Exhibit 10(p)
ONTARIO CASINO CORPORATION
AS AGENT OF HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO
- AND -
WINDSOR CASINO LIMITED
- AND -
CAESARS WORLD, INC.,
CIRCUS CIRCUS ENTERPRISES, INC. AND
HILTON HOTELS CORPORATION
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INTERIM CASINO OPERATING AGREEMENT
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MAY 14, 1994
INTERIM CASINO OPERATING AGREEMENT
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.3 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE TWO
APPOINTMENT OF OPERATOR
2.1 Appointment of Operator as Independent Contractor. . . . . . . . . 15
2.2 Appointment of Operator as Agent . . . . . . . . . . . . . . . . . 15
2.3 Limitation on Authority of Operator. . . . . . . . . . . . . . . . 15
2.4 Access to Building . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE THREE
PRE-OPENING PERIOD
3.1 Pre-Opening Services . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Renovations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Parking Facility Arrangements. . . . . . . . . . . . . . . . . . . 16
3.4 Interim Casino Equipment . . . . . . . . . . . . . . . . . . . . . 17
3.5 Other Services . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE FOUR
OPERATING PERIOD
4.1 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Annual Operating Budget. . . . . . . . . . . . . . . . . . . . . . 19
4.3 Accounting and Distribution of Funds . . . . . . . . . . . . . . . 20
4.4 No Duplication . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.5 Repayment of Deficiency Amounts. . . . . . . . . . . . . . . . . . 24
4.6 OCC Review of Financial Statements . . . . . . . . . . . . . . . . 24
4.7 Major Capital Improvements . . . . . . . . . . . . . . . . . . . . 25
4.8 Extended Deferrals . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Operator . . . . . . . . . . 26
5.2 Representations and Warranties of the Participants . . . . . . . . 27
5.3 Representations and Warranties of OCC. . . . . . . . . . . . . . . 28
5.4 Survival of Representations and Warranties . . . . . . . . . . . . 29
ARTICLE SIX
COVENANTS
6.1 Affirmative Covenants of the Operator. . . . . . . . . . . . . . . 29
6.2 Negative Covenants of the Operator . . . . . . . . . . . . . . . . 31
6.3 Affirmative Covenants of the Participants. . . . . . . . . . . . . 33
6.4 Negative Covenants of Participants . . . . . . . . . . . . . . . . 33
6.5 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE SEVEN
INTELLECTUAL PROPERTY
7.1 Intellectual Property of OCC and the Operator. . . . . . . . . . . 35
7.2 Participants' Individual Intellectual Property . . . . . . . . . . 35
7.3 Collective Intellectual Property of Participants . . . . . . . . . 36
ARTICLE EIGHT
OPERATOR'S FEE AND EXPENSES
8.1 Operator's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 Salaries and Expenses. . . . . . . . . . . . . . . . . . . . . . . 37
8.3 Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Concessions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.5 Business Loss Insurance. . . . . . . . . . . . . . . . . . . . . . 39
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ARTICLE NINE
NON-COMPETITION
9.1 Non-Competition/Right of First Offer . . . . . . . . . . . . . . . 40
ARTICLE TEN
EVENTS OF DEFAULT
10.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Commencement of Grace Period . . . . . . . . . . . . . . . . . . . 42
ARTICLE ELEVEN
TERMINATION
11.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.2 Pre-Opening Expenses . . . . . . . . . . . . . . . . . . . . . . . 44
11.3 Remedies Preserved . . . . . . . . . . . . . . . . . . . . . . . . 45
11.4 Establishment of Severance Reserve . . . . . . . . . . . . . . . . 45
11.5 Withdrawals from Severance Reserve . . . . . . . . . . . . . . . . 45
ARTICLE TWELVE
INDEMNITIES
12.1 Indemnification by Operator. . . . . . . . . . . . . . . . . . . . 45
12.2 Indemnification by OCC . . . . . . . . . . . . . . . . . . . . . . 46
12.3 Indemnification by Participants. . . . . . . . . . . . . . . . . . 46
12.4 United States Taxes. . . . . . . . . . . . . . . . . . . . . . . . 46
12.5 Timely Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.6 Limitation on Claims for Damages . . . . . . . . . . . . . . . . . 47
12.7 No Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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ARTICLE THIRTEEN
DISPUTE RESOLUTION
13.1 Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE FOURTEEN
GENERAL
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
14.2 Table of Contents and Headings. . . . . . . . . . . . . . . . . . 50
14.3 Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.4 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 50
14.5 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.6 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.7 Cooperation of Parties. . . . . . . . . . . . . . . . . . . . . . 51
14.8 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.10 Relationship of the Parties . . . . . . . . . . . . . . . . . . . 52
14.11 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.12 Employment Solicitation . . . . . . . . . . . . . . . . . . . . . 52
14.13 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.14 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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INTERIM CASINO OPERATING AGREEMENT
THIS AGREEMENT made the 14th day of May, 1994.
B E T W E E N:
ONTARIO CASINO CORPORATION,
a corporation established
pursuant to the Enabling
Legislation and which is for
all its purposes an agent of
Her Majesty,
(hereinafter referred to as "OCC"),
OF THE FIRST PART,
- and -
WINDSOR CASINO LIMITED,
a corporation incorporated
pursuant to the laws of the
Province of Ontario,
(hereinafter referred to as the "Operator"),
OF THE SECOND PART,
- and -
CAESARS WORLD, INC.,
a corporation incorporated
pursuant to the laws of the
State of Florida, CIRCUS
CIRCUS ENTERPRISES, INC., a
corporation incorporated
pursuant to the laws of the
State of Nevada and HILTON
HOTELS CORPORATION, a
corporation incorporated
pursuant to the laws of the
State of Delaware,
(hereinafter individually referred to as a
"Participant" and, collectively, the "Participants"),
OF THE THIRD PART.
WHEREAS, in response to a request for proposals dated April 19,
1993, the Operator submitted a proposal for the development, financing and
operation of the Permanent Casino Complex and indicated its willingness to
negotiate and finalize an agreement in respect of the Interim Casino Complex;
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AND WHEREAS the Operator has been designated as the sole and
exclusive party with whom OCC will undertake further negotiations with respect
to the Permanent Casino Complex;
AND WHEREAS the parties have agreed to enter into this Agreement
to provide for the development and operation of the Interim Casino Complex;
THIS AGREEMENT WITNESSES THAT in consideration of the respective
covenants, agreements, representations, warranties and indemnities of the
parties herein contained and for other good and valuable consideration (the
receipt and sufficiency of which are acknowledged by each party hereto), the
parties hereby agree as follows:
ARTICLE ONE
DEFINITIONS
1.1 DEFINITIONS: The following definitions shall apply in the
interpretation of this Agreement and the recitals and Schedules hereto:
(a) "ADJACENT LANDS" means the lands in the City of Windsor legally
described in Part 2 of Schedule A hereto and outlined in blue on
Schedule B hereto and all appurtenances thereto;
(b) "AFFILIATE" means with respect to any Person, any legal entity
which directly or indirectly Controls or is Controlled by such
Person or any legal entity which is directly or indirectly
Controlled by a Person which directly or indirectly Controls
such Person;
(c) "APPLICABLE LAW" means all public laws, statutes, codes, acts,
ordinances, orders, rules, regulations, Governmental Consents
and Governmental Requirements, which now or at any time
hereafter may be applicable to and enforceable against the
relevant work or activity in question or any part thereof,
including without limitation, those relating to employment,
zoning, building, life safety, environment and health;
(d) "APPROVED OPERATING BUDGET" means, with respect to an Operating
Year, the Operating Budget for such Operating Year as approved
by OCC;
(e) "APPROVED OPERATING PLAN" means, collectively, the Approved
Operating Policies and the then current Approved Operating
Budget;
(f) "APPROVED OPERATING POLICIES" means the Operating Policies for
the Interim Casino Complex as approved by OCC pursuant to
Subsection 3.5(d), as
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amended or supplemented from time to time in accordance with the
terms hereof;
(g) "ART GALLERY LAND" means the lands in the City of Windsor
legally described in Part 1 of Schedule A hereto and outlined in
red on Schedule B hereto and all appurtenances thereto;
(h) "AUDITORS" means such firm of independent nationally recognized
chartered accountants appointed by the Operator with the
approval of OCC, as the auditors for the Interim Casino Complex;
(i) "BASE FEE" has the meaning ascribed thereto in Subsection
8.1(a)(i);
(j) "BUILDING" means the premises comprising the entire building
having the municipal address of 445 Riverside Drive, Windsor,
Ontario situate on the Art Gallery Land containing a rentable
area of approximately 90,063 square feet, leased to OCC pursuant
to the Interim Casino Lease together with any premises situate
on the Adjacent Lands;
(k) "BUSINESS DAY" means any day which is not a Saturday, Sunday or
a day observed as a holiday under the laws of the Province of
Ontario or the federal laws of Canada applicable therein;
(l) "CAPITAL RENEWAL RESERVE" means, for any period, the reserve
established in the Approved Operating Budget for Capital
Renewals;
(m) "CAPITAL RENEWALS" means additions or improvements to the
Interim Casino Complex, including the purchase or lease on
behalf of OCC of FF&E by way of replacement, addition,
construction or repair of property with a useful life of one
year or more or which under generally accepted accounting
principles would be classified as a capital expenditure
(excluding items with a cost of $200 or less and, for greater
certainty, excluding FF&E Repairs and Major Capital
Improvements);
(n) "CASINO" means those areas located in the Building which are
used for the purpose of playing or operating a Game of Chance;
(o) "CASINO ACCOUNTS" means, collectively, the Operating Account and
such other account or accounts with a financial institution or
institutions designated by OCC in consultation with the Operator
from time to time;
(p) "CITY" means The Corporation of the City of Windsor;
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(q) "CITY MORTGAGE" means the Charge/Mortgage of Land in the
principal amount of $5,000,000 dated September 30, 1993 made by
the Landlord in favour of the City and registered on title to
part of the Art Gallery Land and the Adjacent Lands on October
1, 1993 as Instrument Nos. 1250623 and 1250625;
(r) "COMMENCEMENT DATE" has the meaning ascribed thereto in the
Interim Casino Lease;
(s) "COMPLEX LANDS" means, collectively, the Art Gallery Land, those
Parking Lot Lands upon which the Parking Facilities are located
and, if applicable, the Adjacent Lands;
(t) "CONTINGENCY RESERVE" has the meaning ascribed thereto in
Section 8.3;
(u) "CONTROL" or "CONTROLLED" means the right to direct the
management and policies of a Person, whether directly or
indirectly, or to elect a majority of the board of directors or
the trustees of a Person, whether through the ownership of
voting securities or by contract or otherwise;
(v) "DEFICIENCY AMOUNTS" means, collectively, Mandatory Deferrals
and Discretionary Deficiency Contributions, outstanding Pre-
Opening Expenses not included in Mandatory Deferrals and accrued
but unpaid Operator's Fees;
(w) "DISCRETIONARY DEFICIENCY CONTRIBUTIONS" has the meaning
ascribed thereto in Subsection 4.3(g);
(x) "ENABLING LEGISLATION" means the ONTARIO CASINO CORPORATION ACT,
1993 (Ontario), as amended or re-enacted from time to time;
(y) "ETA" means the EXCISE TAX ACT (Canada) as amended or re-enacted
from time to time;
(z) "EVENT OF DEFAULT" has the meaning ascribed thereto in Section
10.1;
(aa) "EXECUTIVE STAFF" means the President and Managing Director, the
General Manager, the Chief Financial Officer, the Financial
Controller, the Vice-President, Casino Operations, the Casino
Manager, the Director of Surveillance, the Director of Non-
Gaming Operations, the Casino Controller, the Director of Sales
and Marketing, all department heads and designated assistant
department heads, and such other employees as may be designated
as such by the Operator and agreed to by OCC;
(ab) "EXPERT" has the meaning ascribed thereto in Section 13.1;
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(ac) "FF&E" means all furniture, furnishings, equipment (including
all gaming equipment), fixtures, apparatus and other personal
property used in, held in storage for use in, or required in
connection with the operation of the Interim Casino Complex,
other than Operating Equipment and Operating Supplies;
(ad) "FF&E REPAIRS" means, for any period, normal maintenance and
repair of FF&E as contemplated in the Approved Operating Budget,
expenditures in respect of which during an Operating Year will
not exceed 2% of Gross Revenues for such year except where
otherwise agreed by OCC and the Operator, which agreement can be
reflected in the Approved Operating Budget;
(ae) "FORCE MAJEURE" means any BONA FIDE delay or state of affairs
beyond the control of a party (other than as a result of
financial incapacity and other than a delay or state of affairs
caused by the party relying upon such Force Majeure) which shall
cause or contribute towards any party being unable to fulfill or
being delayed or restricted in the fulfillment of such party's
obligation, including any such delay or state of affairs by
reason of:
(i) the non-delivery or non-availability of the supply or
provision of any service or the doing of any work or the
making of any repairs;
(ii) inability to obtain any required material, goods,
equipment, service or labour;
(iii) Applicable Law or inability to procure any required
Governmental Consent;
(iv) any strikes, lockouts, slow-downs or other combined
action of workers or labour disputes;
(v) litigation or threatened litigation, insurrection, acts
of God, war, riots or civil commotions; or
(vi) any breach of this Agreement by another party hereto or a
delay or failure by another party hereto in providing a
consent or approval (it being understood that the
Participants and the Operator shall, for the purposes of
this Subsection 1.1(ae), collectively constitute one
party and that a consent or approval given or withheld
within the time period envisaged by Subsection 14.6(d)
shall not constitute a delay or failure by such party for
the purposes of this Subsection 1.1(ae)(vi)),
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in each case which results notwithstanding the reasonable
efforts of the party relying upon such Force Majeure to prevent
the same where the Force Majeure was reasonably foreseeable;
(af) "GAME OF CHANCE" means a lottery scheme that may be conducted
and managed by a government of a province under the authority of
paragraph 207(1)(a) of the CRIMINAL CODE (Canada) but does not
include a lottery scheme conducted by the Ontario Lottery
Corporation under the ONTARIO LOTTERY CORPORATION ACT;
(ag) "GAMING CONTROL ACT" means the GAMING CONTROL ACT, 1992 as
amended or re-enacted from time to time;
(ah) "GAMING CONTROL COMMISSION" means the Gaming Control Commission
established under the Regulatory Legislation and any successor
or replacement thereto;
(ai) "G.C.C. LEVY" means the payments to be made under Subsection
15(1)4 of the Enabling Legislation to the general fund of the
Gaming Control Commission;
(aj) "GOVERNMENTAL AUTHORITY" means Canada, the Province of Ontario,
the City, any other political subdivision in which the Interim
Casino Complex is located, and any court or political
subdivision, agency, commission, board or instrumentality or
officer thereof, whether federal, provincial, state or local,
including the Gaming Control Commission, having or exercising a
jurisdiction over OCC, the Operator, a Participant, an Affiliate
of a Participant or the Interim Casino Complex, but excluding
OCC;
(ak) "GOVERNMENTAL CONSENT" means any licence, right, permit,
franchise, privilege, direction, decree, consent, order,
permission, approval or authority to be issued or provided by a
Governmental Authority;
(al) "GOVERNMENTAL REQUIREMENTS" means all laws and agreements with
any Governmental Authority that are applicable to the
development or operation of the Interim Casino Complex,
including without limitation, any rules, guidelines or
restrictions created by or imposed by Governmental Authorities;
(am) "GROSS OPERATING RECEIPTS" means, for any period, the aggregate
of all revenues received without duplication by or on behalf of
the Operator or OCC from the operation and use of the Interim
Casino Complex and any investment or interest income arising out
of cash management of such revenues, all as determined in
accordance with generally accepted accounting principles
consistently applied, without deduction on account of the Win
Tax or amounts representing GST on goods or services provided
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that are directly related to the conduct of Games of Chance, but
excluding any amounts representing GST on goods or services
provided other than those directly related to the conduct of
Games of Chance;
(an) "GROSS REVENUES" means, for any period, the aggregate of all
sums received without duplication by or on behalf of the
Operator or OCC from or in respect of the Interim Casino Complex
or any part thereof;
(ao) "GST" means the tax imposed under Part IX of the ETA or any tax
replacing such tax, including any interest and penalties
thereon, provided that in the event that any similar tax is
introduced by the Province of Ontario, all references to "GST",
"ETA" and "Receiver General for Canada", shall apply, MUTATIS
MUTANDIS, with respect to such tax and its payment;
(ap) "HER MAJESTY" means Her Majesty the Queen in Right of Ontario;
(aq) "IMPOSITIONS" means all taxes, assessments, imposts, water,
sewer or other similar rents, rates and charges, levies, licence
fees, permit fees, inspection fees and other authorization fees
and charges, which at any time may be assessed, levied,
confirmed or imposed on the Interim Casino Complex (or in each
case, amounts paid in lieu thereof) or the operation thereof,
including the Win Tax and the GST payable by the Operator or OCC
to the Receiver General for Canada or other GST authority in
respect of the operation and use of the Interim Casino Complex
but excluding, for greater certainty, capital or income taxes of
the Operator and the G.C.C. Levy and GST paid by the Operator or
OCC for which it is entitled to an input tax credit;
(ar) "IMPROVEMENTS" means, collectively, the Building and the Parking
Facilities;
(as) "INCENTIVE FEE" has the meaning ascribed thereto in Subsection
8.1(a)(ii);
(at) "INCLUDING" means including without limitation;
(au) "INTELLECTUAL PROPERTY" means all trade or brand names, trade
marks, trade mark registrations and applications, service marks,
service mark registrations and applications, copyrights,
copyright registrations and applications, patents, patent
registrations and applications, trade secrets, know-how,
equipment and parts lists and descriptions, instruction manuals,
inventions, inventors' notes, research data, unpatented blue
prints, drawings and designs, formulae, processes, technology,
software and all source and object code versions thereof and all
related documentation, flow charts, service/operator manuals and
any enhancements, modifications or substitutions thereof and
other intellectual property, together with all rights under
licences, registered user agreements, technology transfer
agreements
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and other agreements or instruments relating to any of the
foregoing, but for greater certainty does not include customer
lists;
(av) "INTERIM CASINO AGREEMENT TO LEASE" means the agreement to lease
the Art Gallery Land and the Building dated October 1, 1993 and
accepted October 12, 1993 between the Landlord and Her Majesty,
including the Schedules thereto, as assigned by Her Majesty to
OCC by agreement dated May 1, 1994;
(aw) "INTERIM CASINO COMPLEX" means, collectively, the Complex Lands
and the Improvements;
(ax) "INTERIM CASINO EQUIPMENT" means the FF&E, the Operating
Equipment and the Operating Supplies collectively;
(ay) "INTERIM CASINO LEASE" means, collectively, the Interim Casino
Agreement to Lease and the Lease to be entered into pursuant to
the Interim Casino Agreement to Lease substantially in the form
of Schedule "D" thereto, as the same may be amended from time to
time;
(az) "INTERIM CASINO OPENING DATE" means the date on which the Casino
is opened to the public;
(ba) "LANDLORD" means The Art Gallery of Windsor and its successors
and assigns as landlord under the Interim Casino Lease;
(bb) "LOSSES" in respect of any matter, means all claims, actions,
demands, proceedings, suits, losses, obligations, damages,
penalties, liabilities, deficiencies, costs and expenses
(including, without limitation, all legal and other professional
and consultant fees and disbursements, interest, penalties and
amounts paid in settlement) arising directly or indirectly as a
consequence of such matter;
(bc) "MAJOR CAPITAL IMPROVEMENTS" means capital improvements,
renovation or refurbishing involving an addition to the Interim
Casino Complex or any renovation or refurbishing designed to
materially upgrade, or change the nature or image of, the
Interim Casino Complex (as opposed to FF&E Repairs or items
contained in that portion of the Approved Operating Budget
relating to Capital Renewals);
(bd) "MANDATORY DEFERRALS" has the meaning ascribed thereto in
Subsection 4.3(f);
(be) "MASTER AGREEMENT" has the meaning ascribed thereto in the
Permanent Casino Heads of Agreement;
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(bf) "MATERIAL AGREEMENTS" means this Agreement, the Interim Casino
Lease, the Parking Lot Leases and any other agreements which the
parties hereto have identified and agreed in writing as being
material to the development or the operation of the Interim
Casino Complex;
(bg) "MAXIMUM MANDATORY DEFERRAL" has the meaning ascribed thereto in
Subsection 4.3(f);
(bh) "MEDIATION PERIOD" has the meaning ascribed thereto in Section
13.1;
(bi) "NET OPERATING MARGIN" means, for any period, the Gross
Operating Receipts for such period less:
(i) the Win Tax, up to a maximum of 20% of that portion of
Gross Operating Receipts received from the conduct of
Games of Chance, and other Impositions (other than GST)
for such period;
(ii) the Operating Expenses for such period;
(iii) FF&E Repairs for such period; and
(iv) the Severance Reserve and any Contingency Reserve for
such period;
but without deduction on account of interest expense, Capital
Renewals, other capital expenditures, the Operator's Fee, the
G.C.C. Levy, GST, depreciation and amortization, rent paid and
other payments made (except for Impositions, other than GST, and
Operating Expenses) under the Interim Casino Lease and the
Parking Lot Leases or payments made representing repayment of
Pre-Opening Expenses and interest thereon;
(bj) "OCC" means the Ontario Casino Corporation, the Crown
corporation established pursuant to the Enabling Legislation,
and its successors and permitted assigns;
(bk) "OPERATING ACCOUNT" means an account to be opened and maintained
in the name of OCC with a financial institution designated by
OCC in consultation with the Operator from time to time and on
which designated representatives of the Executive Staff of the
Operator approved by OCC shall have signing authority;
(bl) "OPERATING BUDGET" means, for any period, a budget or budgets
setting forth, on an annual and on a monthly basis, anticipated
Gross Revenues, Gross Operating Receipts, Win Tax, Operating
Expenses (and which may contain a provision for contingencies
not in excess of 15% in respect of
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any line item therein, subject to overall contingencies not
exceeding 5% of Operating Expenses), Net Operating Margin,
Operator's Fee and recommended Capital Renewals, FF&E Repairs,
Capital Renewal Reserves, Operating Reserves, Contingency
Reserves and Severance Reserves on an accrual basis and which
will state the assumptions used in its or their preparation;
(bm) "OPERATING EQUIPMENT" means all china, glassware, silverware and
linens used in, or held in storage for use in, the operation of
the Interim Casino Complex;
(bn) "OPERATING EXPENSES" means, for any period, the aggregate,
without duplication, of all expenses incurred in respect of the
operation and maintenance of the Interim Casino Complex in the
ordinary course during such period, including without
limitation, wages, salaries, security and surveillance, energy
costs, insurance premiums, property and business taxes (or
amounts paid in lieu thereof) and regulatory costs and expenses
(other than the G.C.C. Levy);
(bo) "OPERATING PERIOD" means the period beginning with the Interim
Casino Opening Date and ending upon the expiration or sooner
termination of this Agreement;
(bp) "OPERATING POLICIES" means a collective term for the standards,
policies and procedures to be adopted in connection with the
operation of the Interim Casino Complex including hiring and
training policies and procedures, human resource programs,
marketing programs, insurance and bonding, credit and
collection, security (both physical and gaming), cash management
and investment policies and purchasing and inventory policies
and procedures;
(bq) "OPERATING RESERVE" means, for any Operating Year, the reserve
which the parties have agreed shall be established in the
Approved Operating Budget to satisfy those amounts identified in
Subsections 4.3(d)(i), (ii), (iii), (iv), (vi) and (vii) for a
period of at least three months during such Operating Year
(assuming a 12 month Operating Year) in the event that Gross
Revenues received will be insufficient to pay such amounts
together with any additional reserve as may be agreed to by the
Operator and OCC to ensure the continuous and orderly operation
of the Interim Casino Complex;
(br) "OPERATING SUPPLIES" means consumable items used in, or held in
storage for use in, the operation of the Interim Casino Complex,
including food and beverages, fuel, soap, cleaning material,
matches, stationery and other similar items and with respect to
the gaming operation, chips, tokens, markers, cards and other
similar items needed for such operation;
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(bs) "OPERATING YEAR" means the calendar year, provided that the
first Operating Year shall commence on the Interim Casino
Opening Date and shall end on December 31, 1994 and the last
Operating Year shall end on the last day of the Term;
(bt) "OPERATOR" means Windsor Casino Limited, its successors and
permitted assigns;
(bu) "OPERATOR'S FEE" has the meaning ascribed thereto in Section
8.1;
(bv) "OUTSTANDING PRE-OPENING EXPENSES" has the meaning ascribed
thereto in Section 11.2;
(bw) "PARKING FACILITIES" means the surface parking facilities in
respect of which Parking Lot Leases have been entered into by
the Operator in and upon one or more of the sites comprising the
Parking Lot Lands;
(bx) "PARKING LOT LANDS" means the lands in or near the City of
Windsor identified by OCC and the Operator as being possible
locations for the Parking Facilities;
(by) "PARKING LOT LEASES" means, collectively, the agreements to
lease the Parking Lot Lands entered into by the Operator, as
tenant, and the respective owners of the Parking Lot Lands, as
landlord, and the formal leases entered into pursuant thereto;
(bz) "PARTICIPANT DATA BASES" means, collectively, the data bases and
related software developed by each of the Participants
containing the list of, and other information relating to, those
existing customers of each of the Participants resident within a
250 mile radius of the City of Windsor, as such list and
information is up-dated by the Participants from time to time;
(ca) "PARTICIPANT PROPERTIES" means, collectively, all hotels and/or
casinos other than the Interim Casino Complex managed or
operated by a Participant or a combination of Participants or
any Affiliate of a Participant or a combination of Participants
or the Operator;
(cb) "PARTICIPANT SERVICES" means a collective term for:
(i) the worldwide network of branch offices, sales offices,
reservation offices and casino offices operated by the
Participants, including
(A) the Hilton Reservation Service, and
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(B) sales offices and affiliate locations, including
Caesars Worlds Marketing, and
(ii) programs of advertising and business promotion for
Participant Properties which are conducted by any of the
Participants,
and which are available to the Participant Properties;
(cc) "PARTICIPANTS" means the parties of the third part hereto and
their respective successors and permitted assigns;
(cd) "PERMANENT CASINO COMPLEX" has the meaning ascribed to the term
"Project" in the Permanent Casino Heads of Agreement;
(ce) "PERMANENT CASINO HEADS OF AGREEMENT" means the agreement
entitled "Heads of Agreement" made as of even date herewith
between the parties hereto, as such agreement is amended and/or
supplemented from time to time;
(cf) "PERMITTED DEBT" means:
(i) any indebtedness for trade payables, accounts payable and
accruals incurred or arising out of the ordinary course
of business; and
(ii) any indebtedness under any contract authorized or
contemplated under this Agreement, the Permanent Casino
Heads of Agreement or the Master Agreement;
but shall not include any indebtedness for borrowed money unless
agreed to by OCC or such borrowing has been incurred to fund
Pre-Opening Expenses or is necessary for funding any
Discretionary Deficiency Contributions;
(cg) "PERMITTED ENCUMBRANCES" means:
(i) liens for taxes, assessments and governmental charges due
and being contested in good faith and diligently by
appropriate proceedings (and for the payment of which
adequate provision has been made);
(ii) servitudes, easements, restrictions, rights-of-way and
other similar rights in real property or any interest
therein;
(iii) undetermined or inchoate liens, charges and privileges
incidental to current construction or current operations
and statutory liens, charges, adverse claims, security
interests or encumbrances of any nature whatsoever
claimed or held by any Governmental Authority
- 13 -
that have not at the time been filed or registered
against the title to the asset or served upon the
Operator pursuant to law or that relate to obligations
not due or delinquent;
(iv) assignments of insurance provided to landlords pursuant
to the terms of any lease, and liens or rights reserved
in any lease for rent or for compliance with the terms of
such lease;
(v) security given in the ordinary course of the Operator's
business to any public utility, municipality or
government or to any statutory or public authority in
connection with the operations of the Operator's
business, other than security for borrowed money;
(vi) the reservations in any original grants from the Crown of
any real property or interest therein and statutory
exceptions to title;
(vii) encumbrances affecting the title to the Complex Lands as
of the date hereof (including the City Mortgage); and
(viii) any purchase money mortgage, charge, pledge, lien or
security interest affecting any particular asset (and
only such asset) and created to secure payment of all of
the purchase price of such asset;
(ch) "PERSON" or "PERSON" means any individual, partnership,
corporation, joint venture, association, joint stock company,
trust, unincorporated organization or a Governmental Authority,
and "corporation" shall include "company" and VICE VERSA;
(ci) "PRE-OPENING EXPENSES" means amounts incurred and paid by the
Operator in connection with the provision by it of the
Pre-Opening Services and approved by OCC from time to time
through a budget or otherwise;
(cj) "PRE-OPENING PERIOD" means the period from December 6, 1993 to
the Interim Casino Opening Date;
(ck) "PRE-OPENING SERVICES" means, collectively, the services to be
provided by the Operator in connection with:
(i) the Renovations as detailed in Section 3.2;
(ii) the Parking Facilities as detailed in Section 3.3;
(iii) the acquisition and installation or storage of the
Interim Casino Equipment as detailed in Section 3.4; and
(iv) the other matters set forth in Section 3.5;
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(cl) "PRIME RATE" means the rate of interest per annum established
and reported by Canadian Imperial Bank of Commerce to the Bank
of Canada from time to time as a reference rate of interest in
order to determine the interest rate it will charge for demand
loans in Canadian funds to its Canadian customers and which it
refers to as its "prime lending rate" or "prime rate";
(cm) "REGULATORY LEGISLATION" means the Gaming Control Act and all
regulations made thereunder and all mandatory directives and
orders issued thereunder or pursuant thereto;
(cn) "REIMBURSEMENT RATE OF INTEREST" means 10% per annum calculated
and compounded monthly;
(co) "RENOVATION PLANS" means the construction plans and
specifications relating to the construction and development of
the Renovations developed or adopted by the Operator and
approved by OCC from time to time;
(cp) "RENOVATIONS" means the renovations to the Building contemplated
by the Renovation Plans and includes all related fixtures,
equipment and attachments;
(cq) "SEVERANCE RESERVE" has the meaning ascribed thereto in Section
11.4;
(cr) "SHAREHOLDERS' AGREEMENT" means the shareholders' agreement for
the Operator to be entered into between the Participants and/or
Affiliates of the Participants and the Operator;
(cs) "TERM" means the period from and including the date hereof to
and including the last day of the stated term of the Interim
Casino Lease, being April 30, 1997; and
(ct) "WILFUL" means a voluntary, purposeful and intentional act
intended to do something forbidden by this Agreement or
Applicable Law, to breach this Agreement or violate Applicable
Law, or to fail to do something required by this Agreement or
Applicable Law. Furthermore, the "wilful breach", "wilful non-
performance", "wilful misconduct" and "wilful act" shall be
limited in the case of (i) any Participant, to a wilful breach,
wilful non-performance, wilful misconduct or wilful act
authorized by the shareholders or Board of Directors of such
Participant; and (ii) the Operator and OCC, to a wilful breach,
wilful non-performance, wilful misconduct or wilful act
authorized by the shareholders, Board of Directors or the
following key officers, President and Managing Director, General
Manager or Chief Financial Officer of their respective
corporations. The parties agree that, except for the employees
specifically referred to above, the wilful breach,
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wilful non-performance, wilful misconduct or wilful act of a
party's employee(s) shall not be deemed a wilful breach, wilful
non-performance, wilful misconduct or wilful act of a party.
The wilful breach, wilful non-performance, wilful misconduct or
wilful act of any employee(s) other than the officers named
above (as to the Operator and OCC, as the case may be) will not
be imputed or attributed to the employer for this purpose; and
(cu) "WIN TAX" means payments to be made under Subsection 15(1)2 of
the Enabling Legislation to the Consolidated Revenue Fund of the
Province of Ontario.
1.2 SCHEDULES: The Schedules attached to this Agreement and listed below shall
have the same force and effect as if the information contained therein were
contained in the body of this Agreement:
Schedule A - Legal Descriptions of Art Gallery Land and Adjacent Lands
Schedule B - Interim Casino Site
1.3 CURRENCY: References to money herein are references to lawful money in
Canada.
ARTICLE TWO
APPOINTMENT OF OPERATOR
2.1 APPOINTMENT OF OPERATOR AS INDEPENDENT CONTRACTOR: Subject to Section 2.2,
OCC hereby retains, on a sole and exclusive basis, the Operator as an
independent contractor to improve, develop, operate and maintain the Interim
Casino Complex in accordance with this Agreement, the Approved Operating
Policies and the then current Approved Operating Budget for the Term. The
Operator hereby accepts such appointment as independent contractor upon and
subject to the terms, conditions, covenants and provisions set forth herein. In
connection with this appointment, the Operator shall not enter into any
agreements with third parties as agent of OCC or otherwise hold itself out as a
disclosed agent acting on behalf of OCC as principal.
2.2 APPOINTMENT OF OPERATOR AS AGENT: Notwithstanding Section 2.1, OCC hereby
appoints the Operator as OCC's sole and exclusive agent to operate on its behalf
the Games of Chance to be carried on in the Casino in accordance with this
Agreement, the Approved Operating Policies and the then current Approved
Operating Budget for the Term. The Operator hereby accepts such appointment as
agent upon and subject to the terms, conditions, covenants and provisions set
forth herein.
2.3 LIMITATION ON AUTHORITY OF OPERATOR: The Operator hereby acknowledges and
agrees that the Province of Ontario must conduct and manage all Games of Chance
to be carried on in the Interim Casino Complex as required under paragraph
207(1)(a) of
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the CRIMINAL CODE (Canada). In order to ensure compliance with such provision,
in addition to any other limitations on the powers and authority of the Operator
as set forth herein, the Operator shall not take any action which the Operator
believes would have a material effect or could reasonably be expected to have a
material effect on the operations, affairs, condition or prospects of the Casino
without obtaining the approval of OCC. Without limiting the foregoing:
(a) the Operator shall not take any action in connection with the
operation of the Interim Casino Complex that is inconsistent in
any material respect with the Approved Operating Policies
without the approval of OCC; and
(b) OCC and its authorized representatives shall, in accordance with
the Approved Operating Plan, be provided with working space and
office support in or near the Casino and shall be entitled to
access to all areas of the Casino.
In acting hereunder in all matters relative to this Agreement
and in approving or consenting to any matter hereunder not otherwise
specifically provided for, OCC and the Operator shall act in a reasonable manner
taking into account the requirements of paragraph 207(1)(a) of the CRIMINAL CODE
(Canada) and the Operator's and Participants' advice stemming from their
knowledge and experience as owners and operators of casino properties and the
gaming industry generally.
2.4 ACCESS TO BUILDING: In order for the Operator to perform its services
hereunder, subject to Applicable Law, OCC agrees to provide the Operator with
full access to the Building.
ARTICLE THREE
PRE-OPENING PERIOD
3.1 PRE-OPENING SERVICES: During the Pre-Opening Period, and subject to OCC's
approval where required hereunder, the Operator shall provide the Pre-Opening
Services. The Pre-Opening Expenses, together with GST, shall, during the term
of this Agreement, be recoverable from Gross Revenues in accordance with,
subject to and to the extent provided in Subsection 4.3(d) hereof, and upon
termination of this Agreement, shall be repaid in accordance with and to the
extent set forth in this Agreement.
3.2 RENOVATIONS: The Operator shall, as independent contractor, use its
reasonable efforts to complete the Renovations in accordance with Applicable Law
and in all material respects in accordance with the Renovation Plans.
3.3 PARKING FACILITY ARRANGEMENTS: OCC and the Operator have identified
certain locations comprising the Parking Lot Lands as being suitable sites for
the Parking Facilities. OCC and the Operator shall:
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(a) proceed diligently and in good faith to determine which one or
more of such locations will be required to adequately service
the parking requirements of the Casino; and
(b) thereafter diligently commence and pursue negotiations with the
owners of such locations for the lease of such lands to the
Operator and the development and operation of the Parking
Facilities thereon by the Operator on terms acceptable to OCC
and the Operator,
all with the objective that the completed Parking Facilities will be available
on or before, or as soon as reasonably practicable after, the Interim Casino
Opening Date. The Operator shall develop plans, policies and procedures with
the objective that the Parking Facilities shall effectively and efficiently
service the parking requirements of the Casino (including the establishment and
operation of valet and shuttle services).
3.4 INTERIM CASINO EQUIPMENT: The Operator shall consult with and make
recommendations to OCC with respect to the Interim Casino Equipment to be
acquired for the Interim Casino Complex and thereafter, as agent for OCC,
purchase or lease the Interim Casino Equipment to be used in the Casino and as
independent contractor purchase or lease the Interim Casino Equipment to be used
in those parts of the Interim Casino Complex other than the Casino, and install
the same in the Interim Casino Complex or, as appropriate, place the same in
storage pending the need for use of the same in the Interim Casino Complex.
3.5 OTHER SERVICES: The Operator shall, as independent contractor:
(a) use its reasonable efforts to ensure that it and all Persons
retained by it or on its behalf for the provision of goods or
services for or to the Interim Casino Complex are registered as
suppliers as required under the Regulatory Legislation;
(b) use its reasonable efforts to obtain all necessary Governmental
Consents required for the operation of the Interim Casino
Complex in accordance with Applicable Law;
(c) identify, select, interview, hire and train personnel to be
employed in the operation, renovation and development of the
Interim Casino Complex, all such personnel to be employees of
the Operator and not OCC;
(d) in consultation with OCC, prepare and obtain OCC's approval to
the Operating Policies for the Interim Casino Complex;
(e) from and after the Commencement Date and only during the Pre-
Opening Period, remit directly to the Landlord as and when due
all rent and other monies payable by the tenant under the
Interim Casino Lease, unless the
- 18 -
payment of such rent or other monies is being contested in good
faith and diligently by appropriate proceedings (and for the
payment of which adequate provision has been made);
(f) at the request of OCC, deliver within 30 days a certified cheque
in the amount of $5,000,000 payable to the City, such that OCC
may deliver the same to the City in consideration for an
assignment of the City Mortgage in registerable form; and
(g) perform such other services and employ such personnel and
consultants and professional advisers and do such other things
as it may deem necessary or advisable, acting reasonably, in
preparation of the Interim Casino Complex for operations.
ARTICLE FOUR
OPERATING PERIOD
4.1 SERVICES: During the Operating Period, the Operator shall, in compliance
with this Agreement and the then current Approved Operating Budget and in all
material respects in accordance with the Approved Operating Policies, perform,
or cause to be performed for the account and expense of the Interim Casino
Complex, the following services:
(a) use its reasonable efforts to obtain and maintain all
Governmental Consents required in connection with the proper,
efficient and legal operation of the Interim Casino Complex;
(b) use its reasonable efforts to do or cause to be done all such
things relating to the operation of the Interim Casino Complex
which are necessary to ensure compliance with Applicable Law;
(c) perform and, where desirable, contract for all things necessary
for the proper, efficient and secure operation of, and the
repair, redecoration and maintenance in good working order and
appearance of, the Interim Casino Complex and perform such other
actions in or about the Interim Casino Complex as it may, acting
reasonably, consider necessary or advisable to carry out the
intent of this Agreement;
(d) use its reasonable efforts to negotiate and finalize
concessions, licences or other arrangements with respect to
other space and facilities in the Interim Casino Complex;
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(e) purchase or lease such Operating Equipment and Operating
Supplies as it may, acting reasonably, consider necessary or
advisable for the proper operation of the Interim Casino
Complex; and
(f) to the extent not completed by the Interim Casino Opening Date,
diligently pursue the completion of the Pre-Opening Services.
Notwithstanding anything contained in this Agreement, the parties acknowledge
and agree that neither the Operator nor any of the Participants, as the case may
be, shall be required to perform any obligation under this Agreement which
requires it to expend its own funds except:
(i) to satisfy claims against the Operator (as to the
Operator) or any Participant (as to such Participant)
arising out of Sections 12.1 and 12.3, respectively;
(ii) to satisfy the deferral obligations of the Operator under
Subsections 4.3(f)(iii) and 4.3(f)(iv); and
(iii) to satisfy the Operator's obligations to make a repayment
of Operator's Fees pursuant to Subsection 8.1(c);
provided, however, this is not intended to release the Operator in its capacity
as a separate corporation to expend its own funds to effect actions consistent
with its existence as a separate entity including maintenance of its existence
and maintenance of its registration.
4.2 ANNUAL OPERATING BUDGET: In furtherance of its obligation to operate all
aspects of the Interim Casino Complex, the Operator shall, not less than 45 days
and not more than 60 days prior to the start of an Operating Year, submit to OCC
for its approval the proposed Operating Budget for the Interim Casino Complex
for the ensuing Operating Year and thereafter submit to OCC for its approval
orderly revisions of such Approved Operating Budget from time to time. In its
preparation of such Operating Budget, the Operator shall base its estimates upon
the most recent and reliable information then available, taking into account the
location of the Interim Casino Complex and its experience and knowledge. The
parties acknowledge that the Operating Budget consists of projections that may
not necessarily be achieved. If OCC shall fail to approve any proposed
Operating Budget within 30 days of its submission by the Operator, or to submit
its objections to the Operator within such period, then OCC shall be deemed to
have approved such proposed Operating Budget. If OCC objects to certain
portions of the proposed Operating Budget, the undisputed portions of the
proposed Operating Budget shall be deemed to be approved and, until the disputed
portions are approved, the corresponding items in the Approved Operating Budget
for the immediately preceding Operating Year (as adjusted by the percentage
increase in the Consumer Price Index last published immediately before the time
the Operating Budget was submitted to OCC for its approval over the Consumer
Price Index last published
- 20 -
before the Operating Budget for the previous operating year was submitted to OCC
for its approval) shall be substituted in the proposed Operating Budget in
respect of such disputed portions. The mere fact that an amount or expense is
contemplated by the Approved Operating Budget shall not in and of itself require
the Operator to expend such amount or incur such expense.
4.3 ACCOUNTING AND DISTRIBUTION OF FUNDS: In furtherance of its obligation to
operate all aspects of the Interim Casino Complex, the Operator shall perform
the following accounting and financial services:
(a) MONTHLY REPORTS: The Operator shall, within 20 days after the
end of each month, prepare and submit to OCC written reports, in
a format approved by OCC, for the Interim Casino Complex setting
out:
(i) income and expense statements for the Interim Casino
Complex on a departmental basis for the preceding month
and the year to date on an accrual basis with comparisons
to the Approved Operating Budget and showing separately
for the preceding month, the computation of the
Operator's Fee proposed to be paid for such preceding
month, and a balance sheet;
(ii) an operating statement reconciling Capital Renewal
Reserves and Operating Reserves taken in previous months
to Capital Renewals and Operating Expenses incurred and
paid; and
(iii) bank reconciliations of the Casino Accounts as at the end
of the previous month.
(b) BANKING: The Operator shall handle all banking necessary for
the due performance of the Operator's accounting and
administrative functions under the provisions of this Agreement
and for the receipt and disbursements of all monies pertaining
to the Interim Casino Complex required to be attended to by the
Operator under the provisions of this Agreement.
(c) OPERATING ACCOUNT: The Operator shall, subject to the
establishment and maintenance of appropriate petty cash funds
and gaming bankroll (including but not limited to money in
machines, at tables, cashier's desk and the house vaults as
required for operators), deposit in the appropriate Casino
Accounts in the normal course and without delay all Gross
Revenues and all other cash, cheques and other negotiable
instruments which come into the Operator's hands pursuant to the
provisions of this Agreement. No funds shall be disbursed from
the Casino Accounts except in accordance with Subsections 4.3(d)
and (e).
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(d) CASINO ACCOUNT DISTRIBUTIONS AND RESERVES: The Operator shall,
in accordance with the Approved Operating Plan, withdraw from,
or reserve in the Casino Accounts, the following amounts:
(i) winnings to players of Games of Chance;
(ii) payments for Win Tax, as and when due;
(iii) payments of Impositions, as and when due, and any GST
payable by OCC or the Operator (without duplication of
any recovery hereunder by the Operator for Impositions)
on amounts described in Subsections 4.3(d)(ii), (iv),
(v), (vi), (vii) and (xi) hereof;
(iv) payments of rent and other amounts as required under the
Interim Casino Lease and the Parking Lot Leases, as and
when due;
(v) payments representing repayment of Pre-Opening Expenses
on a straight-line amortization basis over the unexpired
term of this Agreement or such shorter period of time as
may be agreed to by the Operator and OCC, including
interest on such amounts at the Reimbursement Rate of
Interest until paid;
(vi) payments for Operating Expenses as set forth in the
Approved Operating Budget;
(vii) payments for (A) FF&E Repairs in accordance with the
Approved Operating Budget and (B) Capital Renewals in
accordance with the Approved Operating Budget;
(viii) Capital Renewal Reserves, Operating Reserves, Contingency
Reserves and Severance Reserves as established in the
Approved Operating Budget;
(ix) payments representing repayment of Mandatory Deferrals
made by the Operator pursuant to Subsection 4.3(f) during
prior periods, together with accrued and unpaid interest
thereon;
(x) payments representing repayment of Discretionary
Deficiency Contributions made by the Operator pursuant to
Subsection 4.3(g) during prior periods, together with
accrued and unpaid interest thereon;
(xi) payment of the Operator's Fee including deferrals
pursuant to Subsection 4.3(f)(iii); and
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(xii) the balance existing at the end of each calendar month
shall be wired to an account designated by OCC within 20
days of the end of each such month.
The Operator shall not overdraw the Casino Accounts. For
greater certainty, the Operator shall only be required to pay or
reserve for the amounts referred to in this Subsection 4.3(d) to
the extent there are monies in the Casino Accounts to make such
payment or to maintain such reserve.
(e) CASH MANAGEMENT: The Operator shall adhere in all material
respects to cash management policies and procedures approved by
OCC in consultation with the Operator, including the
establishment of and transfers to Casino Accounts in addition to
the Operating Account.
(f) MANDATORY DEFERRALS: The parties agree to establish the
Operating Reserve. In the event monies in the Casino Accounts
are at any time insufficient to pay any amounts set out in
Subsection 4.3(d)(i), (ii), (iii), (iv), (vi) or (vii), the
Operator shall:
(i) defer reserves or payments in respect of the amounts set
out in Subsection 4.3(d)(viii) budgeted for such period
and defer any Capital Renewals to the extent reasonable
under the circumstances;
(ii) be entitled to pay any such amounts as set out in
Subsection 4.3(d)(i), (ii), (iii), (iv), (vi) or (vii)
out of the Operating Reserve and then out of the Capital
Renewals Reserve established pursuant to this Agreement;
(iii) defer the payment of the Operator's Fee for a period of
up to three months; and
(iv) defer the repayment of Pre-Opening Expenses ("Mandatory
Deferrals") in an amount no greater than an amount equal
to three months of the principal payments which the
Operator is entitled to receive in respect of the
repayment of Pre-Opening Expenses (the "Maximum Mandatory
Deferral"), provided that the Operator shall have no
obligation to continue to defer repayment of Pre-Opening
Expenses in excess of the Maximum Mandatory Deferral.
Pre-Opening Expenses which are the subject of Mandatory
Deferrals shall bear interest, commencing on the 90th day that
the Pre-Opening Expenses have been so deferred, at a rate per
annum equal to the greater of (i) the Reimbursement Rate of
Interest and (ii) the Prime Rate in effect on the last day of
the deferral period, plus 1%, calculated and compounded monthly.
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(g) DISCRETIONARY DEFICIENCY CONTRIBUTIONS: In the event the monies
in the Casino Accounts are at any time insufficient to pay or
reserve for the amounts set out in Subsections 4.3(d)(i) to
(vii)(A) both inclusive, the Operator may elect to deposit funds
("Discretionary Deficiency Contributions") into the appropriate
Casino Accounts to cover such deficiency. Any such
Discretionary Deficiency Contributions (other than advances in
respect of the amounts set out in Subsection 4.3(d)(v)) shall
bear interest at a rate of interest to be agreed upon between
OCC and the Operator prior to the making of such Discretionary
Deficiency Contributions.
(h) ACCOUNTING/NO COMMINGLING: The Operator acknowledges that all
monies received by the Operator pursuant to any of the
obligations provided for in this Agreement shall be accounted
for and in the manner provided for in Subsections 4.3(c) and
(d). The Operator shall not commingle in the Casino Accounts
funds pertaining to the Interim Casino Complex with funds which
are unrelated to the Interim Casino Complex.
(i) BOOKS OF ACCOUNT; INFORMATION: The Operator at all times shall
maintain at or near the Casino appropriate books of account and
records with respect to all transactions entered into in
performance of this Agreement. OCC and its authorized
representatives shall have the right contemplated by the
Enabling Legislation to obtain information with respect to the
Interim Casino Complex and the Operator and to cause such
inspections of the reports, accounts, records and other
documents maintained by the Operator pursuant to this Agreement
relating to the Interim Casino Complex to be made as may be
reasonable in the circumstances.
(j) METHOD OF KEEPING ACCOUNTS: The Operator shall maintain the
Operator's accounts with respect to matters arising under this
Agreement in such a manner as to enable OCC to readily extract
financial statements pertaining to the Interim Casino Complex.
(k) FURNISH INFORMATION TO AUDITORS: The Operator shall, after
reasonable notice from OCC or the Auditors, make available to
the Auditors such information and material as may be reasonably
required by such Auditors for the purpose of their audit and
otherwise give such cooperation as may be necessary for such
Auditors to carry out their duties in respect of the Interim
Casino Complex, as the case may be.
(l) FINANCIAL STATEMENTS: The Operator shall deliver to OCC as soon
as practicable and, in any event, within 90 days after the end
of each Operating Year, the annual audited financial statements
of the Interim Casino Complex as at the end of each such
Operating Year, such financial statements to consist of at least
a balance sheet as at the end of the
- 24 -
Operating Year and statements of earnings, retained earnings and
changes in financial position for the Operating Year then ended.
4.4 NO DUPLICATION: The interpretation of this Agreement shall not permit a
receipt, payment, reserve or reimbursement to be duplicated.
4.5 REPAYMENT OF DEFICIENCY AMOUNTS: Deficiency Amounts and accrued and unpaid
interest thereon shall, during the term of this Agreement, be repaid to the
Operator from future Gross Revenues received to the extent Gross Revenues are
available for such purpose after payment of the amounts set out in Subsections
4.3(d)(i) to (vii)(A) both inclusive. Upon termination of this Agreement (by
effluxion of time or otherwise), outstanding Deficiency Amounts (to the extent
not recovered or recoverable pursuant to Section 11.2) and any accrued and
unpaid interest thereon shall be repaid:
(a) from any of the Capital Renewal Reserve, the Operating Reserve,
the Severance Reserve and the Contingency Reserve to the extent
there is any amounts remaining in such Reserve after satisfying
in full all liabilities for which such Reserve was established;
(b) from time to time from future Gross Revenues received to the
extent Gross Revenues (and for the purposes of this Subsection
4.5(b), "Gross Revenues" includes revenues received from or in
respect of the Permanent Casino Complex) are available for such
purpose after payment of amounts set out in Subsections
4.3(d)(i) to (iv), both inclusive (or in the case of the
Permanent Casino Complex, after payment of like amounts); and
(c) forthwith upon the appointment by OCC of a replacement third
party operator for the Interim Casino Complex or the Permanent
Casino Complex, if such appointment is made within two years of
the termination of this Agreement.
The Operator and the Participants shall have no recourse against Her Majesty or
OCC or their respective assets for the repayment of any Deficiency Amounts or
interest thereon except as set out in this Section 4.5 and Sections 8.1 and
11.2.
4.6 OCC REVIEW OF FINANCIAL STATEMENTS: OCC shall be entitled to submit any
objection it may have with respect to the financial statements contemplated by
Subsection 4.3(l), including without limitation the computation of Gross
Operating Receipts, Net Operating Margin and Operator's Fee, within 540 days
after submission of the same by the Operator. If OCC does not submit any
objections in respect of such financial statements within such 540 day period,
then OCC shall not be entitled to object to or take issue with such financial
statements or the computation of Gross Operating Receipts, Net Operating Margin
or Operator's Fee with respect to the Operating Year addressed by such financial
statements; provided that it is expressly understood and agreed that the failure
of OCC to object to or take issue with such financial statements within such 540
day period shall not:
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(a) preclude OCC from subsequently taking any action or exercising
any remedies available at law by reason of any fraudulent
misrepresentation contained in such financial statements or the
audit thereof; or
(b) preclude Her Majesty or other Governmental Authority from
objecting to or taking issue with such financial statements or
the computation of any item therein under any Applicable Law.
4.7 MAJOR CAPITAL IMPROVEMENTS: Any Major Capital Improvements in addition to
those to be undertaken as part of the Pre-Opening Services shall only be
undertaken to the extent and on terms mutually agreed upon by the Operator and
OCC.
4.8 EXTENDED DEFERRALS: In the event that, in the reasonable anticipation of
the Operator, monies in the Casino Accounts are or will be at any time
insufficient to pay the amounts set out in Subsections 4.3(d)(i) through (xi)
(taking into account the reserves available or that will be available as
contemplated by Subsection 4.3(d)(viii) and after taking into account the
deferrals contemplated by Subsection 4.3(f)), the parties agree as follows:
(a) the Operator shall thereafter operate the Interim Casino Complex
with a view to minimizing Operating Expenses provided, however,
the Operator shall not be required to provide any funds to
continue the operation of the Interim Casino Complex;
(b) the parties will discuss in good faith for a period of at least
30 days appropriate remedial action to prevent the depletion of
the Operating Reserve; and
(c) if after exhaustion of the Operating Reserve and the Capital
Renewal Reserve and the deferrals contemplated by Subsection
4.3(f) there are insufficient funds in the Casino Accounts to
pay the amounts set out in Subsections 4.3(d)(i) to (xi) and the
parties have been unable to agree upon appropriate remedial
action, then:
(i) the Operator shall be entitled to cease to operate the
Interim Casino Complex;
(ii) the Operator shall be entitled to terminate this
Agreement on 15 days' notice to OCC; and
(iii) the Operator shall be entitled to be repaid outstanding
Deficiency Amounts in accordance with, and subject to,
Section 4.5.
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ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF THE OPERATOR: The Operator represents
and warrants as of the date hereof as follows and acknowledges that OCC is
relying on such representations and warranties in connection with the
transactions contemplated by this Agreement:
(a) Organization: The Operator is a corporation duly incorporated
and organized under the laws of the Province of Ontario.
(b) OWNERSHIP OF OPERATOR: Each of the Participants Controls 1/3 of
all of the issued and outstanding shares of the Operator.
(c) OPTIONS: No Person, other than a Participant or an Affiliate of
a Participant, has any right or option, contingent or otherwise,
to acquire any of its capital stock.
(d) CAPACITY AND AUTHORIZATION: The Operator has all necessary
capacity, power and authority to enter into and to carry out the
provisions of this Agreement and all other documents which may
be necessary to give effect to the transactions contemplated by
this Agreement. This Agreement has been duly authorized by the
Operator and constitutes a valid and binding obligation of the
Operator, enforceable against the Operator in accordance with
its terms. All other agreements referred to in this Agreement
which have been entered into in accordance with this Agreement
and to which the Operator is a party, have been duly authorized
by the Operator and constitute valid and binding obligations of
the Operator, enforceable against the Operator in accordance
with their terms.
(e) NO VIOLATION: Neither the execution and delivery of this
Agreement or any other agreement expressly contemplated by this
Agreement nor the fulfilment of or compliance with the terms and
conditions hereof or thereof:
(i) conflicts with or will conflict with or result in a
breach of any of the terms, conditions or provisions of
or constitute a default under the constating
documentation of the Operator; or
(ii) conflicts in a material respect with or will conflict in
a material respect with or result in a material breach of
any of the terms, conditions or provisions of or
constitute a material default under any agreement,
licence or other instrument to which the Operator is a
party or by which it is bound.
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(f) LITIGATION: To its knowledge after due inquiry, except as has
been disclosed by the Operator to OCC in writing, there are no
actions, suits or proceedings pending or threatened against the
Operator which could reasonably be expected to materially
adversely affect its ability to perform its obligations under
this Agreement or which could reasonably be expected to
materially adversely affect the development, financing or
operation of the Interim Casino Complex.
(g) REGISTRATION: The Operator is registered as a supplier under
the Regulatory Legislation.
5.2 REPRESENTATIONS AND WARRANTIES OF THE PARTICIPANTS: Each Participant
represents and warrants as to itself as of the date hereof as follows and
acknowledges that OCC is relying on such representations and warranties in
connection with the transactions contemplated by this Agreement:
(a) ORGANIZATION: The Participant is a corporation duly
incorporated and organized under the laws of its governing
jurisdiction.
(b) CONTROL: The Participant Controls 1/3 of all of the issued and
outstanding shares of the Operator.
(c) OPTIONS: No Person, other than a Participant or an Affiliate of
a Participant, has any right or option, contingent or otherwise,
to acquire any of the capital stock of the Operator owned by the
Participant.
(d) CAPACITY AND AUTHORIZATION: The Participant has all necessary
capacity, power and authority to enter into and to carry out the
provisions of this Agreement and all other documents which may
be necessary to give effect to the transactions contemplated by
this Agreement. This Agreement has been duly authorized by the
Participant and constitutes a valid and binding obligation of
the Participant, enforceable against the Participant in
accordance with its terms. All other agreements referred to in
this Agreement which have been entered into in accordance with
this Agreement and to which the Participant is a party, have
been duly authorized by the Participant and constitute valid and
binding obligations of the Participant, enforceable against the
Participant in accordance with their terms.
(e) NO VIOLATION: Neither the execution and delivery of this
Agreement or any other agreement expressly contemplated by this
Agreement nor the fulfilment of or compliance with the terms and
conditions hereof or thereof:
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(i) conflicts with or will conflict with any of the terms,
conditions or provisions of or constitute a default under
the constating documentation of the Participant; or
(ii) conflicts in a material respect with or will conflict in
a material respect with or result in a material breach of
any of the terms, conditions or provisions of or
constitute a material default under any material
agreement, licence or other instrument to which the
Participant is a party or by which it is bound; provided,
however, to the extent that a consent or an approval of a
third party is required in accordance with the terms,
conditions or provisions of any material agreement,
licence or other instrument to which the Participant is a
party or by which it is bound, it will obtain any
required consent or approval.
(f) LITIGATION: To its knowledge after due inquiry, except as has
been disclosed by the Participant to OCC in writing, there are
no actions, suits or proceedings pending or threatened against
the Participant which could reasonably be expected to materially
adversely affect its ability to perform its obligations under
this Agreement or which could reasonably be expected to
materially adversely affect the development, financing or
operation of the Interim Casino Complex.
5.3 REPRESENTATIONS AND WARRANTIES OF OCC: OCC represents and warrants as of
the date hereof as follows and acknowledges that the Operator and the
Participants are relying on such representations and warranties in connection
with the transactions contemplated by this Agreement:
(a) ORGANIZATION: OCC is a corporation duly established and
organized under the laws of the Province of Ontario.
(b) CAPACITY AND AUTHORITY: OCC has all necessary capacity, power
and authority to enter into this Agreement as agent of Her
Majesty and to carry out the provisions of this Agreement and
all other documents which may be necessary to give effect to the
transactions contemplated by this Agreement. This Agreement has
been duly authorized by OCC. All other agreements referred to
in this Agreement which have been entered into in accordance
with this Agreement and to which OCC is a party have been duly
authorized by OCC.
(c) NO VIOLATION: Neither the execution and delivery of this
Agreement or any other agreement expressly contemplated by this
Agreement nor the fulfilment of or compliance with the terms and
conditions hereof or thereof:
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(i) conflicts with or will conflict with or result in a
breach of any of the terms, conditions or provisions of
or constitute a default under the constating
documentation of OCC; or
(ii) conflicts in a material respect with or will conflict in
a material respect with or result in a material breach of
any of the terms, conditions or provisions of or
constitute a material default under any material
agreement, licence or other instrument to which OCC is a
party or by which it is bound.
(d) LITIGATION: To its knowledge after due inquiry, except as has
been disclosed by OCC to the Operator in writing, there are no
actions, suits or proceedings pending against OCC which could
reasonably be anticipated to materially adversely affect its
ability to perform its obligations under this Agreement or the
agreements contemplated herein.
5.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES: The representations and
warranties of the parties contained herein shall survive the execution and
delivery of this Agreement and shall remain in full force and effect during the
Term.
ARTICLE SIX
COVENANTS
6.1 AFFIRMATIVE COVENANTS OF THE OPERATOR: In addition to the other covenants
and obligations to be performed by the Operator hereunder, the Operator agrees,
subject to the final paragraph of Section 4.1, to do the following during the
term of this Agreement:
(a) MAINTAIN CORPORATE EXISTENCE, ETC.: Maintain its corporate
existence, rights and power under the laws of the Province of
Ontario and qualify and remain duly qualified to do business and
to own property in the Province of Ontario.
(b) COMPLIANCE WITH LAWS, ETC.: Except to the extent contested in
good faith, comply in all material respects with all Applicable
Law.
(c) MAINTAIN REGISTRATION UNDER THE REGULATORY LEGISLATION:
Maintain its registration under the Regulatory Legislation.
(d) COMPLIANCE WITH ALL MATERIAL AGREEMENTS: Perform promptly and
faithfully all of its obligations under this Agreement and in
all material respects with each of the other Material Agreements
to which it is a party.
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(e) REPORTING REQUIREMENTS: Furnish or cause to be furnished to
OCC:
(i) as soon as available and in any event within 90 days
after the end of each fiscal year of the Operator,
audited balance sheets of the Operator as of the end of
such year and statements of income, surplus and changes
in financial condition of the Operator for such year,
setting forth in each case in comparative form the
figures for the corresponding periods of the previous
fiscal year, if such figures were prepared for the
previous fiscal year, all in reasonable detail and
accompanied by (x) a report upon each thereof, of
independent public accountants of recognized national
standing acceptable to OCC, which report would state that
such financial statements present fairly the financial
position of the Operator as at the dates indicated and
the results of its operations and changes in its
financial position for the periods indicated in
conformity with generally accepted accounting principles
applied on a basis consistent with prior years and that
the audit by such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and (y) a
certificate of the Chief Financial Officer of the
Operator, certifying that such financial statements
present fairly, in accordance with generally accepted
accounting principles on a basis consistent with such
prior fiscal periods, the information contained therein;
(ii) promptly after the filing or receiving thereof, copies of
all reports and notices which the Operator files with or
receives from the Gaming Control Commission relating to
non-compliance with the Regulatory Legislation; and
(iii) such other information respecting the condition or
operations, financial or otherwise, of the Operator or
the Interim Casino Complex as OCC may from time to time
reasonably request.
(f) KEEPING OF RECORDS AND BOOKS OF ACCOUNT, ETC.: Keep adequate
records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles
consistently applied, reflecting in all material respects all
financial transactions of the Operator.
(g) INSPECTION: Permit in accordance with and subject to Applicable
Law any authorized representatives designated by OCC to visit
and, upon notice, inspect any of the properties of the Operator,
including its books of account and all other property, books and
records relating to the Interim Casino Complex, and to make
copies and take extracts therefrom, and to discuss its affairs,
finances and accounts with, and to be advised as to the same by,
its officers and (upon reasonable notice to the Operator setting
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forth the purpose of such discussion) its independent public
accountants (and by this provision the Operator authorizes such
accountants to discuss with such representatives the affairs,
finances and accounts of the Operator, provided that a
representative of the Operator shall be entitled to be present
during such discussions), all at such times and as often as may
be requested, provided that (i) OCC would not have any duty to
make or cause to be made any such inspection and shall not incur
any liability or obligation for not making any such inspection,
for not making the same carefully or properly, or for not
completing the same, and (ii) the fact that such inspection may
not have been made by OCC or any representative thereof would
not relieve the Operator of any obligations it might otherwise
have under any of the Material Agreements. OCC acknowledges and
agrees that in exercising its rights under this
Subsection 6.1(g), it shall use its reasonable efforts to cause
the minimum disruption to the Operator's performance of its
obligations hereunder.
(h) WORKING CAPITAL: Maintain at all relevant times such working
capital of the Operator as may be required by the Gaming Control
Commission but only by limiting distributions to the
shareholders of the Operator of the Operator's net income but
not limiting distributions for the reimbursement of Pre-Opening
Expenses.
(i) CANADIAN PROCUREMENT: To the extent permitted by Applicable
Law, whenever reasonably practicable in the performance of its
duties hereunder and on the basis of comparable quality and
price, purchase materials from, and retain the services of,
Canadian manufacturers and suppliers.
(j) CHANGE OF OFFICERS: Obtain OCC's approval to the identity of
any new President or Chief Financial Officer of the Operator.
(k) WINDSOR RACEWAY: Participate with OCC in discussions and
initiatives instituted with representatives of Windsor Raceway.
(l) CUSTOMER DATA BASE: Develop and maintain a customer data base
for the Interim Casino Complex, which will be the property of
OCC, and which will not be made available to any of the
Participants or their Affiliates without the consent of OCC and
the other Participants.
(m) OPERATING POLICIES: Obtain OCC's prior approval to any
significant changes to the standards, policies and procedures
set forth in the Approved Operating Policies.
6.2 NEGATIVE COVENANTS OF THE OPERATOR: During the term of this Agreement, the
Operator agrees that it will not without the written consent of OCC:
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(a) BUSINESS: Engage in any business other than the operation of
the Interim Casino Complex and the development and financing of
the Permanent Casino Complex and other activities incidental or
related thereto.
(b) LIENS, ETC.: Directly or indirectly create or incur any lien on
or with respect to the Interim Casino Complex or any other
property or asset (including any document or instrument in
respect of goods or accounts receivable) of the Operator,
whether now owned or held or hereafter acquired, or assign or
otherwise convey any right to receive the proceeds or income
therefrom, except for Permitted Encumbrances.
(c) DEBT: Directly or indirectly create, incur, assume, guarantee
or otherwise become or remain directly or indirectly liable with
respect to, any debt except Permitted Debt.
(d) EASEMENTS, IMPROVEMENTS: Forfeit, surrender, diminish or
terminate any claim, lease, easement, privilege, use,
right-of-way, authorization or consent (existing on the date
hereof or hereafter acquired) necessary to the operation of the
Interim Casino Complex or, other than in connection with the
Renovations, alter, remove or demolish any improvement in any
manner or respect which would or might have a material adverse
effect on the value of the Interim Casino Complex taken as a
whole.
(e) TRANSFER OF SHARES: Permit the transfer of any shares of the
Operator by any shareholder of the Operator other than as
permitted by Subsection 6.4(a).
(f) PARTICIPANT TRANSACTIONS: Apprise OCC prior to entering into
any material transaction with any of the Participants or with
any Affiliates of a Participant including any guarantee by the
Operator of any obligations of any such Person, other than as
may be expressly permitted by this Agreement or the then current
Approved Operating Budget.
(g) CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.:
(i) Consolidate with, amalgamate or merge into any other
Person or permit any other Person to consolidate with,
amalgamate or merge into it;
(ii) sell, lease, abandon or otherwise dispose of all or
substantially all of its assets; or
(iii) liquidate, dissolve, wind-up, continue under another
jurisdiction or reorganize.
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6.3 AFFIRMATIVE COVENANTS OF THE PARTICIPANTS: In addition to the other
covenants and obligations to be performed by the Participants hereunder, each
Participant severally agrees with respect to itself to do the following during
the term of this Agreement:
(a) MAINTAIN CORPORATE EXISTENCE: Maintain and keep in full force
and effect its corporate existence and power except as to a
transaction permitted by Subsection 6.4(c).
(b) REPORTING REQUIREMENTS: In order that OCC shall continue to be
apprised of its financial condition, promptly furnish or cause
to be furnished to OCC copies of any reports or documents that
the Participant and any of its Affiliates files as a matter of
public record with the Securities and Exchange Commission or any
national securities exchange.
(c) SEEK TO CAUSE OPERATOR TO COMPLY WITH CERTAIN OBLIGATIONS UNDER
THE MATERIAL AGREEMENTS: Subject to the Shareholders'
Agreement, take reasonable steps consistent with its powers as a
shareholder to cause the Operator to comply with this Agreement,
except for the Operator's obligations under Subsections 6.1(b),
(c), (d) and (h) and Section 6.2.
(d) PARTICIPANT SERVICES: During the term of this Agreement make
available to the Operator the Participant Services on such terms
as may be agreed, failing which such services must be provided
at cost (exclusive of any overhead, administration or other
charge having a profit component), such services to be provided
by the Operator at cost (as defined above) for the use of the
Interim Casino Complex and, if requested by the Operator,
distribute to those persons listed in the Participant Data Bases
mailings, solicitations and other promotional material in
respect of the Interim Casino Complex at cost (exclusive of any
overhead, administration or other charge having a profit
component).
(e) SHAREHOLDERS' AGREEMENT: Ensure that the Shareholders'
Agreement will at all times contain a resolution dispute
mechanism to make certain that no deadlock situation will exist
between the Participants with respect to the business, operation
and affairs of the Operator. The Participant agrees to provide
OCC with a true copy of the Shareholders' Agreement and any
amendments made thereto from time to time promptly following the
execution of the same by the Participant.
6.4 NEGATIVE COVENANTS OF PARTICIPANTS: During the term of this Agreement,
each Participant severally agrees with respect to itself that it will not
without the written consent of OCC:
(a) NO TRANSFER OF SECURITIES OF OPERATOR DURING TERM OF OPERATING
AGREEMENT: Transfer directly or indirectly any shares of the
Operator beneficially owned directly or indirectly by the
Participant except for (a) in
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connection with a transaction permitted by Subsection 6.4(c);
(b) a transfer to a Person Controlled by or under common Control
with a Participant; (c) a transfer to another Participant; (d) a
transfer as may be required under Applicable Law or by any
Governmental Authority; and (e) a transaction permitted by the
Master Agreement.
(b) NO TRANSACTIONS WITH THE OPERATOR: Enter into any material
transaction with the Operator other than as expressly permitted
under this Agreement or the then current Approved Operating
Budget without OCC first being apprised.
(c) LIMITATIONS ON CORPORATE TRANSACTIONS: (i) Consolidate with,
amalgamate or merge into any other Person or permit any other
Person to consolidate with, amalgamate or merge into it unless
the Participant or any surviving entity continues to be bound by
the obligations of the Participant under this Agreement and the
Shareholders' Agreement and any other Material Agreements to
which the Participant is a party, or (ii) enter into any other
form of transaction whereby the Participant's corporate
existence terminates unless a Person acquiring a substantial
part of the gaming business of the Participant assumes the
Participant's liabilities and obligations under this Agreement,
the Shareholders' Agreement and any other Material Agreements to
which the Participant is a party.
6.5 INSURANCE: OCC and the Operator agree that insurance will be acquired and
maintained with mutually acceptable insurers with respect to the maintenance and
operation of the Interim Casino Complex, including its properties, employees
and business, against loss or damage of the kinds customarily insured against by
prudent persons of established reputation engaged in the same or similar
businesses and of similar situations and size, of such types and in such amounts
as are customarily carried under similar circumstances by such persons, which
insurance will include property insurance at a minimum as required by the
Interim Casino Lease, for the types of claims contemplated by Section 8.3 and in
respect of the matters contemplated by Section 8.5. Proceeds of property
insurance shall be used to fulfill the obligations of OCC under the Interim
Casino Lease and, where it is commercially reasonable to do so, shall be applied
to rebuild the Interim Casino Complex. OCC, the Operator and the Participants
will be named insureds or additional insureds, as the case may be, under such
insurance and there shall be a waiver of subrogation. All liability insurance
shall be primary and non-contributing as to the Operator and the Participants
and include such other provisions which are customary in this type of
arrangement.
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ARTICLE SEVEN
INTELLECTUAL PROPERTY
7.1 INTELLECTUAL PROPERTY OF OCC AND THE OPERATOR: The Operator and the
Participants acknowledge and agree that the trade mark and trade name "CASINO
WINDSOR" and any design relating thereto are the sole property of OCC which
shall include any trade mark, trade name or design developed specifically for
use in conjunction with or to identify Casino Windsor. OCC agrees to grant to
the Operator a royalty-free, non-transferable right to use the trade mark and
trade name "CASINO WINDSOR" and any design relating thereto in connection with
the operation, advertising and promotion of the Interim Casino Complex during
the term of this Agreement, and OCC and the Operator shall enter into a licence
agreement governing the use of such property on terms satisfactory to OCC acting
reasonably. The parties acknowledge and agree that all software or know-how
acquired or developed by the Operator from time to time for use in connection
with the Interim Casino Complex shall be, as between OCC and the Operator, the
sole property of the Operator. The Operator agrees to grant to OCC a perpetual
(notwithstanding the termination of this Agreement), royalty-free right to use
upon the termination of this Agreement such know-how and software including
source code and documentation in connection with the operation, advertising and
promotion of casinos conducted and managed by OCC and the Operator and OCC shall
enter into a licence agreement during the term of this Agreement governing the
use of such know-how and software on terms satisfactory to OCC acting
reasonably. No such use or anything contained in this Agreement shall confer
any proprietary or other rights in such Intellectual Property upon any third
parties.
7.2 PARTICIPANTS' INDIVIDUAL INTELLECTUAL PROPERTY: OCC acknowledges that each
of the Participants and their Affiliates are and may become from time to time,
owners or licensees, of trademarks, trademark applications, service marks,
service marks applications, copyrights, copyright applications, and similar
logos and designs. The Operator may, to the extent that it deems appropriate
for the purposes of carrying out its agreements and obligations hereunder, but
is not required to, utilize, and the Participants may, but are not required to,
provide such Intellectual Property in connection with the operation of the
Interim Casino Complex but neither such use nor anything contained in this
Agreement shall confer any proprietary or other rights in such Intellectual
Property upon OCC or any third parties. To the extent such Intellectual
Property is provided, the Operator may enter into licence agreement(s) so that
such Intellectual Property may be utilized by the Operator during the term of
this Agreement. Such licence agreements, if any, shall provide such
Intellectual Property on such terms and conditions, including royalties, as such
Participant (or Affiliate) and the Operator may agree and contain provisions for
the protection of the rights of the Participant, as appropriate, in such
Intellectual Property. The Operator, to the extent that it deems appropriate
for the purposes of carrying out its agreements and obligations hereunder, may
utilize such Intellectual Property in connection with the operation, advertising
and promotion of the Interim Casino Complex on the basis of such terms and
conditions, including royalties, as reflect the terms and conditions on which
such Intellectual
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Property was provided to the Operator by such Participant for such use. Nothing
herein shall oblige the Participant to provide such Intellectual Property for
such use.
7.3 COLLECTIVE INTELLECTUAL PROPERTY OF PARTICIPANTS: OCC acknowledges that
the Participants are, and may become from time to time collectively the owners
or licensees of certain Intellectual Property developed solely for use in
connection with the operation, advertising or promotion of the Interim Casino
Complex or other Participant Properties collectively operated or managed by the
Participants or their Affiliates and which such Participants make generally
available to such collectively managed Participant Properties. The Operator
may, to the extent that it deems appropriate for the purposes of carrying out
its agreements and obligations hereunder, utilize such Intellectual Property in
connection with the operation, advertising or promotion of the Interim Casino
Complex. The Participants agree to grant to the Operator a non-transferable
right to use such Intellectual Property in connection with the operation,
advertising and promotion of the Interim Casino Complex during the term of this
Agreement, and the Operator and the Participants shall enter into a licence
agreement governing the use of such Intellectual Property on terms satisfactory
to the Participants acting reasonably. The Operator, to the extent it deems
appropriate for the purposes of carrying out its agreements and obligations
hereunder, may utilize such Intellectual Property in connection with the
operation, advertising and promotion of the Interim Casino Complex on a royalty-
free basis (or for a royalty chargeable as an Operating Expense not in excess of
and credited against the Operator's Fee).
ARTICLE EIGHT
OPERATOR'S FEE AND EXPENSES
8.1 OPERATOR'S FEE:
(a) In consideration of the Operator's performance of services under
this Agreement, the Operator shall pay itself from the Casino
Accounts a fee equal to the aggregate of the following
(collectively the "Operator's Fee"):
(i) 2.75% of the Gross Operating Receipts in each Operating
Year (the "Base Fee"); and
(ii) 5% of the Net Operating Margin in each Operating Year (the
"Incentive Fee").
(b) The Operator's Fee and GST thereon shall be payable in monthly
instalments concurrently with the delivery to OCC of the monthly
reports described in Subsection 4.3(a) and the payment to OCC
pursuant to Subsection 4.3(d)(xii), if any. The monthly
instalments of the Base Fee shall be an amount equal to 2.75% of
Gross Operating Receipts for the preceding month. The monthly
instalments of the Incentive Fee shall be
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an amount equal to the difference determined by subtracting (i)
the aggregate of the monthly instalments of the Incentive Fee
theretofore paid with respect to the preceding months in the
then current Operating Year, from (ii) 5% of the Net Operating
Margin for the then current Operating Year through the end of
the preceding month.
(c) If the annual statement to be delivered by the Operator to OCC
under Subsection 4.3(1) shall show that the aggregate of the
monthly instalments of the Operator's Fee paid with respect to
the preceding Operating Year shall exceed or be less than the
Operator's Fee as shown in such annual statement for such
Operating Year, then the Operator shall forthwith deposit into,
or withdraw from the Casino Accounts, the amount of such
overpayment or underpayment, as the case may be.
(d) The Operator agrees to defer payment of the Operator's Fee for a
period not exceeding three months in the event there are
insufficient funds in the Casino Accounts to pay or reserve for
the items set forth in Subsections 4.3(d)(i) to (x).
(e) The Operator shall have no recourse against Her Majesty or OCC
or their respective assets for the payment of the Operator's Fee
except as set out in this Section 8.1 and Sections 4.5, 4.8 and
11.2.
8.2 SALARIES AND EXPENSES: The following salaries and expenses shall
constitute expenses properly chargeable and payable as an Operating Expense to
the extent incurred in accordance with the then current Approved Operating
Budget:
(a) salaries and expenses of any employees of the Operator or a
Participant employed exclusively with respect to the Interim
Casino Complex (including the costs of "fringe benefits" and the
costs of all statutory benefit programs payable with respect to
such employees, including without limitation, unemployment
insurance, worker's compensation, employees health tax and
pensions) and all GST payable thereon in accordance with
Subsection 4.3(d)(iii); and
(b) out-of-pocket expenses paid by the Operator to third parties in
accordance with this Agreement and associated with the operation
of the Interim Casino Complex, including without limitation,
legal fees, costs of brochures, surveys, advertising and other
promotion, and all GST payable thereon in accordance with
Subsection 4.3(d)(iii), but EXCLUDING travel and entertainment
expenses incurred by the employees of the Operator not
reasonably allocated to the operation of the Interim Casino
Complex (unless incurred relating to work pertaining directly
and solely to the Interim Casino Complex).
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Except for the salaries and expenses of the Operator referred to in (a) and (b),
no charge other than the Operator's Fee or agreed to specifically with OCC shall
be made by the Operator nor shall the Operator be entitled to recover any
off-site administrative, overhead and indirect costs of the Operator or the
salaries or "fringe benefit" costs, travelling, education, training,
entertainment or overhead expenses with respect to the provision of supervision,
control and accounting personnel of the Operator engaged on a part-time basis in
work pertaining to the Interim Casino Complex, unless such personnel are
specifically allocated to the Interim Casino Complex. The salaries and expenses
of employees of any Participant shall not constitute expenses properly
chargeable and payable as an Operating Expense unless (a) they are incurred in
accordance with the then current Approved Operating Budget, and (b) to the
extent such salaries and expenses are not specifically allocated to the Interim
Casino Complex, they are allocated on a reasonable basis in relation to the time
and expenses incurred in connection with the operation of the Interim Casino
Complex. All expenses incurred by the Operator in performing its duties under
this Agreement shall be charged by the Operator at net cost as reduced by all
available input tax credits and OCC shall receive credit for all available
rebates, commissions, discounts and allowances. OCC acknowledges that the GCC
Levy shall be paid by OCC and such amount shall not be an expense or liability
of the Operator. OCC agrees to notify the Operator in writing if it becomes a
prescribed registrant pursuant to subsection 188(5) of the ETA within two days
of such event.
8.3 THIRD PARTY CLAIMS:
(a) If any third party claim, action or proceeding ("claim") is
commenced by any Person against the Operator, any of the
Participants or OCC arising out of its performance or non-
performance of this Agreement or arises out of any event
happening in or about the Interim Casino Complex or occurring in
connection with the operation or development thereof, regardless
of whether any such claim is caused or contributed to by or
results from the negligence of the Operator, OCC, the
Participants, Affiliates, employees, directors, members,
officers, agents or independent contractors, the Operator, the
Participant or OCC shall first have recourse to the benefit of
the insurance coverage maintained in respect of the Interim
Casino Complex then in effect. In the event the insurance
proceeds are insufficient or there is no insurance coverage to
satisfy a claim, the parties agree to establish an appropriate
reserve funded out of Gross Revenues (a "Contingency Reserve")
in respect of such claim. A party subject to a claim shall be
entitled to withdraw from the Contingency Reserve the amount of
the Losses suffered or incurred by it in connection with the
claim provided the claim did not arise out of the wilful
misconduct of such party. If for any reason no Contingency
Reserve is established or the monies in the Contingency Reserve
are insufficient to pay such Losses, such Losses or any part
thereof not paid from the Contingency Reserve shall be paid from
future Gross Revenues as an Operating Expense provided the claim
did not arise out of the wilful
- 39 -
misconduct of the party whether the loss resulted from the
active or passive negligence of such person. In the event
that there is a balance remaining in the Contingency Reserve
and there are no outstanding claims, OCC shall be entitled
to 95% of the balance and the Operator shall be entitled
to 5% of the balance.
(b) From and after the termination of this Agreement, OCC agrees
that any Losses suffered or sustained by the Operator or any
Participant as a result of any claim shall, whether the result
of active or passive negligence of the Operator and any of the
Participants, as the case may be, to the extent such Losses did
not arise out of the wilful misconduct of the Operator or such
Participant, and were not recovered by the Operator or such
Participant during the term of this Agreement, and are not
otherwise recoverable under any policies of insurance then in
effect, shall be recoverable from:
(i) the interest of OCC in the Interim Casino Complex and any
assets relating directly thereto;
(ii) the interest of OCC in the Permanent Casino Complex and
any assets relating directly thereto; and
(iii) the Gross Revenues (and for the purposes of this
Subsection 8.3(b), "Gross Revenues" includes revenues
received from or in respect of the Permanent Casino
Complex).
No recourse pursuant to this Subsection 8.3(b) shall be had by
the Operator or the Participants against OCC or Her Majesty or
their respective undertaking, property and assets other than
with respect to the assets referred to in items (i), (ii) and
(iii) above.
8.4 CONCESSIONS: The Operator shall not accept for its own account in the
execution of its duties under this Agreement any commissions, reductions,
finder's fees or other concessions from tradesmen, suppliers, contractors,
insurers or other third parties. If such concessions are received by the
Operator, they shall be remitted to or credited to OCC and deposited to the
Operating Account forthwith after receipt.
8.5 BUSINESS LOSS INSURANCE: In the event that the operation of the Interim
Casino Complex or a portion thereof is suspended or terminated by reason of an
event in respect of which business loss insurance is payable, the Operator and
OCC shall receive such amounts in respect of the loss of the Operator's Fee and
the amount referred to in Subsection 4.3(d)(xii) to which they may be entitled
under such policies.
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ARTICLE NINE
NON-COMPETITION
9.1 NON-COMPETITION/RIGHT OF FIRST OFFER:
(a) Each of the Operator and the Participants agrees that it will
not (without the prior written consent of OCC) at any time
during the term of this Agreement directly or indirectly, either
individually or in partnership or jointly or in conjunction with
any person as principal, agent, shareholder or in any other
manner whatsoever, carry on or be engaged in or be concerned
with or interested in or advise, lend money to, guarantee the
debts or obligations of or permit either of their names or any
part thereof to be used or employed by any person engaged in or
concerned with or interested in any business involving the
conduct, management or operation of Games of Chance similar to
or competitive with the businesses being carried on in and at
the Interim Casino Complex within 125 kilometres of the Interim
Casino Complex. For greater certainty, the parties acknowledge
and agree that (i) the solicitation by any of the Participants
of actual or potential customers of the Interim Casino Complex
within such area, unless such solicitation occurs in connection
with a breach of the Operator's obligation in Subsection 6.1(l)
to not make available to any of the Participants or their
Affiliates the customer data base for the Interim Casino
Complex, shall not constitute a breach of this covenant and (ii)
the City of Cleveland and its suburbs are outside the 125
kilometre radius.
(b) OCC agrees that it will not (without the prior written consent
of the Operator) at any time during the term of this Agreement,
conduct or manage another casino within 125 kilometres of the
Interim Casino Complex (other than any casinos operated on lands
reserved for Indians) unless OCC provides the Operator with a
first opportunity to negotiate, on an exclusive basis, for a
period not exceeding 60 days, terms upon which the Operator (or
an Affiliate of the Operator) would establish and operate such a
casino for and on behalf of, and under the supervision and
direction of, OCC. If OCC and the Operator are not able to
agree upon such terms within such period, OCC shall then be
entitled to conclude third party arrangements for the
establishment and operation of such casino on terms less
favourable to a third party operator than those that had been
the subject of unsuccessful negotiations with the Operator (as
evidenced by the terms and conditions on which OCC had last
indicated to the Operator it would be prepared to engage the
Operator (or its Affiliate)).
- 41 -
ARTICLE TEN
EVENTS OF DEFAULT
10.1 EVENTS OF DEFAULT: The following events if not cured or remedied within
the applicable period stated below shall constitute an event of default (each,
an "Event of Default") under this Agreement:
(a) the Operator fails to make any payment when due to OCC under
this Agreement and any such failure remains unremedied for five
days after notice thereof by OCC to the Operator;
(b) any representation or warranty made by the Operator or any of
the Participants under this Agreement proves to have been
incorrect in any material respect when made;
(c) the Operator fails to perform or observe any other term,
covenant or agreement contained in this Agreement in any
material respect (other than the covenant under Subsection
6.1(c) the event of default in respect of which is set forth in
paragraph (h) below) and any such failure remains unremedied for
30 days after the date on which the Operator receives notice of
such failure from OCC or such longer period as may be reasonably
regarded as necessary to remedy such failure, provided that the
Operator has commenced within a reasonable time and in good
faith the remedying of such failure within such 30 day period
and thereafter prosecutes to completion with diligence and
continuity the remedying thereof;
(d) any Participant fails to perform or observe any term, covenant
or agreement contained in this Agreement in any material respect
and any such failure remains unremedied for 30 days after the
date on which the Participant receives notice of such failure
from OCC, or such longer period as may be reasonably regarded as
necessary to remedy such failure, provided that such Participant
has commenced within a reasonable time and in good faith the
remedying of such failure within such 30 day period and
thereafter prosecutes to completion with diligence and
continuity the remedying thereof or one or more of the remaining
Participants not in default promptly and unconditionally
assume(s) the obligation of such Participant hereunder and, to
the extent permitted by Applicable Law, use its reasonable
efforts in a commercially reasonable manner to acquire such
Participant's interest in the Operator;
(e) the Operator or any of the Participants admits its insolvency or
makes a general assignment for the benefit of creditors or any
proceeding is instituted by the Operator or any of the
Participants seeking relief or giving notice of its intention to
seek relief on its behalf as debtor, or to
- 42 -
adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding-up, reorganization, arrangement, adjustment or
composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors,
or seeking appointment of a receiver, receiver and manager,
trustee, custodian or other similar official for it or any
substantial part of its property and assets or the Operator or
any of the Participants takes any corporate action to authorize
any of the foregoing, unless in the case of a Participant one or
more of the remaining Participants promptly and unconditionally
assume(s) the obligations of such Participant hereunder and, to
the extent permitted by Applicable Law, use its reasonable
efforts in a commercially reasonable manner to acquire such
Participant's interest in the Operator;
(f) any proceeding is instituted against the Operator or any of the
Participants seeking to have an order for relief entered against
it as a debtor or to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding-up, reorganization, arrangement,
adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking appointment of a receiver, receiver and
manager, trustee, custodian or similar official for it or for
any substantial part of its property and assets and such
proceedings are not or are no longer being contested in good
faith by appropriate proceedings but in no event longer than 45
days from the institution of such first-mentioned proceedings,
unless in the case of a Participant one or more of the remaining
Participants promptly and unconditionally assume(s) the
obligations of such Participant hereunder and, to the extent
permitted by Applicable Law, use its reasonable efforts in a
commercially reasonable manner to acquire such Participant's
interest in the Operator;
(g) the Operator is in default in the performance of any of the
terms, covenants and agreements contained in any agreement
(beyond any period of time provided in such agreement to cure
such default) to which it is a party which materially impairs
the ability to carry on its business and such material
impairment continues for a period of 15 days; and
(h) the registration of the Operator under the Regulatory
Legislation is suspended or revoked for a period of 14 or more
days during any 12 month period.
10.2 COMMENCEMENT OF GRACE PERIOD: In the event there is a dispute as to
whether an event giving rise to an Event of Default has occurred any applicable
grace or cure period shall commence on the date of the determination of such
dispute.
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ARTICLE ELEVEN
TERMINATION
11.1 TERMINATION: This Agreement will terminate (except to the extent
necessary to give effect to the provisions of this Article Eleven, including
Sections 11.3 and 11.4) in any of the following cases:
(a) upon the expiry of 60 days after notice given by OCC to the
Operator if an Event of Default shall have occurred;
(b) upon the expiry of 180 days after notice given by OCC to the
Operator in the event of a termination (other than by effluxion
of time) of the Permanent Casino Heads of Agreement or the
Master Agreement by reason of the decision of OCC not to extend
the Master Agreement Deadline or the Final Closing Deadline (as
such terms are defined in the Permanent Casino Heads of
Agreement);
(c) upon the expiry of 60 days after notice given by OCC to the
Operator in the event of a termination (other than by effluxion
of time) of the Permanent Casino Heads of Agreement or the
Master Agreement other than for the reason set out in (b) above;
and
(d) upon the expiry of 60 days after notice given by the Operator to
OCC of an Operator Termination Event (as hereinafter defined).
For the purposes of this Article Eleven, "Operator Termination Event" means if
any of the following events shall occur:
(i) OCC shall fail in a material respect to keep, observe or
perform any covenant, agreement or term or provision of
this Agreement to be kept, observed or performed by OCC,
or shall be in breach of any representation or warranty
and such default shall continue for a period of 30 days
after notice thereof by the Operator to OCC; or
(ii) by reason of Force Majeure or a change in Applicable Law
or the application thereof to the operation of the
Casino, the operation of the Casino shall, in a material
respect, be suspended, or the ability of the Operator to
operate the Casino shall be materially impaired, and any
such suspension or impairment shall continue for a period
of six months or more (in the case of Force Majeure) or a
period of three months or more (in the case of Applicable
Law) and provided that the Operator shall have notified
OCC within 10 Business Days of the date which the
Operator alleges to be the commencement of such six-month
or three-month period; or
- 44 -
(iii) an event shall occur or state of facts be found to exist
with respect to the Casino, including its continued
operation, which has resulted in written notification to
a Participant or an Affiliate of a Participant from a
regulatory agency threatening, and which such Participant
exercising its best judgment in good faith determines
will likely lead to, a revocation of a material gaming
licence or application for renewal of an existing
material gaming licence of such Participant or any of its
Affiliates in the States of New Jersey or Nevada in the
United States of America; or
(iv) any increase(s) in the Win Tax or the levying of or any
increase(s) in any Impositions affecting the Casino
which, individually or in the aggregate, materially
adversely affects the operating profit of the Casino.
11.2 PRE-OPENING EXPENSES: In the event of termination of this Agreement
pursuant to Section 11.1, OCC shall, on the Reimbursement Date, pay to the
Operator the then outstanding Pre-Opening Expenses together with any GST payable
by OCC thereon, plus all accrued and unpaid interest thereon at the
Reimbursement Rate of Interest (the "Outstanding Pre-Opening Expenses") and all
outstanding and unpaid Operator's Fee, provided that the obligation of OCC to
reimburse the Operator in respect of any Outstanding Pre-Opening Expenses or
outstanding and unpaid Operator's Fee as aforesaid shall be subject to the
following conditions:
(a) in the case of any Outstanding Pre-Opening Expense incurred for
the supply of materials, OCC or its nominee shall be entitled to
obtain the Operator's interest in and obligations with respect
to such materials and the benefits and obligations of the
Operator in any warranties and guarantees issued by the supplier
of such materials;
(b) in the case of any Outstanding Pre-Opening Expense incurred for
the supply of services, OCC or its nominee shall be entitled to
assume the benefits and obligations of the Operator under such
contract for services without the payment of any penalty or
other amount by OCC or its nominee or further consent (or if
further consent shall be required such consent shall be obtained
by the Operator) and where OCC elects to assume a contract for
services, OCC shall indemnify the Operator with respect thereto;
and
(c) the amount of the Operator's Fee asserted by the Operator to be
outstanding and unpaid is accurate, and for this purpose the
Operator agrees to provide OCC with audited financial statements
as required by Subsection 4.3(l) for the period in question.
- 45 -
For the purposes of this Section 11.2, "Reimbursement Date" means a date which
is no later than 180 days after this Agreement is terminated.
11.3 REMEDIES PRESERVED: Any termination of this Agreement pursuant to
Section 11.1 shall be without prejudice to any rights or remedies available to
the parties hereto under this Agreement in the event of the occurrence of any of
the events set forth in Section 11.1 and the resultant termination pursuant
thereto.
11.4 ESTABLISHMENT OF SEVERANCE RESERVE: The Operator and OCC agree that for
each Operating Year they will establish in the Approved Operating Budget a
reserve out of Gross Revenues (the "Severance Reserve") to satisfy all
obligations and liabilities arising out of the termination or lay-off of
employees of the Operator employed at the Interim Casino Complex (other than the
Executive Staff in respect of whom the Operator has not waived its rights under
Section 14.12) in connection with the termination of this Agreement.
11.5 WITHDRAWALS FROM SEVERANCE RESERVE: Upon the termination of this Agreement
the Operator shall be entitled to withdraw from the Severance Reserve maintained
in the Casino Accounts amounts required by the Operator to satisfy all
obligations and liabilities arising out of the termination or lay-off of
employees of the Operator employed at the Interim Casino Complex (other than the
Executive Staff in respect of whom the Operator has waived its rights under
Section 14.12) in connection with the termination of this Agreement. If the
monies in the Severance Reserve are insufficient to pay all such severance
liabilities, OCC shall be responsible for 95% of the deficiency and the Operator
shall be responsible for 5% of the deficiency. In the event there is a balance
remaining in the Severance Reserve after paying all such severance liabilities,
OCC shall be entitled to 95% of the balance and the Operator shall be entitled
to 5% of the balance.
ARTICLE TWELVE
INDEMNITIES
12.1 INDEMNIFICATION BY OPERATOR: The Operator agrees to indemnify and save
harmless OCC from all Losses suffered or incurred by OCC as a result of:
(a) any breach by the Operator of, or any inaccuracy of any
representation or warranty of the Operator contained in this
Agreement; and
(b) any wilful breach or wilful non-performance by the Operator of
any covenant to be performed by it which is contained in this
Agreement;
provided that the Operator shall not be required to indemnify or save harmless
OCC for any Losses attributable to the wilful misconduct of OCC.
- 46 -
12.2 INDEMNIFICATION BY OCC: OCC agrees to indemnify and save harmless the
Operator and the Participants from all Losses suffered or incurred by the
Operator or any of the Participants as a result of:
(a) any breach by OCC of or any inaccuracy of any representation or
warranty contained in this Agreement; and
(b) any wilful breach or wilful non-performance by OCC of any
covenant to be performed by it which is contained in this
Agreement;
provided that OCC shall not be required to indemnify or save harmless the
Operator or any of the Participants for any Losses occasioned by the wilful
misconduct of the Operator or any of the Participants.
12.3 INDEMNIFICATION BY PARTICIPANTS:
(a) Each of the Participants severally agrees to indemnify and save
harmless OCC from all Losses suffered or incurred by OCC as a
result of:
(i) any breach by such Participant of, or any inaccuracy of any
representation or warranty of the Operator or such
Participant contained in this Agreement; and
(ii) any wilful breach or wilful non-performance by such
Participant of any covenant to be performed by the Operator
or such Participant which is contained in this Agreement;
provided that a Participant shall not be required to indemnify
or save harmless OCC for any Losses attributable to the wilful
misconduct of OCC.
(b) The obligations of the Participants under this Agreement,
including in particular this Article Twelve, are and shall be
several (each as to an undivided one-third) and shall not be
joint nor joint and several.
12.4 UNITED STATES TAXES: All amounts payable by any Participant shall be paid
free and clear and without deduction for any present or future taxes of any
federal, state or local government or governmental subdivision or taxing
authority in the United States, and the Participant shall pay and discharge and
indemnify and hold harmless OCC from, all such taxes with respect to or measured
by any payment made by the Participant pursuant to this Agreement or the
performance of any obligations on, under or pursuant to this Agreement. If at
any time the Participant is required by Applicable Law to make any deduction
or withholding from any amount due under this Agreement, or any such amount in
respect of such taxes, the Participant shall pay such amount that after payment
of any such taxes to the appropriate taxing authority there shall be paid to OCC
the amount otherwise payable in the absence of such taxes.
- 47 -
12.5 TIMELY NOTICE: Whenever a party shall become aware of any claim which
would subject another party to the indemnity provisions of this Article Twelve,
the party shall provide timely notice thereof to the other party.
12.6 LIMITATION ON CLAIMS FOR DAMAGES:
(a) Notwithstanding the other provisions of this Article Twelve, the
provisions in this Article Twelve shall apply only in respect of
Losses suffered or incurred by the parties hereto other than
Losses arising out of third party claims as contemplated by
Section 8.3 and only to the extent such Losses are not otherwise
recoverable from policies of insurance.
(b) Except as expressly set forth in this Article Twelve, OCC shall
not have the right to make a claim for or recover damages, at
law or in equity, against the Operator or any of the
Participants for a breach of this Agreement.
12.7 NO SUBROGATION: Nothing in this Agreement shall be deemed to create any
right of recovery whether by way of subrogation or otherwise on the part of
any insurance or surety company.
ARTICLE THIRTEEN
DISPUTE RESOLUTION
13.1 MEDIATION: Where any dispute arises between the Operator and OCC hereto
as to any matter contemplated by or arising from the terms of this Agreement,
the dispute shall be the subject of non-binding and without prejudice mediation
by recourse to a Person or Persons generally recognized as having familiarity
with and expertise in the matter which is the subject of the dispute (an
"Expert"). Either party may initiate such mediation by giving notice to the
other party to that effect. Within 10 Business Days after the delivery of such
notice, each of OCC and the Operator shall meet and attempt to appoint a single
Expert for non-binding and without prejudice mediation of such dispute. If OCC
and the Operator are unable to agree on a single Expert then, upon notice given
by either of them and within five Business Days of such notice, each of OCC and
the Operator shall name a Person and the two Persons so named shall promptly
thereafter choose the Expert. The Expert selected shall then promptly mediate
the dispute between the parties and shall render its recommendation within 30
days of its appointment (the "Mediation Period"). The costs related to such
mediation shall, in the absence of agreement between the parties to the
contrary, be borne equally between the parties. Each of the parties agrees that
it will give substantial weight and due regard for the recommendation of the
Expert. Notwithstanding the foregoing, following the Mediation Period, each of
the parties shall be entitled to seek resolution of such dispute in accordance
with its normal remedies and recourses available at law.
- 48 -
ARTICLE FOURTEEN
GENERAL
14.1 NOTICES: Any notice, demand, request, consent, agreement or approval
which may or is required to be given pursuant to this Agreement shall be in
writing and shall be sufficiently given or made if served personally upon the
party for whom it is intended, or mailed by registered mail, return receipt
requested or sent by telex, telecopy or telegram and in the case of:
(a) OCC, addressed to it at:
1075 Bay Street
6th Floor
Toronto, Ontario
M5S 2B1
Telecopier: (416) 325-0416
Attention: President
(b) the Operator, addressed to it at:
108 City Centre
333 Riverside Drive
Windsor, Ontario
N9A 7C5
Telecopier: (519) 258-2720
Attention: Michael D. Rumbolz, President
- and to -
Blake, Cassels & Graydon
199 Bay Street
Suite 2800, Commerce Court West
P.O. Box 25
Toronto, Ontario
M5L 1A9
Telecopier: (416) 863-3033
Attention: John M. Tuzyk
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with a copy to each of the Participants
(c) the Participants, addressed to them at:
Caesars World, Inc.
1801 Century Park East
Los Angeles, California
90067
Telecopier: (310) 552-9446
Attention: Philip L. Ball, Senior
Vice-President, Secretary
and Legal Counsel
with a copy to the other Participants
Circus Circus Enterprises, Inc.
2880 Las Vegas Boulevard
P.O. Box 14967
Las Vegas, Nevada
89114-4967
Telecopier: (702) 731-6262
Attention: Clyde T. Turner, President
with a copy to the other Participants
Hilton Hotels Corporation
c/o Hilton Gaming Corporation
2001 E. Flamingo Road
Suite 114
Las Vegas, Nevada
89119
Telecopier: (702) 732-0027
Attention: Mark E. Thomas, Senior Vice President
and General Counsel
with a copy to the other Participants
- and in each case to -
- 50 -
Blake, Cassels & Graydon
199 Bay Street
Suite 2800, Commerce Court West
P.O. Box 25
Toronto, Ontario
M5L 1A9
Telecopier: (416) 863-3033
Attention: John M. Tuzyk
or to such other address or in care of such other officers as a party may from
time to time advise to the other parties by notice in writing. The date of
receipt of any such notice, demand, request, consent, agreement or approval if
served personally or by telex, telecopy or telegram shall be deemed to be the
date of delivery thereof (if such day is a Business Day and if not, the next
following Business Day), or if mailed as aforesaid, the date of delivery by a
postal authority.
14.2 TABLE OF CONTENTS AND HEADINGS: The table of contents hereto and the
headings of any Articles, Section or part thereof are inserted for purposes of
convenience only and do not form part hereof.
14.3 ENFORCEABILITY: If any provision of this Agreement is determined to be
invalid, illegal or unenforceable as written, such provision shall be enforced
to the maximum extent permitted by Applicable Law.
14.4 SUCCESSORS AND ASSIGNS: This Agreement shall enure to the benefit of and
be binding upon the successors and permitted assigns of each party hereto. This
Agreement shall not be assigned by the Operator or the Participants without the
prior written consent of OCC, which consent may be arbitrarily withheld.
14.5 TIME OF ESSENCE: Time shall in all respects be of the essence hereof;
provided, however, that the time for doing or completing any matter provided for
herein may be extended or abridged by an agreement in writing signed by OCC and
the Operator, or by their respective counsel who are hereby expressly appointed
in that regard.
14.6 APPROVALS: Wherever the provisions of this Agreement contemplate an
approval of, consent to, or a decision with respect to, any action, Person,
document or plan by either party, this Agreement (unless the text hereof
expressly states that such approval or consent may be arbitrarily or
unreasonably withheld, or unless the text hereof expressly states that the time
periods are to be otherwise, in which latter case this Section shall apply but
the time periods shall be adjusted accordingly) shall be deemed to provide that:
(a) such request for approval, consent or decision shall:
- 51 -
(i) clearly set forth the matter in respect of which such
approval, consent or decision is being sought;
(ii) form the sole subject matter of the correspondence
containing such request for approval, consent or
decision; and
(iii) clearly state that such approval, consent or decision is
being sought;
otherwise such request shall be deemed never to have been made;
(b) such approval, consent or decision shall be in writing;
(c) such approval, consent or decision shall not be unreasonably
withheld or delayed;
(d) the party whose approval or consent is requested shall, within
15 Business Days after receipt of such request, advise the other
party by notice in writing either that it consents or approves,
or that it withholds its consent or approval and in the latter
case it shall set forth, in reasonable detail, its reasons for
withholding its consent or approval; and
(e) in the case of OCC, an approval, consent or decision hereunder
shall not have been effectively given unless given by an officer
or director of OCC, a member of the "Casino Project Team"
established by Her Majesty and, in the case of an approval
pursuant to Section 14.12, evidenced by a resolution of the
board of directors of OCC.
14.7 COOPERATION OF PARTIES: The parties agree to use their reasonable
efforts to cooperate with each other in the performance of their respective
obligations under this Agreement provided that the failure of any party to
provide such cooperation shall in no event relieve any other party hereto from
the performance or observance of its obligations hereunder.
14.8 FORCE MAJEURE: Notwithstanding any other provision of this Agreement,
if, by reason of Force Majeure, a party is unable to perform in whole or in part
its obligations under this Agreement, then in such event and only during such
period of inability to perform, such party shall be relieved of those
obligations to the extent it is so unable to perform and such inability to
perform, so caused, shall not make such party liable to the other, and any time
period in which such obligation is to be performed shall be extended for such
period of inability to perform. Every obligation in this Agreement shall be
deemed to be subject to Force Majeure.
14.9 GOVERNING LAW: This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and each party irrevocably
and
- 52 -
unconditionally submits to the non-exclusive jurisdiction of the courts of
such province and all courts competent to hear appeals therefrom.
14.10 RELATIONSHIP OF THE PARTIES: Nothing herein shall be construed so as
to make OCC a partner of the Operator or the Participants or, except as
expressly provided herein, to render the Operator or the Participants the agent
or other authorized representative of OCC for any purpose.
14.11 THIRD PARTIES: None of the rights or obligations hereunder of any
party shall enure to the benefit of or be enforceable by any party other than
the parties to this Agreement and their respective successors and permitted
assigns.
14.12 EMPLOYMENT SOLICITATION: OCC agrees not to solicit the employment of
the Executive Staff during the term of this Agreement and not to employ any of
the Executive Staff for a period of 12 months after the termination (by
effluxion of time or otherwise) of this Agreement, in each case without the
Operator's prior written consent. The Operator and each of the Participants
agrees not to solicit the employment of any officer, director or employee of OCC
during the term of this Agreement and not to employ any officer, director or
employee of OCC for a period of 12 months after the termination (by effluxion of
time or otherwise) of this Agreement, in each case without OCC's prior written
consent.
14.13 DISCLOSURE: Each of the parties hereto acknowledges, agrees and
consents to the disclosure of this Agreement as a matter of public record and
further acknowledges and agrees that Applicable Law may require disclosure of
information provided by any party hereto to any other party or parties hereto
pursuant to or in connection with this Agreement. However, the parties
acknowledge and agree that information provided by any party hereto to any other
party or parties hereto pursuant to or in connection with this Agreement may
comprise trade secrets or scientific, technical, commercial, financial or labour
relations information, supplied in confidence, disclosure of which could
reasonably be expected to prejudice significantly the competitive position or
interfere significantly with the contractual or other negotiations of one or all
of the parties or result in undue loss to one or all of the parties or undue
gain to others. Further, such information may include information the
disclosure of which could reasonably be expected to prejudice the economic
interests of OCC or other provincial government institutions or its or their
competitive position and the proposed plans, policies or projects of OCC or
other provincial government institutions or the disclosure of which could
reasonably be expected to result in premature disclosure of a pending policy
decision or undue financial benefit or loss to a person. Accordingly, except as
may be required by Applicable Law, all such information shall be kept
confidential by the parties and shall only be made available to such of a
party's employees and consultants as are required to have access to the same in
order for the recipient party to adequately use such information for the
purposes for which it was furnished.
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14.14 COUNTERPARTS: This Agreement may be executed in counterparts, each of
which shall constitute an original and all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the
parties.
ONTARIO CASINO CORPORATION
by /s/ Elaine Todres
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/s/ Jay Kaufman
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WINDSOR CASINO LIMITED
by /s/ Michael Rumbolz
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CAESARS WORLD, INC.
by /s/ Philip L. Ball
---------------------------
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CIRCUS CIRCUS ENTERPRISES, INC.
by /s/ Clyde Turner
---------------------------
---------------------------
- 54 -
HILTON HOTELS CORPORATION
by /s/ Raymond Avansino Jr.
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SCHEDULE A
LEGAL DESCRIPTION OF
THE ART GALLERY LAND AND THE ADJACENT LANDS
PART 1 - ART GALLERY LAND
Part of Lot 9, all of Lots 10, 11, 12, 13, 14 and 15 on the south side of
Riverside Drive West (formerly Sandwich Street); Part of Lot 20 and all of Lots
21, 22, 23, 24, 25 and 26 on the north side of Pitt Street West; Part of River
Street as closed and part of the 30 foot alley (formerly Assumption Street) as
closed, all according to Registered Plan 120 and part of Lots 4 and 5 according
to Registered Plan 224 designated as Parts 1, 2, 3, 4, 5, 7 and 8 on Reference
Plan 12R-2300, save and except part of Lot 9 on the south side of Riverside
Drive West (formerly Sandwich Street), part of Lot 20 on the north side of Pitt
Street West and part of the 30 foot alley (formerly Assumption Street as closed,
Registered Plan 120 designated as Part 1 on Reference Plan 12R-7613.
PART 2 - ADJACENT LANDS
Part of Lots 1, 4 and 5, all of Lots 2, 3 and 6 and the closed alley, Registered
Plan 224, and part of River Street as closed, Registered Plan 120 designated as
Part 6, Reference Plan 12R-2300, save and except that part of Lot 1 on
Registered Plan 224 designated as Part 1 on Reference Plan 12R-9314.
All of the City of Windsor, County of Essex, Province of Ontario.