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MEMORANDUM OF UNDERSTANDING
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I. Parties to the Agreement
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Xxxxx Xxxxxxx and Xxxxx Xxxxxxx and B. Xxxxxxx Xxxx, residents of the state
of Iowa (hereinafter referred to as "XXXXXXX"), and a company, or companies,
formed by Century Casinos, Inc. (hereinafter referred to as "CENTURY").
II. Joint Venture Company and Funding
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1. Landmark Gaming, LC ("LGL) is an Iowa limited liability company wherein
XXXXXXX is the sole member and manager. Within this entity XXXXXXX and CENTURY
shall form a joint venture in the existing LGL, wherein XXXXXXX shall own 60% of
the issued units of LGL and CENTURY shall own 40% of the issued units of LGL.
LGL has been designated as the Entertainment Facility operator for Franklin
County, Iowa, by the Franklin County Development Association ("FCDA"). LGL and
FCDA shall be the applicant and recipient of, the license to develop and operate
a competitive and innovative excursion gambling boat casino, hotel and
entertainment facility in Franklin County, Iowa (hereinafter referred to as the
"Entertainment Facility") on the property described in Annexure A to this
Agreement. The Entertainment Facility, in general terms, is expected to be
approximately 40,000 sq. ft. of gaming space, 100 hotel rooms and 300 parking
spaces. Once the final and uncontested casino license has been awarded to LGL
and FCDA and other conditions to funding set forth in the Contribution Agreement
between the parties have been satisfied, the parties shall contribute to LGL the
following:
A. CENTURY shall contribute one million two hundred fifty thousand
dollars ($1,250,000) for the development of the Entertainment Facility
(as and when required per the development/construction schedule),
X. XXXXXXX shall contribute the land and properties, free and clear, as
outlined in Annexure B of this Agreement, the land described in
Annexure A subject to two options to purchase (also included as
Annexure A), as well as all tangible, intangible and intellectual
property associated with the application for a casino license and the
development and operation of a casino facility in Iowa. XXXXXXX
represents that LGL has an exclusive agreement, a copy of which is
attached as Annexure C, with FCDA providing for the exclusive right
for XXXXXXX to develop and operate an Entertainment Facility in
Franklin County with the full support of FCDA. Such agreement shall be
part of XXXXXXX'x contribution.
These contributions of XXXXXXX and CENTURY shall be considered equity for the
purposes of the joint venture and the value of XXXXXXX'x equity is agreed to be
valued
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at one million eight hundred seventy five thousand dollars ($1,875,000) and the
value of CENTURY's equity is agreed to be valued at one million two hundred
fifty thousand dollars ($1,250,000).
2. LGL, assisted by CENTURY, shall use its best efforts to obtain loan(s), on a
non-recourse project finance basis, at the prevailing interest rate(s) in the
amount(s) required to develop, either in one or more phases, and operate the
Entertainment Facility.
3. If no award of a final and uncontested casino license has been made to LGL by
December 31, 2007, the Contribution Agreement and LLC Agreement and any other
agreements between LGL and CENTURY shall be terminated and dissolved in
accordance with normal and customary unwinding provisions.
III. License Application
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Starting from the date of this Agreement, XXXXXXX and CENTURY shall make
good faith efforts to jointly prepare for and make a timely application to the
Iowa Racing and Gaming Commission to establish an excursion gambling boat (as
part of the Entertainment Facility).
X. XXXXXXX and CENTURY agree to jointly prepare all information for the
application but CENTURY is specifically responsible for all gaming
requirements of the application and XXXXXXX is specifically
responsible for site and facility requirements of the application. As
the sections of the application are interrelated in several cases,
XXXXXXX and CENTURY, as members of LGL, agree to work jointly towards
the finalization of the application.
X. XXXXXXX and CENTURY will have the final approval of the contents and
quality of the documents to be provided in the application to the Iowa
Racing and Gaming Commission for all information that is required to
be provided by LGL.
C. CENTURY will provide the required CENTURY personnel towards the joint
preparation of the application and will pay the $15,000 required for
the Division of Criminal Investigation fees and the $25,000
application fee with the submission of the application.
D. CENTURY shall pay $10,000 towards the cost of architectural services
required for the complete construction and design portion of the
application. Any additional out of pocket costs anticipated from the
date of this Agreement will be approved by both XXXXXXX and CENTURY.
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IV. Casino Services Agreement
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LGL shall enter into a Casino Services Agreement with a company affiliated
with CENTURY for provision of expertise for the day-to-day management of the
Entertainment Facility, on behalf of and for the account of LGL, for a period of
ten years, subject to licensing with the option to extend the Casino Services
Agreement for an additional ten year period (subject only to licensing). The
service fee payable to the manager shall be a fixed amount of xxxxxxx per month
for the period of conditional license award to opening, and the following fee
from the first day of casino operations on: xxxxx of all gross revenues up to
xxxxxxxxxxx plus xxxxx of all gross revenues over xxxxxxxxxxx, on an annual
basis, plus xxxxx of adjusted EBITDA (Adjusted EBITDA is normal operating
earnings consistent with GAAP before interest expense, taxes, depreciation,
amortization and any adjustments agreed to by both parties). The EBITDA fee
shall be payable by LGL on a monthly basis and will start to be earned upon the
opening of the Entertainment Facility.
V. Governance of LGL
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1. The number of directors of LGL shall be kept to a reasonable minimum. CENTURY
and XXXXXXX shall each nominate an equal number of directors. The Chairman shall
not have a deciding vote. LGL is and shall be operated pursuant to the
provisions of the Iowa Limited Liability Act.
2. Special arrangements and approvals between CENTURY and XXXXXXX shall be
required for the governance, administration and operation of LGL and the
definitive form of Joint Venture Agreement shall contain special rights and
privileges for CENTURY as a minority shareholder, such as (but not limited to)
approval rights over significant transactions. Both members shall have the right
of first refusal to purchase the other member's interest in the event of sale,
liquidation or dissolution and co-sale rights in case of a proposed sale.
3. LGL has an operating agreement, designation of membership interest, and other
documents required by statute now in existence. Upon issuance of membership
certificates to CENTURY, representing 40% of all outstanding units, the parties
agree that all company documents such as the amended operating agreement,
members agreements etc. for LGL are to be agreed to and approved by CENTURY
before implementation. Between the execution date of this MOU and the date of
issuance of membership certificates to CENTURY, all material decisions regarding
the license application and the development of the Entertainment Facility shall
require mutual approval by CENTURY and XXXXXXX.
4. XXXXXXX agrees that LGL is a company in good standing and will provide all of
the customary representations and warranties, to include, but not limited, to a
representation that LGL is free and clear of all debts and encumbrances.
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VI Binding Agreement
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1. Until the execution by both parties of a definitive form of Contribution
Agreement and LLC Agreement with respect to the matters referred to above, this
memorandum shall be legally binding upon the parties. The parties shall work
diligently toward concluding a mutually acceptable form of Contribution
Agreement and LLC Operating Agreement, as amended which shall be consistent with
this Agreement but which may address certain issues in more detail and other
issues in which this Agreement is silent. The parties agree to work in good
faith and to use all reasonable efforts to complete and sign such Agreements as
soon as practicable.
2. This MOU is binding only if all parties have signed below no later than
October 13, 2004.
3. Upon execution of the final form of Contribution Agreement and LLC Agreement
this MOU agreement shall be merged by reference into such Agreements and shall
have no further force or effect.
DATED this 13th day of October, 2004
CENTURY CASINOS, INC.
/s/ Xxxxx Xxxxxxxxx /s/ Xxxxx Xxxxxxx
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By: Xxxxx Xxxxxxxxx Xxxxx Xxxxxxx
Chief Accounting Office & Secretary on behalf of XXXXXXX
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
on behalf of XXXXXXX
/s/ B. Xxxxxxx Xxxx
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B.Xxxxxxx Xxxx
on behalf of XXXXXXX
