, - 1.1 an expression which denotes - 1.1.1 any gender includes the other genders; 1.1.2 a natural person includes an artificial or juristic person and vice versa; 1.1.3 the singular includes the plural and vice versa; 1.2 the following expressions shall bear the meanings assigned to them below and cognate expressions bear corresponding meanings - 1.2.1 "the Act" - the Companies Act, 61 of 1973, as amended; 1.2.2 "the/this agreement" - the agreement as set out herein together with all its annexures, as amended from time to time; 1 1.2.3 "business day" - any day other than a Saturday, Sunday or official public holiday in the Republic of South Africa; 1.2.4 "claims" - R4 500 000 of the seller's claims on loan account against the company as at the effective date; 1.2.5 "the closing date" - the fifth business day after the last condition has been fulfilled or waived; 1.2.6 "company" - Caledon Casino Bid Company (Proprietary) Limited, registration number 1996/10708/07, a private company with limited liability duly incorporated in accordance with the laws of the Republic of South Africa; 1.2.7 'conditions" - the suspensive conditions set out in 3.1; 1.2.8 "documents of title" - collectively - 1.2.8.1 share certificates in respect of the shares together with share transfer forms in respect thereof duly completed and signed by the register holder(s) of the shares in accordance with the provisions of the Act and the memorandum and articles of association of the company, blank as to transferee and dated not more than three days prior to the effective date; 1.2.8.2 a written and signed cession of the claims in favour of the purchaser or its nominee; 1.2.8.3 a certified copy of a resolution of the directors of the company, passed in accordance with the Act and the memorandum and articles of association of the company approving the transfer of the shares into the name of the purchaser or its nominee and 2 acknowledging the cession of the claims to the purchaser or its nominee; and 1.2.8.4 a certified copy of a resolution of the members of the company, passed in accordance with the Act and the memorandum and articles of association of the company appointing six nominees of the purchaser as directors of the company; 1.2.9 "effective date" - notwithstanding the date on which this agreement is signed by the party signing last in time, the effective date shall be November 1,2000 1.2.10 "Empowerco" - Overberg Empowerment Company Limited, registration number [97/00328/06], a public company with limited liability duly incorporated in the Republic of South Africa; 1.2.11 "parties" - the purchaser, the seller and the company; 1.2.12 "pledge" - the written pledge of shares and claims by the seller to PSGIB in terms of which the seller pledged and ceded in security the shares to PSGIB dated [ 13 April 2000]; 1.2.13 "preferred shareholders" - Empowerco and the Trust; 1.2.14 "PSGIB" - PSG Investment Bank Limited, registration number 1998/817396/06, a public company with limited liability duly incorporated in the Republic of South Africa; 1.2.15 "purchaser" - Century Casinos Incorporated, a company incorporated in the State of [Delaware ], United States of America herein represented by Mr Peter Hoetzinger in his capacity as [President and Vice Chairman I of the purchaser, he being duly authorised thereto, by virtue of a 3 resolution of the directors of the purchaser, a copy of which is annexed hereto markiid A; 1.2.16 "purchase price" - the purchase price for the shares and the claims set out in 5.1; 1.2.17 "seller" - Caledon Overberg Investments (Proprietary) Limited, registration number [96/06728/07 1, a private company with limited liability duly incorporated according to the laws of the Republic of South Africa, herein represented by Mr [Leon Fortes] in his capacity as a director of the seller, he being duly authorised thereto, by virtue of a resolution of the directors of the seller' a copy of which is annexed hereto marked B, and a resolution of the members of the seller duly adopted in terms of section 228 of the Act, a copy of which is annexed hereto marked C; 1.2.18 "shareholders' agreement" - a written shareholders' agreement to be concluded between the preferred shareholders, the purchaser, the seller and the company contemporaneously with this agreement regulating the affairs of the company and the relationship of the preferred shareholders, the seller and the purchaser as shareholders of the company, 1.2.19 "shares" - ordinary par value shares of Rl each in the share capital of the company constituting 15 % of the entire issued ordinary share capital of the company on the effective date, being 600 ordinary par value shares of Rl each in the share capital of the company; 1.2.20 "signature date" - them date on which this agreement is signed by the party signing last in time; 1.2.21 "the Trust" - The Overberg Community Trust, master's reference number [ ] 4 1.2.22 US$ - United States Dollars, the lawful currency of the United States of America; 1.3 any reference to any statute, regulation or other legislation shall be a reference to that statute, regulation or other legislation as at the signature date, and as amended or substituted from time to time; 1.4 if any provision in a definition is a substantive provision conferring a right or imposing an obligation on any party then, notwithstanding that it is only in a definition, effect shall be given to that provision as if it were a substantive provision in the body of this agreement; 1.5 where any term is defined within a particular clause other than this 1, that term shall bear the meaning ascribed to it in that clause wherever it is used in this agreement; 1.6 where any number of days is to be calculated from a particular day, such number shall be calculated as excluding such particular day and commencing on the next day. If the last day of such number so calculated falls on a day which is not a business day, the last day shall be deemed to be the next succeeding day which is a business day; 1.7 any term which refers to a South African legal concept or process (for example, without limiting the aforegoing, winding-up or curatorship) shall be deemed to include a reference to the equivalent or analogous concept or process in any other jurisdiction in which this agreement may apply or to the laws of which a party may be or become subject; 1.8 the use of the word "including" followed by a specific example/s shall not be construed as limiting the meaning of the general wording preceding it and the eiusdem generis rule shall not be applied in the interpretation of such general wording or such specific example/s. 5 2 INTRODUCTION 2.1 The seller is the owner of the shares and the holder of the claims. 2.2 The purchaser wishes to acquire the shares and the claims and the seller is willing to sell same to the purchaser on the terms and conditions set out in this agreement. 3 SUSPENSIVE CONDITIONS 3.1 This agreement, save for the provisions of 1, 3 and 12 to 15 (both inclusive) which will be of immediate force and effect, is subject to the suspensive conditions that, by no later than 30 January 2001 - 3.1.1 PSGIB consents in writing to the to the sale of shares set out herein and agrees (either unconditionally or subject to the condition that the shares and the claims are again pledged to it in security)to release the shares and the claims from the pledge in order to allow same to be delivered to the purchaser in terms hereof; 3.1.2 the seller obtaining all necessary regulatory and other approvals to the transaction set out herein including the written approval of the exchange control authorities of the Republic of South Africa; 3.1.3 the Western Cape Gambling Board consents in writing to the transactionset out herein in terms of applicable legislation to which the company is subject; 3.1.4 the preferred shareholders consent in writing to the sale of the shares as set out herein; and 6 3.1.5 the seller, the purchaser, the preferred shareholders and the company conclude the shareholders' agreement and that the shareholders agreement becomes unconditional as a result of the timeous fulfilment of all suspensive conditions to which it may be subject (save for any such suspensive condition requiring to this agreement becoming unconditional). 3.2 The conditions have been inserted for the benefit of both the purchaser and the seller who may, collectively but not individually, in writing only at any time, waive compliance therewith or extend the date by which they or any of them is to be fulfilled. 3.3 Should any of the conditions not be fulfilled or waived, as the case may be, by the latest date permitted in terms of 3.2, then this agreement, save for the provisions of 1, 3 and 12 to 15 (both inclusive) which shall continue to bind the parties, shall never become effective and shall be of no force or effect and - 3.3.1 to the extent that this agreement may have been partially implemented, the parties shall be restored to the status quo ante; and 3.3.2 no party shall have any claim against any other arising out of or in connection with this agreement except as contemplated in this clause 3. 3.4 The parties shall use their respective best endeavours to procure the timeous fulfilment of the conditions. 4 SALE 4.1 The seller sells and cedes to the purchaser, which purchases and accepts from the seller, the shares and the claims - 7 4.1.1 with effect from the effective date; and 4.1.2 as one indivisible transaction, on the terms and conditions set out in this agreement. 4.2 To the extent required in law, the company consents to the sale of the claims, being only a portion of the seller's claims on loan account against the company, to the purchaser. 5 PURCHASE PRICE AND PAYMENT 5.1 The purchase price payable by the purchaser to the seller for the shares and the claims is an amount of US$l 800 000 ("the purchase price") 5.2 The Rand equivalent of the purchase price (determined at the ruling Rand:US$ exchange rate on the closing date) shall be apportioned - 5.2.1 as to the claims, the face value thereof as at the effective date, being R4 500 000; and 5.2.2 as to the shares, the balance. 5.3 Notwithstanding the effective date or anything else contained herein interest at 1 6% pa will be paid by the company to the seller on the face value of the claims from October 11, 2000 to the closing date 5.4 The purchase price shall be paid by the purchaser to the seller as in full on the closing date at the meeting referred to in 6.1 against compliance by the seller with its obligations in terms of 6 . 8 5.5 The purchase price shall be paid in full by a certified funds transfer or similar guaranteed payment into such South African blink account at an authorised dealer as the seller may notify the purchaser in writing. 6 DELIVERY AND CLOSING 6.1 At 10:00 on the closing date, representatives of the purchaser and the seller shall meet at the offices of [Fortes King ] situated at [64 Kloof Street ], Cape Town. 6.2 At the meeting referred to in 6.1, the seller shall deliver to the purchaser the documents of title, which delivery the purchaser shall accept. 6.3 The seller furthermore agrees to sign all such documents and further do all such things as may be necessary to give effect to the provisions of this agreement and to procure the transfer of the shares and the claims to the purchaser. 7 RISK AND BENEFIT 7.1 All risk and benefit in and to the shares shall pass to the purchaser as from the effective date. 7.2 Ownership in respect of the shares shall pass to the purchaser on the effective date. 7.3 The shares are sold cum dividend. 8 WARRANTIES The seller hereby warrants to the purchaser, as material warranties and this agreement is accordingly based thereon, that - 9 8.1 it is and will be, as at the effective date, the sole registered and beneficial owner of the shares and will be reflected in the register of members of the company as such; 8.2 it is and will be, as at the effective date, the beneficial holder of the claims, save for the Subordination Agreement in favour of PSGIB; 8.3 the shares will, when delivered to the purchaser, be free of any pledge, lien, hypothec, notarial bond or encumbrance whatever and free of all other rights of retention or pre-emption, save for an undertaking that the shares will be repledged to PSGIB; 8.4 upon delivery of the documents of title by the seller to the purchaser, ownership of the shares will pass to the purchaser; 8.5 it has the legal capacity, competence and authority to enter into this agreement and to consummate the transaction contemplated in this agreement and neither the entering into nor the implementation of this agreement will adversely effect the rights of any third party. 9 ANNOUNCEMENT AND CO-OPERATION 9.1 The parties undertake to do all such things, perform all such actions and take all such steps and to procure the doing of all such things, the performance of all such actions and the taking of all such steps as may be open to them and necessary for or incidental to the implementation or the maintenance of the terms, conditions and/or import of this agreement. 9.2 Neither party shall be entitled to make any announcement within the Republic of South Africa concerning this agreement or the transaction referred to herein, unless prior to making such announcement, it has obtained the prior written consent of the other party. Notwithstanding the aforesaid, the purchaser shall be entitled to make any announcement outside of the Republic of South Africa 10 concerning this agreement or the transaction referred to herein without obtaining the consent of the seller. 10 BREACH Should either the seller on the one hand or the purchaser on the other hand ("the party in default") commit a breach of any term, condition, undertaking, warranty or representation contained in this agreement and - 10.1 should such breach be incapable of being remedied; or 10.2 should such breach be capable of being remedied and should the party in default fail to remedy such breach within thirty days after receipt of written notice to that effect from the other of them, such other party shall be entitled, without prejudice and in addition to all of its other rights in terms hereof or at law, to cancel this agreement forthwith by way of written notice to such effect to all the other parties. 11 ARBITRATION 11.1 Any disputes arising from or in connection with this agreement shall if so required by any party by giving written notice to that effect to the others be finally resolved in accordance with the rules of the Arbitration Foundation of Southern Africa ("AFSA") in Cape Town by an arbitrator or arbitrators appointed by AFSA. There shall be a right of appeal as provided for in article 22 of the aforesaid rules. 11.2 Each party to this agreement - 11.2.1 expressly consents to any arbitration in terms of the aforesaid rules being conducted as a matter of urgency; and 11.2.2 irrevocably authorises any of the others to apply, on behalf of all parties to such dispute, in writing, to the secretariat of 11 AFSA in terms of article 23(l) of the aforesaid rules for any such arbitration to be conducted on an urgent basis. 12 GOVERNING LAW AND JURISDICTION 12.1 This agreement shall in all respects (including its existence, validity, interpretation, implementation, termination and enforcement) be governed by the law of the Republic of South Africa which is applicable to agreements executed and wholly performed within the Republic of South Africa. 12.2 Subject to 12, the parties hereby consent and submit to the jurisdiction of the High Court of the Republic of South Africa (Cape Provincial Division) in respect of any dispute or claim arising out of or in connection with this agreement. 13 DOMICILIUM AND NOTICES 13.1 The parties choose domicilium citandi et executandi ("domicilium") for all purposes relating to this agreement, including the giving of any notice, the payment of any sum, the serving of any process, as follows - 13.1.1 the seller physical 64 Kloof Street Gardens 8001 facsimile 021-423 4407 13.1.2 the purchaser 1 Nerina Street c/o Caledon Casino Caledon 7230 facsimile 028-214 1270 13.1.3 the company physical 1 Nerina Street Caledon 7230 facsimile 028- 214 1270 12 13.2 Any party shall be entitled from time to time, by giving written notice to the others, to vary its physical domicilium to any other physical address (not being a post office box or poste restante) within the Republic of South Africa and to vary its facsimile domicilium to any other facsimile number. 13.3 Any notice given or payment made by any party to another ("addressee") which is delivered. by hand between the hours of 09:00 and 17:00 on any business day to the addressee=s physical domicilium for the time being shall be deemed to have been received by the addressee at the time of delivery. 13.4 Any notice given by any party to another which is successfully transmitted by facsimile to the addressee=s facsimile domicilium for the time being shall be deemed (unless the contrary is proved by the addressee) to have been received by the addressee on the day immediately succeeding the date of successful transmission thereof. 13.5 This 13 shall not operate so as to invalidate the giving or receipt of any written notice which is actually received by the addressee other than by a method referred to in this 13. 13.6 Any notice in terms of or in connection with this agreement shall be valid and effective only if in writing and if received or deemed to be received by the addressee. 14 GENERAL 14.1 This agreement read with its appendices constitutes the sole record of the agreement between the parties in regard to the subject matter hereof. 14.2 No party shall be bound by any representation, warranty, undertaking, promise or the like not recorded in this agreement. 13 14.3 No addition to, variation or consensual cancellation of this agreement shall be of any force or effect unless done in writing and signed by or on behalf of all the parties. 14.4 Any indulgence which any party may show to any other in terms of or pursuant to the provisions contained in this agreement shall not constitute a waiver of any of the rights of the party which granted such indulgence. 15 COSTS 15.1 Each party shall bear and pay its own legal and other costs in respect of drafting, preparing and implementing this agreement. 15.2 All stamp duties payable in respect of the. transfer of the shares to the purchaser terms of this agreement shall be borne and paid for by purchaser. 15.3 It is recorded that the purchaser will sell the shares to it's subsidiary Century Casinos Africa (Proprietary) Limited ("CCA') and all stamp duties payable in respect of the transfer of the shares from the purchaser to CCA shall be borne and paid for by the seller. Signed at Caledon on 4th November 2000 for Century Casinos Incorporated /s/ Peter Hoetzinger who warrants that he is duly authorised hereto 14 15 Signed at Caledon on 4th November 2000 for Caledon Overberg Investments (Proprietary) Limited /s/ Leon Fortes who warrants that he is duly authorised hereto Signed at Caledon on 4th November 2000 for Caledon Casino Bid Company (Proprietary) Limited /s/ Kevin King who warrants that he is duly authorised hereto 16 EX-21 4 0004.txt SUBSIDIARIES OF REGISTRANT EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT State or Country Name of Incorporation - ---- ----------------- Century Casinos Management, Inc. Delaware Century Casinos - Nevada, Inc. Nevada Century Management und Beteiligungs GmbH Austria Century Casinos Cripple Creek, Inc. Colorado Century Casinos Missouri, Inc. Missouri WMCK Acquisition Corp. Delaware WMCK Venture Corp. Delaware Century Casinos Africa (Pty) Limited South Africa Caledon Casino Bid Company (Pty) Limited South Africa 1 EX-23.1 5 0005.txt CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We have issued our report dated February 2, 2001, accompanying the consolidated financial statements included in the Annual Report of Century Casinos, Inc. on Form 10-KSB for the year ended December 31, 2000. We hereby consent to the incorporation by reference of said report in Registration Statement No. 333-13801 on Form S-8 of Century Casinos, Inc. /s/ Grant Thornton LLP - ----------------------------- Grant Thornton LLP Denver, Colorado March 29, 2001 1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 333-13801 on Form S-8 of Century Casinos, Inc. of our report dated March 6, 2000, appearing in this Annual Report on Form 10-KSB of Century Casinos, Inc. for the year ended December 31, 2000. /s/ Deloitte & Touche LLP - ----------------------------- Deloitte & Touche LLP Denver, Colorado March 29, 2001 2 -----END PRIVACY-ENHANCED MESSAGE-----